<PAGE> 1
US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/x/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended: December 31, 1995
-----------------
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 0-16284
-------
National TechTeam, Inc.
-------------------------------
(Name of issuer in its charter)
Delaware 38-2774613
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
22000 Garrison Avenue, Dearborn, MI 48124
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (313) 277-2277
<TABLE>
<S> <C>
Securities registered under Section 12(b) of the Securities Exchange Act: None
----
Securities registered under Section 12(g) of the Securities Exchange Act: Common Stock, $.01 par value
-----------------------------
(Title of Class)
</TABLE>
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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.
/x/ Yes / / No
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 15, 1996 was approximately $54,000,000.
Revenues for issuer's most recent fiscal year ended December 31, 1995 were
$41,787,462.
The number of outstanding shares of the issuer's common stock as of March 15,
1996 was 11,224,655.
DOCUMENTS INCORPORATED BY REFERENCE
National TechTeam, Inc.'s definitive Proxy Statement to be filed no later than
120 days after the end of the year covered by this report is incorporated by
reference into Part III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT
National TechTeam, Inc., a Delaware Corporation ("TechTeam" or "Company"), was
formed as a result of the 1987 merger of MegaVest Industries, Inc., a publicly
traded corporation, and Computer Trade Development Corporation, a privately
held company in the high technology industry. Computer Trade Development was
founded in 1979 by Dr. William F. Coyro Jr. for the purpose of selling
microcomputer equipment and providing microcomputer training and support
services. Previous to the merger, MegaVest Industries, Inc. was a "blind-pool"
company that was organized in 1986 solely for the purpose of investing in
business opportunities, including acquisitions. Immediately after the merger
the name of the company was changed to National TechTeam, Inc.
TechTeam has now evolved into a computer services company that provides call
center services, corporate support services, systems integration, and training
for major companies on an international scale. Headquartered in Dearborn,
Michigan, TechTeam also supports customers through facilities located in
Lansing, Southfield, and Troy, Michigan; Chicago, Illinois; San Francisco,
California; Dallas, Texas; Indianapolis, Indiana; Seattle, Washington and
Chelmsford, England.
DEPARTMENTS AND SERVICES
TechTeam is organized into functional departments along the service lines
offered. These service lines are described in detail in Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations.
National TechTeam provides integrated solutions in computer support and
services, network services, computer training, consulting, and contract
computer services. The Company has also formed strategic relationships with
the major computer hardware and software manufacturers such as IBM,
Hewlett-Packard, Novell, Sun, Netscape, Computer Associates, and Oracle, in
order to sell, train, and support their products in corporate environments.
TechTeam believes it is well positioned, with its integrated suite of services,
to take advantage of one of the largest growing segments in the computer
industry.
TechTeam continues to believe that the largest growth segment in the computer
industry during the next decade will be in providing services to corporations
to increase efficiency and manage computer technology more productively. The
need for computer support and services has grown exponentially with the
dramatic rise in computing power and the number of computer users. TechTeam
believes that demand will continue to rise through the 1990's as networks
proliferate and applications become even more sophisticated.
CUSTOMERS
TechTeam has developed a strong customer base. The Company's business activity
has continued its positive upward trend with a number of significant
announcements throughout 1995. In February, the Company announced a major
systems integration contract with the Prosecuting Attorney's Association of
Michigan to automate all 82 of their offices throughout Michigan. In July,
TechTeam announced a significant new contract with AAA Michigan for a
comprehensive computer help desk support center, and that it would provide
office automation and end-user computer training for all north American
locations of NBD Bank. In August, the Company announced a contract to provide
technical support for the Visio product line. Also in 1995, TechTeam signed
the largest new contract in the Company's history, with revenues conservatively
estimated in excess of $10 million during the first year of the contract.
The Company has maintained its well balanced customer profile including, Ford
Motor Company and two finance-related subsidiaries, Chrysler Corporation,
Hewlett-Packard Corporation, Micrografx, Motorola, and AT&T to name a few.
TechTeam continues to concentrate its marketing efforts toward best-in-class
companies in their respective industries. Providing value added solutions,
while improving productivity in hardware and software applications, computer
training, consulting, contract computer services, and the management of
computer technologies, is the Company's primary focus.
2
<PAGE> 3
COMPETITION
The marketplace for computer support and services is intensely competitive.
The dramatic rise in the number of computer users, rapid technological
advancements, and a surge in outsourcing has increased the demand for these
services. TechTeam has concentrated on providing integrated solutions in call
center services, corporate support services, systems integration, and training.
TechTeam believes that there are many companies providing at least one service
which competes directly with one or more of TechTeam's services. Many of these
competitors are substantially larger than TechTeam and have greater financial,
technical, and marketing resources. However, the Company believes there are
several factors that contribute to its ability to compete effectively in the
markets it serves. These include the breadth and quality of its integrated
solutions, experience and success with best-in-class companies, diversification
of its customer base, and its unique customer focused computer service
offerings.
EMPLOYEES
As of March 15, 1996 TechTeam had a total of 1,056 employees of which 135 are
part-time. TechTeam believes its relationship with its employees is excellent.
ITEM 2. PROPERTIES
The following table sets forth the primary real properties which TechTeam
leases and occupies:
<TABLE>
<CAPTION>
Approximate
Lease Term Beginning Square
Location Function & Expiring Footage
-------- -------- ----------- -------
<S> <C> <C> <C>
Dearborn, MI World Headquarters 11/16/87 - 04/01/97 15,290
Dearborn, MI North American Training Center 10/01/88 - 04/01/97 19,468
Southfield, MI World Call Center Headquarters 11/01/93 - 06/30/98 30,817
Chicago, IL Chicago Regional Office 09/01/93 - 08/31/96 5,334
Dallas, TX Dallas Regional Office 10/01/95 - 09/30/00 32,666
Troy, MI Training Center 01/01/96 - 12/31/98 2,345
Indianapolis, IN Training Center 01/01/96 - 12/31/00 1,881
Seattle, WA Call Center 04/01/96 - 03/31/97 3,175
</TABLE>
TechTeam believes that the facilities it occupies are well maintained and in
good operating condition. The offices include general office space and 17
computer training classrooms equipped with microcomputers, workstations, UNIX
and NT servers and X-terminals. Because some TechTeam services are performed
at customer sites, the cost of maintaining multiple offices is minimized. In
addition to the properties listed in the above table, TechTeam employs
personnel and performs ongoing business in California and the United Kingdom.
ITEM 3. LEGAL PROCEEDINGS
TechTeam is not aware of any legal proceedings against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
3
<PAGE> 4
PART II
ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED STOCKHOLDER MATTERS
National TechTeam's common stock trades on The Nasdaq Stock Market under the
symbol "TEAM". The following table reflects the high and low prices for each
quarter for the two year period ended December 31, 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
---- ----
QUARTER LOW HIGH LOW HIGH
<S> <C> <C> <C> <C>
First $ 3.38 $ 5.25 $ 4.63 $ 9.63
Second 4.00 6.50 5.75 8.25
Third 5.25 7.25 5.13 7.50
Fourth 5.00 6.00 4.63 7.63
</TABLE>
National TechTeam has not paid cash dividends and anticipates that dividends
will not be paid in the foreseeable future and that all retained earnings will
be used to develop and expand TechTeam's business.
TechTeam had 1,079 shareholders of record as of March 15, 1996.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data of TechTeam should be read in conjunction
with the consolidated financial statements and related notes appearing in Item
8 of this report. In the opinion of management, the financial data presented
below contains all adjustments necessary for fair presentation.
<TABLE>
<CAPTION>
FOR THE YEAR: 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $41,787,462 $30,224,428 $20,443,947 $10,902,266 $7,905,485
Income before tax provisions 4,077,303 3,371,924 2,769,098 1,031,301 141,428
Net income 2,399,067 1,971,049 1,672,413 766,301 56,939
Earnings per share 0.21 0.18 0.18 0.09 0.01
Weighted average number of
shares outstanding 11,360,768 10,981,183 9,306,255 8,421,756 7,618,221
AT YEAR END:
Current assets $16,191,444 $12,889,697 $6,173,176 $3,084,774 $2,023,040
Current liabilities 3,838,529 1,173,196 2,005,995 2,036,810 1,477,581
Total assets 22,285,523 17,148,682 10,299,647 4,130,459 2,650,229
Long-term liabilities 555,028 146,460 214,100 104,362 39,587
Total shareholders' equity 17,891,966 15,829,026 8,079,552 1,989,287 1,133,061
</TABLE>
4
<PAGE> 5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to revenues of
certain items in the Company's Consolidated Statements of Operations:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Call center services 36.2% 23.7% 11.4%
Corporate support services 35.3 42.5 49.3
Systems integration 18.9 18.5 12.9
Training programs 9.6 15.3 26.4
----- ----- -----
TOTAL REVENUES 100.0% 100.0% 100.0%
===== ===== =====
GROSS MARGIN (Revenues less directly related expenses):
Call center services 30.7% 32.2% 23.3%
Corporate support services 29.6 27.4 22.9
Systems integration 0.2 5.4 5.0
Training programs 10.8 21.6 30.4
----- ---- ----
TOTAL GROSS MARGIN 22.6 23.6 22.6
SELLING, GENERAL AND ADMINISTRATIVE AND INTEREST (12.9) (12.9) (9.1)
GAIN ON SALES OF INVESTMENT - 0.5 -
----- ---- ----
NET MARGIN (INCOME BEFORE TAX PROVISIONS) 9.7% 11.2% 13.5%
===== ==== ====
</TABLE>
COMPARATIVE PERFORMANCE 1995 VERSUS 1994
National TechTeam established new records for revenues and earnings in 1995.
TechTeam earned net income of $2,399,067, or $.21 per share, for 1995 as
compared to a net income of $1,971,049, or $.18 per share, for 1994. The
Company's total revenues increased by $11,563,024 in 1995 to $41,787,462, a
38.3% increase over 1994 revenues.
Call center services - Revenues from call center operations increased by
$7,950,297 in 1995. This was a 110.8% increase over call center revenues in
1994. The Company had 18 contracts in place at December 31, 1995 compared to
the seven contracts at December 31, 1994. The margin on this line of service
decreased between 1994 and 1995 as start-up costs related to new contracts were
incurred, mitigated to some extent by amounts billed at the commencement of
certain new contracts; see Notes to the Consolidated Financial Statements, Note
A - Summary of Significant Accounting Policies, Revenue recognition. This
service line consists of international 800 and 900 telephone support for
computer hardware, computer software and other products and services.
Corporate support services - There was a $1,895,098 (14.8%) increase in
revenues generated from providing computer support and contract staffing
services. The margin on this line of service increased between 1994 and 1995
because of increased utilization of staff resources. The increase in corporate
support services revenues resulted from continued customer demand for
TechTeam's computer services personnel at Ford and other major accounts.
Corporate support services includes a variety of technical services, including
consulting, programming services, and the placement of computer personnel at
customer sites to support end-user applications via on-site help desks and
telephone hotline services. Contracts for these services are generally
negotiated on an hourly rate basis or are priced on a project basis.
Systems integration - There was a $2,313,190 (41.3%) increase in revenues in
this service line between 1994 and 1995. The increased revenues reflect a
growing demand for TechTeam's systems integration, database design and
applications development
5
<PAGE> 6
COMPARATIVE PERFORMANCE 1995 VERSUS 1994 - CONTINUED
services. The margin on this line of service decreased between 1994 and 1995
as the Company incurred losses in excess of $100,000 related to settlement of a
lawsuit and experienced substantial margin pressure on the sale of the
Company's computer hardware and software products.
Training programs - Revenues for 1995 decreased $595,561 (12.9%) as compared to
1994, due to a reduced scope of training services for a major customer. The
Company's experience is that enrollments are somewhat cyclical in nature. The
margin on this line of service decreased between 1994 and 1995 as the Company
incurred substantial start-up costs for a major new contract and charged to
expense all remaining assets of TechTeam's Ford training operations in the
United Kingdom. Training programs consist of instructor led training for word
processing, spreadsheets, graphics, data bases, desktop publishing, operating
systems, and systems administration for JAVA, NT, Windows, OS/2 and UNIX and
mainframe operating systems.
Selling, general and administrative and interest - These expenses, as a percent
of revenues, were 12.9% in 1995 and 1994.
Tax provisions - TechTeam recognized $1,268,236 of Federal income tax in 1995,
resulting in an effective tax rate of 34.6% for 1995 compared to 35.7% for
1994. The Michigan Single Business Tax in 1995 was $410,000, with an effective
tax rate of 10.1% compared to 9.1% for 1994.
COMPARATIVE PERFORMANCE 1994 VERSUS 1993 (See 1995 versus 1994 for general
information on each service line.)
1994 was TechTeam's previous record year in terms of both revenues and
earnings. TechTeam earned net income of $1,971,049, or $.18 per share, for
1994 as compared to a net income of $1,672,413, or $.18 per share, for 1993.
TechTeam's total revenues increased by $9,780,491 in 1994 to $30,224,438, a
47.8% increase over 1993 revenues.
Call center services - This service line commenced in the second quarter of
1993, and the Company had seven contracts in place at December 31, 1994
compared to the four contracts at December 31, 1993. The margin on this line
of service increased between 1993 and 1994 as the product offerings matured and
start-up costs were reduced.
Corporate support services - There was a $2,751,788 (27.3%) increase in
revenues generated from providing computer support and contract staffing
services. The margin on this line of service increased between 1993 and 1994
because of increased utilization of staff resources. The increase in corporate
support services revenues resulted from continued customer demand for
TechTeam's computer services personnel at Ford and other major accounts.
Systems integration - There was a $2,954,178 (111.6%) increase in revenues in
this service line between 1993 and 1994. The increase was primarily
attributable to $1,710,299 additional revenue generated by National TechTeam of
Illinois, Inc. (formerly Micro Systems Group, Inc.) in 1994 versus 1993; this
company was acquired by the Company on September 30, 1993. The increased
revenues also reflect a growing demand for TechTeam's systems integration,
database design and applications development services.
Training programs - Revenues for 1994 decreased $773,141 (14.4%) as compared to
1993, due to a reduced scope of training services for a major customer. The
Company's experience is that enrollments are somewhat cyclical in nature. The
margin on this line of service decreased between 1993 and 1994 because of
reduced utilization of TechTeam's training capacity.
Selling, general and administrative and interest - These expenses, as a percent
of revenues, were 12.9% in 1994 compared with 9.1% in 1993. These costs
increased in response to increased business activity and to support the
Company's expansion in Europe.
Gain on sales of investment - In 1994 TechTeam sold a portion of its investment
in Action Trac.
Tax provisions - TechTeam recognized $1,095,000 of Federal income tax in 1994,
resulting in an effective tax rate of 35.7% for 1994 compared to 34.7% for
1993. The Michigan Single Business Tax in 1994 was $305,875, with an effective
tax rate of 9.1% compared to 7.5% for 1993.
6
<PAGE> 7
IMPACT OF BUSINESS WITH MAJOR CUSTOMERS
<TABLE>
<CAPTION>
Percentage
Increase/(Decrease) Percentage of
Amount From Prior Year Total Revenues
------ --------------- --------------
<S> <C> <C> <C>
Ford Motor Company ("Ford")
1995 $15,584,964 9.8% 37.3%
1994 14,195,853 3.6 47.0
1993 13,703,312 54.0 67.0
Hewlett-Packard Company ("Hewlett-Packard")
1995* $ 7,269,445 - 17.4%
Chrysler Corporation ("Chrysler")
1995 $ 4,162,419 26.3% 10.0%
1994 3,294,788 160.2 10.9
1993 1,266,320 72.9 6.2
Corel Corporation ("Corel")
1995 $ 2,737,601 (25.8%) 6.6%
1994 3,687,298 789.4 12.2
1993* 414,604 - 2.0
Novell, Inc. ("Novell")
1995 $ 522,973 (76.7%) 1.3%
1994 2,260,203 31.6 7.5
1993* 1,717,417 - 8.4
</TABLE>
*First year of business relationship
Services provided to Ford and Chrysler consist of contract computer end-user
support including on-site help desks and hotline telephone support, programming
services, documentation services, and classroom training programs. National
TechTeam provides these services to virtually all Ford divisions and two
finance-related Ford subsidiaries. Services provided to Hewlett-Packard, Corel
and Novell consist of help desk telephone support provided from TechTeam call
center sites.
While the large concentration of business with Ford contributes significantly
to earnings, management is aware of, and has acted upon, the need to diversify
its customer base from both a customer and industry perspective. TechTeam's
services are not specific to any single industry and can be beneficial to most
large corporations. TechTeam's computer support services and training programs
cover most of the popular software applications and can be customized to
improve the productivity of microcomputer users in most companies. Continuing
efforts to increase sales outside of Ford have produced positive results, as
total revenues from non-Ford customers were $26,202,498 in 1995, compared to
$16,028,585 in 1994 and $6,740,635 in 1993; this represents a 288.7% increase
over the two year period.
7
<PAGE> 8
LIQUIDITY AND CAPITAL RESOURCES
The Company's need for capital is dependent upon factors common to most
businesses, such as the rate of business growth and whether sufficient capital
can be generated internally from profits, or must be raised externally to meets
its objectives. Indicators of the Company's growing financial strength are
summarized below:
<TABLE>
<CAPTION>
December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Working capital $12,352,915 $11,716,501 $4,167,181
Current ratio 4.2 11.0 3.1
Debt as a percentage of total capitalization 2.9% .1% 6.6%
Shareholders' equity $17,891,966 $15,829,026 $8,079,552
</TABLE>
The Company's working capital was $12,352,915 at December 31, 1995 an increase
of 5.4% from December 31, 1994. This increase was due primarily to 1995
operating results (reflected primarily in higher accounts receivable balances
due to increased sales).
TechTeam has a line-of-credit agreement with NBD Bank which provides for
short-terms borrowings of up to $3,500,000; the credit is unsecured. The
line-of-credit is at the prime rate. There were no borrowings under the credit
agreement at December 31, 1995. The Company expects to borrow under this
arrangement to finance anticipated increases in accounts receivable balances.
TechTeam invested $680,000 in new computer equipment for its training
classrooms in 1993, which was financed through existing working capital and
through two year bank term notes and $1,057,000 in telecommunications hardware
and software in 1995 which was financed through a five year bank term note.
Management believes sufficient cash resources exist to support its current
long-term growth strategies either through currently available cash, cash
generated from future operations, or the ability for the Company to obtain
additional financing.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGE NUMBER(S)
--------------
<S> <C>
The following consolidated financial statements of National TechTeam, Inc. and subsidiaries are included in Item 8:
Report of independent auditors. 10
Consolidated Statements of Operations - Years Ended December 31, 1995, 1994 and 1993. 11
Consolidated Statements of Financial Position - December 31, 1995 and 1994. 12 - 13
Consolidated Statements of Shareholders' Equity - Years Ended December 31, 1995, 1994 and 1993. 14
Consolidated Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993. 15
Notes to the Consolidated Financial Statements 16 - 23
</TABLE>
The following financial statement schedules of National TechTeam, Inc. and
Subsidiaries are included pursuant to the requirements of Item 14(d): None.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been omitted.
8
<PAGE> 9
This Page Intentionally Left Blank
9
<PAGE> 10
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
Board of Directors
National TechTeam, Inc.
We have audited the accompanying consolidated statements of financial position
of National TechTeam, Inc. and subsidiaries as of December 31, 1995 and 1994 and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on those financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of National
TechTeam, Inc. and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
February 23, 1996
10
<PAGE> 11
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES -- NOTE B
Call center services $ 15,123,294 $ 7,172,997 $ 2,325,331
Corporate support services 14,732,050 12,836,952 10,085,164
Systems integration 7,914,414 5,601,224 2,647,046
Training programs 4,017,704 4,613,265 5,386,406
------------ ------------ ------------
41,787,462 30,224,438 20,443,947
------------ ------------ ------------
COSTS AND EXPENSES
Call center services 10,485,945 4,862,186 1,783,700
Corporate support services 10,368,907 9,321,694 7,775,458
Systems integration 7,899,636 5,298,511 2,515,394
Training programs 3,582,528 3,616,524 3,746,700
Selling, general and administrative 5,349,034 3,872,159 1,786,900
Interest 24,109 33,911 66,697
------------ ------------ ------------
37,710,159 27,004,985 17,674,849
------------ ------------ ------------
REVENUES LESS COSTS AND EXPENSES 4,077,303 3,219,453 2,769,098
GAIN ON SALES OF INVESTMENT - 152,471 -
------------ ------------ ------------
INCOME BEFORE TAX PROVISIONS 4,077,303 3,371,924 2,769,098
TAX PROVISIONS -- NOTE F 1,678,236 1,400,875 1,096,685
------------ ------------ ------------
NET INCOME $ 2,399,067 $ 1,971,049 $ 1,672,413
============ ============ ============
PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE $0.21 $0.18 $0.18
============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND COMMON SHARE
EQUIVALENTS OUTSTANDING
Primary 11,360,768 10,981,183 9,306,255
Fully diluted 11,360,768 11,079,136 9,522,940
</TABLE>
See accompanying notes.
11
<PAGE> 12
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
ASSETS 1995 1994
------------ -------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,717,543 $ 412,559
Temporary investments - 3,500,000
Accounts receivable -- Note B 13,269,272 7,751,801
Note receivable - current portion 53,333 -
Inventories 769,545 499,748
Refundable income tax - 384,258
Other 381,751 341,331
------------ -------------
Total current assets 16,191,444 12,889,697
------------ -------------
PROPERTY AND EQUIPMENT -- NOTE D
Office furniture and equipment 6,622,953 4,017,641
Transportation equipment 154,395 138,572
Leasehold improvements 681,223 345,701
------------ -------------
7,458,571 4,501,914
Less - Accumulated depreciation and amortization 2,898,257 1,861,876
------------ -------------
4,560,314 2,640,038
------------ -------------
OTHER ASSETS
Goodwill (less accumulated amortization of $354,512 at
December 31, 1995 and $193,306 at December 31, 1994)
-- Note H 1,252,585 1,413,791
Note receivable - long-term 102,222 -
Other 178,958 205,156
------------ -------------
1,533,765 1,618,947
------------ -------------
TOTAL ASSETS $ 22,285,523 $ 17,148,682
============ =============
</TABLE>
See accompanying notes.
12
<PAGE> 13
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 96,884 $ 140,100
Accounts payable 893,965 287,403
Accrued payroll, related taxes and withholdings 2,037,446 494,181
Deferred income tax -- Note F 89,839 65,850
Federal income tax payable 160,116 -
Deferred revenue and unapplied receipts 431,967 47,540
Other 128,312 138,122
----------- ------------
Total current liabilities 3,838,529 1,173,196
----------- ------------
LONG-TERM LIABILITIES
Deferred income tax -- Note F 116,066 146,460
Long-term debt, less current portion -- Note D 438,962 -
----------- ------------
555,028 146,460
----------- ------------
SHAREHOLDERS' EQUITY -- NOTES E, G, J AND K
Preferred stock, par value $.01
Authorized -- 5,000,000 shares
None issued
Common stock, par value $.01
Authorized -- 45,000,000 shares
Issued:
11,407,666 shares at December 31, 1995 114,077
10,989,166 shares at December 31, 1994 109,892
Additional paid-in capital 12,601,925 12,035,229
Retained earnings 6,082,972 3,683,905
----------- ------------
Total 18,798,974 15,829,026
Less - Treasury stock (200,000 shares at
December 31, 1995) 907,008 -
----------- ------------
Total shareholders' equity 17,891,966 15,829,026
----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $22,285,523 $ 17,148,682
=========== ============
</TABLE>
See accompanying notes.
13
<PAGE> 14
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Additional
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Common Paid-In Retained Treasury
Stock Capital Earnings Stock
--------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Balance at January 1, 1993 $ 72,288 $ 1,876,556 $ 40,443 $ -
Proceeds from issuance of 475,150
shares of common stock -- Note G 4,752 320,726 - -
Proceeds from issuance of 1,291,750
shares under stock option plans -- Note J 12,917 1,977,783 - -
Shares issued to acquire
Micro Systems Group, Inc. -- Note H 6,241 2,072,025 - -
Tax benefit from exercise of employee stock options and other - 23,408 - -
Net income for 1993 - - 1,672,413 -
--------- ------------ ----------- ----------
Balance at December 31, 1993 96,198 6,270,498 1,712,856 -
Proceeds from issuance of 1,060,731
shares of common stock -- Note G 10,607 5,010,227 - -
Proceeds from issuance of 308,625
shares under stock option plans -- Note J 3,087 574,123 - -
Tax benefit from exercise of employee stock options and other - 180,381 - -
Net income for 1994 - - 1,971,049 -
--------- ------------ ----------- ----------
Balance at December 31, 1994 109,892 12,035,229 3,683,905 -
Proceeds from issuance of 418,500
shares under stock option plans -- Note J 4,185 256,475 - -
Tax benefit from exercise of employee stock options and other - 310,221 - -
Purchase of common stock -- Note K - - - (907,008)
Net income for 1995 - - 2,399,067 -
--------- ------------ ----------- ----------
Balance at December 31, 1995 $ 114,077 $ 12,601,925 $ 6,082,972 $ (907,008)
========= ============ =========== ==========
</TABLE>
See accompanying notes.
14
<PAGE> 15
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
----------- ------------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,399,067 $ 1,971,049 $ 1,672,413
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,594,250 1,037,279 572,927
Provision for uncollectible accounts receivable 123,143 30,308 15,549
Provision for deferred income tax (89,631) 138,310 128,000
(Gain) on sales of investment - (152,471) -
(Gain)/loss on sales of equipment and other 55,209 (3,878) (27,180)
Changes in current assets and liabilities:
Accounts receivable (5,640,614) (2,725,807) (2,240,166)
Inventories (269,797) (130,574) 14,582
Other current assets (40,420) (168,268) (15,956)
Accounts payable 606,562 (173,373) 156,174
Accrued payroll, related taxes and withholdings 1,543,265 128,159 309,144
Federal income tax 544,374 (892,231) 399,795
Deferred revenue and unapplied receipts 384,427 (99,091) 65,239
Other current liabilities (9,810) (182,233) (214,133)
Net cash provided by (used in) operating activities ----------- ------------- -----------
1,200,025 (1,222,821) 836,388
----------- ------------- -----------
INVESTING ACTIVITIES
Purchases of property and equipment (3,187,027) (864,798) (2,145,003)
Development of training manuals (117,970) (116,722) (82,132)
Purchases of temporary investments (100,000) (12,388,000) -
Proceeds from sales of temporary investments 3,600,000 8,888,000 -
Proceeds from sales of investment - 160,000 -
Issuance of note receivable (160,000) - -
Proceeds from sales of property and equipment
and other assets 22,630 23,227 53,256
Net cash of Micro Systems Group, Inc. at acquisition date - - 3,005
Other assets - net (12,293) 13,082 (18,902)
----------- ------------- -----------
Net cash provided by (used in) investing activities 45,340 (4,285,211) (2,189,776)
----------- ------------- -----------
FINANCING ACTIVITIES
Proceeds from long-term borrowings 565,998 - 680,000
Proceeds from issuance of common stock 570,881 5,778,425 2,339,586
Purchase of Company common stock (907,008) - -
Payments on short-term borrowings - - (1,126,830)
Payments on long-term borrowings (170,252) (432,471) (372,514)
----------- ------------- -----------
Net cash provided by financing activities 59,619 5,345,954 1,520,242
----------- ------------- -----------
Increase (decrease) in cash and cash equivalents 1,304,984 (162,078) 166,854
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 412,559 574,637 407,783
----------- ------------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,717,543 $ 412,559 $ 574,637
=========== ============= ===========
</TABLE>
See accompanying notes.
15
<PAGE> 16
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation: The consolidated financial statements include the
accounts of National TechTeam, Inc. and its wholly-owned subsidiaries TechTeam
Europe, Ltd. and National TechTeam of Illinois, Inc., formerly Micro Systems
Group, Inc. ("MSG"). Collectively, these companies are referred to as the
"Company" or "TechTeam." Intercompany accounts and transactions have been
eliminated as appropriate.
Cash and cash equivalents: Cash includes both interest bearing and non-interest
bearing deposits which are available on demand. Cash equivalents include all
liquid investments with a maturity of three months or less when purchased,
including money market funds held at banks.
Temporary investments: The December 31, 1994, temporary investments consisted
of tax free municipal obligations, stated at cost, which equals market value.
Repayment of the principal amount of these investments was guaranteed by
letters of credit issued by a bank. The Company classified the debt securities
held at December 31, 1994, as temporary investments as they were available for
sale.
Inventories: Inventories are stated at the lower of cost (determined by the
first-in, first-out method) or market and consist principally of computer
equipment and software.
Property and equipment: Property and equipment are stated at cost. Property and
equipment are depreciated on the straight-line method over their estimated
useful lives, ranging from 3 to 10 years. Leasehold improvements are amortized
on a straight-line basis over the lesser of the lease term or the estimated
useful lives of the improvements.
Goodwill: Represents the excess cost over the fair value of net assets acquired
in the acquisition of MSG and is amortized on a straight-line basis over 10
years. The carrying value of goodwill will be reviewed if the facts and
circumstances suggest that it may be impaired.
Revenue recognition: Revenues from call center services, corporate support
services, systems integration, and training are recognized as services are
performed. Revenues from product sales are recognized when title is transferred
to the customer. Under the terms of certain call center service contracts,
customers are required to pay certain amounts at the commencement of the
contract. Amounts billed under this provision of such contracts aggregated
$1,655,700 in 1995 and $19,600 in 1994; all such amounts were recognized as
revenues when billed.
Deferred revenue: TechTeam receives advance payments from customers under
certain lease and maintenance agreements. These payments are recognized as
revenues when earned. All deferred revenue recorded at December 31 is expected
to be earned in the subsequent year.
Deferred income taxes: Deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Stock options: TechTeam accounts for employee stock options under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related Interpretations.
Earnings per share: Earnings per share is computed using the weighted average
number of common shares and common share equivalents outstanding during each
year presented. Common share equivalents consist of stock options and warrants
and are calculated using the treasury stock method.
16
<PAGE> 17
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of estimates: 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. Actual results could differ from the estimates and
assumptions made.
NOTE B - DESCRIPTION OF THE BUSINESS
The Company provides call center services, corporate support services, systems
integration, and training for major companies on an international scale.
Revenues and accounts receivable from major customers are summarized as
follows:
<TABLE>
<CAPTION>
Revenues Accounts Receivable
for the Year at Year End
------------- -----------
<S> <C> <C>
Ford Motor Company ("Ford")
1995 $15,584,964 $4,863,948
1994 14,195,853 2,487,263
1993 13,703,312 2,192,175
Hewlett-Packard Company ("Hewlett-Packard")
1995* $ 7,269,445 $2,923,934
Chrysler Corporation ("Chrysler")
1995 $ 4,162,419 $1,221,121
1994 3,294,788 1,457,273
1993 1,266,320 356,075
Corel Corporation ("Corel")
1995 $ 2,737,601 $ 268,550
1994 3,687,298 537,972
1993* 414,604 414,604
Novell, Inc. ("Novell")
1995 $ 522,973 $ 193,682
1994 2,260,203 508,736
1993 1,717,417 436,385
</TABLE>
*First year of business relationship
Allowances for potentially uncollectible accounts receivable at December 31,
1995 and 1994 were $200,000 and $76,857, respectively. The Company generally
does not require collateral from its customers. Credit losses experienced have
been consistent with Management's expectations.
17
<PAGE> 18
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE C - LEASES
The Company leases its corporate offices, other office facilities and certain
office equipment under noncancelable operating leases expiring over the next
five years. These leases are renewable with various options and terms. Total
rental expense was $1,344,574 in 1995, $1,000,992 in 1994 and $595,366 in 1993.
Minimum future payments under noncancelable operating leases with initial terms
of one year or more at December 31, 1995 were:
<TABLE>
<CAPTION>
Year Operating Leases
---- ----------------
<S> <C>
1996 $1,556,786
1997 1,042,704
1998 660,992
1999 406,446
2000 288,455
---------
Total minimum lease payments $3,955,383
=========
</TABLE>
NOTE D - FINANCING ARRANGEMENTS AND LONG-TERM DEBT
TechTeam has an agreement with NBD Bank which provides for short-term
borrowings of up to $3,500,000; the credit is unsecured. Borrowings are at the
prime rate. There were no borrowings under the agreement at December 31, 1995.
The following amounts relate to short-term borrowings:
<TABLE>
<CAPTION>
Maximum Amount Average Amount Average Cost of
Year Borrowed Borrowed Borrowings
---- -------- -------- ----------
<S> <C> <C> <C>
1995 $ -0- $ -0- 0.0%
1994 1,220,000 201,666 5.3%
1993 1,199,830 666,719 5.8%
</TABLE>
Long-term debt consists of the
following:
<TABLE>
<CAPTION>
December 31
1995 1994
---- ----
<S> <C> <C>
Total amounts due under term notes $535,846 $140,100
Less-current portion 96,884 140,100
------- -------
$438,962 $ -
======= =======
</TABLE>
Term notes consist of notes payable with interest of 8.9% held by NBD Bank
with maturities as follows: 1996 - $96,884; 1997 -$105,868; 1998 - $115,684;
1999 - $126,410; and 2000 - $91,000. These notes require monthly payments of
principal and interest and are collateralized by specific telecommunications
hardware and software used for call center operations.
Interest paid was $24,109 in 1995, $33,911 in 1994, and $75,300 in 1993.
18
<PAGE> 19
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE E - EMPLOYEE RETIREMENT PLAN
The Company has a 401(k) Retirement Savings Plan which covers substantially all
employees. Under the provisions of the Plan, the Company will match employee
contributions in amounts up to 3% of gross compensation; contributions were
$247,181 in 1995, $163,087 in 1994 and $88,392 in 1993. The Company's policy
is to fund employee contributions and the Company's matching contributions each
pay period. Contributions are deposited with the trustee, NBD Bank, and then
invested in six funds at the direction of the participants. Effective in 1996,
the Company's matching contributions are credited only to the National TechTeam
Stock Fund for the benefit of each participant.
NOTE F - TAX PROVISIONS
Tax provisions are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal income tax:
Currently payable $1,357,867 $ 956,690 $ 760,000
Deferred (credit) (89,631) 138,310 128,000
---------- ---------- ----------
Total 1,268,236 1,095,000 888,000
Michigan single business tax 410,000 305,875 208,685
---------- ---------- ----------
$1,678,236 $1,400,875 $1,096,685
========= ========= =========
Tax payments $ 905,000 $2,022,000 $ 535,500
========== ========= ==========
</TABLE>
A reconciliation of the Federal income tax provision and the amount computed by
applying the Federal statutory income tax rate to earnings before Federal
income tax follows:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ----- -----
<S> <C> <C> <C>
Income tax at Federal statutory rate of 34% $ 1,246,883 $1,042,457 $ 870,540
Goodwill, intangibles and other permanent differences 21,353 52,543 17,460
---------- --------- -------
$ 1,268,236 $1,095,000 $ 888,000
========== ========= =======
</TABLE>
19
<PAGE> 20
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE F - TAX PROVISIONS (Continued)
The principal components of the deferred Federal income tax provision/(credit)
are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Prepaid expenses $ (2,143) $ 80,056 $ 418
Accelerated tax depreciation 28,909 10,672 39,858
Inventory valuation - - 33,320
Allowance for uncollectible accounts receivable (41,868) (10,305) (5,287)
Conversion of MSG to accrual basis of tax accounting (76,078) 76,078 -
Other ( 1,549) (18,191) 59,691
-------- -------- --------
$(89,631) $138,310 $128,000
======== ======== ========
</TABLE>
The principal components of deferred Federal income tax balances, and the
classification thereof in the Consolidated Statement of Financial Position, are
as follows:
<TABLE>
<CAPTION>
December 31
1995 1994
---- ----
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Allowance for uncollectible
accounts receivable $68,000 $ - $26,132 $ -
Sale of other assets 15,226 - 15,823 -
Prepaid expenses - 89,839 - 91,982
Accelerated tax depreciation - 116,066 - 87,157
Conversion of MSG to accrual
basis of tax accounting - - - 76,078
Other - - 952 -
------- -------- ------- --------
$83,226 $205,905 $42,907 $255,217
======= ======== ======= ========
</TABLE>
Included in income before tax provisions are losses from foreign operations of
$320,641 in 1995, $520,753 in 1994 and $83,683 in 1993.
20
<PAGE> 21
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE G - STOCK TRANSACTIONS
A summary of stock transactions other than those discussed in Notes H and J for
the three years ended December 31, 1995 is as follows:
<TABLE>
<CAPTION>
Shares Proceeds
------- -------
<S> <C> <C>
1993
----
Warrants issued in 1990 and 1991 and exercised in 1993 475,150 $ 325,478
======= ==========
1994
----
Warrants issued in 1990 and 1991 and exercised in 1994 41,667 $ 45,834
Private placement of common shares at
$5.00 per share 618,000 3,090,000
$4.70 per share 401,064 1,885,000
--------- ----------
1,060,731 $5,020,834
========= ==========
</TABLE>
1995
----
None
NOTE H - ACQUISITION
TechTeam acquired all of the outstanding shares of MSG in September 1993. The
transaction was structured as a stock-for-stock exchange and 624,104 shares
(valued at $2,078,266) of TechTeam's restricted common stock were issued. The
purchase method of accounting was used to record the acquisition and $1,607,097
was recorded as goodwill. The following pro-forma financial information
includes the operations of MSG and an adjustment for amortization of goodwill.
<TABLE>
<CAPTION>
Year Ended December 31
1993
-----
<S> <C>
Revenues $22,366,778
Costs and expenses 19,917,557
Income before tax provisions 2,449,221
Net income 1,562,813
Earnings per share $.17
</TABLE>
NOTE I - RELATED PARTY TRANSACTIONS
TechTeam paid legal fees of $119,876 in 1995, $73,591 in 1994 and $117,128 in
1993 to law firms whose members included directors, officers or shareholders of
TechTeam. In addition, TechTeam paid $39,587 in 1995, $42,444 in 1994 and
$47,275 in 1993 for employee travel expenses to a travel agency which is
50%-owned by a TechTeam director.
21
<PAGE> 22
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE J - STOCK OPTIONS
<TABLE>
<CAPTION>
EMPLOYEES DIRECTORS
--------- ---------
Total Shares Shares Price Shares Price
------------ ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Outstanding
January 1, 1993 2,275,000 617,000 .59-2.32 185,000 0.59
Granted 190,000 140,000 2.88-4.82 50,000 4.82
Exercised (1,291,750) (188,750) .59-2.00 -
Cancelled (220,000) (5,000) 1.20 -
------------- ----------- ----------
Outstanding
December 31, 1993 953,250 563,250 .59-4.82 235,000 .59-4.82
Granted 335,500 235,500 5.00-6.38 100,000 7.00
Exercised (308,625) (153,625) .59-2.88 -
Cancelled (22,500) (22,500) 3.81-6.38 -
------------- ----------- ----------
Outstanding
December 31, 1994 957,625 622,625 .59-6.38 335,000 .59-7.00
Granted 338,000 338,000 (1) 4.50-5.3125 - -
Exercised (418,500) (233,500) .59-2.88 (185,000) 0.59
Cancelled (208,000) (208,000) (1) 4.50-6.38 - -
------------- ----------- ----------
Outstanding
December 31, 1995 669,125 (2) 519,125 1.20-6.38 150,000 4.82-7.00
============= =========== ============ ========== ==========
<CAPTION>
OTHERS
------
Shares Price
------ -----
<S> <C> <C>
Outstanding
January 1, 1993 1,473,000 .52-3.00
Granted -
Exercised (1,103,000) .52-2.78
Cancelled (215,000) .57-2.32
-------------
Outstanding
December 31, 1993 155,000 .59-3.00
Granted -
Exercised (155,000) .59-3.00
Cancelled -
-------------
Outstanding
December 31, 1994 - -
Granted - -
Exercised - -
Cancelled - -
-------------
Outstanding
December 31, 1995 - -
============= ==========
</TABLE>
(1) In February 1995, the Company cancelled 183,000 options at prices ranging
from $5.00 to $6.38 and regranted them at $4.50.
(2) Of the 669,125 options outstanding at December 31, 1995
a) 131,125 are currently exercisable through the fourth quarter 1998;
b) 200,000 are currently exercisable through the fourth quarter 1999; and
c) 338,000 will be exercisable in the first quarter 1996 through the fourth
quarter 2001.
Exercise prices for all options granted by TechTeam equaled or exceeded fair
market value at date of grant and, therefore, no compensation expense related
to these options was recorded.
22
<PAGE> 23
NATIONAL TECHTEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE K - STOCK BUY-BACK PROGRAM
In February, 1995, the Board of Directors of the Company authorized a stock
buy-back program. The program provided for the open market purchase of up to
$4,000,000 of the Company's common stock. The repurchase program terminated
July 31, 1995 with 200,000 shares repurchased at a total cost of $907,008.
NOTE L - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly consolidated results of operations are summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
1995
- ----
Revenues $8,460,857 $9,610,262 $10,562,202 $13,154,141
Income before tax provisions 908,662 1,264,894 676,675 1,227,072
Net income 539,227 775,109 346,540 738,191
Earnings per share .05 .07 .03 .07
1994
- ----
Revenues $6,827,299 $7,640,227 $ 8,050,161 $ 7,706,751
Income before tax provisions 462,465 1,199,772 1,099,303 610,384
Net income 273,599 720,606 621,538 355,306
Earnings per share .03 .07 .06 .03
1993
- ----
Revenues $3,817,267 $4,507,827 $ 5,419,685 $ 6,699,168
Income before tax provisions 548,132 733,387 889,866 597,713
Net income 331,157 449,387 544,498 347,371
Earnings per share .04 .05 .06 .03
</TABLE>
Quarterly earnings per share may not add to annual earnings per share because
of rounding and new shares issued during the year.
23
<PAGE> 24
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
There were no changes in accountants, disagreements, or other events requiring
reporting under this Item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required is set forth under the caption "Election of Directors and
Management Information" in the Proxy Statement relating to the 1996 Annual
Meeting of Shareholders to be held on May 15, 1996, which is incorporated
herein by reference.
Information required pertaining to compliance with Section 16(a) of the
Securities and Exchange Act of 1934 is set forth under the caption "Election of
Directors and Management Information - Information Regarding Beneficial
Ownership of Principal Shareholders, Directors and Executive Officers" in the
Proxy Statement relating to the 1996 Annual Meeting of Shareholders to be held
on May 15, 1996, which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required is set forth under the caption "Executive Compensation" in
the Proxy Statement relating to the 1996 Annual Meeting of Shareholders to be
held on May 15, 1996, which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required is set forth under the caption "Election of Directors and
Management Information - Information Regarding Beneficial Ownership of
Principal Shareholders, Directors and Executive Officers" in the Proxy
Statement relating to the 1996 Annual Meeting of Shareholders to be held on May
15, 1996, which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required is set forth under the caption "Executive Compensation -
Certain Relationships and Related Transactions" in the Proxy Statement relating
to the 1996 Annual Meeting of Shareholders to be held on May 15, 1996, which is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Certain documents filed as part of the Form 10-K
See Item 8. Financial Statements and Supplementary Data and (d)
below.
(b) Reports on Form 8-K
Reports on Form 8-K filed by the Company during the last quarter of
the year ended December 31, 1995: None
(c) Exhibits required by Item 601 of Regulation S-K
The response to this portion of Item 14 is submitted as a separate
section of this Report under the caption, Index of Exhibits
(d) Financial statements schedules required by Regulation S-X
The response to this portion of Item 14 is submitted as a separate
section of this Report under the caption, Item 8. Financial
Statements and Supplementary Data.
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
NATIONAL TECHTEAM, INC.
<TABLE>
<S> <C> <C>
Date: March 22, 1996 By:/s/ Lawrence A. Mills Lawrence A. Mills
-------------- ------------------------- Senior Vice President,
Chief Financial Officer
and Treasurer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities indicated
on March 22, 1996.
/s/William F. Coyro Jr. Director, Chairman of the Board,
- ---------------------------- Chief Executive Officer
William F. Coyro Jr.
/s/Valerie J. Niemiec Director
- ----------------------------
Valerie J. Niemiec
/s/Wallace D. Riley Director
- ----------------------------
Wallace D. Riley
/s/Charles H. Roeske Director
- ----------------------------
Charles H. Roeske
/s/Richard G. Somerlott Director
- ----------------------------
Richard G. Somerlott
/s/LeRoy H. Wulfmeier III Director
- ----------------------------
LeRoy H. Wulfmeier III
/s/Karen J. Matheny Controller
- ----------------------------
Karen J. Matheny (Chief Accounting Officer)
25
<PAGE> 26
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ------- ------- ------
<S> <C> <C>
3.1 Certificate of Incorporation of the Company filed with the Delaware
Secretary of State on September 14, 1987. *(1)
3.2 Certificate of Amendment dated November 27, 1987 to the Company's
Certificate of Incorporation to change the par value from $ .001 to
$.01 per share. 3.2*(3)
3.3 Restated Bylaws of the Company. A*(4)
4.1 1990 Nonqualified Stock Option Plan. 4.14*(5)
4.2 Form of Stock Option Agreement used for grant of options to employees
under the 1990 Nonqualified Stock Option Plan. 4.2*(8)
4.3 Form of Stock Option Agreement utilized for option grants to
non-employee directors and certain consultants. 4.16*(5)
10.1 Lease for office space in Dearborn, Michigan, between the Company and
Salisbury Properties Limited Partnership. *(2)
10.2 Lease Amendment for office space in Dearborn, Michigan, between the
Company and Salisbury Properties Limited Partnership dated January
29, 1992. 10.17*(6)
10.3 Lease for office space in Dearborn, Michigan, between the Company and
Dearborn Atrium Associates Limited Partnership dated August 17, 1988. 10.3*(3)
10.4 Lease Amendment for office space in Dearborn, Michigan, between the
Company and Dearborn Atrium Associates Limited Partnership dated
January 19, 1992. 10.18*(6)
10.5 Lease Amendment for office space in Dearborn, Michigan known as Suite
295 between the Company and Dearborn Atrium Associates Limited
Partnership dated April 19, 1993. 10.5*(8)
10.6 Lease Amendment for office space in Dearborn, Michigan known as Suite
145 between the Company and Dearborn Atrium Associates Limited
Partnership dated May 5, 1993. 10.6*(8)
10.7 Purchase Order dated August 4, 1988 by and between the Company as
Vendor and Ford Motor Company as Vendee for End User Computer
Training Classes and User Assistance Services. *(3)
10.8 Purchase Order dated January 1, 1992 by and between the Company as
Vendor and Ford Motor Company as Vendee for Agency Programmer
Services. 10.21*(7)
</TABLE>
- -----------
All exhibits listed above that include a * indicate exhibits
that are incorporated by reference. See the footnotes following the list of
exhibits to locate those exhibits. All other exhibits are filed as part of this
Annual Report at the page number shown.
26
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ------ ------- ------
<S> <C> <C>
10.9 Lease Agreement for office space in Southfield, Michigan known as
Suite 171, 17197 N. Laurel Park Drive between the Company and Eleven
Inkster Associates dated September 29, 1993. 10.18*(9)
10.10 Lease Amendment for office space in Southfield, Michigan known as
Suite 171, 17197 N. Laurel Park Drive between the Company and Eleven
Inkster Associates dated December 7, 1993. 10.19*(9)
10.11 Purchase Order dated November 6, 1986 by and between the Company as
Vendor and Ford Motor Company as Vendee for Support Services,
together with currently effective Amendment dated August 23, 1994. 10.16*(10)
10.12 Sublease Agreement affecting office space leased in Dearborn,
Michigan from Dearborn Atrium Associates Limited Partnership known as
Suites 185 and 195 between the Company and Ford Motor Company dated
December 21, 1994. 10.18*(10)
10.13 Lease Amendment for office space in Southfield, Michigan known as
Suite 171, 17197 N. Laurel Park Drive between the Company and Eleven
Inkster Associates dated January 23, 1995. 10.20*(10)
10.14 Supplier Contract dated July 1, 1994 by and between the Company as
Vendor and Geometric Results Incorporated (doing business as
"PeopleNet") as Vendee for Personnel Services, together with
currently effective Amendment dated February 6, 1995. 10.21*(10)
10.15 Purchase Order dated March 23, 1995 by and between the Company as
Vendor and Ford Motor Company as Vendee for Support for Ford 2000,
together with currently effective amendment dated February 23, 1996.
10.16 Agreement dated June 21, 1995 between the Company and Hewlett-Packard
Company for Technical Support Assistance.
10.17 Lease for office space in Dallas, Texas known as Lyndon Plaza between
the Company and Dallas Lyndon Corporation dated August 17, 1995.
10.18 Credit Authorization Agreement in the principal amount of $3,500,000
between the Company and NBD Bank dated August 28, 1995.
10.19 Installment Business Loan Note in the principal amount of $565,998
and related Continuing Security Agreement between the Company and NBD
Bank dated August 28, 1995.
10.20 Agreement dated September 15, 1995 between the Company and NBD Bank
for End User Computer Training.
10.21 Lease for office space in Troy, Michigan known as Troy Officenter B
between the Company and WRC Properties, Inc. dated November 16, 1995.
</TABLE>
- ---------
All exhibits listed above that include a * indicate exhibits
that are incorporated by reference. See the footnotes following the list of
exhibits to locate those exhibits. All other exhibits are filed as part of this
Annual Report at the page number shown.
27
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
- ------ ------- ------
<S> <C> <C>
10.22 Office Space Lease for office space in Indianapolis, Indiana known as
Market Square Center Building between the Company and MET Life
International Real Estate Partners Limited Partnership dated November
27, 1995.
10.23 Currently effective Purchase Order Amendment dated January 6, 1996 by
and between the Company as Vendor and Ford Motor Company as Vendee
for End User Computer Training Classes and User Assistance Services.
10.24 Installment Business Loan Note in the principal amount of $480,212
and related Continuing Security Agreement between the Company and NBD
Bank dated January 17, 1996.
10.25 Lease for office space in Seattle, Washington between the Company and
Sixth & Pike Associates, L.P. dated February 14, 1996.
10.26 Currently effective Purchase Order Amendment dated February 21, 1996
by and between the Company as Vendor and Ford Motor Company as Vendee
for Programming Services.
11 Statement re: Computation of per share earnings. 29
</TABLE>
*(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1987.
*(2) Incorporated by reference to the Company's Current Report on Form 8-K
dated December 5, 1987.
*(3) Incorporated by reference to the Company's Registration Statement on Form
S-4 (Registration No. 33-26689).
*(4) Incorporated by reference to the Company's 1991 Proxy Statement dated May
24, 1991. The number set forth herein is the exhibit number this Exhibit
was given in that report.
*(5) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1990. The number set forth herein is the
exhibit number this Exhibit was given in that report.
*(6) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991. The number set forth herein is the
exhibit number this Exhibit was given in that report.
*(7) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1992. The number set forth herein is the
exhibit number this Exhibit was given in that report.
*(8) Incorporated by reference to the Company's Registration Statement on
Form S-2 (Registration No. 33-67904). The number set forth herein is the
exhibit number this Exhibit was given in that report.
*(9) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1993. The number set forth herein is
the exhibit number this Exhibit was given in that report.
*(10) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1994. The number set forth
herein is the exhibit number this Exhibit was given in that
report.
28
<PAGE> 1
EXHIBIT 10.15
<TABLE>
<S><C>
*THESE ITEMS MUST APPEAR ON ALL SHIPPING AND BILLING
Blanket Order Release Blanket order number (if any) Purchase Order Number, or Release
[FORD LOGO] Original Authorization when blanket order
is entered
*SHIP TO 055834 *No. A10 RL95 040929
FORD MOTOR CO
21500 OAKWOOD REC C BODY ENGR F.O.B.(TITLE TRANSFER POINT) DATE OF ORDER
DEARBORN, MI 48121 DESTINATION 03/23/95
TRANSPORTATION TERMS DELIVERY DATE
PREPAID (BY SELLER) 04/20/95
PAYMENT TERMS
NET 15TH & 30TH PROX
ROUTING FUNDS
SELLER'S DELIVERY U.S. DOLLAR
Q479D SALES AND *INVOICE TO
NATIONAL TECHTEAM INC USE TAXES
22000 GARRISON AVE Do not bill sales or use tax DO NOT INVOICE
DEARBORN, MI 48124 because purchases are covered ERS CODE 2 FM2150
by direct pay permit or are SEE INSTRUCTIONS BELOW
for resale.
Permit No.
SELLER, agrees to sell and deliver See Section 15 for additional
supplies or services specified herein information and instructions.
</TABLE>
- -------------------------------------------------------------------------------
LINE# * ITEM NUMBER * QUANTITY* U/M* UNIT PRICE
- -------------------------------------------------------------------------------
001 PLANT PART # - MISC 513742 1 LOT 1,183,733.000000
PROVIDE THE FOLLOWING SERVICES TO ASSIST FORD MOTOR CO.
IN PERFORMING 12,000 COMPUTER MOVES IN SUPPORT OF FORD
2000 IN THE GREATER DEARBORN AREA (PER QUOTATION DATED
03-03-95 AND AMENDED 03-08-95):
* DE-INSTALL COMPUTERS AT BASE (ORIGINATING) LOCATION
* PACKAGE FOR TRANSPORT
* RE-INSTALL COMPUTERS AT NEW LOCATION (DESTINATION)
* LOAD SOFTWARE, CONFIGURE SYSTEM, PERFORM SYSTEM
CHECK AND CHECKOUT
TECHNICAL SPECIALIST CLASSIFICATIONS PERFORMING THIS
CONTRACT INCLUDE, PER PRESENT NTT BLANKET ORDER:
0000 10 MI SC B0621407 ($3895/mth),
0000 30 MI SC B0621413 ($5110/mth) AND
000 60 MI SC BO621421 ($6175/mth)
DO NOT INVOICE. FORD'S PAYMENT OBLIGATION IS AS
SPECIFIED IN PURCHASE ORDER. IF A PRICE IS NOT
CORRECT, SEND PRICE ADVICE WITHIN 10 CALENDAR DAYS
OF SHIPMENT. MAIL OR FAX PRICE ADVICE TO: FORD
MOTOR COMPANY, P.O. BOX 6015, DEARBORN, MI 48121,
FAX: (313) 458-0153. IF PAYMENT DOES NOT AGREE WITH
PRICE ADVICE, CONTACT PRICE ADVICE ADMINISTRATION NTW-SP-0000-00
AT (313) 458-0162. IF PAYMENT IS NOT RECEIVED OR
PAYMENT REFLECTS INCORRECT QUANTITY, CONTACT REQUESTER
SHOWN ON THIS ORDER. IF ORDER SPECIFIES PREPAID
AND SUMMARY FREIGHT, INVOICE FREIGHT TO P.O. BOX
6015. DIRECT EVALUATED RECEIPT SETTLEMENT (ERS) OR
PAYMENT INQUIRIES TO (313) 248-4860.
FOR ADDITIONAL INFORMATION, CONTACT: TOM WILSON 313-594-2156.
TOTAL $1,183,733.00
REQUESTOR: TOM WILSON - 3135942156
BUYER : MARK SWEDAN (4752) - (313)-337-3347
REQUISITION# : RQ95081R48
PAGE 1 OF 1 1 = LINE ITEM COUNT
*Each month - put grand total to 41000.
Then give Karen copy of billing report
to she can reclass from 41000 to 11000
that portion.
<PAGE> 2
<TABLE>
<S><C>
GRAP759B C P A R S REQUEST TO PURCHASE (REQUISITION) DIV: A PLT: 10
03/23/95
Blanket No. Requisition No. Procurement No. From Prior Doc.
BKBO 055834 RQ95 081R48 040929
Requested By: TOM WILSON Code: 409 Dept: PTF Phone: (313)-594-2156
Purpose: MOVE PRODUCT DEVEL COMPUTERS AS REQUIRED BY FORD 2000 REORG.
Program:
Buyer: 4752 Requested Delivery: 04/20/95
PPPPP N N
P P NN N
PPPPP N N N Ship To: FORD MOTOR CO
P N NN FM1BB 21500 OAKWOOD REC C BODY ENGR
P N N DEARBORN MI 48121
Last Updated: 03/22/95 Supplier: NATIONAL TECHTEAM INC
1:00 PM Q479D 22000 GARRISON AVE
DEARBORN MI 48124
GEN S/ACC S/D DEPT PROD BAL REF MISC REF/W.0.
Account No:
PRICE ATTACHMENT
LINE --ITEM-NUMBER-- -QUANTITY- UM -------PRICE------- TYPE TYPE DATE
------------DESCRIPTION-------------------------DESCRIPTION-----------------
001 MISC 513742 1 LO 1,183,733.00 E
PROVIDE THE FOLLOWING SERVICES TO ASSIST FORD MOTOR CO. IN PERFORMING 12,000
COMPUTER MOVES IN SUPPORT OF FORD 2000 IN THE GREATER DEARBORN AREA (PER
QUOTATION DATED 03-03-95 AND AMENDED 03-08-95):
* DE-INSTALL COMPUTERS AT BASE (ORIGINATING) LOCATION
* PACKAGE FOR TRANSPORT
* RE-INSTALL COMPUTERS AT NEW LOCATION (DESTINATION)
* LOAD SOFTWARE, CONFIGURE SYSTEM, PERFORM SYSTEM CHECK AND CHECKOUT
TECHNICAL SPECIALIST CLASSIFICATIONS PERFORMING THIS CONTRACT INCLUDE, PER
PRESENT NTT BLANKET ORDER: 0000 10 MI SC B0621407, 0000 30 MI SC B0621413
AND 000 60 MI SC B0621421
Account No: 10X 03 Work Order:
Line 001 Keyword: Commodity Cd: Tox #:
******************************************************************************
*** PROJECT INFORMATION ***
******************************************************************************
Project(s): 20969A Item(s): 6 Cost: 1,183,733.00
[FORD LOGO] Mini-FAX Transmittal Date 3-23-95 Pages 2
TO TOM WILSON FROM S. WILLEUMIER
BLDG. RM. BLDG. RM.
TELEPHONE TELEPHONE 71636
FAX NO. 57616 FAX NO. 27897
11/90 1564
</TABLE>
1
<PAGE> 3
GRAP759B C P A R S REQUEST TO PURCHASE (REQUISITION) DIV: A PLT: 10
03/23/95
Blanket No. Requisition No. Procurement No. From Prior Doc.
BKBO 055834 RQ95 081R48 040929
****************************************************************************
*** ADDENDA ***
****************************************************************************
VE4
FOR ADDITIONAL INFORMATION, CONTACT: TOM WILSON 313-594-2156.
**Total Cost: $1,183,733.00 **Total Items: 1
- ----------------- ------------------ ------------------- -----------------
APPROVAL APPROVAL APPROVAL APPROVAL
PAGE: 2 OF 2
<PAGE> 4
<TABLE>
<S><C>
*THESE ITEMS MUST APPEAR ON ALL SHIPPING AND BILLING
[FORD LOGO] Purchase Order *Blanket order number (if any) *Purchase Order Number, or Release
REVISION Authorization when blanket order
is entered
BUYER AGREES TO PURCHASE AND RECEIVE BKBO 055834 A 10 RL95 040929 001
F.O.B. (TITLE TRANSFER POINT) DATE OF ORDER
NATIONAL TECHTEAM INC DESTINATION 02/23/96 ***
22000 GARRISON AVE
DEARBORN MI 48124 TRANSPORTATION TERMS DELIVERY DATE
PREPAID 02/13/96
PAYMENT TERMS SHIPPING POINT
NET 15TH AND 30TH PROX U.S.A.
SELLER, agrees to sell and deliver ROUTING FUNDS
supplies and services specified herein SELLERS' DELIVERY FUNDS =USD
*Ship to: SALES AND USE TAXES *INVOICE TO:
DO NOT BILL SALES OR
FORD MOTOR CO USE TAX BECAUSE DO NOT INVOICE
21500 OAKWOOD REC C BODY ENG PURCHASES ARE FOR ERS CODE 2
DEARBORN MI RESALE. SEE INSTRUCTIONS BELOW
48121
See Section 15 for additional
information and instructions
</TABLE>
DO NOT INVOICE. FORD'S PAYMENT OBLIGATION IS AS SPECIFIED IN PURCHASE
ORDER. IF A PRICE IS NOT CORRECT, SEND PRICE ADVICE WITHIN 10 CALENDAR
DAYS OF SHIPMENT. MAIL OR FAX PRICE ADVICE TO: FORD MOTOR COMPANY,
P.O. BOX 6015, DEARBORN, MI 48121, FAX: (313) 458-0153. IF PAYMENT DOES
NOT AGREE WITH PRICE ADVICE, CONTACT PRICE ADVICE ADMINISTRATION AT
(313) 458-0162. IF PAYMENT IS NOT RECEIVED OR PAYMENT REFLECTS
INCORRECT QUANTITY, CONTACT REQUESTER SHOWN ON THIS ORDER. IF ORDER
SPECIFIES PREPAID AND SUMMARY FREIGHT, INVOICE FREIGHT TO P.O. BOX 6015.
DIRECT EVALUATED RECEIPT SETTLEMENT (ERS) OR PAYMENT INQUIRIES TO (313)
248-4860.
PURPOSE: MOVE PRODUCT DEVEL COMPUTERS AS REQUIRED BY FORD 2000 REORG.
DELIVERY DATE CHANGED FROM: TO:
07/20/97 02/13/96
- -------------------------------------------------------------------------------
LINE# *ITEM NUMBER* QUANTITY* U/M* PRC/QTY U/M UNIT PRICE
- -------------------------------------------------------------------------------
***********************************DESCRIPTION*********************************
ITEM MI SC 513742 CHANGED FROM: TO:
QUANTITY 1 QUANTITY 1
UNIT OF MEASURE LOT UNIT OF MEASURE LOT
EFF 02/13/96 PRICE 1183733.00000 PRICE 1483733.00000
ITEM MI SC 513742 CONTINUED:
PROVIDE THE FOLLOWING SERVICES TO ASSIST FORD MOTOR CO. IN PERFORMING 12,000
COMPUTER MOVES IN SUPPORT OF FORD 2000 IN THE GREATER DEARBORN AREA (PER
QUOTATION DATED 03-03-95 AND AMENDED 03-08-95):
* DE-INSTALL COMPUTERS AT BASE (ORIGINATING) LOCATION
* PACKAGE FOR TRANSPORT
* RE-INSTALL COMPUTERS AT NEW LOCATION (DESTINATION)
* LOAD SOFTWARE, CONFIGURE SYSTEM, PERFORM SYSTEM CHECK AND CHECKOUT
TECHNICAL SPECIALIST CLASSIFICATIONS PERFORMING THIS CONTRACT INCLUDE, PER
PRESENT NTT BLANKET ORDER: 0000 10 MI SC B0621407, 0000 30 MI SC B0621413
AND 000 60 MI SC B0621421
TOTAL ORDER PRICE CHANGED FROM: TO:
TOTAL PRICE 1183733.00000 TOTAL PRICE 1,483,733.00
REQUESTOR IS: TOM WILSON (313)-594-2156
* SUPPLIER CODE - Q479D BUYER IS: MARC MENDEN (4752) (313)-337-3347
RQ96-044R16
PAGE 0001
<PAGE> 1
EXHIBIT 10.16
AGREEMENT
TECHNICAL SUPPORT ASSISTANCE
This Agreement is entered into by and between Hewlett-Packard Company ("HP"),
located at 3000 Hanover Street, Palo Alto, CA 94304 and National TechTeam,
Inc. ("Seller"), located at 22000 Garrison Avenue, Dearborn, Michigan, 48124.
This Agreement and the attached addenda constitute the entire agreement.
1. PRECEDENCE
1.1. The provisions of this Agreement and the attached exhibits
and addenda hereto take precedence over the Seller's additional or
different terms and conditions, to which notice of objection is
hereby given. Acceptance by the Seller is limited to HP's terms and
conditions. No change or modification of any of the terms and
conditions herein shall be valid or binding on either party unless
in writing and signed by an authorized representative of each party.
1.2. In the event of any conflict between the provisions of this
Agreement and any addenda, the order of precedence is as follows:
a. This Agreement and any modifications to this Agreement ;
b. The addenda to this Agreement and any modifications to
the addenda;
1.3. All references in this Agreement to "HP" shall mean only the
Customer Support Center (CSC) or the Home Products Division (HPD).
2. NOTICES
Any notices sent by the Seller pursuant to this Agreement are to
be sent to the HP address specified in this Agreement , and to the
attention of the contract manager within HP's Customer Support
Center.
3. CHOICE OF LAW
This Agreement shall be interpreted and governed in all respects
by the laws of the State of California.
4. DEFINITIONS
4.1. Definitions in addition to the terms defined in the
Agreement:
4.1.1. "Customers" are end-users requesting post-sales technical
support, or authorized HP resellers and HP sales force
representatives requesting pre-sales or post-sales support
for HP products.
4.1.2. "Customer Support Center" (CSC) is HP's support organization
for end users, authorized resellers, and HP sales force
representatives of HP printers, plotters, scanners, faxes and
PCs, located in Boise, Idaho.
4.1.3. "Home Products Division" (HPD) is the HP division
responsible for development, manufacturing, and marketing of
the Multimedia computers described in this Agreement,
located in Santa Clara, California.
4.1.4. "The Work" The services performed by the Seller as
described in this Agreement shall hereinafter be referred to
as "the work".
4.1.5. "Technician" - a Seller employee whose primary
responsibility is answering Customer inquiries on HP
products. This may refer to either HP employees or Seller
employees.
4.1.6. "Talk-time" - the amount of time spent talking to customers.
This can be measured on a per call basis, or per Technician
per day basis.
4.1.7. "After call work time" - the amount of time spent by a
Technician capturing call information after the customer/
Technician conversation has ended.
4.1.8. "Availability" - the amount of time when a Technician is
logged on to the phone system and is ready to accept a call
from a customer. One minus occupancy percent equals
percentage of availability.
Page 1 of 8
<PAGE> 2
4.1.9. "Occupancy" - the sum of talk-time plus after call work time
equals occupancy. One minus availability percent equals
percentage of occupancy.
4.1.10. "On-line time" - the amount of time Technician is logged on
to the phone system, regardless of the Technician's work
status. Availability plus talk time plus after call work
time equals on-line time.
4.1.11. "Off-line time" - the amount of time a Technician is logged
off the phone system.
4.1.12. "Free support" - support which is provided to the end user
without charge.
4.1.13. "Fee Based Support" - services that are beyond basic set-up
and configuration support or troubleshooting and are
provided to the end-user according to a fee schedule.
5. SERVICE AND PROCESS SCOPE
5.1. SERVICE DESCRIPTION
This Agreement covers the answering of technical assistance phone
calls from customers of certain HP products, and technical
assistance phone calls from HP sales representatives. The Seller
will collect information about each caller and each call. This
information will be synthesized and provided to HP. These
activities will take place at the Seller's facility. A detailed
listed of the duties and responsibilities of both the Seller and HP
is found in Addendum A of this Agreement. The specific list of
products to be supported by the Seller are Addendum D.
5.2. TRANSPARENCY OF SELLER TO HP CUSTOMERS
The Seller will provide support in a manner in which the origin of
the support is transparent to HP Customers. HP Customers are not
to know whether they are speaking with HP or with the Seller acting
on behalf of HP.
5.2.1. Technicians with answer the phone "Thank you for calling
Hewlett-Packard technical support, my name is 'technician
name'".
5.3. CALL TRANSFERS
The Seller may be required to transfer the Customer to other HP
locations. These may include transfers to CSC, HP product repair
facilities, HP driver distribution facilities, HP dealer locator
services, and HP bulletin board services. A phone list describing
transfer phone numbers, transfer processes and procedures is
attached as Addendum E.
5.4. RELATIONSHIP OF THE PARTIES
5.4.1. The relationship of the parties to this Agreement is that of
owner and contracting firm.
5.4.2. Seller shall neither assign any rights nor delegate any
duties under this Agreement without the prior written consent
of HP. This prohibition extends to all assignments and
delegations that may be prohibited by agreement. Seller shall
not subcontract any of the work without the prior consent of
HP; if HP consents to the use of a subcontractor, such
subcontractor shall be bound to the terms and conditions of
this Agreement as an agent of the Seller.
5.4.3. The Seller shall be solely responsible for any employment
related taxes, insurance premiums, or other employment
benefits related to the Seller's performance of services under
this Agreement, and shall hold HP harmless on account thereof.
6. TERM
6.1. This shall be a twelve (12) month Agreement for the period of
April 1, 1995 to March 31, 1996, inclusive. Either party may, at
any time, except as stated in Section 17 - Default of this
Agreement, terminate this Agreement in writing upon sixty (60) days
prior notice. If no such notice is given, this Agreement will
expire on the first (1st) anniversary of the commencement date. On
such event, HP shall be liable only for payment in accordance with
the provisions of this Agreement for work performed prior to the
effective date of termination.
6.2. 60 days prior to the expiration date of this Agreement, HP
and the Seller will each provide notification to the other party of
their intent regarding continuation of the relationship. This
intent may include: renewal of the terms and conditions contained
in this document, re-negotiation of the terms and conditions of the
relationship, or termination of the relationship.
Page 2 of 8
<PAGE> 3
6.3. If the expiration date of this Agreement is reached and HP
and the Seller are in the process of re-negotiating the terms and
conditions of the relationship, the terms of this may be extended
on a month-to-month basis contingent upon the mutual written
agreement of HP and the Seller.
7. HP BUSINESS FORECASTS
All business volume forecasts provided by HP pursuant to this
Agreement are only estimates, and shall not be construed to be
commitments to a certain level of business, and may be revised by
HP as business requirements change.
8. PRICING
8.1. REVIEW PERIOD The price for project start-up costs,
facsimile services and teleservices is in U.S. dollars, unless
otherwise stated, and shall remain in effect during the term of this
Agreement.. Prices and volumes will be reviewed at the end of each
three month period during the Agreement's term. Price changes must
be agreed to in writing by both HP and Seller.
8.2. PAYMENT HP shall pay Seller fees for services detailed in
this Agreement in accordance with the fee schedule in Addendum C,
attached. Seller shall bill HP at the end of each calendar month,
based upon actual costs incurred during that month, and HP shall pay
such invoices net 35 days after receipt of an appropriate invoice
from Seller.
8.3. DISCLOSURE Seller agrees to help HP understand Seller's
costs. Seller further agrees to disclose the cost components of its
teleservices processes with the intent of reducing overall costs.
HP agrees to provide assistance and information necessary to enable
Seller to reduce its costs with the understanding that such cost
savings shall be equally shared with HP.
9. LIST OF PERSONNEL
9.1. Prior to the start of work, and subsequently as personnel are
added, Seller shall submit to HP a list of employees who will
perform any portion of the work. This list shall state the names
and classifications of each employee. Prior to granting new
employees access to HP confidential information or proprietary HP
computer systems, Seller will ensure that each employee is made
aware of the Confidential Disclosure Agreement (in Addendum A)
between HP and the Seller and its applicability to the Seller's
employees. Seller will also ensure that, prior to assignment to the
HP account, each employee will read and sign HP's Non-Disclosure
Agreement (in Addendum A). Seller will keep these signed
Non-Disclosure Agreements on file during and after employment terms
of the employees performing work for HP.
9.1.1. The confidential information disclosure period shall be the
entire term of this Agreement. All information disclosed by
HP to the Seller during this period shall be considered
confidential for 1 year after the termination date of this
Agreement or subsequent renewals to this Agreement.
10. PERSONNEL REQUIREMENTS AND SELLER EMPLOYEE CONDUCT
10.1. SUPERVISION
All persons engaged in the work described in this Agreement shall
be subject to the direction, supervision, and control of the
Seller. Seller shall enforce strict discipline and good order
among Seller's employees and agents at all times during the
performance of this work. Seller shall assure that all persons
involved in the work are appropriately skilled for that portion of
the work assigned to them.
10.2. SELLER'S EMPLOYEE OBLIGATIONS
When Seller employees are visiting an HP location, all employees of
the Seller are obliged and required to follow all written/verbal HP
plant, safety and security rules in place while on the premises of
HP.
10.3. SELLER EMPLOYEE CONDUCT
Seller employees who represent HP will be required to understand
and abide by certain sections of the HP Standards of Business
Conduct when interacting with HP Customers on behalf of HP. The
pertinent sections of the HP Standards of Business Conduct are
attached as Addendum F.
Page 3 of 8
<PAGE> 4
11. INSPECTION AND AUDIT
11.1. HP shall have the right to physically inspect at will the
teleservices processes being performed by the Seller. HP shall also
have the right to perform audits to ensure that customer service,
quality, process, and business controls are maintained. HP may
perform this inspection either by
monitoring the seller's performance in person, at the seller's
place of business, or by remote silent monitoring of seller's
employees' incoming telephone calls from HP customers. HP's
inspection may be for any purpose reasonably related to this
Agreement, including without limitation to assure Seller's
compliance with HP's quality requirements.
11.2. HP may periodically place simulated calls to the Seller as a
means of auditing the quality of the service provided by the Seller.
11.3. HP may conduct periodic Customer surveys to determine the
quality of the service provided by the Seller.
11.4. In order to verify the financial stability of the Seller's
corporation, the Seller will provide HP with annual audited
financial results each year the technical support relationship
remains in effect.
12. PHONE CALL RECORDING NOTIFICATION
12.1. The Seller's VRU must contain clear notification to
Customers that phone calls may be recorded. This notification must
occur immediately after the initial VRU salutation.
12.2. Sample VRU scripting:
"Thank you for calling Hewlett-Packard Technical Support. To
ensure high quality service, your call may be monitored or
recorded."
13. DISASTER RECOVERY
13.1. The Seller will provide disaster recovery plans to HP.
These will address the Seller's disaster avoidance plan and
contingency plans in the event phone service, computer activity, or
facility power is interrupted.
13.2. The Seller will notify HP immediately after identifying any
occurrence which has interrupted or will interrupt the ability of
the Seller perform the services described in this Program Document.
14. INDEMNIFICATION
14.1. RESPONSIBILITIES OF PARTIES
Seller will indemnify HP for all claims arising out of acts by
Seller not authorized by this Agreement. shall defend, indemnify
and hold harmless HP from and against any and all claims, losses,
demands, attorney fees, damages, liabilities, costs, expenses,
obligations, causes of action or suits;
a) For damage or injury (including death) to any person
(including employees) or damage to or loss of any property
arising out of or resulting from any negligent act or omission
by the Seller or its employees or agents;
b) Arising out of or relating to a failure by the Seller to
comply with any applicable federal, state or local law,
regulation, order, judgment or decree.
14.2. NOTIFICATION
Seller shall promptly notify HP in writing of any matter as to
which the above indemnification obligation relates.
14.3. DEFENSE OF CLAIMS
HP shall promptly, and in all events within sixty (60) days of
obtaining actual knowledge thereof, notify the Seller of the
existence of any claim, demand, or other matter requiring a defense
to which the Seller's obligations under this section would apply.
HP shall give the Seller a reasonable opportunity to defend the
claim, demand or matter at the Seller's own expense and with
counsel selected by the Seller and satisfactory to HP; provided
that HP shall at all times also have the right to fully participate
in the defense at its own expense. Any such
Page 4 of 8
<PAGE> 5
claim, demand or other matter shall not be settled or
compromised without the consent of HP; provided, however, if HP
does not consent to such settlement or compromise, such claim,
demand or other matter shall not be settled or compromised, but the
Seller's obligation to indemnify with respect hereto shall be
limited to the amount for which such claim, demand, or other matter
could have been settled or compromised, together with the cost of
defense through the date such matter could have been
settled or compromised. If the Seller shall, within a reasonable
time after the receipt of the notice, fail to defend, HP shall have
the right, but not the obligation, to undertake the defense, and to
compromise or settle, exercising reasonable business judgment, the
claim, demand or other matter on behalf, for the account and at the
risk of the Seller. If the claim is one that cannot by its nature
be defended solely by the Seller (including, without limitation,
any federal or state proceeding), HP shall make available, or cause
to be made available, all information and assistance that the
Seller may reasonably request.
15. EXCLUSIVITY
15.1. To ensure protection of HP proprietary information, the
Seller will not perform technical support activity for manufacturers
that are direct competitors of the HP products covered in this
Program Document at the same physical site as the support provided
for HP. If the Seller is approached by a company whose competitor
status with HP is unclear, the Seller will notify HP to inquire
whether this paragraph restrains Seller from accepting such
business.
15.2. Seller Technicians will perform service exclusively for HP.
Seller Technicians may not perform tasks for non-HP Seller clients.
16. CONFIDENTIAL INFORMATION
16.1. CONFIDENTIAL DISCLOSURE AGREEMENT
A Confidential Disclosure Agreement must be in place and/or updated
and signed by the appropriate company representatives when
confidential information is shared and identified.
16.2. DEFINITION OF CONFIDENTIAL INFORMATION
Seller shall not disclose to any person or entity, except as
necessary to perform work under this Agreement, any confidential
information of HP, whether written or oral, which Seller may obtain
from HP or otherwise, discover. As used in this article, the term
"confidential information" shall include, without limitation:
a) All information or data concerning or related to HP products
(including the discovery, invention, research, improvement,
development, manufacture, or sale of HP products) or business
operations (including sales costs, profits, pricing methods,
organizations, employee or customer lists, and processes);
b) All forecasts for production, support, or service requirements
submitted by HP pursuant to this Agreement, whether oral, written,
or communicated in computer-readable format; and
c) All HP property of a confidential nature.
16.3. RELATIONSHIP EXISTENCE
HP's expectation is that this relationship will remain
confidential. The existence of this relationship or terms of this
Agreement will not be disclosed without prior written approval from
the HP Customer Support Center Manager.
16.4. SEPARATION OF BUSINESS
HP business and information related to HP business will be
physically and logically separated from other Seller business and
information. The Seller will provide proof of this separation to
HP.
16.5. ACCESS
Seller shall maintain all confidential information in strict
confidence. Seller shall take all reasonable steps to ensure that
no unauthorized person or entity has access to confidential
information, and that all authorized persons having access to
confidential information refrain from any unauthorized disclosure.
16.6. EXCLUSIONS
These provisions shall not apply to any information that
a) Is rightfully known to Seller prior to disclosure by HP;
Page 5 of 8
<PAGE> 6
b) Is rightfully obtained by Seller from any third party without
any obligation of confidentiality;
c) Is made available by HP to the public without restrictions;
d) Is disclosed by Seller with the prior written approval of HP;
or
e) Is independently developed by Seller.
16.7. DOCUMENTATION
HP shall provide any proprietary or non-proprietary documentation
to Seller regarding the products and parts deemed necessary by HP
to give customer service for such products and parts. All
documentation provided by HP or created by the Seller as a result
of this Agreement shall be treated by the Seller as HP confidential
information.
17. CONTINGENCIES
17.1. DELAYING CAUSES
Seller shall not be liable for any delay in performance under this
Agreement caused by an act of God or any other cause beyond
Seller's control and without Seller's fault or negligence
(collectively "delaying cause"). Seller shall, in the event of a
delaying cause, immediately give notice to HP of that cause.
17.2. HP'S RIGHTS
In the event of a delaying cause, HP may elect in its sole
discretion to suspend the Agreement in whole or in part for the
duration of the delaying cause; or terminate this Agreement or any
part thereof.
18. DEFAULT
18.1. HP'S RECOURSE
If the Seller fails to perform or breaches any material provision
of this Agreement, HP provides written notice to the Seller of such
failure to perform or breach, and Seller fails to provide a written
response within ten (10) days from HP's written notice, and fails
to cure the failure to perform or breach within thirty (30) days
from the receipt of such written notice, HP may, except as
otherwise prohibited by the United States Bankruptcy laws,
terminate the whole or any part of this Agreement. Further, if
voluntary bankruptcy proceedings are instituted against Seller and
not discharged within sixty (60) days, HP may, except as otherwise
prohibited by United States Bankruptcy laws, terminate the whole or
any part of this Agreement.
18.2. PROCUREMENT OF SERVICES
In the event that HP terminates this Agreement in whole or in part,
as provided in this section on Default, HP may procure, upon such
terms and in such manner as HP deems appropriate, services similar
to the services as to which this Agreement is terminated. Seller
shall reimburse HP upon demand for all additional costs incurred by
HP in purchasing such similar services.
18.3. RIGHTS OF LAW
The rights and remedies granted to HP pursuant to this Agreement
are in addition to, and shall not be deemed to limit or affect, any
other rights or remedies available at law or in equity.
19. PROGRAM CONTACTS
19.1. Written correspondence regarding this Agreement should be
addressed as follows:
If to HP:
Hewlett-Packard Company
Customer Support Center
Attn: Brad Sprenger
11311 Chinden Blvd. MS 516
Boise, ID 83714
If to Seller:
Page 6 of 8
<PAGE> 7
National TechTeam
Attn: Valerie Niemiec
22000 Garrison Ave.
Dearborn, MI 48124
19.2. Electronic mail correspondence regarding this Agreement should be
addressed as follows:
If to HP:
[email protected]
If to Seller:
[email protected]
19.3. Telephone contacts regarding this Agreement are:
HP
--
CSC Contact
Brad Sprenger----------------------------- (208) 396-5436
FAX number ----------------------------- (208) 332-3124
Home Products Division
Jim White ------------------------------ (408) 553-3432
Technical Resource or Technical Escalations
Jim White ------------------------------ (408) 553-3432
Customer Satisfaction Escalations
FAX number ------------------------------ (208) 396-4492
Hotline phone number---------------------- (208) 396-5726
Cellular phone number--------------------- (208)866-9387
SELLER
-------
Contract related issues:
Valerie Niemiec (313) 277-2277
Operational Management issues:
Jeff Ruffini (810) 357-2866
Tactical Project Management
Rob Pedrotte (810) 357-2866 x2214
Fax, for HP to Seller use only (810) 357-2570
20. USE OF THE HEWLETT-PACKARD NAME AND TRADEMARKS
20.1. HP grants to Seller a personal non-exclusive license to use
the trademarks identified below in conjunction with the services
performed pursuant to this Agreement provided that Seller and
Seller's agents meet the HP quality requirements set out in this
Agreement or otherwise set by HP. In connection with the use of
these trademarks, Seller shall not represent that Seller has any
ownership in the Trademarks, Seller will not attempt to register the
mark in any for, and the parties acknowledge that the use of the
Trademarks shall be only for the benefit of HP. HP may terminate
this license immediately if Seller does not meet the HP quality
requirements. Seller shall indemnify HP from any cost, claims or
damages arising from the intentional acts of Seller or it's agents
relating to the use of the Trademark in any manner except as
permitted by this Agreement.
20.2. Trademarks authorized for use by Seller: "HP", "Hewlett-Packard"
21. ADDENDA ATTACHED
Page 7 of 8
<PAGE> 8
All addenda to this Agreement shall be deemed a part of this Agreement
and incorporated herein. Terms which are defined in this Agreement, and
used in any addendum, have the same meaning in the addendum as in the
Agreement.
The following addenda are hereby made a part of this Agreement:
Addendum A -- Confidential Disclosure Agreement
Addendum B -- Process Definitions
Addendum C -- Pricing And Fee Schedule
Addendum D -- HP Products Supported By The Seller
Addendum E -- HP Standards Of Business Conduct
Addendum F -- HP 3rd Party Seller Monitoring Form
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives.
Hewlett-Packard Company
Worldwide Sales, Distribution, and Support
By: Alex Sozonoff National TechTeam
Title: General Manager, Worldwide Sales, By: Valerie J. Niemiec
Distribution, and Support Title: Senior Vice President
Signature: Signature: Valerie J. Niemiec
--------------------------- -----------------------------
Date Signed: Date Signed:
------------------------- ---------------------------
Page 8 of 8
<PAGE> 9
ADDENDUM A
HEWLETT-PACKARD COMPANY
CONFIDENTIAL DISCLOSURE AGREEMENT
Multi-part standard Confidential Disclosure Agreement attached.
Addendum A - Page 1 of 1
<PAGE> 10
[HEWLETT PACKARD LOGO]
CONFIDENTIAL DISCLOSURE AGREEMENT
Effective Date: April 1, 1995
In order to protect certain confidential information, Hewlett-Packard Company
and its corporate affiliates ("HP"), and the "Participant" identified below,
agree that:
1. DISCLOSING PARTY: The party disclosing confidential information
("Discloser") is Both
(Note: Fill in "HP", Participant", or "both parties".)
2. PRIMARY REPRESENTATIVE: Each party's representative for coordinating
disclosure or receipt of confidential information is:
HP: Brad Sprenger
Participant: Valerie Niemiec
3. DESCRIPTION OF CONFIDENTIAL INFORMATION: The confidential information
disclosed under this Agreement is described as:
HP: HP operational information, current & future product information, shipment
projections, support volume
PARTICIPANT: Call center operational information.
(Note: Be specific; for example, individually list materials provided.
Attach additional sheets if needed.)
4. USE OF CONFIDENTIAL INFORMATION: The party receiving confidential
information ("Recipient") shall make use of the confidential information only
for the following purpose (e.g., "evaluation and testing for a make/buy decision
on project xyz"):
HP: Validation of delivery against contract.
PARTICIPANT: Delivery against contract specifications.
5. CONFIDENTIALITY PERIOD: This Agreement and Recipient's duty to hold
confidential information in confidence expire on:
March 31, 1999
(Note: This is the period of protection of confidential information.)
6. DISCLOSURE PERIOD: This Agreement pertains to confidential information that
is disclosed between the Effective Date and
March 31, 1996
(Note: This is the period during which confidential information is going to be
disclosed.)
7. STANDARD OF CARE: Recipient shall protect the disclosed confidential
information by using the same degree of care, but no less than a reasonable
degree of care, to prevent the unauthorized use, dissemination, or publication
of the confidential information as Recipient uses to protect its own
confidential information of a like nature.
8. MARKING: Recipient's obligations shall only extend to confidential
information that is described in paragraph 3, and that: (a) comprises
specific materials individually listed in paragraph 3; or, (b) is marked as
confidential at the time of disclosure; or, (c) is unmarked (e.g. orally
disclosed) but treated as confidential at the time of disclosure, and is
designated as confidential in a written memorandum sent to Recipient's primary
representative within thirty days of disclosure, summarizing the confidential
information sufficiently for identification.
9. EXCLUSIONS: This Agreement imposes no obligation upon Recipient with respect
to information that: (a) was in Recipient's possession before receipt from
Discloser; (b) is or becomes a matter of public knowledge through no fault of
Recipient; (c) is rightfully received by Recipient from a third party without a
duty of confidentiality; (d) is disclosed by Discloser to a third party without
a duty of confidentiality on the third party; (e) is independently developed by
Recipient; (f) is disclosed under operation of law; or (g) is disclosed by
Recipient with Discloser's prior written approval.
10. WARRANTY: Each Discloser warrants that it has the right to make the
disclosures under this Agreement. NO OTHER WARRANTIES ARE MADE BY EITHER PARTY
UNDER THIS AGREEMENT. ANY INFORMATION EXCHANGED UNDER THIS AGREEMENT IS
PROVIDED "AS IS".
11. RIGHTS: Neither party acquires any intellectual property rights under this
Agreement except the limited rights necessary to carry out the purposes set
forth in paragraph 4. This Agreement shall not restrict reassignment of
Recipient's employees.
MISCELLANEOUS
12. This Agreement imposes no obligation on either party to purchase, sell,
license, transfer or otherwise dispose of any technology, services or
products.
13. Both parties shall adhere to all applicable laws, regulations and rules
relating to the export of technical data, and shall not export or reexport any
technical data, any products received from Discloser, or the direct product of
such technical data to any proscribed country listed in such applicable laws,
regulations and rules unless properly authorized.
14. This Agreement does not create any agency or partnership relationship.
15. All additions or modifications to this Agreement must be made in writing
and must be signed by both parties.
16. This Agreement is made under, and shall be construed according to, the laws
of the State of California, U.S.A.
HEWLETT-PACKARD COMPANY
Customer Support Center
- --------------------------------
(Entity Name)
11311 Chinden Blvd. MS 516
- --------------------------------
Boise, ID 83714
- --------------------------------
(Address)
BY
------------------------------
(Functional Manager's Signature)
Kriss Kirchhoff
- --------------------------------
(Name)
US CSC Manager
- --------------------------------
(Title)
PARTICIPANT
National Tech Team
- --------------------------------
(Company Name)
22000 Garrison Avenue
- --------------------------------
Dearborn, MI 48124
- --------------------------------
(Address)
BY
------------------------------
(Authorized Signature)
Valerie Niemiec
- --------------------------------
(Name)
Senior VP
- --------------------------------
(Title)
<PAGE> 11
ADDENDUM B
PROCESS DEFINITIONS
1. DELIVERY AND HANDLING OF END USER TECHNICAL ASSISTANCE CALLS
1.1. End users who are calling for support on the target products
will call 1 (800) 724-6631. This phone number will be owned by HP,
but will ring at the Seller's location. HP will incur all phone
company service tariffs associated with (800) 724-6631.
1.2. The Seller's Voice Response Unit (VRU) will route the calls
as defined by HP.
1.3. The customer's product registration will be verified by the
Seller. If the customer's product is not registered, the Technician
will perform product registration before technical assistance is
provided.
1.4. The Seller Technician will answer the customer call based on
information in the Seller knowledge base or in HP product
documentation. If information pertaining to the customer question
does not exist, the Technician will note this deficiency in the
Seller call tracking system.
1.5. The Seller Technician will create a call summary for every
call handled. This call summary will be recorded in the Seller call
tracking system.
1.6. In the event that the customer must be escalated for either
technical or customer satisfaction reasons, the Technician will do
so as documented in Customer Satisfaction Escalations section of
Addendum B.
1.7. The Seller will assist customers with software installation
questions for all non-Microsoft software products which are bundled
with the HP Personal Computer. The Seller will provide full
software support (including installation and usage assistance) for
any Microsoft software product which is bundled with the HP Personal
Computer.
1.8. Based on history, some Customers who do not own an HP
Multimedia computer will call 800 724-6631. The Seller will
redirect these customers to the appropriate HP location. A phone
list of other HP locations will be provided to the Seller by HP.
2. DELIVERY AND HANDLING OF END USER HARDWARE FAILURE CALLS
2.1. In the event that a customer calls for technical assistance
and the customer is identified as having some sort of hardware
failure, the Technician will take one of two action paths:
a. If the customer's product failure is related to a user
replaceable part, as defined by HP (such as speakers,
microphone, combo card, keyboard, or mouse) the Seller will
process the order through the Seller's current relationship
and processes that are in place with HP SMO.
b. If the customer's product failure is related to a
non-user replaceable part or sub-assembly, the Seller will
initiate an on-site repair Customer Support Order (CSO)
through the HP SupportLine system.
c. Due to the expensive nature of warranty repairs, the
Seller will work to constantly improve the fault isolation
process thus minimizing No Parts Used (NPU) for on site
repairs and No Trouble Found (NTF) for on-site and
replacement parts service. As HP gather additional
information regarding the products covered in this Agreement,
specific NPU and NFT measurements will be defined.
2.2. The Technician will record all call related data in the
Seller call tracking system.
3. DELIVERY AND HANDLING OF RESELLER OR HP SALES REPRESENTATIVE CALLS
3.1. Authorized HP Resellers and HP Sales Representatives who are
calling for support on any HP CPO product will call 800-544-9976.
HP CSC in Boise will validate whether the caller is authorized to
use the 800-544-9976 phone number. If the caller is validated by
HP, calls on the products supported by the seller will be
transferred from Boise to the Seller. The Seller is expected to
provide the same level of technical assistance to Authorized
Resellers and HP Sales Representatives as for End Users.
Addendum B - Page 1 of 7
<PAGE> 12
3.2. If the Reseller or HP Sales Representative is asking for
assistance regarding a sales promotion or marketing program, the
Seller Technician should transfer the call to the Reseller Support
Group at the CSC in Boise. HP will communicate to the Seller the
appropriate transfer phone number for these calls.
3.3. If the Reseller or HP Sales Representative is asking for
service assistance (assistance while repairing an HP product), the
Seller Technician will transfer the caller to the HP Response Center
in Atlanta (800 430-1801).
4. CUSTOMER SATISFACTION ESCALATIONS
4.1. In some cases, Customer satisfaction issues may arise that
are outside the control of the Seller. These calls will be
initially handled by the Seller supervisor or lead. If no
resolution which is satisfactory to the Customer can be reached,
the Customer name, phone number, address, Seller contact and problem
description will be recorded and sent either electronically or by
fax immediately to the HP Customer Support Center escalation
department at (208) 396-4492. A record of this action will be
recorded in the Seller's call tracking system. The call will remain
in a open status upon escalation.
4.1.1. Examples of customer satisfactions include:
- The customer believes HP owes money
to the customer (perhaps a product buy-back, warranty
extension, etc).
- Some portion of the customer request
will cause HP to spend money above the cost of technical
phone assistance.
- the customer is questioning some HP
policy or procedure.
- Any issue where the customer
discusses legal proceedings that could involve HP.
- The customer indicates that they need
to talk with someone who has the authority to solve
their problem and that authority does not exist within
the Seller's organization.
4.2. The CSC escalation department will assume ownership of the
call.
4.3. The CSC escalation department will provide resolution
information to the Seller, and the call status will be modified to
closed by the Seller.
4.4. In the event that the Seller escalates the call to the CSC
escalation department, the Seller SHOULD NOT set the Customers
expectation about possible resolution beyond the telling the
customer their call if being forwarded to the Customer Support
Quality department.
5. TECHNICAL ESCALATIONS
5.1. Hewlett-Packard's Home Products Division will provide
technical backup for the Seller. In the event a call is beyond the
technical abilities of the Seller Technicians or the Seller's Senior
Technicians, the Seller Team Lead will arrange contact with the HPD
technical resource desk.
5.1.1. HPD and the Seller will arrange periodic conference call
periods where any open technical escalations or issues can be
addressed.
5.2. Access to the HPD technical backup group will be limited to
the Seller Team Leads or supervisors. The Seller will be expected
to document the issue and resolution of any problem which is
escalated to HPD. This issues and resolutions will be included in
the Sellers knowledge base.
5.2.1. HP HPD will act as an additional technical resource for the
Seller. The Seller will retain ownership of the call.
6. HOURS OF OPERATION AND STAFFING
6.1. National TechTeam will provide staffing to handle in-bound
phone calls 24 hours per day, 7 days per week, 365 days per year.
7. PERFORMANCE METRICS
7.1. All performance metrics described below are HP's expectations
as of the commencement date of the Work. Any and all performance
measures are subject to change at HP's sole discretion. The
Addendum B - Page 2 of 7
<PAGE> 13
Seller will be expected to adjust performance to match HP's
expectations within a reasonable time period. The appropriate time
period for adjustment will be jointly agreed to between HP and the
Seller.
7.2. 95% of all calls must be picked up and serviced by a
Technician within 3 minutes. This service level metric must be met
on a daily basis.
7.2.1. Calls will not be pulled from the queue for later call back
in order to meet service level objective.
7.2.2. HP will provide a 3 month rolling forecast to the Seller.
This will be provided monthly. This forecast will include a
plus or minus 10% boundary.
7.2.3. The service level objective described in paragraph 7.2 above
will be met by the Seller up to the upper bound of the
forecast described above in paragraph 7.2.2. Beyond the upper
bound of the forecast, the seller will make every reasonable
attempt to service all callers as quickly as possible. HP
will consider service level degradation as predicted by the
Erlang C queuing model to be acceptable performance of the
Seller.
7.3. No call blockage is acceptable. Call blockage means: there
are not enough phone lines to handle the call demand and the
Customer receives a busy signal.
7.4. Call resolution rate (the number of customer contacts
required to reach resolution on a single problem), as identified by
the HP customer satisfaction survey, will not differ between the
Seller and HP CSC. HP will report call resolution rates to the
Seller as part of the monthly Customer Satisfaction Survey.
7.5. 94% of the Customers surveyed by HP will report a neutral or
positive experience with the technical assistance service delivered
by the Seller.
7.6. Results of HP CSC silent call monitoring will show no less
than 90% success rate for calls handled by the Seller.
7.6.1. Success rate will be determined by the ratio of positive
responses to total responses as scored by CSC call monitoring
teams.
7.6.2. The components of this score will include a combination of
communication skills, trouble shooting skills, and technical
accuracy. A copy of the "3rd Party Seller Monitoring Form" is
attached as Addendum G. HP may periodically change the items
on the "3rd Party Seller Monitoring Form" in order to better
reflect Customer expectations of support delivery.
7.7. Results of HP CSC silent call monitoring will show 100%
adherence to knowledge base documentation and approved training
materials as an information source answering Customer questions.
7.8. HP will define metrics for No Trouble Found (NTF) and No
Parts Used. These metrics will be communicated to the Seller as
they are defined.
8. EQUIPMENT
8.1. CARE OF HP EQUIPMENT All designs, materials and equipment
furnished to Seller by HP or paid for by HP in connection with this
Agreement (collectively "HP Property") shall:
- Be clearly marked or tagged as property of HP;
- Be subject to inspection by HP at any time;
- Be used only in servicing HP customer needs;
- Be reasonably kept separate from other materials,
tools, or property of Seller or held by Seller;
- Not be modified in any manner by Seller unless so directed
by HP;
- Have periodic maintenance performed by Seller; and
- Be kept free of liens and encumbrances which may arise due
to actions of Seller.
- The Seller will maintain an inventory list of HP
owned equipment and will audit the inventory of HP equipment
monthly. Results of the monthly inventory audit will be
reported to HP.
8.2. EQUIPMENT PROVIDED BY HP
Addendum B - Page 3 of 7
<PAGE> 14
HP will provide the following equipment to the Seller for use by
Seller in fulfilling the requirements of this Agreement. HP will
retain ownership of all equipment described in this section.
8.2.1. HP personal computers for production uses such as data
collection and knowledge base access.
8.2.2. HP Multimedia personal computers for lab use.
8.2.3. HP peripherals for lab use.
8.2.4. HP will provide copies of the software which is bundled with
the HPD personal computers. The Seller will provide
Technicians with access to this software, either over the
network or on the individual Technician desktops. HP will
retain software license ownership for these software bundles.
8.3. EQUIPMENT PROVIDED BY NATIONAL TECHTEAM
At a minimum, the Seller will provide the following equipment for
use by Seller Technicians in fulfilling the requirements of this
Agreement. The Seller will retain ownership of this equipment
and/or maintain current software licenses.
8.3.1. Computer networking hardware and software that will allow
access by Technicians to necessary computer based support
tools.
8.3.2. All necessary phone equipment to accept delivery of the call
and route the call to the Seller Technician. The Seller will
provide a Voice Response Unit (VRU) to assist in automatic
customer call routing.
8.3.3. All necessary phone equipment to transfer calls to other HP
locations.
8.3.4. Knowledge base and call tracking tools.
8.3.5. Reasonable equipment and connections to allow HP to perform
remote, silent monitoring of Technician calls.
8.3.6. The Seller will provide reasonable equipment and connections
to allow HP to remotely monitor the queue status of the HP
support group on the Seller's phone switch.
8.3.7. Bulletin board software and hardware to allow the customer
to upload configuration files for use by the Seller
Technician in the problem identification and resolution
process.
9. TRAINING
9.1. The Seller's employees will be proficient with the personal
computer concepts, DOS, Windows, and various software applications.
Additionally, the Seller Technicians will have excellent trouble
shooting and Customer service skills. It is the responsibility of
the Seller to provide technology and environment training, trouble
shooting training, and Customer service skills training for the
Seller Technicians prior to beginning HP product specific training
or support.
9.1.1. HP will pay for training of all new Seller Technicians,
which are attributable to project growth, as described in the
pricing summary (Addendum C of this document).
9.1.2. The Seller will pay for Seller Technician training, when the
new Technicians are a result of Seller employee turnover.
9.2. If additional product support responsibility is awarded to
the Seller, HP and the Seller will jointly develop and deliver new
product support training. HP and the Seller will jointly determine
the appropriate method of training delivery (either class room,
train-the trainer, self paced, etc).
9.2.1. If this training can occur during the normal Seller
Technician work schedule, no additional costs will be covered
by HP. If Seller Technicians must attend training outside
their normal work schedule, HP will reimburse the Seller for
the actual cost of training. This reimbursement will be
dependent upon prior expense authorization from HP.
9.2.2. Class room training for Seller Technicians will occur at the
Seller's location. This training will be delivered by a
Seller trainer or an HP trainer. The audience for this
training will be Seller Technicians employed by the Seller at
the time the training
Addendum B - Page 4 of 7
<PAGE> 15
occurs. HP will pay for the travel cost
of the HP trainer delivering the training program if HP feels
that an HP trainer is required.
9.2.3. Train-the-trainer sessions will be held at an HP location
(either Boise, Idaho or Santa Clara, California). This
training will be delivered by an HP trainer. The audience
for these train-the-trainer sessions will be determined by
the Seller. The Seller will pay for the travel cost of the
Seller employees attending train-the-trainer sessions at HP.
The Seller employees who attend the train-the-trainer
sessions will be responsible for training all Seller
Technicians on the material covered during the
train-the-trainer session.
9.3. Software drivers and software bundles are periodically
updated by HP. Depending on the purpose and scope of the update,
additional Technician training may be required. HP and the Seller
will jointly determine whether additional Technician training is
required. Training for updated software will be provided as
described above.
10. SUPPORT INFORMATION
10.1. During the term of this Agreement significant support
documentation will be created, both by HP and the Seller. This
documentation will reside in various forms, including: TOPIC
database, HP developed support notes, Seller developed FOLIOs, call
tracking systems, product manuals, etc.
10.1.1. HP will retain ownership of all information provided by HP.
10.1.2. HP will assume ownership of all information created by the
Seller as a result of the activity described in this
Agreement.
10.1.3. The Seller may not use HP support information for any
activity outside those activities intended by this
Agreement.
10.1.4. Seller will provide HP with unlimited access to all support
information held at the Seller's location.
10.2. HP and the Seller will each create support information. The
master database containing all information will reside at the
Customer Support Center in Boise. The Seller and HP will jointly
determine the process for ensuring that the CSC database and the
Seller database are version compatible.
10.3. All information provided by HP or collected by the Seller
will be considered confidential and will be handled by the Seller as
HP Confidential information, otherwise described in section 15 of
the Agreement.
10.4. Customer support delivered by the Seller will follow HP
developed or HP approved support documentation or product
documentation.
10.5. HP reserves the right to review and approve or dis-approve
any documentation created by the Seller for use in this project.
11. QUALITY MONITORING AND REPORTING
11.1. The Seller will perform periodic Technician monitoring. The
frequency of the monitoring will be determined by the Seller. HP
will provide a monitoring checklist, which will be considered a
minimum checklist and may be expanded by the Seller or by HP. A
copy of this monitoring checklist is attached as Addendum G.
11.2. The Seller will provide monthly metrics to HP regarding the
results of Technician monitoring. This will include a recap of
areas of deficiency and an action plan for resolution of any
deficiency.
11.3. The Seller will provide a mechanism for remote, silent
monitoring of Technicians by HP.
11.4. HP will provide the Seller with feedback regarding the
silent monitoring of Seller Technicians.
11.5. HP will have the right to request that individual
Technicians be removed from the HP support group due to misconduct
by the Technician. The Seller will be expected to immediately
comply with these requests.
11.6. HP will provide the Seller with summaries of customer
satisfaction survey results.
11.7. The Seller will provide customer names and phone numbers to
HP daily for the purpose of surveying the customer's satisfaction
with the support provided by the Seller.
Addendum B - Page 5 of 7
<PAGE> 16
12. CALL TRACKING
12.1. The Seller must have the ability to track call history and
product issues on all supported products.
12.2. HP and the Seller will jointly develop a list of pre-defined
support issues and the corresponding definitions. The Seller will
report the results of data collected on these issues to HP at least
monthly. In some instances, the criticality of the product issues
may warrant reporting more frequently than monthly.
12.2.1. Seller will have processes in place which enable
Technicians to highlight issues which are not encompassed by
the pre-defined issues.
12.3. HP will assume and retain ownership for all HP customer
information and HP products issues information that are collected by
or provided to the Seller.
12.4. HP will have unlimited access to all databases containing
customer information for call issues data.
12.5. HP may require periodic, ad-hoc data collection.
12.6. The Seller will monitor Customer issues and will immediately
report emerging issues to HP.
13. REPORTING
13.1. The following information will be reported by the Seller to
HP daily. This information will be faxed or transmitted to HP by
9:00 am mountain time the day after the activity occurred:
13.1.1. service level - percent of calls picked up within 30
seconds, 60 seconds, 90 seconds, 120 seconds, 150 seconds,
and 180 seconds
13.1.2. average hold time
13.1.3. longest hold time
13.1.4. total calls offered, itemized by product family
13.1.5. total calls handled, itemized by product family
13.1.6. total call minutes, itemized by product family
13.2. The following information will be reported by the Seller to
HP monthly. This information will be faxed or transmitted to HP by
5:00 p.m. mountain time on the 2nd work day of the month after the
activity occurred:
13.2.1. total calls offered.
13.2.2. total calls handled, itemized by product.
13.2.3. total call minutes handled, itemized by product.
13.2.4. average inbound talk time, itemized by product.
13.2.5. total outbound calls handled, itemized by product.
13.2.6. total outbound minutes, itemized by product.
13.2.7. average outbound talk time, itemized by product.
13.2.8. total mis-routed calls which were redirected to another
HP support group.
13.2.9. service level - percent of calls picked up within 30
seconds, 60 seconds, 90 seconds, 120 seconds, 150 seconds,
and 180 seconds
13.2.10. total calls abandon. Abandon means the caller
disconnected (hung up) before a Technician picked up the
call.
13.2.11. amount to be invoiced by Seller for the previous months
activity.
13.2.12. average hold time before the call is picked up by a
Technician.
13.2.13. longest hold time before the call is picked up by a
Technician.
13.3. The following information will be reported by the Seller to
HP monthly. This information will be faxed or transmitted to HP by
5:00 p.m. mountain time on the 10th work day of the month after the
activity occurred:
13.3.1. monthly summary of downtime of critical support systems
(phone, networks, etc).
13.3.2. total calls blocked.
13.3.3. a copy of the invoice which was submitted by the Seller to
the HP accounts payable department.
13.3.4. monthly Seller employee turnover (specific to the HP
technical support group). This will include the number of
Technicians that left the HP technical support group, and
the number of Technicians that joined the HP technical
support group.
Addendum B - Page 6 of 7
<PAGE> 17
13.3.5. monthly monitoring results and action plans to address any
deficiencies identified through the monitoring process.
13.3.6. results of the monthly HP equipment audit as described in
8.1 above.
13.3.7. total transactions associated with the Seller's call
tracking system (customers added, cases added, calls added).
13.4. The following information will be reported by the Seller to
HP weekly. This information will be transmitted to HP by 9:00 am
mountain time on the Tuesday following the week after the activity
occurred:
13.4.1. Number of calls offered
13.4.2. Number of calls handled by product
13.4.3. Summary of calls by issue (as tracked in the call tracking
system). This is to be issue information, not individual
database records. This should include issues and
sub-issues, and all information entered in free form
format by Technicians in the "comments" area.
Addendum B - Page 7 of 7
<PAGE> 18
ADDENDUM C
PRICING AND FEE SCHEDULE
C.1 TECHNICAL INFRASTRUCTURE START-UP COSTS
<TABLE>
<CAPTION>
Item Price each Total price for startup
- -----------------------------------------------------------------------------------
<S> <C> <C>
CSU for T1-Span (2 needed for startup) 2142 4284
T1 multiplexer card 4172 8344
ACD queue message 901 901
Fax server PBX cards 636 636 Act 1254
Fax modem upgrade 552 552 Act 1254
Folio Macro Development in MS Word 1560 1560
HP BBS system 4751 4751
Call process system phase one (IVR license) 17613 17613
File servers (2 duplex with UPS and tape b/u) 13039 26078
Cisco 3000 router 2120 4240 - 0
Report setup and customization 1500
SCO FTP server software 900
FTP server use PDO
Remote access to TracTeam 4508
Remote access to NTT ACD queue status 1255 - 7320
Vendor Support Services 2218
DID trunk card configuration 3059
TOTAL $82,399
</TABLE>
C.2 ONE TIME PROGRAM MANAGEMENT START UP COSTS
<TABLE>
<S> <C>
Program Management, Launch Coordination
(Rob Pedrotte @ 50% x 3 mo. x $6000 9000
Telecom
(Jim Kaske @ 25% x 3 mo. x $6000 4500
Datacomm
(Chris Lawrence @ 25% x 3 mo. $3750 2800
Training Development & Delivery *
(6 man months @ $4900) 18240
TOTAL $34,540
</TABLE>
* Additional training development cost will be billed to HP at
cost, as it occurs, over the first 6 months of this project.
Addendum C - Page 1 of 3
<PAGE> 19
C.3 PER TECHNICIAN EQUIPMENT AND TRAINING START UP COSTS (THESE
COSTS RECUR FOR EVERY TECHNICIAN ADDED FOR THE LIFE OF THE PROGRAM)
Rolm phone 624 display / ACS headset 698 Aspect 1470
Rolm phone card 226 Aspect 1470
Office equipment and terminal emulation sw 1151
Technician training (per seat)** 3000
TOTAL $5075
** Training cost calculation: (76230 minutes per year x $.6125
per minute) / (231 days per year x 15 days of training) = $3050.
TechTeam is providing technicians at cost during the training
period and does not recover development or delivery expenses
in this figure.
C.4 MONTHLY PER-TECHNICIAN RUNNING COST
HP will pay a flat per technician fee for the period April 1, 1995
through July 31, 1995. HP must approve the hiring of additional
technicians for the period April 1, 1995 through July 31, 1995.
Beginning August 1, 1995, the running cost for this activity will paid
for by HP via a per talk minute fee. This per minute fee is yet to be
determined, but will be something less that $.80 per minute.
For the period April 1, 1995 through July 31, 1995, the per technical fee
will be: $4837.
The calculation for this fee is: $.7615 per minute x 76230 minutes per
year / 12 months = $4837.
$.7615 per minute is calculated as follows:
Technician cost per minute .6923
Team lead cost per minute .0428
Other overhead labor .0381
Off hours, holiday premiums .0154
On-going training development/delivery .0063
Turnover retraining .0060
Travel .0031
Employee care .0030
Discount (.0455)
TOTAL .7615
C.5 CALL TRACKING DATABASE DEVELOPMENT
As of March 27, 1995, approximately 600 hours of development
time has been estimated by National TechTeam as being required for
initial implementation of a call tracking system for this project.
These services will be billed at a rate of $65 / hour. Upon receipt
of a finalized call tracking system specification from HP, National
TechTeam will provide to HP a project schedule and the associated
costs, which will be mutually agreed to by both parties in writing.
Ongoing enhancements identified by HP will be billed at $65 / hour.
Additional license fees as required for exclusive use by the HP
project team (as required and agreed to by mutual written consent of
both parties) will be billed to HP at National TechTeam's actual
cost.
Addendum C - Page 2 of 3
<PAGE> 20
National TechTeam shall provide to HP, for HP's use at its sole
discretion, all software developed by National TechTeam, its
subcontractors, or agents for use on the HP HPD project. This shall
include, but not be limited to, Customer Tracking System Client and
Server source code and object code at all levels. National TechTeam
shall provide both object code and source code in electronic form.
National TechTeam shall provide assistance to HP in implementing
these software systems in the HP environment.
As of March 27, 1995, the extimated total cost of Call Tracking
development is: $39,000
C.6 TRANSFER OF EQUIPMENT OWNERSHIP UPON TERMINATION
In the event that this agreement is terminated for any reason, all
tangible assets and equipment which have been purchased by HP (as
described in this Addendum C, and subsequent purchases not described
herein) shall become the property of HP. At its option, Seller may
purchase said tangible assets and equipment from HP according to the
following depreciation schedule:
o Software licenses and hardware (including, but not limited
to, ACD equipment, desktop personal computers, servers, routers, and
modems): 50% for first year, 25% second year, 25% third year.
o Furniture: 25% per year for four years.
Addendum C - Page 3 of 3
<PAGE> 21
ADDENDUM D
HP PRODUCTS SUPPORTED BY THE SELLER
HP Multimedia Personal Computer 6100 (HP product # D3845A)
HP Multimedia Personal Computer 6140S (HP product # D3846A)
HP Multimedia Personal Computer 6170S (HP product # D3847A)
HP PC monitor (HP product # D3848A)
Addendum D - Page 1 of 1
<PAGE> 22
ADDENDUM E
HP STANDARDS OF BUSINESS CONDUCT
All National TechTeam employees who are involved in the delivery of HP work
will be held to the same Standards of Business Conduct as employees of
Hewlett-Packard Company. This addendum describes these Standards of Business
Conduct. All National TechTeam employees who are involved in the delivery of
HP work must read and understand the entirety of this addendum. Any questions
related to any item should be directed through National Tech Team management to
Hewlett-Packard.
Non-compliance with any item described in this addendum will be considered
misconduct by the National TechTeam employee, and will constitute grounds for
immediate removal from all HP activity carried out by National TechTeam.
For purposes adherance to the HP Standards of Business Conduct only, National
Tech Team employees who are involved with HP work must comply with the same
rules as HP employees. This addendum does not in any way suggest that National
Tech Team employees are directly employed by HP. National Tech Team should
make it clear to National Tech Team employees that they are employed by
National Tech Team and not HP.
================================================================================
PRESIDENT'S MESSAGE
Our company's reputation means a lot to us. It's an asset money can't buy. It
opens doors for us when we call on customers, when we look for business
partnerships, when we deal with governments, and when we work to improve the
communities in which we operate. By all measures, HP enjoys one of the best
reputations any company has -- in any business -- anywhere in the world.
This hasn't happened by accident. Over the years employees at every level have
endeavored to build HP's reputation by fair and honest dealing in every
business transaction and relationship. Maintaining this reputation is a
critical objective for all entity managers. We expect every employee to make
this a personal responsibility as well.
These Standards of Business Conduct are intended to inform all employees of
their legal and ethical obligations to HP, its customers, competitors and
suppliers. Simply stated, every HP employee must comply with these standards.
I expect all managers to review these standards with their employees every year
in order to answer questions and to ensure compliance. Failure to comply with
these standards is regarded as misconduct and may result in termination of
employment.
Sometimes you may believe an HP employee has engaged in unethical or illegal
conduct. In this situation, you are expected to notify a manager or the
Personnel Department. As an alternative, a post
office box has been established by HP's Corporate Legal Department for
worldwide use to receive information on a confidential basis. The address is:
Hewlett-Packard Company
Corporate Legal Department (20 BQ)
Post Office Box 50161
Palo Alto, CA 94303-0890
The day-to-day performance of each of us adds to -- or subtracts from -- HP's
reputation as a company. Uncompromising integrity is part of the HP Way and
part of every HP job; it always has been, it always will be.
Lew Platt
President and
Chief Executive Officer
Addendum E - Page 1 of 5
<PAGE> 23
CONFLICTS OF INTEREST
GENERAL POLICY
Although you are generally free to engage in personal financial and
business transactions, this freedom is not unlimited. You must
avoid situations where your loyalties may be divided between HP's
interests and your own interests. HP wants you to conduct yourself
so that you do not even appear to have a conflict. You can avoid
most unacceptable conflicts by following the rules described below.
OUTSIDE EMPLOYMENT
What are the limits on my working for another company or having my
own business? HP policy does not prohibit all outside employment,
but does forbid any outside employment that could lead to divided
loyalties. The following examples illustrate some of the
limitations on outside work:
*You may not be an employee, consultant or contractor for any
competitor of any HP division or operation. Example: you may not
work for a company which makes computers or peripheral products,
even if your division makes unrelated products.
*You may not be an employee, consultant or contractor for any HP
customer or supplier without written approval from your entity
manager. Further, you may not have more than one HP employment
status at a time. Example: you may not be an employee at one
division and also a consultant to another HP entity.
*You may not sell services or products similar to HP's services or
products. Example: you may not service HP products on your own
time.
*You may not engage in activities which support or promote a
competitor's products or services. Example: you may not write and
sell software for a competitor's products.
*You may not accept a position with another company if the time
demands of the position interfere with your HP job. Example: a
position which required receiving phone calls during your HP work
hours would not be acceptable.
PERSONAL BENEFIT FROM HP BUSINESS
When would it be wrong for me to benefit personally from conducting
HP business?
You must disclose all situations where you may be conducting HP
business with friends or family members. You must obtain written
approval from your entity manager before conducting business with
these individuals and you must remove yourself from any involvement
in the decision to retain their services. Thus, you would need
approval to hire your brother-in-law to do repair work on an HP
facility. If the entity manager approves, the transaction should
be handled by your manager or another department, and proposals
from competing businesses should be considered.
You may not personally benefit (other than your compensation from
HP) from any transaction undertaken on behalf of HP. For example,
a sales representative may not accept anything of value from an HP
reseller in return for promoting that company's products.
You may participate in published frequent traveler programs, except
those offering cash refunds. However, you may not participate in
frequent purchaser programs outside the travel industry. As an
example, you may not accept equipment from an office supply vendor
based on HP's purchases.
GRATUITIES FROM THIRD PARTIES
Addendum E - Page 2 of 5
<PAGE> 24
Companies often exchange gifts. What can I accept?
Other than inexpensive advertising novelties or business meals and
entertainment, you and your immediate family may not accept any
gift, payment, loan, or other favor from a customer, supplier or
competitor.
Care should be exercised in accepting business meals and
entertainment. Such activities should be infrequent, consistent
with accepted business practices, and for the express purpose of
furthering a business relationship. You should not accept payment
of travel expenses by a customer or supplier without prior entity
manager approval. Some HP organizations may adopt more restrictive
rules in these matters.
In rare circumstances, local custom may call for an exchange of
gifts having more than nominal value as part of a business
relationship with a foreign company. In these situations you may
only accept such gifts on behalf of HP and with the approval of
your entity manager. Such gifts should be turned over to HP for
appropriate disposition such as HP internal use, general employee
benefit or donation to charity.
OUTSIDE DIRECTORSHIPS
What if I am asked to be a director for another organization?
You may not accept a position as a director of any HP competitor.
You may not accept a position as director of a company which
supports or promotes a competitor's products or services, without
prior approval of the Management Staff. Before becoming a director
of any HP customer or supplier, you must obtain the prior approval
of HP's president or an HP executive vice president. If you
encounter any situation as a director which conflicts with HP's
interests, you will need either to withdraw from participation in
the decision or resign as a director.
You may not receive separate compensation (including stock options)
for service on the board of directors of a company if the service
is at HP's request or in connection with an HP investment in, or
relationship with, that company.
FINANCIAL INTERESTS IN OTHER BUSINESSES
What personal investments are not acceptable?
You may not have a financial interest in any HP customer, supplier
or competitor that might cause divided loyalty or even the
appearance of divided loyalty. Whether there is divided loyalty
depends upon many factors, including: (a) your ability to
influence HP decisions that affect your personal interests; (b)
the size of the investment relative to your finances; and (c) the
nature of the relationship between HP and the other business.
REPORTING POTENTIAL CONFLICTS
When should I report an outside activity?
You do not have to report every outside activity. However, you
must promptly disclose in writing to your entity manager any actual
or potential conflicts of interest. The manager will review the
matter and communicate HP's position in writing.
The manager will indicate either (a) that HP has no present
objection to the relationship, subject to future review, or (b) the
steps you must take to resolve the conflict to HP's satisfaction.
Copies of the response and your disclosure will be kept in your
personnel file.
When reviewing a potential conflict, HP will consider the following
questions:
Addendum E - Page 3 of 5
<PAGE> 25
- What kind of outside work will you be performing?
- Does the outside work involve an HP competitor, customer or
supplier?
- Are any HP products or services involved in your outside
work?
- Does any HP entity offer similar products or services as the
entity engaging you for the outside work?
- Does the outside work support or promote a competitor's
products?
- What are your HP duties?
- Can you influence HP decisions that affect the outside work?
- Will the outside work impact your ability to perform your
HP duties?
- Is this outside work an opportunity HP should take for
itself?
- Will you be getting an improper personal advantage?
- Are members of your family, friends, or other HP employees
involved in the outside work?
- Are you receiving gratuities, gifts or money that may be
improper?
- How will your actions appear to others--both inside and
outside HP?
HANDLING COMPANY INFORMATION
GENERAL POLICY
HP business information is company property which may not be
disclosed outside HP unless properly released to the public by HP.
If you disclose information about existing, new, or proposed
products or processes, it can hurt HP's competitive position and
jeopardize R&D efforts.
You must be sure that confidential or proprietary information is
appropriately safeguarded against external disclosure as well as
unauthorized disclosure within HP. Remember, when you store
sensitive HP data on a personal computer or workstation, you are
also responsible for applying the appropriate level of protection.
Under no circumstances should you disclose it to third parties
without prior approval from the responsible department manager.
Where business needs require such information to be disclosed
outside HP, you must complete appropriate confidential disclosure
agreements before disclosure. You should be equally careful when
releasing prototypes or models.
CONFIDENTIAL INFORMATION GUIDELINES
How do I know how sensitive certain information is?
HP has established guidelines for marking and handling sensitive
information. These guidelines establish four classes of sensitive
information. No other legends or designations should be used
within HP. For a more detailed discussion of how to handle
confidential and proprietary HP information, you should consult the
agreement signed by employees at the time of hiring and the HP
brochure called "Protecting HP Trade Secrets".
Addendum E - Page 4 of 5
<PAGE> 26
* "HP Private - Not To Be Copied" - This designation is used
for information generated solely for management use to make major
decisions and must not be disclosed outside HP. "HP Private"
documents may be numbered for greater control and must not be
reproduced without written
permission of the originator. Examples include non-public
consolidated financial information, strategic business plans,
significant technical product data, R&D proposals and certain
product marketing strategies. "HP Private" documents must be
disposed of by shredding.
* "HP Confidential" - This designation is used for
information which if disclosed would damage HP's interests, such as
non-public organization charts, and other kinds of personnel
information, bids, sales forecasts, lab notebooks and customer
lists. "HP Confidential" documents should be disposed of by
shredding.
* "For HP Internal Use Only" - This designation is used for
information that will have broad distribution, but which is
considered sensitive and should not go outside HP, such as the
International Telephone and Communications Directory. In addition,
an appropriate designation such as "HP and HP Channel Partner
Internal Use Only" may be used for documents such as product
training materials which the business unit specifically decides may
be shared with HP resellers or other third party channels.
* "HP Proprietary" - This designation is used for drawings or
other documents containing proprietary information made available
to HP suppliers or other third parties. These drawings should not
be duplicated or disclosed except as authorized by the responsible
HP person.
HANDLING COMPANY ASSETS
GENERAL POLICY
Each employee must take care to safeguard HP's assets. This
includes protecting them from unauthorized use. Use of HP assets
for any unlawful or improper purpose is strictly prohibited.
COMMENTING ABOUT COMPETITORS
GENERAL POLICY
Competition is a fact of business life. HP emphasizes the quality
of its products and avoids disparaging comments about competitors
or their products. When you talk about a competitor or its
products, the statements must be fair, factual and complete.
BUSINESS PRACTICES INVOLVING BOTH END USER AND RESELLERS
GENERAL POLICY
You must deal fairly and honestly with HP's customers. You should
exercise caution when offering discounts on purchases of different
product combinations. Exchange of confidential information is not
permitted without a written agreement.
CLOSING COMMENT
The practices in this brochure are only some of the legal and ethical standards
you must observe as an HP employee. Each employee has an important
responsibility to help maintain HP's reputation for the highest standards of
integrity. If you have any questions, contact your supervisor who will in turn
contact the HP liaison..
Addendum E - Page 5 of 5
<PAGE> 27
ADDENDUM F
QUALITY MONITORING FORM
AGENT GROUP: ___________ CALL NUMBER: _____________ TAPE NUMBER/DATE: _______
PRODUCT: ___________ CSC MONITORS: _______________________________________
QUESTION: __________________________________________________________________
SCORING:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
0 1 2 3 N/A
No Effort Made Minimal Effort Made Improvement Needed No Improvement Needed Not Applicable
</TABLE>
SECTION 1 - CUSTOMER SERVICE SKILLS
<TABLE>
<S> <C> <C> <C> <C>
0 1 2 3
A. The agent offered their name and identified HP and/or product. / / / / / / / /
B. The agent used language in a manner which reflected the / / / / / / / /
customer's level of understanding. / / / / / / / /
C. The agent answered questions in a confident manner. / / / / / / / /
D. The agent was professional and courteous throughout the call.
NUMBER OF BOXES CHECKED PER COLUMN: SECTION
/x 0/ /x 1/ /x 2/ /x 3/ TOTAL / /
CUSTOMER SERVICE SKILLS SCORE: /=0/ /=/ /=/ /=/
</TABLE>
SECTION 2 - TROUBLESHOOTING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
0 1 2 3 N/A
A. The agent gathered pertinent information to troubleshoot the call and
retained this information throughout the call. / / / / / / / /
B. Agent used available resources and efficient troubleshooting
techniques. / / / / / / / /
C. The agent proved product functionality. / / / / / / / /
D. The agent verified the solution. / / / / / / / /
E. The agent educated the customer to prevent callback (rework). / / / / / / / /
F. The information given was consistent with CSC guidelines of support. / / / / / / / /
G. The agent offered AFS1 as a supplement to the call. / / / / / / / /
NUMBER OF BOXES CHECKED PER COLUMN:
/x 0/ /x 1/ /x 2/ /x 3/
TROUBLESHOOTING SKILLS SCORE /=0/ /=/ /=/ /=/
</TABLE>
SECTION 3 - TECHNICALLY CORRECT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
0 1 2 3 N/A
A. The elements of the call were technically
correct.
BOXES CHECKED (MAXIMUM IS 1 FOR THIS SECTION)
/x 0/ /x 2/ /x 4/ /x 6/
TECHNICALLY CORRECT SCORE /=0/ /=/ /=/ /=/ /*/
SECTION 1 TOTAL (CUSTOMER SERVICE SKILLS) ______________________________________
+ SECTION 2 TOTAL (TROUBLESHOOTING SKILLS) ______________________________________
+ SECTION 3 TOTAL (TECHNICALLY CORRECT) ______________________________________
</TABLE>
Addendum F -- Page 1 of 2
<PAGE> 28
= TOTAL ______________________
/ HIGHEST POSSIBLE SCORE ______________________
2
=CALL QUALITY SCORE ______________________
3
Addendum F - Page 2 of 2
<PAGE> 29
[HEWLETT PACKARD LOGO]
CONFIDENTIAL DISCLOSURE AGREEMENT
Effective Date: April 1, 1995
In order to protect certain confidential information, Hewlett-Packard Company
and its corporate affiliates ("HP"), and the "Participant" identified below,
agree that:
1. DISCLOSING PARTY: The party disclosing confidential information
("Discloser") is Both
(Note: Fill in "HP", Participant", or "both parties".)
2. PRIMARY REPRESENTATIVE: Each party's representative for coordinating
disclosure or receipt of confidential information is:
HP: Brad Sprenger
Participant: Valerie Niemiec
3. DESCRIPTION OF CONFIDENTIAL INFORMATION: The confidential information
disclosed under this Agreement is described as:
HP: HP operational information, current & future product information, shipment
projections, support volume
PARTICIPANT: Call center operational information.
(Note: Be specific; for example, individually list materials provided.
Attach additional sheets if needed.)
4. USE OF CONFIDENTIAL INFORMATION: The party receiving confidential
information ("Recipient") shall make use of the confidential information only
for the following purpose (e.g., "evaluation and testing for a make/buy decision
on project xyz"):
HP: Validation of delivery against contract.
PARTICIPANT: Delivery against contract specifications.
5. CONFIDENTIALITY PERIOD: This Agreement and Recipient's duty to hold
confidential information in confidence expire on:
March 31, 1999
(Note: This is the period of protection of confidential information.)
6. DISCLOSURE PERIOD: This Agreement pertains to confidential information that
is disclosed between the Effective Date and
March 31, 1996
(Note: This is the period during which confidential information is going to be
disclosed.)
7. STANDARD OF CARE: Recipient shall protect the disclosed confidential
information by using the same degree of care, but no less than a reasonable
degree of care, to prevent the unauthorized use, dissemination, or publication
of the confidential information as Recipient uses to protect its own
confidential information of a like nature.
8. MARKING: Recipient's obligations shall only extend to confidential
information that is described in paragraph 3, and that: (a) comprises
specific materials individually listed in paragraph 3; or, (b) is marked as
confidential at the time of disclosure; or, (c) is unmarked (e.g. orally
disclosed) but treated as confidential at the time of disclosure, and is
designated as confidential in a written memorandum sent to Recipient's primary
representative within thirty days of disclosure, summarizing the confidential
information sufficiently for identification.
9. EXCLUSIONS: This Agreement imposes no obligation upon Recipient with respect
to information that: (a) was in Recipient's possession before receipt from
Discloser; (b) is or becomes a matter of public knowledge through no fault of
Recipient; (c) is rightfully received by Recipient from a third party without a
duty of confidentiality; (d) is disclosed by Discloser to a third party without
a duty of confidentiality on the third party; (e) is independently developed by
Recipient; (f) is disclosed under operation of law; or (g) is disclosed by
Recipient with Discloser's prior written approval.
10. WARRANTY: Each Discloser warrants that it has the right to make the
disclosures under this Agreement. NO OTHER WARRANTIES ARE MADE BY EITHER PARTY
UNDER THIS AGREEMENT. ANY INFORMATION EXCHANGED UNDER THIS AGREEMENT IS
PROVIDED "AS IS".
11. RIGHTS: Neither party acquires any intellectual property rights under this
Agreement except the limited rights necessary to carry out the purposes set
forth in paragraph 4. This Agreement shall not restrict reassignment of
Recipient's employees.
MISCELLANEOUS
12. This Agreement imposes no obligation on either party to purchase, sell,
license, transfer or otherwise dispose of any technology, services or
products.
13. Both parties shall adhere to all applicable laws, regulations and rules
relating to the export of technical data, and shall not export or reexport any
technical data, any products received from Discloser, or the direct product of
such technical data to any proscribed country listed in such applicable laws,
regulations and rules unless properly authorized.
14. This Agreement does not create any agency or partnership relationship.
15. All additions or modifications to this Agreement must be made in writing
and must be signed by both parties.
16. This Agreement is made under, and shall be construed according to, the laws
of the State of California, U.S.A.
HEWLETT-PACKARD COMPANY
Customer Support Center
- --------------------------------
(Entity Name)
11311 Chinden Blvd. MS 516
- --------------------------------
Boise, ID 83714
- --------------------------------
(Address)
BY
------------------------------
(Functional Manager's Signature)
Kriss Kirchhoff
- --------------------------------
(Name)
US CSC Manager
- --------------------------------
(Title)
PARTICIPANT
National Tech Team
- --------------------------------
(Company Name)
22000 Garrison Avenue
- --------------------------------
Dearborn, MI 48124
- --------------------------------
(Address)
BY
------------------------------
(Authorized Signature)
Valerie Niemiec
- --------------------------------
(Name)
Senior VP
- --------------------------------
(Title)
<PAGE> 1
EXHIBIT 10.17
LYNDON PLAZA
LEASE
DALLAS LYNDON CORPORATION, LANDLORD
NATIONAL TECHTEAM, INC., TENANT
AUGUST 17, 1995
<PAGE> 2
INDEX
<TABLE>
<S> <C>
ARTICLE I: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sec. 1.1. LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sec. 1.2. LEASE TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sec. 1.3. LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II: GRANT OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sec. 2.1. GRANT TO TENANT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sec. 2.2. TITLE AND CONDITION . . . . . . . . . . . . . . . . . . . . . . . . 1
Sec. 2.3. COVENANT OF QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . 2
Sec. 2.4. SERVICES FURNISHED BY LANDLORD . . . . . . . . . . . . . . . . . . . 2
ARTICLE III: TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Sec. 3.1. PRIMARY TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Sec. 3.2. LEASE RENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV: PAYMENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . 4
Sec. 4.1. BASIC RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Sec. 4.2. ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Sec. 4.3. LATE CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Sec. 4.4. RENTAL ESCALATION . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. DEFINITIONS APPLICABLE TO THIS SECTION . . . . . . . . . . . . . . 4
B. PAYMENT OF RENTAL ESCALATION . . . . . . . . . . . . . . . . . . . 7
Sec. 4.5. PAYMENT OF RENT . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Sec. 4.6. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Sec. 4.7. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Sec. 4.8. INSURANCE; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 9
A. LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 9
B. CASUALTY INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 9
C. INCREASED INSURANCE PREMIUMS . . . . . . . . . . . . . . . . . . .10
D. WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . .10
E. INDEMNITY AND EXCULPATORY CLAUSE . . . . . . . . . . . . . . . . .10
Sec. 5.1. USE OF LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . .10
A. DESCRIPTION OF PERMITTED USE . . . . . . . . . . . . . . . . . .11
B. USE IN COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . .11
C. TENANT'S USE . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Sec. 5.2. MAINTENANCE OF LEASED PREMISES . . . . . . . . . . . . . . . . . . .12
A. MAINTENANCE BY LANDLORD . . . . . . . . . . . . . . . . . . . . .12
B. ACCESS BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . .12
C. MAINTENANCE BY TENANT . . . . . . . . . . . . . . . . . . . . . .13
D. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Sec. 5.3. SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI: SPECIAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 14
Sec. 6.1. ASSIGNMENTS AND SUBLEASES . . . . . . . . . . . . . . . . . . . . 14
A. BY TENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
B. BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Sec. 6.2. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Sec. 6.3. ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Sec. 6.4. SUBORDINATION OF LEASE . . . . . . . . . . . . . . . . . . . . . . 16
Sec. 6.6. PARKING FOR TENANT . . . . . . . . . . . . . . . . . . . . . . ..17
Sec. 6.7. RULES OF PROJECT . . . . . . . . . . . . . . . . . . . . . . . ..17
ARTICLE VII: DAMAGE AND CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . ..17
Sec. 7.1. DAMAGE TO LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . . 18
A. SUBSTANTIAL DAMAGE . . . . . . . . . . . . . . . . . . . . . . . . .18
B. PARTIAL DAMAGE . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Sec. 7.2. CONDEMNATION OF LEASED PREMISES . . . . . . . . . . . . . . . . . . . . 18
A. TOTAL CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . .18
B. PARTIAL CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE VIII: DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Sec. 8.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 19
Sec. 8.2. DEFAULT BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX: REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Sec. 9.1. LANDLORD'S RIGHT TO CURE DEFAULT . . . . . . . . . . . . . . . . 20
Sec. 9.2. LANDLORD'S RIGHT TO RE-ENTER . . . . . . . . . . . . . . . . . . 20
Sec. 9.3. LANDLORD'S ELECTION TO TERMINATE OR RELET . . . . . . . . . . . . 21
Sec. 9.4. CHANGE OF LOCKS . . . . . . . . . . . . . . . . . . . . . . . . . 22
Sec. 9.5. TENANT REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE X: MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . .. . .23
Sec. 10.1. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Sec. 10.2. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Sec. 10.3. ENTIRE AGREEMENT AND AMENDMENTS . . . . . . . . . . . . . . . . . .24
Sec. 10.4. NO JOINT VENTURE . . . . . . . . . . . . . . . . . . . . . . . . .24
Sec. 10.6. BROKER'S COMMISSION . . . . . . . . . . . . . . . . . . . . . . . .25
Sec. 10.7. HEADING, CAPTIONS, ETC. . . . . . . . . . . . . . . . . . . . . .25
Sec. 10.8. NO SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Sec. 10.9. HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Sec. 10.10. PLACE OF PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . .25
Sec. 10.11. BUILDING IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . .25
Sec. 10.12. RIGHT OF FIRST REFUSAL AND OPTION TO EXPAND . . . . . . . . . . .27
Sec. 10.13. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . .28
EXHIBIT "A" PROJECT - LEGAL DESCRIPTION . . . . . . . . . . . . . . . . . . 29
EXHIBIT "B" RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . 30
EXHIBIT "C" OUTLINE AND LOCATION OF PREMISES . . . . . . . . . . . . . . . 34
EXHIBIT "D" TENANT'S CERTIFICATE OF INSURANCE . . . . . . . . . . . . . . . 35
EXHIBIT "E" LANDLORD'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 36
EXHIBIT "F" RENEWAL OPTION . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
<PAGE> 4
OFFICE LEASE
This LEASE AGREEMENT is entered into August 17, 1995, by DALLAS LYNDON
CORPORATION (hereafter called "Landlord") and NATIONAL TECHTEAM, INC.
(hereafter called "Tenant").
ARTICLE I: DEFINITIONS
SEC. 1.1. LEASED PREMISES Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord approximately 32,666 square feet of rentable
area on the first, second and third (1st, 2nd, and 3rd) floors in that
certain office building (hereinafter called the "Building") in the office
building complex (hereinafter called the "Office Complex") commonly known
as Lyndon Plaza, located at 10945 Estate Lane, Dallas, Dallas County,
Texas (hereinafter the Building and the Office Complex will sometimes be
collectively referred to as the "Project"). The land which constitutes
part of the Project and upon which the improvements, fixtures, equipment
and other items which are defined as the Project is described by metes and
bounds in Exhibit "A" attached hereto and incorporated herein for all
purposes. The area hereby leased in the Building is hereinafter called
"Leased Premises" and is shown outlined and hatched on the floor plan
drawing designated Exhibit "C" which is attached hereto and made a part
hereof and signed or initialed by the parties for identification. The
Leased Premises shall also refer, when applicable, to all other rights in
parking areas, access, common areas and any other rights granted or
accruing to Tenant under this Lease. Landlord shall have the right at any
time and from time to time to change the Project name and address.
The Rentable Area for the entire Project shall be deemed to be 139,666
square feet for the purpose of this Lease. The Rentable Area contained
within the Leased Premises shall be deemed to be the number of square feet
set forth in the preceding paragraph.
SEC. 1.2. LEASE TERM. The phrase "Lease Term" shall mean the primary
term hereafter stated plus any renewal and extension periods which validly
go into effect at the end of such primary term.
SEC. 1.3. LEASE. The term "Lease" shall mean this Lease Agreement
and all amendments hereto hereafter entered into.
ARTICLE II: GRANT OF LEASE
SEC. 2.1. GRANT TO TENANT. In consideration of the mutual covenants
contained in this Lease, Landlord hereby leases to Tenant the Leased
Premises. Landlord and Tenant each acknowledge and agree that
notwithstanding the fact that the Lease Term may commence at a date
subsequent to the execution of this Lease, such parties intend that each
shall have vested rights immediately upon the execution of this Lease and
that this Lease shall be fully binding and in full force and effect from
and after execution hereof.
SEC. 2.2. TITLE AND CONDITION. The Leased Premises are leased
subject to the existing state of the title thereof as of the date of this
Lease; to all zoning regulations,
1
<PAGE> 5
restrictions, rules and ordinances, and all building restrictions and
other laws and regulations now in effect or hereafter adopted by any
governmental authority having or acquiring jurisdiction, provided that
Landlord warrants that the rights and uses granted to Tenant hereunder are
not limited thereby; and, as regards the improvements, to their present
state and condition and without representation or warranty of any kind by
Landlord. Landlord does hereby warrant and represent that the Building
contains no asbestos or other toxic or harmful substances and that the
Project conforms, at the date of this Lease, to all applicable asbestos
safety standards and all applicable environmental laws, ordinances,
statutes, rules and regulations of any governmental or regulatory body or
agency.
Tenant shall be responsible for the compliance of the Leased Premises with
all applicable building laws, codes, and regulations including, without
limitation the Americans With Disabilities Act, the Architectural Barriers
Act of the State of Texas, and other similar laws. When the Plans for the
Improvements (as hereinafter defined) are submitted to the appropriate
state and local agencies for approval and issuance of permits, if the
applicable agency makes any requirements with respect to the remainder of
the Building or the Project to bring it into compliance with applicable
laws and regulations as a condition of approval, Landlord shall perform
the work on the Building or Project necessary to obtain and maintain in
full force and effect such approval or permit. The first $5,000.00 of the
cost of such work shall be paid by Landlord, the next $5,000.00 shall be
paid by Tenant, and the balance shall be paid by Landlord.
Landlord further makes the warranties and representations set forth in
Exhibit "E" attached hereto and made a part hereof for all purposes.
SEC. 2.3. COVENANT OF QUIET ENJOYMENT. So long as Tenant complies
fully with all of the provisions of this Lease, Landlord covenants that
Landlord or anyone claiming under Landlord shall not interfere with the
peaceful and quiet occupation and enjoyment of the Leased Premises by
Tenant.
If Landlord fails to comply with this covenant, Tenant may seek
appropriate injunctive relief and damages but Tenant may not, except as
provided in this Lease, terminate this Lease or abate or offset against any
rent or other payments owing to Landlord under this Lease. In the event
Landlord assigns or mortgages Landlord's interest in the Leased Premises,
it is understood and agreed that Landlord may under no circumstances be
held liable for any breach of this covenant of quiet enjoyment occasioned
by acts or omissions of any assignee or successor to the interest of
Landlord if and to the extent such assigns or mortgagees assume the
obligations of Landlord under this Lease.
SEC. 2.4. SERVICES FURNISHED BY LANDLORD. During the Lease Term,
Landlord at its sole cost and expense shall furnish to Tenant in the
Leased Premises and the Building the following services:
A. Central heating and air conditioning to be furnished
twenty-four (24) hours per day, seven (7) days per week (including
all holidays) at such temperatures and in such amounts as are
reasonably considered by Landlord to be sufficient for comfortable
working conditions.
2
<PAGE> 6
B. Building standard fluorescent lighting, including
replacement of lamps, ballast's and starters and electric current at
wall and floor outlets; sufficient quantities of running potable
water, public restrooms and all necessary sanitary fixtures and
equipment.
C. Janitor service five (5) days per week; provided, however,
if Tenant's floor covering or other improvements require special
treatment, Tenant shall pay the additional cleaning cost attributable
thereto as additional rent upon presentation of a statement therefore
by Landlord.
D. Routine maintenance and electric lighting service for all
Common Areas and Service Areas of the Building in a reasonably good
manner.
E. Stocking, cleaning, and maintenance of all restrooms
located within the Leased Premises.
F. Access control to the Building during other than Normal
Business Hours shall be provided in such form as Landlord reasonably
deems appropriate. Tenant shall cooperate fully in Landlord's
efforts to maintain access control to the Building and shall follow
all regulations promulgated by Landlord with respect thereto.
Landlord shall use its best efforts to insure complete access to the
Leased Premises by Tenant, its agents, employees and invitees, at all
times to accommodate Tenant's work requirements.
ARTICLE III: TERM
SEC. 3.1. PRIMARY TERM. Partial possession of the Leased Premises by
Tenant will begin on September 1, 1995, or, if later, the date specified
in the contracts approved by Landlord and Tenant for construction of the
improvements to the Leased Premises, for the purpose of allowing Tenant to
install modular furnishings and partitions, opening, move in, setup, and
employee training with initial occupancy for other limited purposes
scheduled for October 1, 1995, or, if later, the date specified in the
contract approved by Landlord and Tenant for construction of the
improvements to the Leased Premises. Tenant shall occupy the Leased
Premises prior to full construction so as not to interfere with or delay
the completion of the construction; such occupancy shall be at Tenant's
risk; and Landlord and the contractor shall have no liability to Tenant or
Tenant's agents, employees, invites, or property for injury or damage
occurring during such occupancy prior to full completion except for
Landlord's or the contractor's gross negligence or willful misconduct.
Subject to Tenant's compliance with all of the provisions of this Lease,
Landlord agrees to lease the Leased Premises to Tenant for a primary term
of five (5) years beginning on the "Commencement Date," which is the
initial occupancy scheduled for October 1, 1995, or, if later, the date
specified in the contracts (as such contracts may be amended) approved by
Landlord and Tenant for construction of the improvements to the Leased
Premises and ending five (5) years after the Commencement Date.
3
<PAGE> 7
SEC. 3.2. LEASE RENEWAL. Tenant will have two renewal options for
two (2) years and three (3) years, respectively, each at 95% of current
market rental rate determined in accordance with the terms of Exhibit "F"
attached hereto and incorporated herein.
ARTICLE IV: PAYMENT OBLIGATIONS
SEC. 4.1. BASIC RENT. Tenant agrees to pay monthly as "Basic Rent"
during the Lease Term a rental payment based upon the following schedule
amounts:
Year 1 - $ 3.00/SF = $8,166.50 per month
(months 1 - 5)
Year 1 - $7.75/SF = $21,096.79 per month
(months 6 - 12)
Year 2 - $10.00/SF = $27,221.67 per month
Year 3 - $10.50/SF = $28,582.75 per month
Year 4 - $11.00/SF = $29,943.83 per month
Year 5 - $11.50/SF = $31,304.92 per month
The "Basic Rent" amount shall be payable to Landlord at the address shown
below on the first day of the month without demand, deduction, or offset
except as expressly provided in Section 9.5 hereof.
SEC. 4.2. ADDITIONAL RENT. Other provisions of this Lease require
Tenant, under certain circumstances, to pay additional sums of money to
Landlord or others. For all purposes of this Lease, such sums of money
shall be deemed to be Additional Rent owing by Tenant to Landlord, and in
the event of Tenant's failure to pay such sums when due, Landlord may
exercise all rights, powers and remedies provided herein or by law or
equity or otherwise as in the case of Tenant's failure to pay the Basic
Rent.
SEC. 4.3. LATE CHARGES. Tenant agrees that if the rent (either as
Basic Rent or Additional Rental) is not paid to Landlord on or before the
tenth (10th) day of each month or a check is returned to the Landlord by
the bank for any reason whatsoever, Tenant shall promptly pay the Landlord
the sum of five hundred dollars= ($500.00) as special damages, it being
expressly agreed by the parties hereto that said special damages are
intended to compensate Landlord for the increased administrative expense
incurred as a result of said delay or return.
SEC. 4.4. RENTAL ESCALATION.
A. DEFINITIONS APPLICABLE TO THIS SECTION
1. In the event the Operating Expenses (as defined below) of
Landlord for the Building or the Project, as applicable, shall,
in any calendar year during the term of this Lease, exceed the
amount of Operating Expenses actually incurred for the Base
Year (as hereinafter defined), Tenant agrees to pay as
additional rental
4
<PAGE> 8
Tenant's pro rata share of such excess Operating Expenses. Tenant's
pro rata share as of the Commencement Date is agreed to be as follows:
(i) As to the "Building Operating Expenses" (hereinafter defined)
91.493% (based upon the gross total of 35,703 rentable square feet
within the Building) and (ii) As to the "Project Operating Expenses"
(hereinafter defined) 23.388% (based upon the gross total of 139,666
rentable square feet within the Project).
2. The term "Operating Expenses", as such term is defined below,
shall be computed on an annual basis, for the operation of the
Project or Building as specified below during the applicable year of
the Lease Term; the first full calendar year (1996) of the Lease Term
shall be referred to as the "Base Year". All Operating Expenses shall
be determined in accordance with generally accepted accounting
principles which shall be consistently applied. The Operating
Expenses shall include all reasonable and normal costs, expenses, and
disbursements of every kind and nature (except the costs of the
replacement of capital investment items and the other items
hereinafter excluded) in connection with the ownership and operating
of the Project or the Building, as applicable, including, but not
limited to, the following:
(a) Wages and salaries of all employees while engaged in the
maintenance of the Project; employer's social security taxes,
unemployment taxes and insurance, and any other taxes which may
be levied on such wages and salaries; the cost of disability
and hospitalization insurance and pension or retirement
benefits for such employees;
(b) All supplies and materials used in operation and
maintenance of the Project and related equipment;
(c) Cost of water, electricity, natural gas and trash removal
for the Building;
(d) Cost of janitorial services, maintenance and service
agreements on equipment, including alarm service, window
cleaning and elevator maintenance, landscape and parking lot
maintenance related to the Building;
(e) Premiums for casualty and liability insurance applicable
to the Project and Landlord's personal property used in
connection herewith;
(f) All real property taxes and installments of special
assessments, including special assessments due to deed
5
<PAGE> 9
restrictions and/or owners' associations, which accrue against
the Project excluding, however, federal and state taxes on
income, and;
(g) Costs of repairs and general maintenance of the Project.
(h) Costs of general and administrative expenses of the
Project, including but not limited to reasonable management
fees not exceeding 5% of Basic Rent.
Those operating Expenses defined above in items 2(c) and 2(d) are
designated as "Building Operating Expenses" and the excess Building
Operating Expenses incurred over the Building Operating Expenses
incurred for the Base Year shall be multiplied by the percentage set
forth in item 1(i) above to determine Tenant's pro rata share thereof.
Those Operating Expenses defined above in items 2(a), 2(b), 2(e),
2(f), 2(g), and 2(h) are designated as "Project Operating Expenses,"
and the excess Project Operating Expenses incurred over those Project
Operating Expenses incurred for the Base Year shall be multiplied by
the percentage set forth in item 1(ii) above to determine Tenant's
pro rata share thereof. Due to the usage and occupancy of Tenant, it
is necessary to subdivide general Operating Expenses and make
separate calculations of each of these divisions. The sum of
Tenant's pro rata share of excess Building Operating Expenses and
Tenant's pro rata share of excess Project Operating Expenses shall be
Tenant's total pro rata share of excess Operating Expenses under the
terms of this Lease.
Anything in the foregoing provisions hereof to the contrary
notwithstanding, Operating Expenses shall not include the following:
(i) Leasing commissions, attorneys' fees; costs,
disbursements, and other expenses incurred in connection
with negotiations for leases with tenants, other
occupants, or prospective tenants or other occupants of
the Project; or similar costs incurred in connection with
disputes with tenants, other occupants, or prospective
tenants or other occupants of the Project.
(ii) Non-cash items, such as deductions for depreciation
or obsolescence of equipment, or interest on capital
invested.
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(iii) Payments of principal and interest or other
finance charges made on any debt and rental payments made
under any ground or underlying lease or leases, except to
the extent that a portion of such payments is expressly
for ad valorem/real estate taxes or insurance premiums
provided above.
(iv) Costs incurred by Landlord in the sale, financing,
refinancing, mortgaging, selling or change of ownership of
the Project, including without limitation brokerage
commissions, attorneys' and accountants' fees, closing
costs, title insurance premiums, transfer taxes and
interest charges.
(v) Costs which are to be capitalized in accordance with
generally accepted accounting principles.
(vi) Costs and expenses attributable to the initial
construction of the Project.
(vii) Any penalty charges incurred by Landlord due to
Landlord's late payment of taxes, utility bills or other
amounts included in the Operating Expenses.
(viii) Allowances and other costs and expenses incurred
in fixturing, furnishing, renovating or otherwise
improving, decorating or redecorating space for tenants or
prospective tenants of the Project or vacant leasable
space (including permit, license and inspection costs but
excluding normal maintenance, repair and replacement
costs).
(ix) Cost of any political or charitable donations or
contributions.
(x) Any expenses directly or otherwise paid by Tenant.
B. PAYMENT OF RENTAL ESCALATION.
1. At the end of each year during the Lease Term commencing in
1997, Landlord shall, within ninety (90) days after the end of such
year (or calendar year, as determined by Landlord in its discretion)
for which rental escalation is due, give written notice thereof to
Tenant which notice shall also contain or be accompanied by a
computation of such rental escalation. (It is understood that there
shall be no payment by Tenant for excess
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Operating Expenses or the estimated rental escalation for Lease
on calendar years 1995 and 1996 due to the Base Year
determination.)
2. Tenant shall pay, without further notice or demand, such
rental escalation to Landlord within thirty (30) days after
receipt of the written notice described in the preceding
paragraph.
3. At Landlord's option, Tenant shall pay, as Additional Rent
beginning in calendar year 1998, the estimated rental
escalation for the current year of the Lease Term. The amount
of estimated rental escalation shall be determined by Landlord
based on the amount of Operating Expenses for prior years.
Landlord shall notify Tenant of the amount of such estimated
escalation at the beginning of each year during the Lease Term,
and Tenant shall pay one-twelfth (1/12) of the amount of such
estimate each month simultaneously with Tenant's payment of
Basic Rent.
4. Within ninety (90) days after the end of each calendar
year during the Lease Term beginning December 31, 1997,
Landlord shall render an accounting to Tenant with regard to
the estimated rental escalation referred to in paragraph 3
above. If the actual excess Operating Expenses for any such
year or partial year, as applicable, are greater than
Landlord's estimate described herein, then Tenant shall pay
that excess to Landlord as stated herein. Likewise, if the
actual excess Operating Expenses are less than Landlord's
estimate, then the difference shall be applied to the next
succeeding payments of Basic Rent and Additional Rent payable
by Tenant hereunder or, if the Lease Term has expired, refunded
to Tenant. If additional monies are due by Landlord or Tenant,
such monies shall be paid within thirty (30) days after
Landlord renders such accounting to Tenant. Tenant, at its
sole cost and expense, shall have the right (to be exercised by
giving notice to Landlord within sixty (60) days after receipt
of the statement of excess Operating Expenses for such previous
calendar year or lease year) to audit and/or inspect Landlord's
books and records pertaining to items affecting excess
Operating Expenses for such preceding calendar year. If the
audit discloses any discrepancy then the same shall be
reconciled as soon as possible. If the audit reveals that
Tenant paid more than 105% of its proportionate share of the
actual excess Operating Expenses during the year in question,
Landlord shall immediately pay to Tenant the cost of Tenant's
audit.
SEC. 4.5. PAYMENT OF RENT. All sums payable by Tenant to Landlord as
rent (either as Basic Rent or as Additional Rent) shall be made by check
or draft payable to the order of Landlord. Landlord may change the party
to the order of whom any such checks or drafts are to be made payable, or
the address to which such checks or drafts are to be mailed, by
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giving written notice to such effect to Tenant at least ten (10) days
prior to the effective date of such change. If any check or draft
delivered to Landlord is not honored or paid when presented for payment
for any reason other than negligence or fault of Landlord or other proper
payee, Landlord may thereafter require all such future payments of Tenant
to be made by cash, cashier's check, or United States postal money order.
SEC. 4.6. SECURITY DEPOSIT. There will be no security deposit paid
by Tenant.
SEC. 4.7. TAXES. Parties other than Tenant shall pay as they become
due all taxes, charges, levies, and assessments at any time levied or
assessed against the Project by any governmental taxing authority. During
the Lease Term, Tenant shall pay as they become due all taxes, charges,
levies, and assessments levied or assessed by any governmental authority
against any leasehold interest or personal property of Tenant placed in,
on, or about the Leased Premises by Tenant, and Tenant shall further pay
as they become due all taxes, charges, assessments, and levies (including
without limitation franchise, sales, excise and use taxes) in any way
stemming from or connected with Tenant's business operations upon the
Leased Premises.
SEC. 4.8. INSURANCE; INDEMNIFICATION
A. LIABILITY INSURANCE. During the Lease Term, Tenant shall,
at Tenant's sole expense, carry and maintain public liability
insurance covering the Leased Premises and the business operations
conducted upon the Leased Premises (including business operations
conducted by Tenant's licensees, concessionaires, and, permitted
sublessees) providing coverage in the minimum amount of $1,000,000.00
against liability for injury to or the death of any one person,
$1,000,000.00 against liability arising out of any one accident or
occurrence, and property damage insurance in the minimum amount
required to provide coverage for Tenant's property which is
maintained on the Leased Premises. Such insurance shall be written
with insurance companies authorized to do business in the State of
Texas and acceptable to Landlord, shall include Tenant as insured and
Landlord as an Additional Insured; and shall contain a clause that
the insurer will not cancel or change such insurance without first
giving Landlord a minimum of thirty (30) days' prior written notice.
Tenant shall furnish Landlord with copies of the policies or
certificates evidencing that such insurance is in full force and
effect and stating the terms thereof.
B. CASUALTY INSURANCE. Landlord shall provide fire and
extended coverage insurance policies (in such amounts as are
customary under the circumstances but no less than 80% of the
replacement value) covering the Project including, without
limitation, the Leased Premises, the Improvements, fixtures and
equipment installed by Landlord and all common areas and parking
areas. Tenant shall provide fire and extended coverage insurance
policies (in such amounts a shall equal the replacement value
thereof) covering all of Tenant's property which is located in, on,
or about the Leased Premises.
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C. INCREASED INSURANCE PREMIUMS. Tenant shall not use or
offer products for sale at or from the Leased Premises or engage in
activities which may be prohibited by the then approved Texas
Standard Form of Fire Insurance Policy or which would result in
increased premiums for any of Landlord's insurance policies covering
the Project or the Leased Premises.
D. WAIVER OF SUBROGATION. Notwithstanding any other
provision in this lease, neither Landlord nor Tenant shall be liable
to the other or to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage to the
Leased Premises, the Building, the Project, or any tangible personal
property, even though such loss or damage might have been occasioned
by the negligence of Landlord or Tenant, its agents, officers,
directors, shareholders, employees, or invitees. Landlord and Tenant
agree immediately to give their respective insurance companies which
have issued policies of insurance covering risk of physical loss,
written notice of the terms of the mutual waivers contained in this
section, and to have the insurance policies properly endorsed, if
necessary, to prevent the invalidation of the insurance coverages by
reason of such mutual waivers.
E. INDEMNITY AND EXCULPATORY CLAUSE. Except as stated in the
preceding paragraph D and except as otherwise specifically provided
herein, Tenant shall indemnify, hold harmless, and defend Landlord
against and from all claims, actions, damages, liability, and
expense, including, but not limited to, reasonable attorneys' and
other professional fees, in connection with injury to persons or
damage to property arising from or related to the occupancy or use of
the Leased Premises or any other part of the Project by Tenant caused
in whole or in part by any act or omission of Tenant, its officers,
agents, contractors, employees, or invitees.
Except as stated in the preceding paragraph D and except as otherwise
specifically provided herein, Landlord agrees to indemnify hold
harmless, and defend Tenant against and from all claims, actions,
damages, liability, and expense, including, but not limited to,
reasonable attorneys' and other professional fees, in connection with
injury to persons or damage to property occurring upon any part of
the Project caused in whole or in part by any act or omission of
Landlord, its officers, agents, contractors, or employees.
Landlord shall not be liable to Tenant or to anyone claiming by,
through, or under Tenant, for any injury or damage caused by the acts
or omissions of persons occupying portions of the Project other than
the Leased Premises.
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ARTICLE V: USE AND MAINTENANCE OBLIGATIONS
SEC. 5.1. USE OF LEASED PREMISES.
A. DESCRIPTION OF PERMITTED USE. The Leased Premises are leased
by Landlord to Tenant, and Tenant shall use the Leased Premises, only for
the following purposes:
General office and computer training use and service call center and
all other related uses only
and for no other purposes whatsoever. Tenant hereby accepts the Leased
Premises and the Project as completely suitable for such purposes. Tenant
shall not commit any act on or near the Leased Premises or the Project
which constitutes a nuisance nor otherwise allow any nuisance to exist
thereon.
B. USE IN COMPLIANCE WITH LAWS. Tenant shall, at Tenant's own
expense, comply with all applicable laws, ordinances, rules, requirements,
and regulations of all duly constituted public or semi-public authorities
relating to the operation of Tenant's business or the conduct of Tenant's
visitors, licensees, agents, and employees now or hereafter in any manner
affecting the Leased Premises or the Project whether or not any such laws,
ordinances, rules, requirements, and regulations which may be hereafter
enacted involve a change of policy on the part of the enacting authority
which are applicable solely because of Tenant's use of the Leased Premises
beyond the uses described above. Tenant shall not: (1) permit or
knowingly allow any unlawful or immoral practice to be carried on or
committed on the Leased Premises or the Project by Tenant's employees,
agents, officers, directors and invitees; (2) make any use of or allow the
Leased Premises or the Project to be used for any purposes that might
invalidate or increase the rate of insurance thereof; (3) keep or use or
permit to be kept or used on the Leased Premises or the Project any
inflammable fluids; (4) use the Leased Premises or the Project for any
purpose whatsoever which might create a nuisance or injure the reputation
of the Leased Premises or the Project; (5) deface or injure any
improvements located on the Leased Premises or the building; (6) overload
the floors; nor (7) commit or suffer any waste. Tenant agrees to pay as
additional rent any increases in the cost of insurance on the Leased
Premises or the Building to Landlord as a result of any unauthorized use
of the Leased Premises or the Building by Tenant, but such payment shall
not constitute in any manner a waiver by Landlord of Landlord's right to
enforce all of the provisions of this Lease. Tenant shall indemnify
Landlord for any liabilities, loss, cost, and expense (including court
costs and reasonable attorneys' fees) incurred by Landlord as a result of
Tenant's violation of the provisions contained in this paragraph.
Landlord acknowledges that the use by Tenant described in this Lease does
not and shall not cause any liability for Tenant under this Section 5.1.B.
Tenant may, at Tenant's own expense, contest the validity of any law,
ordinance, rule, requirement or regulation of the nature herein referred
to. If by the terms of any such law, ordinance, rule, requirement or
regulation,
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compliance therewith may be legally held in abeyance without incurring any
lien, charge, or liability of any kind against the fee or leasehold
interest in and to the Leased Premises or the Building and without
subjecting Tenant or Landlord to any liability for failure so to comply,
Tenant may postpone compliance therewith until a final determination in
any such proceedings, but only if all such proceedings are prosecuted by
Tenant with all due diligence and dispatch and at the sole cost, expense,
and risk of Tenant.
C. TENANT'S USE. Landlord accepts Tenant's permitted use as
described herein as an acceptable use and as not being in violation of
Section 5.1 A. and B. above.
SEC. 5.2. MAINTENANCE OF LEASED PREMISES.
A. MAINTENANCE BY LANDLORD. Landlord shall, at Landlord's sole
expense, make all repairs and replacements which may be necessary to
maintain in good condition (1) the roof, foundation, structural walls,
exterior glass windows, common areas, parking areas and Landlord's related
fixtures and improvements located at the Project; (2) all air conditioning
and heating equipment (including replacement of air conditioning filters)
and plumbing fixtures, and (3) all electrical wiring installed as part of
the Improvements, except for repairs required by Tenant's using equipment
which requires electricity in excess of the capacity of the installed
wiring, and not including any cabling or wiring installed by Tenant to
serve Tenant's communications or computer equipment. Landlord shall not
be liable to Tenant for any damage resulting from failure to make said
repairs unless, prior to the occurrence of such damages, Tenant has given
Landlord written notice of the defect and Landlord does not, within ten
(10) days thereafter, commence such repairs and continue the repairs to
completion without unreasonable delays. However, Landlord may not be
required to provide any such maintenance, repairs, or replacements which
become necessary as a result of any negligence of Tenant (or Tenant's
employees, agents or invitees) except as described in this Lease unless
such damage is covered by a standard fire and extended insurance policy.
If, as a result of the making of any such repairs or replacements, other
than those caused by Tenant (or Tenant's employees, agents or invitees),
Tenant is deprived of the use of a significant portion of the Leased
Premises for a significant period of time, or Tenant's business is
interrupted for a substantial period of time, the rent payable by Tenant
to Landlord shall be equitably reduced for such period in an amount as
determined by Landlord in its reasonable discretion.
B. ACCESS BY LANDLORD. Tenant agrees to allow Landlord and
Landlord's agents, employees and representatives to enter into and upon
the Leased Premises during normal business hours or otherwise for the
purpose of inspecting the Leased Premises and carrying out Landlord's
maintenance obligations. Landlord shall take due care to protect Tenant's
privacy and the confidentiality of any information within the Leased
Premises. In carrying out Landlord's maintenance obligations, Landlord
may use and temporarily store on
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the Leased Premises all necessary materials, tools and equipment subject
to the reduced rental provisions in Section 5.2 above. Landlord may under
no circumstances be held liable for inconvenience, annoyance, disturbance
or loss of business caused to Tenant or Tenant's guests, business invitees,
employees or sublessees by the carrying out of Landlord's maintenance
obligations.
C. MAINTENANCE BY TENANT. Except for any construction to be
completed by Landlord pursuant to the terms of this Lease, Tenant agrees
to accept possession of the Leased Premises in their present condition and
to allow for such changes in condition as may normally be expected to
occur through reasonable deterioration between the date of this Lease and
the date Tenant actually takes possession of the Leased Premises.
Landlord warrants that the Leased Premises and any improvements thereto
and/or any of Landlord's equipment therein will be in good condition and
working order as of the Commencement Date. Tenant shall, at Tenant's sole
expense, make all repairs and replacements which may be necessary to
maintain in good condition the Leased Premises other than those repairs,
replacements, and maintenance which are required by this Lease to be made
by Landlord. If Tenant fails to make the repairs or replacements required
by this Lease, Landlord is authorized by this Lease to complete such
repairs and replacements on behalf of Tenant, and to be reimbursed for the
reasonable and customary expenses incurred thereby multiplied by one
hundred five percent (105%), with said sum, at Landlord's sole option, to
be collectible as Additional Rent, and in such event Landlord may under no
circumstances be held liable to Tenant for any damages that Tenant might
suffer as a result of such action on the part of Landlord. Upon the
termination of this Lease, Tenant shall surrender the Leased Premises to
Landlord in good order and repair, reasonable wear and tear excepted.
Except as otherwise provided in this Lease, Tenant shall be liable at the
time of termination of this Lease for all repairs and replacements which
have become necessary as a result of any act of negligence of Tenant (or
Tenant's employees, agents, or invitees).
D. ALTERATIONS. Tenant shall not make any structural alterations,
additions, or changes to Landlord's lock system, or other changes to the
Leased Premises without Landlord's prior written consent which consent
shall not be unreasonably withheld. Tenant may make non-structural
alterations to the interior of the improvements constituting part of the
Leased Premises without Landlord's prior written consent, but only if: (1)
such alterations are accomplished in a good and workmanlike manner at
Tenant's sole expense and in accordance with all applicable federal, state
and local laws, regulations, ordinances and other promulgations; and (2)
such alterations shall not adversely affect the structural strength or
market value of the improvements. Title to such alterations (excluding
trade fixtures which, except as provided otherwise herein, shall remain
the property of Tenant but which shall be removed at the end of the Lease
Term without damage to the Leased Premises) shall immediately vest in
Landlord at the end of the final day of the Lease Term and shall remain as
part of the Leased Premises. However, Landlord may elect to have Tenant
remove
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any or all of such alterations in which event such alterations shall be
completely removed by Tenant (without damage to the Leased Premises) by
the end of the Lease Term. Tenant shall promptly pay for all work done or
materials furnished in connection with the making of any such alterations,
additions, or other changes to the Leased Premises, and under no
circumstances may any of Tenant's suppliers of work or materials obtain
any lien or other claim to Landlord's or Tenant's interest in the Leased
Premises or the Project. Landlord's consent to the making of such
alterations, additions, or other changes shall not be construed to make
Tenant an agent of Landlord with authority to subject Landlord's interest
in the Leased Premises to any such lien or other claim. If Tenant shall
desire to challenge the amount of the claim or charges of any such
supplier or work or material, Tenant shall provide, at Tenant's sole cost
and expense, reasonable assurance of payment or release of said claim
reasonably satisfactory to Landlord.
SEC. 5.3. SIGNS
A. Landlord will furnish and install a suitable building directory
and establish suite numbers to facilitate locating and identifying
Tenant's premises. In order to effect uniformity, to control the
graphics, and to maintain dignified aesthetics, Landlord will also furnish
and install at the entrance door to the Leased Premises one uniform suite
number plate and name plate. Signs, name plates or graphics which are
wholly within the Leased Premises and not visible from the exterior of the
Building or from public spaces within the Building will be permitted, to
the extent that neither the structure nor the market value of the Leased
Premises or the Building will be affected thereby.
B. Tenant, at Tenant's sole expense, shall have the right to
install a sign which is acceptable to Landlord in its reasonable
discretion identifying Tenant on the exterior parapet of the Building.
Tenant agrees that no other sign of any description shall be erected or
painted in or about the Leased Premises or the Project unless previously
approved in writing by Landlord. Tenant shall, at Tenant's expense,
remove all signs at the termination of this Lease, and the installation
and removal shall be in such manner as to avoid any injury, defacement or
overloading of the Building or other improvements.
ARTICLE VI: SPECIAL PROVISIONS
SEC. 6.1. ASSIGNMENTS AND SUBLEASES.
A. BY TENANT. Tenant may assign or sublet all or any part of
the Leased Premises with prior notice to Landlord pursuant to a
transfer of a majority interest in outstanding shares of stock of
Tenant or the merger or dissolution of Tenant, or to a subsidiary of
Tenant or the holder of the majority of the outstanding shares of stock
of Tenant. Otherwise, Tenant shall not assign this Lease nor sublease
any part or all of the Leased Premises without Landlord's prior written
consent which consent shall not be unreasonably withheld. Consent
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by Landlord to one assignment or sublease shall not be construed as
meaning consent to further assignments or subleases. Regardless of any
such assignment or sublease, Tenant shall remain liable to Landlord for
the full performance of all of the provisions of this Lease. Any
attempted unpermitted sublease or assignment shall, at Landlord's
election, be null and void and without any binding effect.
B. BY LANDLORD. Landlord may at any time convey, assign, or
encumber the Leased Premises, the Project and/or Landlord's rights under
this Lease. In the event of any such conveyance or assignment (other than
a conveyance or assignment as collateral security for an indebtedness),
Landlord shall be completely relieved from all obligations placed on
Landlord by this Lease, including, without limitation, the return of any
security deposits, effective the date of such conveyance or assignment but
only to the extent that any assignee or mortgagee assumes the obligations
of Landlord under this Lease.
SEC. 6.2. FORCE MAJEURE. In the event that Landlord or Tenant shall be
delayed or hindered in or prevented from the performance of any of their
respective obligations anywhere herein contained by reason of: (1) the
destruction, in whole or in part, of any improvements forming a part of the
Leased Premises; (2) strikes; (3) lockouts; (4) labor troubles; (5) war,
whether declared or undeclared; (6) riot; (7) Act of God; (8) embargoes; (9)
delays in transportation; (10) inability to procure materials and/or labor;
(11) failure of power; (12) restrictive governmental laws or regulations,
whether valid or not; (13) insurrection; or (14) any other reason (other than
financial) beyond the reasonable control of such party, and not the fault of
the party so delayed or hindered in or prevented from performing work or doing
acts otherwise required under this Lease, then performance of such work or
doing of such acts shall be excused for the period of the delay, and the period
for the performance of such work or doing such acts shall be extended for a
period equivalent to the period of such delay; provided, however, that the
provisions of this Section shall not operate so as to excuse or release Tenant
from the prompt payment of rentals or other sums required to be paid by Tenant
to Landlord or to other payees anywhere hereunder.
SEC. 6.3. ESTOPPEL CERTIFICATE. Within ten (10) days after written
request therefor by Landlord (in connection with a proposed conveyance or
encumbering of the Building by Landlord) Tenant shall deliver to Landlord (or
Landlord's nominee) in recordable form an Estoppel Certificate certifying (if
such be the case) that this Lease is unmodified and in full force and effect
and the dates to which the Basic Rent, Additional Rent, and other charges have
been paid, and stating whether or not to the knowledge of the signer of such
certificate Landlord is in default in the performance of any provision
contained in this Lease, and, if so, specifying each such default of which the
signer may have knowledge, and any other matters which Landlord may request.
Tenant shall not be required to deliver more than two (2) estoppel certificates
in any year of the Lease Term. Thereafter, for each request Landlord shall
prepay Tenant $500 to cover some of the administrative expense incurred by
Tenant in supplying such Estoppel Certificates. If Tenant, for any reason,
fails to do so upon request, if Landlord gives Tenant written notice of such
failure and such failure continues for an additional ten (10) days after such
notice, Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact for the sole and limited purpose of executing such Estoppel
Certificate on behalf of Tenant with full
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power and authority to execute, acknowledge, and deliver any such Estoppel
Certificate in the name of and on behalf of Tenant.
SEC. 6.4. SUBORDINATION OF LEASE. If Landlord is required by the holder
of any note secured by a mortgage, deed of trust, or other lien now or
hereafter given by Landlord covering the Leased Premises to subordinate this
Lease to such mortgage, deed of trust, or other lien (and to all advances
hereafter made in connection therewith), Tenant shall, after ten (10) days'
written request therefor, execute and deliver such instruments as Landlord
determines may be necessary to effect such subordination on the condition that
Landlord's mortgagee (i) recognizes this Lease, and (ii) agrees that all
rights of Tenant under this Lease shall remain in full force and effect
notwithstanding any subordination thereof to such mortgagee's lien, and that
Tenant may continue its occupancy of the Leased Premises in accordance of the
terms and the provisions of this Lease, so long as Tenant continues to pay rent
and otherwise performs its obligations under this Lease, and (iii) covenants
that it will not disturb Tenant's right of possession during the term of the
Lease or any renewal or extension thereof provided for herein so long as Tenant
is not in default under any of the terms, covenants or conditions of this
Lease. Landlord hereby represents to Tenant that there is no item of current
mortgage, deed of trust lien or other similar financing agreement other than
those for which Landlord shall have obtained a Non-Disturbance Letter pursuant
hereto, which prohibits or restricts in any manner Tenant's use and enjoyment
of the Leased Premises pursuant to the terms and conditions of this Lease. If
Tenant, for any reason, fails to do so upon request, if Landlord gives Tenant
written notice of such failure and such failure continues for an additional ten
(10) days after such notice, Tenant hereby irrevocably appoints Landlord as
Tenant's attorney-in-fact for the sole and limited purpose of executing such
subordination instrument on behalf of Tenant with full power and authority to
execute, acknowledge, and deliver any such instrument in the name of and on
behalf of Tenant on the condition that such instrument contains items (i), (ii),
and (iii) in this Section.
Landlord will use all reasonable efforts to obtain a non-disturbance and
attornment agreement from the holders of all existing liens on the Building
containing items (i), (ii), and (iii) in this Section.
SEC. 6.5 LANDLORD'S LIEN. In order to secure Tenant's payment of rent and
other payment obligations under this Lease, in addition to Landlord's statutory
landlord's lien, Tenant hereby grants to Landlord a contractual security
interest, pursuant to the Uniform Commercial Code of the State of Texas, in
all tangible personal property of the Tenant now or hereafter located in the
Leased Premises (the "Collateral"). Upon an Event of Default (as hereinafter
defined) by Tenant, Landlord may take possession of the Collateral, and may
sell all or part of the Collateral at a public or private sale, in one or more
sales, with or without notice, to the highest bidder for cash, and, on behalf
of Tenant, convey the Collateral to the highest bidder. The proceeds of the
sale of the Collateral shall be applied by Landlord toward the reasonable
costs and expenses of the sale, including but not limited to reasonable
attorney's fees, and then toward the payment of all sums then due by Tenant to
Landlord under the terms of this Lease. Any excess remaining shall be paid to
Tenant or any other person entitled thereto by law.
Landlord, in addition to the rights prescribed in the preceding paragraph,
shall have all the rights granted a secured party under the Uniform Commercial
Code. Tenant will, on request, execute and deliver to Landlord a financing
statement for the purpose of perfecting Landlord's
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contractual security interest under this Lease, or Landlord may file this Lease
or a copy thereof as a financing statement. Landlord and Tenant agree that any
requirement for reasonable notice shall be met if such notice is given by ten
(10) days written notice, certified mail, return receipt requested to Tenant at
Tenant's address hereinafter specified.
If any of Tenant's equipment is leased from or financed by an unrelated
third-party institution, Landlord agrees to subordinate Landlord's liens and
security interests in such equipment to the rights of such financial
institution. Within ten (10) days' after written request therefor, Landlord
shall execute and deliver such instruments as the party providing such leasing
or financing reasonably requires to effect such subordination. If Landlord,
for any reason, fails to do so upon request, if Tenant gives Landlord written
notice of such failure and such failure continues for an additional ten (10)
days after such notice, Landlord hereby irrevocably appoints Tenant as
Landlord's attorney-in-fact for the sole and limited purpose of executing such
instruments on behalf of Landlord with full power and authority to execute,
acknowledge, and deliver any such instruments in the name of and on behalf of
Landlord.
Tenant has advised Landlord that Tenant may purchase equipment for the benefit
of Tenant's customers using the customers' funds for such purpose, that such
equipment is the property of such customers, and that, upon termination of the
contracts with such customers, such equipment is to be delivered to such
customers. Landlord agrees that any such equipment shall not be subject to
Landlord's liens or security interests.
SEC. 6.6. PARKING FOR TENANT. Landlord shall provide a minimum of two
hundred (200) uncovered parking spaces adjacent to the Building in addition to
fifteen (15) parking spaces in the parking garage reserved for the exclusive
use of the Tenant. Tenant and Tenant's employees, agents, and invitees shall
park their cars only in areas specifically designated by Landlord from time to
time. Upon written request by the Landlord, Tenant shall furnish to Landlord
within ten (10) days of such request the automobile license numbers assigned to
Tenant's cars and the cars of all of Tenant's employees and agents.
Notwithstanding anything else stated in this Lease, in the event that any
portion of the parking spaces to be provided to Tenant hereunder or access
thereto is taken by eminent domain or purchase in lieu thereof or any other
reason, then Landlord shall replace either the parking places on other land on
the Project by re-striping the number of parking spaces so taken or lost.
Should Landlord be unable to restore the parking spaces as stated above and
this Lease is not terminated by any other provision contained herein, then
Tenant may terminate this Lease at its option if it shall provide written
notice thereof to Landlord on or before sixty (60) days from its receipt by
Tenant of Landlord's notice of inability to so restore.
SEC. 6.7. RULES OF PROJECT. Tenant agrees to comply with all rules and
regulations currently or hereafter established by Landlord for the operation of
the Project of which the Leased Premises are a part. A copy of any current
Rules and Regulations is attached as Exhibit "B" and incorporated herein by
reference. Landlord agrees to enforce the same Rules and Regulations equally
with regard to all tenants of the Project.
ARTICLE VII: DAMAGE AND CONDEMNATION
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Sec. 7.1. DAMAGE TO LEASED PREMISES.
A. SUBSTANTIAL DAMAGE. If the improvements constituting part of the
Leased Premises are damaged by fire or other casualty to the extent of fifty
percent (50%) or more of their replacement cost, as determined by either party
in its sole and reasonable discretion, then either Tenant or Landlord may
elect, by written notice delivered to the other no later than ninety (90) days
after such damage to terminate this Lease. In such event, no rent shall be owing
by Tenant to Landlord for the period beginning on the day of such damage,
unless Tenant shall have continued or have been able to continue to occupy the
Leased Premises during said period, in which case, the reduced amount of rent
shall be owing until the date of said termination.
B. PARTIAL DAMAGE. If the improvements constituting part of the Leased
Premises are damaged by fire or other casualty to the extent of less than fifty
percent (50%) of their replacement cost (or if such damage is greater but both
parties fail to exercise the election given in paragraph A above), then
Landlord shall proceed with due diligence to restore such improvements to
substantially their previous condition and shall deliver possession of such
improvements to Tenant as soon as such restoration has been completed. Should
Landlord elect to repair or restore, the rental hereunder shall be adjusted in
proportion to the amount of floor space which Tenant cannot use, as determined
by Landlord, until such repairs are substantially complete and all permits and
certificates necessary for Tenant's occupancy of the entire Leased Premises are
issued. If such damage has been so slight that Tenant's occupancy of the
Leased Premises is not significantly interfered with, the rental hereunder
shall continue to be paid as herein provided. Notwithstanding the foregoing
provisions of these Sections 7.1.A. and B., Tenant agrees that if the Leased
Premises or any other portion of the Project is damaged by fire or other
casualty resulting from the fault or negligence of Tenant or any of its agents,
employees or invitees, then the damage shall be repaired at the sole cost and
expense of Landlord's insurer, except that Tenant shall pay any deductible not
exceeding $5,000.00, and there shall be no adjustment of rent before or during
the repair of such damage or during the remainder of the Lease Term in the
event said damage is not repaired.
SEC. 7.2. CONDEMNATION OF LEASED PREMISES.
A. TOTAL CONDEMNATION. If all of the Leased Premises are taken under
any eminent domain proceedings, this Lease shall terminate on the date title to
the Leased Premises vests in the condemning authority. There shall be refunded
to Tenant any portion of prepaid rent covering the period subsequent to such
date of termination. Tenant shall not be entitled to any of the condemnation
award other than the amount, if any, equal to the value of Tenant's leasehold
estate which is awarded to Tenant by the condemning authority for the value of
said leasehold estate, moving cost and the value of Tenant's improvements to
the Leased Premises.
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B. PARTIAL CONDEMNATION. If twenty percent (20%) or less of the
Leased Premises is taken under any eminent domain proceeding, Landlord and
Tenant shall each receive such portion of the condemnation award as may be
expressly allocated to such party; but if there be no such separate award,
then the condemnation award shall be fairly and equitably apportioned
between Landlord and Tenant in accordance with the damage caused to said
parties' interest in the Leased Premises as a result of such taking. If
more than twenty percent (20%) of the Leased Premises (but less than all
of the Leased Premises) is taken under any eminent domain proceeding,
Tenant shall, within sixty (60) days after Tenant first receives notice of
the condemnation, elect (by written notice delivered to Landlord) either
to terminate this Lease on the date title to the Leased Premises vests in
the condemning authority, or continue this lease as to that portion of the
Leased Premises not taken by the condemning authority. If Tenant fails to
elect within the thirty-day period, this Lease shall automatically be
continued in full force and effect as to that portion of the Leased
Premises not taken by the condemning authority. In the event Tenant
elects to terminate this Lease, then there shall be paid to Tenant a
portion of any prepaid rent and a portion of the condemnation award in the
same manner as provided above in the event of a total condemnation. In
the event this Lease is continued, the Basic Rent payable by Tenant to
Landlord shall be reduced by an amount determined by taking the ratio
which the number of square feet of the Leased Premises actually taken by
the condemning authority bears to the total number of square feet of the
Leased Premises originally contained in the Leased Premises and
multiplying said ratio by the amount of Basic Rent.
ARTICLE VIII: DEFAULT
SEC. 8.1. EVENTS OF DEFAULT. An "Event of Default" will be deemed to
have occurred upon the happening of any of the events or conditions designated
herein, or any one of the following events or conditions:
A. Tenant abandons the Leased Premises or allows them to remain
unoccupied for a continuous period of twenty (20) days and fails to pay
rent and any increased insurance premiums resulting from such vacancy.
B. Any Basic rent or Additional Rent remains unpaid ten (10) days
after written notice of such fact forwarded to Tenant; provided, however,
in no event shall Landlord be required to give said notice and additional
ten (10) days more than two (2) times per calendar year for the failure to
pay said rent on the date it is due and payable to constitute an Event of
Default;
C. Tenant makes an assignment for the benefit of creditors,
becomes insolvent, commits an act of bankruptcy, files for bankruptcy, or
involuntary bankruptcy proceedings are instituted or threatened against
Tenant or any guarantor of Tenant's obligations hereunder; or Tenant's
leasehold estate in the
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Leased Premises or Tenant's assets are attached or otherwise levied upon
or placed in the hands of a receiver or other representative of a court; or
D. Tenant fails to comply fully with all of the provisions of this
Lease or the Rules and Regulations, currently or hereafter promulgated by
Landlord, to be observed by Tenant; Landlord gives Tenant written notice
of such failure; and Tenant fails to cure such failure within thirty (30)
days thereafter (unless such cure cannot be accomplished within such
thirty-day period in which event Tenant shall have not more than an
additional ninety (90) days to cure such failure if Tenant commences such
curative action within such thirty (30) day period and diligently pursues
such curative action to completion.
SEC. 8.2. DEFAULT BY LANDLORD. The following shall be deemed to be events
of default by Landlord under this Lease: (i) Landlord shall fail to comply with
any material term, provision or covenant of this Lease, and the failure is not
cured within thirty (30) days after written notice to Landlord; provided,
however, no such default shall exist if, within such thirty (30) day period,
Landlord commences the required action and continues to pursue such action
diligently and without interruption thereafter, but the failure must be cured
within ninety (90) days after such written notice to Landlord.
ARTICLE IX: REMEDIES
Upon the occurrence of any Event of Default by Tenant, Landlord shall have the
option to do any one or more of the following without any notice or demand, in
addition to and not in limitation of any other remedy permitted by law or by
this Lease.
SEC. 9.1. LANDLORD'S RIGHT TO CURE DEFAULT. Upon the occurrence of an
Event of Default, and at any time thereafter during the continuance of any
Event of Default, Landlord may, but shall not be obligated to (without any
requirement of giving notice to Tenant), take whatever steps may be necessary
to cure any and all such Events of Default and, in order to accomplish this
purpose, may enter upon the Leased Premises without being liable to prosecution
or any claim for damages therefor except those caused by the gross negligence
or willful misconduct of Landlord, its agents, employees, representatives,
contractors, subcontractors and consultants. Such action on Landlord's part
may in no event be construed as a waiver by Landlord of any of Tenant's
obligations under this Lease. All sums expended by Landlord in curing any and
all such Events of Default (including reasonable attorney's fees and related
legal costs), together with interest thereon at the maximum lawful rate per
annum (unless there is no maximum rate of interest provided by law with respect
to such amount, in which event such amount shall bear interest at the rate of
1-1/2% per month) from the date of the making of any such expenditure to the
date of repayment thereof to Landlord, shall be deemed Additional Rent and
shall be payable to Landlord ten (10) days after written demand therefor given
the Tenant, and the failure to do so shall constitute an Event of Default.
SEC. 9.2. LANDLORD'S RIGHT TO RE-ENTER. Upon the occurrence of an Event
of Default, and at any time thereafter during the continuance of any Event of
Default, Landlord may (without any requirement of giving notice to Tenant)
re-enter and repossess the Leased
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Premises, by picking or changing locks if necessary, remove therefrom Tenant
and all those claiming under Tenant, and remove and store in public warehouses
or elsewhere at Tenant's expense all property found in or upon the Leased
Premises. Landlord may accomplish all this without resort to legal process and
without being deemed guilty of trespass or becoming liable to Tenant or others
for any resulting loss or damage, and without terminating this Lease (unless
expressly provided otherwise herein) or otherwise affecting the obligations of
the Tenant for the unexpired term of this Lease, including without limitation,
liability for unaccrued rent.
SEC. 9.3. LANDLORD'S ELECTION TO TERMINATE OR RELET. Upon the occurrence
of an Event of Default, whether or not Landlord re-enters the Leased Premises
as above provided, Landlord may:
A. Terminate this Lease by giving Tenant written notice to such
effect in which event all of Tenant's rights under this Lease shall cease,
in which event Tenant shall immediately surrender the Leased Premises to
Landlord, but if Tenant shall fail so to do, Landlord may without notice
and without prejudice to any other remedy Landlord may have for possession
or arrearage in rent, enter upon and take possession of the Leased
Premises and expel or remove Tenant and its property and other effects
without being liable to prosecution or any claim for damages therefor and
Tenant agrees to indemnify Landlord for all loss and damage which Landlord
may suffer by reason of such termination whether through inability to
relet the Premises or otherwise, and to pay the aforementioned accelerated
rental amounts to Landlord on demand. Tenant shall, within ten (10) days
after the receipt of such aforementioned written notice, pay to Landlord
as liquidated damages a sum of money equal to the Basic Rent plus the
Additional Rent for the balance of the Lease Term less the fair rental
value of the Leased Premises, for such period; or
B. Take possession of and relet the Leased Premises, or any part
thereof, as the agent of Tenant, without terminating this Lease and
without being liable for prosecution or any claim for damages therefor for
such terms (which may extend beyond the maximum Lease Term provided for in
this Lease) as Landlord may, in Landlord's sole discretion, deem advisable
and at such rental which Landlord can negotiate. All rents received by
Landlord from such releasing shall be applied: (1) first to the payment of
all expenses incurred in connection with such re-entering and reletting
(including without limitation all repairs, renovations, alterations and
modifications helpful in reletting the Leased Premises, and attorney's
fees and related legal costs) together with interest on any sums so
advanced computed at the highest lawful rate per annum (unless there is no
maximum rate of interest provided by law with respect to such amount, in
which event such amount shall bear interest at the rate of 1-1/2% per
month) from the date of the expenditure of such sums until such payment is
received by Landlord; and (2) second to the payment of all past due Basic
Rent and Additional Rent. If the rent received by Landlord from such
reletting for any month be less than that owing by Tenant under this Lease
for such month, Tenant shall pay the deficiency to Landlord within ten
(10) days after written demand therefor (and if Tenant fails to do so,
interest shall run on such deficiency as set
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forth above in this Paragraph). So long as Tenant has not received
Landlord's written notice of termination, Landlord will be deemed to have
elected to relet the Leased Premises. Notwithstanding any reletting by
Landlord, Landlord may at any time decide to terminate this Lease if an
Event of Default remains uncured at such time. Notwithstanding anything
contained herein to the contrary, Landlord shall have no duty to relet the
Leased Premises, and the failure of Landlord to relet the Leased Premises
shall not release or affect Tenant's liability for the payment of Basic
Rent, Additional Rent, or any other charges due hereunder or for damages.
SEC. 9.4. CHANGE OF LOCKS. Following any uncured Event of Default as
aforesaid (and, if the Event of Default is non-monetary, ten (10) days after an
additional notice and opportunity to cure such Event of Default) Landlord may
alter locks and other security devices at the Leased Premises. Tenant agrees
that entry may be gained for this purpose through use of a duplicate master key
or any other peaceable means, that same may be conducted out of the presence of
Tenant if Landlord so elects, that no notice shall be required to be posted by
the Landlord on any door to the Leased Premises (or elsewhere) disclosing the
reason for such action or any other information, and that Landlord shall not be
obligated to provide a key to the changed lock to Tenant except during
Landlord's business hours and unless Tenant shall have first:
(i) brought current all payments due to Landlord under this
Lease; provided, however, that if Landlord has theretofore formally
and permanently repossessed the Leased Premises pursuant to
subparagraph 9.3(b), or has terminated this Lease pursuant to
subparagraph 9.3(a), then Landlord shall be under no obligation to
provide a key to the new locks to Tenant regardless of Tenant's
payment of past-due rent or other past-due amounts, damages, or any
other payments or amounts of any nature or kind whatsoever; and
(ii) fully cured and remedied to Landlord's reasonable
satisfaction all other defaults of Tenant under this Lease.
Landlord will, upon written consent by Tenant, during normal business hours and
upon Tenant's execution and delivery of such waivers as Landlord may reasonably
require, at Landlord's option either (i) escort Tenant or its specifically
authorized employees or agents to the Leased Premises to retrieve personal
belongings and effects of Tenant's employees, and property of Tenant that is
not subject to the Landlord's lien and security interest or (ii) obtain from
Tenant a list of such property described in (i) above, and arrange for such
items to be removed from the Leased Premises and made available to Tenant at
such place and at such time in or about the Premises or the Project as Landlord
may designate; provided, however, that if Landlord elects option (ii), then
Tenant shall be required to pay to Landlord (a) the estimated costs that
Landlord will incur in removing such property from the Leased Premises and
making same available to Tenant at the stipulated location, and (b) all moving
and/or storage charges theretofore incurred by Landlord with respect to such
property. The provisions of this Section 9.4 are intended to override and
supersede any conflicting provisions of the Texas Property Code (including,
without
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limitation, Section 93.002 thereof, and any amendments or successor statutes
thereto), and of any other law, to the maximum extent permitted by applicable
law.
Pursuit of any of the foregoing remedies in this Article 9 shall not preclude
pursuit of any of the other remedies herein provided or any other remedies
provided by law.
SEC. 9.5. TENANT REMEDIES. Upon the occurrence of any event of Landlord's
default set forth in Section 8.2 hereof, in addition to other remedies
available under law or equity, Tenant shall have the option to (i) cure such
default and invoice Landlord the reasonable cost incurred by Tenant in so
doing, and/or (ii) seek an order from a court for specific performance to cure
such default, and the reasonable cost incurred by Tenant shall be invoiced to
Landlord. If Landlord fails to pay such invoices within sixty (60) days after
delivery to Landlord, and if Tenant obtains a final judgment or arbitration
award for such amount against Landlord, if such final judgment or arbitration
award is not promptly paid, Tenant may offset the amount of such judgment
against future Basic and Additional Rent. Landlord and Tenant agree that
Tenant's right to remedies for Landlord's default as provided in this Section
9.5 shall be determined by arbitration conducted in Dallas, Texas in accordance
with the rules of the American Arbitration Association or such other rules as
Landlord and Tenant may agree upon.
ARTICLE X: MISCELLANEOUS PROVISIONS
SEC. 10.1. NOTICES
A. All notices allowed or required to be given hereunder must be in
writing and dispatched by United States certified mail, return receipt
requested, to the addresses shown below. Either party hereto may change
the address to which any such notice is to be addressed by giving notice
in writing, as provided herein, to the other party of such change. Any
notice or document required or permitted to be delivered by this Lease
shall be deemed to be delivered (whether or not actually received) when
deposited in the United States Mail, postage prepaid, certified mail,
return receipt requested, addressed to the parties at the respective
addresses set out below:
B. All rent and other payments required to be made by Tenant shall
be payable to Landlord at the address set forth below, or any other
address Landlord may specify from time to time by written notice delivered
to Tenant. All payments required to be made by Landlord to Tenant shall
be payable to Tenant at the address set forth below, or at any other
address within the United States as Tenant may specify from time to time
by written notice.
Landlord:
Dallas Lyndon Corporation
10925 Estate Lane, Suite 100
Dallas, Texas 75238
Attn: J. Clifton Whisnant
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Tenant:
National TechTeam, Inc.
10945 Estate Lane
Dallas, Texas 75238
Attn: William Crampton
and
22000 Garrison
Dearborn, Michigan 48124
Attn: Lawrence A. Mills
SEC. 10.2. WAIVER. The waiver by either Landlord or Tenant of any
provision of this Lease shall not be deemed to be a waiver of any other
provision. The subsequent acceptance of Basic Rent or Additional Rent by
Landlord from Tenant may under no circumstances be deemed to be a waiver of any
preceding breach (including, without limitation, the failure to pay said Basic
Rent or Additional Rent in accordance with the terms of this Lease) by Tenant
of any provision hereof regardless of Landlord's knowledge of such preceding
breach at the time of the acceptance of such rent. No provision of this Lease
may under any circumstances be deemed to have been waived by any party hereto
unless such waiver is in writing and signed by the party charged with such
waiver. Acceptance of any payment in an amount less than that portion then
owing under this Lease shall be deemed an acceptance on account only and not a
waiver regardless of any notation contained on such means of payment to the
contrary; and the failure to pay the entire amount then due shall constitute an
Event of Default.
SEC. 10.3. ENTIRE AGREEMENT AND AMENDMENTS. This Lease constitutes the
entire agreement between Landlord and Tenant, and there are no other covenants,
agreements, promises, terms, provisions, conditions, undertakings, or
understandings, either oral or written, between them concerning the Leased
Premises other than those herein set forth. No subsequent alteration,
amendment, change, deletion or addition to this Lease shall be binding upon
Landlord or Tenant unless in writing and signed by both Landlord and Tenant.
SEC. 10.4. NO JOINT VENTURE. Nothing herein contained shall be deemed to
constitute Landlord a partner of Tenant in the conduct of Tenant's business or
a joint venturer or a member of a joint enterprise with Tenant.
SEC. 10.5. PARTIAL INVALIDITY. If any provision of this Lease, or the
application thereof to any person or circumstances, shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such affected provision to persons or circumstances other than those to which
it is held invalid or unenforceable, shall not be affected thereby, and each
provision of this Lease shall be valid and shall be enforced to the fullest
extent permitted by law. It is further the intention of Landlord and Tenant
that if any provision of this Lease is capable of two constructions, one of
which would render the provision void and other of which would render the
provision valid, then the provision shall have the meaning which renders it
valid.
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SEC. 10.6. BROKER'S COMMISSION. Landlord and Tenant each represent
and warrant to the other that there are no claims for brokerage commissions or
finder's fees in connection with the execution and delivery of this Lease other
than Revest Management Services, Inc. and Grubb & Ellis Company, all such
commissions to be paid by Landlord pursuant to separate written agreements.
Landlord agrees to indemnify and hold harmless Tenant from and against any
liability or claim, whether meritorious or not, arising with respect to any
broker or agent whose claim arises by, through or on behalf of Landlord
including, without limitation, the aforementioned commission obligations.
Tenant agrees to indemnify and hold harmless Landlord from and against any
liability or claim, whether meritorious or not, arising with respect to any
broker or agent whose claim arises by, through or on behalf of Tenant excluding
specifically the aforementioned commission obligations of Landlord.
SEC. 10.7. HEADING, CAPTIONS, ETC. The headings, captions, and
numbering system, used in this Lease are inserted only as a matter of
convenience and may under no circumstance be considered in interpreting the
provisions of this Lease.
SEC. 10.8. NO SETOFF. Except as provided herein, Tenant may under no
circumstances have any right of setoff or deduction against any payments
payable by Tenant to Landlord under any of the terms, provisions, conditions
and covenants of this Lease, but instead Tenant may register a protest in
connection with any payments being made and/or pursue its other remedies under
this Lease, at law or in equity.
SEC. 10.9. HOLDING OVER. Any holding over of the Leased Premises, or
any part thereof, by Tenant after the expiration of this Lease (for whatever
reason such termination may occur) shall be construed only as a tenancy from
day to day, terminable at the will of Landlord, at a daily rental of one
hundred fifty percent (150%) of the Basic Rent plus the amount of Additional
Rent payable during the last month of the term, as determined on a prorated
daily basis, and otherwise subject to the terms of this Lease applicable to
tenancies at sufferance.
SEC. 10.10. PLACE OF PERFORMANCE. The duties and obligations herein
contained are performable in Dallas County, Texas, and venue for any action
hereunder shall be in Dallas County, Texas.
SEC. 10.11. BUILDING IMPROVEMENTS. Tenant's architects are preparing
the plans and specifications (the "Plans") for the improvements to be made to
the Leased Premises (the "Improvements"). Tenant shall pay the entire cost of
the architectural services, including all engineering, consulting, and other
expenses Tenant's architects may incur in connection with preparation of the
Plans. The Plans will be subject to Landlord's reasonable approval. When the
final Plans have been agreed upon, they shall be signed by Landlord and Tenant
to indicate their approval. Landlord will pay $391,992 (the "Tenant Finish
Allowance") (based upon $12.00 per rentable square foot of the Leased Premises)
of the cost of the Improvements to be made pursuant to the Plans including, but
not limited to, millwork, fixtures, equipment, draperies, utilities and
hook-ups, all other finish work shown on the Plans, construction management and
administration fees, occupancy and relocation expenses, and any other costs
incurred by Tenant in occupying the Leased Premises. Included in the cost of
the Improvements, Tenant will address the following items normally considered
base building costs: any upgrades to restrooms required to meet ADA or TAS
compliance, life safety devices located
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within the Leased Premises, and all other items within the Leased Premises
pertaining to building permits, certificates of occupancy, ADA or TAS
compliance, or any other permit or permits, certificates of occupancy, ADA or
TAS compliance, or any other permit or governmental approval process. Any
additional improvements made to the base building as mandated by applicable
building codes, regulations, statutes, or ordinances, ADA, TAS, or other
similar laws will be timely completed by Landlord at its sole cost and expense
not from the Tenant Finish Allowance but as defined in Section 2.2. Additional
improvements may include, but are not limited to, upgrades to the building fire
control systems, elevators, entries and exits, parking lots, and all other
items outside the Leased Premises pertaining to building permits, certificates
of occupancy, ADA, or TAS compliance.
Landlord and Tenant shall agree upon the contractor to be used for the
Improvements and the form of the construction contract (the "Contract"). The
Contract shall be between the contractor and Landlord as Owner and shall
contain, among other things, a standard one-year warranty by the Contractor
against defects in workmanship or materials. Upon approval of the Contract, no
change shall be made to the terms of the Contract without the consent of Tenant
and Landlord including, without limitation, those affecting the contract sum.
The Contract shall provide that all payments to the contractor shall be made
jointly by Landlord and Tenant, and Tenant shall be a party to the Contract to
evidence Tenant's approval of the contract and Tenant's agreement to make such
payments. Landlord shall pay that part of each payment which bears the same
proportion to such payment as $391,992 bears to the total contract price, as
such price may be amended. Tenant shall pay the full cost incurred pursuant to
any change orders or extras. In the event of a price reduction, it is understood
that Landlord will in any event pay $391,992 of the cost of the Improvements.
Landlord shall require the contractor to perform all work and supply all
equipment, materials fixtures and other items shown on the Plans in a good and
workmanlike manner and in compliance with all applicable laws, rules, codes,
ordinances and regulations. Landlord will rely on Tenant's architect to assure
that the Improvements, fixtures, equipment, and other work set forth in the
Plans comply with the Americans With Disabilities Act, The Architectural
Barriers Act of the State of Texas and other similar laws. As and to the extent
provided in Section 2.2 hereof, and not as part of the Tenant Finish Allowance,
Landlord shall do the work, if any, required on the Building or the Project to
enable all necessary approvals and permits required from governmental agencies
to be obtained.
Landlord agrees that, immediately upon execution of the Contract and issuance of
all required permits and approvals, Landlord shall cause the contractor to
commence and diligently carry forward the work provided for in the Contract so
as to achieve the completion date specified in the Contract. Landlord agrees,
and the Contract shall provide, that Tenant's representatives shall have full
authority with regard to the progress and scheduling of the work with the
Contractor. If the time for completion of the work to the point of initial
occupancy of a portion of the Leased Premises is extended for reasons not caused
by Landlord or Contractor and without the written agreement of Landlord, Tenant
shall pay Basic Rent on a per diem basis at the rate provided for the first five
months of the Lease Term for the number of days of such extension in addition to
the Basic Rent payable beginning on the date of such initial occupancy. The
completion date shall be that date when the Improvements have been finally
completed in accordance with the Plans and a complete and unconditional
certificate of occupancy has been
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issued by the City of Dallas allowing occupancy by the Tenant of the entire
Leased Premises. At any time prior to the completion date when construction of
the Improvements has reached a status satisfactory to Tenant, Tenant shall have
the option to occupy a portion of the Leased Premises upon written notification
to Landlord and subject to the provisions of Section 3.1 hereof. The term of
this Lease and all obligations of Landlord and Tenant with regard to the actual
occupancy of the Leased Premises shall commence upon such occupancy, including,
without limitation Tenant's obligation to pay the Basic Rent. Landlord shall
continue the construction of Improvements until final completion and issuance
of the complete and unconditional certificate of occupancy for Tenant's
occupancy of the Leased Premises as provided in the Plans, the Contract, and
this Lease.
SEC. 10.12. RIGHT OF FIRST REFUSAL AND OPTION TO EXPAND. Landlord
hereby grants to Tenant the Right of First Refusal and Option to Expand into
(i) the Pocket Sandwich Shop space in the Building
containing 1,642 rentable square feet should it become
available; and
(ii) at any time after December 25, 1995, the
approximately 1,395 rentable square feet of space remaining
within the Building not within the Leased Premises
The rental rate for these respective spaces will be the same as the
then-current Basic and Additional Rent rate provided in this Lease at the time
such space is occupied. If Landlord desires to lease any of such space to a
third party, Landlord shall first notify Tenant in writing of its intention to
offer either space for lease. Tenant shall have twenty (20) days from receipt
of such notice to notify Landlord in writing of Tenant's intent to exercise its
right of first refusal. If Tenant does not exercise its right of first refusal
and Landlord enters into a lease with a bona fide third party for such space
within sixty (60) days after having given notice to Tenant, then Tenant's right
of first refusal as to the space described in the notice from Landlord to
Tenant shall terminate. If Landlord does not enter into such a lease within
said sixty (60) day period or upon the termination of the lease with such bona
fide third party, the rights granted to Tenant shall continue in force or be
re-established. If Tenant elects to exercise its right of first refusal to
lease any or all such space, the term for such space shall expire upon the
expiration of the Lease Term. Such space shall be subject to all of the terms,
covenants and conditions of this Lease. Within twenty (20) days from the date
of Tenant's election to exercise its right of first refusal, Landlord and
Tenant shall execute a modification and ratification of this Lease to include
the additional space. Thereafter, within a reasonable time, Landlord and
Tenant shall execute plans and specifications, change orders showing
construction costs to be paid by Tenant (which shall be the amount by which the
costs of construction exceed the amount Landlord will pay for such construction
on a per square foot basis) and other documents Landlord and Tenant agree are
necessary and appropriate. Landlord shall not pay more than Nine Dollars
($9.00) per rentable square foot for the improvements to such additional space,
such allowance to decline by 15 cents per square foot per month each month after
January 1, 1996, until such option is exercised by Tenant. Tenant may at any
time give Landlord notice of its
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desire to expand into all or a portion of the described refusal/expansion space
under all applicable terms and provisions hereof.
SEC. 10.13. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which will for all purposes be deemed to be an original
and all of which shall constitute one agreement.
EXECUTED this 17th day of August, 1995.
<TABLE>
<S> <C>
LANDLORD: TENANT:
DALLAS LYNDON CORPORATION NATIONAL TECHTEAM, INC.
By: Revest Management Services, Inc.
Agent By: Lawrence A. Mills
-------------------------
Lawrence A. Mills
Chief Operating Officer
By:
--------------------------
J. Clifton Whisnant
President
</TABLE>
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<PAGE> 32
EXHIBIT "A"
PROJECT - LEGAL DESCRIPTION
BEING a tract of land situated in the City of Dallas and being or
intended to be all Lot 9, Block B/8051, Shelton/Dallas
Northeast Addition, an addition to the City of Dallas, Dallas
County, Texas, according to the Map thereof recorded in Volume
84059, Page 3086 of the Map Records, Dallas County, Texas,
said Lot 9 being more particularly described by metes and
bounds as follows:
BEGINNING at a 1/2-inch capped steel rod with NEBTEX stamped in said cap
and being the Northeast corner of said Lot 9, said POINT OF
BEGINNING also being on the Southerly R.O.W. line of Estate
Lane (a 60 foot R.O.W.);
THENCE South 35 degrees 02 minutes 55 seconds West (called South 35
degrees 00 minutes 40 seconds West), along the easterly line
of said Lot 9, a distance of 689.98 feet (called 690.00 feet)
to a 1/2-inch steel rod being the Southeast corner of said Lot
9;
THENCE North 16 degrees 52 minutes 03 seconds West (called North 16
degrees 52 minutes 53 seconds West), along a Southerly line of
said Lot 9, a distance of 323.89 feet (called 324.08 feet) to
a "+" cut in concrete being a point of angle to the left in
said Southerly line of Lot 9;
THENCE North 54 degrees 59 minutes 33 seconds West (called North 54
degrees 59 minutes 20 seconds West), continuing along a
Southerly line of said Lot 9, a distance of 304.88 feet
(called 305.00 feet), to a 3/4-inch steel rod being the
Southwest corner of said Lot 9;
THENCE North 35 degrees 01 minutes 21 seconds East (called North 35
degrees 00 minutes 40 seconds East), along the Westerly line
of said Lot 9, a distance of 490.06 feet (called 490.00 feet)
to a 1/2-inch steel rod on the Southerly R.O.W. line of said
Estate Lane, being the Northwest corner of said Lot 9;
THENCE South 54 degrees 59 minutes 20 seconds East (Reference
Bearing), along said Southerly R.O.W. line and along a North
line of said Lot 9, a distance of 560.04 feet (called 560.00
feet) to the POINT OF BEGINNING and embracing 299,873.17
Square Feet or 6.884 Acres of Land.
29
<PAGE> 33
EXHIBIT "B"
RULES AND REGULATIONS
Except in the event of conflict with the express written terms of the Lease
between Landlord and Tenant, in which case the terms of such Lease shall
control:
1. Tenant shall not do or permit anything to be done to said
premises in excess of the rights of usage as proposed to and agreed to by
Landlord, or bring or keep anything therein, which will in any way increase the
rate of fire insurance on said Project, or on property kept therein, or
obstruct or interfere with the rights of other Tenant, or in any way injure or
annoy them, or conflict with the laws relating to fire, or with regulations of
the fire department, or with any of the rules or ordinances of the Board of
Health of the municipality in which the building is located.
2. The sidewalks, halls, passageways, elevators and stairwells
will not be obstructed by the Tenants, or used by any Tenant for any purpose
other than for ingress and egress to and from their respective Premises. Nor
shall any rubbish, letter, trash or material of any nature be placed or emptied
in these areas.
3. Tenant shall adhere to and obey all such parking control
measures as may be placed into effect by the Landlord through the use of
signs, fire lanes identifying decals or other instructions.
4. No moving company shall be used for the purpose of moving
furnishings in or out of the Premises unless they are reputable commercial
movers.
5. Any electric wiring that the Tenant desires to introduce into
his Premises must be connected as directed by the Landlord. No boring or
cutting for wires will be allowed except with a specific consent of the
Landlord. The location of telephone, electrical appliances, call boxes,
intercoms and so forth shall be prescribed by the Landlord. All telephone
equipment will be installed within the Tenant's lease space.
6. The Tenant shall not conduct any auction of the Premises, nor
store goods, wares or merchandise on the premises except for the Tenant's own
personal use.
7. All freight must be moved into, within and out of the Project
under the supervision of the Landlord and according to such regulations as may
be posted in the Project Office. All moving of furniture or equipment into or
out of the Building by Tenant shall be done at such time and in such manner as
directed by the Landlord or its agent. In no cases, shall items of freight,
furniture, fixtures or equipment be moved into or out of the Building or in any
elevator during rush hours as are normally considered rush hours to an office
building; i.e., morning rush hours, noon rush hours, and evening rush hours.
All such movement shall be as directed by Landlord in a manner to be agreed upon
between Tenant and Landlord by prearrangement before performance. Such
prearrangement, initiated by Tenant shall include determination by Landlord and
subject to its decision and control of the time, method, and routing of
movement, limitation imposed by safety of other concerns which may prohibit any
article, equipment or any other
30
<PAGE> 34
items from being brought into the building. Tenant expressly assumes all risk
of damage to any and all articles so moved, as well as injury to any person or
persons or the public engaged or not engaged in such movement, including
equipment, property, and personnel of Landlord if damaged or injured as a
result of any acts in connection with carrying out this service for Tenant
from time of entering property to completion of the work; and Landlord shall
not be liable for the act or acts of any person or persons so engaged in, or
any damage or loss in connection with such service performed by or for Tenant.
8. Requirements of the Tenant for building services, maintenance
or repair shall be attended to only upon application to the office of the
Project. Employees of the Project are not permitted to perform any work nor to
do anything outside their regular duties unless under special instructions from
the office of the Project. No employees of the Project shall admit any person,
Tenant or otherwise, to any office, without specific instructions from the
office of the Project. Tenant will refer all contractor's representatives and
installation technicians rendering any service for Tenant, to Landlord for
Landlord's supervision and/or approval before performance of any such
contractual services. This shall apply to all work performed in the Building
including, but not limited to, installation of telephones, telegraph equipment,
electrical devices, and attachments, and installation of any and every nature
affecting floors, walls, woodwork, trim windows, ceilings, equipment or any
other physical portion of the Building. None of this work will be done by
Tenant without Landlord's prior written approval.
9. The Tenant shall not change locks or install other locks on
doors without the written consent of the Landlord. Landlord may permit
entrance to Tenant's office by use of pass keys controlled by Landlord, to
employees, contractors, or service personnel supervised or employed by
Landlord. No additional locks shall be placed upon the doors of the Leased
Premises, and Tenant shall not permit any duplicate keys to be made. All
necessary keys will be furnished by Landlord. Upon termination of the Lease,
Tenant shall surrender and deliver to the Landlord all keys to the Leased
Premises, which are in Tenant's possession or in the possession of Tenant's
agents, employees or others permitted to occupy said Premises by said Tenant.
10. The Tenant shall give prompt notice to the Landlord of any
accident to or defects in plumbing, electrical fixtures, or heating apparatus.
11. No safes or other objects larger or heavier than the freight
elevators of the Building are limited to carry shall be brought into or
installed on the Premises. The Landlord shall have the power to prescribed the
weight and position of such safes or other objects which shall, if considered
necessary by the Landlord, be required to be supported by such additional
materials placed on the floor as the Landlord may direct, and at the expense of
the Tenant. In no event can any items exceed a weight of 50 pounds per square
foot of floor space utilized.
12. No person or persons other than those approved by the Landlord
will be permitted to enter the Building for purposes of cleaning, maintenance,
construction or painting.
13. Tenant shall not permit or suffer the Premises to be occupied
or used in a manner offensive or objectionable to Landlord or other occupants
of the Project by reason of noise, odors, or vibrations or interfere in any way
with other tenants or those having business therein,
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<PAGE> 35
nor shall any animals be kept in or about the Project. Smoking and carrying of
a lighted cigar or cigarette in the elevators or any common areas of the
Project is prohibited.
14. The Tenant shall at all times maintain the Premises in good
order, neatly, and shall not permit or allow the Premises to become unsightly
by reason of accumulation of trash, disarray of merchandise or contents, or
other, and, in the event that in Landlord's judgment Tenant has permitted the
Premises to become or to remain in an unsightly condition, Tenant shall upon
Landlord's request immediately correct such condition and bring the Premises
into a good state or order and array. In adherence to and enforcement of this
rule, it shall be clearly understood that the intent of this rule is that
Tenant shall at all times maintain the Premises in a neat and orderly manner,
and in the enforcement hereof Landlord's decision shall be binding and
controlling.
15. The Tenant shall at all times take such measures as required
to protect the carpet and agrees to use either carpet casters or approved
protective pads to prevent damage to the carpet from chairs. Tenant also
agrees that any damages resulting from moving furniture or any other cause of
damage to the carpet will be paid for by the Tenant and the Landlord will be
notified immediately so that such repairs as necessary may be made.
16. No cooking other than microwave cooking of a limited personal
type shall be done or permitted by Tenant on the Premises nor shall offices of
the Project be used for storage of merchandise or for lodging, or for any
immoral or illegal purpose or any other purpose that will damage the Leased
Premises or the condition thereof.
17. Each Tenant upon the termination of the tenancy shall deliver
to the Landlord all keys of the office rooms and toilet rooms which shall have
been furnished to the Tenant.
18. Tenant shall not install, affix, or utilize any window
covering, i.e., blinds, draperies reflective coating, etc. without Tenant first
receiving the prior written consent of the Landlord.
19. On Sundays, holidays (legal) and other days during certain
business hours for which the Building may be closed after normal hours, access
to the Building or to the halls, corridors, elevators and stairwells will be
controlled by the Landlord. Building personnel will have the right to demand
of any and all persons seeking access to the Building proper identification to
determine if they have rights of access to the Leased Premises. The Landlord
shall, in no case, be liable for damages wherein admission to the Building has
not been granted during abnormal hours by reason of a Tenant failing to
properly identify himself to the watchman, or through the failure of the
Building to be unlocked and open for access by the Tenant, Tenant's employees,
and general public.
20. Tenant shall see that doors of the Premises are closed and
securely locked before leaving the Building, must observe strict care not to
leave such doors and so forth open and exposed to the weather or other
elements, and the Tenant shall exercise extraordinary care and caution that all
water faucets or water apparatus are entirely shut off before the Tenant or
Tenant's employees leave the Building, and that all electricity, gas and air
shall likewise be carefully shut off so as to prevent waste or damage.
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<PAGE> 36
21. Canvassing, soliciting and peddling in the Project are
prohibited. Tenant shall cooperate to prevent the same.
22. Only "Bulldog" type picture hangers may be used for wall
hangings. Nails, screws or picture hangers shall not be driven into the walls
or wood finish of the Leased Premises for any purpose whatsoever unless
specific approval in writing is obtained from Landlord.
23. All signs will be contracted for by Landlord for Tenant at the
rate fixed by Landlord from time to time, and Tenant will be billed and pay for
such service accordingly. Written consent from Landlord is an absolute
prerequisite for any such sign or signs which Tenant may be so permitted to
use.
24. Tenant shall not place, install or operate on the Leased
Premises or in any part of the Project, any engine, stove or machinery, or
conduct mechanical operations or cook thereon or therein, or place or use in or
about the Leased Premises any explosives, gasoline, kerosene, oil, acids,
caustics, or any other inflammable, explosive or hazardous material without
written consent of Landlord first had and obtained.
25. Landlord will not be responsible for any lost or stolen
personal property, equipment, money or jewelry regardless of whether such loss
occurs when the area is locked against entry or not.
26. Landlord shall have the right to prohibit the use of the name
of the Project or any other publicity by Tenant, which in the Landlord's
opinion, tends to impair the reputation of the Project or its desirability for
the executive offices of the Landlord or of other tenants; and, upon written
notice from Landlord, Tenant will refrain from or discontinue such publicity.
27. The Landlord reserves the right, at any time, to rescind any
one or more of these rules and regulations as in the Landlord's judgment may
from time to time be necessary for the safety, care and cleanliness of the
Leased Premises, and for the preservation of order herein.
33
<PAGE> 37
EXHIBIT "C"
OUTLINE AND LOCATION OF PREMISES
10945 Estate Lane
Dallas, Texas 75238
34
<PAGE> 38
[WADDILL GROUP LOGO]
NATIONAL TECH TEAM
LYNDON PLAZA - EAST BUILDING
10945 Estate
Dallas, TX
1 Furniture Plan - First Floor
<PAGE> 39
[WADDILL GROUP LOGO]
NATIONAL TECH TEAM
LYNDON PLAZA - EAST BUILDING
10945 Estate
Dallas, TX
1 Furniture Plan - Second Floor
<PAGE> 40
[WADDILL GROUP LOGO]
NATIONAL TECH TEAM
LYNDON PLAZA - EAST BUILDING
10945 Estate
Dallas, TX
1 Furniture Plan - Third Floor
<PAGE> 41
EXHIBIT "D"
TENANT'S CERTIFICATE OF INSURANCE
35
<PAGE> 42
EXHIBIT "E"
LANDLORD'S REPRESENTATIONS AND WARRANTIES
Landlord covenants, warrants and represents as follows:
(a) Landlord has full right and power to execute and perform this
Lease and to grant the estate demised herein.
(b) There is no covenant, deed restriction or other agreement
applicable to the use of the Project or the Leased Premises which affect or
restrict in any way the permitted use of, or the permitted activities which may
be conducted in or about, the Project or the Leased Premises by Tenant as
provided in this Lease.
(c) There are no existing or, to the best of Landlord's knowledge,
proposed or contemplated eminent domain proceedings which would affect the
Leased Premises in any way whatsoever, and to the best of Landlord's knowledge,
there are no contemplated public improvements which will or would result in any
charge being levied or assessed against, or in the creation of any lien upon,
the Leased Premises.
(d) The Leased Premises is connected to and serviced by water,
solid waste and sewage disposal, storm drainage and electricity and gas
facilities.
36
<PAGE> 43
EXHIBIT "F"
RENEWAL OPTION
If, at the end of the primary term or, if the first renewal option is
exercised, the first renewal term, as applicable, of this Lease, Tenant is not
in default in any of the material terms, conditions or covenants of this Lease,
Tenant, is hereby granted two (2) options to renew this Lease for additional
terms of two (2) and three (3) years respectively upon the same terms and
conditions contained in this Lease with the following exceptions:
A. Any renewal option term will not contain a further renewal
option unless expressly granted by Landlord in writing; and
B. The rental for each renewal term shall be ninety-five percent
(95%) of the then prevailing rental rates for properties of
equivalent quality, size, utility and location, with the
length of the lease term and credit standing of the Tenant to
be taken into account.
If Tenant desires to renew this Lease, Tenant will notify the Landlord
of its intention to renew no later than six (6) months prior to the expiration
date of the term of this Lease; Landlord shall, within the next ten (10) days
notify Tenant in writing of the proposed renewal rate and Tenant shall, within
the next fifteen (15) days following receipt of the proposed rate, notify
Landlord in writing of its acceptance or rejection of the proposed rental rate.
In the event that Tenant does not accept the rental as stated by Landlord and
Tenant gives Landlord notice of rejection as above stated, then Tenant may
request arbitration of such rental in accordance with the following procedure.
Landlord shall appoint one qualified (MAI) appraiser, Tenant shall appoint one
qualified (MAI) appraiser and those two appraisers shall mutually agree upon a
third qualified (MAI) appraiser. Landlord and Tenant shall each bear the cost
of its appraiser and one-half (1/2) of the third appraiser. The three said
appraisers, shall within thirty (30) days after the notice from Tenant that it
notifies Landlord of Tenant's rejection of the rental determine the fair market
rental in accordance with the parameters set forth herein and shall notify
Landlord and Tenant in writing of such ninety-five percent (95%) of market
rental. The Base Year shall be advanced to be the year the applicable renewal
term commences. Tenant shall have twenty (20) days to accept or reject, in
writing, the renewal term rental as above determined. If such rental is not
agreed to by Tenant as determined by said appraisers on or before the end of
the twenty (20) day period then this Option to renew and all rights of Landlord
and Tenant under this Option to renew shall immediately terminate and all terms
and conditions of this Option to renew shall be of no further force and effect
and the cost of the appraisal process including any cost, fee or expense
incurred by either party in the process shall be borne by the party incurring
same except as specifically stated above.
37
<PAGE> 1
EXHIBIT 10.18
[NBD LOGO] CREDIT AUTHORIZATION AGREEMENT
NBD BANK (the "Bank"), 611 Woodward Avenue, Detroit, Michigan 48226-3947, has
approved the credit facilities listed below (collectively, the "Credit
Facilities," and, individually, as designated below) to:
National TechTeam, Inc. (the "Borrower"),
- --------------------------------------------------------------
(Borrower's Name)
22000 Garrison Avenue, Dearborn, MI 48124
- -------------------------------------------------------------------------------
(Borrower's Address)
subject to the terms and conditions set forth in this agreement.
1.0 CREDIT FACILITIES. (Check and complete applicable sections)
1.1 UNCOMMITTED CREDIT AUTHORIZATIONS. The Bank has approved the
uncommitted credit authorizations listed below (collectively, the "Credit
Authorizations," and, individually, as designated below) subject to the terms
and conditions of this agreement and the Bank's continuing satisfaction with
the Borrower's financial status. Disbursements under the Credit Authorizations
are solely at the Bank's discretion. Any disbursement on one or more occasions
shall not commit the Bank to make any subsequent disbursement.
/X/ A. FACILITY A. The Bank has approved an uncommitted Credit
Authorization to the Borrower in the principal sum not to exceed
$3,500,000.00 in the aggregate at any one time outstanding ("Facility
A"). Credit under Facility A shall be in the form of disbursements
evidenced by credits to the Borrower's account and shall be repayable
as set forth in a Master Demand Note executed concurrently (referred
to in this agreement both singularly and together with any other
promissory notes referenced in this Section 1 as the "Notes"). The
proceeds of Facility A shall be used for the following purpose:
working capital. Facility A shall expire on April 30, 1996 unless
earlier withdrawn.
/X/ B. FACILITY B (INCLUDING LETTERS OF CREDIT). The Bank has approved
an uncommitted Credit Authorization to the Borrower in the principal
sum not to exceed $50,000.00 in the aggregate at any one time
outstanding ("Facility B"). Facility B shall include the issuance of
[commercial/standby] letters of credit not exceeding $ 50,000.00 in
the aggregate at any one time outstanding, expiring not later than
April 30, 1996 [which shall include time drafts expiring not later
than ____________________, 199____] (the "Letters of Credit").
(Strike bracketed words if inapplicable.) Each Letter of Credit
shall be in form acceptable to the Bank and shall bear a fee of %
per year of the face amount of each standby Letter of Credit plus an
issuance fee of $ _______________ upon issuance of each Letter of
Credit.(If no fee is listed, the Letters of Credit shall bear a fee
to be agreed upon by the Bank and the Borrower). Credit under
Facility B shall be in the form of disbursements evidenced by credits
to the Borrower's account and shall be repayable as set forth in a
Master Demand Note executed concurrently (referred to in this
agreement both singularly and together with any other promissory
notes referenced in this Section 1 as the "Notes") or by issuance of
a Letter of Credit upon completion of an application acceptable to
the Bank. The proceeds of Facility B shall be used for the following
purpose: Facility B shall expire on , 199 unless earlier
withdrawn.
/X/ C. FACILITY C (PURCHASE MONEY TERM LOANS). The Bank has approved an
uncommitted credit authorization to the Borrower in the principal sum
not to exceed $ 2,000,000.00 in the aggregate at any one time
outstanding ("Facility C"). Facility C shall be in the form of loans
evidenced by the Borrower's notes on the Bank's form (referred to in
this agreement both singularly and together with any other promissory
notes referenced in this Section 1 as the "Notes"), the proceeds of
which shall be used to purchase the following equipment computer
equipment. Interest on each loan shall accrue at a rate to be agreed
upon by the Bank and the Borrower at the time the loan is made. The
maturity of each note shall not exceed 60 months from the note date.
Notwithstanding the aggregate amount of Facility C stated above, the
original principal amount of each loan shall not exceed the lesser of
100% of the cost of the equipment purchased with loan proceeds or
$2,000,000.00. Facility C shall expire on April 30, 1996 unless
earlier withdrawn.
/ / 1.2 TERM LOANS. The Bank agrees to extend credit to the Borrower in the
form of term loan(s) (whether one or more, the 'Term Loans") in the principal
sum(s) of___________________ respectively, bearing interest and payable as set
forth in the Term Note(s) executed concurrently (referred to in this agreement
both singularly and together with any other promissory notes referenced in this
Section 1 as the "Notes"). The proceeds of the Term Loans shall be used for
the following purpose:__________________________________________________________
________________________________________________________________________________
2.0 CONDITIONS PRECEDENT.
2.1 CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT. Before the first
extension of credit under this agreement. whether by disbursement of a loan,
issuance of a letter of credit, or otherwise, the Borrower shall deliver to the
Bank, in form and substance satisfactory to the Bank:
<PAGE> 2
A. LOAN DOCUMENTS. The Notes, the letter of credit applications required
by Section 1.2; the security agreements, financing statements, mortgages
and other documents required by Section 5.1; the guaranties required by
Section 6.0; the subordination agreements required by Section 7.0; and any
other loan documents which the Bank may reasonably require to give effect
to the transactions contemplated by this agreement;
B. EVIDENCE OF DUE ORGANIZATION AND GOOD STANDING. Evidence
satisfactory to the Bank of the due organization and good standing of the
Borrower and every other business entity that is a party to this agreement
or any other loan document required by this agreement; and
C. EVIDENCE OF AUTHORITY TO ENTER INTO LOAN DOCUMENTS. Evidence
satisfactory to the Bank that (i) each party to this agreement or any
other loan document required by this agreement is authorized to enter into
the transactions contemplated by this agreement and the other loan
documents, and (ii) the person signing on behalf of each such party is
authorized to do so.
2.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. Before any
extension of credit under this agreement, whether by disbursement of a loan,
issuance of a letter of credit, or otherwise, the following conditions shall
have been satisfied:
A. REPRESENTATIONS. The representations contained in Section 10 shall
be true on and as of the date of the extension of credit;
B. NO EVENT OF ACCELERATION. No event of acceleration shall have
occurred and be continuing or would result from the extension of credit.
C. CONTINUED SATISFACTION. The Bank shall have remained satisfied with
the Borrower's managerial and financial status;
D. ADDITIONAL APPROVALS, OPINIONS, AND DOCUMENTS. The Bank shall have
received such other approvals, opinions and documents as it may reasonably
request; and
E. OTHER CONDITIONS.___________________________________________________
_________________________________________________________________________
_________________________________________________________________________.
3.0 BORROWING BASE/ANNUAL PAY DOWN.
3.1 BORROWING BASE. (complete if applicable) Notwithstanding any other
provision of this agreement, the aggregate principal amount outstanding at any
one time under (check applicable clauses)
/ / Facility A
/ / Facility B
shall not exceed the lesser of the Borrowing Base or $__________________.
Borrowing Base means:
(Check and complete applicable clauses)
/ / A. ____% of the Borrower's trade accounts receivable in which the
Bank has a perfected, first priority, security interest, excluding
accounts more than 90 days past due from the date of invoice,
accounts subject to offset or defense, government, bonded, affiliate
and foreign accounts, accounts from trade debtors of which more than
% of the aggregate amount owing from the trade debtor to the Borrower
is more than days past due, and accounts otherwise unacceptable to
the Bank, plus
/ / B. Inventory of the Borrower in which the Bank has a perfected,
first priority, security interest valued at the lower of cost or
market, but not exceeding $ in aggregate, as follows:
[](1)_____________________ % of aggregate inventory; or
[](1)_____________________ % of raw material inventory; and
[](2)_____________________ % of work-in-process inventory; and
[](3)_____________________ % of finished goods inventory, plus
/ / C._____% of the ___________ value of the Borrower's machinery and
equipment in which the Bank has a perfected, first priority, security
interest but not exceeding $____________________, plus
/ / D. Additional Borrowing Base provisions are contained in the attached
addendum.
3.2 ANNUAL PAY DOWN. (complete if applicable) Notwithstanding any other
provision of this agreement, there shall be no debt outstanding under
________________________________________ for a period of _____________________
(Facility A, Facility B, etc.)
consecutive months during each fiscal year of the Borrower.
4.0 FEES AND EXPENSES. (complete if applicable)
4.1 FEES. Upon execution of this agreement, the Borrower shall pay the
Bank the following fees, all of which the Borrower acknowledges have been
earned by the Bank: negotiable up to 1%
4.2 OUT-OF POCKET EXPENSES. In addition to any fee set forth in Section
4.1 above, the Borrower shall reimburse the Bank for its out-of- pocket
expenses and reasonable attorney's fees (including the fees of in-house
counsel) allocated to the Credit Facilities.
5.0 SECURITY.
5.1 Payment of all amounts owing under the Credit Facilities shall be
secured by the Borrower's grant of a continuing first security interest and/or
real estate mortgage, as the case may be, covering its interest in the
following property and all its additions, substitutions, increments, proceeds
and products, present and future, whether now owned or later acquired, (the
"Collateral"):
<PAGE> 3
(check and complete applicable clauses)
/ / A. ACCOUNTS RECEIVABLE. All of the Borrower's accounts, chattel
paper, general intangibles, instruments, and documents (as those terms are
defined in the Uniform Commercial Code), rights to refunds of taxes paid at any
time to any governmental entity, and any letters of credit and drafts under
them given in support of the foregoing, wherever located. The Borrower shall
deliver to the Bank executed security agreements and financing statements in
form and substance satisfactory to the Bank.
/ / B. INVENTORY. All of the Borrower's inventory, wherever located.
The Borrower shall deliver to the Bank executed security agreements and
financing statements in form and substance satisfactory to the Bank.
/ / C. EQUIPMENT. All of the Borrower's equipment, wherever located.
The Borrower shall deliver to the Bank executed security agreements and
financing statements in form and substance satisfactory to the Bank.
/ / D. REAL ESTATE. The real property, including improvements, located
at ____________________________. The Borrower shall deliver to the Bank an
executed mortgage ALTA mortgage title insurance policy without exceptions with
mortgage survey certified to the Bank and the title company, and, where
applicable, an assignment of rents, subordinations of leases and assignments of
land contracts, all in form and substance satisfactory to the Bank.
/ / E. ___________________________________________________________________
_______________________________________________________________________________
5.2 No forbearance or extension of time granted any subsequent owner of
the Collateral shall release the Borrower from liability.
5.3 ADDITIONAL COLLATERAL/SETOFF. To further secure payment of all
amounts owing under the Credit Facilities and all of the Borrower's other
liabilities to the Bank, the Borrower grants to the Bank a continuing security
interest in: (i) all securities and other property of the Borrower in the
custody, possession or control of the Bank (other than property held by the
Bank solely in a fiduciary capacity), and (ii) all balances of deposit accounts
of the Borrower with the Bank. The Bank shall have the right at any time to
apply its own debt or liability to the Borrower, or to any other party liable
for payment of the Credit Facilities, in whole or partial payment of the Credit
Facilities or other present or future liabilities, without any requirement of
mutual maturity.
5.4 CROSS LIEN. Any of the Borrower's other property in which the Bank
has a security interest to secure payment of any other debt, whether absolute,
contingent, direct or indirect, including the Borrower's guaranties of the
debts of others, shall also secure payment of and be part of the Collateral for
the Credit Facilities.
6.0 GUARANTIES. (complete if applicable)
Payment of the Borrower's liabilities under the Credit Facilities shall be
guaranteed by _______________________________________, by execution of the
Bank's form of guaranty agreement. The liability of the guarantors, if more
than one, shall be joint and several.
7.0 SUBORDINATION. (complete if applicable)
The Credit Facilities shall be supported by the subordination of debt
owing from the Borrower to____________________________________________________
_______________________, including without limitation debt currently owing in
the amount of $ __________________________________________ in manner and by
agreement satisfactory to the Bank.
8.0 AFFIRMATIVE COVENANTS. So long as any debt remains outstanding under
the Credit Facilities, the Borrower, and each of its subsidiaries, if any,
shall:
8.1 INSURANCE. Maintain insurance with financially sound and reputable
insurers covering its properties and business against those casualties and
contingencies and in the types and amounts as shall be in accordance with sound
business and industry practices.
8.2 EXISTENCE. Maintain its existence and business operations as
presently in effect in accordance with all applicable laws and regulations, pay
its debts and obligations when due under normal terms, and pay on or before
their due date all taxes, assessments, fees and other governmental monetary
obligations, except as they may be contested in good faith if they have been
properly reflected on its books and, at the Bank's request, adequate funds or
security has been pledged to insure payment.
8.3 FINANCIAL RECORDS. Maintain proper books and records of account, in
accordance with generally accepted accounting principles where applicable, and
consistent with financial statements previously submitted to the Bank.
8.4 NOTICE. Give prompt notice to the Bank of the occurance of (i) any
event of acceleration, and (ii) any other development, financial or otherwise,
which would affect the Borrower's business, properties or affairs in a
materially adverse manner.
8.5 COLLATERAL AUDITS. (complete if applicable) Permit the Bank or its
agents to perform_______________________________________
(monthly, annual, etc.)
audits of the Collateral. The Borrower shall compensate the Bank for those
audits in accordance with the Bank's schedule of fees as may be amended from
time to time. Whether or not this section has been completed, the Bank shall
retain the right to inspect the Collateral and business records related to it
at such times and at such intervals as the Bank may reasonably require.
<PAGE> 4
8.6 MANAGEMENT. (complete if applicable) Maintain____________________ as
___________________________________________________________________________.
8.7 FINANCIAL REPORTS. Furnish to the Bank whatever information, books
and records the Bank may reasonably request, including at a minimum: (Check and
complete applicable clauses. If the Borrower has subsidiaries, all financial
statements required will be provided on a consolidated basis.)
/X/ A. Within 45 days after each quarterly period, a balance
------------------
(Monthly/quarterly)
sheet as of the end of that period and statements of income, retained
earnings, and cash flows from the beginning of that fiscal year to the
end of that period,
/X/ B. Within 90 days after and as of the end of each of its fiscal years,
a detailed financial statement ,
------------------------------
(audit/financial statement)
including a balance sheet and statements of income, retained earnings, and
cash flows audited
-------------------------------
(reviewed compiled certified)
by an independent certified public accountant of recognized standing.
/X/ C. Within 30 days after and as of the end of each calendar month, the
following lists, (check applicable clauses)
/X/ (1) a list of accounts receivable, aged from date of invoice;
/X/ (2) a list of accounts payable, aged from date of receipt;
/ / (3) a list of inventory, valued at the lower of cost or market.
/ / D. Within ______ days after and as of the end of each calendar year,
the signed personal financial statement of
_________________________________________________________________________.
(Borrower/Guarantor/other)
/ / E. Within 5 days after filing, a signed copy of the annual tax return,
with exhibits, of _______________________________________________________
(Borrower/Guarantor/other)
/ / F. An Environmental Certificate on the Bank's form on and as of the
date of this agreement, and thereafter as required by the Environmental
Certificate.
/ / G. _________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
9.0 NEGATIVE COVENANTS.
9.1 DEFINITIONS. As used in this agreement, the following terms have the
following respective meanings:
A. "Subordinated Debt" means debt subordinated to the Bank in manner and
by agreement satisfactory to the Bank.
B. "Tangible Net Worth" means total assets less intangible assets
and total liabilities. Intangible assets include goodwill, patents,
copyrights, mailing lists, catalogs, trademarks, bond discount and
underwriting expenses, organization expenses, and all other intangibles.
9.2 Unless otherwise noted, the financial requirements set forth in this
section shall be computed in accordance with generally accepted accounting
principles applied on a basis consistent with financial statements previously
submitted by the Borrower to the Bank.
9.3 Without the written consent of the Bank, so long as any debt remains
outstanding under the Credit Facilities, the Borrower shall not: (where
appropriate, covenants shall apply on a consolidated basis - clauses H-0 apply
only if completed.)
A. DIVIDENDS. Acquire or retire any of its shares of capital
stock, or declare or pay dividends or make any other distributions upon
any of its shares of capital stock, except dividends payable in its
capital stock, and dividends payable to "Subchapter S" corporation
shareholders, in amounts sufficient to pay the shareholder(s) income tax
obligations related to the Borrower's taxable income.
B. SALE OF SHARES. Issue, sell or otherwise dispose of any shares
of its capital stock or other securities, or rights, warrants or options
to purchase or acquire any such shares or securities.
C. DEBT. Incur, or permit to remain outstanding, debt for borrowed
money or installment obligations, except debt reflected in the latest
financial statement of the Borrower furnished to the Bank prior to
execution of this agreement and not to be paid with proceeds of borrowings
under the Credit Facilities. For purposes of this covenant, the sale of
any accounts receivable shall be deemed the incurring of debt for borrowed
money.
D. GUARANTIES. Guarantee or otherwise become or remain secondarily
liable on the undertaking of another, except for endorsement of drafts for
deposit and collection in the ordinary course of business.
E. LIENS. Create or permit to exist any lien on any of its
property, real or personal, except: existing liens known to the Bank;
liens to the Bank; liens incurred in the ordinary course of business
securing current nondelinquent liabilities for taxes, worker's
compensation, unemployment insurance, social security and pension
liabilities; and liens for taxes being contested in good faith.
F. ADVANCES AND INVESTMENTS. Purchase or acquire any securities
of, or make any loans or advances to, or investments in, any person, firm
or corporation, except obligations of the United States Government, open
market commercial paper rated one of the top two ratings by a rating
agency of recognized standing, or certificates of deposit in insured
financial institutions.
<PAGE> 5
G. USE OF PROCEEDS. Use, or permit any proceeds of the Credit
Facilities to be used, directly or indirectly, for the purpose of
"purchasing or carrying any margin stock" within the meaning of Federal
Reserve Board Regulation U. At the Banks request, the Borrower shall
furnish to the Bank a completed Federal Reserve Board Form U-1.
H. WORKING CAPITAL. Permit the difference between its current
assets [less all sums owing from stockholders, members or partners, as the
case may be, and from officers, managers and directors] and current
liabilities [plus all sums (other than Subordinated Debt) owing to
stockholders, members or partners, as the case may be, and to officers,
managers and directors] to be less than $______________________.(Strike
bracketed words if not applicable.)
I. TANGIBLE NET WORTH [PLUS SUBORDINATED DEBT]. Permit its
Tangible Net Worth [plus Subordinated Debt] to be less than $ 6,500,000.
(Strike bracketed words if not applicable).
J. CURRENT RATIO. Permit the ratio of its current assets to its
current liabilities to be less than _____________________ to 1.00.
K. LEVERAGE RATIO. Permit the ratio of its total liabilities to
its Tangible Net Worth (plus Subordinated Debt] to exceed 1.00 to 1.00.
(Strike bracketed words if not applicable).
L. FIXED ASSETS. Expend for, contract for, lease, rent or
otherwise acquire fixed assets, if the expense to the Borrower, and all
subsidiaries, if any, shall exceed $ __________________________________
in the aggregate in any one fiscal year.
M. LEASES. Contract for or assume in any manner, lease obligations
if the aggregate of all payments shall exceed $ _________________________
in any one fiscal year.
N. COMPENSATION. Pay, or award compensation of any kind, in any
one fiscal year, to __________________ exceeding $_____________________.
O. _________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
10.0 REPRESENTATIONS BY BORROWER. Each Borrower represents that: (a) the
execution and delivery of this agreement and the Notes and the performance of
the obligations they impose do not violate any law, conflict with any agreement
by which it is bound, or require the consent or approval of any governmental
authority or any third party; (b) this agreement and the Notes are valid and
binding agreements, enforceable according to their terms; and (c) all balance
sheets, income statements, and other financial statements furnished to the Bank
are accurate and fairly reflect the financial condition of the organizations
and persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed materially
and adversely since those dates. Each Borrower, if other than a natural
person, further represents that: (a) it is duly organized, existing and in good
standing under the laws of the jurisdiction under which it was organized; and
(b) the execution and delivery of this agreement and the Notes and the
performance of the obligations they impose (i) are within its powers; (ii) and
have been duly authorized by all necessary action of its governing body, and
(iii) do not contravene the terms of its articles of incorporation or
organization, its by laws, or any partnership, operating or other agreements
governing its affairs.
11.0 ACCELERATION.
11.1 EVENTS OF ACCELERATION. If any of the following events occur, the
Credit Facilities shall terminate and all borrowings under them shall become
due immediately, without notice, at the Bank's option, whether or not the Bank
has made demand.
A. The Borrower or any guarantor of any of the Credit Facilities
("Guarantor") fails to pay when due any amount payable under the Credit
Facilities or under any agreement or instrument evidencing debt to any
creditor.
B. The Borrower or any Guarantor (a) fails to observe or perform
any other term of this agreement or the Notes; (b) makes any materially
incorrect or misleading representation, warranty or certificate to the Bank;
(c) makes any materially incorrect or misleading representation in any
financial statement or other information delivered to the Bank; or (d) defaults
under the terms of any agreement or instrument relating to any debt for
borrowed money (other than borrowings under the Credit Facilities) such that
the creditor declares the debt due before its maturity.
C. There is a default under the terms of any loan agreement,
mortgage, security agreement or any other document executed as part of the
Credit Facilities, or any guaranty of the liabilities under the Credit
Facilities becomes unenforceable in whole or in part, or any Guarantor fails to
promptly perform under its guaranty.
D. A "reportable event" (as defined in the Employee Retirement
Income Security Act of 1974 as amended) occurs that would permit the Pension
Benefit Guaranty Corporation to terminate any employee benefit plan of the
Borrower or any affiliate of the Borrower.
E. The Borrower or any Guarantor becomes insolvent or unable to pay
its debts as they become due.
F. The Borrower or any Guarantor (a) makes an assignment for the
benefit of creditors; (b) consents to the appointment of a custodian, receiver
or trustee for it or for a substantial part of its assets; or (c) commences
any proceeding under any bankruptcy, reorganization, liquidation or similar
laws of any jurisdiction.
G. A custodian, receiver or trustee is appointed for the Borrower
or any Guarantor or for a substantial part of its assets without its consent
and is not removed within 60 days after the appointment.
H. Proceedings are commenced against the Borrower or any Guarantor
under any bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and those proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the commencement of the
proceedings.
I. Any judgment is entered against the Borrower or any Guarantor.
or any attachment, levy or garnishment is issued against any property of the
Borrower or any Guarantor.
J. The Borrower or any Guarantor dies.
<PAGE> 6
K. The Borrower or any Guarantor, without the Bank's written
consent, (a) is dissolved, (b) merges or consolidates with any third party, (c)
leases, sells or otherwise conveys a material part of its assets or business
outside the ordinary course of business, (d) leases, purchases, or otherwise
acquires a material part of the assets of any other corporation or business
entity, except in the ordinary course of business, or (e) agrees to do any of
the foregoing (notwithstanding the foregoing, any subsidiary may merge or
consolidate with any other subsidiary, or with the Borrower, so long as the
Borrower is the survivor).
L. The loan-to-value ratio of any pledged securities at any time
exceeds %, and such excess continues for five (5) days after notice from the
Bank to the Borrower.
M. There is a substantial change in the existing or prospective
financial condition of the Borrower or any Guarantor which the Bank in good
faith determines to be materially adverse.
N. The Bank in good faith shall deem itself insecure.
11.2 REMEDIES. If the amounts owing under the Credit Facilities are
not paid at maturity, whether by demand, acceleration, or otherwise, the Bank
shall have all of the rights and remedies provided by any law or agreement.
Any requirement of reasonable notice shall be met if the Bank sends the notice
to the Borrower at least seven (7) days prior to the date of sale, disposition
or other event giving rise to the required notice. The Bank is authorized to
cause all or any part of the Collateral to be transferred to or registered in
its name or in the name of any other person, firm or corporation, with or
without designation of the capacity of such nominee. The Borrower shall be
liable for any deficiency remaining after disposition of any Collateral. The
Borrower is liable to the Bank for all reasonable costs and expenses of every
kind incurred in the making or collection of the Credit Facilities, including,
without limitation, reasonable attorneys' fees and court costs (whether
attributable to the Bank's in-house or outside counsel.) These costs and
expenses shall include, without limitation, any costs or expenses incurred by
the Bank in any bankruptcy, reorganization, insolvency or other similar
proceeding.
12.0 MISCELLANEOUS.
12.1 Notice from one party to another relating to this agreement
shall be deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or fax number set forth
under its name below by any of the following means: (a) hand delivery, (b)
registered or certified mail, postage prepaid, with return receipt requested,
(c) first class or express mail, postage prepaid, (d) Federal Express, or like
overnight courier service, or (e) fax, telex or other wire transmission with
request for assurance of receipt in a manner typical with respect to
communication of that type. Notice made in accordance with this section shall
be deemed delivered upon receipt if delivered by hand or wire transmission,
three (3) business days after mailing if mailed by first class, registered or
certified mail, or one business day after mailing or deposit with an overnight
courier service if delivered by express mail or overnight courier.
12.2 No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver. No single or partial exercise by the Bank of
any right or remedy shall preclude any other future exercise of it or the
exercise of any other right or remedy. No waiver or indulgence by the Bank of
any default shall be effective unless in writing and signed by the Bank, nor
shall a waiver on one occasion be construed as a bar to or waiver of that right
on any future occasion.
12.3 This agreement, the Notes, and any related loan documents embody
the entire agreement and understanding between the Borrower and the Bank and
supersede all prior agreements and understandings relating to their subject
matter. If any one or more of the obligations of the Borrower under this
agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Borrower shall not in any way be affected or impaired, and
such validity, illegality or unenforceability in one jurisdiction shall not
affect the validity, legality or enforceability of the obligations of the
Borrower under this agreement or the Notes in any other jurisdiction.
12.4 The Borrower, if more than one, shall be jointly and severally
liable.
12.5 This agreement is delivered in the State of Michigan and
governed by Michigan law. This agreement is binding on the Borrower and its
successors, and shall inure to the benefit of the Bank, its successors and
assigns.
12.6 Section headings are for convenience of reference only and shall
not affect the interpretation of this agreement.
13.0 WAIVER OF JURY TRIAL. The Bank and the Borrower, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of this agreement or
any related instrument or agreement, or any of the transactions contemplated by
this agreement, or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Borrower
shall seek to consolidate, by counterclaim or otherwise, any action in which a
jury trial has been waived with any other action in which a jury trial cannot
be or has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Bank or the Borrower
except by a written instrument executed by both of them. Executed by the
parties on: August 28, 1995 .
----------------
(Date)
"BANK": "BORROWER":
NBD Bank National TechTeam, Inc.
By: Gregory D. Toney, Loan Officer By: Lawrence A. Mills, CFO
Gregory D. Toney, Loan Officer Lawrence A. Mills, CF0
____________________________________ ____________________________
ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:
18800 Hubbard Dr. 22000 Garrison Avenue
Dearborn, MI 48126 Dearborn, MI 48124
____________________________________ ____________________________
Fax/Telex No. ______________________ Fax/Telex No._______________
<PAGE> 1
EXHIBIT 10.19
[NBD LOGO]
Due August 28, 2000 $ 565,998.00
----------------------------- --------------------------------
No. Date August 28 , 1995
----------------------------- --------------------------- -
PROMISE TO PAY: For value received, the undersigned (the "Borrower")
promises to pay to NBD BANK (the "Bank") or order, at any office of the Bank
in the State of Michigan, the sum of Five Hundred Sixty Five Thousand Nine
Hundred Ninety Eight and 00/100 * DOLLARS ($565,998.00) plus interest computed
on the basis of the actual number of days elapsed in a year of 360 days at the
rate of:
8.90% per annum (the "Note Rate") until maturity, whether by acceleration or
otherwise, and at the rate of 3% per annum above the Note Rate on
overdue principal from the date when due until paid; or
% per annum above the rate announced from time to time by the Bank as its
"prime" rate (the "Note Rate"), which rate may not be the lowest rate
charged by the Bank to any of its customers, until maturity, whether by
acceleration or otherwise, and at the rate of 3% per annum above the
Note Rate on overdue principal from the date when due until paid. Each
change in the "prime" rate will immediately change the Note Rate.
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payment which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
The Borrower will pay this sum in 59 consecutive monthly installments of
$11,721.74, including interest, commencing September 28, 1995 with a final
payment due August 28, 2000 at which time the entire balance of unpaid
principal plus accrued interest shall be due and payable immediately. Each
payment will be applied first to accrued interest, then to principal.
LOAN AGREEMENT: [complete if applicable] This note evidences a debt under the
terms of a Credit Agreement between the Bank and the Borrower dated August 28,
1995 and any amendments.
PREPAYMENT: If a fixed interest rate is specified above, the Borrower may
prepay all or any part of the principal balance of this note on one business
day's notice provided that, in addition to all principal, interest and costs
owing at the time of prepayment, the Borrower pays a prepayment premium equal
to the Current Value of (i) the interest that would have accrued on the amount
prepaid at the Note Rate, minus (ii) the interest that could accrue on the
amount prepaid at the Treasury Rate. In both cases, interest will be calculated
from the prepayment date to the maturity dates of the installments being
prepaid. Such maturity dates shall be determined by applying the prepayment to
the scheduled installments of principal in their inverse order of maturity.
"Treasury Rate" means the yield, as of the date of prepayment, on United States
Treasury bills, notes or bonds, selected by the Bank in its discretion, having
maturities comparable to the scheduled maturities of the installments being
prepaid. "Current Value" means the net present value of the dollar amount of
the interest to be earned, discounted at the Treasury Rate. In no event shall
the prepayment premium be less than zero. The Borrower's notice of its intent
to prepay shall be irrevocable. If the balance of this note is accelerated in
accordance with the terms of this note, the resulting balance due shall be
considered a prepayment due and payable as of the date of acceleration. The
Borrower agrees that the prepayment premium is a reasonable estimate of loss
and not a penalty. The prepayment premium is payable as liquidated damages for
the loss of bargain and its payment shall not in any way reduce, affect or
impair any other obligation of the Borrower under this note.
SECURITY: To secure the payment of this note and any other present or future
liability of the Borrower, whether several, joint, or joint and several, the
Borrower pledges and grants to the Bank a continuing security interest in the
following described property and all of its additions, substitutions,
increments, proceeds and products, whether now owned or later acquired
("Collateral"):
1. All securities and other property of the Borrower in the custody, possession
or control of the Bank (other than property held by the Bank solely in a
fiduciary capacity);
2. All property or securities declared or acknowledged to constitute security
for any past, present or future liability of the Borrower to the Bank;
3. All balances of deposit accounts of the Borrower with the Bank;
4. The following additional property: Aspect Teleset Customview Director 24 LIC
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BANK'S RIGHT TO SETOFF: The Bank shall have the right at any time to apply its
own debt or liability to the Borrower or to any other party liable on this note
in whole or partial payment of this note or other present or future
liabilities, without any requirement of mutual maturity.
REPRESENTATIONS BY BORROWER: Each Borrower represents: (a) that the execution
and delivery of this Note and the performance of the obligations it imposes do
not violate any law, conflict with any agreement by which it is bound, or
require the consent or approval of any governmental authority or any third
party; (b) that this Note is a valid and binding agreement, enforceable
according to its terms; and (c) that all balance sheets, profit and loss
statements, and other financial statements furnished to the Bank are accurate
and fairly reflect the financial condition of the organizations and persons to
which they apply on their effective dates, including contingent liabilities of
every type, which financial condition has not changed materially and adversely
since those dates. Each Borrower, if other than a natural person, further
represents: (a) that it is duly organized, existing and in good standing under
the laws where it is organized; and (b) that the execution and delivery of this
Note and the performance of the obligations it imposes (i) are within its
powers; (ii) have been duly authorized by all necessary action of its governing
body; and (iii) do not contravene the terms of its articles of incorporation or
organization, its by-laws, or any agreement governing its affairs.
WAIVER OF JURY TRIAL: The Bank and the Borrower, after consulting or having had
the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this note or any related instrument or
agreement or any of the transactions contemplated by this note or any course of
conduct, dealing, statements, whether oral or written, or actions of either of
them. Neither the Bank nor the Borrower shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Borrower except by a written instrument
executed by both of them.
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS INCLUDING EVENTS OF DEFAULT
BORROWER:
Address: 22000 Garrison Avenue National TechTeam, Inc.
--------------------------- -------------------------------
Dearborn, MI 48124
---------------------------
Address: By: Lawrence A. Mills
-------------------------- -------------------------------
Lawrence A. Mills, CFO
--------------------------
-------------------------------
Approved by 8470 N / X /
PN / /
R / /
PR / /
S / /
SUPP / X /
U / / CK DDA #6024504
<PAGE> 2
ADDITIONAL TERMS AND CONDITIONS
EVENTS OF DEFAULT/ACCELERATION: If any of the following events occurs:
1. The Borrower or any guarantor of this note ("Guarantor") fails to pay when
due any amount payable under this note or under any agreement or instrument
evidencing debt to any creditor;
2. The Borrower or any Guarantor (a) fails to observe or perform any other term
of this note; (b) makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; (c) makes any
materially incorrect or misleading representation in any financial statement
or other information delivered to the Bank; or (d) defaults under the terms
of any agreement or instrument relating to any debt for borrowed money
(other than the debt evidenced by this note) such that the creditor declares
the debt due before its maturity;
3. There is a default under the terms of any loan agreement, mortgage, security
agreement, or any other document executed as part of the loan evidenced by
this note, or any guaranty of the loan evidenced by this note becomes
unenforceable in whole or in part, or any Guarantor fails to promptly
perform under such a guaranty;
4. A "reportable event" (as defined in the Employee Retirement Income Security
Act of 1974 as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of the Borrower
or any affiliate of the Borrower;
5. The Borrower or any Guarantor becomes insolvent or unable to pay its debts
as they become due;
6. The Borrower or any Guarantor (a) makes an assignment for the benefit of
creditors; (b) consents to the appointment of a custodian, receiver, or
trustee for itself or for a substantial part of its assets; or (c) commences
any proceeding under any bankruptcy, reorganization, liquidation, insolvency
or similar laws of any jurisdiction;
7. A custodian, receiver, or trustee is appointed for the Borrower or any
Guarantor or for a substantial part of its assets without its consent and is
not removed within 60 days after such appointment;
8. Proceedings are commenced against the Borrower or any Guarantor under any
bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and such proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the commencement of
such proceedings;
9. Any judgment is entered against the Borrower or any Guarantor, or any
attachment, levy, or garnishment is issued against any property of the
Borrower or any Guarantor;
10. The Borrower or any Guarantor dies;
11. The Borrower or any Guarantor, without the Bank's written consent, (a) is
dissolved, (b) merges or consolidates with any third party, (c) leases,
sells or otherwise conveys a material part of its assets or business outside
the ordinary course of its business, or (d) leases, purchases or otherwise
acquires a material part of the assets of any other corporation or business
entity except in the ordinary course of business, or (e) agrees to do any of
the foregoing (notwithstanding the foregoing, any subsidiary may merge or
consolidate with any other subsidiary, or with the Borrower so long as the
Borrower is the survivor);
12. The loan-to-value ratio of any pledged securities at any time exceeds %,
and such excess continues for five (5) days after notice from the Bank to
the Borrower;
13. There is a substantial change in the existing or prospective financial
condition of the Borrower or any Guarantor which the Bank in good faith
determines to be materially adverse;
14. The Bank in good faith deems itself insecure; then this note shall become
due immediately, without notice, at the Bank's option.
REMEDIES: If this note is not paid at maturity, whether by acceleration or
otherwise, the Bank shall have all of the rights and remedies provided by any
law or agreement. Any requirement of reasonable notice shall be met if the Bank
sends the notice to the Borrower at least seven (7) days prior to the date of
sale, disposition or other event giving rise to the required notice. The Bank
is authorized to cause all or any part of the Collateral to be transferred to
or registered in its name or in the name of any other person, firm or
corporation, with or without designation of the capacity of such nominee. The
Borrower shall be liable for any deficiency remaining after disposition of any
Collateral. The Borrower is liable to the Bank for all reasonable costs and
expenses of every kind incurred in the making or collection of this note,
including, without limitation, reasonable attorneys' fees and court costs.
These costs and expenses shall include, without limitation, any costs or
expenses incurred by the Bank in any bankruptcy, reorganization, insolvency or
other similar proceeding.
WAIVER: Each endorser and any other party liable on this note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of the
Collateral, to the addition of any party, and to the release or discharge of,
or suspension of any rights and remedies against, any person who may be liable
for the payment of this note. No delay on the part of the bank in the exercise
of any right or remedy shall operate as a waiver. No single or partial exercise
by the Bank of any right or remedy shall preclude any other future exercise of
it or the exercise of any other right or remedy. No waiver or indulgence by the
Bank of any default shall be effective unless in writing and signed by the
Bank, nor shall a waiver on one occasion be construed as a bar to or waiver of
that right on any future occasion.
MISCELLANEOUS: The Borrower, if more than one, shall be jointly and severally
liable, and the term "Borrower" shall mean any one or more of them. This note
shall be binding on the Borrower and its successors, and shall inure to the
benefit of the Bank, its successors and assigns. Any reference to the Bank shall
include any holder of this note. This note is delivered in the State of
Michigan and governed by Michigan law. Section headings are for convenience of
reference only and shall not affect the interpretation of this note.
===============================================================================
PAYMENT GUARANTEED BY:
- -------------------------------------------------------------------------------
(Signature) Address
- -------------------------------------------------------------------------------
(Signature) Address
- -------------------------------------------------------------------------------
(Signature) Address
- -------------------------------------------------------------------------------
FOR BANK USE ONLY
- -------------------------------------------------------------------------------
FACILITY AUTHORIZED TO LEND UNDER
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
METHOD OF DISBURSEMENT
- -------------------------------------------------------------------------------
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN CLASSIFICATION
- ------------------------------------------------------------------------------------------------------------------------------------
Country Code ORC Address SIC Code Borr. Branch Number Social Security Number
Div Reg Grp Sect ORC Code
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Account Limit Special ID Ln. FRB Code Officer Loan Profit Tx. Pr. Yr. Main Coll. Reg U/
Tm. Initials Purpose Center Ex Rel BA Type
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
BILLING INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Payment 1st Principal 1st Interest Interest Incl. Principal Interest Lead Time Day of Month
Amount Payment Payment Cycle Cycle
- ------------------------------------------------------------------------------------------------------------------------------------
Int. Collars Charge DDA Account Number Pymt. Chg. Rev. Part Maximum Note Limit
High Low Type Type Cr. Bght/Sold
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
<PAGE> 3
[NBD LOGO] CONTINUING SECURITY AGREEMENT
NAME OF DEBTOR: National TechTeam, Inc. ("the Debtor")
-------------------------------------------------
TAXPAYER I.D. NO: 38-2774613
---------------------------------------------------------------
22000 Garrison Avenue,
DEBTOR'S ADDRESS (Chief executive office): Dearborn, MI 48124
--------------------------------------
GRANT OF SECURITY INTEREST: The Debtor grants to NBD BANK, a Michigan banking
corporation, the secured party referred to as the "Bank", whose address is 611
Woodward Avenue, Detroit, Michigan 48226, a continuing security interest in the
Collateral listed below, to secure the payment and performance of:
All of Debtor's debt to the Bank; and
(check if applicable)
/ / All of 's debt to the Bank.
---------------------------------------------
(Name of Borrower if other than Debtor)
Debt shall include each and every debt, liability and obligation of every type
and description now owed or arising at a later time, whether they are direct or
indirect, joint, several, or joint and several and whether or not of the same
type or class as presently outstanding, which shall collectively be referred to
as "Liabilities." Liabilities shall also include all interest, costs, expenses
and reasonable attorney's fees accruing to or incurred by the Bank in
collecting the Liabilities or in the protection, maintenance or liquidation of
the Collateral.
COLLATERAL:
/ / Accounts Receivable / / Equipment / / Farm Products
/ / Inventory / / Instruments /X/ Specific (see Item 6)
NOTE: If no box is checked, it is expressly agreed by Debtor that the Bank is
granted a security interest in "All Assets." "All Assets" of Debtor shall
include Accounts Receivable, Inventory, Equipment, Instruments and Farm
Products, all as defined below.
DESCRIPTION OF COLLATERAL: The Collateral covered by this agreement is all of
the Debtor's property indicated above and defined below, present and future,
including but not limited to any items listed on any schedule or list attached.
Also included are all proceeds, including but not limited to stock rights,
subscription rights, dividends, stock dividends, stock splits, or liquidating
dividends, and all cash, accounts, chattel paper and general intangibles
arising from the sale, rent, lease, casualty loss or other disposition of the
Collateral, and any Collateral returned to, repossessed by or stopped in
transit by the Debtor. Also included are the Debtor's books and records which
relate to the Collateral. Where the Collateral is in the possession of the
Bank, the Debtor agrees to deliver to the Bank any property which represents an
increase in the Collateral or profits or proceeds of the Collateral.
1. "Accounts Receivable" shall consist of accounts, chattel paper and general
intangibles as those terms are defined in the Michigan Uniform Commercial
Code ("UCC"). Also included is any right to a refund of taxes paid at any
time to any governmental entity. Also included are letters of credit, and
drafts under them, given in support of Accounts Receivable. Debtor
warrants that its chief executive office is at the address shown above.
2. "Inventory" shall consist of all property held at any location by or for
the Debtor for sale, rent or lease, or furnished or to be furnished by the
Debtor under any contract of service, or raw materials or work in process
and their products, or materials used or consumed in its business, and
shall include containers and shelving useful for storing. Without limiting
the security interest granted, the Inventory is presently located at
------------------------------------------------------------------------
------------------------------------------------------------------------.
3. "Equipment" shall consist of any goods at any time acquired, owned or held
by the Debtor at any location primarily for use in its business, including
but not limited to machinery, fixtures, furniture, furnishings and
vehicles, and any accessions, parts, attachments, accessories, tools,
dies, additions, substitutions, replacements and appurtenances to them or
intended for use with them. Without limiting the security interest
granted, the Equipment is presently located at
--------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------.
4. "Instruments" shall consist of the Debtor's interest of any kind in any
negotiable instrument or security as those terms are defined in the UCC,
or any other writing which evidences a right to payment of money and is of
a type which is, in the ordinary course of business, transferred by
delivery alone or by delivery with any necessary endorsement or
assignment.
5. "Farm Products" shall consist of all poultry and livestock and their
young, along with their products and produce; all crops, annual or
perennial, and all products of the crops; and all feed, seed, fertilizer,
medicines, and other supplies used or produced in farming operations. The
Debtor will provide the Bank with a written list of the buyers, commission
merchants or selling agents to or through whom it may sell the Farm
Products, in form acceptable to the Bank. The Debtor will keep this list
current by notice to the Bank at least 7 days prior to any sale. In this
paragraph the term farm products, buyers, commission merchants and selling
agents have the meanings given to them in the Federal Food Security Act of
1985, and Section 9307 of the UCC.
6. "Specific" shall consist of the following, and all accessions, parts,
attachments, accessories, additions, substitutions, replacements,
appurtenances, and their related rights: Aspect Teleset Customview
Director 24 LIC
--------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
presently located at: 22000 Garrison Avenue, Dearborn, MI 48124
---------------------------------------------------
ADDITIONAL TERMS AND CONDITIONS: The Debtor agrees to all of the Additional
Terms and Conditions on the reverse.
WAIVER OF JURY TRIAL: The Bank and the Debtor after consulting or having had
the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this agreement or any related
instrument or agreement, or any of the transactions contemplated by this
agreement, or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Debtor shall
seek to consolidate, by counterclaim or otherwise, any action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been modified
in any respect or relinquished by either the Bank or the Debtor except by a
written instrument executed by both of them.
DEBTOR:
Dated: August 28, ,1995 National TechTeam, Inc.
------------------ -- ---------------------------------------
By: Lawrence A. Mills
---------------------------------------
Lawrence A. Mills, CFO
---------------------------------------
---------------------------------------
<PAGE> 4
WARRANTIES & COVENANTS: The Debtor warrants and covenants to the Bank that:
1. It will pay its Liabilities to the Bank secured by this agreement;
2. It is or will become the owner of the Collateral free from any liens,
encumbrances or security interests, except for this security interest, and
existing liens disclosed to and accepted by the Bank in writing, and will
defend the Collateral against all claims and demands of all persons at any
time claiming any interest in it;
3. It will keep the Collateral free of liens, encumbrances and other security
interests, maintain it in good repair, not use it illegally and exhibit it
to the Bank on demand;
4. At its own expense, the Debtor will maintain comprehensive casualty
insurance on the Collateral against such risks, in such amounts, with such
deductibles and with such companies as may be satisfactory to the Bank, and
provide the Bank with proof of insurance satisfactory to the Bank. Each
insurance policy shall contain a lender's loss payable endorsement
satisfactory to the Bank and a prohibition against cancellation or amendment
of the policy or removal of the Bank as loss payee without at least 30 days
prior written notice to the Bank. In all events, the amounts of such
insurance coverages shall conform to prudent business practices and shall be
in such minimum amounts that the Debtor will not be deemed a co-insurer;
5. It will not sell or offer to sell or otherwise transfer the Collateral, nor
change the location of the Collateral, without the written consent of the
Bank, except in the ordinary course of business;
6. It will pay promptly when due all taxes and assessments on the Collateral,
or for its use or operation;
7. No financing statement covering all or any part of the Collateral or any
proceeds is on file in any public office, unless the Bank has approved that
filing, and at the Bank's request the Debtor will execute one or more
financing statements in form satisfactory to the Bank and will pay the cost
of filing them in all public offices wherever filing is deemed by the Bank
to be desirable;
8. It will immediately notify the Bank in writing of any name change or any
change in business organization;
9. It will provide any information that the Bank may reasonably request, and
will permit the Bank upon prior notice to inspect and copy its books and
records during normal business hours.
ACCOUNTS RECEIVABLE: The Debtor acknowledges that if the Collateral includes
"Accounts Receivable" then until the Bank gives notice to the Debtor to the
contrary, the Debtor will, in the usual course of its business and at its own
cost and expense, on the Bank's behalf but not as the Bank's agent, demand and
receive and use its best efforts to collect all moneys due or to become due on
the Accounts Receivable. Until the Bank gives notice to the Debtor to the
contrary or until the Debtor is in default, it may use the funds collected in
its business. Upon notice from the Bank or upon default, the Debtor agrees that
all sums of money it receives on account of or in payment or settlement of the
Accounts Receivable shall be held by it as trustee for the Bank without
commingling with any of its funds, and shall immediately be delivered to the
Bank with endorsement to the Bank's order of any check or similar instrument.
It is agreed that, at any time the Bank so elects, it shall be entitled, in its
own name or in the name of the Debtor or otherwise, but at the expense and cost
of the Debtor, to collect, demand, receive, sue for or compromise any and all
Accounts Receivable, and to give good and sufficient releases, to endorse any
checks, drafts or other orders for the payment of money payable to the Debtor
and, in its discretion, to file any claims or take any action or proceeding
which the Bank may deem necessary or advisable. It is expressly understood and
agreed, however, that the Bank shall not be required or obligated in any manner
to make any demand or to make any inquiry as to the nature or sufficiency of
any payment received by it or to present or file any claim or take any other
action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times. All notices
required in this paragraph will be immediately effective when sent. Such
notices need not be given prior to the Bank taking action.
REPRESENTATIONS BY DEBTOR: Each Debtor represents: (a) that the execution and
delivery of this agreement and the performance of the obligations it imposes do
not violate any law, conflict with any agreement by which it is bound, or
require the consent or approval of any governmental authority or any third
party; (b) that this agreement is a valid and binding agreement, enforceable
according to its terms; and (c) that all balance sheets, profit and loss
statements, and other financial statements furnished to the Bank are accurate
and fairly reflect the financial condition of the organizations and persons to
which they apply on their effective dates, including contingent liabilities of
every type, which financial condition has not changed materially and adversely
since those dates. Each Debtor, if other than a natural person, further
represents: (a) that it is duly organized, existing and in good standing under
the laws where it is organized; and (b) that the execution and delivery of this
agreement and the performance of the obligations it imposes (i) are within its
powers; (ii) have been duly authorized by all necessary action of its governing
body; and (iii) do not contravene the terms of its articles of incorporation or
organization, its by-laws, or any agreement governing its affairs.
PLEDGE: If the Debtor is not liable for all or any part of the Borrower's
obligations to the Bank (the "Debt"), then it agrees that:
(a) If any monies become available to the Bank that it can apply to any Debt,
the Bank may apply them to Debt not secured by this agreement.
(b) Without notice to or the consent of the Debtor, the Bank may (i) take any
action it chooses against any Borrower, against any collateral for the Debt,
or against any other person liable for the Debt; (ii) release any Borrower
or any other person liable for the Debt, release any collateral for the
Debt, and neglect to perfect any interest in any such collateral; (iii)
forbear or agree to forbear from exercising any rights or remedies,
including any right of setoff, that it has against the Borrower, any other
person liable for the Debt, or any other collateral for the Debt; (iv)
extend to any Borrower additional Debt to be secured by this agreement; or
(v) renew, extend, modify or amend any Debt, and deal with any Borrower or
any other person liable for the Debt as it chooses.
(c) None of the Debtor's obligations under this agreement shall be affected by
(i) any act or omission of the Bank; (ii) the voluntary or involuntary
liquidation, sale or other disposition of all or substantially all of the
assets of any Borrower; (iii) any receivership, insolvency, bankruptcy,
reorganization or other similar proceedings affecting any Borrower or any of
its assets; or (iv) any change in the composition or structure of any
Borrower or any Debtor, including a merger or consolidation with any other
entity.
(d) The Bank's rights under this section and this agreement are unconditional
and absolute, regardless of the unenforceability of any provision of any
agreement between any Borrower and the Bank, or the existence of any
defense, setoff or counterclaim that any Borrower may be able to assert
against the Bank.
(e) It waives all rights of subrogation, contribution, reimbursement, indemnity,
exoneration, implied contract, recourse to security, and any other claim (as
that term is defined in the federal Bankruptcy Code, as amended from time to
time) that it may have or acquire in the future against any Borrower, any
other person liable for the Debt, or any collateral for the Debt, because of
the existence of this agreement, the Debtor's performance under this
agreement, or the Bank's availing itself of any rights or remedies under
this agreement.
(f) If any payment to the Bank on any Debt is wholly or partially invalidated,
set aside, declared fraudulent or required to be repaid to the Borrower or
anyone representing the Borrower or the Borrower's creditors under any
bankruptcy or insolvency act or code, under any state or federal law, or
under common law or equitable principles, then this agreement shall remain
in full force and effect or be reinstated, as the case may be, until payment
in full to the Bank of the repaid amounts, and of the Debt. If this
agreement must be reinstated, the Debtor agrees to execute and deliver to
the Bank new agreements and financing statements, if necessary, in form and
substance acceptable to the Bank, covering the Collateral.
DEFAULT/REMEDIES: If the Debtor or the Borrower fails to pay any of the
Liabilities when due, or if a default by anyone occurs under the terms of any
agreement related to any of the Liabilities, or if the Debtor dies or fails to
observe or perform any term of this agreement, or if any representation or
warranty contained in this agreement is untrue, or if there is a material
change in the financial condition of the Debtor which the Bank in good faith
determines to be materially adverse, then the Bank shall have the rights and
remedies provided by law or this agreement, including but not limited to the
right to require the Debtor to assemble the Collateral and make it available to
the Bank at a place to be designated by the Bank which is reasonably
convenient to both parties, the right to take possession of the Collateral with
or without demand and with or without process of law, and the right to sell and
dispose of it and distribute the proceeds according to law. In connection with
the right of the Bank to take possession of the Collateral, the Bank may take
possession of any other items of property in or on the Collateral at the time
of taking possession, and hold them for the Debtor without liability on the
part of the Bank. If there is any statutory requirement for notice, that
requirement shall be met if the Bank sends notice to the Debtor at least seven
(7) days prior to the date of sale, disposition or other event giving rise to
the required notice. The Debtor shall be liable for any deficiency remaining
after disposition of the Collateral.
MISCELLANEOUS:
1. Where the Collateral is located at, used in or attached to a facility
leased by the Debtor, the Debtor will obtain from the lessor a consent to
the granting of this security interest and a subordination of the lessor's
interest in any of the Collateral, in form acceptable to the Bank.
2. At its option the Bank may, but shall be under no duty or obligation to,
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral, pay for insurance on the Collateral, and
pay for the maintenance and preservation of the Collateral, and the Debtor
agrees to reimburse the Bank on demand for any payment made or expense
incurred by the Bank, with interest at the maximum legal rate.
3. No delay on the part of the Bank in the exercise of any right or remedy
shall operate as a waiver, no single or partial exercise by the Bank of any
right or remedy shall preclude any other exercise of it or the exercise of
any other right or remedy, and no waiver or indulgence by the Bank of any
default shall be effective unless in writing and signed by the Bank, nor
shall a waiver on one occasion be construed as a waiver of that right on any
future occasion.
4. If any provision of this agreement is invalid, it shall be ineffective
only to the extent of its invalidity, and the remaining provisions shall be
valid and effective.
5. Except as provided in the Accounts Receivable paragraph above, notice
from one party to another relating to this agreement shall be deemed
effective if made in writing (including telecommunications) and delivered to
the recipient's address, telex number or facsimile number set forth above by
any of the following means: (a) hand delivery, (b) registered or certified
mail, postage prepaid, with return receipt requested, (c) first class or
express mail, postage prepaid, (d) Federal Express, Purolator Courier or
like overnight courier service, or (e) facsimile, telex or other wire
transmission with request for assurance of receipt in a manner typical with
respect to communications of that type. Notice made in accordance with this
section shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing if mailed by first
class, registered or certified mail, or on the next business day after
mailing or deposit with an overnight courier service if delivered by express
mail or overnight courier.
6. All rights of the Bank shall inure to the benefit of the Bank's
successors and assigns; and all obligations of the Debtor shall bind the
Debtor's heirs, executors, administrators, successors and assigns. If there
is more than one Debtor, their obligations are joint and several.
7. A carbon, photographic or other reproduction of this agreement is
sufficient and can be filed as a financing statement. The Bank is
irrevocably appointed the Debtor's attorney-in-fact to execute any financing
statement on the Debtor's behalf covering the Collateral.
8. The terms and provisions of this security agreement shall be governed by
Michigan law.
<PAGE> 1
EXHIBIT 10.20
NBD BANK AND NATIONAL TECHTEAM, INC.
END USER COMPUTER TRAINING AGREEMENT
This Agreement is made September 15, 1995, by and between NBD Bank,
including without limitation its now owned and hereafter acquired subsidiaries
and affiliates, hereafter "NBD", having its principle place of business at 611
Woodward Avenue, Detroit, Michigan 48226, and National TechTeam, Inc.,
hereafter "NTT", having its principle place of business at 22000 Garrison
Avenue, Dearborn, Michigan 48124.
GENERAL.
Whereas NBD seeks to promote the long-term effectiveness of its employees by
improving their productive use of personal computers and software programs,
Whereas NTT would like to develop, customize, and deliver high-quality training
programs to meet NBD's needs. Therefore this Agreement, including the exhibits
which may be revised from time-to-time with the consent of both parties, sets
forth the training services and support as well as the terms and conditions
that will govern both parties. It is agreed that these and future services
will be adapted to the needs of NBD and delivered in a manner that will ensure
NBD's workforce gains and maintains a competitive advantage now and for the
future.
1. TERM AND TERMINATION.
1.01 INITIAL TERM. The initial term of this Agreement is 24
months.
1.02 AUTOMATIC RENEWAL. Unless otherwise terminated by either
party 60 days prior to the end of the then current term of the
Agreement, the Agreement shall automatically renew for successive
one-year terms. NTT will furnish NBD with a reminder notice of the
contract renewal 90 days prior to the automatic contract renewal
date.
1.03 TERMINATION WITHOUT CAUSE. Either party may terminate this
Agreement without cause by giving the other party 120 days advance
written notice.
1.04 TERMINATION WITH CAUSE. Either party may, upon giving the
required notice, terminate this Agreement with cause as specifically
set forth in other sections of this Agreement.
2. COURSES, CUSTOMIZATION, AND DOCUMENTATION SERVICES.
2.01 NBD BANK CLOSED ENROLLMENT. NTT will provide closed
enrollment, instructor-led training classes for the approved NBD
Standard software applications (see Exhibit A). These courses and
classes will be adapted to NBD's needs and will include beginning,
intermediate, and advanced level topics.
2.02 NEW COURSE DEVELOPMENT. NTT will assist NBD in meeting its
professional training needs by developing and delivering new
training courses and programs that enhance NBD's ability to deliver
high-quality services and products to its customers. New courses or
replacement courses for those on the NBD closed enrollment course
list require four to eight weeks to develop and another three to
four weeks following approval by NBD before they can be presented.
Course development and deployment will be accomplished using the
methodology defined in Exhibit B, Courseware Design Evaluation
Checklist.
2.03 MODIFICATION OF EXISTING COURSEWARE. As part of the
continuous process improvement, NTT will partner with NBD to modify
and adapt NTT's existing Courseware to NBD's specific needs.
Modification of existing Courseware, like the development of new
Courseware, will be guided by the process described in Exhibit B,
Courseware Design Evaluation Checklist.
2.03.1 Within seven business days after NTT completes each of the
steps listed in the process checklist, NBD will either
approve the work or specify changes to be made. If major
changes are requested by NBD following approval of the
expanded outline (Step 1), NTT and NBD will prepare a
revised development plan and schedule.
2.03.2 Course formats, descriptions, objectives and materials
developed by NTT shall be suitable for the intended NBD
enrollment. NTT Guidelines for development of customized
Courseware are set forth in Exhibit B, Courseware Design
Evaluation Checklist.
<PAGE> 2
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 2 OF 19
September 15, 1995
2.03.3 Closed enrollment courses customized by NTT will include
course modules with objectives, functional content, and
examples that are tailored to NBD's business environment.
Course modules will be designed around logically grouped
functions and allow adequate practice time for students.
Each four hours of training will include one fifteen minute
break period.
2.03.4 NTT will make recommendations to NBD concerning course
format, length, and content for each class. The objective
is to structure each class to focus on specific application
functions to give students comprehensive exposure to program
functionality in the shortest possible time. NBD will have
final approval for course content, format, and length.
2.04 CUSTOMIZATION OF COURSEWARE. NTT will employ professionally
qualified Courseware developers to customize courses to NBD's
needs. Customization may include:
2.04.1 Revising the course outline by deleting or rearranging
existing modules or combining elements from more than one
course. Revisions may be made to shorten the length of the
training class or to meet special training needs or
constraints identified by NBD.
2.04.2 Developing specific examples or training exercises that are
tailored to the course and to the students.
2.04.3 Adapting the class to local operating procedures or
hardware requirements.
2.04.4 Preparing special class participant guides, job aids, and
other related training materials for students.
2.04.5 NTT will offer, for a fee and production cost, document and
consulting services that may be needed to support the
training (see Exhibit D).
2.04.6 Travel expenses for Courseware developers performing
services 60 miles or more from the designated NTT training
hubs (see Exhibit D), which are chargeable at actual cost,
will be separately identified and itemized on invoices. NTT
will ensure that these costs are reasonable and generally
conform to NBD's policies and practices for the
reimbursement of reasonable expenses to its employees.
Expenses may include transportation, lodging, meals, and
other expenses incurred incidental to the travel.
2.05 COURSEWARE RIGHTS. NTT will customize Courseware and other
training materials needed for NBD's closed enrollment programs.
NBD will have the right to use NTT customized Courseware during
the term of the Agreement and thereafter will retain the rights to
confidentiality of such customized Courseware. NTT may not use
Courseware customized for NBD in any other industrial, commercial,
or government activity. NTT may, however, with NBD's approval and
direction, use such material for a reasonable period of time to
conduct training classes for organizations formerly owned by NBD.
2.06 COURSEWARE COPYRIGHTS AND RIGHTS OF USE. NTT retains full
copyrights and distribution rights for the NBD customized
Courseware in both use and delivery. During the term of the
Agreement, NTT grants to NBD the right to use this course material
for its internal use only. Exhibit D list pricing for Courseware.
2.07 COURSEWARE MATERIALS. During the term of the Agreement, NTT
will furnish NBD with electronic and hardcopy versions of all
current NBD customized Courseware, course examples, instructor
manuals, teaching materials, and other course related data files.
NBD is responsible for maintaining its own back-up files of
current course material.
<PAGE> 3
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 3 OF 19
September 15, 1995
2.08 ENROLLMENT AGENT. NTT is designated to act as an agent on
behalf of NBD for the limited purpose of negotiating enrollment
arrangements with Inacom Information Services or other third parties
that are approved by NBD.
2.09 OPEN ENROLLMENT COURSES. NTT has partnered with Inacom
Information Services to provide NBD with training for programs and
applications that are not included in the NTT developed and
delivered closed enrollment program. The intent of the open
enrollment program is to ensure that training is available to NBD
employees and organizations that are not using software supported
under the closed enrollment program; open enrollment courses include
beginning, intermediate, and advanced training. NTT may, if
requested by NBD, provide open enrollment training where NTT has the
required course materials or otherwise agrees to provide the
training.
2.10 CANCELLATION POLICY FOR OPEN ENROLLMENT. Unless otherwise
agreed, the procedure and practices for cancellation of open
enrollment classes provided by third parties, including Inacom
Information Services and its affiliates, will be identical to NTT's.
2.11 STUDENT ENROLLMENT. NTT will provide Inacom Information
Services and its affiliates with enrollment confirmation information
for NBD employees that will be attending their open enrollment
classes. When NTT confirms each employee's class enrollment, the
employee will be given a class enrollment confirmation number to be
presented at the class.
2.12 PAYMENT FOR OPEN ENROLLMENT CLASSES. NBD will be billed in
advance for the cost of coupons purchased by NTT for NBD's use; they
will be procured monthly based on forecasted training requirements
furnished by NBD. Training coupons remain the property of NBD.
3. QUALITY CONTROL.
3.01 REGULARLY SCHEDULED PERFORMANCE REVIEWS. NTT and NBD hold
quality performance review meetings every two months to assess the
quality of courses, instruction , and such other matters as deemed
appropriate. The agenda for these meetings will include, but is not
limited to, course content, materials, instructors, evaluations,
testing, facilities, scheduling, registration, and billing.
3.02 PERFORMANCE DEFICIENCIES AND RESOLUTION. Should NBD conclude
that the NTT training programs are not meeting NBD standards, NTT
will take immediate action to rectify the deficiencies. NBD will
provide NTT with a written list of the deficiencies and NTT will be
given a reasonable time to develop and implement corrective actions
that are acceptable to NBD. If NTT is unable within a reasonable
time, not to exceed 30 days, to correct the deficiencies to comply
with NBD standards, NBD may terminate the Agreement.
3.03 ASSESSMENTS AND EVALUATIONS. NTT will provide a "pre-course"
student skill assessment tool as an instrument for determining
course level placement. The parties will also use the Kirkpatrick
Assessment Model to measure skill improvement of students at the
four levels described below. NTT will administer all assessment and
evaluation processes and the results will be reported to NBD on a
monthly or quarterly basis as appropriate.
3.03.1 Level I evaluations, which measure each student's reaction
to training on the day of training, will be administered by
NTT at the end of the class and tracked electronically.
Statistical analysis and evaluation of the results will be
given to NBD monthly or on request.
3.03.2 Level II evaluations, which measure what each student
learned during the class, will be based on pre- and
post-training evaluations; the assessment measures will be
jointly developed by NBD and NTT.
<PAGE> 4
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 4 OF 19
September 15, 1995
3.03.3 Level III evaluations, which measure the student's ability
to apply the knowledge gained in the classroom to the job,
are normally reviewed 30 - 45 days after completion of
training. Unlike level I and II evaluations, level III
evaluations are based on statistically valid random samples
of students and are performed quarterly.
3.03.4 Level IV evaluations measure the effect that training has
on the productivity and return on investment; the assessment
measures will be developed jointly by NBD and NTT during the
initial term of the Agreement. Level IV evaluations are
based on statistically valid random samples of students and
are performed quarterly.
4. REGISTRATION.
4.01 CLOSED ENROLLMENT COURSE CATALOGS. NTT will provide NBD with
a customized course catalog containing information about courses and
classes offered to NBD employees; the catalog will be updated and
distributed three times each year.
4.02 REGISTRATION PROCEDURE. NBD employees will register for all
closed enrollment, open enrollment, and NBD taught classes by
calling NTT's training center (see Exhibit E). Students must bring
a properly completed class confirmation notice, with their cost
center manager's signature, to class; NTT will return class rosters
and the signed confirmation notices to NBD.
4.03 MAXIMUM CLASS ENROLLMENT. Unless otherwise requested by NBD,
class enrollment will be limited to a maximum of 12 students.
4.04 CLASS CONFIRMATIONS. NTT will send each registered student a
class confirmation notice acknowledging enrollment in the class;
confirmation notices will include the student's name, course title,
and the class date, time, and location. The form and method of
delivering class confirmation notices will be jointly determined by
both parties and may change as technology evolves. All costs
incurred for administering class confirmations are included in the
course fees and are borne by NTT.
4.05 REGISTRATION AND ATTENDANCE DATA FILE TRANSFERS. NTT will
provide NBD with a monthly electronic file download of NBD employee
class registration and attendance information in a format compatible
with NBD's registration and tracking system. NTT will maintain NBD
class registration information for two years after the course
training date.
4.06 CANCELLATION POLICY. Students that need to cancel their
enrollment in NTT closed enrollment classes may do so by telephoning
the NTT training center (see Exhibit E). NTT will attempt to
reschedule the student for the next available class and will update
the student record to reflect the change.
4.06.1 If NTT receives a request for enrollment cancellation five
business days or more in advance of a scheduled class, the
class fee will be fully refunded.
4.06.2 If NTT receives a request for enrollment cancellation three
to five business days in advance of a scheduled class, 75% of
the class fee will be refunded. However, if NTT is successful
in filling the class opening with another employee on the
waiting list, the class fee will be fully refunded.
4.06.3 If NTT receives a request for enrollment cancellation less
than three business days in advance of a scheduled class, no
refund will be given. However, if NTT is successful in
filling the class opening with another employee on the
waiting list, the class fee will be fully refunded.
4.07 PER STUDENT CLASSES. Per student classes include an
instructor and manuals in addition to registration, scheduling,
course customization, and other program management expertise. If
<PAGE> 5
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 5 OF 19
September 15, 1995
NBD chooses the NTT per student pricing model, NTT will administer
registrations and cancellations caused by low enrollment. If,
five days prior to the class, enrollment is less than seven
students at a hub location or five students at a remote location,
NTT has the option of canceling the class at no charge to NBD. If
the number of students fails to meet the minimum of students
required for the class, NBD may elect to pay the group rate for
the training.
4.08 GROUP CLASSES. Group classes include an instructor and
manuals. In addition, it is agreed that NTT will track student
participation in group classes by entering enrollment information,
provided by NBD, in the NTT registration system. Special requests
or group classes arranged and administered by an NBD coordinator
will never be canceled by NTT; group class cancellations must be
made by NBD at least five business days in advance of the class.
NBD will assume responsibility for making and administering
registrations, cancellations, and confirmations; group rates will
apply (see Exhibit D).
5. ADMINISTRATION.
5.01 CLOSED ENROLLMENT CLASSES. NTT will manage the
administrative tasks related to scheduling, registration, marketing,
management reporting, and billing for NBD closed enrollment.
5.02 OPEN ENROLLMENT CLASSES. NTT will coordinate NBD student
class registrations, confirmations, and cancellations for open
enrollment courses taught by Inacom Information Services.
5.03 CATALOGS. NTT will develop and distribute customized NBD
training catalogs at four month intervals listing course
descriptions, schedules, prerequisites, and administrative policies
for NBD closed enrollment courses.
5.04 INVOICING. NTT will provide appropriately detailed invoices
monthly (content and format will be approved by NBD) to NBD at the
address shown below for closed enrollment classes, services, and
Inacom training coupons purchased on behalf of NBD by NTT under this
Agreement. A second information only copy of the invoice and
supporting detail will be sent to the Systems Development Division.
Payment terms will be net 30 days from invoice date.
NBD Bank
Administration Support, 2nd Floor
9000 Haggerty Road
Belleville, Michigan 48111
6. FACILITIES.
6.01 COMPUTER WORKSTATION CONFIGURATION. NTT will provide
classroom facilities, equipment, and software which duplicate the
predominant computing environment as defined by the NBD End-User
Computing Desktop Standards.
6.02 TRAINING AIDS AND EQUIPMENT. NTT will provide classrooms
equipped with workstation screen projection system capable of
projecting readable screen images from the instructor's workstation
for viewing by all students. In addition, overhead projection
equipment, dry-marker boards, and flip-charts will be available as
needed.
6.03 NTT TRAINING CENTER AND TRAINING HUB LOCATIONS. NTT training
center and hub locations are listed in Exhibit E.
<PAGE> 6
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 6 OF 19
September 15, 1995
7. INSTRUCTORS.
7.01 INSTRUCTOR QUALIFICATIONS. NTT will provide instructors
qualified to teach the closed enrollment courses listed on Exhibit
A. NTT will certify that each instructor has acquired a practical
knowledge of the NBD closed enrollment programs.
7.02 CLASS AUDITS AND REMOVAL OF INSTRUCTORS. NBD may conduct
audits on the classes taught by NTT to ensure that training meets
NBD's standards. NBD and NTT agree to use the Instructor Evaluation
form (see Exhibit C) as a tool to measure for quality performance.
NBD may, upon giving NTT adequate advance written notice, request
that a specific instructor not be assigned to teach an NBD closed
enrollment course or class.
7.03 REGULAR TRAINING HOURS. Instructors will be available to
teach at the designated facilities during regular business hours,
i.e., 8:00 a.m. to 5:00 p.m., Monday through Friday. At NBD's
request, training may be scheduled outside of regular business hours
at mutually agreeable times for an additional fee (see Exhibit D).
7.04 TRAVEL EXPENSES. Travel expenses for instructors performing
services 60 miles or more from the designated NTT Training Hubs (see
Exhibit E), chargeable actual cost, will be separately identified
and itemized on invoices sent to NBD. NTT will ensure that these
costs are reasonable and generally conform to NBD's policies and
practices for the reimbursement of reasonable expenses to its
employees. Expenses may include transportation, lodging, meals, and
other expenses incurred incidental to the travel.
8. PRICING AND SPECIAL TERMS.
8.01 CLOSED ENROLLMENT. NTT will provide NBD with quality
instructors, registration, class customization services, and
Courseware for closed enrollment at NTT's or NBD's facilities (see
Exhibit D).
8.02 OPEN ENROLLMENT. Inacom Information Services pricing for
open enrollment programs is listed in Exhibit D.
8.03 PRICE PROTECTION. During the initial term of this Agreement,
the price list shown on Exhibit D will apply. Following the initial
term of the Agreement NTT will limit increases on both a per student
and group basis to no more than eight percent of the prior year's
rate.
8.04 In the future, if NBD should separately contract with NTT to
provide corporate help desk support, NBD shall be entitled to a
$15.00 credit per student per class attended from NTT's Standard
Subscription Support Service charge.
9. CONFIDENTIALITY
9.01 CONFIDENTIAL AND PROPRIETARY INFORMATION. Documentation and
information, including orally or visually disclosed, is confidential
if:
9.01.1 It is designated as confidential or proprietary, by letter,
stamp or legend; by verbal notice, or
9.01.2 It would be apparent to a reasonable person, familiar with
the disclosing party's business or the industry in which it
operates, that such information is of a confidential or
proprietary nature. All such proprietary or confidential
information, collectively, "Proprietary Information", shall
be treated confidentially by the receiving party and its
employees and shall not be disclosed by the receiving party
without the disclosing party's prior written consent.
Proprietary Information shall include, but is not limited
to, the names, addresses and telephone information
concerning NBD employees and customers, as well as all
technical
<PAGE> 7
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 7 OF 19
September 15, 1995
information and documentation not generally available to
end users which NBD provides to NTT hereunder.
9.02 TREATMENT OF PROPRIETARY INFORMATION. A party to the
Agreement shall not duplicate or in any from reproduce, summarize,
or otherwise disclose Proprietary Information of the other party,
except in accordance with the terms and conditions of this
Agreement. Each party shall have an appropriate Agreement with each
of its employees and agents having access to the other party's
Proprietary Information sufficient to enable that party to comply
with all terms of this Agreement. Each party agrees to protect the
other's Proprietary Information with the same standard of care and
procedures which it uses to protect its own trade secrets and
confidential or Proprietary Information of like importance and, in
any event, shall adopt or maintain procedures reasonably calculated
to protect such Proprietary Information.
9.03 FURTHER TREATMENT OF PROPRIETARY INFORMATION. Each party
agrees to hold all Proprietary Information of the other party in
trust and confidence for the other party and not to use the same
other than as expressly authorized under this Agreement or in
furtherance of its obligations under this agreement. Each party
agrees not to disclose any such Proprietary Information, without the
prior written consent of the other party, to anyone other than each
party's employees, agents, or contractors who have a need to know
same to carry out the rights granted hereunder or as required under
any applicable law or regulation.
9.04 EXCEPTIONS. Any obligation in the confidentiality provisions
of this Agreement does not apply to any information which:
9.04.1 Is or becomes known publicly through no fault of the
receiving party; or;
9.04.2 Is already known or becomes known to the receiving party,
except as listed or specified in writing by the receiving
party as being the subject of previous discussions between
the disclosing party and the receiving party regarding
Proprietary Information, and is so agreed by both parties;
or;
9.04.3 Is developed by or for the receiving party independent of
activities under this Agreement.
10. INDEMNITY.
10.01 INDEMNIFICATION BY NTT. NTT agrees to indemnify and hold NBD
harmless from and against any and all claims, demands, costs and
liabilities, including all reasonable legal fees and expenses, of
any kind whatsoever, arising directly or indirectly out of NTT's
performance under this Agreement. NBD agrees to promptly notify NTT
if any such claims arise and offer NTT reasonable assistance and
information necessary in responding to and defending against any
such claims.
10.02 INDEMNIFICATION BY NBD. If notified in writing of any action or
prior claim brought against NTT alleging that NTT's use of the
Product or any other materials provided to NTT by NBD hereunder
infringes any valid United States patent or copyright, NBD will
defend that action at its expense and will pay the costs and
damages awarded against NTT in the action, provided:
10.02.1 NBD shall have sole control of the defense of any such
action and all negotiations for its settlement or
compromise; and
10.02.2 NTT, and where applicable, those for whom NTT is in law
responsible, cooperate fully with NBD in its defense of the
action; and
10.02.3 NBD shall have no liability if the action results from the
use of the Product or other materials delivered by NBD for
purposes or in an environment for which it was not designed,
modification of the Product or other materials delivered by
<PAGE> 8
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 8 OF 19
September 15, 1995
NBD or use of the Product or material delivered by
NBD in combination with software or other products not
supplied by NBD.
10.03 LIMITATION OF LIABILITY. Neither NBD or NTT shall be liable to the
other for incidental, consequential, exemplary, indirect or special
damages of any kind including, without limitation, loss of profits,
savings, revenue, or other commercial loss or the claims of third
parties including end users whether or not advised of the
possibility of such loss, however caused and on any theory of
liability, arising out of this Agreement or the relationship of
NBD and NTT.
11. MISCELLANEOUS
11.01 ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties concerning the subject matter hereof and
supersedes all prior statements, representations, discussion,
negotiations and Agreements, both oral and written.
11.02 AMENDMENT OR WAIVER. This Agreement may not be amended or modified
except in a writing signed by authorized officers of both parties.
11.03 ILLEGAL OR UNENFORCEABLE PROVISIONS. In the event that any one or
more of the provisions of this Agreement shall be found to be
illegal or unenforceable, this Agreement shall nevertheless remain
in full force and effect, and such term or provision shall be deemed
severed.
11.04 INDEPENDENT CONTRACTORS. The parties to this Agreement are
independent contractors. No relationship or principal to agent,
master to servant, employer to employee or franchiser to franchisee
is established hereby between the parties. Neither party has the
authority to bind the other or incur any obligation on its behalf.
11.05 NO WAIVER. Neither of the party's rights to enforce provisions of
this Agreement shall be affected by any prior course of dealing,
waiver, delay, omission or forbearance.
11.06 ASSIGNMENT. This Agreement and the rights granted hereunder shall
not be assigned, encumbered by security interest or otherwise
transferred by NTT without the prior written consent of NBD. NBD
may assign this Agreement at any time upon giving written notice of
such action to NTT.
11.07 NOTICES. Any notice or other communication to the parties shall be
sent to the addresses shown below or such other places as they may
from time to time specify by notice in writing to the other party.
Any such notice or other communication shall be in writing, and,
unless delivered to a responsible officer of the addressee, shall be
given by overnight courier, facsimile or telex and shall be deemed
to have been given when such notice should have reached the
addressee in the ordinary course.
NATIONAL TECHTEAM, INC.
22000 Garrison Avenue
Dearborn, MI 48124 USA
ATTN: Warren Webermin, Vice President
(313) 277-2277 Telephone
(313) 277-6409 Facsimile
NBD BANK
Administration Support, 2nd Floor
9000 Haggerty Road
Belleville, Michigan 48111
(313) 957-2435 Telephone
(313) 957-2450 Facsimile
<PAGE> 9
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 9 OF 9
September 12, 1995
11.08 FURTHER ASSURANCES. The parties agree to do all such things
and to execute such further documents as may reasonably be required
to give full effect to this Agreement.
11.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan
without reference to conflict of laws principles.
11.10 JURISDICTION. Any dispute arising out of this Agreement
shall exclusively be brought in the state and federal courts within
Wayne County, Michigan.
WITNESS WHEREOF, the duly authorized representatives of the parties have
executed this Agreement as of the Effective Date first above written.
NBD BANK NATIONAL TECHTEAM
By /s/ Ben Hollist By Warren E. Webermin
----------------------- ----------------------
Name Ben Hollist Name WARREN E. WEBERMIN
----------------------- ----------------------
(print or type) (print or type)
Title First Vice President Title Vice President
----------------------- ----------------------
Date 9/20/95 Date Sept. 26, 1995
----------------------- ----------------------
<PAGE> 10
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 10 OF 10
September 12, 1995
- --------------------------------------------------------------------------------
EXHIBIT A
NBD CLOSED ENROLLMENT
CUSTOMIZED STANDARD SOFTWARE COURSES
<TABLE>
<CAPTION>
COURSE
COURSE TITLE HOURS
- ------------------------------------------------------------------
<S> <C>
Introduction to Personal Computers 4
- ------------------------------------------------------------------
Introduction to LAN Concepts 2
- ------------------------------------------------------------------
Novell Netware Use and Operations 2
- ------------------------------------------------------------------
Microsoft Windows 4
- ------------------------------------------------------------------
Lotus SmartSuite Interface and Commonalties 4
- ------------------------------------------------------------------
Lotus Ami Pro 3.1 Fundamentals 8
- ------------------------------------------------------------------
Lotus Ami Pro 3.1 Formatting 4
- ------------------------------------------------------------------
Lotus Ami Pro 3.1 Tables and Forms 4
- ------------------------------------------------------------------
Lotus Ami Pro 3.1 Macros 4
- ------------------------------------------------------------------
Lotus Ami Pro 3.1 Managing Style Sheets 4
- ------------------------------------------------------------------
Lotus Freelance 2.1 Fundamentals 8
- ------------------------------------------------------------------
Lotus Freelance 2.1 Presentations 4
- ------------------------------------------------------------------
Lotus Approach 3.0 Fundamentals 8
- ------------------------------------------------------------------
Lotus Approach 3.0 Find and Report 4
- ------------------------------------------------------------------
Lotus Approach 3.0 Templates 4
- ------------------------------------------------------------------
Lotus 1-2-3 5.0 Fundamentals 8
- ------------------------------------------------------------------
Lotus 1-2-3 5.0 Linking 4
- ------------------------------------------------------------------
Lotus 1-2-3 5.0 Printing Techniques 4
- ------------------------------------------------------------------
Lotus 1-2-3 5.0 Charting 4
- ------------------------------------------------------------------
Lotus 1-2-3 5.0 Databases 4
- ------------------------------------------------------------------
Lotus Organizer 1.1 and 2.0 Fundamentals 4
- ------------------------------------------------------------------
Lotus Organizer 1.1 and 2.0 Personal Data Management 4
- ------------------------------------------------------------------
Lotus cc:Mail 2.1 Fundamentals 4
- ------------------------------------------------------------------
Lotus SmartSuite 3.1 Integration 4
- ------------------------------------------------------------------
Microsoft Access 2.0 8
- ------------------------------------------------------------------
Microsoft Project 4.0 16
- ------------------------------------------------------------------
</TABLE>
<PAGE> 11
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 11 OF 11
September 12, 1995
EXHIBIT A (CONTINUED)
NBD OPEN ENROLLMENT
NON-STANDARD SOFTWARE COURSES
<TABLE>
<CAPTION>
COURSE
COURSE TITLE HOURS
- --------------------------------------
<S> <C>
Introduction to DOS 8
- --------------------------------------
DOS based applications 8
- --------------------------------------
WordPerfect for Windows 8
- --------------------------------------
Microsoft Word for Windows 8
- --------------------------------------
Microsoft Excel 8
- --------------------------------------
</TABLE>
<PAGE> 12
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 12 OF 12
September 12, 1995
EXHIBIT B
COURSEWARE DESIGN EVALUATION CHECKLIST
The attached Courseware Design Evaluation Checklist has been prepared by
National TechTeam for use by National TechTeam Lead Documentation Specialist to
ensure that all quality checks have been performed for each documentation
deliverable. This Courseware Design Evaluation Checklist is to be used in
addition to Project Tracking Sheets which are incorporated at key deliverable
points.
The result is a quality product and a guarantee that all internal ISO 9000
Quality Standards and external customer expectations have been met.
PART I: PROCESS CHECKLIST
The documentation development is currently defined as a 9-step process. Each
step is supportive of the following step and adheres to all customer
expectations and timing. The process may vary according to customer
specification and is subject to change as additional steps are incorporated.
A Training/Documentation Model Timeline is distributed to the development team
prior to project start.
PART II: SPECIFIC COMPONENTS CHECKLIST
Components to be included in the documentation development process are
identified and accounted for. These components are incorporated into the
document development and tracked by the Lead Documenter.
<PAGE> 13
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 13 OF 13
September 12, 1995
EXHIBIT B (CONTINUED)
COURSEWARE DESIGN EVALUATION CHECKLIST
This document is to be completed by the Lead Documenter for a course. Upon
completion of this document, attach supplemental Project Tracking Sheets.
PART I: PROCESS CHECKLIST
<TABLE>
<CAPTION>
STEP COMPLETE
- -------------------------------------------------------------------------------------------------------
<S> <C>
1. Course adheres to approved, expanded outline
- -------------------------------------------------------------------------------------------------------
2. Course is developed for appropriate audience profile
- -------------------------------------------------------------------------------------------------------
3. Course is developed with predetermined prerequisites in mind
- -------------------------------------------------------------------------------------------------------
4. Course is dry run
- -------------------------------------------------------------------------------------------------------
5. Course is piloted
- -------------------------------------------------------------------------------------------------------
6. All necessary revisions have been made
- -------------------------------------------------------------------------------------------------------
7. Subject Matter Expert (SME) and NBD Project Manager review/approve final course material
- -------------------------------------------------------------------------------------------------------
8. NBD Project Manager reviews/approves final instructor notes
- -------------------------------------------------------------------------------------------------------
9. Final materials ready for production (delivery to customer)
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 14
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 14 OF 14
September 12, 1995
EXHIBIT B (CONTINUED)
PART II: SPECIFIC COMPONENTS CHECKLIST
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
COMPONENT COMPLETE
- ---------------------------------------------------------------------------------------------------
<S> <C>
COURSE OBJECTIVES ARE:
- ---------------------------------------------------------------------------------------------------
Goal Oriented
- ---------------------------------------------------------------------------------------------------
Measurable
- ---------------------------------------------------------------------------------------------------
Written in active tense
- ---------------------------------------------------------------------------------------------------
INDIVIDUAL LESSON OBJECTIVES ARE:
- ---------------------------------------------------------------------------------------------------
Goal-oriented
- ---------------------------------------------------------------------------------------------------
Measurable
- ---------------------------------------------------------------------------------------------------
Written in active tense
- ---------------------------------------------------------------------------------------------------
COURSE LENGTH MEETS REQUIREMENTS
- ---------------------------------------------------------------------------------------------------
COURSE CONTENT/MATERIAL HAS BEEN REVIEWED FOR:
- ---------------------------------------------------------------------------------------------------
Technical accuracy
- ---------------------------------------------------------------------------------------------------
Inclusion of specific NBD examples illustrating the taught concepts where applicable
- ---------------------------------------------------------------------------------------------------
Logical instructional flow
- ---------------------------------------------------------------------------------------------------
Content matching objectives and audience
- ---------------------------------------------------------------------------------------------------
Consistent leveling among topics
- ---------------------------------------------------------------------------------------------------
Formatting consistency
- ---------------------------------------------------------------------------------------------------
Inclusion of appropriate on-the-job examples
- ---------------------------------------------------------------------------------------------------
Hands-on activities adequate to help students reinforce the knowledge and skills needed
on the job
- ---------------------------------------------------------------------------------------------------
Practice Exercises providing step-by-step activities on how to perform specific functions
- ---------------------------------------------------------------------------------------------------
Practice Exercises are adequate throughout modules
- ---------------------------------------------------------------------------------------------------
Independent Exercises are comprehensive, summary exercises of all functions from one
lesson or module
- ---------------------------------------------------------------------------------------------------
Graphics, charts, diagrams, illustrations are accurate and correct
- ---------------------------------------------------------------------------------------------------
Graphics, charts, diagrams, illustrations are appropriately provided where necessary
- ---------------------------------------------------------------------------------------------------
Visual aids are provided when necessary
- ---------------------------------------------------------------------------------------------------
Student Data Files are complete and correct
- ---------------------------------------------------------------------------------------------------
Instructor Notes are complete and accurate
- ---------------------------------------------------------------------------------------------------
Pilot Evaluations were utilized and data has been compiled
- ---------------------------------------------------------------------------------------------------
QUALITY ASSURANCE:
- ---------------------------------------------------------------------------------------------------
1st draft edited for grammar, spelling and format
- ---------------------------------------------------------------------------------------------------
2nd draft edited for grammar, spelling and format
- ---------------------------------------------------------------------------------------------------
Technical writer keystroked
- ---------------------------------------------------------------------------------------------------
Instructor Keystroked
- ---------------------------------------------------------------------------------------------------
Project tracking sheets maintained and filed for reference
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 15 OF 15
September 12, 1995
EXHIBIT B (CONTINUED)
PART II: SPECIFIC COMPONENTS CHECKLIST
COMPONENT COMPLETE
CLIENT ACCEPTANCE (NBD):
Participant satisfaction
Participants' expectations were met
The defined NBD process was followed
JOB AIDS:
Supplied when necessary
Provide students with tools to integrate skills on the job
EVALUATIONS:
Designed to measure how well learning objectives were met
A plan in place to analyze evaluations, measure results,
and recommend continuous improvement opportunities
A plan in place for the post-instruction evaluation
<PAGE> 16
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 16 OF 19
September 15, 1995
EXHIBIT C
INSTRUCTOR EVALUATION FORM
Please see the following page for a detailed description of the Instructor
Evaluation spreadsheet.
<PAGE> 17
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 17 OF 19
September 15, 1995
<TABLE>
<CAPTION>
INSTRUCTOR EVALUATION FORM EVALUATOR
INSTRUCTOR'S NAME DATE
CLASS MANAGER
EVALUATION CRITERIA STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE NA
<S> <C> <C> <C> <C> <C> <C>
COURSE INTRODUCTION
Introduces housekeeping information 5 4 3 2 1 0
Presents agenda 5 4 3 2 1 0
Has students introduce themselves 5 4 3 2 1 0
Asks for student expectations 5 4 3 2 1 0
States course objectives 5 4 3 2 1 0
INSTRUCTOR PROFESSIONALISM
Professional Grooming 5 4 3 2 1 0
Greets students 5 4 3 2 1 0
Uses positive body language 5 4 3 2 1 0
INSTRUCTOR'S ENERGY
Voice is clear, easy to hear 5 4 3 2 1 0
Friendly, polite, enthusiastic 5 4 3 2 1 0
Voice varies in volume and tempo 5 4 3 2 1 0
Posture is appropriate 5 4 3 2 1 0
Moves around room 5 4 3 2 1 0
Appears confident 5 4 3 2 1 0
PRESENTATION
Presentation 5 4 3 2 1 0
Prepares materials before class 5 4 3 2 1 0
Writing is legible 5 4 3 2 1 0
Written information can be seen 5 4 3 2 1 0
References projection display 5 4 3 2 1 0
Verifies students are at proper screen before moving on 5 4 3 2 1 0
Avoids touching students' computers 5 4 3 2 1 0
PEOPLE SKILLS
Maintains eye contact 5 4 3 2 1 0
Uses students' names 5 4 3 2 1 0
Listens to students 5 4 3 2 1 0
Encourages students to ask questions 5 4 3 2 1 0
Responds to questions to student's satisfaction 5 4 3 2 1 0
Periodically asks open-ended questions 5 4 3 2 1 0
Pauses for students to respond 5 4 3 2 1 0
Records unresolved questions 5 4 3 2 1 0
Incorporates work examples into presentation 5 4 3 2 1 0
References are non-discriminatory 5 4 3 2 1 0
Refers back to course objectives during presentation 5 4 3 2 1 0
Keeps discussion on topic 5 4 3 2 1 0
Understands terminology used 5 4 3 2 1 0
Provides guidance to students who fall behind 5 4 3 2 1 0
Allows students adequate time to complete exercises 5 4 3 2 1 0
Gives positive feedback 5 4 3 2 1 0
Summarizes objective before moving ahead 5 4 3 2 1 0
TIMING
Starts class on time 5 4 3 2 1 0
Starts class after breaks on time 5 4 3 2 1 0
Adjusts the pacing to fit students' needs 5 4 3 2 1 0
Ends class on time 5 4 3 2 1 0
Is available before and after class 5 4 3 2 1 0
ADDITIONAL COMMENTS
CERTIFICATION
Is the instructor certified to train this class? Y N
If no, what are the recommendations to attain certification
</TABLE>
<PAGE> 18
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 18 OF 19
September 15, 1995
EXHIBIT D
CLOSED ENROLLMENT AND OPEN ENROLLMENT
PRICING AND SPECIAL TERMS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
COST
-------------------------------------------------------
CLIENT SITE VENDOR SITE CLIENT SITE
-------------------------------------------------------
DESCRIPTION(1) CLIENT EQUIPMENT VENDOR EQUIPMENT VENDOR EQUIPMENT(2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLOSED ENROLLMENT
- ----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
COST FOR 1001 + STUDENTS
- --------------------------------------------------------------------------------------------------------------------------
8 hour class, per student 75.00 95.00 75.00
- --------------------------------------------------------------------------------------------------------------------------
4 hour class, per student 50.00 65.00 50.00
- --------------------------------------------------------------------------------------------------------------------------
2 hour class, per student 35.00 45.00 35.00
- --------------------------------------------------------------------------------------------------------------------------
Two 4 hour classes or four 2 hour classes, per day per site (Group) 575.00 750.00 575.00
- --------------------------------------------------------------------------------------------------------------------------
One 4 hour class or two 2 hour classes, per day per site (Group) 375.00 495.00 375.00
- --------------------------------------------------------------------------------------------------------------------------
Premium for services outside of regular business hours (i.e., 8:00
a.m. - 5:00 p.m., Monday - Friday), not to exceed a premium of
30%.
- --------------------------------------------------------------------------------------------------------------------------
OPEN ENROLLMENT (INACOM)
- --------------------------------------------------------------------------------------------------------------------------
8 hour class, per student 110.00
- --------------------------------------------------------------------------------------------------------------------------
OTHER SERVICES
- --------------------------------------------------------------------------------------------------------------------------
Executive Training and Consultation for specific training needs,
per hour(3) 40.00 40.00 40.00
- --------------------------------------------------------------------------------------------------------------------------
Tutorial Services Including Travel (6 x $95) 570.00 570.00 570.00
- --------------------------------------------------------------------------------------------------------------------------
Documentation and Consultation fee, per hour 40.00
- --------------------------------------------------------------------------------------------------------------------------
Room Rental Only, per day per site 495.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
_________________________
1
Unless otherwise requested or approved by NBD, class enrollment will be limited
to a maximum of 12 students.
2
Equipment will be charged at cost by NTT.
3
Two hour minimum.
<PAGE> 19
NBD/NTT END USER COMPUTER TRAINING AGREEMENT, PAGE 19 OF 19
SEPTEMBER 15, 1995
EXHIBIT E
NATIONAL TECHTEAM, INC.
TRAINING CENTER AND TRAINING HUB LOCATIONS
NATIONAL TECHTEAM TRAINING CENTER AND TRAINING HUB LOCATIONS. Travel expenses
for training provided more than 60 miles from a Hub Location are billable as an
additional charge.
Chicago, IL(4)
Columbus, OH
Dearborn, MI
Flint, MI
Fort Wayne, IN
Grand Rapids, MI(4)
Indianapolis, IN(4)
Lansing, MI
London, UK(4)
Merrillville, IN(4)
Saginaw, MI
Southfield, MI(4)
Troy, MI(4)
CLASS REGISTRATION TELEPHONE NUMBER: 1 (800) 443-4907
_____________________________
4 NTT Training Hub Location.
<PAGE> 1
EXHIBIT 10.21
--------------------------
LEASE
BETWEEN
WRC PROPERTIES, INC.,
AS LANDLORD
AND
NATIONAL TECH TEAM, INC.,
AS TENANT
--------------------------
<PAGE> 2
TABLE OF CONTENTS
SECTION 1. BASIC LEASE PROVISIONS............................................1
SECTION 2. THE PREMISES......................................................2
SECTION 3. THE TERM..........................................................2
SECTION 4. THE BASE RENT.....................................................3
SECTION 5. LATE CHARGES AND INTEREST.........................................3
SECTION 6. OPERATING EXPENSES, UTILITIES, AND TAXES..........................3
SECTION 7. USE OF PREMISES...................................................5
SECTION 8. INSURANCE.........................................................7
SECTION 9. DAMAGE BY FIRE OR OTHER CASUALTY..................................8
SECTION 10. REPAIRS, RENOVATIONS AND ALTERATIONS.............................9
SECTION 11. LIENS...........................................................10
SECTION 12. EMINENT DOMAIN..................................................10
SECTION 13. ASSIGNMENT OR SUBLETTING........................................11
SECTION 14. INSPECTION OF PREMISES..........................................12
SECTION 15. FIXTURES AND EQUIPMENT..........................................12
SECTION 16. PARKING AREAS...................................................12
SECTION 17. NOTICE OR DEMANDS...............................................12
SECTION 18. BREACH; INSOLVENCY; RE-ENTRY....................................13
SECTION 19. SURRENDER OF PREMISES ON TERMINATION............................14
SECTION 20. PERFORMANCE BY LANDLORD OF THE COVENANTS OF TENANT..............14
SECTION 21. SUBORDINATION; ESTOPPEL CERTIFICATES............................14
SECTION 22. QUIET ENJOYMENT.................................................15
SECTION 23. HOLDING OVER....................................................15
SECTION 24. REMEDIES NOT EXCLUSIVE; WAIVER..................................15
SECTION 25. WAIVER OF SUBROGATION...........................................15
SECTION 26. RIGHT TO SHOW PREMISES..........................................16
SECTION 27. INDEMNIFICATION.................................................16
SECTION 28. DEFINITION OF LANDLORD; LANDLORD'S LIABILIT.....................16
SECTION 29. SECURITY DEPOSIT AND SECURITY INTEREST..........................17
SECTION 30. RULES AND REGULATIONS...........................................17
SECTION 31. SIGNS AND ADVERTISING...........................................17
SECTION 32. GENERAL.........................................................18
EXHIBIT A SPACE PLAN........................................................20
EXHIBIT B RULES AND REGULATIONS OF THE PROJECT..............................21
EXHIBIT C DAILY JANITORIAL SERVICE..........................................24
EXHIBIT D SPECIAL PROVISIONS.................................................25
D1 EXCESS TENANT IMPROVEMENT COSTS.........................................25
<PAGE> 3
LEASE
-----
THIS LEASE is made and entered into as of November 16, 1995, by and
between WRC Properties, Inc. (the "Landlord"), a Delaware Corporation having
its principal office at 730 Third Avenue, New York, New York 10017, and Tenant
named below who agree as follows:
SECTION 1.
BASIC LEASE PROVISIONS
1.01 The following basic lease provisions are an integral part of this
Lease and are referred to in other Sections of this Lease.
(a) Tenant's name and jurisdiction of formation:
NATIONAL TECH TEAM, INC., a Delaware Corporation
<TABLE>
<S><C>
Tenant Social Security/Taxpayer Identification Number: 38-2774613
----------------------
Tenant Standard Industrial Classification (SIC) Code Number: 7373, 7379, 8299, 7371
----------------------
(b) Tenant's Address: 22000 Garrison Avenue
------------------------------
Dearborn, Michigan 48124
------------------------------
(c) Manager's Name REDICO Management, Inc.
and Address: 20500 Civic Center Drive
Suite 3000
Southfield, Michigan 48076
(d) Project Name: Troy Officentre A-B
------------------------------
Building Name: Troy Officentre B
------------------------------
Building Address: 320 East Big Beaver
------------------------------
Troy, Michigan 48083-1240
------------------------------
(e) Premises: Floor: 1st
---------------------
Suite Number: 180
---------------------
Square Feet: 2,345 usf / 2,626 rsf
---------------------
(f) Term:
Scheduled Occupancy Date: January 1, 1996
-----------------
Scheduled Expiration Date of Initial Term: December 31, 1998
-----------------
Initial Term: Three (3) years
-----------------
(g) Base Rent:
Monthly $4,103.13
------------
Annual $49,237.56
------------
Aggregate $147,712.68
------------
(h) Tenant's Proportionate Share:
2,626 Rentable square feet in the Premises divided by
443,071 Rentable square feet in the Building =0.593%
(i) Number of Exclusive Parking Spaces: None at an initial increase
of additional rent of $ -0-
(j) Security Deposit: $ 3,950.00
(k) Tenant Improvement Allowance: See Exhibit D
(l) Base Year: 1996
(m) Permitted Use: General Office
</TABLE>
1
<PAGE> 4
SECTION 2.
THE PREMISES
2.01 Landlord, in consideration of the rents to be paid and the covenants
and agreements to be performed by Tenant, hereby leases to Tenant the premises
set forth in Section 1.01(e) (the "Premises") in the building(s) (the
"Building") described in Section 1.01(d), together with the right to use the
parking and common areas and facilities which may be furnished from time to
time by Landlord (collectively the "Common Areas"), including, without
limitation, all common elevators, hallways and stairwells located within the
Building, and all common parking facilities, driveways and sidewalks, in common
with Landlord and with the tenants and occupants of the Project, their agents,
employees, customers, clients and invitees. Tenant agrees that the Premises
and the Building shall be deemed to include the number of rentable square feet
set forth in Section 1.01(h) and in no event shall Tenant have the right to
challenge, demand, request or receive any change in the base rent or other sums
due hereunder as a result of any claimed or actual error or omission in the
rentable or usable square footage of the Premises, the Building or the Project.
Landlord reserves the right at any time and from time to time to make
alterations or additions to the Building or the Common Areas, and to demolish
improvements on and to build additional improvements on the land surrounding
the Building and to add or change the name of the Building from time to time,
in its sole discretion without the consent of Tenant and the same shall not be
construed as a breach of this Lease. The Building, the other buildings listed
in Section 1.01(d), the Common Areas and the land surrounding the Building and
the Common Areas are hereinafter collectively referred to as the "Project".
2.02 Landlord agrees to construct the improvements to the Premises (the
"Tenant Improvements") in accordance with the space plan(s) (as it may be
amended by approved change orders, the "Plans"), attached as Exhibit "A". All
material changes from the Plans which Landlord determines are necessary during
construction shall be submitted to Tenant for Tenant's approval or rejection.
If Tenant fails to notify Landlord of Tenant's approval or rejection of such
changes within five (5) days of receipt thereof, Tenant shall be conclusively
deemed to have approved such changes. Landlord's approval of the Plans shall
not constitute a representation, warranty or agreement (and Landlord shall have
no responsibility or liability for) the completeness or design sufficiency of
the Plans or the Tenant Improvements, or the compliance of the Plans or Tenant
Improvements with any laws, rules or regulations of any governmental or other
authority.
2.03 The provisions of Exhibit D, special provisions, shall govern the
cost of constructing Tenant Improvements.
2.04 Landlord intends to shall construct the Tenant Improvements and
deliver the Premises "ready for occupancy" (as defined below) to Tenant on the
Scheduled Occupancy Date set forth in Paragraph 1.01(f). The Premises will be
conclusively deemed "ready for occupancy" on the earlier to occur of when: (i)
the work to be done under this Paragraph has been substantially completed and
after the issuance of a conditional or temporary certificate of occupancy for
the Premises by the appropriate government agency within whose jurisdiction the
Building is located, or (ii) when Tenant takes possession of the Premises. The
Premises will not be considered unready or incomplete if only minor or
insubstantial details of construction, decoration or mechanical adjustments
remain to be done within the Premises or Common Areas of the Building, or if
only landscaping or exterior trim remains to be done outside the Premises, or
if the delay in the availability of the Premises for Tenant's occupancy is
caused in whole or in material part by Tenant. By occupying the Premises,
Tenant will be deemed to have accepted the Premises and to have acknowledged
that they are in the condition called for in this Lease, subject only to "punch
list" items (as the term "punch list" is customarily used in the construction
industry in the area where the Project is located) identified by Tenant by
written notice delivered to Landlord within ten (10) days after the date
Landlord tenders possession of the Premises to Tenant. If in good faith
Landlord is delayed or hindered in construction by any labor dispute, strike,
lockout, fire, unavailability of material, severe weather, acts of God,
restrictive governmental laws or regulations, riots, insurrection, war or other
casualty or events of a similar nature beyond its reasonable control ("Force
Majeure"), the date for the delivery of the Premises to Tenant "ready for
occupancy" shall be extended for the period of delay caused by the Force
Majeure. If Landlord is delayed or hindered in construction as a result of
change orders or other requests by, or acts of, Tenant ("Tenant Delay") the
date for the delivery of the Premises to Tenant "ready for occupancy" shall be
accelerated by the number of days of delay caused by Tenant Delay. The
Scheduled Occupancy Date as extended or accelerated as a result of the
occurrence of a Force Majeure or Tenant Delay or with the consent of Tenant, is
herein referred to as the Occupancy Date.
SECTION 3.
THE TERM
3.01 The initial term of this Lease (the "Initial Term or "Term"") will
commence (the "Commencement Date") on the earlier of: (i) the date Tenant
takes possession of the Premises; or (ii) the Occupancy Date; (iii) the date
the Occupancy Date would have occurred in the absence of Tenant
2
<PAGE> 5
Delay. Unless sooner terminated or extended in accordance with the terms
hereof, the Lease will terminate the number of Lease Years and Months set
forth in Paragraph 1.01(f) after the Commencement Date. If the Commencement
Date is other than the first day of a calendar month, the first Lease Year
shall begin on the first day of the first full calendar month following the
Commencement Date. Upon request by Landlord, Tenant will execute a written
instrument confirming the Commencement Date and the expiration date of the
Initial Term.
SECTION 4.
THE BASE RENT
4.01 From and after the Commencement Date, Tenant agrees to pay to
Landlord, as minimum net rental for the Initial Term and Option Terms of this
Lease, the sum(s) set forth in Paragraph 1.01(g) (the "Base Rent"). The term
"Lease Year" as used herein shall be defined to mean a period of twelve (12)
consecutive calendar months. The first Lease Year shall begin on the date
determined in accordance with Section 3.01. Each succeeding Lease Year shall
commence on the anniversary date of the first Lease Year.
4.02 Base Rent and other sums due Landlord hereunder shall be paid by
Tenant to Landlord in equal monthly installments (except as otherwise provided
herein), in advance, without demand and without any setoffs or deductions
whatsoever, on the first day of each and every calendar month (the "Rent Day")
during the Initial Term and Option Terms, if any, at the office of Manager as
set forth in Section 1.01(c), or at such other place as Landlord from time to
time may designate in writing. In the event the Commencement Date is other
than the first day of a calendar month, the Base Rent for the partial first
calendar month of the Initial Term will be prorated on a daily basis based on
the number of days in the calendar month and will be paid in addition to the
rent provided in Paragraph 4.01 above. Base Rent for such partial calendar
month and for the first full calendar month of the first Lease Year shall be
paid upon the execution of this Lease by Tenant.
SECTION 5.
LATE CHARGES AND INTEREST
5.01 Any rent or other sums payable by Tenant to Landlord under this Lease
which are not paid within five (5) days after they are due will be subject to a
late charge of ten (10%) percent of the amount due. Such late charges will be
due and payable as additional rent on or before the next Rent Day.
5.02 Any rent, late charges or other sums payable by Tenant to Landlord
under this Lease not paid within ten (10) days after the same are due will bear
interest at a per annum rate equal to the lower of: (i) eighteen (18%) percent
per annum, or (ii) the highest rate permitted by law. Such interest will be
due and payable as additional rent on or before the next Rent Day, and will
accrue from the date that such rent, late charges or other sums are payable
under the provisions of this Lease until actually paid by Tenant.
5.03 Any default in the payment of rent, late charges or other sums will
not be considered cured unless and until the late charges and interest due
hereunder are paid by Tenant to Landlord. If Tenant defaults in paying such
late charges and/or interest, Landlord will have the same remedies as Landlord
would have if Tenant had defaulted in the payment of rent. The obligation
hereunder to pay late charges and interest will exist in addition to, and not
in the place of, the other default provisions of this Lease.
SECTION 6.
OPERATING EXPENSES, UTILITIES, AND TAXES
6.01 In the event that Operating Expenses for the Project, in any calendar
year, exceed the Operating Expenses for the Base Year (as defined in Paragraph
1.01(l)), Tenant shall pay to Landlord, as additional rent, Tenant's
Proportionate Share (as defined in Paragraph 1.01(h)) of any such excess.
Tenant's obligations hereunder shall be pro-rated for any calendar year in
which Tenant is obligated to pay rent for only a portion thereof. For the
purposes of this Section, the term "Operating Expenses" shall mean and include
those expenses paid or incurred by Landlord for: maintaining, operating,
owning, and repairing the Project, providing electricity, steam, water, sewer,
fuel, heating, lighting, air conditioning, window cleaning, janitorial service,
personal property taxes, insurance (including, but not limited to, fire,
extended coverage, liability, worker's compensation, elevator, boiler and
machinery, war risk, or any other insurance carried in good faith by Landlord
and applicable to the Project); painting, uniforms, management fees, supplies,
sundries, sales, or use taxes on supplies or services; wages and salaries of
all persons engaged in the operation, maintenance and repair of the Project,
and so-called fringe benefits, including social security taxes, unemployment
insurance taxes, providing coverage for disability benefits, pension,
hospitalization, welfare or retirement plans, or any other similar or like
expenses
3
<PAGE> 6
incurred under the provisions of any collective bargaining agreement,
or any other similar or like expenses which Landlord pays or incurs to provide
benefits for employees so engaged in the operation, maintenance and repair of
the Project; the charges of any independent contractor who, under contract with
Landlord or its representatives, does any of the work of operating, maintaining
or repairing the Project; capital expenditures required under any governmental
law or regulation; legal and accounting expenses including, but not limited to,
such expenses as relate to seeking or obtaining reductions in, and refunds of,
real estate taxes; or any other expenses or charges, whether or not
hereinbefore mentioned, which in accordance with generally accepted accounting
and management principles would be considered as an expense of maintaining,
operating, owning or repairing the Project.
6.02 If the Project is not fully rented during all or a portion of any
year, then Landlord may elect to make an appropriate adjustment of the
Operating Expenses and Real Estate Taxes (as defined below) for such year and
for the Base Year employing sound accounting and management principles, to
determine the amount of Operating Expenses and Real Estate Taxes that would
have been paid or incurred by Landlord had the Project been fully rented; and
the amount so determined shall be deemed to have been the amount of Operating
Expenses and Real Estate Taxes for such year. If any expenses relating to the
Project, though paid in one year, relate to more than one calendar year, at the
option of Landlord such expense may be proportionately allocated among such
related calendar years. In addition, in the event any Operating Expense or
Real Estate Tax applies to only some portion of the Project or is partially
allocable to other buildings or projects, Landlord may allocate such expense
among such buildings and projects in accordance with sound accounting and
management principles to determine the amount of Operating Expenses and Real
Estate Taxes for the Project and the Building.
6.03 In the event that Real Estate Taxes (as hereinafter defined) for the
Project, in any calendar year, exceed the Real Estate Taxes for the Base Year,
Tenant shall pay to Landlord, as additional rent, Tenant's Proportionate Share
of any such excess over and above the Base Real Estate Taxes (as hereinafter
defined). The "Base Real Estate Taxes" shall be the Real Estate Taxes shown on
the bills for which the "due date" occurs in the Base Year. "Real Estate
Taxes" as used herein shall mean real estate taxes, assessments (general,
special, ordinary or extraordinary) sewer rents, rates and charges, taxes based
upon the receipt of rent, and any other federal, state or local charge
(general, special, ordinary or extraordinary) which may now or hereafter be
imposed, levied or assessed against the Project or any part thereof, or on any
building or improvements at any time situated thereon. In the event the State
of Michigan or any political subdivision thereof having taxing authority shall
modify, repeal or abolish the ad valorem tax on real property, or impose a tax
or assessment of any kind or nature upon, against, or with respect to the
Project or the rents payable by Tenant or on the income derived from the
Project, or with respect to Landlord's ownership interest in the Project, which
tax is assessed or imposed by way of substitution for or in addition to all or
any part of the Real Estate Taxes, then such tax or assessment shall be
included within the definitions of "Real Estate Taxes"; provided, however,
nothing herein contained shall impose an obligation on Tenant to pay the
general income tax or Michigan Single Business Tax liabilities of Landlord,
except to the extent such a tax is being used to fund governmental functions
presently or previously funded by ad valorem taxes on real property.
6.04 At any time after the Base Year and from time to time, Landlord may
reasonably estimate the amount by which current Real Estate Taxes and Operating
Expenses are expected to exceed the Real Estate Taxes and Operating Expenses
for the Base Year (the "Estimated Excess Expenses"). Tenant shall pay its
Proportionate Share of the Estimated Excess Expenses by depositing with
Landlord on each Rent Day during the term hereof an amount equal to one-twelfth
(1/12) of its annual share of the Estimated Excess Expenses. Landlord shall
deliver to Tenant, within a reasonable period of time after the close of each
calendar year, an annual statement indicating the amount by which the Real
Estate Taxes and Operating Expenses actually incurred in that calendar year
exceed the Real Estate Taxes and Operating Expenses for the Base Year (the
"Actual Excess Expenses"). In the event that the Actual Excess Expenses exceed
the Estimated Excess Expenses, Tenant shall pay Tenant's Proportionate Share of
the difference to Landlord within fifteen (15) days of delivery of the annual
statement. In the
event that Estimated Excess Expenses exceed Actual Excess Expenses, then at
Landlord's option Tenant shall either be reimbursed to the extent that Tenant's
payments toward Tenant's share of the Estimated Excess Expenses exceed Tenant's
Proportionate Share of the Actual Excess Expenses, or Tenant shall be granted a
corresponding credit against the Base Rent or other sums next due Landlord
hereunder.
6.05 Tenant shall be responsible for and pay before delinquent all
municipal, county, and state taxes assessed, levied or imposed during the term
of this Lease, and all extensions thereof, upon the leasehold interest and all
furniture, fixtures, machinery, equipment, apparatus, systems and all other
personal property of any kind whatsoever located at, placed in or used in
connection with the Premises.
6.06 Landlord agrees with Tenant that Landlord will furnish heat and air
conditioning during normal business hours (8:00 a.m. to 6:00 p.m. Monday
through Friday and Saturday 9:00 a.m. to 2:00 p.m., excluding Building
holidays), usual and customary janitorial services, as set forth in Exhibit
"C", and provide water and sewer service to the Premises for ordinary lavatory
purposes. However, if Tenant uses or consumes water for any other purpose or
in unusual quantities (of which fact Landlord shall be the sole judge) Landlord
may install a water meter at Tenant's expense which Tenant shall thereafter
4
<PAGE> 7
maintain at Tenant's expense in good working order and repair, to register such
water consumption. Tenant shall pay for the quantity of water shown on said
meter, together with the sewer rents, debt service and other charges made by
the local utilities for water and sewer service, as additional rent, at the
secondary rate per gallon (general service rate) established by the applicable
governmental authority or the applicable utility company providing the water.
Whenever machines or equipment which generate heat are used in the Premises
which affect the temperature otherwise maintained by the air-conditioning
system, Landlord reserves the right to install supplementary air-conditioning
equipment in the Premises, and the cost thereof, and the expense of operation
and maintenance thereof, shall be paid by Tenant to Landlord. Although
Landlord will provide air-conditioning and/or heat upon the prior request of
Tenant in accordance with Building practices for hours other than regular
business hours, Tenant will pay Landlord's charges for providing such service.
Said charges shall include a cost equal to the cost to operate the equipment
for Tenant's expanded business hours and days, and Landlord's maintenance,
equipment amortization and other appropriate charges which Landlord determines
are attributable to operating the equipment for periods in excess of the normal
business hours described above.
6.07 Tenant shall pay all charges made against the Premises for
electricity used upon or furnished to the Premises as and when due during the
continuance of this Lease. To the extent electricity is not separately metered
for the Premises, Landlord shall make a determination of Tenant's usage of
electricity supplied to the Building, and Tenant agrees to pay for such
electricity within thirty (30) days after request therefor from Landlord.
Whether or not metered, Tenant shall pay for the electricity at the secondary
rate (general service rate) established by the applicable governmental
authority or the applicable utility company providing the electricity. Tenant
shall also pay for fluorescent or other electric light bulbs or tubes and
electric equipment used in the leased premises.
SECTION 7.
USE OF PREMISES
7.01 Tenant shall occupy and use the Premises during the Term for the
purposes set forth in Section 1.01(m) only, and for no other purpose without
the prior written consent of Landlord. Tenant agrees that it will not use or
permit any person to use the Premises or any part thereof for any use or
purpose in violation of the laws of the United States, the laws, ordinances or
other regulations of the State or municipality in which the Premises are
located, or of any other lawful authorities, or any building and use
restrictions, now or hereafter affecting the Premises or any part thereof.
7.02 Tenant will not do or permit any act or thing to be done in or to the
Premises or the Project which will invalidate or be in conflict with any terms
or conditions required to be contained in any property or casualty insurance
policy by the State of Michigan or and term or condition of the Insurance
Services Office's (ISO) Commercial Property Insurance and/or Commercial General
Liability Insurance Conditions or any different or additional terms and
conditions of any insurance policy in effect on the Premises or the Project
from time to time (collectively the "Building Insurance"), Nor shall Tenant do
nor permit any other act or thing to be done in or to the Premises or the
Project which shall or might subject Landlord to any liability or
responsibility to any person or for property damage, nor shall Tenant use the
Premises or keep anything on or in the Project except as now or hereafter
permitted by the fire regulations, the fire department or zoning, health,
safety, land use or other regulations. Tenant, at Tenant's sole cost and
expense, shall comply with all requirements and recommendations set forth by
any property or casualty insurer or reinsurer providing coverage for the
Premises or the Project or by any person or entity engaged by Landlord or
Manager to perform any loss control, analysis or assessment for the Premises or
the Project. Tenant shall not do or permit anything to be done in or upon the
Premises or
the Project or bring or keep anything therein or use the Premises or the
Project in a manner which increases the rate of premium for any Building
Insurance or any property or equipment located therein over the rate in effect
at the commencement of the Term of this Lease. In addition, Tenant agrees to
pay Landlord the amount of any increase in premiums for insurance which may be
charged during the term of this Lease resulting from the act or omissions of
Tenant or the character or nature of its occupancy or use of the Project or the
Premises, whether or not Landlord has consented to the same. Any scheduled or
"make-up" of any insurance rate for the Premises, the Building or the Project
issued by any insurance company establishing insurance premium rates for the
Premises, Building or the Project shall be prima facie evidence of the facts
therein stated and of the several items and charges in the insurance premium
rates then applicable to the Premises, the Building or the Project. Tenant
shall give Landlord notice promptly after Tenant learns of any accident,
emergency, or occurrence for which Landlord is or may be liable, or any fire or
other casualty or damage or defects to the Premises, the Building or the
Project which Landlord is or may be responsible or which constitutes the
property of Landlord.
7.03 Tenant shall not perform acts or carry on any activities or engage in
any practices which may injure the Premises or any portion of the Project or
which may be a nuisance or menace to other persons on or in the Project.
Tenant shall pay all costs, expenses, fines, penalties, or damages which may be
imposed upon Landlord by reason of Tenant's failure to comply with the
provisions of this Section.
5
<PAGE> 8
7.04 Tenant will not place any load upon any floor of the Premises
exceeding the floor load per square foot area which it was designed to carry
and which is allowed by law. Landlord reserves the right to prescribe the
weight and position of all safes, business machines and mechanical equipment.
Such items shall be placed and maintained by Tenant, at Tenant's expense, in
settings sufficient in Landlord's judgment, to absorb and prevent vibration,
noise and annoyance. If at any time any windows of the Premises are
temporarily or permanently closed, darkened or covered for any reason
whatsoever, including Landlord's own acts, Landlord shall not be liable for any
damage Tenant may sustain thereby, and the same shall not be considered a
default under this Lease and Tenant shall not be entitled to any compensation
therefore nor abatement of any Base Rent or any other sums due hereunder, nor
shall the same release Tenant from its obligations hereunder nor constitute an
eviction, construction, actual or otherwise.
7.05 During the term hereof, and consistent with janitorial services
provided by Landlord, Tenant will keep the Premises in a clean and wholesome
condition, will use the same in a careful and proper manner, and generally will
comply with all laws, ordinances, orders and regulations affecting the Premises
and the cleanliness, safety, occupancy and use thereof. Tenant will not commit
waste in or on the Premises, and will use the Premises in accordance with the
Rules and Regulations of the Project, as set forth in Exhibit B, attached
hereto and made a part hereof.
7.06 As between Landlord and Tenant, Tenant shall be responsible for any
alterations, changes or improvements to the Premises which may be necessary in
order for the Premises and Tenant's use thereof to be in compliance with the
Americans with Disabilities Act of 1990 and its state and local counterparts or
equivalents (the "Disabilities Act") during the term of this Lease.
7.07 For the purposes of this Lease, the term "Hazardous Materials" shall
mean, collectively, (i) any biological materials, chemicals, materials,
substances or wastes which are now or hereafter become defined as or included
in the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", "toxic pollutants", or words of similar import, under any
applicable Environmental Law (as defined below) and (ii) any petroleum or
petroleum products and asbestos in any form that is or could become friable.
7.08 For the purposes of this Lease, the term "Environmental Laws" shall
mean all federal, state, and local laws, statutes, ordinances, regulations,
criteria, guidelines and rules of common law now or hereafter in effect, and in
each case as amended, and any judicial or administrative interpretation
thereof, including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases or Hazardous Materials
or otherwise related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
Environmental Laws include but are not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended;
the Resource Conservation and Recovery Act, as amended; the Clean Air Act, as
amended; the Clean Water Act, as amended; and their state and local
counterparts or equivalents.
7.09 Tenant shall not (either with or without negligence) cause or permit
the escape, disposal or release of any Hazardous Materials. Tenant shall not
allow the storage or use of such Hazardous Materials on the Premises or the
Project in any manner prohibited by the Environmental Laws or by the highest
standards prevailing in the industry for the storage and use of such Hazardous
Materials, nor allow to be brought into the Premises or the Project any such
Hazardous Materials except to use in the ordinary course of Tenant's business,
and then only after written notice is given to Landlord of the identity of such
Hazardous Materials and Landlord consents in writing to the use of such
materials. Landlord shall have the right at any times during the term of this
Lease to perform assessments of the environmental condition of the Premises and
of Tenant's compliance with this Section 7.09. In connection with any such
assessment, Landlord shall have the right to enter and inspect the Premises and
perform tests (including physically invasive tests), provided such tests are
performed in a manner that minimizes disruption to Tenant. Tenant will
cooperate with Landlord in connection with any such assessment by, among other
things, responding to inquires and providing relevant documentation and
records. Tenant will accept custody and arrange for the disposal of any
Hazardous Materials that are required to be disposed of as a result of those
tests. Landlord shall have no liability or responsibility to Tenant with
respect to any such assessment or test or with respect to results of any such
assessment or test. If any lender or governmental agency shall ever require
testing to ascertain whether or not there has been any release of Hazardous
Materials, then the reasonable costs thereof shall be reimbursed by Tenant to
Landlord upon demand as additional charges if such requirement applies to the
Premises or Tenant's activities on the Project. If any inspection indicates
any (i) non-compliance with any Environmental Law or the highest standards
prevailing in the industry for the storage and use of Hazardous Materials; (ii)
damage; or (iii) contamination, Tenant shall, at its cost and expense, remedy
such non-compliance, damage or contamination. In addition, Tenant shall
execute affidavits, representations and the like from time to time at
Landlord's request concerning Tenant's best knowledge and belief regarding the
presence of Hazardous Materials on the Premises. Irrespective of whether
Landlord elects to inspect the Premises, if Hazardous Materials are found on or
about the Premises, Landlord shall have no responsibility, liability or
obligation whatsoever with respect to the existence, removal or transportation
of the Hazardous Material or the restoration and remediation of the Premises.
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Further, Landlord shall have the right to require Tenant to immediately
terminate the conduct of any activity in violation of the Environmental Law,
the highest standards prevailing in the industry for the storage and use of
Hazardous Materials or, if none exist, the standards determined by Landlord.
Tenant's obligations under this Section 7 with respect to any environmental
condition shall not be applicable to the extent that such environmental
condition (a) exists prior to the commencement of the initial term of this
Lease or (b) results from (i) the actions or omissions of Landlord either
before the commencement of this Lease, during the term hereof or after the
termination of this Lease, or (ii) the actions or omissions of any preceding or
succeeding tenant or owner of the Premises, or (iii) the actions or omissions
of any person or entity who or which is not a subtenant, employee, agent,
invitee, customer, visitor, licensee, contractor or designee of Tenant
7.10 Tenant further agrees that it will not, by either action or inaction,
invite or otherwise cause agents or representatives of any federal, state or
local governmental agency to enter onto the Premises or the Project and/or
investigate the Premises or the Project. This agreement does not allow Tenant
to obstruct any such entry or investigation and the mere fact of a regulatory
agency entry or investigation without Tenant's involvement either by action or
inaction shall not be deemed a breach of this lease. Nothing set forth in this
paragraph shall prohibit Tenant from reporting any fact or condition which
Tenant has been advised it has a legal obligation to report provided Tenant
first notifies Landlord of such fact or condition and Tenant's intention to
report the fact or condition.
7.11 Tenant shall indemnify, hold harmless and defend Landlord, its
licensees, servants, agents, employees and contractors for any loss, damage,
claim, liability or expense (including reasonable attorney's fees) arising out
of any violation of any Environmental Law(s) or the Disabilities Act which
exists or occurs after the date hereof. Tenant shall notify Landlord as soon
as possible after Tenant learns of the existence of or potential for any such
loss, damage, claim, liability or expense arising out of any violation or
suspected violation of any Environmental Law(s) or the Disabilities Act. In
the event Tenant refuses to address such violation or suspected violation
within five (5) days of such notice or another notice from Landlord, and,
thereafter, to investigate such violation or suspected violation, and promptly
commence and diligently pursue any action required to address such violation or
suspected violation, Landlord shall have the right, in addition to every other
right and remedy it may have hereunder, to terminate this Lease by giving ten
(10) days prior written notice thereof to Tenant, and upon the expiration of
such ten (10) days, this Lease shall terminate. The covenants set forth herein
shall survive the expiration or earlier termination of this Lease.
SECTION 8.
INSURANCE
8.01 Commencing on the Commencement Date, Tenant shall, during the Term
of this Lease, maintain in full force and effect policies of commercial general
liability insurance (including premises, operation, bodily injury, personal
injury, death, independent contractors, broad form contractual liability and
broad form property damage coverage), in a combined single limit amount of not
less than Two Million Dollars ($2,000,000), per occurrence (exclusive of
defense costs), against all claims, demands or actions with respect to damage,
injury or death made by or on behalf of any person or entity, arising from or
relating to the conduct and operation of Tenant's business in, on or about the
Premises (which shall include Tenant's signs, if any), or arising from or
related to any act or omission of Tenant or of Tenant's principals, officers,
agents, contractors, servants, employees, licensees and invitees. Whenever, in
Landlord's reasonable judgment, good business practice and changing conditions
indicate a need for additional amounts or different types of insurance
coverage, Tenant shall, within ten (10) days after Landlord's request, obtain
such insurance coverage, at Tenant's sole cost and expense.
8.02 Commencing on the Commencement Date, Tenant shall obtain and maintain
policies of workers' compensation and employers' liability insurance which
shall provide for statutory workers' compensation benefits and employers'
liability limits of not less than that required by law.
8.03 Commencing on the Commencement Date, Tenant shall obtain and maintain
insurance protecting and indemnifying Tenant against any and all damage to or
loss of any personal property, fixtures, leasehold improvements, alterations,
decorations, installations, repairs, additions, replacements or other physical
changes in or about the Premises, including but not limited to the Tenant
Improvements, and all claims and liabilities relating thereto, for their full
replacement value without deduction or depreciation. In addition, if Tenant
shall install or maintain one or more pressure vessels to serve Tenant's
operations on the Premises, Tenant shall, at Tenant's sole cost and expense,
obtain, maintain and keep in full force and effect appropriate boiler or other
insurance coverage therefore in an amount not less than One Million and No/100
Dollars ($1,000,000.00) (it being understood and agreed, however, that the
foregoing shall not be deemed a consent by Landlord to the installation and/or
maintenance of any such pressure vessels in the Premises, which installation
and/or maintenance shall at all times be subject to the prior written consent
of Landlord). All insurance policies required pursuant to this Paragraph 8.03
shall be written on a so-called "all risk" form and shall be carried in
sufficient amount so as to avoid the imposition of any co-insurance penalty in
the event of a loss. Such insurance
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shall provide the broadest coverage then available, including coverage for
loss of profits or business income or reimbursement for extra expense incurred
as the result of damage or destruction to all or a part of the Premises.
8.04 All insurance policies which Tenant shall be required to maintain
pursuant to this Section 8 shall, in addition to any of the foregoing: be
written by insurers which have an A.M. Best & Company rating of "A", Class "X",
or better and who are authorized to write such business in the State of
Michigan and are otherwise satisfactory to Landlord; be written as "occurrence"
policy; be written as primary policy coverage and not contributing with or in
excess of any coverage which Landlord or any ground or building lessor may
carry; name Landlord, the Manager, and Landlord's mortgagee and ground or
building lessor, if any, as additional insureds; be endorsed to provide that
they shall not be cancelled, failed to be renewed, diminished or materially
altered for any reason except on thirty (30) days prior written notice to
Landlord and the other additional insureds; and provide coverage to Landlord,
Landlord's property management company, and Landlord's mortgagee whether or not
the event or occurrence giving rise to the claim is alleged to have been caused
in whole or in part by the acts or negligence of Landlord, Landlord's property
management company, or Landlord's mortgagee. At Landlord's option, either the
original policies or certified duplicate copies of the original policies will
be delivered by Tenant to Landlord at least ten (10) days prior to their
effective date thereof, together with receipts evidencing payment of the
premiums therefor. Tenant will deliver certificates of renewal for such
policies to Landlord not less than fifteen (15) days prior to the
expiration dates thereof. No such policy shall contain a deductible or self
insured retention greater than $5,000.00 per claim, nor shall any such policy
be the subject of an indemnification or other arrangement by which any insured
is obligated to repay any insurer with respect to loss occurring on the
Premises.
8.05 If Tenant fails to provide all or any of the insurance required by
this Section 8 or subsequently fails to maintain such insurance in accordance
with the requirements hereof, then after giving one (1) business day written
notice to Tenant, Landlord may (but will not be required to) procure or renew
such insurance to protect its own interests only, and any amounts paid by
Landlord for such insurance will be additional rental due and payable on or
before the next Rent Day, together with late charges and interest as provided
in Section 5 hereof. Landlord and Tenant agree that no insurance acquired by
Landlord pursuant hereto shall cover any interest or liability of Tenant, any
procurement by Landlord of any such insurance or the payment of any such
premiums shall not be deemed to waive or release the default of Tenant with
respect thereto.
SECTION 9.
DAMAGE BY FIRE OR OTHER CASUALTY
9.01 It is understood and agreed that if, during the Term hereof, the
Project and/or the Premises shall be damaged or destroyed in whole or in part
by fire or other casualty, without the fault or
neglect of Tenant, Tenant's servants, employees, agents, visitors, invitees or
licensees, which damage is covered by insurance carried pursuant to Section 8
above, unless Landlord elects to terminate this Lease as provided in Paragraph
9.02 below, Landlord shall cause the Project and/or the Premises to be repaired
and restored to good, tenantable condition with reasonable dispatch at its
expense; provided, however, Landlord shall not be obligated to expend for such
repair or restoration an amount in excess of insurance proceeds made available
to Landlord for such purpose, if any. Landlord's obligation hereunder shall be
limited to repairing or restoring the Project and/or the Premises to
substantially the same condition that existed prior to such damage or
destruction. Landlord shall, during the Term hereof, keep in full force and
effect the following insurance: (a) Comprehensive General Liability or
Commercial General Liability Insurance with respect to common areas and
Landlord's operation of the Building for bodily injury, including death, and
damage to property of others; (b) Standard "All Risk Insurance" for physical
loss or property damage insurance in respect of the Building but excluding
Tenant's trade fixtures, equipment, personal property and any additional
improvements which Tenant may construct thereon, together with such insurance
as Landlord, in its sole discretion, elect to obtain. Insurance effected by
Landlord shall be in amounts and be subject to such deductibles and exclusions
and on such terms and conditions as Landlord shall from time to time determine
reasonable and sufficient. Notwithstanding the above, Landlord reserves the
right to self-insure all or some of the risk.
9.02 If (i) more than fifty (50%) percent of the floor area of the
Premises shall be damaged or destroyed, (ii) more than twenty-five (25%)
percent of the Project shall be damaged or destroyed, or (iii) any material
damage or destruction occurs to the Premises or the Project during the last
twelve (12) months of the Initial Term or Option Term, as the case may be, then
Landlord may elect to either terminate this Lease or repair and rebuild the
Premises. In order to terminate this lease pursuant to this Paragraph,
Landlord must give written notice to Tenant of its election to so terminate,
such notice to be given within ninety (90) days after the occurrence of damage
or destruction fitting the above description, and thereupon the term of this
Lease shall expire by lapse of time ten (10) days after such notice is given
and Tenant shall vacate the Premises and surrender the same to Landlord,
without prejudice, however, to Landlord's rights and remedies against Tenant
under the Lease provisions in effect prior to such termination, and any rent
owing shall be paid up to such date and any payments of rent made by Tenant
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which were on account of any period subsequent to such date shall be returned
to Tenant. Tenant acknowledges that Landlord will not carry insurance on
Tenant's furniture and/or furnishings or any fixtures or equipment,
improvements, or appurtenances removable by Tenant and agrees that Landlord
will not be obligated to repair any damage thereto or replace the same.
9.03 Tenant shall give immediate notice to Landlord in case of fire or
accident at the Premises. If Landlord repairs or restores the Premises as
provided in Paragraph 9.01 above, Tenant shall promptly repair or replace its
trade fixtures, furnishings, equipment, personal property and leasehold
improvements in a manner and to a condition equal to that existing prior to the
occurrence of such damage or destruction.
9.04 If the casualty, or the repairing or rebuilding of the Premises
pursuant to Paragraphs 9.01 and 9.02 above shall render the Premises
untenantable, in whole or in part, a proportionate abatement of the rent due
hereunder shall be allowed from the date when the damage occurred until the
date Landlord completes the repairs on the Premises or, in the event Landlord
elects to terminate this Lease, until the date of termination. Such abatement
shall be computed on the basis of the ratio of the floor area of the Premises
rendered untenantable to the entire floor area of the Premises.
9.05 Tenant shall not entrust any property to any employee, contractor,
licensee, or invitee of Landlord. Any person to whom any property is entrusted
by or on behalf of Tenant in violation of foregoing prohibition shall be deemed
to be acting as Tenant's agent with respect to such property and neither
Landlord nor its agents shall be liable for any damage to property of Tenant or
of others entrusted to employees of the Project, nor shall Landlord or its
agents be liable for any such damage caused by other tenants or persons in,
upon or about the Project or caused by operations or construction of any
private, public or quasi-public work.
SECTION 10.
REPAIRS, RENOVATIONS AND ALTERATIONS
10.01 Tenant shall, at Tenant's sole expense, keep the interior of the
Premises and the fixtures therein in good condition, reasonable wear and tear
excepted, and will also repair all damage or injury to the Premises and
fixtures resulting from the carelessness, omission, neglect or other action or
inaction of Tenant, its servants, employees, agents, visitors, invitees or
licensees. Such damage shall be promptly repaired or damaged items replaced by
Tenant, at its sole expense, to the satisfaction of Landlord. If
Tenant fails to make such repairs or replacements, Landlord may do so and the
cost thereof shall become collectible as additional rent hereunder and shall be
paid by Tenant within ten (10) days after presentation of statement therefor.
Landlord shall maintain, and shall make all necessary repairs and replacements
to, the Building, the heating, air conditioning and electrical and plumbing
systems located therein, and the Common Areas, provided that at Landlord's
option, (i) Tenant shall make all repairs and replacements arising from its
act, neglect or default and that of its agents, servants, employees, invitees
and licensees, or (ii) Landlord may make such repairs and replacements and the
costs thereof shall become collectable as additional rent hereunder and shall
be paid by Tenant within five (5) days after presentation of a statement
therefore. Tenant shall keep and maintain the Premises in a clean, sanitary
and safe condition, and shall keep and maintain the interior of the Premises in
full compliance with the laws of the United States and State of Michigan, all
directions, rules and regulations of any health officer, fire marshal, building
inspector, or other proper official of any governmental agency having
jurisdiction over the Premises, and the requirements of Landlord's mortgagee,
all at Tenant's full cost and expense, and Tenant shall comply with all
requirements of law, ordinance and regulation affecting the Premises. Tenant
shall make all non-structural repairs to the Premises as and when needed to
preserve them in good order and condition. All the aforesaid repairs shall be
of quality or class equal to the original construction. Tenant shall give
Landlord prompt written notice of any defective condition in any plumbing,
heating system or electrical lines located in, servicing or passing through the
Premises and following such notice, Landlord shall remedy the condition with
due diligence but at the expense of Tenant if repairs are necessitated by
damage or injury attributable to Tenant, Tenant's servants, agents, employees,
invitees or licensees. There shall be no allowance to Tenant for diminutions
of rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord, Tenant,
or others making or failing to make any repairs, alterations, additions, or
improvements in or to any portion of the Building or the Premises or in and to
the fixtures, appurtenances or equipment thereof. The provisions of this
Section 10 with respect to the making of repairs shall not apply in the case of
fire or other casualty which are dealt with in Section 9 hereof.
10.02 Tenant shall not make any renovations, alterations, additions or
improvements to the Premises without Landlord's prior written consent. All
plans and specifications for such renovations, alterations, additions or
improvements shall be approved by Landlord prior to commencement of any work.
Landlord's approval of the plans, specifications and working drawings for
Tenant's alterations shall create no responsibility or liability on the part of
Landlord for their completeness, design sufficiency, or compliance with laws,
rules and regulations of governmental agencies or authorities, including but
not limited to the Americans with Disabilities Act, as amended. All
renovations, alterations, additions or improvements made by Tenant upon the
Premises, except for movable office furniture and movable
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trade fixtures installed at the expense of Tenant, shall be and shall remain
the property of Landlord, and shall be surrendered with the Premises at the
termination of this Lease, without molestation or injury. In addition,
Landlord may designate by written notice to Tenant the alterations, additions,
improvements and fixtures made by or for Tenant, which shall be removed by
Tenant at the expiration or termination of the Lease and Tenant shall promptly
remove the same and repair any damage to the Premises caused by such removal.
Such written notice relating to the Tenant Improvement's provided by the
Landlord at the commencement of the Lease must be provided in writing by
Landlord to Tenant within one (1) year of Lease Commencement Date.
10.03 Tenant agrees that all renovations, alterations, additions and
improvements made by it pursuant to Paragraph 10.02, notwithstanding Landlord's
approval thereof, shall be done in a good and workmanlike manner and in
conformity with all guidelines provided by Landlord and all laws, ordinances
and regulations of all public authorities having jurisdiction, that materials
of good quality shall be employed therein, that the structure of the Premises
shall not be impaired thereby, that the work shall be carried out and completed
in an orderly, clean and safe manner, and that, while the work is being
performed, Tenant shall maintain builder's risk insurance coverage with
Landlord as a named insured, which insurance coverage shall meet the criteria
set forth in Section 8.
SECTION 11.
LIENS
11.01 Tenant will keep the Premises free of liens of any sort and will
hold Landlord harmless from any liens which may be placed on the Premises
except those attributable to debts incurred by Landlord. In the event a
construction or other lien shall be filed against the Building, the Premises or
Tenant's interest therein as a result of any work undertaken by Tenant or its
employees, agents, contractors or subcontractors, or as a result of any repairs
or alterations made by or any other act of Tenant or its employees, agents,
contractors or subcontractors, Tenant shall, within two (2) days after
receiving notice of such lien, discharge such lien either by payment of the
indebtedness due the lien claimant or by filing a bond (as provided by statute)
as security for the discharge of such lien. In the event
Tenant shall fail to discharge such lien, Landlord shall after have the right
to procure such discharge by filing such bond, and Tenant shall pay the cost of
such bond to Landlord as additional rent upon the next Rent Day in accordance
with Section 5 hereof.
SECTION 12.
EMINENT DOMAIN
12.01 If all of the Premises are condemned or taken in any manner
(including without limitation any conveyance in lieu thereof) for any public or
quasi-public use, the term of this Lease shall cease and terminate as of the
date title is vested in the condemning authority. If (i) more than fifty (50%)
percent of the floor area of the Premises shall be condemned or taken in any
manner, or (ii) more than twenty-five (25%) percent of the Building shall be
condemned or taken, or (iii) any material condemnation or taking occurs during
the last twelve (12) months of the Initial Term or Option Term, as the case may
be, or (iv) such a portion of the parking area on the Land is so condemned or
taken that the number of parking spaces remaining are less than the number
required by applicable zoning laws or other building code for the Building,
then Landlord may elect to terminate this Lease. In order to terminate this
Lease pursuant to this Paragraph, Landlord must give Tenant written notice of
its election to so terminate, such notice to be given not later than ninety
(90) days after the completion of such condemnation or taking, and thereupon
the term of this Lease shall expire on the date set forth in such notice, and
Tenant shall vacate the Premises and surrender the same to Landlord, without
prejudice, however, to Landlord's rights and remedies against Tenant under the
Lease provisions in effect prior to such termination, and any rent owing shall
be paid up to such date and any payments of rent made by Tenant which were on
account of any period subsequent to such date shall be returned to Tenant.
12.02 If this Lease is not terminated following such a condemnation or
taking, Landlord, as soon as reasonably practicable after such condemnation or
taking and the determination and payment of Landlord's award on account
thereof, shall expend as much as may be necessary of the net amount which is
awarded to Landlord and released by Landlord's mortgagee, if any, in restoring,
to the extent originally constructed by Landlord (consistent, however, with
zoning laws and building codes then in existence), so much of the Building as
was originally constructed by Landlord to an architectural unit as nearly like
its condition prior to such taking as shall be practicable; provided, however,
Landlord shall not be obligated to expend for such restoration an amount in
excess of condemnation proceeds made available to Landlord, if any. Landlord's
obligation hereunder shall be limited to restoring the Building and/or the
Premises to substantially the same condition that existed prior to such
condemnation or taking.
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12.03 If this Lease is not terminated pursuant to Paragraph 12.01, the
Base Rent and other sums payable by Tenant hereunder, as adjusted as provided
herein, shall be reduced in proportion to the reduction in area of the Premises
by reason of the condemnation or taking. If this Lease is terminated pursuant
to Paragraph 12.01, the minimum net rental and other charges which are the
obligation of Tenant hereunder shall be apportioned and prorated accordingly as
of the date of termination.
12.04 The whole of any award or compensation for any portion of the
Premises taken, condemned or conveyed in lieu of taking or condemnation,
including the value of Tenant's leasehold interest under the Lease, shall be
solely the property of and payable to Landlord. Nothing herein contained shall
be deemed to preclude Tenant from seeking, at its own cost and expense, an
award from the condemning authority for loss of its business, the value of any
trade fixtures or other personal property of Tenant in the Premises or moving
expenses, provided that the award for such claim or claims shall not be in
diminution of the award made to Landlord.
SECTION 13.
ASSIGNMENT OR SUBLETTING
13.01 Tenant agrees not to assign or in any manner transfer this Lease or
any interest in this Lease without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, and not to sublet the Premises or
any part of the Premises or to allow anyone to use or to come in, through or
under the Premises without Landlord's consent. Any attempted subletting or
assignment without Landlord's consent shall be voidable in Landlord's sole
discretion and, at Landlord's option, shall grant Landlord the right to
terminate this Lease or to exercise any of the other rights or remedies it may
have hereunder. If consented to, no assignment or subletting shall be binding
upon Landlord unless the sublessee or assignee shall deliver to Landlord an
instrument (in recordable form, if Landlord so requests) containing an
agreement of assumption of all of Tenant's obligations under this Lease. In no
event may Tenant assign, sublet or otherwise transfer this Lease or any
interest in this Lease at any time while an Event of Default exists hereunder.
Landlord may, in its reasonable discretion, refuse to give its consent to
any proposed subletting or assignment or exercise its other rights hereunder
for any reason, including, but not limited to, the financial condition,
creditworthiness or business reputation of the proposed sublessee or assignee,
the prevailing market or quoted rental rates for space in the Building or other
comparable buildings, and the proposed use of the Premises by, or business of,
the proposed sublessee or assignee. One consent by Landlord to a subletting or
assignment will not be deemed a consent to any subsequent assignment,
subletting, occupation or use by any other person. Neither the consent to any
assignment or subletting nor the acceptance of rent from an assignee, subtenant
or occupant will constitute a release of Tenant from the further performance of
the obligations of Tenant contained in this Lease. A dissolution, merger,
consolidation, or other reorganization of Tenant, and the issuance or transfer
of twenty (20%) percent or more of the voting capital of Tenant to persons
other than shareholders as of the beginning of such period within any twelve
(12) month period, shall each be deemed to be an assignment of this Lease, and
as such, prohibited without Landlord's prior written consent.
13.02 In the event Tenant desires to sublet all or a portion of the
Premises or assign this Lease, Tenant shall give notice to Landlord setting
forth the terms of the proposed subletting or assignment together with such
financial and other information Landlord may request. Landlord shall have the
right, exercisable by written notice to Tenant within sixty (60) days after
receipt of Tenant's notice, (i) to consent or refuse to consent thereto in
accordance with Paragraph 13.01 above, or (ii) to terminate this Lease which
termination may, in Landlord's sole discretion, be conditioned upon Landlord
and the proposed subtenant/assignee entering into a new Lease.
13.03 Upon the occurrence of an Event of Default, as defined under Section
18, if all or any part of the Premises are then sublet or assigned, Landlord,
in addition to any other remedies provided by this Lease or by law, may, at its
option, collect directly from the sublessee or assignee all rent becoming due
to Landlord by reason of the subletting or assignment. Any collection by
Landlord from the sublessee or assignee shall not be construed to constitute a
waiver or release of Tenant from the further performance of its obligations
under this Lease or the making of a new Lease with such sublessee or assignee.
13.04 In the event Tenant shall sublet all or a portion of the Premises or
assign this Lease, all of the sums of money or other economic consideration
received by Tenant or its affiliates, directly or indirectly, as a result of
such subletting or assignment, whether denominated as rent or otherwise, which
exceed in the aggregate the total sums which Tenant is obligated to pay
Landlord under this Lease (prorated to reflect obligations allocable to that
portion of the Premises subject to such sublease) shall be payable to Landlord
as additional rent under this Lease without effecting or reducing any other
obligation of Tenant hereunder.
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SECTION 14.
INSPECTION OF PREMISES
14.01 Tenant agrees to permit Landlord to enter the Premises for the
purpose of inspecting the same and to show same to prospective purchasers,
tenants or mortgagees of the Project, and to make such repairs, alterations,
improvements or additions as Landlord may deem necessary or desirable, and
Landlord shall be allowed to take all material into and upon the Premises that
may be required therefor without the same constituting an eviction of Tenant in
whole or in part and the rent reserved shall in no way abate while said
repairs, alterations, improvements, or additions are being made, by reason of
loss or interruption of business of Tenant, or otherwise. Landlord will give
Tenant reasonable notice prior to an entry by Landlord pursuant to this Section
14.01, except in the case of emergencies in which event no notice need be
given.
SECTION 15.
FIXTURES AND EQUIPMENT
15.01 All fixtures and equipment paid for by Landlord and all fixtures and
equipment which may be paid for and placed on the Premises by Tenant from time
to time but which are so incorporated and affixed to Premises that their
removal would involve damage or structural change to Premises will be and
remain the property of Landlord.
15.02 All tenant furnishings, office equipment and tenant fixtures (other
than those specified in Sections 10.02 and 15.01), which are paid for and
placed on the Premises by Tenant from time to time (other than those which are
replacements for fixtures originally paid for by Landlord) will remain the
property of Tenant.
SECTION 16.
PARKING AREAS
16.01 Tenant and its agents, employees, customers, licensees and invitees
shall have the non-exclusive right to use in common with Landlord and all other
tenants and occupants of the Building and their respective agents, employees,
customers, licensees and invitees, the Common Area parking and loading dock
facilities, if any, on the Land, and all driveways, entrances and exits located
within the Project necessary to provide a means of ingress and egress to and
from the Premises. Such use of parking facilities shall be subject to, and
consistent with, the Rules and Regulations of the Project (as set forth in
Exhibit B), together with such reasonable modifications and additions as may be
made thereto during the term of this Lease. Landlord shall designate the
number of parking spaces set forth in Paragraph 1.01(i) in the parking lot of
the Project for the exclusive use of Tenant. Tenant shall pay Landlord, as
additional rent on each Rent Day, an amount set forth in Section 1.01(i). Such
sums may be increased by Landlord from time to time by the delivery of thirty
(30) days prior written notice to Tenant. Within thirty (30) days of receipt
of such notification, Tenant may: (i) accept such increase; or (ii) reject
such increase for all or any of its exclusive spaces, in which event Tenant's
exclusive parking rights for such spaces shall terminate. If Tenant accepts
such increase or fails to reject such increase within the thirty (30) day
period, then commencing with the next Rent Day following Landlord's notice, the
amount of additional rent payable hereunder shall be increased accordingly.
Notwithstanding anything contained herein to the contrary, Landlord shall have
the right to relocate Tenant's Designated Parking Spaces within the parking lot
of the Project, and Landlord shall have the right to designate other parking
spaces in the parking lot for the exclusive use of others. Tenant agrees to be
bound by parking regulations in effect at the Project, together with reasonable
modifications or additions as may be necessary during the term of this Lease,
as more fully described in Exhibit "B", attached hereto and made part hereof.
SECTION 17.
NOTICE OR DEMANDS
17.01 All bills, notices, requests, statements, communications, or demands
(collectively, "notices or demands") to or upon Landlord or Tenant desired or
required to be given under any of the provisions hereof must be in writing.
Any such notices or demands from Landlord to Tenant will be deemed to have been
duly and sufficiently given if a copy thereof has been personally delivered,
mailed by United States certified mail, return receipt requested, postage
prepaid, or sent via overnight courier service to Tenant at the address of the
Premises or at such other address as Tenant may have last furnished in writing
to Landlord for such purpose. Any such notices or demands from Tenant to
Landlord will be deemed to have been duly and sufficiently given if delivered
to Landlord in the same manner as provided above at the address set forth at
the heading of this Lease or at the address last furnished by
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written notice from Landlord to Tenant. The effective date and the delivery
date of such notice or demand will be deemed to be the time when it is
personally delivered three (3) days after it is mailed or the day after it is
sent via overnight courier as herein provided.
SECTION 18.
BREACH; INSOLVENCY; RE-ENTRY
18.01 Each of the following shall constitute an Event of Default under
this Lease: (i) Tenant's failure to pay rent or any other sum payable
hereunder when due; (ii) Tenant's failure to perform any of the non-monetary
terms, conditions or covenants of this Lease to be observed or performed by
Tenant for more than ten (10) business days after written notice of such
failure shall have been delivered to Tenant; (iii) if Tenant is named as the
debtor in any bankruptcy proceeding, or similar debtor proceeding, and any such
proceeding, if involuntary, is not dismissed or set aside within sixty (60)
days from the date thereof; (iv) if Tenant makes an assignment for the benefit
of creditors or petitions for or enters into an arrangement with creditors or
if a receiver of any property of Tenant in or upon the Premises is appointed in
any action, suit or proceeding by or against Tenant, or if Tenant shall admit
to any creditor or to Landlord that it is insolvent, or if the interest of
Tenant in the Premises shall be sold under execution or other legal process; or
(v) if Tenant shall abandon the Premises, vacate the Premises for a period of
more than fifteen (15) consecutive days, or suffer this Lease to be taken under
any writ of execution. Upon the occurrence of any Event of Default, Landlord,
in addition to any other rights and remedies it may have hereunder or by law,
shall have the immediate right of re-entry, and may remove all persons and
property from the Premises and it shall have the right to abandon or otherwise
dispose of such property in any way it may deem fit which is not in
contravention of applicable law. In addition, Landlord shall have the right,,
but not the obligation, to store all or some of the property which may have
been removed in a public warehouse or elsewhere at the cost of, and for the
account of, Tenant, all without service of notice or resort to legal process
and all without being deemed guilty of trespass or becoming liable for any loss
or damage which may be occasioned thereby.
18.02 In the event Landlord shall elect to re-enter the Premises in
accordance with Paragraph 18.01, or should Landlord take possession of Premises
pursuant to legal proceedings or pursuant to any notice provided by law,
Landlord may either terminate this Lease or may from time to time without
terminating this Lease, make such alterations and repairs as Landlord may deem
necessary in order to relet the Premises, and relet the Premises or any part
thereof for any such term or terms (which may be for a term extended beyond the
term of this Lease) and at such rental or rentals, and upon such other terms
and conditions as Landlord may deem advisable.
18.03 Upon the reletting of the Premises in accordance with Paragraph
18.02, all rentals received by Landlord from such reletting shall be applied in
the following order of priority: (a) to the payment of any additional rent
payable as provided in Section 5 hereof, including interest and late charges;
(b) to the payment of any other indebtedness other than rent due hereunder from
Tenant to Landlord; (c) to the payment of the actual costs and expenses of
obtaining possession, restoring and repairing the Premises and the actual costs
and expenses of reletting, including brokerage and attorneys' fees; and (d) to
the payment of any rent and other sums due and unpaid under this Lease. The
remainder, if any, shall be held by Landlord and applied in payment of future
rent as the same may become due and payable hereunder. If the rental received
from such reletting during any month is less than that to be paid during that
month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord
monthly. No such re-entry or taking possession of the Premises or any part
thereof by Landlord shall be construed as an election on its part to terminate
this Lease unless a written notice of such intention is given to Tenant or
unless the termination thereof is decreed by a court of competent jurisdiction.
18.04 Notwithstanding any reletting of the Premises without termination in
accordance with Paragraph 18.02, Landlord may at any time after the occurrence
of any Event of Default, terminate this Lease and, in addition to any other
remedies Landlord may have, Landlord may recover from Tenant all damages it may
incur by reason of Tenant's breach, including, without limitation, the
reasonable cost of recovering and reletting the Premises and reasonable
attorneys' fees incidental thereto and the worth at the time of the termination
of the amount of rent and other charges payable hereunder for the remainder of
the Term, all of which amounts shall be immediately due and payable by Tenant
to Landlord.
18.05 Landlord shall be entitled to recover reasonable attorneys' fees in
any action to enforce the terms of this Lease. In addition, Landlord and
Tenant hereby waive trial by jury in any action, proceeding or counterclaim
brought by Landlord or Tenant against the other on any matter whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord to Tenant, the use or occupancy of the Premises by Tenant or any
person claiming through or under Tenant, any claim of injury or damage, and any
emergency or other statutory remedies; provided, however, the foregoing waiver
shall not apply to any action for personal injury or property damage.
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SECTION 19.
SURRENDER OF PREMISES ON TERMINATION
19.01 At the expiration (or earlier termination) of the Term hereof,
Tenant will surrender the Premises broom clean and in as good condition and
repair as they were at the time Tenant took possession, reasonable wear and
tear excepted, and promptly upon surrender will deliver all keys and building
security cards for the Premises to Landlord at the place then fixed for the
payment of rent. All costs and expenses incurred by Landlord in connection
with repairing or restoring the Premises to the condition called for herein,
together with the costs, if any, of removing any property of Tenant together
with any property designated by Landlord pursuant to Section 10.02, left on the
Premises, shall be paid by Tenant on demand. Tenant shall remove all property
of Tenant and make all repairs necessitated thereby at its own cost, as
directed by Landlord. Tenant's obligation to observe or perform this covenant
shall survive the expiration or other termination of the Term of this Lease.
At the expiration of the Lease term, Tenant shall yield and deliver the
Premises to Landlord in the improved condition as when it was taken,
except for reasonable use and wear thereof and insured repairs, and Tenant
will, at its own cost and expense, repair or pay the cost of restoration with
respect to any damage to the Premises arising from the removal of any trade
fixtures or similar items by Tenant. Tenant shall have no rights of removal as
to property affixed or otherwise placed on or in the Premises by or at the
expense of Landlord, its predecessors, successors or assigns.
SECTION 20.
PERFORMANCE BY LANDLORD OF THE COVENANTS OF TENANT
20.01 If Tenant fails to pay any sum of money, other than Base Rent,
required to be paid hereunder or fails to perform any act on its part to be
performed hereunder, including, but not limited to, the performance of all
covenants pertaining to the condition and repair of the Premises pursuant to
Section 10 above, and if such failure shall not otherwise be cured within the
time, if any, provided herein, then upon five (5) days notice Landlord
may (but shall not be required to), without waiving or releasing Tenant from
any of Tenant's obligations, make any such payment or perform any such other
act. All sums so paid or incurred by Landlord and all incidental costs,
including, but not limited to, the cost of repair, maintenance or restoration
of the Premises, shall be deemed additional rental and, together with interest
thereon computed at the rate set forth in Section 5 hereof from the date of
payment by Landlord until the date of repayment by Tenant to Landlord, shall be
payable to Landlord on demand. On default in such payment, Landlord shall have
the same remedies as on default in payment of rent. The rights and remedies
granted to Landlord under this Section 20 shall be in addition to, and not in
lieu of, all other remedies, if any, available to Landlord under this Lease or
otherwise, and nothing contained herein shall be construed to limit such other
remedies of Landlord with respect to any matters covered herein.
SECTION 21.
SUBORDINATION; ESTOPPEL CERTIFICATES
21.01 This Lease is subject and subordinate to all ground leases,
underlying leases, and mortgages, if any, now or hereafter made, which may now
or hereafter affect the Project and to all renewals, modifications,
consolidations, replacements and extensions of any such ground leases,
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be necessary. Notwithstanding the
foregoing, Landlord reserves the right to declare this Lease prior to the lien
of any ground lease, underlying lease, or mortgage now or hereinafter placed
upon the real property of which the Premises are a part by recording a written
notice of such priority with the register of deeds. Tenant covenants and
agrees to execute and deliver, within ten (10) days after requested by
Landlord, such further instrument or instruments subordinating this Lease (or
declaring the Lease prior and superior) to any lease or proposed lease or to
the lien of any such mortgage or mortgages as shall reasonably be desired by
Landlord, any lessor or proposed lessor, and any mortgagees or proposed
mortgagees. See Exhibit D, Special Provision D-2.
21.02 In the event any proceedings are brought for foreclosure of, or in
the event of the conveyance by deed in lieu of foreclosure of, or in the event
of the exercise of the power of sale under, any mortgage made by Landlord
covering the Premises, Tenant hereby attorns to the new owner, and covenants
and agrees to execute any instrument in writing reasonably satisfactory to the
new owner, whereby Tenant attorns to such successor in interest and recognizes
such successor as Landlord under this Lease.
21.03 Tenant, within ten (10) days after request (at any time or times) by
Landlord, will execute and deliver to Landlord an estoppel certificate, in form
reasonably acceptable to Landlord, certifying: (i) to the Commencement Date
and expiration date of the Term; (ii) that this Lease is unmodified and in full
force and effect, or is in full force and effect as modified, stating the
modifications; (iii) that Tenant
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does not claim that Landlord is in default in any way, or listing any such
claimed defaults and that Tenant does not claim any rights of setoff, or
listing such rights of setoff; (iv) to the amount of monthly rent and other
sums due hereunder as of the date of the certificate, the date to which the
rent has been paid in advance, and the amount of any security deposit or
prepaid rent; (v) that Tenant agrees to provide any mortgagee of Landlord with
notice of any default by Landlord hereunder and give such mortgagee the
opportunity to cure such default within sixty (60) days of such mortgagee's
receipt of notice of such default; and (vi) such other matters as may be
reasonably requested by Landlord. Any such certificate may be relied upon by
any prospective purchaser, mortgagee or lessor of the Premises or any part
thereof.
SECTION 22.
QUIET ENJOYMENT
22.01 Landlord agrees that at all times when no Event of Default exists
under this Lease, Tenant's quiet and peaceable enjoyment of the Premises, in
accordance with and subject to the terms of this Lease, will not be disturbed
or interfered with by Landlord or any person claiming by, through, or under
Landlord.
SECTION 23.
HOLDING OVER
23.01 If Tenant remains in possession of the Premises after the expiration
of this Lease without executing a new lease, Landlord shall have the right to
deem Tenant to be occupying the Premises as a tenant from month to month and
the Base Rent for each month will be one hundred fifty (150%) percent of the
greater of: (a) the regular monthly installment of Base Rent payable for the
last month of the Term of this Lease; or (b) the then prevailing market rates
of rent for the Project determined by Landlord in its sole and absolute
discretion. This provision shall not preclude Landlord from terminating the
lease or recovering any and all damages Landlord may incur as a result of
Tenant's failure to timely deliver possession of the Premises to Landlord or
from exercising any other right or remedy it may have hereunder.
SECTION 24.
REMEDIES NOT EXCLUSIVE; WAIVER
24.01 Each and every of the rights, remedies and benefits of Landlord
provided by this Lease are cumulative, and are not exclusive of any other of
said rights, remedies and benefits, or of any other rights, remedies and
benefits allowed by law.
24.02 The failure of Landlord to seek redress for violation of, or to
insist upon the strict performance of, any covenant or condition of this Lease
or of any of the rules or regulations set forth or hereafter adopted by
Landlord, shall not prevent a subsequent act which would have originally
constituted a violation from having all the force and effect of an original
violation. The receipt by Landlord of rent with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach and no
provision of this Lease shall be deemed to have been waived by Landlord unless
such waiver be in writing signed by Landlord. One or more waivers of any
covenant or condition by either party shall not be construed as a waiver of a
further or subsequent breach of the same covenant or condition, and the consent
or approval by Landlord to or of any act by Tenant requiring Landlord's consent
or approval will not be deemed to waive or render unnecessary Landlord's
consent or approval to or of any subsequent similar act by Tenant. No payment
by Tenant or receipt by Landlord of a lesser amount than the monthly rental
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord shall accept such check or payment without prejudice
to Landlord's right to recover the balance of such rent or pursue any other
remedy provided in this Lease.
SECTION 25.
WAIVER OF SUBROGATION
25.01 Landlord and Tenant hereby release each other and their respective
agents and employees from any and all liability to each other or anyone
claiming through or under them by way of subrogation or otherwise for any loss
or damage to property caused by or resulting from risks insured against under
the property insurance for loss, damage or destruction by fire or other
casualty carried by the parties hereto and which was in force at the time of
any such loss or damage or which would have been so covered had the insurance
required hereunder been maintained; provided, however, that this release shall
be applicable only with respect to loss or damage occurring during such time as
the
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releasor's policies of insurance contain a clause or endorsement to the
effect that any such release shall not adversely affect or impair such policies
or prejudice the right of the releasor to recover thereunder. Landlord and
Tenant each agrees that it will require its property insurance carriers to
include in its policy such a clause or endorsement. However, if such
endorsement cannot be obtained, or shall be obtainable only by the payment of
an additional premium charge above that which is charged by companies carrying
such insurance without such waiver of subrogation, then the party undertaking
to obtain such waiver shall notify the other party of such fact and such other
party shall have a period of ten (10) days after the giving of such notice to
agree in writing to pay such additional premium if such policy is obtainable at
additional cost (in the case of Tenant, pro rate in proportion of Tenant's
rentable area to the total rentable area covered by such insurance); and if
such other party does not so agree or the waiver shall not be obtainable, then
the provisions of this Section 25.01 shall be null and void as to the risks
covered by such policy for so long as either such waiver cannot be obtained or
the party in whose favor a waiver of subrogation is desired shall refuse to pay
the additional premium. If the release of either Landlord or Tenant, as set
forth in the second sentence of this Section 25.01, shall contravene any law
with respect to exculpatory agreements, the liability of the party in question
shall be deemed not released, but no action or rights shall be sought or
enforced against such party unless and until all rights and remedies against
the other's insurer are exhausted and the other party shall be unable to
collect such insurance proceeds. The waiver of subrogation referred to above
shall extend to the agents and employees of each party (including, as to
Landlord, the Manager), but only if and to the extent that such waiver can be
obtained without additional charge (unless such party shall pay such charge).
Nothing contained in this Section 25.01 shall be deemed to relieve either party
from any duty imposed elsewhere in this Lease to repair, restore and rebuild.
SECTION 26.
RIGHT TO SHOW PREMISES
26.01 Landlord may show the Premises to prospective tenants and brokers,
and may display signs about the Project and elsewhere advertising the
availability of the Premises.
SECTION 27.
INDEMNIFICATION
27.01 Tenant at its expense will defend, indemnify, save and hold harmless
Landlord, its invitees, licensees, servants, agents, employees, affiliated
entities and contractors, from and against any loss, damage, claim of damage,
liability or expense, (including attorney fees) to or for any person or
property, whether based on contract, tort, negligence or otherwise, arising
directly or indirectly out of or in connection with the condition of the
Premises, the occupation, use or misuse thereof by Tenant or any other person,
the acts or omissions of Tenant, its invitees, licensees, servants, agents,
employees or contractors, the failure of Tenant to comply with any provision of
this Lease, or any event on or relating to the Premises, whatever the cause or
any litigation or other proceeding by or against Tenant to which Landlord is
made a party, other than the intentional, willful or malicious act of Landlord
which causes an injury which was either expected or intended by Landlord when
it performed the act in question. The provisions of this Section 27.01 will
survive the expiration or termination of this Lease.
SECTION 28.
DEFINITION OF LANDLORD; LANDLORD'S LIABILITY
28.01 The term "Landlord" as used in this Lease so far as covenants,
agreements, stipulations or obligations on the part of Landlord are concerned
is limited to mean and include only the owner or owners of the Premises at the
time in question, and in the event of any transfer or transfers of the title to
such fee Landlord herein named (and in case of any subsequent transfers or
conveyances the then grantor) will automatically be freed and relieved from and
after the date of such transfer or conveyance of all personal liability for the
performance of any covenants or obligations on the part of Landlord contained
in this Lease thereafter to be performed.
28.02 This Lease and the obligation of Tenant to pay rent hereunder and
perform all of the other covenants and agreements hereunder on the part of
Tenant to be performed shall in no way be affected, impaired or excused because
Landlord is unable to fulfill any of its obligations under this Lease or is
unable to supply or is delayed in supplying any service expressly or impliedly
to be supplied or is unable to make, or is delayed in making any repairs,
additions, alterations or decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is prevented or delayed from so
doing by reasons of shortages of materials, acts of God, governmental
restrictions, strike or labor troubles or any cause beyond Landlord's
reasonable control including, but not limited to, government preemption in
connection with a national emergency or by reason of any rule, order or
regulation of any department or subdivision thereof of any government agency or
by reason of the conditions of supply and demand which have been or are
affected by war or other emergency.
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SECTION 29.
SECURITY DEPOSIT AND SECURITY INTEREST
29.01 Upon execution hereof, Tenant shall deliver to Landlord cash in the
amount set forth in Paragraph 1.01(j), above, which Landlord is to retain as
security for the faithful performance of all the covenants, conditions and
agreements of this Lease, but in no event shall Landlord be obligated to apply
the same upon rents or other charges in arrears or upon damages for Tenant's
failure to perform the said covenants, conditions, and agreements; Landlord may
so apply the security at its option, and Landlord's right to the possession of
the Premises for nonpayment of rent or for any other reason shall not in any
event be affected by reason of the fact that Landlord holds this security. The
said sum, if not applied toward the payment of rent in arrears or toward the
payment of damages suffered by Landlord by reason of Tenant's breach of the
covenants, conditions and agreements of this Lease, is to be returned, without
interest thereon, to Tenant when this Lease is terminated, and fully performed
by Tenant, according to these terms, and in no event is the said security to be
returned until Tenant has vacated the Premises and delivered possession to
Landlord.
29.02 In the event that Landlord repossesses the Premises because of
Tenant's default or because of Tenant's failure to carry out the covenants,
conditions and agreements of this Lease, Landlord may apply the said security
upon all damages suffered to the date of said repossession and may retain the
said security to apply upon such damages as may be suffered or shall accrue
thereafter by reason of Tenant's default or breach. Landlord shall not be
obligated to keep the said security as a separate fund, but may mix the said
security with its own funds. In the event Landlord shall use any part of the
Security Deposit, Tenant shall, upon demand, deposit with Landlord the full
amount so used, in order that Landlord shall have the full Security Deposit on
hand at all times during the Term of this Lease. In the event of a sale or
lease of the Building and the transfer of the Security Deposit to the purchaser
or lessee, Landlord shall be released from all liability for the return of the
Security Deposit. Tenant shall have no legal power to assign or encumber the
Security Deposit herein described.
SECTION 30.
RULES AND REGULATIONS
30.01 Tenant shall faithfully abide by and observe the rules and
regulations for the Building, a copy of which is attached hereto as Exhibit B
and made a part hereof, and, after notice thereof, all additions thereto and
modifications thereof of uniform applicability from time to time promulgated in
writing by Landlord.
SECTION 31.
SIGNS AND ADVERTISING
31.01 No signs, lighting, lettering, pictures, notices, advertisements,
shades, awnings or decorations will be displayed, used or installed by Tenant
except as approved in writing by Landlord. All such materials displayed in and
about the Premises will be such only as to advertise the business carried on
upon the Premises and Landlord will control the location, character and size
thereof. Tenant shall not cause or permit to be used any advertising materials
or methods which are reasonably objectionable to Landlord or to other tenants
of the Building, including without limiting the generality of the foregoing:
loudspeakers, mechanical or moving display devices, unusually bright or
flashing lights and similar devices the effect of which may be seen or heard
from outside the Premises. Tenant shall not solicit business, sell or display
merchandise, or distribute hand bills or other advertising matter in the
parking area or other Common Areas.
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SECTION 32.
GENERAL
32.01 If, by reason of the occurrence of unavoidable delays due to acts of
God, governmental restrictions, strikes, labor disturbances, shortages of
materials or supplies or for any other cause or event beyond Landlord's
reasonable control, Landlord is unable to furnish or is delayed in furnishing
any service required by Landlord under the provisions of this Lease, or
Landlord is unable to perform or make or is delayed in performing or making any
installations, decorations, repairs, alterations, additions, or improvements,
required to be performed or made under this Lease, or is unable to fulfill or
is delayed in fulfilling any of Landlord's other obligations under this Lease,
no such inability or delay shall constitute an actual or constructive eviction
in whole or in part, or, except as otherwise expressly provided herein, entitle
Tenant to any abatement or diminution of rental or other charges due hereunder
or otherwise relieve Tenant from any of its obligations under this Lease, or
impose any liability upon Landlord or its agents by reason of inconvenience or
annoyance to Tenant, or injury to or interruption of Tenant's business, or
otherwise.
32.02 This Lease is being entered into and executed in the State of
Michigan, and all questions with respect to the construction of this Agreement
and the rights and liabilities of the parties shall be determined in accordance
with the provisions of the laws of the State of Michigan.
32.03 Many references in this Lease to persons, entities and items have
been generalized for ease of reading. Therefore, references to a single
person, entity or item will also mean more than one person, entity or thing
whenever such usage is appropriate (for example, "Tenant" may include, if
appropriate, a group of persons acting as a single entity, or as
tenants-in-common). Similarly, pronouns of any gender should be considered
interchangeable with pronouns of other genders.
32.04 Section headings appearing in this Lease are for convenience only.
They do not define, limit or construe the contents of any paragraphs or clauses
contained herein.
32.05 Landlord reserves the right to relocate Tenant in other comparable
space in the Building upon not less than sixty (60) days prior written notice
to Tenant. Landlord shall pay the cost of moving Tenant to new space. If
Tenant does not wish to accept such relocation, Tenant may object thereto by
written notice to Landlord within ten (10) days after the notice from Landlord.
In the event Tenant fails to object within such ten (10) day period, Tenant
shall be deemed to have accepted the relocation. In the event Tenant so
objects, Landlord may rescind the notice of intention to relocate Tenant or may
reaffirm said intention, in which event Tenant may terminate this Lease by
written notice to Landlord within five (5) days after the affirmation notice
from Landlord. In the event Tenant fails to notify Landlord of its termination
within such five (5) day period, it shall be deemed to have accepted the
relocation. If Tenant terminates this Lease pursuant this paragraph, Tenant
must vacate the Premises within thirty (30) days following Tenant's notice to
Landlord of termination.
32.06 The covenants, conditions and agreements contained in this Lease
shall bind and inure to the benefit of Landlord and Tenant and their respective
heirs, distributees, successors, administrators and executors provided,
however, that no assignment by, from, through, or under Tenant in violation of
any of the provisions hereof shall vest in the assigns any right, title, or
interest whatsoever. All provisions of this Lease are and will be binding on
the successors and permitted assigns of Landlord and Tenant.
32.07 Time shall be and is of the essence in this Lease and with respect
to the performance of all obligations of Landlord and Tenant hereunder.
32.08 Any services which Landlord is required to furnish pursuant to the
provisions of this Lease may, at Landlord's option, be furnished from time to
time, in whole or in part, by employees of Landlord or by the managing agent of
the Project or by one or more third persons.
32.09 Landlord shall have the right at any time, and from time to time, to
unilaterally amend the provisions of this Lease if Landlord is advised by
counsel that all or any portion of the monies paid by Tenant to Landlord
hereunder are, or may be deemed to be, unrelated business income within the
meaning of the United States Internal Revenue Code or regulation issued
thereunder, and Tenant agrees that it will execute all documents or instruments
necessary to effect such amendment or amendments, provided that no such
amendment shall result in Tenant having to pay in the aggregate more money on
account of its occupancy of the Premises under the term of this Lease as so
amended and provided, further, that no such amendment or amendments shall
result in Tenant receiving under the provisions of this Lease less service than
it is entitled to receive, nor services of a lesser quality.
32.10 Neither Landlord nor Landlord's agents have made any representations
or promises with respect to the physical condition of the Building, the Land or
the Premises, or with respect to the rents, leases, expenses of operation or
any other matter or thing affecting or related to the Premises except as
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expressly set forth herein; 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.
32.11 Annually and at any other time, Tenant shall promptly furnish
Landlord financial statements reflecting Tenant's and any Guarantor's current
financial condition. All such financial statements shall be in such form and
contain such detail as Landlord shall reasonably request.
32.12 In case any provision of this Lease or any agreement or instrument
executed in connection herewith shall be invalid, illegal or unenforceable,
such provision shall be enforced to the fullest extent permitted by applicable
law, and the validity, legality and enforceability of the remaining provisions
hereof and thereof shall not in any way be affected or impaired thereby. This
Lease shall not be construed more strictly against one party than against the
other, merely by virtue of the fact that it may have been prepared by counsel
for one of the parties, it being recognized that both Landlord and Tenant have
contributed substantially and materially to the preparation of this Lease.
32.13 This Lease can be modified or amended only by a written agreement
signed by Landlord and Tenant. This Lease and the Exhibits attached hereto and
forming a part hereof set forth all of the covenants, agreements, stipulations,
promises, conditions and understandings between Landlord and Tenant concerning
the Premises, and there are no covenants, agreements, stipulations, promises,
conditions or understanding, either oral or written, between them other than
set forth herein or therein.
32.14 Tenant will not record this Lease or a memorandum hereof, and will
not otherwise disclose the terms of this Lease to anyone other than its
attorneys, accountants or employees who need to know of its contents in order
to perform their duties for Tenant. Any other disclosure will be an Event of
Default under the Lease. Tenant agrees that Landlord shall have the right to
publish a "tombstone" or other promotional description of this Lease.
32.15 Except as disclosed in writing to Landlord, Tenant represents and
warrants to Landlord that there are no claims for brokerage commissions or
finder's fees in connection with this Lease as a result of the contracts,
contacts or actions of Tenant, and Tenant agrees to indemnify Landlord and hold
it harmless from all liabilities arising from any such claim arising from an
alleged agreement or act by Tenant (including, without limitation, the cost of
counsel fees in connection therewith); such agreement to survive the
termination of this Lease.
32.16 The matters set forth on Exhibit D, Special Provisions, if any, are
hereby accepted and agreed to between Landlord and Tenant and incorporated
herein by reference.
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease as of the
date and year first above written.
<TABLE>
<CAPTION>
<S> <C>
LANDLORD: TENANT:
WRC PROPERTIES, INC., NATIONAL TECH TEAM, INC.,
a Delaware Corporation a Delaware Corporation
By: By:
------------------------------- -------------------------
Nicholas E. Stolatis L.A. Mills
Its: Assistant Secretary Its: COO
------------------------------- -------------------------
</TABLE>
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EXHIBIT A
SPACE PLAN
[PLAN]
Approved by Tenant:
NATIONAL TECH TEAM, INC., a Delaware Corporation
L.A. Mills, COO
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EXHIBIT B
RULES AND REGULATIONS OF THE PROJECT
Tenant agrees for itself, its employees, agents, clients, customers,
licensees, invitees and guests, to comply fully with the following rules and
regulations and with such reasonable modifications thereof and additions
thereto as Landlord may make for the Project. All rules and regulations set
forth in this Exhibit B shall be in addition to, and shall in no way limit, the
provisions of the Lease.
1. The Common Areas of the Project shall not be used by Tenant for any
purpose other than those for which they are intended or designated.
2. Landlord has the right to control access to the Project and refuse
admittance to any person or persons without satisfactory identification or a
pass issued by Tenant during hours reasonably determined by Landlord.
3. No person shall disturb other occupants of the Building by making loud
or disturbing noises.
4. Soliciting, peddling and canvassing is prohibited in the Project and
Tenant shall cooperate to prevent the same. No vending machine shall be
operated in the Building by any tenant without the prior written consent of
Landlord.
5. All deliveries and removals of furniture, equipment or other bulky
items must take place after notification to Landlord, during such hours and in
such manner as Landlord shall reasonably determine. Tenant shall be
responsible for all damage or injury resulting from the delivery or removal of
all articles into or out of the Project or the Premises. No load shall be
placed on the floors or in elevators in excess of the limits which shall be
established by Landlord.
6. Tenant shall not use any equipment emitting noxious fumes or offensive
odors unless they are properly vented at Tenant's expense.
7. Nothing shall be attached to the interior or exterior of the Building
without the prior written consent of Landlord.
8. No sign or other representation shall be placed on the interior or
exterior of the Building without prior written consent of Landlord.
9. No hazardous articles, bicycles, vehicles or animals of any kind (other
than wheelchairs and seeing-eye dogs) shall be brought into or kept in or about
the Building without the prior consent of Landlord.
10. No marking, painting, drilling, boring, cutting or defacing of the
walls, floors or ceilings of the Building, other than that which is reasonably
necessary for the hanging of art work, diplomas and similar objects which do
not require any material alteration to any wall, floor or ceiling, shall be
permitted without the prior written consent of Landlord.
11. The electrical system and lighting fixtures in the Building shall not
be altered or disturbed in any manner without the prior written consent from
Landlord. Any alterations or additions must be performed by licensed personnel
authorized by Landlord.
12. The toilets and other plumbing fixtures shall not be used for any
purpose other than that for which they are designed. No sweepings, rubbish or
other similar materials or substances shall be deposited therein.
13. Smoking is prohibited in the elevator(s), hallways, corridors, stairs,
lobbies and other common areas of the Project unless clearly designated to the
contrary by Landlord.
14. Tenant shall not waste electricity, water or air-conditioning, and
shall cooperate fully with Landlord to assure the most effective operation of
the Building's heating and air-conditioning. Tenant shall not adjust any
controls other than room thermostats installed for Tenant's use. Tenant shall
not tie, wedge or otherwise fasten open any water faucet or outlet. Tenant
shall keep all corridor doors closed.
15. Tenant assumes full responsibility for protecting the Premises from
theft, burglary, robbery and pilferage. Except during Tenant's normal business
hours, Tenant shall keep all doors to the Premises locked and other means of
entry to the Premises closed and secured.
16. Tenant or Tenant's employees shall not distribute literature, flyers,
handouts or pamphlets of any kind in any of the common areas of the Project
without the prior written consent of Landlord.
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17. Tenant shall not sell or prepare any food or beverages in or from the
Premises without Landlord's prior written consent.
18. Tenant shall not permit the use of any apparatus for sound production
or transmission in such manner that the sound so transmitted or produced shall
be audible or vibrations therefrom shall be detectable beyond the Premises.
19. Tenant shall keep all electrical and mechanical apparatus free of
vibration, noise and air waves which may be transmitted beyond the Premises.
20. No floor covering shall be affixed to any floor in the Premises by
means of glue or other adhesive without Landlord's prior written consent.
21. Tenant shall not use the name of the Building for any purpose other
than that of the business address of Tenant (which it may do, at its own risk,
in the event the name of the Building changes), and shall not use any picture
or likeness of the Building in any circulars, notices, advertisements or
correspondence.
22. Tenant shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in or about the Building,
nor shall Tenant place objects against glass partitions, doors or windows which
would be unsightly from the Building's corridors, or from other areas of the
Building.
23. Tenant shall not make any room-to-room canvass to solicit business
from other tenants of the Building.
24. No additional locks or similar devices shall be attached to any door
and no locks shall be changed without Landlord's prior written consent. Upon
termination of this Lease or of Tenant's possession of the Premises, Tenant
shall surrender all keys for door locks and other locks in or about the
Premises and shall make known to Landlord the combination of all locks, safes,
cabinets and vaults which are not removed by Tenant.
25. Tenant shall not install or operate any machinery or mechanical
devices of a nature not directly related to Tenant's ordinary use of the
Premises without Landlord's prior written consent.
26. Tenant shall not employ any person to perform any cleaning, repairing,
janitorial, decorating, painting or other services or work in or about the
Premises, except with the approval of Landlord.
27. Tenant shall ascertain from Landlord the maximum amount of electrical
current which can safely be used in the Premises, taking into account the
capacity of the electric wiring in the Building and the Premises and the needs
of other tenants, and shall not use more than such safe capacity. Landlord's
consent to the installation of electric equipment shall not relieve Tenant from
the obligation not to use more electricity than such safe capacity.
28. Tenant shall not overload any floor or elevator and shall not install
any heavy objects, safes, business machines, files or other equipment without
having received Landlord's prior written consent as to size, maximum weight,
routing and locations thereof. Safes, furniture, equipment, machines and other
large or bulky articles shall be brought through the Building and into and out
of the Premises at such times and in such manner as Landlord shall direct
(including the designation of elevator) and at Tenant's sole risk and
responsibility. Prior to Tenant's removal of any such articles from the
Building, Tenant shall obtain written authorization therefore from Landlord.
29. Tenant shall not in any manner deface or damage the Building.
30. Tenant shall not bring into the Building or Premises inflammables such
as gasoline, kerosene, naphtha and benzine, or explosives or any other articles
of intrinsically dangerous nature.
31. Movement into or out of the Building of furniture or office equipment,
or dispatch or receipt by Tenant of any merchandise or materials other than
hand-delivered packages, which requires the use of
elevators or stairways or movement through the Building entrances or lobby,
shall be restricted to the hours designated by Landlord. Tenant assumes all
risk of damage to any and all articles so moved, as well as injury to any
person or property in such movement, and hereby agrees to indemnify Landlord
against any loss resulting therefrom.
32. Landlord shall not be responsible for any lost or stolen property,
equipment, money or jewelry from the Premises or the public areas of the
Building regardless of whether such loss occurs when the Premises are locked.
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<PAGE> 25
33. The Premises shall not be used for housing, lodging, sleeping or for
any immoral or illegal purpose.
34. The work of the janitor or cleaning personnel shall not be hindered by
Tenant after 5:30 p.m. and the windows may be cleaned at any time. Tenant
shall provide adequate waste and rubbish receptacles to prevent unreasonable
cost to Landlord in discharging its obligations regarding cleaning services.
35. Tenant will refer all contractors or installation technicians
rendering any service for Tenant for supervision and approval of Landlord
before performance of any contractual services.
36. Parking Regulations:
(i) Cars WILL NOT park in the designated "Reserved"
spaces. There will be no parking in any area of the Project
other than those areas clearly marked and defined for parking.
(ii) Parking will be on the basis of first-come,
first-served except for reserved spaces.
(iii) Parkers will be expected to park their cars in
an orderly manner within the marked stalls provided.
(iv) It is recommended that cars be left in a "brakes
on, doors locked" condition at all times.
(v) No car will be allowed to park in any driveway
area or in any manner which will interfere with the normal
flow of traffic.
(vi) Cars parked illegally will be towed at the car
owner's expense.
(vii) Tenant agrees that all its employees have been
fully informed as to the content of these regulations.
(viii) Landlord or Landlord's agents and employees shall not be
liable for and Tenant waives all claims through Tenant
resulting from any accident or occurrence in and upon the
parking area.
(ix) All automobiles parked in the parking areas shall
be in good condition and repair, utilized for personal
transportation, not commercial in nature and driven and
handled at the risk of the owner.
(x) Automobile owner or owner's agents shall not
wash, wax or otherwise clean or prep the interior/exterior of
vehicles or perform any maintenance whatsoever on vehicles
within the parking area or on any part of the parking lot
servicing the Building.
(xi) In the event that automobile owner's use of the
parking area violates any local, county or state law,
regulation or ordinance, automobile owner's right to utilize
the parking area shall immediately cease. In addition, in no
event shall Tenant permit its employees, licensees, invitees
or other occupants to use more than Tenant's Proportionate
Share of the existing parking spaces for the Project.
(xii) Parking areas shall not be used to store
vehicles or for parking large commercial or recreational
vehicles.
Tenant shall be responsible for the observance of all the foregoing rules and
regulations by Tenant's employees, agents, clients, customers, invitees,
licensees and guests. Landlord shall not be responsible for any violation of
the foregoing rules and regulations by other tenants of the Building and shall
have no obligation to enforce the same against other tenants. Landlord shall
have the right to amend these rules and regulations from time to time in
accordance with the terms of the Lease.
Approved by Tenant:
NATIONAL TECH TEAM, INC., a Delaware Corporation
L.A. Mills, COO
23
<PAGE> 26
EXHIBIT C
DAILY JANITORIAL SERVICE
(a) All waste paper baskets and ashtrays are emptied and cleaned.
(b) All furniture and cleared desks are dusted as required.
(c) All carpeting is vacuum cleaned daily as required.
(d) All doors, doorknobs, and glass are wiped down as required.
(e) Walls are spot cleaned as required.
(f) Windows are spot cleaned as required.
(g) All corridors, common areas, common area bathrooms, and elevators are
cleaned daily, which includes washing all tile floors, washing out the sinks
and stalls, vacuum cleaning the hallway carpeting, cleaning out the drinking
fountains and spot cleaning the walls and mirrors where necessary.
Approved by Tenant:
NATIONAL TECH TEAM, INC., a Delaware Corporation
L.A. Mills, COO
24
<PAGE> 27
EXHIBIT D
SPECIAL PROVISIONS
D1 EXCESS TENANT IMPROVEMENT COSTS.
Landlord shall construct the Tenant Improvements up to a cost of
$46,250.00 (the "Tenant Improvement Allowance"). In the event the cost of
completing the Tenant Improvements is less than the Tenant Improvement
Allowance, Landlord shall retain the difference and Tenant shall have no claim
for and not be entitled to receive any such sums. In the event the estimated
cost of completing the Tenant Improvements in accordance with the Plans shall
at anytime exceed one hundred five percent (105%) of the Tenant Improvement
Allowance, Tenant shall pay Landlord, within five (5) days of request for such
payment (which request will come no more than twice monthly), the difference
between the estimated cost of completion and the Tenant Improvement Allowance
on a percentage of completion basis. If the estimated cost of completion of
the Tenant Improvements is less than one hundred five percent (105%) of the
Tenant Improvement Allowance, Tenant shall pay Landlord the difference between
the actual cost of completion and the Tenant Improvement Allowance when the
Tenant Improvements are substantially complete.
D2 NON-DISTURBANCE.
In the event of subordination of this Lease, the subordination shall be
conditioned upon the agreement of the mortgagee or lessor that in the event of
foreclosure or the assertion of any other rights under the mortgage or lease,
this Lease and the rights of Tenant hereunder shall continue in effect and
shall not be terminated or disturbed so long as Tenant continues to perform and
no Event of Default exists under this Lease.
Approved by Tenant:
NATIONAL TECH TEAM, INC., a Delaware Corporation
L.A. Mills, COO
25
<PAGE> 1
EXHIBIT 10.22
MARKET SQUARE CENTER BUILDING
OFFICE SPACE LEASE Tenant:
NATIONAL TECHTEAM, INC.
Index Article
Basic Lease Provisions and Identification of Exhibits .................. 1
Premises, Term and failure to Give Possession .......................... 2
Rent ................................................................... 3
Security Deposit ....................................................... 4
Services ............................................................... 5
Possession, Use and Enjoyment of Premises .............................. 6
Condition of Premises .................................................. 7
Assignment and Subletting .............................................. 8
Maintenance ............................................................ 9
Alterations and Improvements ........................................... 10
Waiver of Claims and Indemnity ......................................... 11
Landlord's Remedies .................................................... 12
Surrender of Premises .................................................. 13
Holding Over ........................................................... 14
Damage by Fire or Other Casualty ....................................... 15
Eminent Domain ......................................................... 16
Tenant's Insurance ..................................................... 17
Rules and Regulations .................................................. 18
Landlords Rights ....................................................... 19
Estoppel Certificate ................................................... 20
Relocation of Tenant ................................................... 21
Rent Adjustments and Payments .......................................... 22
Real Estate Brokers .................................................... 23
Subordination and Attornment ........................................... 24
Notices ................................................................ 25
Exculpation ............................................................ 26
Miscellaneous .......................................................... 27
ARTICLE 1
BASIC LEASE PROVISIONS AND IDENTIFICATION OF EXHIBITS
1.01 BASIC LEASE PROVISIONS.
A. Building and Address: Market Square Center Building, 151 North Delaware,
Indianapolis, Indiana 46204
B. Landlord and Address: MET LIFE INTERNATIONAL REAL ESTATE PARTNERS
LIMITED PARTNERSHIP, a Delaware limited
partnership, having its principal office at
One Madison Avenue, New York, New York 10010
C. Tenant: NATIONAL TECHTEAM, INC., a Delaware corporation,
D. Date of Lease: November 27, 1995
E. Lease Term: 5 years
F. Commencement Date of Term: January 1, 1996
G. Expiration Date of Term: December 31, 2000
H. Monthly Base Rent: $1,959.00
I. Rentable Area of the Premises: Approximately 1,881 square feet
J. Security Deposit: N/A
K. Floor(s): A portion of the concourse level - see attached Exhibit A.
L. Tenant's Proportionate Share: 0.47%
M. Tenant's Use of Premises: office use
N. Brokers: F.C. Tucker Company, Inc. and William J. Moore
O. Base Year: 1995
P. Number of Parking Spaces: 3
1.02 ENUMERATION OF EXHIBITS. The exhibits set forth below and attached to this
Lease are incorporated in this Lease by this reference:
Exhibit A. Plot Plan of Premises
<PAGE> 2
ARTICLE 2
PREMISES, TERM AND FAILURE TO GIVE POSSESSION
2.01 LEASE OF PREMISES. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the premises (the "Premises") shown on Exhibit A which are
or will be contained in the office building (the "Building") located at 151
North Delaware, Indianapolis, Indiana, for the term and upon the conditions
provided in this Lease.
2.02 TERM. The term of this Lease (the "Term") shall commence on the date
(the "Commencement Date") which is the earlier to occur of:
(i) the date specified in 1.01F or
(ii) the date Tenant first occupies all or part of the Premises.
The Term shall expire on the date (the "Expiration Date") specified in 1.01G,
unless sooner terminated as otherwise provided elsewhere in this Lease.
2.03 FAILURE TO GIVE POSSESSION. If Landlord shall be unable to give
possession of the Premises on the Commencement Date by reason of any of the
following: (i) Landlord has not completed its preparation of the Premises, (ii)
Landlord is unable to give possession of the Premises by reason of the holding
over or retention of possession of any tenant, tenants or occupants, or (iii)
for any other reason, Landlord shall not be subject to any liability for the
failure to give possession on said date. Under such circumstances the Monthly
Base Rent and the Rent Adjustments reserved and covenanted to be paid herein
shall not commence until the Premises are available for occupancy by Tenant,
unless Landlord's failure to give possession of the Premises is due to the
fault of Tenant, and no such failure to give possession on the Commencement
Date shall affect the validity of this Lease or the obligations of Tenant
hereunder, nor shall the same be construed to extend the term of this Lease. If
the Premises are ready for occupancy prior to the Commencement Date and Tenant
occupies the Premises prior to said date, Tenant shall pay Monthly Base Rent
and Rent Adjustments for the period of occupancy prior to the Commencement Date
on a per diem basis. The Premises shall not be deemed to be unready for
Tenant's occupancy or incomplete if only minor insubstantial details of
construction, decoration or mechanical adjustments remain to be done in the
Premises or any part thereof, or if the delay in the availability of the
Premises for occupancy shall be due to special work, changes, alterations or
additions required or made by Tenant in the layout or finish of the Premises or
any part thereof or shall be caused in whole or in part by Tenant through the
delay of Tenant in submitting plans, supplying information, approving plans,
specifications or estimates, giving authorizations or otherwise or shall be
caused in whole or in part by delay and/or default on the part of Tenant and/or
its subtenant or subtenants. In the event of any dispute as to whether the
Premises are ready for Tenant's occupancy, the decision of Landlord's space
planner shall be final and binding on the parties.
ARTICLE 3
RENT
Tenant agrees to pay to Landlord at the office of the managing agent (the
"Manager") of the Landlord, or at such other place designated by Landlord,
without any prior demand therefor and without any deduction or set-off
whatsoever and without relief from valuation and appraisement laws, base rent
at the initial monthly rate specified in 1.01H ("Monthly Base Rent") during the
Term of the Lease. In addition to Monthly Base Rent, Tenant shall pay Rent
Adjustments pursuant to Section 22.02 and 22.04 and Rent Adjustment Deposits
pursuant to Section 22.03. Unless otherwise provided to the contrary in this
Lease, Monthly Base Rent shall be paid monthly in advance on the first day of
each month of the Term. Monthly Base Rent shall be prorated for partial months
within the Term. All other charges, costs and sums required to be paid
by Tenant to Landlord under this Lease shall be deemed additional rent, and
together with Monthly Base Rent, Rent Adjustments, and Rent Adjustment Deposits
shall hereinafter be collectively called "Rent". Tenant's covenant to pay Rent
shall be independent of every other covenant in this Lease.
ARTICLE 4
SECURITY DEPOSIT
As security for the performance of its obligations under this Lease and the
Workletter, Tenant upon its execution of this Lease has paid to Landlord a
security deposit (the "Security Deposit") in the amount specified in 1.01(J).
The Security Deposit may be applied by Landlord to cure any default of Tenant
under this Lease, and upon notice by Landlord of such application, Tenant shall
replenish the Security Deposit in full by promptly paying to Landlord the
amount so applied. Landlord shall not pay any interest on the Security Deposit.
Within 45 days after the Expiration Date, Landlord shall return to Tenant the
balance, if any, of the Security Deposit. The Security Deposit shall not be
deemed an advance payment of Rent or measure of damages for any default by
Tenant under this Lease, nor shall it be a bar to defense of any action which
Landlord may at any time commence against Tenant.
ARTICLE 5
SERVICES
5.01 LANDLORD'S GENERAL SERVICES. Landlord, as long as Tenant is not
in default under any of the covenants of this Lease, shall provide the
following services: (a) heat and air-conditioning in the Premises, Monday
through Friday from 8:00 A.M. to 6:00 P.M. and Saturdays from 9:00 A.M. to 1:00
P.M., excluding national holidays, to the extent necessary for the comfortable
occupancy of the Premises (subject to all applicable mandatory regulations and
laws) under normal business operation, (b) electrical power sufficient for the
operation of building standard lighting, typewriters, office copying machines
and other machines of similar low electrical consumption, but not in excess of
one kilowatt hour per month per square foot of rentable area in the Premises
and not including electricity required for electronic data processing
equipment, special lighting in excess of building standard, or any other item
of electrical equipment which (singly) consumes more than 500 watts per hour at
rated capacity or requires a voltage other than one hundred twenty (120) volts
single phase; and provided that if the installation of any of Tenant's
equipment, or any special electrical equipment installed by Landlord to service
Tenant's equipment, requires additional air conditioning or ventilating
capacity above that provided by the Building's standard systems, then the
additional air conditioning and/or ventilating equipment shall be provided by
Tenant and the installation and operating costs of such additional equipment
will be the obligation of Tenant and will be paid by Tenant within ten (10)
days after Tenant's receipt from Landlord of a bill for such costs, (c) tepid
water for use in lavatories Landlord installs for use in common with other
tenants. If Tenant desires water in the Premises, cold water only shall be
supplied from City of Indianapolis mains drawn through a line, meter and
fixtures installed by Tenant, at Tenant's expense, with Landlord's consent.
Tenant shall pay Landlord as additional Monthly Base Rent, at rates fixed by
Landlord, charges for all water furnished to the Premises, (d) customary
cleaning and janitorial services in the Premises substantially similar to those
provided in other similar office buildings in the City of Indianapolis, Monday
through Friday, excluding national holidays, (e) automatic passenger elevator
service in common with other tenants of the Building and freight elevator
service subject to scheduling by Landlord. The term national holidays as used
in this Section 5.01 shall also include other holidays recognized by Landlord
and the janitor and other union servicing the Building in accordance with their
contracts, (f) lamps, bulbs, tubes and ballasts for building standard lighting
fixtures initially used in the Premises, but Tenant shall reimburse Landlord
for the cost and expense of replacement lamps, bulbs, tubes and ballasts and
the installation thereof, (g) building security service during weekends and
after normal working hours during the week; provided, however, Landlord shall
not be liable to Tenant for losses due to theft or burglary, or for damages
done by persons in the Building. If Landlord determines that Tenant is a
substantial user of any utilities which are not separately metered, Landlord
may require Tenant to install submeters for such utilities, at Tenant's sole
cost and expense.
5.02 ELECTRICAL SURVEY. Landlord may employ an independent power consumption
survey expert to render an opinion as to the quantity of electricity consumed
by Tenant. If such survey indicates Tenant's consumption is in excess of one
kilowatt hour per month per square foot of rentable area in the Premises,
Tenant shall pay the cost of such survey together with the cost to Landlord of
such excess electrical consumption. Should any of the equipment or machinery
utilized in supplying the services listed herein cease to function properly,
Landlord shall use reasonable diligence to repair same promptly, but Tenant
shall have no right to terminate this Lease, and shall have no claim for rebate
of rental or damages on account of any interruptions in service occasioned
thereby or resulting therefrom. Notwithstanding any other provisions hereof, in
the event that any law, ordinance or other governmental regulation now or
hereafter in effect shall impose a limit or allocation to the Building of any
utility or other service, whether or not the same is to be supplied to the
Building or the Premises by Landlord pursuant to Section 5.01 above, then
Tenant shall not use or cause to be consumed on the Premises, nor shall
Landlord be required to provide to the Premises hereunder, such utility or
other service in an amount or in a manner which would result in violation by
Landlord or Tenant of such law, ordinance or regulation.
5.03 ADDITIONAL AND AFTER-HOUR SERVICES. Landlord shall in no event be
obligated to furnish any services or utilities, other than those specified in
5.01 above. If Landlord elects to furnish services or utilities requested by
Tenant in addition to those specified in 5.01 above (including but not limited
to the operation of special air-conditioning systems which may be required for
data processing equipment or for other special equipment or machinery installed
by Tenant or other utility services at times other than those specified in said
section). Tenant shall pay to Landlord 115% of the Landlord's then prevailing
cost for such services (other than utilities which shall be billed to Tenant at
Landlord's actual cost for the same) (such cost specifically shall include
amortization of Landlord's equipment) and Tenant shall pay to Landlord the cost
for such additional services, within 10 days after the receipt of Landlord's
invoices therefor. If Tenant shall fail to make any such payment Landlord may,
without notice to Tenant and in addition to Landlord's other remedies under
this Lease, discontinue any or all of the additional services.
5.04 DELAYS IN FURNISHING SERVICES. Landlord does not warrant that any of the
above services will be free from interruption caused by war, insurrection,
civil commotion, riots, acts of God, or the enemy, governmental action,
repairs, mechanical breakdown, renewals, improvements, alterations, strikes,
lockouts, picketing, whether legal or illegal, accidents, inability of Landlord
to obtain fuel or supplies or any other cause or causes beyond the reasonable
control of Landlord. No failure or delay in furnishing any service caused in
whole or in part
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by any one or more of the causes specified hereunder shall result in any
liability of Landlord to Tenant, or be deemed to be an eviction or disturbance
of Tenant's use and possession of the Premises, or relieve Tenant from its
obligation to pay all Rent when due or from any other obligations of Tenant
under this Lease.
ARTICLE 6
POSSESSION, USE AND ENJOYMENT OF PREMISES
6.01 POSSESSION AND USE OF PREMISES. Tenant shall be entitled to possession of
the Premises upon substantial completion of the improvements to the Premises,
provided, however, that such possession does not interfere with Landlord's
completion of the Premises. Tenant shall occupy and use the Premises only for
general office purposes in order to conduct the business specified in Section
1.01M and for no other purpose whatsoever without the prior written consent of
Landlord. Tenant shall not occupy or use the Premises (or permit the use or
occupancy of the Premises) for any purpose or in any manner which: (a) is
unlawful or in violation of any applicable legal, governmental or
quasi-governmental environmental or other requirement, ordinance or rule
(including, without limitation, the Board of Fire Underwriters); (b) may be
dangerous to persons or property; or (c) is contrary to or prohibited by the
terms and conditions of this Lease including the rules and regulations hereof.
6.02 ACCESS TO PREMISES. Tenant shall permit Landlord to erect, use and
maintain pipes, ducts, wiring and conduits in and through the Premises.
Landlord or Landlord's agents shall have the right to enter upon the Premises,
to inspect the same, to perform janitorial and cleaning services and to make
such repairs, alterations, improvements or additions to the Premises or the
Building as Landlord may deem necessary or desirable, and Landlord shall be
allowed to take all material into and upon said Premises that may be required
therefor without the same constituting an eviction of Tenant, in whole or in
part and the rent reserved shall not abate (except as provided in Article 15)
while said repairs, alterations, improvements, or additions are being made, by
reason of loss or interruption of business of Tenant, or otherwise. If Tenant
shall not be personally present to open and permit any entry into said
Premises, at any time, when for any reason an entry therein shall be necessary
or permissible, Landlord or Landlord's agents may enter the same by a master
key, or may forcibly enter the same, without rendering Landlord or such agents
liable therefor (if during such entry Landlord or Landlord's agents shall
accord reasonable care to Tenant's property), and without in any manner
affecting the obligations and covenants of this Lease. Nothing herein
contained, however, shall be deemed or construed to impose upon Landlord any
obligations, responsibility or liability whatsoever, for the care, supervision
or repair of the Building or any part thereof, other than as herein provided.
Landlord shall also have the right at any time without the same constituting an
actual or constructive eviction and without incurring any liability to Tenant
therefor, to change the arrangement and/or location of entrances or
passageways, doors and doorways, and corridors, elevators, stairs, toilets or
public parts of the Building, and to close entrances, doors, corridors,
elevators or other facilities. Landlord shall not be liable to Tenant for any
expense, injury, loss or damage resulting from work done in or upon, or the use
of, any adjacent or nearby building, land, street, or alley.
ARTICLE 7
CONDITION OF PREMISES
Tenant shall notify Landlord in writing within 10 days after Tenant takes
possession of the Premises of any defects in the Premises claimed by Tenant,
other than damage caused by Tenant's own actions. Except for defects stated in
such notice, Tenant shall be conclusively deemed to have accepted the Premises
in the condition existing on the date Tenant first takes possession, and to have
waived all claims relating to the condition of the Premises. No agreement of
Landlord to alter, remodel, decorate, clean or improve the Premises or the
Building and no representation regarding the condition of the Premises or the
Building has been made by or on behalf of Landlord to Tenant, except as stated
in this Lease.
ARTICLE 8
ASSIGNMENT AND SUBLETTING
8.01 CONSENT REQUIRED. Without the prior written consent of Landlord, Tenant
may not sublease, assign, mortgage, pledge, hypothecate or otherwise transfer or
permit the transfer of this Lease or the interest of Tenant in this Lease, in
whole or in part, by operation of law or otherwise. If Tenant desires to enter
into any sublease or assignment, Tenant shall deliver written notice thereof to
Landlord, together with financial and other information sufficient for Landlord
to make an informed judgment with respect to such proposed subtenant or
assignee and a copy of the proposed sublease or assignment agreement at least
60 days prior to the commencement date of the term of the proposed sublease or
assignment. In making its determination of whether to consent to any proposed
sublease or assignment, Landlord may take into consideration the business
reputation and credit worthiness of the proposed subtenant or assignee; the
intended use of the Premises by the proposed subtenant or assignee; the
estimated pedestrian and vehicular traffic in the Premises and to the Building
which would be generated by the proposed subtenant or assignee; and any other
factors which Landlord shall deem relevant. The withholding or granting of any
such consent shall be in the sole discretion of Landlord. Landlord shall in no
event be obligated to consider a consent to any proposed sublease or assignment
of the Premises if Tenant is then in default under this Lease. Any approved
sublease or assignment shall be expressly subject to the terms and conditions
of this Lease, and in the event of an assignment, the instrument shall contain
a clause obligating the assignee to assume Tenant's obligations to Landlord
during the term of the assignment Tenant shall pay Landlord on the first day of
each month during the term of the sublease, the excess of all rent and other
consideration due from the subtenant or assignee for such month over that
portion of the Monthly Base Rent and Rent Adjustment due under this Lease for
said month which is allocable to the space sublet or assigned.
8.02 LANDLORD'S OPTION. In the event Landlord consents pursuant to Article 8.01
above to any sublease of the Premises, Landlord shall have the option to exclude
from the Premises covered by this Lease, the space proposed to be sublet by
Tenant, effective as of the proposed commencement date of sublease of said space
by Tenant. Landlord may exercise said option by giving Tenant written notice
thereof within 20 days after receipt by Landlord of Tenant's notice of the
proposed sublease. In the event Landlord exercises said option, Tenant shall
surrender possession of the proposed sublease space to Landlord on the effective
date of exclusion of said space from the Premises covered by this Lease, and
neither party hereto shall have any further rights or liabilities with respect
to said space under this Lease. Effective as of the date of exclusion of any
portion of the Premises covered by this Lease pursuant to this paragraph, (i)
the Monthly Base Rent specified in 1.01H shall be reduced in the same proportion
as the number of square feet of rentable area contained in the portion of the
Premises so excluded bears to the number of square feet of rentable area
contained in the Premises prior to such exclusion, and (ii) the Rentable Area of
the Premises specified in 1.01I and Tenant's Proportionate Share specified in
1.01L shall be decreased in the same proportion that the Premises has been
decreased, for all purposes under this Lease.
8.03 TENANT'S LIABILITY. In the event of any approved sublease or
assignment, Tenant shall not be released or discharged from any liability,
whether past, present or future, under this Lease, including any renewal term of
this Lease. For purposes of this Article 8, an assignment shall be deemed to
include a change in the majority control of Tenant, if Tenant is a partnership
or a corporation whose shares of stock are not traded publicly. If Landlord
grants consent to such sublease of assignment Tenant shall pay all of the
attorney fees of Landlord incurred with respect to such assignment or sublease.
In addition, if Tenant has any options to renew the term of this Lease, such
options shall not be available to any subtenant, directly or indirectly.
ARTICLE 9
MAINTENANCE
9.01 LANDLORD'S MAINTENANCE. Landlord shall maintain and make necessary repairs
to foundations, roofs, exterior walls, marquees, and the structural elements of
the Building, and, subject to the provisions of Article 15, the electrical,
plumbing, heating, ventilation and air-conditioning systems of the Building and
the public corridors, washrooms and lobby of the Building, except that: (a)
Landlord shall not be responsible for the maintenance or repair of any such
systems which are located within the Premises and are supplemental or special to
the Building's standard systems; and (b) the cost of performing any of said
maintenance or repairs caused by the negligence of Tenant, its employees,
agents, servants, licensees, subtenants, contractors or invitees, shall be paid
by Tenant, except to the extent of insurance proceeds, if any, actually
collected by Landlord with regard to the damage necessitating such repairs. As
used in this Section 9.01, the "exterior walls" do not include interior glass,
windows, doors, window sashes or frames, door frames or office fronts of the
Premises.
9.02 TENANT'S MAINTENANCE. Tenant, at its expense, shall keep and maintain the
Premises in good order, condition and repair and in accordance with all
applicable legal, governmental and quasi-governmental requirements, ordinances
and rules (including the Board of Fire Underwriters). Tenant shall promptly and
adequately repair all damages to the Premises and replace or repair all damaged
or broken glass in the interior of the Premises, fixtures or appurtenances. If
Tenant fails to perform any of its obligations set forth in this Section 9.02,
Landlord may, in its sole discretion, perform the same, and Tenant shall pay to
Landlord the cost therefor upon demand.
ARTICLE 10
ALTERATIONS AND IMPROVEMENTS
10.01 TENANT'S ALTERATIONS. Tenant shall not, without the prior
written consent of Landlord, make or cause to be made any alterations,
improvements, additions, installations or decorations in or to the Premises.
If Landlord so consents, before commencement, of any such work or delivery of
any materials into the Premises or the Building, Tenant shall furnish to
Landlord for approval architectural plans and specifications, names and
addresses of all contractors and subcontractors, copies of all contracts,
affidavits from engineers acceptable to Landlord stating that the alterations
will not in any way adversely affect the mechanical, heating, ventilating,
air-conditioning, and the electrical systems in the Building, necessary permits
and licenses, certificates of insurance and instrument of indemnification
against any and all claims, costs, expenses, damages and liabilities which may
arise in connection with such work, and such other documents requested by
Landlord, all in such form and amount as may be satisfactory to Landlord. In
addition, prior to commencement of any such work.
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or delivery of any materials into the Premises. Tenant shall provide
Landlord with appropriate evidence of Tenant's ability to pay for such work and
materials in full, and, if requested by Landlord, shall deposit with Landlord
at such time such security for the payment of said work and materials as
Landlord may require. Whether or not Tenant furnishes the foregoing, Tenant
agrees to indemnify and hold Landlord, any mortgagee of the Building, the
Manager and their respective directors, officers, agents and employees
(hereinafter for convenience sometimes collectively referred to as the
"Indemnities") forever harmless against all claims and liabilities of every
kind, nature and description which may arise out of or in any way be connected
with such work. All such work shall be done only by contractors or mechanics
approved by Landlord and at such time and in such manner as Landlord may from
time to time designate. Tenant shall pay the cost of all such work and the
cost of decorating the Premises and the Building occasioned thereby. Upon
completion of such work, Tenant shall furnish Landlord with contractor's
affidavits and full and final waivers of lien and receipted bills covering all
labor and materials expended and used in connection therewith. All such work
shall be in accordance with all applicable legal, governmental and
quasi-governmental requirements, ordinances and rules (including the Board of
Fire Underwriters), and all requirements of applicable insurance companies.
All such work shall be done in a good and workmanlike manner and with the use
of good grades of materials and in accordance with the approved plans and
specifications. Tenant shall permit Landlord, if Landlord so desires, to
supervise construction operations in connection with such work. In no event
shall such supervision or right to supervise by Landlord nor shall any
approvals given by Landlord under this Lease constitute any warranty by
Landlord to Tenant of the adequacy of the design, workmanship or quality of
such work or materials for Tenant's intended use or impose any liability upon
Landlord in connection with the performance of such work. All alterations,
improvements, temporary or permanent, additions and installations to or on the
Premises, whether placed there by Landlord or Tenant, shall, unless Landlord
requests their removal, become part of the Premises at the time of their
installation and shall remain in the Premises at the expiration or termination
of this Lease, or termination of Tenant's right of possession of the Premises,
without compensation or credit to Tenant.
10.02 LIENS. Tenant shall not permit any lien or claim for lien of any
mechanic, laborer or supplier or any other lien to be filed against the
Building, the Land (as defined in Section 22.01(I)), the Premises, or any part
thereof arising out of work performed, or alleged to have been performed by, or
at the direction of, or on behalf of Tenant. If any such lien or claim for
lien is filed, Tenant immediately either shall have such lien or claim for lien
released of record or shall deliver to Landlord either: (i) a bond in form,
content, amount, and issued by surety satisfactory to Landlord, indemnifying
Landlord, the Indemnities and others designated by Landlord against all costs
and liabilities resulting from such lien or claim for lien and the foreclosure
or attempted foreclosure thereof, or (ii) endorsements to the title policies of
Landlord and Landlord's mortgagee "insuring over" such liens satisfactory to
Landlord and Landlord's mortgagee, respectively. If Tenant fails to have such
lien or claim for lien so released or to deliver such bond or title endorsement
to Landlord, Landlord, without investigating the validity of such lien, may pay
or discharge the same and Tenant shall reimburse Landlord upon demand for the
amount so paid by Landlord, including Landlord's expenses and attorneys' fees.
Landlord and Tenant hereby expressly agree that Landlord has not consented to
any work being performed on the Premises at the direction of Tenant nor the
placement of any liens thereon.
ARTICLE 11
WAIVER OF CLAIMS AND INDEMNITY
11.01 WAIVER OF CLAIMS. To the extent permitted by law, Tenant releases the
Indemnities (as defined in Section 10.01 hereof) from, and waives all claims
for, damage to person or property sustained by Tenant or any occupant of the
Building or Premises resulting from the Building or Premises, or any part of
either, or any equipment appurtenance, becoming out of repair, or resulting from
any accident in or about the Building, or resulting directly or indirectly from
any act or neglect of any tenant or occupant of the Building or of any other
person, including Landlord's agents and servants. This Section 11.01 shall
apply especially, but not exclusively to the flooding of basements or other
subsurface areas, and to damage caused by refrigerators, sprinkling devices,
air-conditioning apparatus, water, snow, frost, steam, excessive heat or cold,
falling plaster, broken glass, sewage, gas, odors or noise, or the bursting or
leaking of pipes or plumbing fixtures, and shall apply equally whether any such
damage results from the act or neglect of Landlord or of other tenants,
occupants or servants in the Building or of any other person, and whether such
damage be caused or result from any thing or circumstances above mentioned or
referred to, or any other thing or circumstances whether of a like nature or of
a wholly different nature. If any such damage, whether to the Premises or to
the Building or any part thereof, or whether to Landlord or to other tenants in
the Building, results from any act or neglect of Tenant, its employees, agents,
invitees and customers, Tenant shall be liable therefor and Landlord may, at
Landlord's option, repair such damage and Tenant shall, upon demand by Landlord,
reimburse Landlord forthwith for the total cost of such repairs. Tenant shall
not be liable for any damage caused by its acts or neglect if Landlord or a
tenant has recovered the full amount of the damage from insurance and the
insurance company has waived its right of subrogation against Tenant.
11.02 INDEMNITY. Tenant agrees to indemnify and hold the Indemnities (as
defined in Section 10.01 hereof) harmless against any and all claims, demands,
costs and expenses, including reasonable attorneys' fees for the defense
thereof, arising from Tenant's occupation of the Premises or from any breach or
default on the part of Tenant in the performance of any covenant or agreement
on the part of Tenant to be performed pursuant to the terms of this Lease, or
from any acts or negligence of Tenant, its agents, servants, employees or
invitees, in or about the Premises. In case of any action or proceeding
brought against the Indemnities by reason of any such claim, upon notice from
Landlord, Tenant covenants to defend such action or proceeding by counsel
reasonably satisfactory to Landlord.
11.03 WAIVER OF SUBROGATION. Landlord and Tenant hereby release each
other and each other's employees, agents, customers and invitees from any and
all liability for any loss of or damage or injury to person or property
occurring in, on or about or to the Premises, the Building or personal property
within the Building by reason of fire or other casualty which could be insured
against under a standard fire and extended coverage insurance policy,
regardless of cause, including the negligence of Landlord or Tenant and their
respective employees, agents, customers and invitees, and agree that such
insurance carried by either of them shall contain a clause whereby the insurer
waives its right of subrogation against the other party. Because the
provisions of this Section 11.03 are intended to preclude the assignment of any
claim mentioned herein by way of subrogation or otherwise to an insurer or any
other person, each party to this Lease shall give to each insurance company
which has issued to it one of more policies of fire and extended coverage
insurance notice of the provisions of this Section 11.03 and have such
insurance policies properly endorsed, if necessary, to prevent the invalidation
of such insurance by reason of the provisions of this Section 11.03.
ARTICLE 12
LANDLORD'S REMEDIES
12.01 EVENTS OF DEFAULT. Each of the following shall constitute a
breach of this Lease by Tenant: Tenant fails to pay any installment or other
payment of Rent including without limitation Rent Adjustment Deposits or Rent
Adjustments when due; Tenant fails to observe or perform any of the other
covenants, conditions or provisions of this Lease to be observed or performed
by Tenant and fails to cure such default within 15 days after written notice
thereof to Tenant; the interest of Tenant in this Lease is levied upon under
execution or other legal process; a petition is filed by or against Tenant to
declare Tenant bankrupt or seeking a plan of reorganization or arrangement
under any Chapter of the Bankruptcy Act, or any amendment, replacement or
substitution therefore, or to delay payment of, reduce or modify Tenant's debts,
or any petition is filed or other action taken to reorganize or modify Tenant's
capital structure or upon the dissolution of Tenant; Tenant is declared
insolvent by law or any assignment of Tenant's property is made for the benefit
of creditors; a receiver is appointed for Tenant or Tenant's property; or
Tenant abandons the Premises for a continuous period of five days or more
provided that Tenant shall not be in default so long as the Premises are kept
in a clean and orderly fashion and Tenant pays all Rent as it becomes due.
12.02 LANDLORD'S REMEDIES. In the event of any breach of this Lease by
Tenant, Landlord, at its option, without further notice or demand to Tenant,
may, in addition to all other rights and remedies provided in this Lease, at
law or in equity: (a) terminate this Lease and Tenant's right of possession of
the Premises, and recover all damages to which Landlord is entitled under law,
specifically including, without limitation, Rent for the balance of the Term,
all Landlord's expenses of reletting (including repairs, alterations,
improvements, additions, decorations, legal fees and brokerage commissions), or
(b) terminate Tenant's right of possession of the Premises without terminating
this Lease, in which event Landlord may, but shall not be obligated to, relet
the Premises, or any part thereof for the account of Tenant, for such rent and
term and upon such terms and conditions as are acceptable to Landlord. For
purposes of such reletting, Landlord is authorized to decorate, repair, alter
and improve the Premises to the extent reasonably necessary. If Landlord fails
or refuses to relet the Premises or if the Premises are relet and a sufficient
sum not be realized therefrom after payment of all Landlord's expenses of
reletting (including repairs, alterations, improvements, additions,
decorations, legal fees and brokerage commissions) to satisfy the payment when
due of Rent reserved under this Lease for any monthly period, then Tenant shall
pay Landlord, a sum equal to the amount of Rent due under this Lease for each
such monthly period, or if the Premises have been relet, Tenant shall pay such
deficiency monthly. Tenant agrees that Landlord may file suit to recover any
sums due to Landlord hereunder from time to time and that such suit or recovery
of any amount due Landlord hereunder shall not be any defense to any subsequent
action brought for any amount not theretofore reduced to judgment in favor of
Landlord. In the event Landlord elects, pursuant to this subsection (b) of
this Section 12.02, to terminate Tenant's right of possession only without
terminating this Lease, Landlord may, at Landlord's option, enter into the
Premises, remove Tenant's signs and other evidences of tenancy, and take and
hold possession thereof, as provided in Article 13 hereof; provided, however,
that such entry and possession shall not terminate this Lease or release
Tenant, in whole or in part, from Tenant's obligation to pay the Rent reserved
hereunder for the full Term or from any other obligation of Tenant under this
Lease.
Any and all property which may be removed from the Premises by Landlord
pursuant to the authority of the Lease or of law, to which Tenant is or may be
entitled may be handled, removed or stored by Landlord at the risk, cost and
expense of Tenant, and Landlord shall in no event be responsible for the value,
preservation or safekeeping thereof. Tenant shall pay to Landlord, upon
demand, any and all expenses incurred in such removal and all storage charges
against such property so long as the same shall be in Landlord's possession or
under Landlord's control. Any such property of Tenant not retaken from storage
by Tenant within thirty (30) days after the end of the Term, however
terminated, shall be conclusively presumed to have been conveyed by Tenant to
Landlord under this Lease as a bill of sale without further payment or credit
by Landlord to Tenant. Tenant hereby grants to Landlord a first lien upon the
interest of Tenant under this Lease to secure the payment of moneys due under
this Lease, which lien may be enforced in equity; and Landlord shall be
entitled as a matter of right to have a receiver appointed to take possession
of the Premises and relet the same under order of court.
12.03 ATTORNEYS' FEES. Tenant shall pay upon demand, all costs and
expenses, including attorneys' fees, incurred by Landlord in enforcing the
observance and performance by Tenant of all covenants, conditions and provisions
of this Lease to be observed and performed by Tenant, or resulting from
Tenant's default under this Lease.
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ARTICLE 13
SURRENDER OF PREMISES
Upon expiration or termination of this Lease or termination of Tenant's
right of possession of the Premises, or any part thereof, Tenant shall
surrender and vacate the Premises immediately and deliver possession thereof to
Landlord in a clean, good and tenantable condition, ordinary wear and tear
excepted. Upon any termination which occurs other than by reason of Tenant's
default, Tenant shall be entitled to remove from the Premises all movable
personal property of Tenant, provided Tenant immediately shall repair all damage
resulting from such removal and shall restore the Premises to a tenantable
condition. In the event possession of the Premises is not immediately
delivered to Landlord or if Tenant shall fail to remove all of Tenant's movable
personal property, as aforesaid, Landlord may remove any of such property
therefrom without any liability to Tenant. All movable personal property which
may be removed from the Premises by Landlord shall be conclusively presumed to
have been abandoned by Tenant and title thereto shall pass to Landlord without
any cost or credit therefor and Landlord may at its option and at Tenant's
expense, store and/or dispose of such property.
ARTICLE 14
HOLDING OVER
Tenant shall pay Landlord double the Monthly Base Rent, plus Landlord's estimate
of the Rent Adjustments then applicable, for each month or portion thereof that
Tenant retains possession of the Premises, or any portion thereof, after the
expiration or termination of this Lease, and also shall pay all damages
sustained by Landlord, consequential as well as direct, by reason of such
retention of possession. The provisions of this Article shall not constitute a
waiver by Landlord of any reentry rights of Landlord hereinbefore or by law
provided. If Tenant retains possession of the Premises, or any part thereof,
for 30 days after the expiration or termination of this Lease, then at the sole
option of Landlord expressed by written notice to Tenant, but not otherwise,
such holding over shall constitute a renewal of this Lease on a month-to-month
basis on the same terms and conditions as provided in this Lease.
ARTICLE 15
DAMAGE BY FIRE OR OTHER CASUALTY
15.01 SUBSTANTIAL UNTENANTABILITY. If the Building or the Premises are
made substantially untenantable by fire or other casualty, Landlord may elect
either to: (a) terminate this Lease as of the date of the fire or other casualty
by giving Tenant written notice thereof within 90 days after said date; or (b)
proceed to repair or restore the Building or the Premises, other than leasehold
improvements and personal property paid for or installed by Tenant, and this
Lease shall remain in full force and effect.
If Landlord elects to proceed pursuant to subsection (b) above,
Landlord shall notify Tenant thereof within 90 days after the date of such fire
or other casualty, which notice shall contain Landlord's reasonable estimate of
the time required to substantially complete such repair or restoration. In the
event such estimate indicates that the time so required will exceed 180 days
from the date of the casualty, then Tenant shall have the right to terminate
this Lease as of the date of such casualty by giving written notice thereof to
Landlord not later than 20 days after the date of Landlord's notice. If
Landlord's estimate indicates that the repair or restoration can be
substantially completed with 180 days, or if Tenant fails to exercise its right
to terminate this Lease, as aforesaid, this Lease shall remain in force and
effect.
15.02 INSUBSTANTIAL UNTENANTABILITY. If the Premises or the Building are
damaged by fire or other casualty but neither is rendered substantially
untenantable, then Landlord shall proceed to repair and restore the Building or
the Premises, other than the leasehold improvements and personal property paid
for or installed by Tenant, unless such damage occurs during the last 12 months
of the Term, in which event Landlord shall have the right to terminate this
Lease as of the date of such fire or other casualty by giving written notice
thereof to Tenant within 30 days after the date of such fire or other casualty.
15.03 RENT ABATEMENT. Except for the negligence or willful act of
Tenant or its agents, employees, contractors or invitees, if all or any part of
the Premises are rendered substantially untenantable by fire or other casualty
and this Lease is not terminated, Monthly Base Rent and Rent Adjustments shall
abate for that part of the Premises which is untenantable on a per diem basis
from the date of the fire or other casualty until Landlord has substantially
completed the repair and restoration work in the Premises which it is required
to perform, provided, that as a result of such fire or other casualty, Tenant
does not occupy the portion of the Premises which is untenantable during such
period.
ARTICLE 16
EMINENT DOMAIN
16.01 TAKING OF WHOLE OR SUBSTANTIAL PART. In the event the whole or
any substantial part of the Building, the Land (as defined in Section 22.01(I)
or the Premises is taken or condemned by any competent authority for any public
use or purpose (including a deed given in lieu of condemnation), this Lease
shall terminate as of the date title vests in such authority, and Monthly Base
Rent and Rent Adjustments shall be apportioned as of said date.
16.02 TAKING OF PART. In the event a part of the Land, Building or the Premises
is taken or condemned by any competent authority for any public use or purpose
(including a deed given in lieu of condemnation) and this Lease is not
terminated pursuant to Section 16.01, the Lease shall be amended to reduce the
Monthly Base Rent in the same ratio as the number of square feet of rentable
area in the Premises so taken or condemned bears to the number of square feet of
rentable area then leased by Tenant and to adjust Tenant's Proportionate Share
to reflect its percentage of rentable area in the Building compared to the total
rentable area remaining after such taking or condemnation. Landlord, upon
receipt and to the extent of the award in condemnation or proceeds of sale and
to the extent such funds are available from Landlord's mortgagees, shall make
necessary repairs and restorations (exclusive of Tenant's leasehold improvements
and personal property paid for or installed by Tenant) to restore the Premises
remaining to as near its former condition as circumstances will permit, and to
the Building to the extent necessary to constitute the portion of the Building
not so taken or condemned as a complete architectural unit. In the event of a
partial taking or condemnation of the Premises and/or the Building as herein
described, the rentable area of the Premises then leased by Tenant and/or the
rentable area of the Building as specified in this Lease, respectively, shall be
reduced for ail purposes under this Lease by the number of square feet of
rentable area of the Premises and/or the Building, respectively, so taken or
condemned. Notwithstanding the foregoing, if as a result of any taking
including a governmental order that the grade of any street or alley adjacent to
the Building is to be changed and such taking or change of grade makes it
necessary or desirable to substantially remodel or restore the Building,
Landlord shall have the right to terminate this Lease upon ninety (90) days'
prior written notice.
16.03 COMPENSATION. Landlord shall be entitled to receive the entire
price or award from any such sale, taking or condemnation without any payment
to Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if any, in
such award.
ARTICLE 17
TENANT'S INSURANCE
Tenant, at Tenant's expense, agrees to maintain in full force and
effect during the Term of the Lease, Comprehensive General Liability Insurance
naming Landlord and Tenant as insured parties and covering the Premises on an
"occurrence" basis against all claims for personal injury, bodily injury, death
and property damage and including contractual liability specifically covering
the indemnification provision in Article 11.02 and be for such limits as
reasonably required by the Landlord from time to time, but not less than a
combined single limit of $1,000,000.
Prior to the Commencement Date and at any time thereafter upon
Landlord's request, Tenant shall submit to Landlord a Certificate(s) of
Insurance as evidence of the insurance required in this Article. Such
Certificate shall stipulate that the insurance certified thereby shall not be
materially changed or cancelled by the insurer or any insured thereunder without
30 days' prior written notice to Landlord.
Tenant, on its own behalf and on behalf of any insurer providing
insurance on Tenant's property, waives any claim against Landlord with respect
to any damage to Tenant's property which is, or customarily is, covered by a
standard insurance policy for fire and extended coverage.
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ARTICLE 18
RULES AND REGULATIONS
18.01 RULES AND REGULATIONS. Tenant agrees for itself and for its subtenants,
employees, agents, and invitees to comply with all rules and regulations
established by Landlord from time to time, and with all reasonable
modifications and additions thereto which Landlord may from time to time
hereafter make.
18.02 VIOLATION AND ENFORCEMENT. In addition to all other liabilities,
rights and remedies for breach of any covenant of this Article 18, Tenant shall
pay to Landlord all damages caused by such breach and shall also pay to
Landlord as additional rent an amount equal to any increase in insurance
premium or premiums caused by such breach. Any violation of this Article 18
may be restrained by injunction. Tenant shall be liable to Landlord for all
damages resulting from violation of any of the provisions of this Article 18.
Nothing in this Lease shall be construed to impose upon Landlord any duty or
obligation to enforce provisions of this Article 18 or any rules and
regulations hereafter adopted, or the terms, covenants or conditions of any
other lease as against any other tenant, and Landlord shall not be liable to
Tenant for violation of the same by any other tenant, its servants, employees,
agents, visitors or licensees.
ARTICLE 19
LANDLORD'S RIGHTS
Landlord shall have the following rights exercisable without notice
(except as expressly provided to the contrary in this Lease), without liability
to Tenant for damage or injury to persons, property or business and without
being deemed an eviction or disturbance of Tenant's use or possession of the
Premises or giving rise to any claim for setoff or abatement of Rent: (1) To
change the Building's name or street address upon 30 days' prior written notice
to Tenant; (2) To install, affix and maintain all signs on the exterior and/or
interior of the Building; (3) To designate and/or approve prior to
installation, all types of signs, window shades, blinds, draperies, awnings or
other similar items, and all internal lighting that may be visible from the
exterior of the Premises; (4) To display the Premises to prospective tenants at
reasonable hours during the last 12 months of the Term; (5) To grant to any
party the exclusive right to conduct any business or render any service in or
to the Building, provided such exclusive right shall not operate to prohibit
Tenant from using the Premises for the purpose permitted hereunder; (6) To
prohibit the placing of vending or dispensing machines of any kind in or about
the Premises, (7) To designate all sources furnishing sign painting and
lettering, ice, drinking water, towels, coffee cart service and toilet supplies
used on the Premises; (8) To have access for Landlord and other tenants of the
Building to any mail chutes and boxes located in or on the Premises according
to the rules of the United States Post Office; (9) To close the Building after
normal business hours, except that Tenant and its employees and invitees shall
be entitled to admission at all times, under such regulations as Landlord
prescribes for security purposes; and (10) to control the common areas of the
Building in such manner as Landlord deems necessary or proper (including,
without limitation, requiring all persons entering or leaving the Building to
identify themselves and their business in the Building; or excluding or
expelling any peddler, solicitor or loud or unruly person from the Building).
ARTICLE 20
ESTOPPEL CERTIFICATE
Within ten (10) days after request therefor by Landlord or any
mortgagee, or prospective mortgagee, Tenant agrees to deliver to Landlord or
any prospective owner or mortgagee, or prospective mortgagee, an Estoppel
Certificate in recordable form, binding upon Tenant, wherein Tenant shall
certify and agree that: (a) the Lease is in full force and effect, and indicate
what the Commencement Date of the Lease is; (b) Tenant has no offsets or
defenses to its performance of the terms and conditions of this Lease,
including the payment of rent, if such be the case, or if Tenant believes in
good faith there are any such defenses or offsets, specifying the same; (c)
Tenant is in the possession of the Premises; (d) Tenant will not pay rent more
than one (1) month in advance to the Landlord; (e) Tenant will not look to any
mortgagee for any security deposits paid to Landlord hereunder unless such
deposits have been received in cash by such mortgagee; (f) If an assignment of
rents; or leases has been served upon the Tenant by a mortgagee or prospective
mortgagee, acknowledging receipt thereof and agreeing to be bound by the
provisions thereof; (g) Tenant will give to the first mortgagee copies of all
notices required or permitted to be given by Tenant to Landlord; and (h) Any
other reasonable requirements of Landlord or a mortgagee.
ARTICLE 21
RELOCATION OF TENANT
At any time after the execution date of this Lease, Landlord may
substitute for the Premises, other premises in the Building (the "New
Premises"), in which event the New Premises shall be deemed to be the Premises
for all purposes under this Lease; provided, the New Premises shall be
substantially similar to the Premises in area, location and configuration; the
substitution shall be made in order to lease the Premises to a tenant of the
Building or a proposed tenant who as a result of such tenancy will occupy, all
or a substantial part of the floor of the Building on which the Premises are
located; if Tenant is then occupying the Premises, Landlord shall pay the
actual and reasonable expenses of physically moving Tenant, its property and
equipment to the New Premises; Landlord shall give Tenant not less than 30
days' prior written notice of such substitution; and Landlord, at its expense,
shall improve the New Premises with improvements substantially similar to those
in the Premises at the time of such substitution, if the Premises are then
improved, or if not then improved, Landlord, at its expense, shall improve the
New Premises in accordance with plans and specifications to be prepared by
Landlord.
ARTICLE 22
RENT ADJUSTMENTS AND PAYMENTS
22.01 DEFINITIONS. For all purposes of this Lease, the following words and
phrases shall have the following meanings:
A. "BASE YEAR" shall be the calendar year described in Section 1.01(O).
B. "RENT ADJUSTMENT" or "RENT ADJUSTMENTS" means any amount owed by
Tenant resulting from increases in Operating Expenses or Taxes, as
hereinafter defined. The Rent Adjustments shall be determined under Section
22.02 and shall be paid in addition to Monthly Base Rent as provided in
Section 22.04.
C. "ADJUSTMENT YEAR" means the calendar year (or any portion thereof) in
which the Commencement Date occurs and for which a Rent Adjustment
computation is being made.
D. "RENT ADJUSTMENT DEPOSIT" shall be equal to the Rent Adjustment
attributable to each month within the latest Adjustment Year for which the
Rent Adjustment has been or is being determined. The Rent Adjustment
Deposit shall be calculated by dividing the Landlord's estimate of the
total annual increase in Operating Expenses and Taxes for the latest
Adjustment Year by the number of square feet in the Building, and then
multiplying the quotient thereof times the Rentable Area of the Premises
and then dividing the product thereof by 12.
E. "OPERATING EXPENSES" shall mean all costs, expenses and disbursements of
every kind and nature which Landlord shall pay or become obligated to pay
in connection with the management, operation, maintenance, replacement and
repair of the Real Property (as hereinafter defined) including capital
expenses necessary to cause the Building to conform to any new building
codes enforced by a governmental authority, current amortization of capital
improvements reasonably necessary for the operation and maintenance of the
Building and of the personal property, fixtures, machinery, equipment,
systems and apparatus located in or used in connection with the Real
Property, including without limitation, insurance and utility expenses
(including the cost of energy management systems), except as hereinafter
provided. Operating Expenses shall not include the following: costs of
improvement of the Premises and the premises of other tenants of the
Building; charges for depreciation of the Building; interest and principal
payments on mortgages; ground rental payments; real estate brokerage and
leasing commissions; expenses incurred in enforcing obligations of other
tenants of the Building; salaries and other compensation of executive
officers of the Manager senior to the individual building manager; any
expenditures for which Landlord has been reimbursed (other than pursuant to
rent, rent adjustment and escalation provisions provided in leases); and
capital improvements to the Building (except as provided above). If any
Operating Expense, though paid in one year, relates to more than one
calendar year, at the option of the Landlord, such expenses may be
proportionately allocated among such calendar years.
F. "TAXES" shall mean all federal, state and local governmental taxes,
assessments and charges (including, without limitation, transit or transit
district taxes or assessments), of every kind or nature, whether general,
special, ordinary or extraordinary, which Landlord shall pay or become
obligated to pay because of or in connection with the ownership, leasing,
management, control or operation of the Real Property, or of the personal
property, fixtures, machinery, equipment, systems and apparatus located
therein or used in connection therewith (including any rental or similar
taxes levied in lieu of or in addition to general real and/or personal
property taxes). For purposes hereof, Taxes for any year shall be Taxes
which are due for payment or paid in that year, rather than Taxes which
are assessed or become a lien during such year. There shall be included in
taxes for any year the amount of all fees, costs and expenses (including
reasonable attorneys' fees) paid by Landlord during such year in seeking or
obtaining any refund or reduction of Taxes. Taxes in any year shall be
reduced by the net amount of any tax refund received by Landlord during
such year. If a special assessment
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payable in installments is levied against the Real Property, Taxes for any
year shall include only the installment of such assessment and any interest
payable or paid during such year. Taxes shall not include any federal or
state inheritance, general income, gift or estate taxes, except that if a
change occurs in the method of taxation resulting in whole or in part in
the substitution of any such taxes, or any other assessment, for any Taxes
as above defined, such substituted taxes or assessments shall be included
in the Taxes.
G. "RENTABLE AREA OF THE PREMISES" as set forth in 1.01(I) is determined
by using the American National Standard method for measuring floor area in
office buildings as adopted by the Building Owners and Managers Association
("BOMA"). The "Rentable Area" standard is used for all floors of the
Building except for the first and lower concourse floors, as to which
measurement is based on the "Usable Area" standard for measuring floor area
in office buildings as adopted by BOMA.
H. "RENTABLE AREA OF THE BUILDING" is 396,300 square feet.
I. "REAL PROPERTY" means the Building, the Land (which means and includes
the parcel or parcels which are owned and/or leased by or for Landlord and
which are used in connection with the ownership, management or operation of
the Building) and the personal property used in conjunction with both.
22.02 RENT ADJUSTMENTS. Tenant shall pay to Landlord, as provided in Section
22.04 below, Rent Adjustments during the Term as follows:
A. If the amount of Operating Expenses attributable to any calendar
year during the Term is greater than the Operating Expenses of the
Base Year, then Tenant shall pay Landlord, as a Rent Adjustment for
such calendar year, Tenant's Proportionate Share of such increase.
B. If the amount of Taxes attributable to any calendar year during
the Term is greater than the Taxes of the Base Year, then Tenant shall
pay Landlord as a Rent Adjustment for such calendar year, Tenant's
Proportionate Share of such increase.
The obligation of Tenant to pay the Rent Adjustments shall survive the
termination of the Lease.
22.03 PAYMENT OF RENT ADJUSTMENT DEPOSIT. Tenant shall pay Landlord the Rent
Adjustment Deposit in the same manner as the Monthly Base Rent commencing with
the first day of the Term. The Rent Adjustment Deposit shall be credited
against Rent Adjustments due for the applicable Adjustment Year. During the
last complete calendar year or during any partial calendar year in which the
Lease terminates, Landlord may include in the Rent Adjustment Deposit its
estimate of Rent Adjustments which may not be finally determined until after the
termination of this Lease.
22.04 STATEMENT OF LANDLORD. As soon as feasible after the expiration of each
calendar year of this Lease, Landlord will furnish Tenant a statement showing
the following:
(i) Operating Expenses and Taxes for the Adjustment Year;
(ii) The amount of Rent Adjustments due Landlord for the Adjustment Year,
less credit for Rent Adjustment Deposits paid, if any (this will be a
lump sum due Landlord or a credit to Tenant which will be applied to
future Rent Adjustments); and
(iii) The Rent Adjustment Deposit due in the calendar year next following the
Adjustment Year including the amount or revised amount due for months
prior to the rendition of the statement.
Tenant shall pay to Landlord the amounts due in accordance with said statement.
Monthly Base Rent shall be paid as provided in Article 3, the lump sum Rent
Adjustment shall be paid within ten (10) days after receipt of such statement,
and Rent Adjustment Deposits shall be paid as provided in Section 22.03. No
interest or penalties shall accrue on any amounts which Landlord is obligated to
credit to Tenant by reason of Section 22.03 or this Section 22.04.
Notwithstanding the foregoing, in no event shall the Monthly Base Rent and the
Rent Adjustments be less than the Monthly Base Rent.
22.05 PARTIAL OCCUPANCY. For purposes of determining adjustments to
installments of Monthly Base Rent for any Adjustment Year if the Building is
less than 90% rented during all or a portion of any year subsequent to the Base
Year, Landlord may elect to make an appropriate adjustment of the Operating
Expenses to such year employing sound accounting and management principles, to
determine the amount of the Operating Expenses that would have been paid or
incurred by Landlord had the Building been 90% occupied, and the amount so
determined shall be deemed to have been the amount of Operating Expenses for
such year. If any Operating Expense, though paid in one year, relates to more
than one calendar year, at the option of Landlord such expenses may be
proportionally allocated among such related calendar years.
22.06 BOOKS AND RECORDS. Landlord shall maintain books and records showing
Operating Expenses and Taxes in accordance with generally acceptable accounting
principles and management practices. Tenant or its representative shall have
the right to examine Landlord's books and records with respect to the items in
the foregoing statement of Operating Expenses and Taxes during normal business
hours at any time within ten (10) days following the furnishing by Landlord to
Tenant of such statement. Unless Tenant shall take written exception to any
time within thirty (30) days after the furnishing of the foregoing statement,
such statement shall be considered as final and accepted by Tenant. Any amount
due to Landlord as shown on any such statement, whether or not written exception
is taken thereto, shall be paid by Tenant within thirty (30) days after Landlord
shall have submitted the statement, without prejudice to any such written
exception.
ARTICLE 23
REAL ESTATE BROKERS
Tenant represents that, except for the brokers listed in Section 1.01(N) above,
Tenant has not dealt with any real estate broker, sales person, or finder in
connection with this Lease, and no such person initiated or participated in the
negotiation of this Lease, or showed the Premises to Tenant. Tenant hereby
agrees to indemnify and hold harmless Landlord and Manager from and against any
and all liabilities and claims for commissions and fees arising out of a breach
of the foregoing representations.
ARTICLE 24
SUBORDINATION AND ATTORNMENT
24.01 SUBORDINATION. Landlord may execute and deliver a mortgage or a trust
deed in the nature of a mortgage, both sometimes hereinafter referred to as
"Mortgage," against the Building, the Land or any interest therein including a
ground lease thereof (the "Ground Lease") and sell and leaseback the underlying
Land. This Lease and the rights of Tenant hereunder shall be and are hereby
made expressly subject and subordinate at all times to any Ground Lease of the
Land and/or the Building, now or hereafter existing and all amendments,
renewals and modifications thereto and extensions thereof, and to the lien of
the mortgage now or hereafter existing against the Land and/or the Building,
and to all advances made or hereafter to be made upon the security thereof.
Tenant agrees to execute and deliver such further instruments subordinating
this Lease to any such Ground Lease or to the lien of any such mortgage as may
be requested in writing by Landlord from time to time. Tenant acknowledges
that its title is and always shall be subordinate to the title of the owner of
the Land and the Building, and nothing herein contained shall empower Tenant to
do any act which can, shall or may encumber the title of the owner of the Land
or the Building. Notwithstanding anything to the contrary contained herein, any
mortgagee by notice in writing to the Tenant may subordinate its mortgage to
this Lease.
24.02 ATTORNMENT. In the event of the cancellation of termination of any such
Ground Lease described in Section 24.01 above in accordance with its terms or by
the surrender thereof, whether voluntary, involuntary or by operation of law, or
by summary proceedings, or the foreclosure of any such mortgage by voluntary
agreement or otherwise, or the commencement of any judicial action seeking such
foreclosure, Tenant, at the request of the then landlord, shall attorn to and
recognize such ground lessor, mortgagee or purchaser in foreclosure as Tenant's
landlord under this Lease. Tenant agrees to execute and deliver at any time
upon request of such ground lessor, mortgagee, purchaser, or their successors,
any instrument to further evidence such attornment. This Lease may be
terminated by the mortgagee or ground lessor it Tenant is named as a party and
served with process in any applicable proceeding and a warrant or judgment for
possession of the Premises is issued in such proceeding or a foreclosure sale is
held. However, if Tenant is not named as a party in such proceeding, then Tenant
hereby waives its right, if any, to elect to terminate this Lease or to
surrender possession of the Premises in the event of any such ground lease
termination or mortgage foreclosure.
24.03 ATTORNEY-IN-FACT. As and for additional security for the performance of
its duties hereunder and to induce Landlord to enter into this Lease, Tenant
shall execute promptly such instruments or certificates to carry out the intent
of Article 20 and Sections 24.01 and 24.02 above as shall be requested by
Landlord, or any mortgagee. Tenant hereby irrevocably appoints Landlord, as
attorney-in-fact for Tenant with full power and authority to execute and deliver
in the name of Tenant any such instruments or certificates. If within fifteen
(15) days after the date of a written request by Landlord, or any mortgagee to
execute such instruments, Tenant shall not have executed the same, Landlord
may, at its option, cancel this Lease without incurring any liability on account
thereof, and the Term hereby granted is expressly limited accordingly.
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24.04 MORTGAGEE PROTECTION. Tenant agrees to give any mortgagees
and/or trust deed holders and any ground lessors, by registered or certified
mail, a copy of any notice of default served upon Landlord by Tenant, provided
that prior to such notice Tenant has received notice (by way of service on
Tenant of a copy of an assignment of rents and leases, or otherwise) of the
address of such mortgagees and/or trust deed holders and any ground lessors.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the mortgagees and/or trust
deed holders and any ground lessors shall have an additional thirty (30) days
after receipt of notice thereof within which to cure such default or if such
default cannot be cured within that time, then such additional notice time as
may be necessary, if, within such thirty (30) days, any mortgagee and/or trust
deed holder has commenced and is diligently pursuing the remedies necessary to
cure such default (including but not limited to commencement of foreclosure
proceedings, if necessary to effect such cure). Such period of time shall be
extended by any period within which such mortgagee and/or trust deed holder and
ground lessor is prevented from commencing or pursuing such foreclosure
proceedings by reason of Landlord's bankruptcy. Until the time allowed as
aforesaid for mortgagee and/or trust deed holder and ground lessor to cure such
defaults has expired without cure, Tenant shall have no right to, and shall
not, terminate this Lease on account of default. This Lease may not be modified
or amended so as to reduce the Rent or shorten the Term, or so as to adversely
affect in any other respect to any material extent the rights of the Landlord,
nor shall this Lease be cancelled or surrendered, without the prior written
consent, in each instance, of the ground lessor or the mortgagee.
ARTICLE 25
NOTICES
All notices required or permitted to be given hereunder shall be in writing and
shall be deemed given and delivered, whether or not received, when deposited in
the United States Mail, postage prepaid and properly addressed, certified mail,
return receipt requested, at the following addresses (a) to Landlord: F. C.
Tucker Company Inc., 2500 One American Square, Box 82055, Indianapolis,
Indiana 46282-0002, Attention: Vice President, Property Management Division,
with copies to F. C. Tucker Company, Inc., Building Manager, 151 North Delaware
Street, Indianapolis, Indiana 46204; or such other address as Landlord shall
designate by written notice to Tenant; and (b) to Tenant: At the address
specified in Section 1.01(C) prior to the Commencement Date, and at the Premises
after the Commencement Date, or such other address as Tenant shall designate by
written notice to Landlord.
ARTICLE 26
EXCULPATION
If Landlord shall fail to perform or observe any term, condition, covenant or
obligation required to be performed or observed by it under this Lease and if
Tenant shall, as a consequence thereof, recover a money judgment against
Landlord, Tenant agrees that it shall look solely to Landlord's right, title and
interest in and to the Building for the collection of such judgment; and Tenant
further agrees that no other assets of Landlord shall be subject to levy,
execution or other process for the satisfaction of Tenant's judgment and that
Landlord shall not be liable for any deficiency.
The reference to "Landlord" in this Lease shall be limited to mean and include
only the owner or owners, at the time, of the fee simple interest in the
Building. In the event of a sale or transfer of such interest (except a mortgage
or other transfer as security for a debt) the "Landlord" named herein, or, in
the case of a subsequent transfer, the transferor, shall, after the date of such
transfer, be automatically released from all personal liability for the
performance or observance of any term, condition, covenant or obligation
required to be performed or observed by Landlord hereunder; and Landlord's
transferee shall be deemed to have assumed all of such terms, conditions,
covenants and obligations.
ARTICLE 27
MISCELLANEOUS
27.01 LATE CHARGES. All Rent as defined in Section 3 (unless otherwise
provided herein, and other than the Monthly Base Rent, Rent Adjustments, and
Rent Adjustment Deposits, which shall be due as herein before provided) owed by
the Tenant to the Landlord hereunder shall be paid in advance on or before the
first day of each calendar month. All such amounts (including without
limitation Monthly Base Rent, Rent Adjustments, and Rent Adjustment
Deposits) shall bear interest from the date due until the date paid at the
annual rate of 2% above the prime rate of interest publicly announced from time
to time by NBD Bank, N.A. or such other bank acceptable to Landlord in the
event that NBD Bank, N.A. ceases to announce a prime rate of interest, or at
the maximum legal rate of interest, allowed by law, if such maximum legal rate
is applicable and lower. In the event that a check or draft of Tenant is
returned to Landlord uncollected for any reason, then there shall be added to
the amount due a service charge for one hundred dollars ($100.00) for such
uncollected check or draft, which charge shall be in addition to any late
charges payable by Tenant as a result of such nonpayment.
27.02 ENTIRE AGREEMENT. This Lease and the Exhibits attached hereto contain the
entire agreement between Landlord and Tenant concerning the Premises and there
are no other agreements, either oral or written.
27.03 NO OPTION. The execution of this Lease by Tenant and delivery of same to
Landlord or Manager does not constitute a reservation of or option for the
Premises or an agreement to enter into a Lease. This Lease shall become
effective only if and when Landlord executes and delivers same to Tenant;
provided, however, the execution and delivery by Tenant of this Lease to
Landlord or Manager shall constitute an irrevocable offer by Tenant to lease the
Premises on the terms and conditions herein contained, which offer may not be
withdrawn or revoked for 30 days after such execution and delivery. If Tenant
is a corporation, partnership, association or any other entity, it shall deliver
to Landlord, concurrently with the delivery to Landlord of an executed Lease,
certified resolutions of Tenant's directors or other government person or body
authorizing the execution and delivery of this Lease and the performance by
Tenant of its obligations hereunder and the authority of the party executing the
Lease as having been duly authorized to do so.
27.04 ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of a
lesser amount than any installment or payment of Rent due shall be deemed to be
other than on account of the amount due, and no endorsement or statement on any
check or any letter accompanying any check or payment of Rent shall be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such installment or
payment of Rent or pursue any other remedies available to Landlord. No receipt
of money by Landlord from Tenant after the termination of this Lease or Tenant's
right of possession of the Premises shall reinstate, continue or extend the
Term.
27.05 LANDLORD'S OBLIGATIONS ON SALE OF BUILDING. In the event of any sale or
other transfer of the Building, Landlord and the seller or transferor (and the
beneficiaries of any selling or transferring land trusts) shall be entirely
freed and relieved of all agreements and obligations of Landlord hereunder
accruing or to be performed after the date of such sale or transfer.
27.06 BINDING EFFECT. This Lease shall be binding upon and inure to the benefit
of Landlord and Tenant and their respective heirs, legal representatives,
successors and permitted assigns.
27.07 MODIFICATION OF LEASES. Should any mortgagee, leasehold or otherwise,
require a modification or modifications of this Lease, which modification or
modifications will not bring about any increased cost or expense to Tenant or
in any other way substantially change the rights and obligations of Tenant
hereunder, then and in such event, Tenant agrees that this Lease may be so
modified.
27.08 CAPTIONS. The Article and Section captions in this Lease are inserted
only as a matter of convenience and in no way define, limit, construe, or
describe the scope or intent of such Articles and Sections.
27.09 APPLICABLE LAW. This Lease shall be construed in accordance with the laws
of the State of Indiana. If any term, covenant or condition of this Lease or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term, covenant or condition to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby and
each item, covenant or condition of this Lease shall be valid and be enforced to
the fullest extent permitted by law.
27.10 TIME. Time is of the essence of this Lease and the performance of all
obligations hereunder.
27.11 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES. If Tenant fails timely to
perform any of its duties under this Lease, Landlord shall have the right (but
not the obligation), after the expiration of any grace period elsewhere under
this Lease expressly granted to Tenant for the performance of such duty, to
perform such duty on behalf and at the expense of Tenant without further prior
notice to Tenant, and all sums expended or expenses incurred by Landlord in
performing such duty shall be deemed to be additional Rent under this Lease and
shall be due and payable upon demand by Landlord.
27.12 RIDERS. All Riders and exhibits attached hereto and executed both by
Landlord and Tenant shall be deemed to be a part hereof and hereby
incorporated herein.
27.13 RECORDING OF LEASE. This Lease shall not be recorded without the prior
written consent of Landlord.
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27.14 INITIAL IMPROVEMENTS TO THE PREMISES. Landlord agrees, at its expense, to
make all initial improvements to the Premises in accordance with drawings and
specifications that are subject to Landlord's approval in writing prior to
commencement of the work.
27.15 PARKING SPACES. Provided Tenant is not in default hereunder, Tenant shall
have the right to park in the number of parking spaces described in Section
1.01(P) in the parking garage adjacent to the Building ("Parking Spaces").
Tenant shall pay the monthly rental rate for the Parking Spaces established by
Landlord, in its sole discretion from time to time. It is acknowledged and
agreed that the Parking Spaces are not reserved specifically for Tenant's use.
27.16 LEGAL PROCEEDINGS. Landlord and Tenant hereby waive trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matters whatsoever rising out of or in any way
in connection with this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Premises, and/or any other claims (except
claims for personal injury or property damage), and any emergency statutory or
any other statutory remedy. It is further mutually agreed that in the event
Landlord commences any summary proceeding for non-payment of rent, Tenant will
not interpose and does hereby waive the right to interpose any counterclaim of
whatever nature or description in any such proceeding.
27.17 NO REPRESENTATIONS. Landlord or Landlord's agents have made no
representations or promises with respect to the Building or Premises except as
herein expressly set forth.
27.18 NO PRESUMPTION. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Lease to be drafted.
27.19 INDEPENDENT CONTRACTORS. Except as otherwise expressly provided in this
Lease, each covenant, agreement, obligation or other provision of this Lease on
Tenant's part to be performed shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease.
27.20 GENDER. All terms and words used in this Lease, regardless of the number
or gender in which they are used, shall be deemed to include any other number
any other lender as the context may require.
27.21 CREDITS. In the event that Tenant is in arrears in payment of any, Rent
hereunder, Tenant waives Tenant's right, if any, to designate the items against
which any payments made by Tenant are to be credited, and Tenant agrees that
Landlord may apply any payments made by Tenant to any items it sees fit,
irrespective of and notwithstanding any designation or request by Tenant as to
the items against which any such payments shall be credited.
27.22 RIGHT TO TERMINATE. Provided that Tenant is not in default hereunder,
Tenant shall have the right to terminate this Lease, effective as of December
31, 1998, in consideration of the payment of a termination fee in the amount of
$23,508.00, provided that written notice of termination is received by Landlord
on or before August 31, 1998. The failure of Tenant to deliver said notice to
Landlord on or before said date shall constitute an irrevocable waiver of said
right. The termination fee shall be paid to Landlord on December 31, 1998.
27.23 RIGHT OF FIRST OPPORTUNITY. Provided that Tenant is not in default
hereunder, during the period from January 1, 1996 through December 31, 1998,
Tenant shall have the continuing right of first opportunity to lease and occupy
the space designated by hatched lines on the attached Exhibit A ("Expansion
Space") during the Term of this Lease. Tenant shall exercise such
right in a writing delivered to Landlord not later than ten (10) days after
receiving written notice that the Expansion Space is, or is about to become,
available for lease, (which notice shall also set forth the rental rate
described below) and the failure to do so shall constitute an irrevocable
waiver of said right. Rental to be paid by Tenant for the Expansion Space shall
be a rental rate equal to the then-prevailing market rate for comparable space
in first-class buildings located in downtown Indianapolis, Indiana at the time
said right is exercised by Tenant, and Tenant's Proportionate Share shall be
increased to reflect the addition of the Expansion Space to the Premises. All
improvements to the Expansion Space shall be made by Landlord, at its expense,
in accordance with drawings and specifications which are subject to Landlord's
approval. Tenant must exercise said right as to all of the Expansion Space that
may become available for lease and may not exercise the right as to only a
portion of that space. In the event Tenant exercises its rights under this
Section 27.23, Tenant shall have irrevocably waived its right to terminate under
Section 27.22 hereof.
IN WITNESS WHEREOF, the parties' duty authorized representatives have executed
this Lease on the date stated in subparagraph (D) of Article 1 hereof.
MET LIFE INTERNATIONAL REAL ESTATE PARTNERS
LIMITED PARTNERSHIP, a Delaware limited partnership,
by Met Life Real Estate Advisors, Inc., its general
partner
By: John F. Loeth
-------------------------
Printed: John F. Loeth
-------------------------
Title: Vice President
-------------------------
"Landlord"
NATIONAL TECHTEAM, INC., A Delaware corporation
By: Lawrence A. Mills
-------------------------
Printed: Lawrence A. Mills
-------------------------
Title: Chief Operating Officer
-------------------------
"Tenant"
-9-
<PAGE> 10
EXHIBIT "A"
Attached to and made a part of the lease for office space on the () () floor to
Market Square Center dated this 27 day of November, 1995.
- ---------------------------------------- ------------------------------------
MET LIFE INTERNATIONAL REAL ESTATE NATIONAL TECHTEAM, INC., a Delaware
PARTNERS LIMITED PARTNERSHIP, a Delaware Corporation
limited partnership by Met Life Real
Estate Advisors, Inc., its general partner
LANDLORD TENANT
[FLOOR PLAN OF MARKET SQUARE CENTER]
LAMSON & CONDON [LOGO] MARKET SQUARE CENTER
ARCHITECTURE BASEMENT LEVEL
<PAGE> 1
EXHIBIT 10.23
<TABLE>
<S><C>
[FORD LOGO] *THESE ITEMS MUST APPEAR ON ALL SHIPPING AND BILLING
Purchase Order *Blanket order number (if any) *Purchase Order Number, or Release
AMENDMENT Authorization when blanket order
is entered
BUYER AGREES TO PURCHASE AND RECEIVE FMOFB BKBO 058050 AMENDMENT - 0008
FORD MOTOR COMPANY F.O.B. (Title Transfer Point) DATE OF ORDER
DESTINATION 02/21/96
NATIONAL TECHTEAM INC. TRANSPORTATION TERMS DELIVERY DATE
22000 GARRISON AVE PREPAID
DEARBORN MI PAYMENT TERMS SHIPPING POINT
43124 NET 30 DAYS
SELLER, AGREES TO SELL AND DELIVER ROUTING FUNDS
SUPPLIES AND SERVICES SPECIFIED HEREIN SELLERS' DELIVERY FUNDS = USD
*Ship tax SALES AND USE TAXES *INVOICE TO:
AS RELAEASED DO NOT BILL SALES OR USE TAX AS RELEASED
BECAUSE PURCHASES ARE COVERED BY
DIRECT PAY.
SEE SECTION 15 FOR ADDITONAL
INFORMATION AND INSTRUCTIONS
</TABLE>
- --------------------------------------------------------------------------------
LINE# *ITEM NUMBER* QUANTITY* U/M PRC/QTY U/M UNIT PRICE
- --------------------------------------------------------------------------------
***********************************DESCRIPTION**********************************
THE FOLLOWING PLANTS ARE COVERED UNDER THIS BLANKET ORDER:
AF1FB MARKETING & SALES OPERATI
AF30A FPSD PARTS REDISTRIBUTION
AF31A FPSD NATIONAL PARTS
AF38A FPSD DETROIT PARTS
AF52A FPSD GENERAL OFFICE
AP01A FORD ATLANTA ASSEMBLY
AP02A FORD MICHIGAN TRUCK
AP03A FORD CHICAGO ASSEMBLY
AP04A FORD OHIO ASSEMBLY
AP05A FORD DEARBORN ASSEMBLY
AP06A FORD KANSAS CITY ASSEMBLY
AP06F FORD KANSAS CITY PAINT
AP07A FORD LORAIN ASSEMBLY
AP09A FORD LOUISVILLE ASSEMBLY
AP11A FORD EDISON ASSEMBLY
AP12A FORD NORFOLK ASSEMBLY
AP14A FORD ST LOUIS ASSEMBLY
AP15A FORD TWIN CITIES ASSEMBLY
AP16A FORD WAYNE ASSEMBLY
AP17A FORD WIXOM ASSEMBLY
AP18A FORD PILOT PLANT
AP19A FORD KENTUCKY TRUCK
CC0BA GENERAL OFFICE
CC01A FORD SHELDON RD
CC05A FORD CCD CONNERSVILLE
CS0AA CASTING DIV GEN OFFICE
CS04A FORD CLEVELAND CASTING
CS07A FORD VULCAN FORGE WORKS
CS08A ESSEX ALUMINUM PLT
EE0CA GENERAL OFFICE
EE0FA NORTH PENN ELECTRONIC PAC
EE0FF NP TEST ENGR/KULPSVILLE
EE01A FORD EED RAWSONVILLE
EE02A FORD PPD SANDUSKY PLANT
EE03A FORD EED YPSILANTI
EE04A FORD EED LANSDALE
EE05J EXPORT OPERATION N. PENN
EE06A BEDFORD
EF0AA ROMEO ENGINE PLANT
EF0EA WINDSOR TRANSPORTATION SVCS
EF01A CLEVELAND ENGINE PLT #1
EF02A CLEVELAND ENGINE PLANT #2
* SUPPLIER CODE - Q479D BUYER IS: SUE SEESTADT (4743) (313) 322-7132
<PAGE> 2
ORDER DATE: 02/21/96 BLANKET ORDER NO. FM0FB BKBO 058050
EF03A DEARBORN ENGINE
EF05A FORD ENGINE GENERAL OFFICE
EF06A LIMA ENGINE PLT
EF17A ESSEX ENGINE PLANT
EF18A FORD CHIHUAHUA ENGINE
FD0JC CAR PRODUCT DEVEL - ENVIR
FD0LA TRAFFIC & TRUCK SERVICES
FD0MA RAILROAD-TRACK STOCK
FD0MB RAILROAD-HEAVY EQUIPMENT
FD0NA CONSTR, BLDG. & ENVIRON
FD0PA POWERHOUSE
FD0QA REPROGRAPHICS & OFFICE ST
FD0RA TECHNICAL PHOTOGRAPHY
FD0SA GRAPHIC ARTS & ADMIN SERV
FD0SB HIGHLAND PARK T&TS
FD0TA CONTROLLERS OFFICE-T&TS
FD0VA INDUST RADIO & VIDEO SVC
FD0WB POWERTRAIN OPERATIONS
FD04A FORD UTICA TRIM PLANT
FD05A FORD CHESTERFIELD TRIM
FM0CC B & A GENERAL OFFICE
FM0FB CENTRAL STAFFS
FM0RA FORD MOTOR LIGHT TRUCK OP
FM00Q CAR PRODUCT DEVELOPMENT
FM1BP ADV. VEHICLE ENGINEERING
FM2EP PRIMUS FORD CREDIT
GD01A DEARBORN GLASS PLT
GD02A FORD NASHVILLE GLASS
GD05A GLASS DIV GENERAL OFF
GD07A FORD TULSA GLASS
GD09A FORD GLASS CARLITE
GD21A FORD GLASS DIV
L7VWC JAGUAR MAHWAH N.J.
MS0BA WAYNE BODY & STAMPING PLT
MS01A BUFFALO STAMPING PLANT
MS02A CHICAGO STAMPING PLANT
MS03A WALTON HILLS STAMPING PLT
MS04A DEARBORN FRAME PLT
MS05A DEARBORN STAMPING PLT
MS06A MONROE STAMPING PLANT
MS07A DEARBORN TOOL & DIE
MS08A MAUMEE STAMPING PLANT
MS09A WOODHAVEN STAMPING PLANT
PP0AD DIVISION GENERAL OFFICE
PP02A FORD MT CLEMENS PLANT
PP03A FORD SALINE PLANT
PP04A FORD MILAN PLANT
TC0AA GENERAL OFFICE
TC02A FORD T & C SHARONVILLE
TC03A FORD T & C INDIANAPOLIS
TC04A FORD T & C LIVONIA
TC05A FORD T & C STERLING
TC11A FORD T & C VAN DYKE
TC12A FORD T & C BATAVIA
0088A FAIRTEL ASSOCIATES
0168A FAIRLANE GOLF INC,
5005A FAO STAFF SERVICES
7001A FORD MOTOR LAND DEVELOP
7050A FORD COLORADO PROPERTIES
9010A FORD LEASING DEV COMPANY
9100A FORD MOTOR CREDIT COMPANY
MISCELLANEOUS DISTRIBUTION- FOR NON CPARS LOCATIONS.
(PLACE AN X ON THE APPLICABLE LINE(S))
ALL LOCATIONS
__ AIR TRANSPORTATION
__ ENGINEERING COMPUTER SYS.
__ F.M.C.C.
__ MANUFACTURING DEV.
__ U.S. LEASING/TOM KAY.
__ SYSTEMS MANAGERS
__ FIRST NATIONWIDE BANK
Page 3
<PAGE> 3
ORDER DATE: 02/21/96 BLANKET ORDER NO. FM0FB BKBO 058050
__ ENGINEERING COMPLEX (9 COPIES)
__ COPPO, ROOM 1003, BODY ENGR.
__ GRACE CLARION, RM B7, FPSD GO.
__ ASSOC. CORP. OF N. AMERICA
__ DYNAMOMETER BLDG.
__ DIVERSIFIED PROD. TECH CTR.
__ SCIENTIFIC RESEARCH LAB
SPECIAL DISTRIBUTION INSTRUCTIONS:
ALLIANCE PROGRAM OFFICE
STE. 300 ATRIUM BLDG
ATTN: DICK MINNICK
JIM CLANCY
NAAO MARKETING
JIM VANNIER, NAAO BUILDING, RM. 578
MARY BODLEY
FAIRLAINE TRAINING AND DEVELOPMENT CENTER
B3
TELEPHONE X43324
EFFECTIVE DATE
01/01/96
THIS LIMITED PURCHASE ORDER IS ISSUED TO ESTABLISH PRICES FOR THE FOLLOWING:
APO END USER COMPUTER TRAINING PROGRAM
IT IS UNDERSTOOD THAT BUYER'S OBLIGATION WITH RESPECT TO QUANTITY COMMITMENTS
SHALL BE LIMITED TO THE QUANTITIES SPECIFIED IN BUYER'S RELEASE AUTHORIZATION
FORMS.
SELLER SHALL FURNISH BUYER WITH A WRITTEN REPORT INDICATING DOLLAR VOLUME OF
ALL RELEASES, BY BUYER'S USING LOCATION, PROCESSED AGAINST THIS ORDER DURING
THE PERIOD SPECIFIED. THIS REPORT WILL BE ISSUED ON A QUARTERLY BASIS.
NO ADDITION, DEDUCTIONS OR CHANGES AFFECTING COST OR PHYSICAL SPECIFICATIONS,
INCLUDING SUBSTITUTIONS, COVERED BY THIS ORDER WILL BE HONORED OR PAID UNLESS
SO STATED IN A WRITTEN NOTICE OF AMENDMENT TO PURCHASE ORDER.
THIS PURCHASE ORDER CANCELS AND SUPERSEDES PURCHASE ORDER NUMBER NP-56426. ALL
REQUIREMENTS SUBSEQUENT TO 11-01-90 MUST BE INVOICED AGAINST ORDER NUMBER
NP-58050.
THIS PURCHASE ORDER WILL BE EFFECTIVE FOR A ONE YEAR TERM BEGINNING 11-01-90.
THE ORDER WILL BE RENEWED AUTOMATICALLY FOR ONE YEAR TERMS UNLESS EITHER PARTY
NOTIFIES THE OTHER, BEFORE COMPLETION OF EACH CURRENT TERM, THAT THE ORDER
WILL NOT BE RENEWED. FORD MOTOR COMPANY RESERVES THE RIGHT TO AMEND OR CANCEL
THE ORDER AT ANY TIME.
INVOICE TO BE APPROVED BY MARTY GEARNS (OR DESIGNEE).
BUYER'S PAYMENT OBLIGATION SHALL BE NO MORE THAN THE SPECIFIED MAXIMUM, IF ANY,
FOR SELLER'S ACTUAL TIME AT SPECIFIED RATES AND ACTUAL COSTS OF PURCHASED
MATERIALS AND SERVICES. SELLER SHALL ESTABLISH A REASONABLE ACCOUNTING SYSTEM
AND BUYER MAY AUDIT SELLER'S RECORDS, AT ANY TIME PRIOR TO TWO YEARS AFTER
FINAL PAYMENT, TO VERIFY BUYER'S PAYMENT OBLIGATION TO SELLER.
WORK WILL BE PERFORMED AND PRICING WILL BE AS STATED IN THE ATTACHMENT TO
NP-58050 DATED 10-24-90.
AMENDMENT #3 IS CREATED TO ADD UNIX RELATED TRAINING SERVICES TO THIS PURCHASE
ORDER. WORK WILL BE PERFORMED AND PRICING WILL BE AS STATED IN THE ATTACHMENT
TO BKBO 05805O DATED 7/23/93.
***** ADDITIONAL PROVISIONS EFFECTIVE 01/01/96 *****
FTDC WILL HAVE THE OPPORTUNITY TO REVIEW THE RESUMES OF POTENTIAL FTDC
INSTRUCTORS BEFORE THEY ARE ENDORSED AS FTDC ASSOCIATES.
FTDC WILL ALLOCATE APPROXIMATELY 70% OF THE OPEN ENROLLMENT BUSINESS TO
NATIONAL TECHTEAM.
NATIONAL TECHTEAM'S TOTAL DESIGNATED PERCENTAGE OF BUSINESS WILL BE
DEFINED AS CLASSES THAT ARE CURRENTLY CATEGORIZED AS BOTH "GROUP TRAINING"
AND "OPEN ENROLLMENT/CATALOG" COURSES.
Page 4
<PAGE> 4
ORDER DATE: 02/21/96 BLANKET ORDER NO. FM0FB BKBO 058050
FTDC WILL CONTINUE TO UTILIZE TECHTEAM FOR THE MAJORITY OF COURSEWARE
DEVELOPMENT, BUT WILL HAVE THE OPTION OF USING ALTERNATE SOURCES WITH
EXTENSIVE FORD KNOWLEDGE, EXPERIENCE AND BACKGROUND FOR SOME PROJECTS.
TECHTEAM WILL NO LONGER BE RESPONSIBLE FOR 100% OF COURSEWARE DEVELOPMENT.
FTDC WILL INCLUDE LEAD INSTRUCTORS FROM TECHTEAM AND OTHER TRAINING SUPPLIER
SUPPLIERS IN DISCUSSIONS SURROUNDING NEW COURSEWARE DEVELOPMENT, REVISIONS TO
EXISTING COURSEWARE AND PRIORITIZING THE NECESSARY REVISIONS.
TECHTEAM WILL PROVIDE A FULL-TIME ADMINISTRATIVE ASSISTANT ON-SITE AT FTDC TO
HANDLE GROUP TRAINING ISSUES AND OTHER ISSUES AS AGREED UPON BY TECHTEAM AND
FTDC. FTDC WILL PROVIDE A WORKSTATION FOR THE ASSISTANT. TECHTEAM WILL
CONTINUE TO BE RESPONSIBLE FOR THE ASSISTANT'S SECRETARY AND RELATED FRINGE
BENEFITS.
TECHTEAM'S DOCUMENTATION FEE WILL REMAIN AT $38 PER HOUR.
ALL INVOICES WILL BE DISCOUNTED 1% EFFECTIVE 1-1-91, AND THE DISCOUNT IS TO BE
SHOWN SEPARATELY ON THE INVOICE.
FROM: TO:
AS WRITTEN WORK TO BE PERFORMED AND PRICING TO BE AS STATED IN THE
ATTACHED PRICE LIST DATED 4/l/92.
COVERAGE TO BE COMPANY WIDE DIRECT RELEASE BLANKET ORDER,
FORD STANDARD COPYRIGHT, TITLE TO WORK PRODUCT, AND WORK MADE FOR HIRE TERMS &
CONDITIONS APPLY TO THIS BLANKET ORDER AGREEMENT.
000010 MI SC B0563833 HR 85.000000
PROJECT MANAGEMENT CONSULTING RATES DETAIL OF ALL
DELIVERABLES ASSOCIATED WITH THESE RATES IN VENDOR
LETTER DATED 4/22/94 ON FILE IN BUYER'S PURCHASING
OFFICE.
000020 MI SC B0563834 HR 85.000000
NETWORK CONSULTING RATES DETAIL OF ALL DBLIVERABLES
ASSOCIATED WITH THESE RATES IN VENDOR LETTER DATED
4/22/94 ON FILE IN BUYER'S PURCHASING OFFICE.
000030 MI SC B0563836 HR 75.000000
SOFTWARE INSTALLATION RATES DETAIL OF ALL DELIVERABLES
ASSOCIATED WITH THESE RATES IN VENDOR LETTER DATED 4/22/94
ON FILE IN BUYER'S PURCHASING OFFICE.
000040 MI SC B0563838 HR 75.000000
SOFTWARE INTEGRATION RATES DETAIL OF ALL DELIVERABLES
ASSOCIATED WITH THESE RATES IN VENDOR LETTER DATED
4/22/94 ON FILE IN BUYER'S PURCHASING OFFICE.
000050 MI SC B0698358 HR 75.000000
INSTRUCTOR RATE FOR END-USER TRAINING: WEEKENDS,
HOURLY, EVENINGS
000060 MI SC B0698359 DA 290.000000
INSTRUCTOR RATE FOR END-USER TRAINING FOR 1/2 DAY
000070 MI SC B0698360 DA 450.000000
INSTRUCTOR RATE FOR END-USER COMPUTER TRAINING FOR
FULL DAY
000080 MI SC 90698361 DA 105.000000
MARKETING FEE FOR GROUP COMPUTER TRAINING PER COURSE
FOR A HALF DAY COURSE,
000090 MI SC 30696362 DA 290.000000
INSTRUCTOR RATE FOR GROUP TRAINING FOR 1/2 DAY
000100 MI SC B0699363 DA 450.000000
INSTRUCTOR RATE FOR GROUP COMPUTER TRAINING - FULL DAY
000110 MI SC B0698364 DA 450.000000
INSTRUCTOR RATE FOR TECHNICAL COMPUTER TRAINING *WINDOWS
3.1 - TECHNICAL SUPPORT PERSONNEL, *MICROSOFT
PROJECT 4.0 - MIGRATION FROM 3.0,*MICROSOFT
PROJECT 4.0, *SUPERPROJECT 3.0 FOR WINDOWS AT
HOURLY, WEEKEND, EVENING RATES (4 HOUR MINIMUM) -
GROUP TRAINING FOR FULL DAY.
000120 MI SC B0698365 EA 490.000000
INSTRUCTOR RATE FOR TECHNICAL COMPUTER TRAINING -
*WINDOWS 3.1 - TECHNICAL SUPPORT PERSONNEL,
* MICROSOFT PROJECT 4.0 - MIGRATION FROM 3.0,
*MICROSOFT 4.0, *SUPERPROJECT 3.0 FOR WINDOWS -
HALF DAY RATE (4 HOURS MINIMUM)
Page 5
<PAGE> 5
ORDER DATE: 02/21/96 BLANKET ORDER NO. FL0FB BKBO 058050
000130 MI SC B0698366 DA 750.000000
INSTRUCTOR RATE FOR TECHNICAL COMPUTER TRAINING FOR FULL DAY:
* WINDOWS 3.1 - TECHNICAL SUPPORT PERSONNEL
* MICROSOFT PROJECT 4.0 - MIGRATION FROM 3.0
* MICROSOFT PROJECT 4.0
* SUPERPROJECT 3.0 FOR WINDOWS
000140 MI SC B0698367 DA 290.000000
TUTORIAL SERVICES: 1/2 DAY
000150 MI SC B0698368 DA 450.000000
TUTORIAL SERVICES: FULL DAY
000160 MI SC B0698669 DA 545.000000
CLASSROOM RENTAL - DEARBORN (UP TO 60 ROOMS PER MONTH)
000l61 Ml SC B0698671 DA 475.000000
CLASSROOM RENTAL - DEARBORN (61-80 ROOMS PER MONTH)
000162 MI SC B0698675 DA 375.000000
CLASSROOM RENTAL - DEARBORN (81-100 ROOMS PER MONTH)
000163 MI SC B0698676 DA 370.000000
CLASSROOM RENTAL - DEARBORN (100+ R00MS PER MONTH)
000170 MI SC B0698677 DA 750.000000
CLASSROOM RENTAL OUTSIDE OF SOUTHEAST MICHIGAN
000175 MI SC B0830955 EA 160.000000
MARKETING FEE PER COURSE
000180 MI SC B0698678 HR 38.000000
COURSE DEVELOPMENT-WRITING SERVICES
000190 MI SC B0792963 HR 160.000000
MARKETING FEE FOR GROUP TRAINING PER COURSE FOR A FULL DAY COURSE IS $160.
TOTAL NUMBER OF ITEMS 23
Page 6
<PAGE> 1
[NBD LOGO] Exhibit 10.24
INSTALLMENT BUSINESS LOAN NOTE
- --------------------------------------------------------------------------------
Due January 17, 2001 $ 480,211.64
No. Date January 17, 1996
--------------------
PROMISE TO PAY: For value received, the undersigned (the "Borrower") promises to
pay to NBD BANK (the "Bank") or order, at any office of the Bank in the
State of Michigan, the sum of Four Hundred Eighty Thousand Two Hundred Eleven
and 64/100 ******** DOLLARS ($480,211.64) plus interest computed on the basis
of the actual number of days elapsed in a year of 360 days at the rate of:
8.25 % per annum (the "Note Rate") until maturity, whether by
acceleration or otherwise, and at the rate of 3% per annum
above the Note Rate on overdue principal from the date when
due until paid; or
----- % per annum above the rate announced from time to time by the
Bank as its "prime" rate (the "Note Rate"), which rate may
not be the lowest rate charged by the Bank to any of its
customers, until maturity, whether by acceleration or
otherwise, and at the rate of 3% per annum above the Note Rate
on overdue principal from the date when due until paid. Each
change in the "prime" rate will immediately change the Note
Rate.
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payment which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
The Borrower will pay this sum in 59 consecutive monthly installments of
$9,794.52, including interest, commencing February 17, 1996 with a final
payment due January 17, 2001 at which time the entire balance of unpaid
principal plus accrued interest shall be due and payable immediately. Each
payment will be applied first to accrued interest, then to principal.
LOAN AGREEMENT: [complete if applicable] This note evidences a debt under the
terms of a Credit Agreement between the Bank and the Borrower dated August
28, 1995 and any amendments.
PREPAYMENT: If a fixed interest rate is specified above, the Borrower may prepay
all or any part of the principal balance of this note on one business day's
notice provided that, in addition to all principal, interest and costs owing at
the time of prepayment, the Borrower pays a prepayment premium equal to the
Current Value of (i) the interest that would have accrued on the amount prepaid
at the Note Rate, minus (ii) the interest that could accrue on the amount
prepaid at the Treasury Rate. In both cases, interest will be calculated from
the prepayment date to the maturity dates of the installments being prepaid.
Such maturity dates shall be determined by applying the prepayment to the
scheduled installments of principal in their inverse order of maturity.
"Treasury Rate" means the yield, as of the date of prepayment, on United States
Treasury bills, notes or bonds, selected by the Bank in its discretion, having
maturities comparable to the scheduled maturities of the installments being
prepaid. "Current Value" means the net present value of the dollar amount of the
interest to be earned, discounted at the Treasury Rate. In no event shall the
prepayment premium be less than zero. The Borrower's notice of its intent to
prepay shall be irrevocable. If the balance of this note is accelerated in
accordance with the terms of this note, the resulting balance due shall be
considered a prepayment due and payable as of the date of acceleration. The
Borrower agrees that the prepayment premium is a reasonable estimate of loss and
not a penalty. The prepayment premium is payable as liquidated damages for the
loss of bargain and its payment shall not in any way reduce, affect or impair
any other obligation of the Borrower under this note.
SECURITY: To secure the payment of this note and any other present or future
liability of the Borrower, whether several, joint, or joint and several, the
Borrower pledges and grants to the Bank a continuing security interest in the
following described property and all of its additions, substitutions,
increments, proceeds and products, whether now owned or later acquired
("Collateral"):
1. All securities and other property of the Borrower in the custody, possession
or control of the Bank (other than property held by the Bank solely in a
fiduciary capacity);
2. All property or securities declared or acknowledged to constitute security
for any past, present or future liability of the Borrower to the Bank;
3. All balances of deposit accounts of the Borrower with the Bank;
4. The following additional property: 1 Aspect Call System 100R and 5 Aspect
Teleset 1F Card 16 Port
BANK'S RIGHT TO SETOFF: The Bank shall have the right at any time to apply its
own debt or liability to the Borrower or to any other party liable on this
note in whole or partial payment of this note or other present or future
liabilities, without any requirement of mutual maturity.
REPRESENTATIONS BY BORROWER: Each Borrower represents: (a) that the execution
and delivery of this Note and the performance of the obligations it imposes do
not violate any law, conflict with any agreement by which it is bound, or
require the consent or approval of any governmental authority or any third
party; (b) that this Note is a valid and binding agreement, enforceable
according to its terms; and (c) that all balance sheets, profit and loss
statements, and other financial statements furnished to the Bank are accurate
and fairly reflect the financial condition of the organizations and persons
to which they apply on their effective dates, including contingent liabilities
of every type, which financial condition has not changed materially and
adversely since those dates. Each Borrower, if other than a natural person,
further represents: (a) that it is duly organized, existing and in good
standing under the laws where it is organized; and (b) that the execution and
delivery of this Note and the performance of the obligations it imposes
(i) are within its powers; (ii) have been duly authorized by all necessary
action of its governing body; and (iii) do not contravene the terms of its
articles of incorporation or organization, its by-laws, or any agreement
governing its affairs.
WAIVER OF JURY TRIAL: The Bank and the Borrower, after consulting or having had
the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this note or any related instrument or
agreement or any of the transactions contemplated by this note or any course of
conduct, dealing, statements, whether oral or written, or actions of either of
them. Neither the Bank nor the Borrower shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived with
any other action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Borrower except by a written instrument
executed by both of them.
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS INCLUDING EVENTS OF DEFAULT
BORROWER:
Address: 22000 Garrison Avenue National TechTeam, Inc.
Dearborn, MI 48124
Address: By: Lawrence A. Miller
--------------------- ---------------------------
--------------------- Lawrence A. Miller
---------------------------
<PAGE> 2
ADDITIONAL TERMS AND CONDITIONS
EVENTS OF DEFAULT/ACCELERATION: If any of the following events occurs:
The Borrower or any guarantor of this note ("Guarantor") fails to pay
when due any amount payable under this note or under any agreement or
instrument evidencing debt to any creditor;
The Borrower or any Guarantor (a) fails to observe or perform any other
term of this note; (b) makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; (c) makes any
materially incorrect or misleading representation in any financial
statement or other information delivered to the Bank; or (d) defaults
under the terms of any agreement or instrument relating to any debt
for borrowed money (other than the debt evidenced by this note) such
that the creditor declares the debt due before its maturity;
There is a default under the terms of any loan agreement, mortgage,
security agreement, or any other document executed as part of the loan
evidenced by this note, or any guaranty of the loan evidenced by this
note becomes unenforceable in whole or in part, or any Guarantor fails
to promptly perform under such a guaranty;
A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974 as amended) occurs that would permit the Pension
Benefit Guaranty Corporation to terminate any employee benefit plan of
the Borrower or any affiliate of the Borrower;
The Borrower or any Guarantor becomes insolvent or unable to pay its
debts as they become due;
The Borrower or any Guarantor (a) makes an assignment for the benefit
of creditors; (b) consents to the appointment of a custodian, receiver,
or trustee for itself or for a substantial part of its assets; or (c)
commences any proceeding under any bankruptcy, reorganization,
liquidation, insolvency or similar laws of any jurisdiction;
A custodian, receiver, or trustee is appointed for the Borrower or any
Guarantor or for a substantial part or its assets without its consent
and is not removed within 60 days after such appointment;
Proceedings are commenced against the Borrower or any Guarantor under
any bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and such proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the commencement
of such proceedings;
Any judgement is entered against the Borrower or any Guarantor, or any
attachment, levy, or garnishment is issued against any property of the
Borrower or any Guarantor;
1. The Borrower or any Guarantor dies;
The Borrower or any Guarantor, without the Bank's written consent,
(a) is dissolved, (b) merges or consolidates with any third party,
(c) leases, sells or otherwise conveys a material part of its assets
or business outside the ordinary course of its business, or (d) leases,
purchases or otherwise acquires a material part of the assets of any
other corporation or business entity except in the ordinary course of
business, or (e) agrees to do any of the foregoing (notwithstanding
the foregoing, any subsidiary may merge or consolidate with any other
subsidiary, or with the Borrower so long as the Borrower is the
survivor);
2. The loan-to-value ratio of any pledge securities at any time exceeds
%, and such excess continues for five (5) days after notice from
the Bank to the Borrower;
3. There is a substantial change in the existing or prospective financial
condition of the Borrower or any Guarantor which the Bank in good faith
determines to be materially adverse;
4. The Bank in good faith deems itself insecure;
When this note shall become due immediately, without notice, at the Bank's
option.
REMEDIES: If this note is not paid at maturity, whether by acceleration or
otherwise, the Bank shall have all of the rights and remedies provided by any
law or agreement. Any requirement of reasonable notice shall be met if the
Bank sends the notice to the Borrower at least seven (7) days prior to the date
of sale, disposition or other event giving rise to the required notice. The Bank
is authorized to cause all or any part of the Collateral to be transferred to
or registered in its name or in the name of any other person, firm or
corporation, with or without designation of the capacity of such nominee. The
Borrower shall be liable for any deficiency remaining after disposition of any
Collateral. The Borrower is liable to the Bank for all reasonable costs and
expenses of every kind incurred in making or collection of this note,
including, without limitation, reasonable attorneys' fees and court costs. These
costs and expenses shall include, without limitation, any costs or expenses
incurred by the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
WAIVER: Each endorser and any other party liable on this note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the
number or period, to any substitution, exchange or release of all or part of
the Collateral, to the addition of any party, and to the release or discharge
of, or suspension of any rights and remedies against, any person who may be
liable for the payment of this note. No delay on the part of the bank in the
exercise of any right or remedy shall operate as a waiver. No single or
partial exercise by the Bank of any right or remedy shall preclude any other
future exercise of it or the exercise of any other right or remedy. No waiver
or indulgence by the Bank of any default shall be effective unless in writing
and signed by the Bank, nor shall a waiver on one occasion be construed as a
bar to or waiver of that right on any future occasion.
MISCELLANEOUS: The Borrower, if more than one, shall be jointly and severally
liable, and the term "Borrower" shall mean any one or more of them. This note
shall be binding on the Borrower and its successors, and shall inure to the
benefit of the Bank, its successors and assigns. Any reference to the Bank
shall include any holder of this note. This note is delivered in the State of
Michigan and governed by Michigan law. Section headings are for convenience of
reference only and shall not affect the interpretation of this note.
PAYMENT GUARANTEED BY:
(Signature) Address
(Signature) Address
(Signature) Address
FOR BANK USE ONLY
FACILITY AUTHORIZED TO LEND UNDER
METHOD OF DISBURSEMENT
LOAN CLASSIFICATION
<TABLE>
<S><C>
COUNTRY CODE ORC ADDRESS SIC CODE BORR. BRANCH NUMBER SOCIAL SECURITY NUMBER
CODE
Div Reg Grp Sect ORC
MAXIMUM ACCOUNT LIMIT SPECIAL ID LN. FRB CODE OFFICER LOAN PROFIT TX. PR. YR. MAIN COLL. REG U/
TM. INITIALS PURPOSE CENTER EX REL BA TYPE
BILLING INSTRUCTIONS
Payment Amount 1st Principal Payment 1st Interest Payment Interest Incl. Principal Cycle Interest Cycle Lead Time Day of Month
INT. COLLARS CHARGE DDA ACCOUNT NUMBER PYMT. CHG. REV. PART MAXIMUM NOTE LIMIT
High Low TYPE TYPE CR. BGHT/
SOLD
</TABLE>
<PAGE> 3
[NBD LOGO] CONTINUING SECURITY AGREEMENT
NAME OF DEBTOR: National TechTeam, Inc. (the "Debtor")
TAXPAYER I.D. NO: 38-2774613
DEBTOR'S ADDRESS (Chief executive office): 22000 Garrison Avenue, Dearborn,
MI 48124
GRANT OF SECURITY INTEREST: The Debtor grants to NBD BANK, a Michigan banking
corporation, the secured party referred to as the "Bank", whose address is 611
Woodward Avenue, Detroit, Michigan 48226, a continuing security interest in the
Collateral listed below, to secure the payment and performance of:
All of Debtor's debt to the Bank; and
(Check if applicable)
/ / All of 's debt to the Bank.
----------------------------------------
(Name of Borrower if other than Debtor)
Debt shall include each and every debt, liability and obligation of every type
and description now owed or arising at a later time, whether they are direct or
indirect, joint, several, or joint and several and whether or not of the same
type or class as presently outstanding, which shall collectively be referred to
as "Liabilities." Liabilities shall also include all interest, costs, expenses
and reasonable attorney's fees accruing to or incurred by the Bank in collecting
the Liabilities or in the protection, maintenance or liquidation of the
Collateral.
COLLATERAL:
/ /Accounts Receivable / /Equipment / /Farm Products
/ /Inventory / /Instruments /X/Specific (see Item 6)
NOTE: If no box is checked, it is expressly agreed by Debtor that the Bank is
granted a security interest in "All Assets." "All Assets" of Debtor shall
include Accounts Receivable, Inventory, Equipment, Instruments and Farm
Products, all as defined below.
DESCRIPTION OF COLLATERAL: The Collateral covered by this agreement is all of
the Debtor's property indicated above and defined below, present and future,
including but not limited to any items listed on any schedule or list attached.
Also included are all proceeds, including but not limited to stock rights,
subscription rights, dividends, stock dividends, stock splits, or liquidating
dividends, and all cash, accounts, chattel paper and general intangibles arising
from the sale, rent, lease, casualty loss or other disposition of the
Collateral, and any Collateral returned to, repossessed by or stopped in transit
by the Debtor. Also included are the Debtor's books and records which relate to
the Collateral. Where the Collateral is in the possession of the Bank, the
Debtor agrees to deliver to the Bank any property which represents an increase
in the Collateral or profits or proceeds of the Collateral.
1. "Accounts Receivable" shall consist of accounts, chattel paper and
general intangibles as those terms are defined in the Michigan
Uniform Commercial Code ("UCC"). Also included is any right to a
refund of taxes paid at any time to any governmental entity. Also
included are letters of credit, and drafts under them, given in
support of Accounts Receivable. Debtor warrants that its chief
executive office is at the address shown above.
2. "Inventory" shall consist of all property held at any location by
or for the Debtor for sale, rent or lease, or furnished or to be
furnished by the Debtor under any contract of service, or raw
materials or work in process and their products, or materials used
or consumed in its business, and shall include containers and
shelving useful for storing. Without limiting the security
interest granted, the Inventory is presently located at ___________
__________________________________________________________________.
3. "Equipment" shall consist of any goods at any time acquired, owned
or held by the Debtor at any location primarily for use in its
business, including but not limited to machinery, fixtures,
furniture, furnishings and vehicles, and any accessions, parts,
attachments, accessories, tools, dies, additions, substitutions,
replacements and appurtenances to them or intended for use with
them. Without limiting the security interest granted, the
Equipment is presently located at _________________________________
__________________________________________________________________.
4. "Instruments" shall consist of the Debtor's interest of any kind in
any negotiable instrument or security as those terms are defined in
the UCC, or any other writing which evidences a right to payment of
money and is of a type which is, in the ordinary course of
business, transferred by delivery alone or by delivery with any
necessary endorsement or assignment.
5. "Farm Products" shall consist of all poultry and livestock and
their young, along with their products and produce; all crops,
annual or perennial, and all products of the crops; and all feed,
seed, fertilizer, medicines, and other supplies used or produced
in farming operations. The Debtor will provide the Bank with a
written list of the buyers, commission merchants or selling agents
to or through whom it may sell the Farm Products, in form
acceptable to the Bank. The Debtor will keep this list current by
notice to the Bank at least 7 days prior to any sale. In this
paragraph the term farm products, buyers, commission merchants and
selling agents have the meanings given to them in the Federal Food
Security Act of 1985, and Section 9307 of the UCC.
6. "Specific" shall consist of the following, and all accessions,
parts, attachments, accessories, additions, substitutions,
replacements, appurtenances, and their related rights: 1 Aspect
Call System 100R and 5 Aspect Teleset 1F Card 16 Port
presently located at: 22000 Garrison Avenue, Dearborn, MI 48124
ADDITIONAL TERMS AND CONDITIONS: The Debtor agrees to all of the Additional
Terms and Conditions on the reverse.
WAIVER OF JURY TRIAL: The Bank and the Debtor after consulting or having had
the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in
any litigation based upon or arising out of this agreement or any related
instrument or agreement, or any of the transactions contemplated by this
agreement, or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Debtor shall
seek to consolidate, by counterclaim or otherwise, any action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Bank or the Debtor except
by a written instrument executed by both of them.
DEBTOR:
Dated January 17, 1995 National TechTeam, Inc.
By: Lawrence A. Miller
------------------
Lawrence A. Miller
------------------
<PAGE> 4
WARRANTIES & COVENANTS: The Debtor warrants and covenants to the Bank that:
1. It will pay its Liabilities to the Bank secured by this agreement;
2. It is or will become the owner of the Collateral free from any liens,
encumbrances or security interests, except for this security interest, and
existing liens disclosed to and accepted by the Bank in writing, and will
defend the Collateral against all claims and demands of all persons at any
time claiming any interest in it;
3. It will keep the Collateral free of liens, encumbrances and other
security interests, maintain it in good repair, not use it illegally and
exhibit it to the Bank on demand;
4. At its own expense, the Debtor will maintain comprehensive casualty
insurance on the Collateral against such risks, in such amounts, with such
deductibles and with such companies as may be satisfactory to the Bank,
and provide the Bank with proof of insurance satisfactory to the Bank.
Each insurance policy shall contain a lender's loss payable endorsement
satisfactory to the Bank and a prohibition against cancellation or
amendment of the policy or removal of the Bank as loss payee without at
least 30 days prior written notice to the Bank. In all events, the
amounts of such insurance coverages shall conform to prudent business
practices and shall be in such minimum amounts that the Debtor will not be
deemed a co-insurer.
5. It will not sell or offer to sell or otherwise transfer the Collateral,
nor change the location of the Collateral, without the written consent of
the Bank, except in the ordinary course of business;
6 It will pay promptly when due all taxes and assessments on the
Collateral, or for its use or operation;
7. No financing statement covering all or any part of the Collateral or any
proceeds is on file in any public office, unless the Bank has approved
that filing, and at the Bank's request the Debtor will execute one or more
financing statements in form satisfactory to the Bank and will pay the
cost of filing them in all public offices wherever filing is deemed by
the Bank to be desirable;
8. It will immediately notify the Bank in writing of any name change or any
change in business organization;
9. It will provide any information that the Bank may reasonably request, and
will permit the Bank upon prior notice to inspect and copy its books and
records during normal business hours.
ACCOUNTS RECEIVABLE: The Debtor acknowledges that if the Collateral includes
"Accounts Receivable" then until the Bank gives notice to the Debtor to the
contrary, the Debtor will, in the usual course of its business and at its own
cost and expense, on the Bank's behalf but not as the Bank's agent, demand and
receive and use its best efforts to collect all moneys due or to become due on
the Accounts Receivable. Until the Bank gives notice to the Debtor to the
contrary or until the Debtor is in default, it may use the funds collected in
its business. Upon notice from the Bank or upon default, the Debtor agrees
that all sums of money it receives on account of or in payment or settlement of
the Accounts Receivable shall be held by it as trustee for the Bank without
commingling with any of its funds, and shall immediately be delivered to the
Bank with endorsement to the Bank's order of any check or similar instrument.
It is agreed that, at any time the Bank so elects, it shall be entitled, in its
own name or in the name of the Debtor or otherwise, but at the expense and
cost of the Debtor, to collect, demand, receive, sue for or compromise any and
all Accounts Receivable, and to give good and sufficient releases, to endorse
any checks, drafts or other orders for the payment of money payable to the
Debtor and, in its discretion, to file any claims or take any action or
proceeding which the Bank may deem necessary or advisable. It is expressly
understood and agreed, however, that the Bank shall not be required or
obligated in any manner to make any demand or to make any inquiry as to the
nature or sufficiency of any payment received by it or to present or file any
claim or take any other action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times. All notices required in this paragraph will be immediately effective
when sent. Such notices need not be given prior to the Bank taking action.
REPRESENTATIONS BY DEBTOR: Each Debtor represents: (a) that the execution and
delivery of this agreement and the performance of the obligations it imposes do
not violate any law, conflict with any agreement by which it is bound, or
require the consent or approval of any governmental authority or any third
party; (b) that this agreement is a valid and binding agreement, enforceable
according to its terms; and (c) that all balance sheets, profit and loss
statements, and other financial statements furnished to the Bank are accurate
and fairly reflect the financial condition of the organizations and persons to
which they apply on their effective dates, including contingent liabilities of
every type, which financial condition has not changed materially and adversely
since those dates. Each Debtor, if other than a natural person, further
represents: (a) that it is duly organized, existing and in good standing under
the laws where it is organized; and (b) that the execution and delivery of this
agreement and the performance of the obligations it imposes (i) are within its
powers; (ii) have been duly authorized by all necessary action of its governing
body; and (iii) do not contravene the terms of its articles of incorporation or
organization, its by-laws, or any agreement governing its affairs.
PLEDGE: If the Debtor is not liable for all or any part of the Borrower's
obligations to the Bank (the "Debt"), then it agrees that:
(a) If any monies become available to the Bank that it can apply to any Debt,
the Bank may apply them to Debt not secured by this agreement.
(b) Without notice to or the consent of the Debtor, the Bank may (i) take any
action it chooses against any Borrower, against any collateral for the
Debt, or against any other person liable for the Debt; (ii) release any
Borrower or any other person liable for the Debt, release any collateral
for the Debt, and neglect to perfect any interest in any such collateral;
(iii) forbear or agree to forbear from exercising any rights or remedies,
including any right of setoff, that it has against the Borrower, any
other person liable for the Debt, or any other collateral for the Debt;
(iv) extend to any Borrower additional Debt to be secured by this
agreement; or (v) renew, extend, modify or amend any Debt, and deal with
any Borrower or any other person liable for the Debt as it chooses.
(c) None of the Debtor's obligations under this agreement shall be affected
by (i) any act or omission of the Bank; (ii) the voluntary or involuntary
liquidation, sale or other disposition of all or substantially all of the
assets of any Borrower; (iii) any receivership, insolvency, bankruptcy,
reorganization or other similar proceedings affecting any Borrower or any
of its assets; or (iv) any change in the composition or structure of any
Borrower or any Debtor, including a merger or consolidation with any other
entity.
(d) The Bank's rights under this section and this agreement are
unconditional and absolute, regardless of the unenforceability of any
provision of any agreement between any Borrower and the Bank, or the
existence of any defense, setoff or counterclaim that any Borrower may be
able to assert against the Bank.
(e) It waives all rights of subrogation, contribution, reimbursement,
indemnity, exoneration, implied contract, recourse to security, and any
other claim (as that term is defined in the federal Bankruptcy Code, as
amended from time to time) that it may have or acquire in the future
against any Borrower, any other person liable for the Debt, or any
collateral for the Debt, because of the existence of this agreement, the
Debtor's performance under this agreement, or the Bank's availing itself
of any rights or remedies under this agreement.
(f) If any payment to the Bank on any Debt is wholly or partially invalidated,
set aside, declared fraudulent or required to be repaid to the Borrower or
anyone representing the Borrower or the Borrower's creditors under any
bankruptcy or insolvency act or code, under any state or federal law, or
under common law or equitable principles, then this agreement shall
remain in full force and effect or be reinstated, as the case may be, until
payment in full to the Bank of the repaid amounts, and of the Debt. If
this agreement must be reinstated, the Debtor agrees to execute and deliver
to the Bank new agreements and financing statements, if necessary, in form
and substance acceptable to the Bank, covering the Collateral.
DEFAULT/REMEDIES: If the Debtor or the Borrower fails to pay any of the
Liabilities when due, or if a default by anyone occurs under the terms of any
agreement related to any of the Liabilities, or if the Debtor dies or fails to
observe or perform any term of this agreement, or if any representation or
warranty contained in this agreement is untrue, or if there is a material
change in the financial condition of the Debtor which the Bank in good faith
determines to be materially adverse, then the Bank shall have the rights and
remedies provided by law or this agreement, including but not limited to the
right to require the Debtor to assemble the Collateral and make it available
to the Bank at a place to be designated by the Bank which is reasonably
convenient to both parties, the right to take possession of the Collateral
with or without demand and with or without process of law, and the right to
sell and dispose of it and distribute the proceeds according to law. In
connection with the right of the Bank to take possession of the Collateral, the
Bank may take possession of any other items of property in or on the Collateral
at the time of taking possession, and hold them for the Debtor without liability
on the part of the Bank. If there is any statutory requirement for notice,
that requirement shall be met if the Bank sends notice to the Debtor at least
seven (7) days prior to the date of sale, disposition or other event giving
rise to the required notice. The Debtor shall be liable for any deficiency
remaining after disposition of the Collateral.
MISCELLANEOUS:
1. Where the Collateral is located at, used in or attached to a facility
leased by the Debtor, the Debtor will obtain from the lessor a consent to
the granting of this security interest and a subordination of the lessor's
interest in any of the Collateral, in form acceptable to the Bank.
2. At its option the Bank may, but shall be under no duty or obligation
to, discharge taxes, liens, security interests or other encumbrances at any
time levied or placed on the Collateral, pay for insurance on the Collateral,
and pay for the maintenance and preservation of the Collateral, and the
Debtor agrees to reimburse the Bank on demand for any payment made or expense
incurred by the Bank, with interest at the maximum legal rate.
3. No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver, no single or partial exercise by the Bank
of any right or remedy shall preclude any other exercise of it or the
exercise of any other right or remedy, and no waiver or indulgence by the
Bank of any default shall be effective unless in writing and signed by the
Bank, nor shall a waiver on one occasion be construed as a waiver of that
right on any future occasion.
4. If any provision of this agreement is invalid, it shall be
ineffective only to the extent of its invalidity, and the remaining
provisions shall be valid and effective.
5. Except as provided in the Accounts Receivable paragraph above,
notice from one party to another relating to this agreement shall be deemed
effective if made in writing (including telecommunications) and delivered to
the recipient's address, telex number or facsimile number set forth above by
any of the following means: (a) hand delivery, (b) registered or certified
mail, postage prepaid, with return receipt requested, (c) first class or
express mail, postage prepaid, (d) Federal Express, Purolator Courier or like
overnight courier service, or (e) facsimile, telex or other wire transmission
with request for assurance of receipt in a manner typical with respect to
communications of that type. Notice made in accordance with this section
shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing if mailed by first
class, registered or certified mail, or on the next business day after
mailing or deposit with an overnight courier service if delivered by express
mail or overnight courier.
6. All rights of the Bank shall inure to the benefit of the Bank's
successors and assigns; and all obligations of the Debtor shall bind the
Debtor's heirs, executors, administrators, successors and assigns. If there
is more than one Debtor, their obligations are joint and several.
7. A carbon, photographic or other reproduction of this agreement is
sufficient and can be filed as a financing statement. The Bank is
irrevocably appointed the Debtor's attorney-in-fact to execute any financing
statement on the Debtor's behalf covering the Collateral.
8. The terms and provisions of this security agreement shall be governed by
Michigan law.
<PAGE> 1
EXHIBIT 10.25
BASIC LEASE INFORMATION
BASIC LEASE INFORMATION
OFFICE LEASE
Lease Date: February 14, 1996
Landlord: SIXTH & PIKE ASSOCIATES, L.P.
a limited partnership
Address of Landlord: 520 Pike Street, Suite 1210
Seattle, WA 98101
Tenant: NATIONAL TECHTEAM, INC., a Delaware
Corporation
Address of Tenant: 520 Pike Street, Suite 1460
Seattle, WA 98101
Contact: Cheryl Young Telephone:
PARAGRAPH 1 Premises: Suite 1460
PARAGRAPH 2 Lease Term: Twelve months, commencing April 1, 1996
and ending March 31, 1997.
PARAGRAPH 3 Base Rent: $4,500.00 per month.
Area of Premises: Approximately 3,175 rentable square feet.
PARAGRAPH 27 Percent of Total Building Area: .875%
Base Services Year: 1996. See Paragraph 43.
Base Utility Rate: Actual 1996 rate.
Base Tax Rate: Actual 1996 rate.
PARAGRAPH 32 Security Deposit: $5,000.00.
The foregoing Basic Lease Information is hereby
incorporated into and made a part of this Lease. Each
reference in this Lease to any of the Basic Lease
Information shall mean the respective information
hereinabove set forth and shall be construed to
incorporate all of the terms provided under the
particular Lease paragraph pertaining to such
information. In the event of any conflict between any
Basic Lease Information and the Lease, the latter shall
control.
LANDLORD: TENANT;
SIXTH & PIKE ASSOCIATES, L.P. NATIONAL TECHTEAM, INC., a
a limited partnership Washington Corporation
By: Oregon Property Investment
Corporation,
an Oregon corporation
Its: General Partner
By: LA SALLE ADVISORS LIMITED
Its: Advisor and Duly Authorized Agent
By: /s/ Stephen T. Wong By: /s/ L. A. Miller
------------------- -----------------
Stephen T. Wong
Its: Vice President Its: COO/CFO
Date: 2/26/96 Date: 2/15/96
------------------- -----------------
By: /s/ Diane R. McMahon By:
------------------- -----------------
Diane R. McMahon
Its: Vice President Its:
------------------
Date: 2/26/96 Date:
------------------- -----------------
<PAGE> 2
PARAGRAPHS DESCRIPTION
BASIC LEASE INFORMATION ............................................ 1
TABLE OF CONTENTS .................................................. 1(A)
1. OCCUPANCY ............................................................ 2
2. TERM AND POSSESSION .................................................. 2
3. RENT ................................................................. 2
4. RESTRICTIONS ON USE .................................................. 2
5. COMPLIANCE WITH LAWS ................................................. 2
6. ALTERATIONS .......................................................... 2
7. REPAIR ............................................................... 2
8. LIENS ................................................................ 2
9. ASSIGNMENT AND SUBLETTING............................................. 3
10. INSURANCE AND INDEMNIFICATION ........................................ 3
11. WAIVER OF SUBROGATION ................................................ 4
12 SERVICES AND UTILITIES ............................................... 4
13. ESTOPPEL CERTIFICATE ................................................. 4
14. HOLDING OVER ......................................................... 5
15. SUBORDINATION ........................................................ 5
16. RULES AND REGULATIONS ................................................ 5
17. RE-ENTRY BY LANDLORD ................................................. 5
18. INSOLVENCY OR BANKRUPTCY ............................................. 5
19. DEFAULT .............................................................. 5
20. DAMAGE BY FIRE, etc. ................................................. 6
21. EMINENT DOMAIN ....................................................... 6
22. SALE BY LANDLORD ..................................................... 6
23. RIGHT OF LANDLORD TO PERFORM ......................................... 6
24. SURRENDER OF PREMISES ................................................ 7
25. WAIVER ............................................................... 7
26. NOTICES .............................................................. 7
27. RENTAL ADJUSTMENTS ................................................... 7
28. TAXES PAYABLE BY TENANT .............................................. 9
29. ABANDONMENT .......................................................... 9
30. SUCCESSORS AND ASSIGNS ............................................... 9
31. ATTORNEYS' FEES ...................................................... 9
32. SECURITY DEPOSIT ..................................................... 9
33. SUBSTITUTION SPACE ................................................... 9
34. CORPORATE AUTHORITY .................................................. 9
35. LEASE EFFECTIVE DATE ................................................. 9
36. BROKERAGE ............................................................ 10
37. FORCE MAJEURE ........................................................ 10
38. CERTAIN RIGHTS RESERVED BY LANDLORD .................................. 10
39. PERSONAL LIABILITY ................................................... 10
40. MISCELLANEOUS ........................................................ 10
EXHIBIT A ............................................. Rules & Regulations
EXHIBIT B ............................................. Outline of Premises
EXHIBIT D ...................................... Form of Tenant Certificate
EXHIBIT E ............................................... Legal Description
Page 1(A)
<PAGE> 3
LEASE AGREEMENT
THIS LEASE made as of this 14th day of February, 1996, Between
Sixth & Pike Associates (hereinafter called "Landlord") and
National TechTeam, Inc., a Delaware Corporation (hereinafter
called "Tenant").
Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord those Premises (hereinafter called "Premises")
outlined in red on Exhibit "B" attached hereto and made a part
hereof, specified in the Basic Lease Information attached
hereto.
OCCUPANCY 1. Tenant shall use and occupy the Premises for general office
purposes and for no other use or purpose without the prior
written consent of Landlord.
TERM AND 2. (A) The term of this Lease shall be for the period
POSSESSION specified in the Basic Lease Information (or until sooner
terminated as herein provided). If Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant
at the commencement of the lease term, this Lease shall not be
void or voidable, nor shall Landlord or its agent be liable to
Tenant for any loss or damage resulting therefrom. In that
event, however, Tenant shall not be liable for any rent until
Landlord delivers possession of the Premises to Tenant. If
Landlord tenders possession of the Premises to Tenant prior to
the commencement of the term and Tenant chooses to accept such
possession, then the term of this Lease and Tenant's
obligations hereunder shall commence on the date that it
accepts such possession. Any failure to deliver possession at
the stated commencement of the term of this Lease or delivery
of possession prior to the stated commencement date shall not
in any way affect the obligations of Tenant hereunder or the
expiration date hereof.
RENT 3. (a) Tenant shall pay to Landlord throughout the term of this
Lease, rent as specified in the Basic Lease Information,
payable in monthly installments in advance on the
first day of each month during every year of the term hereby
demised in lawful money of the United States, without
deduction or offset whatsoever, to Landlord at the address
specified in the Basic Lease Information, or to such other
firm or to such other place as Landlord may from time to time
designate in writing. Said rental is subject to adjustment as
provided in Paragraph 27 hereof. If this Lease commences on a
day other than the first day of a calendar month or ends on a
day other than the last day of a calendar month, the monthly
rental for the fractional month shall be appropriately
prorated.
(B) Tenant recognizes that late payment of any rent or other
sum due hereunder from Tenant to Landlord will result in
administrative expense to Landlord, the extent of which
additional expense is extremely difficult and economically
impractical to ascertain. Tenant therefore agrees that if rent
or any other payment due hereunder from Tenant to Landlord
remains unpaid ten (10) days after said amount is due, the
amount of such unpaid rent or other payment shall be increased
by a late charge to be paid Landlord by Tenant in an amount
equal to five percent (5%) of the amount of the delinquent
rent or other payment. The amount of the late charge to be paid
to Landlord by Tenant on any unpaid rent or other payment shall
be reassessed and added to Tenant's obligation for each
successive monthly period accruing after the date on which the
late charge is initially imposed. Tenant agrees that such
amount is a reasonable estimate of the loss and expense to be
suffered by Landlord as a result of such late payment by Tenant
and may be charged by Landlord to defray such loss and expense.
The provisions of this paragraph in no way relieve Tenant of
the obligations to pay rent or other payments on or before the
date on which they are due, nor do the terms of this paragraph
in any way affect Landlord's remedies pursuant to Paragraph 19
of this Lease in the event said rent or other payment is unpaid
after the date due.
RESTRICTIONS 4. Tenant shall not do or permit anything to be done in or about
ON USE the Premises which will in any way obstruct or interfere with
the rights of other tenants or occupants of the building or
injure or annoy them, or use or allow the Premises to be used
for any improper, immoral, unlawful or objectionable purpose,
nor shall Tenant cause or maintain or permit any nuisance in,
on, or about the Premises. Tenant shall not commit or suffer
the commission of any waste, in, on, or about the Premises, nor
permit any use of the Premises which may be dangerous to
persons or property. Tenant shall not do nor permit anything to
be done on or about the Premises or bring or keep anything
therein which will in any way increase the rate of any
insurance upon the building in which the Premises are situated
or any of its contents or cause a cancellation of said
insurance or otherwise affect said insurance in any manner. No
retail sales shall be permitted upon the Premises without the
prior written consent of Landlord.
COMPLIANCE 5. Tenant shall not use the Premises or permit anything to be
WITH LAWS done in or about the Premises which will in any way conflict
with any law, statute, ordinance, or governmental rule
or regulation now in force or which may hereafter be enacted
or promulgated. Tenant shall at its sole cost and expense
promptly comply with all laws, statutes, ordinances and
governmental rules, regulations, or requirements now in force
or which may hereafter be in force and with the requirements
of any board of fire underwriters or other similar body now or
hereafter constituted relating to or affecting the condition,
use, or occupancy of the Premises, excluding structural
changes not related to or affected by alterations or
improvements made by or for Tenant or Tenant's acts. The
judgment of any court of competent jurisdiction or the
admission of Tenant in an action against Tenant, whether
Landlord be a party thereto or not, that Tenant has so violated
any such law, statute, ordinance, rule, regulation, or
requirement, shall be conclusive of such violation as between
Landlord and Tenant.
ALTERATIONS 6. Tenant shall not make or suffer to be made any alterations,
additions, or improvements in, on, or to the Premises or any
part thereof without the prior written consent of Landlord; and
any such alterations, additions, or improvements in, on or to
said Premises, except for Tenant's movable furniture and
equipment, shall immediately become Landlord's property and, at
the end of the term hereof, shall remain on the Premises
without compensation to Tenant. In the event Landlord
consents to the making of any such alterations, additions, or
improvements by Tenant, the same shall be made by Tenant, at
Tenant's sole cost and expense, in accordance with plans and
specifications approved by Landlord, and any contractor or
person selected by Tenant to make the same must first be
approved in writing by Landlord, or, at Landlord's option, the
alterations, additions or improvements shall be made by
Landlord for Tenant's account and Tenant shall reimburse
Landlord for the cost thereof within twenty (20) days after
receipt of a statement. Upon the expiration or sooner
termination of the term herein provided, Tenant shall upon
demand by Landlord, at Tenant's sole cost and expense forthwith
and with all due diligence remove any or all alterations
including all communications equipment and wires, additions, or
improvements made by or for the account of Tenant, designated
by Landlord to be removed, and Tenant shall forthwith and with
all due diligence, at its sole cost and expense, repair and
restore the Premises to their original condition.
REPAIR 7. By taking possession of the Premises, Tenant
accepts the Premises as being in the condition in which
Landlord is obligated to deliver them and otherwise in good
order, condition and repair. Tenant shall, at all times during
the term hereof at Tenant's sole cost and expense, keep the
Premises and every part thereof in good order, condition and
repair. Tenant shall upon the expiration or sooner termination
of the term hereof provided, surrender to Landlord the Premises
and all repairs, changes, alterations, additions, and
improvements thereto, neat and clean and in the same condition
as when received except for reasonable wear and tear as
determined by Landlord. It is hereby understood and agreed
that Landlord has no obligation to alter, remodel, improve,
repair, decorate, or paint the Premises or any part thereof
except as specified in Exhibit "C" attached hereto and made a
part hereof, and that no representations respecting the
condition of the Premises or the Building have been made by
Landlord to Tenant, except as specifically herein set forth.
<PAGE> 4
demand with interest at the rate payable of eighteen percent
18%) per annum or four percent (4%) above the prime rate of
Seattle First National Bank, whichever is more. Landlord shall
have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the
Premises, the Building, and any other party having an interest
herein, from mechanics' and materialmen's liens, and Tenant
shall give to Landlord at least five (5) business days prior
notice of commencement of any construction on the Premises.
ASSIGNMENT 9. (A) Tenant shall not sell, assign, encumber or otherwise
AND transfer by operation of law or otherwise this Lease or any
SUBLETTING interest herein, sublet the Premises or any part thereof, or
suffer any person to occupy or use the Premises or any portion
thereof, without the prior written consent of Landlord as
provided herein, nor shall Tenant permit any lien to be placed
on the Tenant's interest by operation of law. A transfer by
the present majority shareholders of ownership and control of
the voting stock of a corporate tenant, or a transfer of a
controlling interest in a partnership or proprietorship, as
applicable, shall be deemed an assignment for the purposes of
this paragraph. Tenant shall, by written notice, advise
Landlord of its desire from and after a stated date (which
shall not be less than thirty (30) days nor more than ninety
(90) days after the date of tenant's notice), to sublet the
Premises or any portion thereof for any part of the term
hereof, and in such event Landlord shall have the right,
to be exercised by giving written notice to Tenant ten (10)
days after receipt of Tenant's notice, to terminate this Lease
as to the portion of the Premises described in Tenant's notice
and such notice shall, if given, terminate this Lease with
respect to the portion of the Premises therein described as of
the date stated in Tenant's notice. Said notice by Tenant
shall state the name and address of the proposed subtenant,
and Tenant shall deliver to Landlord a true and complete copy
of the proposed sublease with said notice. If said notice
shall specify all of the Premises and Landlord shall give said
termination notice with respect thereto, this Lease shall
terminate on the date stated in Tenant's notice. If, however,
this Lease shall terminate pursuant to the foregoing with
respect to less than all the Premises, the rent, as defined
and reserved hereinabove and as adjusted pursuant to Paragraph
27, shall be adjusted on a pro rata basis to the number of
square feet retained by Tenant, and this Lease as so amended
shall continue thereafter in full force and effect. If
Landlord, upon receiving said notice by Tenant with respect to
any of the Premises, shall not exercise its right to
terminate, Landlord will not unreasonably withhold its consent
to Tenant's subletting the Premises specified in said notice.
(B) Any subletting hereunder by Tenant shall not result in
Tenant being released or discharged from any liability under
this Lease. As a condition to Landlord's prior written consent
as provided for in this paragraph, the subtenant or subtenants
shall agree in writing to comply with and be bound by all of
the terms, covenants, conditions, provisions, and agreements of
this Lease, and Tenant shall deliver to Landlord, promptly
after execution, an executed copy of each sublease and an
agreement of said compliance by each sublessee.
(C) Landlord's consent to any sale, assignment, encumbrance,
subletting, occupation, lien or other transfer shall not
release Tenant from any of Tenant's obligations hereunder or be
deemed to be a consent to any subsequent occurrence. Any sale,
assignment, encumbrance, subletting, occupation, lien or other
transfer of this Lease which does not comply with the
provisions of this Paragraph 9 shall be void.
INSURANCE 10. (A) Landlord shall not be liable to Tenant and Tenant hereby
AND INDEM- waives all claims against Landlord for any injury or damage to
NIFICATION any person or property in or about the Premises by or from any
cause whatsoever, other than Landlord's gross negligence or
willful acts or omissions, and, without limiting the generality
of the foregoing, whether caused by water leakage of any
character from the roof, walls, basement, or any other portion
of the Premises of the Building, or caused by gas, fire, oil,
or electricity in or about the Premises of the building or the
complex of which it is a part or any part thereof.
(B) Tenant shall hold Landlord harmless from and defend
Landlord against any and all claims or liability for any injury
or damage to any person or property whatsoever; (i) occurring
in, on, or about the Premises or any part thereof, (ii)
occurring in, on, or about any facilities (including without
prejudice to the generality of the term "facilities",
elevators, stairways, passageways, or hallways), the use of
which Tenant may have in conjunction with other tenants of the
Building, when such injury or damage shall be caused in part or
in whole by the act, neglect, fault of, or omission of any duty
with respect to the same by Tenant, its agents, servants,
employees, or invitees. Tenant further agrees to indemnify and
save harmless the Landlord against and from any and all claims
by or on behalf of any person, firm or corporation, arising
from the conduct or management of any work or thing whatsoever
done by the Tenant in or about or from transactions of the
Tenant concerning the Premises, and will further indemnify and
save the Landlord harmless against and from any and all claims
arising from any breach or default on the part of the Tenant in
the performance of any covenant or agreement on the part of the
Tenant to be performed pursuant to the terms of this Lease, or
arising from any act or negligence of the Tenant, or any of its
agents, contractors, servants, employees, or licensees, and
from and against all costs, counsel fees, expenses and
liabilities incurred in connection with any such claim or
action or proceeding brought thereon. Furthermore, in case any
action or proceeding be brought against Landlord by reason of
any claims or liability, Tenant agrees to defend such action or
proceeding at Tenant's sole expense by counsel reasonably
satisfactory to Landlord. The provisions of this Paragraph 10
shall survive the expiration or termination of this Lease with
respect to any claims or liability occurring prior to such
expiration or termination.
(C) Tenant shall secure and maintain, at Tenant's expense:
(i) All risk property insurance on all of Tenant's fixtures
and personal property in the Demised Premises, and on any
alterations, additions, or improvements made by Tenant upon
the Demised Premises all for the full replacement cost
thereof. Tenant shall use the proceeds from such insurance
for the replacement of fixtures and personal property and
for the restoration of Tenant's improvements, alterations,
additions to the leased premises. Landlord shall be named
as loss payee as respects to alterations, additional, or
improvements.
(ii) Business income and extra expense insurance with
limits not less than Tenant's 100% gross revenue for a
period of twelve (12) months.
(iii) Workers compensation and employers liability
insurance. The employers liability insurance shall afford
limits not less than $500,000 per accident, $500,000 per
employee for bodily injury by disease, and $500,000 policy
limit for bodily injury by disease. Such insurance shall
comply with Tenant's obligations to its employees under the
lease in the state in which the premises are located.
(iv) Commercial general liability insurance which insures
claims for bodily injury, personal injury, advertising
injury, and property damage based upon, involving or
arising out of the use, occupancy, or maintenance of the
Premises and the Project. Such insurance shall afford, at
a minimum, the following limits:
<TABLE>
<S> <C>
Each Occurrence $1,000,000
General Aggregate $2,000,000
Products/Completed Operations Aggregate $2,000,000
Personal and Advertising Injury Liability $1,000,000
Fire Damage Legal Liability $50,000
Medical Payments $5,000
</TABLE>
Any general aggregate limit shall apply on a per-location
basis.
Such insurance shall name Landlord; its trustees, officers,
directors, agents, and employees; Landlord's Mortgagees of
whom Tenant has notice; and Landlord's Representatives of
whom Tenant has notice as additional insureds.
This coverage shall include blanket contractual liability,
broad form property damage liability, and shall contain an
exception to any pollution exclusion which insures damage
or injury arising out of heat, smoke, or fumes from a
hostile fire. Such insurance shall be written on an
occurrence basis and contain a standard separation of
insureds provision.
(v) Business auto liability which insures against bodily
injury and property damage claims arising out of the
ownership, maintenance, or use of "any auto." A minimum of
a $1,000,000 combined single limit per accident shall
apply.
(vi) Umbrella excess liability insurance, on a occurrence
basis, that applies excess of required commercial general
liability, business auto liability, and employers liability
policies, which insures against bodily injury, property
damage, personal injury and advertising injury claims with
the following minimum limits:
<PAGE> 5
These limits shall be in addition to and not
including those stated for underlying commercial
general liability, business auto liability, and
employers liability insurance. Such policy shall name
Landlord; its trustees, officers, directors, agents,
and employees; Landlord's Mortgagees of whom Tenant has
notice, and Landlord's Representatives of whom Tenant
has notice as additional insureds.
(vii) General Insurance requirements. All
policies required to be carried by Tenant hereunder
shall be issued by and binding upon an insurance
company licensed to do business in the State of
Washington with a rating of at least "A-" "VIII" or
better as set forth in the most current issue of
Best's Insurance reports, unless otherwise approved by
Landlord. Tenant shall not do or permit anything to
be done that would invalidate the insurance policies
required.
Liability insurance maintained by Tenant shall
be primary coverage without right of contribution by
any similar insurance that may be maintained by
Landlord.
Certificates of insurance, acceptable to
Landlord, evidencing the existence and amount of each
insurance policy required hereunder and Evidence of
Property Insurance Form, Acord 27, evidencing property
insurance as required shall be delivered to Landlord
prior to delivery or possession of the Premises and
ten (10) days prior to each renewal date.
Certificates of Insurance shall include an endorsement
for each policy showing that Landlord; its trustees,
officers, directors, agents, and employees; Landlord's
Mortgagees and Landlord's Representatives are included
as additional insureds on liability policies (except
Employer's Liability). The Evidence of Property
Insurance Form shall name Landlord as loss payee for
property insurance as respects Landlord's interest in
improvements and betterments. Further, the
certificates must include an endorsement for each
policy whereby the insurer agrees not to cancel,
non-renew, or materially alter the policy without at
least thirty (30) days prior written notice to
Landlord and Landlord's representatives.
In the event that Tenant fails to provide
evidence of insurance required to be provided by
Tenant hereunder, prior to commencement of the term
and thereafter during the term, within ten (10) days
following Landlord's request thereof, and thirty (30)
days prior to the expiration date of any such
coverage, Landlord shall be authorized (but not
required) to procure such coverage in the amount
stated with all costs thereof to be chargeable to
Tenant and payable upon written notice thereof.
The limits of insurance required by this Lease,
or as carried by Tenant, shall not limit the liability
of Tenant or relieve Tenant of any obligation
thereunder, except to the extent provided for under
Paragraph 11, Waiver of Subrogation. Any deductibles
selected by Tenant shall be the sole responsibility of
Tenant.
Landlord may, at its sole discretion, change the
insurance policy limits and forms which are required
to be provided by Tenant. Such changes will be made to
conform with common insurance requirements for similar
properties in similar geographic locations. Landlord
will not change required insurance limits or forms
more often than once per calendar year.
WAIVER OF 11. Anything in this Lease to the contrary notwithstanding,
SUBROGATION Landlord and Tenant each waives all rights of recovery,
claim, action, or cause of action against the other,
its agents (including partners, both general and
limited), trustees, officers, directors, employees, for
any loss or damage that may occur to the Premises, or any
improvements thereto, or the Project or any personal
property of such party therein, by reason of any peril
required to be insured against under this Lease,
regardless of cause of origin, including negligence of
the other party. Tenant and Landlord covenant that, to
the fullest extent permitted by law, no insurer shall
hold any right of subrogation against the other. Tenant
shall advise its insurers of the foregoing and such
waiver shall be permitted under any policies maintained
by Tenant pursuant to Paragraph 10(b) and Paragraph
10(c).
SERVICES 12. (A) Landlord shall maintain the public and common areas
AND of the Building, including lobbies, stairs, elevators,
UTILITIES corridors and rest rooms, the windows in the Building,
the mechanical, plumbing and electrical equipment serving
the Building, and the structure itself, in reasonably
good order and condition except for damage occasioned by
the act of the Tenant, which damage shall be repaired by
Landlord at Tenant's expense.
(B) Provided the Tenant shall not be in default
hereunder, and subject to the provisions elsewhere herein
contained and to the rules and regulations of the
Building, Landlord agrees to furnish to the Premises
during ordinary business hours of generally recognized
business days, to be determined by Landlord (but
exclusive, in any event, of Saturdays, Sundays, and legal
holidays), water and electricity suitable for the
intended use of the Premises, heat and air conditioning
required in Landlord's judgment, for the comfortable use
and occupation of the Premises, janitorial services
during the times and in the manner that such services
are, in Landlord's judgment customarily furnished in
comparable office buildings in the immediate market area,
and elevator service which shall mean service either by
non-attended automatic elevators or elevators with
attendants, or both, at the option of the Landlord.
Landlord shall be under no obligation to provide
additional or after-hours heating or air conditioning,
but if Landlord elects to provide such services at
Tenant's request, Tenant shall pay to Landlord a
reasonable charge for such services as determined by
Landlord. Tenant agrees to keep and cause to be kept
closed all window coverings when necessary because of the
sun's position, and Tenant also agrees at all times to
cooperate fully with Landlord and to abide by all the
regulations and requirements which Landlord may prescribe
for the proper functioning and protection of said
heating, ventilating, and air-conditioning system.
Wherever heat-generating machines, excess lighting or
equipment are used in the Premises which affect the
temperature otherwise maintained by the air-conditioning
system, Landlord reserves the right to install
supplementary air conditioning units in the Premises, and
the cost thereof, including the cost of installation and
the cost of operation and maintenance thereof, shall be
paid by Tenant to Landlord upon demand by Landlord.
Landlord shall in no event be liable for any interruption
or failure of utility services on the Premises.
(C) Tenant will not without the written consent of
Landlord use any apparatus or device in the Premises,
including without limitation, electronic data processing
machines, punch card machines, and machines using excess
lighting or current which will in any way increase the
amount of electricity or water usually furnished or
supplied for use of the Premises as general office space;
nor connect with electric current, except through
existing electrical outlets in the Premises, or water
pipes, any apparatus or device for the purposes of using
electrical current or water. If Tenant shall require
water or electric current or any other resource in excess
of that usually furnished or supplied for use of the
Premises as general office space, Tenant shall first
procure the consent of Landlord which Landlord may
refuse, to the use thereof, and Landlord may cause a
special meter to be installed in the Premises so as to
measure the amount of water, electric current or other
resource consumed for any such other use. The cost of
any such meters and of installation, maintenance, and
repair thereof shall be paid for by Tenant, and Tenant
agrees to pay Landlord promptly upon demand by Landlord
for all such water, electric current or other resource
consumed, as shown by said meters, at the rate charged by
the local public utility, furnishing the same, plus any
additional expense incurred in keeping account of the
water, electric current or other resource so consumed.
Landlord shall not be in default hereunder or be liable
for any damages directly or indirectly resulting from,
nor shall the rental herein reserved be abated by reason
of (i) the installation, use or interruption of use of
any equipment in connection with the furnishing of any of
the foregoing utilities and services, (ii) failure to
furnish or delay in furnishing any such utilities or
services when such failure or delay is caused by Acts of
God or the elements, labor disturbances of any character,
any other accidents or other conditions beyond the
reasonable control of Landlord, or by the making of
repairs or improvements to the Premises or the Building,
or (iii) the limitation, curtailment, rationing, or
restriction on use of water or electricity, gas or any
other form of energy or any other service or utility
whatsoever serving the Premises of the Building.
Furthermore, Landlord shall be entitled to cooperate
voluntarily in a reasonable manner with the efforts of
national, state or local governmental agencies or
utilities suppliers in reducing energy or other resources
consumption.
(D) Any sums payable under this Paragraph 12 shall be
considered additional rent and may be added to any
installment or rent thereafter becoming due, and Landlord
shall have the same remedies for a default in payment of
such sum as for a default in the payment of rent.
ESTOPPEL 13. (A) Within ten (10) days following any written request
CERTIFICATE which Landlord may make from time to time, Tenant shall
execute and deliver to Landlord a certificate
substantially in the form attached hereto as Exhibit "D"
and made a part hereof, indicating thereon any exceptions
thereto which may exist at that time. Failure of the
Tenant to execute and deliver such certificate shall
constitute an acceptance of the Premises and
acknowledgment by Tenant that the statements included in
Exhibit "D" are true and correct without exception.
Landlord and Tenant intend that any statement delivered
pursuant to this paragraph may be relied upon by any
mortgagee, beneficiary, purchaser or prospective
purchaser of the Building or any interest therein.
(B) Within ten (10) days following any written request
from Landlord, Tenant shall furnish current financial
statements to Landlord.
HOLDING 14. (A) Any holding over after the expiration of this Lease
OVER with the written consent of Landlord shall be a tenancy
from month to month. The terms, covenants and conditions
of such tenancy shall be the same as provided herein, and
the monthly rental shall be the then fair market value
of the Premises as determined by Landlord, but in no
event less than the monthly rental for the last period
prior to the expiration subject to adjustment
<PAGE> 6
(B) If Tenant shall retain possession of the Premises or
any part thereof without Landlord's consent following the
expiration or sooner termination of this Lease for any
reason, then Tenant shall pay to Landlord for each day of
such retention double the amount of the daily rental for
the last period prior to the date of such expiration or
termination, subject to adjustment as provided in
Paragraph 27. Tenant shall also indemnify and hold
Landlord harmless from any loss or liability resulting
from delay by Tenant in surrendering the Premises,
including, without limitation, any claims made by any
succeeding tenant founded on such delay. Alternatively,
if Landlord gives notice to Tenant of Landlord's election
thereof, such holding over shall constitute renewal of
this Lease for a period from month to month. Acceptance
of rent by Landlord following expiration or termination
shall not constitute a renewal of this Lease, and nothing
contained in this paragraph shall waive Landlord's right
of re-entry or any other right. Unless Landlord
exercises the option hereby given to it, Tenant shall be
only a tenant at sufferance, whether or not Landlord
accepts any rent from Tenant while Tenant is holding over
without Landlord's written consent.
SUB- 15. Without the necessity of any additional document being
ORDINATION executed by Tenant for the purpose of effecting a
subordination, this Lease shall be subject and
subordinate at all times to: (a) all ground leases or
underlying leases which may now exist or hereafter be
executed affecting the Building or the land upon which
the Building is situated or both, and (b) the lien of any
mortgage or deed of trust which may now exist or
hereafter be executed in any amount for which said
Building, land, ground leases or underlying leases, or
Landlord's interest or estate in any of said items, is
specified as security. Notwithstanding the foregoing,
Landlord shall have the right to subordinate or cause to
be subordinated any such ground leases or underlying
leases or any such liens to this Lease. In the event
that any ground Lease or underlying Lease terminates for
any reason or any mortgage or deed of trust is foreclosed
or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall, notwithstanding any subordination,
attorn to and become the Tenant of the successor in
interest to Landlord at the option of such successor in
interest. Tenant covenants and agrees to execute and
deliver, upon demand by Landlord and in the form
requested by Landlord, any additional documents
evidencing the priority of subordination of this Lease
with respect to any such ground leases or underlying
leases or the lien of any such mortgage or deed of trust.
Tenant hereby irrevocably appoints Landlord as
attorney-in-fact of Tenant to execute, deliver and record
any such documents in the name and on behalf of Tenant.
RULES AND 16. Tenant shall faithfully observe and comply with the rules
REGULATIONS and regulations printed on or annexed to this Lease and
all reasonable modifications thereof and additions
thereto from time to time put into effect by Landlord.
Landlord shall not be responsible for the nonperformance
by any other Tenant or occupant of the Building of any
said rules and regulations.
RE-ENTRY BY 17. Landlord reserves and shall at all times have the right
LANDLORD to re-enter the Premises to inspect the same, to supply
janitor service and any other service to be provided by
Landlord to Tenant hereunder, to show said Premises to
prospective purchasers, mortgagees or tenants, to post
notices of non-responsibility, and to alter, improve,
or repair the Premises and any portion of the building of
which the Premises are a part, without abatement of rent,
and may for that purpose erect, use, and maintain
scaffolding, pipes, conduit, and other necessary
structures in and through the Premises where reasonably
required by the character of the work to be performed,
provided that entrance to the Premises shall not be
blocked thereby, and further provided that the business
of Tenant shall not be interfered with unreasonably.
Tenant hereby waives any claim for damages for any injury
or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby. For
each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of
the doors in, upon, and about the Premises, excluding
Tenant's vaults and safes, or special security areas
(designated in advance), and Landlord shall have the
right to use any and all means which Landlord may deem
necessary or proper to open said doors in an emergency,
in order to obtain entry to any portion of the Premises,
and any entry to the Premises, or portions thereof
obtained by Landlord by any of said means, or otherwise,
shall not under any circumstances be construed or deemed
to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction, actual or constructive,
of Tenant from the Premises or any portions thereof.
Landlord shall also have the right at any time, without
the same constituting an actual or constructive eviction
and without incurring any liability to Tenant therefor,
to change the arrangement and/or location of entrances,
passageways, doors and doorways, and corridors,
elevators, stairs, toilets, or other public parts of the
Building and to change the name, number or designation by
which the Building is commonly known.
INSOLVENCY 18. The appointment of a receiver to take possession of all
OR or substantially all of the assets of Tenant, or an
BANKRUPTCY assignment of Tenant for the benefit of creditors, or any
action taken or suffered by Tenant under any insolvency,
bankruptcy, or reorganization act, shall at Landlord's
option constitute a breach of this Lease by Tenant. Upon
the happening of any such event or at any time
thereafter, this Lease shall terminate five (5) days
after written notice of termination from Landlord to
Tenant. In no event shall this Lease be assigned or
assignable by operation of law or by voluntary or
involuntary bankruptcy proceedings or otherwise and in no
event shall this Lease or any rights or privileges
hereunder be an asset of Tenant under any bankruptcy,
insolvency, or reorganization proceedings.
DEFAULT 19. The failure to perform or honor any covenant, condition
or representation made under this Lease shall constitute
a default hereunder by Tenant. Tenant shall not have any
grace period within which to cure any default in the
payment of rental or adjustments thereto, and Landlord
shall not be required to give any notice to Tenant of any
such default before exercising any remedies available to
Landlord. Tenant shall have a period of ten (10) days
from the date of written notice from Landlord within
which to cure any default under this Lease other than a
default in the payment of rental or adjustments thereto;
provided, however, that with respect to any default which
cannot reasonably be cured within ten (10) days, Tenant
shall have additional time necessary to cure the default
so long as Tenant commences to cure within ten (10) days
from Landlord's notice, and continues to prosecute
diligently the curing thereof. Upon a default under this
Lease by Tenant, and failure to cure the default by Tenant
within the permissible time period, if any, Landlord
shall have the following rights and remedies in addition
to, or as an alternative to, any other rights or remedies
available to Landlord at law or in equity:
(A) The Lease may be terminated at the option of Landlord
by notice in writing to Tenant. If Landlord gives notice
to Tenant as herein provided, the Lease will be deemed
terminated as of the date specified in Landlord's notice
and Tenant shall have no further rights or obligations
under the Lease except as provided in the Paragraph 19
which shall survive termination of the Lease.
(B) Unless the Lease is terminated as provided in
subparagraph (a), the Lease will continue in full force
and effect, except Tenant's right to possession of the
Premises may be terminated at anytime, at the option of
Landlord, by notice in writing to Tenant. If Landlord
gives notice to Tenant as herein provided, Tenant's right
to possession of the Premises will be deemed terminated
as of the date specified in Landlord's notice, and
Landlord, as attorney-in-fact for Tenant, may from time
to time, but shall not be obligated to, sublet the
Premises or any part thereof for such term or terms and
at such rental and such other terms as Landlord in its
sole discretion deems advisable, with the right to make
alterations and repairs to the Premises. Upon each
subletting, at the option of Landlord, (i) either Tenant
shall be immediately liable to pay to Landlord, in
addition to indebtedness other than rent due hereunder,
the cost of such subletting and such alterations and
repairs incurred by Landlord and the amount, if any, by
which the rent hereunder for the period of such
subletting exceeds the amount to be paid as rent for the
Premises for such period, or (ii) Landlord shall apply
rents received from such subletting first, to payment of
any indebtedness other than rent due hereunder from
Tenant to Landlord; second, to the payment of any costs
of subletting and of any alterations and repairs; third,
to payment of rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in
payment of future rent as the same comes due hereunder.
If, under the option (i), the rents shall not be promptly
paid to Landlord by the subtenant(s), or if, under option
(ii), the rentals received from the subletting during any
month are less than all amounts owed for that month by
Tenant hereunder, Tenant shall pay any such deficiency to
Landlord. Such deficiency shall be calculated and paid
monthly. Unless and until the Lease is terminated as
provided in subparagraph (a), Tenant shall continue to be
liable to Landlord for rent and all other amounts owing
under the Lease when and as they become due, whether or
not Tenant's possession of the Premises has been
terminated, and whether or not the Premises are sublet by
Landlord. For all purposes set forth in the subparagraph
(b), Landlord is hereby irrevocably appointed
attorney-in-fact for Tenant, with power of substitution.
No taking possession of the Premises by Landlord, as
attorney-in-fact for Tenant, shall be construed as an
election on its part to terminate this Lease unless a
written notice of such intention is given to Tenant as
provided in subparagraph (a). Notwithstanding any action
taken by Landlord under this subparagraph, Landlord may
at anytime thereafter elect to terminate this Lease for
such previous breach.
(C) Upon termination of the Lease as provided in
subparagraph (a), or upon termination of Tenant's right
to possession of the Premises, as provided in
subparagraph (b), Landlord may re-enter and take
possession of the Premises, and may remove any persons or
property by legal action or by self-help with the use of
reasonable force or any other means and without liability
for damages. Any of Tenant's property remaining on the
Premises, including, without limitation, equipment,
inventory, furnishings and trade fixtures, shall be
deemed to have been abandoned by Tenant and shall be and
become the property of Landlord; provided, however, that
Landlord may, in its sole discretion, reject the property
and
<PAGE> 7
(1) All past due rent and other amounts owing by
Tenant to Landlord pursuant to the terms of this
Lease as of the date of termination of the Lease.
(2) All costs associated with Tenant's default,
whether or not suit was commenced, including, without
limitation, costs of reentry and reletting, costs of
clean-up, refurbishing, removal of Tenant's property
and fixtures, other expenses occasioned by Tenant's
failure to quit the Premises upon termination and to
leave them in the required condition, any remodeling
costs, attorneys' fees, court costs, broker
commissions and advertising costs.
(3) The loss of reasonable rental value from the date
of termination of the Lease until a new tenant has
been, or with the exercise of reasonable efforts
could have been, secured.
(4) Any excess of the value of the rent and all of
Tenant's other obligations under this Lease, as if
the Lease had not been terminated, over the
reasonable expected return from the Premises for the
period commencing on the earlier of the date of trial
or the date the Premises are relet and continuing
through the end of the term. The present value of
future amounts will be computed using a discount rate
equal to the lowest prime interest rate announced
by a major Washington bank on short-term commercial
loans for its most credit-worthy customers, in effect
on the earlier of the date of trial or the date the
Premises are relet.
(e) Landlord may, in its sole discretion, sue periodically to
recover damages during the period corresponding with the
remainder of the Lease term, whether or not the Lease has
been terminated, and no action for damages shall bar a
later action for damages subsequently accruing.
(f) Landlord may elect to call the entire amount of rental
for the balance of the term, or what would have been the
balance of the term if the Lease had not been terminated
as provided in subparagraph (a), immediately due and
payable, which rent shall be paid by Tenant to Landlord
as liquidated damages.
DAMAGE BY 20. If the Premises or the Building are damaged by fire or
FIRE, ETC. other casualty, Landlord shall forthwith repair the same,
provided such repairs can be made within two hundred
ten (210) days from the date of such damage under the laws
and regulations of the federal, state, and local
governmental authorities having jurisdiction thereof. In
such event, this Lease shall remain in full force and
effect except that Tenant shall be entitled to a
proportionate reduction of rent while such repairs to be
made hereunder by Landlord are being made. Said
proportionate reduction shall be based on the extent to
which the making of such repairs to be made hereunder by
Landlord shall interfere with the business carried on by
Tenant on the Premises. Within twenty (20) days from the
date of such damage, Landlord shall notify Tenant whether
or not such repairs can be made within two hundred
ten(210)days from the date of such damage and Landlord's
determination thereof shall be binding on Tenant. If
such repairs cannot be made within two hundred ten (210)
days from the date of such damage, Landlord shall have
the option within thirty (30) days of the date of such
damage either to: (a) notify Tenant of Landlord's
intention to repair such damage and diligently prosecute
such repairs, in which event this Lease shall continue in
full force and effect and the rent shall be reduced as
provided herein; or (b) notify Tenant of Landlord's
intention to terminate this Lease as of a date specified
in such notice, which date shall be not less than thirty
(30) days nor more than sixty (60) days after such notice
is given. In the event that such notice to terminate is
given by Landlord, this Lease shall terminate on the date
specified in such notice. In case of termination by
either event, the rent shall be reduced by a
proportionate amount based upon the extent to which said
damage interfered with the business carried on by Tenant
in the Premises, and the Tenant shall pay such reduced
rent up to the date of termination. Landlord agrees to
refund to Tenant any rent previously paid for any period
of time subsequent to such date of termination. The
repairs to be made hereunder by Landlord shall not
include, and Landlord shall not be required to repair,
any damage by fire or other cause to the property of
Tenant or any repairs or replacements of any paneling,
decorations, ceiling, floor coverings, or any
alterations, additions, fixtures or improvements
installed on the Premises by or at the expense of Tenant.
EMINENT 21. If any part of the property described in Exhibit "E"
DOMAIN shall be taken or appropriated under the power of eminent
domain or conveyed in lieu thereof, Landlord shall have
the right to terminate this Lease at its sole option.
In such event Landlord shall receive (and Tenant shall
assign to Landlord upon demand from Landlord) any and all
income, rent, award or any interest thereon which may be
paid or owed in connection with the exercise of such
power of eminent domain or conveyance in lieu thereof,
and Tenant shall have no claim against Landlord or
against the agency exercising such power or receiving
such conveyance, for any part of such sum paid by virtue
of such proceedings, whether or not attributable to the
value of the unexpired term of this Lease. If a part of
the property described in Exhibit "E" shall be so taken
or appropriated or conveyed and Landlord hereto shall
elect not to terminate this Lease, Landlord shall
nonetheless receive (and Tenant shall assign to Landlord
upon demand from Landlord) any and all income, rent,
award, or any interest thereon paid or owed in connection
with such taking, appropriation or conveyance and if the
Premises have been damaged as a consequence of such
partial taking or appropriation or conveyance, Landlord
shall restore the Premises continuing under this Lease at
Landlord's cost and expense provided that such
restoration can be made, in Landlord's sole opinion
within three hundred sixty (360) days of the time the
property so taken is appropriated or conveyed.
If such restoration cannot be made, in Landlord's sole
opinion, within three hundred sixty (360) days from the
time of taking, Landlord shall notify Tenant within sixty
(60) days of such taking and Tenant shall have the right
to cancel this Lease by giving Landlord written notice of
its intention to cancel within thirty (30) days of the
date of Landlord's notice.
If Tenant elects not to cancel this Lease, it shall
remain in full force and effect except that Tenant shall
be entitled to an appropriate reduction in rent while
such restoration is being made by Landlord. Such
proportionate reduction shall be based upon the extent to
which the restoration being made by Landlord shall
interfere with the business carried on by Tenant in the
demised Premises. Landlord will not be required to
repair or restore any injury or damage to the property of
Tenant or make any repairs or restoration to any
alterations, additions, fixtures or improvements
installed in the Premises by or at the expense of Tenant.
Notwithstanding anything to the contrary contained in
this paragraph, if the temporary use or occupancy of any
part of the Premises shall be taken or appropriated under
such power of eminent domain during the term of this
Lease, this Lease shall be and remain unaffected by such
taking or appropriation and Tenant shall continue to pay
in full all rent payable hereunder by Tenant during the
term of this Lease; in the event of any such temporary
appropriation or taking, Tenant shall be entitled to
receive that portion of any award which represents
compensation for the use or occupancy of the Premises
during the term of this Lease, and Landlord shall be
entitled to receive that portion of any award which
represents the cost of restoration of the Premises and
the use and occupancy of the Premises after the end of
the term of this Lease.
SALE BY 22. In the event of a sale or conveyance by Landlord of the
LANDLORD Building, the same shall operate to release Landlord from
any future liability upon any of the covenants or
conditions, express or implied, herein contained in favor
of Tenant, and in such event Tenant agrees to look solely
to the responsibility of the successor in interest of
Landlord in and to this Lease. This Lease shall not be
affected by any such sale, and Tenant agrees to attorn
to the purchaser or assignee.
RIGHT OF 23. All covenants and agreements to be performed by Tenant
LANDLORD TO under any of the terms of this Lease shall be performed
PERFORM by Tenant at Tenant's sole cost and expense and without
any abatement of rent. If Tenant shall fail to pay any
sum of money, other than rent, required to be paid by
it hereunder or shall fail to perform any other act on
its part to be performed hereunder, and such failure
shall continue for ten (10) days after notice thereof by
Landlord, Landlord may, but shall not be obligated so to
do, and without waiving or releasing Tenant from any
obligations of Tenant, make any such payment or perform
any such act on Tenant's part to be made or performed as
in this Lease provided. All sums so paid by Landlord and
all necessary incidental costs together with interest
thereon at the rate of eighteen percent (18%) per annum
or four percent (4%) above the prime rate of Seattle
First National Bank, whichever is more per annum from the
date of such payment by Landlord, shall be payable as
additional rent to Landlord on demand, and Tenant
covenants to pay any such sums, and Landlord shall have,
in addition to any other right or remedy of Landlord, the
same rights and remedies in the event of nonpayment
thereof by Tenant as in the case of default by Tenant in
the payment of the rent.
SURRENDER 24. (a) Tenant shall, at least ninety (90) days before the
OF PREMISES last day of the term hereof, give to Landlord a written
notice of intention to surrender the Premises on that
date, but nothing contained herein shall be construed as
an extension of the term hereof or as consent of
Landlord to a holding over by Tenant.
<PAGE> 8
equipment belonging to Tenant at Tenant's sole cost, title
to which shall be in Tenant until such termination,
repairing any damage caused by such removal. Property
not so removed upon the termination of this Lease or upon
termination of Tenant's right to possession shall be
deemed abandoned by Tenant, and title to the same shall
thereupon pass to Landlord. Upon request by Landlord,
unless otherwise agreed to in writing by Landlord, Tenant
shall remove, at Tenant's sole cost, any or all permanent
improvements or additions to the Premises installed by or
at the expense of Tenant and all movable furniture and
equipment belonging to Tenant which may be left by Tenant
and repair any damage resulting from such removal.
(C) The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work
a merger, and shall, at the option of Landlord, terminate
all or any existing subleases or subtenancies, or may, at
the option of Landlord, operate as an assignment to it or
any or all such subleases or subtenancies.
WAIVER 25. If either Landlord or Tenant waives the performance of
any term, covenant or condition contained in this Lease,
such waiver shall not be deemed to be a waiver of any
subsequent breach of the same or any other term,
covenant or condition contained herein. Furthermore, the
acceptance of rent by Landlord shall not constitute a
waiver of any preceding breach by Tenant of any term,
covenant or condition of this Lease, regardless of
Landlord's knowledge of such preceding breach at the time
Landlord accepted such rent. Failure by Landlord to
enforce any of the terms, covenants or conditions of this
Lease for any length of time shall not be deemed to waive
or to decrease the right of Landlord to insist thereafter
upon strict performance by Tenant. Waiver by Landlord of
any term, covenant or condition contained in this Lease
may only be made by a written document signed by
Landlord.
NOTICES 26. All notices and demands which may be or are required to be
given by either party to the other hereunder shall be in
writing. All notices and demands by Landlord to Tenant
shall be sent by United States certified or registered
mail, postage prepaid, addressed to Tenant at the
Premises, or to such other place as Tenant may from time
to time designate in a notice to Landlord. All notices
and demands by Tenant to Landlord shall be sent by
United States certified or registered mail, postage
prepaid, addressed to Landlord at the address specified
in the Basic Lease Information, or to such other firm or
to such other place as Landlord may from time to time
designate in a notice to Tenant. All notices and demands
shall be deemed given on the date personally delivered to
the address designated above or on the date mailed as
provided above.
RENTAL 27. RENTAL ADJUSTMENT FOR COSTS OF OPERATIONS, UTILITIES AND
ADJUSTMENTS TAXES ADJUSTMENTS
I. COSTS OF OPERATIONS AND UTILITIES
In addition to the Basic Rent to be paid hereunder,
Tenant shall pay to Landlord increases under this
Paragraph 27 as Additional Rent in the manner set
forth below:
(A) Definition: For the purposes hereof, the
terms used in this Paragraph 27 shall have the
following meanings:
(i) "Operating Costs" shall include Costs of
Utilities and Other Operating Costs.
(1) "Costs of Utilities" shall mean all
expenses paid or incurred by Landlord,
including any surcharges imposed, in
operation and maintenance of the
Building for heat, light, power, gas,
fuel, air conditioning and ventilating,
electricity and the cost of electrical
surveys, other utilities, including
without limitation to temporary or
permanent utility surcharge or other
exaction, whether now or hereinafter
imposed.
(2) "Other Operating Costs" shall mean
all other expenses paid or incurred by
Landlord for maintaining, operating and
repairing the Building and any real or
personal property used in conjunction
therewith, including, without
limitation: guard services, materials
and supplies, equipment and locks,
service agreements on equipment, the
costs of refuse collection, sewer, water
and other utilities services (excluding
costs included in the Costs of
Utilities), supplies, fluorescent tubes
(which Landlord may replace from time to
time on a group re-lamping basis)
janitorial and cleaning services, window
washing, landscape maintenance, services
of independent contractors, compensation
(including employment taxes and fringe
benefits) of all persons who perform
duties in connection with the operation,
maintenance and repair of the Building,
its equipment and the Land upon which it
is situated, insurance, licenses,
permits and inspection fees. Building
office rent or rental value,
depreciation on personal property,
including without limitation, window
coverings provided by Landlord and
carpeting in public corridors and common
areas, and the cost of contesting the
validity or applicability of any
governmental enactments which may affect
operating costs, customary management
fees (currently equal to 4% of the gross
rental income from the Building, whether
such fees are actually paid or not),
legal and accounting expenses and any
other expense or charge whether or not
hereinabove described which in
accordance with general accepted
accounting and management practices
would be considered an expense of
maintaining, operating or repairing the
Building.
Notwithstanding anything to the
contrary herein contained, operating
costs shall not include:
(A) Costs of any special services
rendered to individual tenants
(including Tenant) for which a special
charge is made;
(B) Real Property Taxes (as defined in
Paragraph 27 of this Lease); and
(C) Depreciation or amortization of costs
required to be capitalized in accordance
with generally accepted accounting
practices (except Other Operating Costs
shall include amortization of capital
improvements made subsequent to the
initial development of the Building
which are designed with a reasonable
probability of improving the operating
efficiency or security of the Building
or its systems, provided that such
amortization costs shall not exceed
expected savings in operating costs
resulting from such capital
expenditures).
(ii) "Lease Year" shall mean the twelve-month
period commencing January 1 and ending
December 31.
(iii) "Base Services Year" shall mean the
Lease Year in which the Commencement
Date occurs.
(iv) "Actual Costs" shall mean the actual
expenses paid or incurred by
Landlord for Operating Costs during
any Lease Year of the term hereof.
(v) "Actual Costs Allocable to the
Premises" shall mean the Tenant's
share of the Actual Costs determined
by Tenant's Percentage of the
Building described in the Basic
Lease Information.
(vi) "Estimated Costs Allocable to the
Premises" shall mean Landlord's
estimate of Actual Costs Allocable
to the Premises for the following
Lease Year to be given by Landlord
to Tenant pursuant to Paragraph
27(c) below.
(B) Base Amount. The "Base Amount" for purposes
of this Section shall be the aggregate of:
(i) Actual Costs Allocable to the
Premises for the Base Services Year
for Other Operating Costs (excluding
Costs of Utilities); and
(ii) With respect to Costs of Utilities,
an amount determined by multiplying
the Base Utility Rate, as specified
in the Basic Lease Information by
the area of Tenant's Premises as
described in the Basic Lease
Information; provided, however, that
Landlord shall estimate to the
extent required the Actual Costs
Allocable to the Premises for
purposes of determining the Base
Amount in the statement furnished in
accordance with Paragraph 27(c)
below and payments shall be further
adjusted as appropriate at such time
as Actual Costs are determined in
accordance with Paragraph 27(d)
below.
(c) Additional Rent for Estimated Increases in
Costs. Prior to the commencement of each
Lease Year (except that with respect to the
Base Services Year, Paragraphs 27(c) and (d)
shall apply only to the Costs of Utilities
and shall exclude Other Operating Costs)
<PAGE> 9
its estimate for such Lease Year and
Additional Rent payments by Tenant for such
Lease Year shall be based on such revised
estimate.
(d) Actual Costs. Within 120 days after the
close of each Lease Year during the term
hereof, or as soon thereafter as practicable,
Landlord shall deliver to Tenant a written
statement setting forth the Actual Costs
Allocable to the Premises during the
preceding Lease Year. If such costs for any
Lease Year exceed Estimated Costs Allocable
to the Premises paid by Tenant to Landlord
pursuant to the preceding subsection (c),
Tenant shall pay the amount of such excess to
Landlord as added Additional Rent within 20
days after receipt of such statement by
Tenant. If such statement shows such costs
to be less than the amount paid by Tenant to
Landlord pursuant to the preceding subsection
(c), then the amount of such overpayment by
Tenant shall be credited by Landlord to the
next immediate Rent payable by Tenant.
(e) Determinations. The determination of Actual
Costs and Estimated Costs Allocable to the
Premises shall be made by Landlord.
(f) Beginning of Term. If this Lease shall
commence on a day other than the first day of
a Lease Year, the amount of any adjustment
between Estimated and Actual Costs Allocable
to the Premises with respect to the Lease
Year in which such commencement occurs shall
be prorated on the basis which the number of
days from the commencement of this Lease to
the end of the Lease Year bears to 365; and
any amount payable by Landlord to Tenant or
Tenant to Landlord with respect to such
adjustment shall be payable within 30 days
after delivery by Landlord to Tenant of the
statement of Actual Costs Allocable to the
Premises with respect to such Lease Year.
(g) End of Term. If this Lease shall terminate
on a day other than the last day of a Lease
Year, the amount of any adjustment between
Estimated and Actual Costs Allocable to the
Premises with respect to the Lease Year in
which such termination occurs shall be
prorated on the basis which the number of
days from the commencement of such Lease Year
to and including such termination date bears
to 365; and shall be due and payable when
rendered, notwithstanding the termination of
this Lease.
(h) Further Adjustment. In the event the average
occupancy level of the Building for the Base
Services Year was or is not 95% or more of
full occupancy, then the Actual Costs for
such year shall be proportionately adjusted
by Landlord to reflect those costs which
would have occurred had the Building been 95%
occupied during such year.
(i) Base Rent. Notwithstanding anything to the
contrary in this Paragraph 27, the Rent
payable by Tenant shall in no event be less
than the Rent specified in the Basic Lease
Information.
(j) Nonpayment of Additional Rent. In the event
of nonpayment of the Additional Rent
hereunder, Landlord shall have the same
rights with respect to such nonpayment as it
has with respect to any other nonpayment of
Rent hereunder.
II. COSTS OF TAXES
In addition to the Basic Rent to be paid hereunder,
Tenant shall pay to Landlord increases under this
Paragraph 27 as Additional Rent in the manner set forth
below:
(a) Definition: for purposes hereof, the terms
used in the Paragraph 27 shall have the
following meanings:
(i) "Real Property Taxes" shall mean
taxes on real property, development
rights, air rights, and personal
property, including all tenant
improvements which are paid for by
Landlord and not reimbursed by
tenants, and taxes on property of
tenants of the Building, which have
not been paid by such tenants
directly to the taxing authority;
charges and assessment levied with
respect to the Land, the Building,
development rights, air rights, any
improvements, fixtures and
equipment, and all other property of
Landlord, real or personal, used
directly in the operation of the
Building and located in or on the
Building; and any taxes levied or
assessed in addition to or in lieu
of, in whole or in part, such real
property or personal property taxes,
or any other tax upon leasing of the
Building or rents collected, but not
including any federal or state
income tax or franchise tax, and the
cost to Landlord of contesting the
amount or validity or applicability
of any of the aforementioned taxes.
Net recoveries through protest,
after deduction of all costs and
expenses, including counsel and
other fees, shall be deducted from
direct taxes for the year of
receipt.
(ii) "Lease Year" shall mean the period
defined in Paragraph 27(a)(iii) herein.
(iii) "Tenant's Share of Real Property
Taxes" shall mean the amount of Real
Property Taxes payable during any
Lease Year by Landlord multiplied by
Tenant's Percentage of the Building
described in the Basic Lease
Information.
(iv) "Base Tax Amount" shall mean the
product of the Base Tax Rate
described in the Basic Lease
Information multiplied by the area
of Tenant's Premises as described in
the Basic Lease Information.
(b) Additional Rent for Estimated Increase in Tenant's Share of
Real Property Taxes. Prior to the commencement of each Lease
Year, or as soon thereafter as practicable, Landlord may
furnish Tenant with a written statement setting forth the
estimate of Tenant's Share of Real Property Taxes for such
Lease Year. One-twelfth (1/12) of the amount, if any, by
which such estimate exceeds the Base Tax Amount shall be
Additional Rent payable by Tenant as provided in Paragraph 3
for each month during such Lease Year.
(c) Actual Real Property Taxes. Within 120 days after the close
of each Lease Year, during the term hereof, or as soon
thereafter as practicable, Landlord shall deliver to Tenant a
written statement setting forth the Tenant's Share of Real
Property Taxes during the preceding Lease Year. If Tenant's
Share of Real Property Taxes for such Lease Year exceeds the
estimated Tenant's Share of Real Property Taxes determined as
provided in Paragraph 27II(b), Tenant shall pay the amount of
such excess to Landlord as added Additional Rent within 20
days after receipt of such statement by Tenant. If such
statement shows such amount to be less than the amount paid by
Tenant to Landlord pursuant to Paragraph 27II(b), then the
amount of such overpayment shall be credited by Landlord to
the next immediate Rent payable by Tenant, within 30 days
following the date of such statement.
(d) Personal Property Taxes. Tenant shall pay, prior to
delinquency, all Personal Property Taxes payable with respect
to all Property of Tenant located on the Premises or the
Building and promptly upon request of Landlord shall provide
written proof of such payment. As used herein, "Property of
Tenant" shall include all improvements which are paid for by
Tenant. "Personal Property Taxes" shall include all property
taxes assessed against the Property of Tenant, whether
assessed as real or personal property.
(e) Determinations. The determination of Tenant's Share of Real
Property Taxes shall be made by Landlord.
(f) Beginning of Term. If this Lease shall commence on a day
other than the first day of a Lease Year, the amount of any
adjustment between the estimated and actual Tenant's Share of
Real Property Taxes with respect to the Lease Year in which
such commencement occurs shall be prorated on the basis which
the number of days from the commencement of this Lease to the
end of the Lease Year bears to 365; and any amount payable by
Landlord to Tenant or Tenant to Landlord with respect to such
adjustment shall be payable within 30 days after delivery by
Landlord to Tenant of the statement of Tenant's Share of Real
Property Taxes with respect to such Lease Year.
(g) End of Term. If this Lease shall terminate on a day other
than the last day of a Lease Year, the amount of any
adjustment between the estimated and actual Tenant's Share of
Real Property Taxes with respect to the Lease Year in which
such termination occurs shall be prorated on the basis which
the number of days from commencement of such Lease Year to and
including such termination date bears to 365 and shall be due
and payable when rendered notwithstanding the termination
of this Lease.
<PAGE> 10
(i) Nonpayment of Additional Rent. In the event
of nonpayment of Additional Rent payable by
Tenant hereunder, Landlord shall have the
same rights with respect to such nonpayment
as it has with respect to any other
nonpayment of Rent hereunder.
TAXES 28. Tenant shall pay before delinquency any and all taxes
PAYABLE levied or assessed and which become payable by
BY TENANT Landlord (or Tenant) during the term of this Lease
(excluding, however, state and federal personal
or corporate income taxes measured by the income of
Landlord from all sources, capital stock taxes, and
estate and inheritance taxes), whether or not now
customary or within the contemplation of the parties
hereto, which are based upon, measured by or otherwise
calculated with respect to: (a) the gross or net
payable under this Lease, including without
limitation, any gross receipts tax levied by any
taxing authority, or any other gross income tax or
excise tax levied by any taxing authority with
respect to the receipt of the rental hereunder; (b)
the value of Tenant's equipment, furniture, fixtures
or other personal property located in the Premises;
(c) the possession, lease, operation, management,
maintenance, alteration, repair, use or occupancy by
Tenant of the Premises or any portion thereof; (d)
the value of any leasehold improvements, alterations
or additions made in or to the Premises, regardless
of whether title to such improvements, alterations or
additions shall be in Tenant or Landlord; or (e) this
transaction or any document to which Tenant is a part
creating or transferring an interest or an estate in
the Premises.
In the event that it shall not be lawful for Tenant
to so reimburse Landlord, the rent payable to
Landlord under this Lease shall be revised to net
Landlord the same net rent after imposition of any
such tax upon Landlord as would have been payable to
Landlord prior to the imposition of any such tax.
All taxes payable by Tenant under this Paragraph 28
shall be deemed to be, and shall be paid as,
Additional Rent.
ABANDONMENT 29. Tenant shall not vacate or abandon the Premises at any
time during the term, and any such vacation or
abandonment shall be a breach of this Lease. If Tenant
shall abandon, vacate or surrender said Premises or be
dispossessed by process of law, or otherwise, any
personal property belonging to Tenant and left on the
Premises shall, at the option of Landlord, be deemed to
be abandoned and title thereto shall pass to Landlord,
except such property as may be mortgaged to Landlord.
SUCCESSORS 30. Subject to the provisions of Paragraph 9 hereof, the
AND ASSIGNS terms, covenants and conditions contained herein shall be
binding upon and inure to the benefit of the heirs,
successors, executors, administrators and assigns of the
parties hereto.
ATTORNEYS' 31. In the event that any action must be taken to enforce any
FEES term, covenant or condition of this Lease, Landlord
shall be entitled to payment by Tenant of all
reasonable costs incurred in connection with such
enforcement, whether or not litigation is commenced,
including, without limitation, reasonable attorneys'
fees.
SECURITY 32. (A) By execution of this Lease, Landlord acknowledges
DEPOSIT receipt of Tenant's security deposit for the faithful
performance of all terms, covenants and conditions of
this Lease. The sum of said deposit is specified in
the Basic Lease Information. Tenant agrees that
Landlord may apply said security deposit to remedy
any failure by Tenant to repair or maintain the
Premises or to perform any other terms, covenants or
conditions contained herein. If Tenant has kept and
performed all terms, covenants and conditions of this
Lease during the term hereof, Landlord will on the
termination hereof promptly return said sum to Tenant
or the last permitted assignee of Tenant's interest
hereunder at the expiration of the lease term.
Should Landlord use any portion of said sum to cure
any default by Tenant hereunder, Tenant shall
forthwith replenish said sum to such original amount.
Landlord shall not be required to keep any security
deposit separate from its general funds, and Tenant
shall not be entitled to interest on any such
deposit. Upon the occurrence of any events of
default described in Paragraph 19 of this Lease said
security deposit shall become due and payable to
Landlord.
(B) Tenant hereby agrees not to look to the
mortgagee, as mortgagee, mortgagee in possession, or
successor in title to the property, for
accountability for any security deposit required by
the Landlord hereinunder, unless said sums have
actually been received by such mortgagee as security
for the Tenant's performance of this Lease.
SUBSTITUTION 33. (A) Landlord shall have the right at any time from the
SPACE date hereof through the end of the term of this Lease or
any renewal or extension hereof, to substitute, instead of
the leased Premises, other space (of approximately the
same area as the leased Premises) hereinafter referred to
as "Substitution Space", in the Building.
(B) If Landlord desires to exercise such right, it
shall give Tenant at least sixty (60) days prior
written notification that Tenant is to relocate to
another space. Tenant shall then give Landlord
written notice within ten (10) days of receipt of
Landlord's notification whether Tenant agrees to
relocate, or whether Tenant elects to terminate the
Lease and vacate the Premises as of the sixtieth
(60th) day following the date of Landlord's
notification. Should Tenant fail to give Landlord
written notice within ten (10) days of receipt of
Landlord's notification, then Tenant shall be deemed
to have elected to terminate, and this Lease shall
automatically terminate sixty (60) days following the
date of Landlord's notification. If Tenant shall
retain possession of the Premises or any part thereof
following the termination date, Tenant shall be
liable to Landlord, for each day of such retention,
for double the amount of the daily rental for the
last period prior to the date of such expiration or
termination, subject to rent adjustments as provided
in Paragraph 27, plus actual damages incurred by
Landlord resulting from delay by Tenant in
surrendering the Premises, including without
limitation any claims made against Landlord by any
succeeding Tenant to the Premises and Landlord's
costs in taking any action at law, in equity or self
help to evict Tenant from the Premises.
(C) If Tenant elects to move to the Substitution
Space, such move shall be at the sole cost of
Landlord including all costs and expenses related to
improving the space with leasehold improvements equal
to those then in Tenant's Premises, moving the
furniture, office equipment and other contents of the
Premises to the new space, reinstating
telecommunications equipment, printing of new
stationery, business cards and other printed matter
bearing the address of Tenant and such other
reasonable expenses as Tenant may incur, it being the
intention of the parties that Tenant incur no costs
or expenses as a result of the move. After such
move, all terms, covenants, conditions, provisions,
and agreements of this Lease shall continue in full
force and effect and shall apply to the Substitution
Space except that (a) if the then unexpired balance
of the term of the Lease shall be less than one year,
the term of this Lease shall be extended so that the
unexpired balance of the term of this Lease shall be
from one year from the date of the move and (b) if
the Substitution Space contains more square footage
than the presently leased Premises, the monthly
rental shall be increased proportionately (provided
that such rental increase shall not be in excess of
five percent (5%) of the rental immediately preceding
such an increase).
CORPORATE 34. If Tenant signs as a corporation, each of the persons
AUTHORITY executing this Lease on behalf of Tenant does hereby
covenant and warrant that Tenant is a duly
authorized and existing corporation, that Tenant has
and is qualified to do business in Washington, that
the corporation has full right and authority to enter
into this Lease, and that each and both of the
persons signing on behalf of the corporation were
authorized to do so. Upon Landlord's request, Tenant
shall provide Landlord with evidence reasonably
satisfactory to Landlord confirming the foregoing
covenants and warranties.
LEASE EFFEC- 35. Submission of this instrument for examination or signature
TIVE DATE by Tenant does not constitute a reservation of or option
for lease, and it is not effective as a Lease or
otherwise until execution and delivery by both
Landlord and Tenant.
BROKERAGE 36. Tenant represents and warrants that it has dealt with no
broker, agent or other person in connection with this
transaction and/or that no broker, agent or other person
brought about this transaction, other than N/A and Tenant
agrees to indemnify and hold Landlord harmless from and
against any claims by any other broker, agent or other
person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with
regard to this leasing transaction. The provisions of
this Article shall survive the termination of this Lease.
FORCE 37. Whenever a period of time is herein prescribed for action
MAJEURE to be taken by Landlord, Landlord shall not be liable or
responsible for, and there shall be excluded from the
computation for any such period of time, any delays due
to strikes, riots, Acts of God, shortages of labor or
materials, war, governmental laws, regulations or
restrictions or any other causes of any kind whatsoever
which are beyond the control of Landlord.
CERTAIN 38. Landlord shall have the following rights, exercisable
RIGHTS without notice and without liability to Tenant for damage
RESERVED or injury to property, persons or business and without
BY LANDLORD effecting an eviction, constructive or actual, or
disturbance of Tenant's use or possession or giving rise
to any claim for setoff or abatement of rent:
<PAGE> 11
Building, all without abatement of rent or affecting
any of Tenant's obligations hereunder, so long as the
leased Premises are reasonably accessible.
(B) To have and retain a paramount title to the
leased Premises free and clear of any act of Tenant
purporting to burden or encumber them.
(C) To change the name by which the Building is
designated.
(D) To grant to anyone the exclusive right to conduct
any business or render any service in or to the
Building, provided such exclusive right shall not
operate to exclude Tenant from the use expressly
permitted herein.
(E) To prohibit the placing of vending or dispensing
machines of any kind in or about the leased Premises
without the prior written permission of Landlord.
(F) To have access for Landlord and other tenants of
the Building to any mail chutes located on the leased
Premises according to the rules of the United States
Postal Service.
(G) To take all such reasonable measures as Landlord
may deem advisable for the security of the Building
and its occupants, including without limitation, the
search of all persons entering or leaving the
Building, the evacuation of the Building for cause,
suspected cause, or for drill purposes, the
temporary denial of access to the Building, and the
closing of the Building after normal business hours
and on Saturdays, Sundays and holidays, subject,
however, to Tenant's right to admittance when the
Building is closed after normal business hours under
such reasonable regulations as Landlord may prescribe
from time to time which may include by way of example
but not of limitation, that persons entering or
leaving the Building, whether or not during normal
business hours, identify themselves to a security
officer by registration or otherwise and that such
persons establish their right to enter or leave the
Building.
PERSONAL 39. The liability of Landlord to Tenant for any default by
LIABILITY Landlord under the terms of this Lease shall be
limited to the interest of Landlord in the Building
and the land, and Landlord shall not be personally
liable for any deficiency. This clause shall not be
deemed to limit or deny any remedies which Tenant may
have in the event of default by Landlord hereunder
which do not involve the personal liability of
Landlord.
MISCEL- 40. (A) The term "Premises" wherever it appears herein
LANEOUS includes and shall be deemed or taken to include (except
where such meaning would be clearly repugnant to the
context) the office space demised and improvements now
or at any time hereinafter comprising or built in the
space hereby demised. The paragraph headings herein are
for convenience of reference and shall in no way define,
increase, limit or describe the scope or intent of any
provision of this Lease. The term "Landlord" in these
presents shall include the Landlord, its successors, and
assign. In any case where this Lease is signed by more
than one person, the obligations hereunder shall be joint
and several. The term "Tenant" or any pronoun used in
place thereof shall indicate and include the masculine or
feminine, the singular or plural number, individuals,
firms or corporations, and their and each of their
respective successors, executors, administrators, and
permitted assigns, according to the context hereof.
(B) Time is of the essence of this Lease and all its
provisions. This Lease shall in all respects be
governed by the laws of the State of Washington.
This Lease, together with its exhibits, contains all
the agreements of the parties hereto and supersedes
any previous negotiations. There have been no
representations made by the Landlord or
understandings made between the parties other than
those set forth in this Lease and its exhibits. This
Lease may not be modified except by a written
instrument by the parties hereto.
(C) If for any reason whatsoever any of the
provisions hereof shall be unenforceable or
ineffective, all of the other provisions shall be and
remain in full force and effect.
Additional Paragraphs attached hereto and made a part
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease the day and year first above written.
LANDLORD: TENANT:
SIXTH & PIKE ASSOCIATES, L.P. NATIONAL TECHTEAM, INC.,
a limited partnership a Delaware Corporation
By: Oregon Property Investment
Corporation, By: L. A. Mills
an Oregon corporation -------------------
Its: General Partner Its: COO/CFO
By: LA SALLE ADVISORS LIMITED
Its: Advisor and Duly Date: 2/15/96
Authorized Agent -------------------
By: Stephen T. Wong By:
-------------------------- -------------------
Stephen T. Wong
Its: Vice President Its:
-------------------
Date: 2/26/96 Date:
--------------------------- -------------------
By: Diane R. McMahon
---------------------------
Diane R. McMahon
Its: Vice President
Date: 2/26/96
---------------------------
<PAGE> 12
Additonal Paragraphs.
Additonal Paragraph 42 - Tenant Improvements
Landlord agrees to provide the following tenant improvements:
* The entire premises will be painted.
* A locking door will be provided and installed in the wall adjacent to the
single private office.
* Landlord will provide a budget of $1,000 for electrical work, including
installation of Landlord supplied light fixtures.
* The carpet will be patched.
Additonal Paragraph 43 - Rental Adjustments.
Tenant will not be responsible for additonal rent as described in Paragrah 27
of the Lease unless Tenant renews or extends this Lease, in which case Tenant
will pay additonal rent commencing with the first month of the extended term,
based on a Base Services Year of 1996.
<PAGE> 13
RULES AND REGULATIONS
EXHIBIT A 1. Sidewalks, halls, passages, exits, entrances, elevators,
escalators and stairways shall not be obstructed by Tenants or
used by them for any purpose other than for ingress to and
egress from their respective Premises. The halls, passages,
exits, entrances, elevators and stairways are not for the use of
the general public and Landlord shall in all cases retain the
rights to control and prevent access thereto by all person whose
presence, in the judgement of Landlord, shall be 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 person with whom any Tenant
normally deals in the oridinary course of such Teneant's
business unless such person are engaged in illegal activities.
No Tenant, and no employees or invites of any Tenant, shall go
upon the roof of the Building, except as authorized by Landlord.
2. No sign, placard, picture, name, advertisement or notice,
visible from the exterior of leased premsies shall be inscrived,
painted, affixed, installed or otherwise displayed by any Tenant
either on its Premises or any part of the Building without the
prior written consent of Landlord, and Landlord shall have the
right to remove any such sigh, placard, picture, name,
advertisement, or notice without notice to and at the expense
of the Tenant.
All approved signs or lettering on doors and walls shall be
printed, painted, affixed or inscribed at the expenses of the
Tenant by a person approved by Landlord.
3. The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of Tenants
only and landlord reserves the right to exclude any other names
therefrom.
4. No curtains, draperies, blinds, shutters, shades, screens or
other coverings, awnings, hangings or decorations shall be
attached to, hung or placed in, or used in connections with, any
window or door on any Premises without the prior written consent
of Landlord. In any event with the prior written consent of
Landlord, all such items shall be installed inboard of
Landlords standard window covering and shall in no way be
visible from the exterior of the building. No articles shall be
placed or kept on the window sills so as to be visible form the
exterior of the Building. No articles shall be placed against
glass partitions or doors which might appear unsightly from
outside Tenant's Premises.
5. Landlord reserves the right to exclude from the Building,
between the hours of 6 p.m. and 8 am and at all hours on
Saturdays, Sundays and holidays, all persons who are not Tenants
or their accompanied guests in the Building. Each Tenant shall
be responsible for all person for whom it allows to enter the
building and shall be liable to Landlord for all acts of such
persons.
Landlord shall in no case be liable for damages for error with
regard to the admission to or exclusion from the Building of
any person.
During the continuance of any invasion, mob, riot, public
excitement or other circumstance rendering such action advisable
in Landlord's opinion, Landlord reserves the right to prevent
access to the Building by closing the doors, or otherwise, for
the safety of Tenants and protection of the Building and
property in the Building.
6. No Tenant shall emply any person or persons other than the
janitor of Landlord for the purpose of cleaning the Premises
umless otherwise agreed to by Landlord in writing. Except with
the written consent of Landlord no person or person s other than
those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the same. No Tenant shall
cause any unnecessary labor by reason of such Tenant's
carelessness or indifference in the preservation of good order
and cleanliness to the Premises. Landlord shall in no way be
responsible to any Tenant for any loss of property on the
Premises, however occuring, or for any damage done to the
effects of any Tenant by the janitor or any other employee or
any other person.
7. No Tenant shall obtain for use upon its Premises ice, drinking
water, food, beverage, towel, or other similar services except
through facilities provided by Landlord (and maintained by
Tenant) and under regulations fixed by Landlord, or accept
barbering or bootblacking services in its Premises except from
persons authorized by Landlord.
8. Each Tenant shall see that all doors of its Premises are closed
and securely locked and must observe strict care and caution
that all water faucets or water apparatus are entirely shut off
before the Tenant or its employees leave such Premises, and that
all utilities shall likewise be carefully shut off, so as to
prevent waste or damage, and for any default or carelessness the
Tenant shall make good all injuries sustained by other Tenants
or occupants of the Building or Landlord. On multiple-tenancy
follor, all Tenants shall keep the door or doors to the Building
corridors closed at all tiems except for ingress and egress.
9. As more specifically provided in the Tenant's Lease of the
Premises, Tenant shall not waste electricity, water or
air-conditioning and agrees to cooperate fully with Landlord to
asure the most effective operation of the Building's heating
and air-conditioning, and shall refrain from attempting to
adjust any controls other than room thermostats installed for
Tenant's use.
10. No Tenant shall alter any lock or access device or install a
new or additonal lock of access device or any bolt on any door
of its Premsies without the prior written consent of Landlord.
If Landlord shall give its consent, the Tenant shall in each
case furnish Landlord with a key for any such lock.
11. No Tenant shall make or have made additional copies of any keys
or access devices provided by Landlord. Each Tenant, upon the
termination of the Tenancy, shall deliver to Landlord all the
keys or access devices for the Building, offices, rooms and
toilet rooms which shall have been furnished the Tenant or which
the Tenant shall have had made. In the event of the loss of any
keys or access devices so furnished by Landlord, Tenant shall
pay Landlord therefore.
12. The toilet rooms, toilets, urinals, wash bowls and other
appartus shall not be used for any purpose other than that for
which they were constructed and no foreign substance of any kind
whatsoever shall be thrown therein, and the expense fo brekage,
stoppage or damage resulting from the violation of this rule
shall be borne by the Tenant who, or whose employees or invitee,
shall have caused it.
13. No Tenant shall use or keep in its Premsies or the Building any
kerosene, gasoline or inflammable or combustible fluid or
material other than limited quantities necessary for the
operation or maintenance of office or office equipment. No
Tenant shall use any method of heating or air-conditioning
other than that supplied by Landlord.
14. No Tenant shall use, keep or permit to be used or kept in its
Premises any foul or noxious gas or substance or permit or
suffer such Premsises 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 or kept in or
about any Premises of the Building.
15. No cooking shall be done or permitted by any Tenant on its
Premsies (except that use by the Tenant of Underwriters'
Laboratory approved equipement of the preparation of coffee,
tea, hot chocolate and similar beverages for Tenants and their
employees shall be permitted, provided that such equipment and
use is in accordance with all applicable federal, state and city
laws, codes, ordinances, rules and regulations), nor shall
Premises be used for lodging.
16. Except with the prior written consent of Landlord, no Tenant
shall sell, or permit the sale, at retail, of newspapers,
magazimes, periodicals, theater tickets or any other goods or
merchandise in or on any Premises, nor shall Tenant carry on, or
permit or allow any employee or other person to carry on the
business of stenography, typewriting or any similar business in
or from any Premises for the service or accomodation of
occupants of any
<PAGE> 14
17. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions
in their installation.
18. Landlord will direct electricians as to where and how telephone, telegraph
and electrical wires are to be introduced or installed. No boring or
cutting for wires will be allowed without the prior consent of Landlord.
The location of burglar alarms, telephones, call boxes and other office
equipment affixed to all Premises shall be subject to the written approval
of Landlord.
19. No Tenant shall install any radio or television antenna, loudspeaker or any
other device on the exterior walls or the roof of the Building. Tenants
shall not interfere with radio or television broadcasting or reception from
or in the Building or elsewhere.
20. No Tenant shall lay linoleum, tile, carpet or any other floor covering
so that the same shall be affixed to the floor of its Premises in any
manner except as approved in writing by Landlord. The expense of repairing
any damage resulting from a violation of this rule or the removal of any
floor covering shall be borne by the Tenant by whom, or by whose
contractors, employees or invitees, the damage shall have been caused.
21. No furniture, freight, equipment, materials, supplies, packages,
merchandise or other property will be received in the Building or carried
up or down the elevators except between such hours and in such elevators as
shall be designated by Landlord.
Landlord shall have the right to prescribe the weight, size and position of
all safes, furniture or other heavy equipment brought into the Building.
Safes or other heavy objects shall, if considered necessary by Landlord,
stand on wood strips of such thickness as determined by Landlord to be
necessary to properly distribute the weight thereof. Landlord will not be
responsible for loss of or damage to any such safe, equipment or property
from any cause, and all damage done to the Building by moving or
maintaining any such safe, equipment or other property shall be repaired at
the expense of Tenant.
Business machines and mechanical equipment belonging to Tenant which cause
noise or vibration that may be transmitted to the structure of the Building
or to any space therein to such a degree as to be objectionable to
Landlord or to any Tenants in the Building shall be placed and maintained
by Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The persons employed to move
such equipment in or out of the Building must be acceptable to Landlord.
22. No Tenant shall place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which
is allowed by law. No Tenant shall mark, or drive nails, screw or drill
into, the partitions, woodwork or plaster or in any way deface such
Premises or any part thereof.
23. No Tenant shall install, maintain or operate upon the Premises any vending
machine without the written consent of Landlord.
24. There shall not be used in any space, or in the public areas of the
Building, either by any Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material handling
equipment as Landlord may approve. No other vehicles of any kind shall be
brought by any Tenant into or kept in or about the Premises.
25. Each Tenant shall store all its trash and garbage within the interior of
its Premises. No material shall be placed in the trash boxes or receptacles
if such material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and
garbage in the city without violation of any law or ordinance governing
such disposal. All trash, garbage and refuse disposal shall be made only
through entryways and elevators provided for such purposes and at such
times as Landlord shall designate.
26. Canvassing, soliciting, distribution of handbills or any other written
material and peddling in the Building are prohibited and each Tenant shall
cooperate to prevent the same. No Tenant shall make room-to-room
solicitation of business from other Tenants in the Building, without the
written consent of Landlord.
27. Landlord shall have the right, exercisable without notice and without
liability to any Tenant, to change the name and address of the Building.
28. Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's judgment, is intoxicated or under the influence
of liquor or drugs or who is in violation of any of the rules and
regulations of the Building.
29. Without the prior written consent of Landlord, Tenant shall not use the
name of the Building in connection with or in promoting or advertising the
business of Tenant except as Tenant's address.
30. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
31. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
32. The requirements of Tenants will be attended to only upon application at
the office of the Building by an authorized individual. Employees of
Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord, and no employees
will admit any person (Tenant or otherwise) to any office without specific
instructions from Landlord.
33. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular Tenant or Tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of
any other Tenant or Tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all Tenants of the Building.
34. Landlord reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for safety
and security, for care and cleanliness of the Building and for the
preservation of good order therein. Tenant agrees to abide by all such
Rules and Regulations herein above stated and any additional rules and
regulations which are adopted.
35. Landlord reserves the right to designate the use of the parking spaces on
the Premises.
36. Tenants shall use carpet protectors under all desk chairs.
37. Tenant or Tenant's guests shall park between designated parking lines only,
and shall not occupy two parking spaces with one car. Vehicles in violation
of the above shall be subject to tow-away, at vehicle owner's expense.
38. Vehicles parked on Premises overnight without prior written consent of the
Landlord shall be deemed abandoned and shall be subject to tow-away at
vehicle owner's expense.
39. Tenant shall be responsible for the observance of all of the foregoing
Rules and Regulations by Tenant's employees, agents, clients, customers,
invitees and guests.
40. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify, alter or amend, in whole or in part, the terms,
covenants, agreements and conditions of any Lease of Premises in the
Building. The word "Building" as used herein means 520 Pike Tower, of which
the Premises are part.
41. 520 Pike Tower is a non-smoking Building. Smoking is strictly prohibited in
any common areas or office spaces within the Building.
<PAGE> 15
EXHIBIT B
[FLOOR PLAN]
CANNON
REAL
ESTATE 14th FLOOR PLAN 1/16" = 1" = 0"
SERVICES
PLEASE
INITIAL
LANDLORD
<PAGE> 16
FORM OF TENANT CERTIFICATE
EXHIBIT D
Date:__________________________, 19____
TO: (Lender) ________________________________________________________
________________________________________________________
________________________________________________________
and
TO: (Landlord) ________________________________________________________
________________________________________________________
________________________________________________________
RE: Property known as: 520 Pike Tower, Suite ___________________________
Gentlemen:
Respecting that certain Lease dated _________________, 19____ between
_________________________________________ as Landlord and ___________________
as Tenant. Tenant hereby certifies that it has unconditionally accepted
possession of the Premises described in said Lease, and that said Lease is in
full force and effect and has not been modified, supplemented or amended in any
way, and that the DATE OF COMMENCEMENT of the term of the Lease is
_____________________________, 19____ and the end of the term is
________________, 19____, unless sooner terminated as therein provided.
Undersigned further certifies that all terms and conditions to be
performed by the Landlord under said Lease have been satisfied and that on this
date there are not existing defenses or offsets which the undersigned has
against the full enforcement of said Lease by Landlord; and that no rent has
been paid in advance (except as provided in said Lease) and that rent has
continued to be paid in accordance with said Lease since the term commencement.
Tenant is in occupancy of the leased Premises; and there is ONGOING
FULL OPERATION OF TENANT'S BUSINESS at leased Premises, being conducted BY
NAMED TENANT during normal business hours.
Undersigned further agrees not to look to (LENDER) as mortgagee in
possession or successor in title to the property, for accountability for any
SECURITY DEPOSIT required by the Landlord under said Lease UNLESS such sums
have actually been received by (LENDER) as cash security for Tenant's
performance of this Lease.
Tenant understands that its Lease may be assigned as collateral
security for a mortgage loan to be granted to Landlord by (LENDER)
under a Collateral Assignments of Lease form containing (among others)
the agreements by and restrictions on Landlord that, WITHOUT YOUR PRIOR
WRITTEN AUTHORIZATION as Assignee, LANDLORD WILL NOT THEREAFTER MODIFY,
TERMINATE OR ACCEPT SURRENDER OF THE LEASE and will NOT REDUCE, ABATE
OR ACCEPT PREPAYMENT OF ANY RENT (except the regular monthly rental
payments required by said Lease to be paid in advance). Tenant
acknowledges its Landlord's agreements and the restrictions on
Landlord's rights under said Assignment, and hereby agrees to be bound
by said agreements and restrictions.
Tenant will not assign its leasehold without (LENDER'S) written
consent.
(Tenant): _______________________________________________________
By: _______________________________________________________
<PAGE> 17
EXHIBIT E
TO
520 PIKE TOWER
LEASE AGREEMENT
REAL PROPERTY DESCRIPTION
Lots 10 and 11, Block 18, Addition to the Town of Seattle, as laid out by A.A.
Denny (commonly known as A.A. Denny's 3rd Addition to the City of Seattle),
according to the plat thereof recorded in Volume 1 of Plats, page 33, in King
County, Washington, EXCEPT the southerly 10 feet of said Lot 11, condemned in
King County Superior Court Cause No. 41394 for the widening of Pike Street, as
provided by Ordinance No. 10051 of the City of Seattle.
SUBJECT TO AND TOGETHER WITH all rights granted pursuant to Development and
Parking Rights Agreement dated April 8, 1982 recorded under King County,
Washington recording number 8204080464, as amended by agreement recorded under
King County, Washington recording number 8208240318.
<PAGE> 18
STATE OF ________________)
) SS.
County of ________________)
BE IT REMEMBERED, That on this 15th day of February, 1996 before me,
the undersigned a Notary Public in and for said County and State, personally
appeared the within named Lawrence A. Mills known to me to be who
executed the within instrument and acknowledged to me that he executed the same
freely and voluntarily.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year last above written.
Notary Public for Wayne County
My commission expires May 8, 1999
CANDACE M. BREWER
NOTARY PUBLIC STATE OF MICHIGAN
WAYNE COUNTY
MY COMMISSION EXP. MAY 8, 1999
STATE OF ________________)
) SS.
County of ________________)
BE IT REMEMBERED, That on this day of , 1996 before me,
the undersigned a Notary Public in and for said County and State, personally
appeared the within named known to me to be who
executed the within instrument and acknowledged to me that he executed the same
freely and voluntarily.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year last above written.
Notary Public for __________________________________
My commission expires __________________________________
<PAGE> 19
STATE OF OREGON )
)ss
COUNTY OF MULTNOMAH)
BE IT REMEMBERED, That on this 26th day of February, 1996, before
me, the undersigned a Notary Public in and for said County and State,
personally appeared the within named Stephen T. Wong known to me to be
the Vice President of LaSalle Advisors Limited who executed the within
instrument and acknowledged to me that he executed the same freely and
voluntarily.
[SEAL] OFFICIAL SEAL IN TESTIMONY WHEREOF, I have hereunto
MARLENE KASTING set my hand and affixed my official seal
NOTARY PUBLIC-OREGON the day and year last above written.
COMMISSION NO.021740
MY COMMISSION EXPIRES JAN. 31, 1997 Marlene Kasting
NOTARY PUBLIC in and for the State of
Oregon, residing at Portland. My
commission expires 1/31/97.
STATE OF OREGON )
)ss
COUNTY OF MULTNOMAH)
BE IT REMEMBERED, That on this 26th day of February, 1996, before
me, the undersigned a Notary Public in and for said County and State,
personally appeared the within named Diane R. McMahon, known to me to
be Vice President of LaSalle Advisors Limited who executed the within
instrument and acknowledged to me that he executed the same freely and
voluntarily.
[SEAL] OFFICIAL SEAL IN TESTIMONY WHEREOF, I have hereunto
MARLENE KASTING set my hand and affixed my official seal
NOTARY PUBLIC-OREGON the day and year last above written.
COMMISSION NO.021740
MY COMMISSION EXPIRES JAN. 31, 1997 Marlene Kasting
NOTARY PUBLIC in and for the State of
Oregon, residing at Portland. My
commission expires 1/31/97.
<PAGE> 1
EXHIBIT 10.26
<TABLE>
<S><C>
[FORD LOGO] Purchase Order *THESE ITEMS MUST APPEAR ON ALL SHIPPING AND BILLING
AMENDMENT *Blanket order number (if any) *Purchase Order Number, or Release
Authorization when blanket order is
entered
BUYER AGREES TO PURCHASE AND RECEIVE FM0FB BKBO 058368 AMENDMENT-0008
FORD MOTOR COMPANY F.O.B. (TITLE TRANSFER POINT) DATE OF ORDER
DESTINATION 01/06/96
NATIONAL TECHTEAM INC TRANSPORTATION TERMS DELIVERY DATE
22000 GARRISON AVE PREPAID
DEARBORN MI
48124 PAYMENT TERMS SHIPPING POINT
NET 15TH AND 30TH PROX N/A
SELLER, AGREES TO SELL AND DELIVER SUPPLIES ROUTING FUNDS
AND SERVICES SPECIFIED HEREIN SELLERS' DELIVERY FUNDS =USD
*Ship to: SALES AND USE TAXES *INVOICE TO:
AS RELEASED DO NOT BILL SALES OR AS RELEASED
USE TAX BECAUSE
PURCHASES ARE COVERED
BY DIRECT PAY.
SEE SECTION 15 FOR ADDITIONAL
INFORMATION AND INSTRUCTIONS
</TABLE>
- -------------------------------------------------------------------------------
LINE# *ITEM NUMBER* QUANTITY* U/M* PRC/QTY U/M UNIT PRICE
- -------------------------------------------------------------------------------
**********************************DESCRIPTION**********************************
THE FOLLOWING PLANTS ARE COVERED UNDER THIS BLANKET ORDER:
AF1FB MARKETING & SALES OPERATI
AF30A FPSD PARTS REDISTRIBUTION
AF31A FPSD NATIONAL PARTS
AF34A FPSD NEW YORK PARTS
AF35A FPSD CHICAGO PARTS
AF38A FPSD DETROIT PARTS
AF39A FPSD ATLANTA PARTS
AF44A FPSD DALLAS PARTS
AF46A FPSD KANSAS CITY PARTS
AF49A FPSD LOS ANGELES PARTS
AF50A FPSD SAN FRANCISCO PARTS
AF52A FPSD GENERAL OFFICE
AP01A FORD ATLANTA ASSEMBLY
AP02A FORD MICHIGAN TRUCK
AP02F FORD MICHIGAN TRUCK BODY
AP03A FORD CHICAGO ASSEMBLY
AP04A FORD OHIO ASSEMBLY
AP05A FORD DEARBORN ASSEMBLY
AP06A FORD KANSAS CITY ASSEMBLY
AP06F FORD KANSAS CITY PAINT
AP06H FORD KANSAS CITY BODY
AP07A FORD LORAIN ASSEMBLY
AP09A FORD LOUISVILLE ASSEMBLY
AP11A FORD EDISON ASSEMBLY
AP12A FORD NORFOLK ASSEMBLY
AP14A FORD ST LOUIS ASSEMBLY
AP15A FORD TWIN CITIES ASSEMBLY
AP16A FORD WAYNE ASSEMBLY
AP17A FORD WIXOM ASSEMBLY
AP18A FORD PILOT PLANT
AP19A FORD KENTUCKY TRUCK
CC0BA GENERAL OFFICE
CC01A FORD SHELDON RD
CC05A FORD CCD CONNERSVILLE
CS0AA CASTING DIV GEN OFFICE
CS0FA WOODHAVEN FORGING PLANT
CS04A FORD CLEVELAND CASTING
CS07A FORD VULCAN FORGE WORKS
EE0BA DIV. GEN. OFFICE
EE0CA GENERAL OFFICE
EE0FA NORTH PENN ELECTRONIC FAC
EE0FF NP TEST ENGR/KULPSVILLE
* SUPPLIER CODE - Q479D BUYER IS: B. RODRIGUEZ (4753) (313)-845-3544
<PAGE> 2
5322
Oct 93 TERMS AND CONDITIONS
1. OFFER, ACCEPTANCE, AND MODIFICATION - This purchase order is an offer to
Seller by Buyer to enter into the purchase agreement it describes, and upon
acceptance shall be the complete and exclusive statement of such agreement.
Beginning work hereunder shall constitute an acceptance of the offer.
Modifications proposed by Seller are not part of the agreement in the
absence of Buyer's written acceptance.
2. CHANGES - (a) Buyer at any time, by amendment or other writing signed by
it, may change the design (including drawings, materials, and
specifications, processing (method of packing and shipping, and the place
of delivery of the supplies and services.
(b) If any such change affects cost or timing, Buyer shall adjust purchase
price and deliver schedules equitably.
(c) Seller shall not make any change in the design, processing, packing,
shipping, and the place of delivery of the supplies and services.
(d) Seller shall notify Buyer's manager of the facility to which Seller
ships the supplies and Buyer's purchasing office that issued this purchase
order of each change to the construction or operation of the supplies of
this agreement that is issued by Seller subsequent to sale and that relates
to (i) safety of operation, (ii) compliance with laws or regulations, or
(iii) compliance with the specifications of this order. Each notice shall
identify the number of this order. Within a reasonable time after each
notice, Seller at its expense shall implement the change in the supplies.
3. BAILED PROPERTY - Unless otherwise specified in this order, Seller
is responsible for loss of, and damage to, property owned by Buyer and
possessed by Seller for use in carrying out this order, including
responsibility for loss and damage which occur despite Seller's exercise of
reasonable care, but excluding normal wear and tear. Seller shall (a)
properly house and maintain such property on Seller's premises, (b) mark it
"Property of Ford Motor Company" (or of the appropriate Ford Associated
Company, as the case may be), (c) refrain from commingling it with the
property of Seller or with that of a third party, and (d) maintain it as
personalty. Buyer shall have the right to enter Seller's premises at
reasonable times to inspect such property and Seller's records pertaining
thereto and to take possession of the property. Upon Buyer's request,
Seller immediately shall deliver such property to a carrier selected by
Buyer, properly packed and marked in accordance with the requirements of
the carrier and Buyer, at Buyer's option F.O.B. Carrier, Seller's facility
or F.O.B. Buyer's facility, freight collect.
4. RELEASES - If delivery dates are not specified in this agreement, Seller
shall procure materials and fabricate, assemble, and ship supplies only as
authorized in shipment releases issued to Seller by Buyer. Buyer may return
overshipments to Seller at Seller's expense for all packing, handling,
sorting and transportation. Buyer from time to time and with reasonable
notice may change or temporarily suspend shipping schedules specified in the
purchase order or shipment release.
5. PACKING, MARKING, AND SHIPPING - (a) Seller shall pack and ship the supplies
in accordance with the requirements of Buyer and the carrier transporting
such supplies. Seller shall mark each package in accordance with the current
edition of Buyer's Package Identification or Steel Packaging Standards, as
applicable, and additional instructions of Buyer and the carrier. Seller
will reimburse Buyer for costs incurred as a result of improper packing,
marking, routing or shipping.
(b) Upon request, Seller shall advise Buyer with regard to packing,
marking, routing, and shipping that will enable Buyer to secure the most
economical transportation rates.
(c) Seller shall not charge separately for packing, marking or shipping
unless Buyer authorizes such charges in writing, in which case Seller shall
add such charges to its invoice as a separate item and attach supporting
data.
(d) Buyer may require shipment of any of the supplies covered by this
agreement by a more expeditious method of transportation if seller fails to
meet the shipping requirements of this agreement, and Seller shall bear the
cost difference of such transportation unless such failure is due to an
excusable delay of Section 13.
(e) Seller shall be responsible for any loss, damage, or injury which
results from, or occurs during, shipment of supplies by Seller's vehicles.
6. PACKING SLIPS AND BILLS OF LADING - (a) Seller shall obtain a straight bill
of lading from the carrier of these supplies and shall include on each
packing slip and bill of lading the number of this purchase order and the
location of the destination facility.
(b) Seller shall include a numbered master packing slip with each shipment.
If less than a carload or truckload is being shipped, the slip shall be
included in one of the packages which shall be marked "Packing Slip Inside".
In carload and truckload shipments the master packing slip shall be enclosed
in an unsealed envelope that is affixed near the door on the inside of the
freight vehicle.
(c) Seller shall retain the original bill of lading for two years from the
date of shipment unless otherwise directed by the Traffic Manager at the
destination facility.
7. EXPORT/IMPORT - For each international shipment, Seller shall include a
priced invoice with the master packing slip and upon request shall furnish
all other required export/import documents. Export credits and custom
drawbacks shall belong to Buyer or its designee. Upon request, Seller shall
furnish in satisfactory form all documents required to obtain export credits
and customs drawbacks or to satisfy any other government requirement,
including certificates that identify the country of origin of the materials
used in these supplies and the value added in each country.
8. INSPECTION - Buyer at its option may reject, or retain and correct, supplies
that do not meet the requirements of this purchase order. If Buyer elects to
correct the supplies, it shall consult with Seller on the method of
correction. Seller shall reimburse Buyer for reasonable expenses resulting
from rejection or correction.
9. PROPRIETARY RIGHTS - (a) Seller shall handle and be responsible for every
claim of infringement of any present or future patent, copyright, industrial
design right, or other proprietary right that results from the sale or use
of the supplies hereof (i) alone, (ii) in combination by reason of their
content, design, or structure, or (iii) in combination in accordance with
Seller's recommendations, or at Buyer's option provide all reasonable
assistance to Buyer in Buyer's handling of such claims. Seller's obligations
shall apply even though Buyer furnishes all or any portion of the design
and specifies all or any portion of the processing.
(b) Seller grants to Buyer and its Associated Companies a nonexclusive,
royalty free, irrevocable license to rebuild and have rebuilt the supplies
of this purchase order.
(c) Seller will neither assert nor transfer to another a right to assert
against Buyer and/or its Associated Companies, or dealers or customers
thereof, any copyright of Seller that is applicable to any works of
authorship furnished to Buyer or any of Buyer's Associated Companies in the
course of Seller's activity hereunder.
(d) All technical information disclosed heretofore and hereafter by Seller
to Buyer in connection with these supplies or services is disclosed on a
nonconfidential basis.
10. WARRANTY - Seller warrants that the supplies and services will conform to
the applicable drawings and specifications and will be free of defects in
design (to the extent that Seller furnished the design), materials, and
workmanship. Seller shall handle and be responsible for every claim of
damage or injury that is based on a breach of the foregoing warranty, or at
Buyer's option provide all reasonable assistance to Buyer in Buyer's
handling such claims.
11. SUBCONTRACTING AND ADVERTISING - Seller may subcontract for goods or
services to be incorporated in the supplies or services of this agreement,
but Seller shall not subcontract all of its duties under this agreement
without Buyer's prior written approval. Seller shall not refer to Buyer in
advertising or public releases without Buyer's written approval.
12. COMPLIANCE WITH LAW - (a) Ford Motor Company (Ford U.S.) serves from time to
time as a contractor for the United States government. The policy of the
United States government expressed in Pub. L95-507, that small business
concerns and small disadvantaged business concerns shall have the maximum
practicable opportunity to participate in performing contracts of the United
States government, and its clause entitled "Utilization of Small Business
Concerns and Small Business Concerns Owned and Controlled by Socially and
Economically Disadvantaged Individuals," apply to Ford U.S. and its U.S.
suppliers. Ford U.S. mailed the foregoing clause to its U.S. suppliers and a
copy is available upon request. (b) If Ford U.S. is the Buyer, Seller shall
comply with federal laws, rules, and regulations applicable to
subcontractors of government contractors, including those relating to
contracting with small and disadvantaged business concerns (Pub. L 95-507);
equal employment opportunity and affirmative action in the employment of
minorities (Executive Order - 11246), women (Executive Order - 11375), the
handicapped (29 USC 793), and certain veterans (38 USC 2012); contracting
with business concerns operating in areas of surplus labor (41 CFR 1-1.805);
and contracting with women-owned business concerns (Executive Order 12138).
13. EXCUSABLE DELAYS - Neither Buyer nor Seller shall be liable for a failure to
perform that arises from causes or events beyond its reasonable control and
without its fault or negligence, including labor disputes of any kind. In
the event of a delay in performance, Buyer at its option may acquire
possession of all finished supplies, work in process, and parts and
materials produced or acquired for the work hereof, and Seller immediately
shall deliver such property to a carrier selected by Buyer, property packed
and marked in accordance with the requirements of the Carrier and Buyer, at
Buyer's option F.O.B. Carrier, Seller's facility or F.O.B. Buyer's facility,
freight collect.
14. WORK ON BUYER'S PREMISES - (a) If Seller's employees, contractors, or agents
provide services to Buyer on Buyer's premises, Seller shall examine the
premises to determine whether they are safe for such services and shall
advise Buyer promptly of any situations it deems to be unsafe. For services
performed on Buyer's premises in Canada, Seller must furnish, prior to
payment, evidence of compliance with the Worker's Compensation Act.
(b) Seller shall handle and be responsible for every claim that arises
from Seller's work on Buyer's premises and that is for actual or alleged (i)
injury to any person, (ii) damage to any property, (iii) economic loss, or
(iv) violation of any law, ordinance, or regulation, or at Buyer's option
provide all reasonable assistance to Buyer in Buyer's handling of such
claims, unless the claim arises from the negligence or recklessness of
Buyer, Buyer's director, and Buyer's employees.
15. SALES AND USE TAXES - (a) Seller must not include sales and use taxes for
supplies that will be shipped to, or services that will be furnished in,
locations for which Buyer has a direct pay permit. These locations and the
applicable permit numbers are:
<TABLE>
<CAPTION>
Ford Motor Company Ford Motor Company (Cont.)
State Location/Plant Permit No. State Location Permit No.
<S> <C> <C> <C> <C> <C>
Indiana Indianapolis 380549190-001-5 Loraine Assembly and Ohio 98-000545
Georgia All Locations 080-30-03517-4 Truck Plants
Kentucky Kentucky Truck 8448 Maumee Stamping 98-001860
Louisville Assembly 29370 Sandusky 98-000553
Michigan All Locations 38-0549190 Ford Parts & Service and 98-001877
Minnesota Twin Cities Assy 1032 All Other Locations
Missouri Kansas City Assy 10352287
St. Louis Assy 10795952
New Jersey Edison Assembly DP-038-0549190- Tennessee Nashville Glass 2-280549190-
002 003-8
New York All locations 38-0549190C Virginia Norfolk Assembly 998168-3
(DP-000045) Ford Electronics & Refrig Corporation
Ohio Batavia 98-001982 Indiana Bedford 003298086-
Canton 98-000546 002-0
Cleveland Casting 98-000548 Connersville Plant 003298086-
Cleveland Engine #1 98-000551 001-4
and #2 Pennsylvania Lansdale 89-11068-3
Walton Hills Stamping 98-000554
Sharonville 98-000550
Lima Engine 98-000552
</TABLE>
(b) Illinois and Oklahoma exempt from sales or use taxes most supplies and
services that are used or consumed in manufacturing products for sale.
Seller must not include sales or use taxes for supplies or services shipped
to the locations listed below when this purchase order designates that the
supplies or services are exempt.
State Location Permit or Registration No.
Illinois Chicago Assembly Plant 0069-1801
Chicago Stamping Plant 759-220-5
Oklahoma Tulsa Glass Plant 127240
(c) Seller must include sales or use tax on other supplies and services if
Seller is licensed to do so by the tax authorities of the destination.
Seller must identify the sales or use tax on Seller's invoice as a separate
item.
16. TERMINATION AT OPTION OF BUYER - (a) Buyer may terminate its purchase
obligations hereunder, in whole or in part, at any time, by a written notice
of termination to Seller. Buyer shall have such right of termination
notwithstanding the existence of an excusable delay of Section 13.
(b) Upon receipt of the notice of termination, Seller, unless otherwise
directed by Buyer, shall (i) terminate promptly all work under this purchase
order; (ii) transfer title and deliver to Buyer the finished work, the work
in process, and the parts and materials which Seller produced or acquired in
accordance with this purchase order and which Seller cannot use in producing
goods for itself or for others; (iii) settle all claims by subcontractors
for actual costs that are rendered unrecoverable by such termination; and
(iv) take actions reasonably necessary to protect property in Seller's
possession in which Buyer has an interest.
(c) Upon termination by Buyer under this Section, Buyer's obligation to
Seller shall be; (i) the purchase order price for all finished work and
completed services which conform to the requirements of the purchase order;
(ii) Seller's actual cost of the work in process and parts and materials
transferred to Buyer in accordance with subsection (b)(ii) hereof; (iii)
Sellers actual costs if settling claims by subcontractors of subsection
(b)(iii) hereof; and (iv) Seller's actual cost of carrying out its
obligations of subsection (b)(iv) hereof, but Buyer's obligation shall not
exceed those Buyer would have had to Seller in the absence of termination.
(d) Seller shall furnish to Buyer, within one month after the date of
termination, Seller's termination claims, which shall consist exclusively of
the items of Buyer's obligations to Seller that are listed in the subsection
(c) hereof. Buyer may audit Seller's records, before or subsequent to
payment, to verify amounts requested in Seller's termination claim.
(e) Buyer shall not be liable to Seller if Buyer terminates its purchase
obligations of this agreement because of Seller's default.
17. APPLICABLE LAW - This purchase order shall be governed by the law of
Buyer's principal place of business, and litigation on contractual causes
arising from the purchase order shall be brought only in that jurisdiction.
When this document is a release, these terms and
conditions are superseded by the terms and
conditions of the purchase order.
Page 2
<PAGE> 3
ORDER DATE: 01/06/96 BLANKET ORDER NO. FM0FB BKBO 058368
EE01A FORD EED RAWSONVILLE
EE02A FORD PPD SANDUSKY PLANT
EE03A FORD EED YPSILANTI
EE04A FORD EED LANSDALE
EE05J EXPORT OPERATION N.PENN
EE06A BEDFORD
EE07A MARKHAM
EF0AA ROMEO ENGINE PLANT
EF01A CLEVELAND ENGINE PLT #1
EF02A CLEVELAND ENGINE PLANT #2
EF03A DEARBORN ENGINE
EF05A FORD ENGINE GENERAL OFFIC
EF06A LIMA ENGINE PLT
FD0JC CAR PRODUCT DEVEL - ENVIR
FD0LA TRAFFIC & TRUCK SERVICES
FD0MA RAILROAD-TRACK STOCK
FD0MB RAILROAD-HEAVY EQUIPMENT
FD0NA CONSTR, BLDG. & ENVIRON
FD0PA POWERHOUSE
FD0QA REPROGRAPHICS & OFFICE ST
FD0QB BUSINESS MACHINE REPAIR
FD0QC REPROGRAPHICS & OFFICE ST
FD0RA TECHNICAL PHOTOGRAPHY
FD0SA GRAPHIC ARTS & ADMIN SERV
FD0SB HIGHLAND PARK T&TS
FD0TA CONTROLLERS OFFICE-T&TS
FD0VA INDUST RADIO & VIDEO SVC
FD0WB POWERTRAIN OPERATIONS
FD04A FORD UTICA TRIM PLANT
FD05A FORD CHESTERFIELD TRIM
FD20F VEHICLE DEVELOPMENT
FM0CC B & A GENERAL OFFICE
FM0CD ROUGE OFFICE BLDG.
FM0FB CENTRAL STAFFS
FM0FD FM&SP
FM0MA FORD LEASING DEVLP. CO.
FM0QA ARIZONA PROVING GROUND
FM0RA FORD MOTOR LIGHT TRUCK OP
FM00Q CAR PRODUCT DEVELOPMENT
FMlBP ADV. VEHICLE ENGINEERING
FM2EP PRIMUS FORD CREDIT
GD0BA GLASS PRODUCT DEV & RES
GD01A DEARBORN GLASS PLT
GD02A FORD NASHVILLE GLASS
GD05A GLASS DIV GENERAL OFF
GD07A FORD TULSA GLASS
GD09A FORD GLASS CARLITE
GD21A FORD GLASS DIV
L7VWC JAGUAR MAHWAH N.J.
MS0BA WAYNE BODY & STAMPING PLT
MS01A BUFFALO STAMPING PLANT
MS02A CHICAGO STAMPING PLANT
MS03A WALTON HILLS STAMPING PLT
MS04A DEARBORN FRAME PLT
MS05A DEARBORN STAMPING PLT
MS06A MONROE STAMPING PLANT
MS07A DEARBORN TOOL & DIE
MS08A MAUMEE STAMPING PLANT
MS09A WOODHAVEN STAMPING PLANT
PP0AD DIVISION GENERAL OFFICE
PP02A FORD MT CLEMENS PLANT
PP03A FORD SALINE PLANT
PP04A FORD MILAN PLANT
TC0AA GENERAL OFFICE
TC02A FORD T & C SHARONVILLE
TC03A FORD T & C INDIANAPOLIS
TC04A FORD T & C LIVONIA
TC05A FORD T & C STERLING
TC11A FORD T & C VAN DYKE
TC12A FORD T & C BATAVIA
0088A FAIRTEL ASSOCIATES
0168A FAIRLANE GOLF INC.
Page 3
<PAGE> 4
ORDER DATE: 01/06/96 BLANKET ORDER NO. FM0FB BKBO 058368
1503A FORD EXPORT - WIXOM
5005A FAO STAFF SERVICES
7001A FORD MOTOR LAND DEVELOP
7020A DETROIT DOWNTOWN DEVELOP
7040A FORD MOTOR PROPERTIES
7050A FORD COLORADO PROPERTIES
7060B GREENFIELD PROPERTIES
7066B FAIRLANE WOODS
9010A FORD LEASING DEV COMPANY
9100A FORD MOTOR CREDIT COMPANY
MISCELLANEOUS DISTRIBUTION- FOR NON CPARS LOCATIONS.
(PLACE AN X ON THE APPLICABLE LINE(S))
__ ALL LOCATIONS
__ AIR TRANSPORTATION
__ ENGINEERING COMPUTER SYS.
__ F.M.C.C.
__ MANUFACTURING DEV.
__ U.S. LEASING/TOM KAY
__ SYSTEMS MANAGERS
__ FIRST NATIONWIDE BANK
__ ENGINEERING COMPLEX (9 COPIES)
__ COPPO, ROOM 1003, BODY ENGR.
__ GRACE CLARION, RM B7, FPSD GO.
__ ASSOC. CORP. OF N. AMERICA
__ DYNAMOMETER BLDG.
__ DIVERSIFIED PROD. TECH CTR.
__ SCIENTIFIC RESEARCH LAB
SPECIAL DISTRIBUTION INSTRUCTIONS:
SYSTEMS MANAGERS (40)
EFFECTIVE DATE
01/08/96
SEE ATTACHED FOR PRICES, TERMS AND CONDITIONS.
AMENDMENT IS BEING ISSUED TO INCORPORATE THE 2.5% ECONOMIC INCREASE INTO THE
BILL RATES FOR BILLING RANGES 04-10. THESE NEW MAXIMUM BILL RATES ARE
EFFECTIVE 1-01-95 AND ARE AS FOLLOWS:
<TABLE>
<CAPTION>
BILLING RANGES MAXIMUM BILL RATES
<S> <C>
10 $49.85
09 $43.77
08 $40.09
07 $36.92
06 $31.91
05 $27.06
04 $23.73
</TABLE>
ATTACHMENT TO PURCHASE ORDER
GENERAL CONSULTING TERMS AND CONDITIONS
1. DESCRIPTION OF CONTRACT SERVICES. THE SELLER SHALL PROVIDE, AS
REQUESTED BY THE BUYER, THE SERVICES DESCRIBED ON THE FACE OF THE PURCHASE
ORDER IN MORE SPECIFIC DETAIL, THE WORK ASSIGNMENTS TO BE PERFORMED BY THE
EMPLOYEES PROVIDED BY THE SELLER. BUYER SHALL DESIGNATE IN WRITING THE PERSON
OR PERSONS AUTHORIZED TO MAKE SUCH WORK ASSIGNMENTS ON BEHALF OF BUYER. TO THE
EXTENT THAT THE STANDARD TERMS AND CONDITIONS OF THE REVERSE SIDE OF BUYER'S
ABOVE REFERENCED PURCHASE ORDER ARE INCONSISTENT WITH THE ADDITIONAL TERMS AND
CONDITIONS SET OUT IN THIS ATTACHMENT, THE ADDITIONAL TERMS AND CONDITIONS
SHALL APPLY.
2. FEE FOR CONTRACT SERVICES. IN CONSIDERATION OF THE CONTRACT SERVICES TO BE
PERFORMED AS SET OUT IN PARAGRAPH 1, BUYER WILL PAY SELLER A FEE AS SHOWN ON
THE FACE OF THIS PURCHASE ORDER. (FOR OVERTIME SEE PARAGRAPH 14)
3. PLACE OF PERFORMANCE OF CONTRACT SERVICES; TRAVEL EXPENSES. THE
CONTRACT SERVICES SHALL BE PERFORMED AT A PLACE OR PLACES DESIGNATED BY THE
BUYER. REASONABLE TRAVEL EXPENSES TO BE REIMBURSED BY BUYER TO SELLER ON AN
ACTUAL COST BASIS. TRAVEL EXPENSE TO COVER OVERNIGHT TRAVEL OUTSIDE THE
METRO-DETROIT AREA. ALL TRAVEL TO BE PRE-APPROVED BY A FORD PROGRAM MANAGER.
Page 4
<PAGE> 5
ORDER DATE: 01/06/96 BLANKET ORDER NO. FMOFB BKBO O58368
4. STATEMENTS - PAYMENT. BETWEEN THE FIRST AND TENTH DAY OF EACH MONTH, SELLER
SHALL FURNISH A STATEMENT, IN A FORM AGREED BY BUYER, COVERING CONTRACT SERVICES
RENDERED AND TRAVEL EXPENSES INCURRED DURING THE PRECEDING MONTH. SELLER SHALL
INCLUDE ON EACH SUCH STATEMENT SELLER'S PURCHASE ORDER NUMBER, DATE OF INVOICE
AND INVOICE NUMBER. BUYER SHALL PAY STATEMENTS IN GOOD ORDER PER FORD STANDARD
TERMS (NET 15/30 PROX). BUYER SHALL HAVE THE RIGHT TO AUDIT SELLER'S RECORDS AT
ANY TIME PRIOR TO TWO YEARS AFTER FINAL PAYMENT TO VERIFY PAYMENT OBLIGATION.
THE TOTAL FEE PAYABLE TO SELLER FOR ALL CONTRACT SERVICES AND EXPENSES REQUESTED
AND PROVIDED UNDER THIS AGREEMENT, SHALL NOT EXCEED THE AMOUNT SHOWN ON THE FACE
OF ABOVE ORDER, AND SELLER SHALL NOT PERFORM CONTRACT SERVICES OR INCUR ANY
EXPENSES THAT CAUSE THE AGGREGATE AMOUNT PAYABLE UNDER THIS AGREEMENT TO EXCEED
SUCH AMOUNT WITHOUT A WRITTEN MODIFICATION OF THIS AGREEMENT.
5. RELATIONSHIP. SELLER'S RELATIONSHIP TO BUYER UNDER THIS AGREEMENT
SHALL BE THAT OF AN INDEPENDENT CONTRACTOR AND NOT AN EMPLOYEE OR AGENT.
SELLER SHALL NOT REPRESENT OR HOLD ITSELF OUT AS HAVING ANY RELATIONSHIP WITH
BUYER OTHER THAN THAT OF AN INDEPENDENT CONTRACTOR. NO NEW ASSIGNMENTS WILL BE
UNDERTAKEN BY SELLER WITHOUT SECURING PRIOR WRITTEN APPROVAL FROM BUYER'S
DESIGNATED REPRESENTATIVE. BUYER SHALL NOT BE RESPONSIBLE FOR ANY TAX LEVIED
ON SELLER OR SELLER'S EMPLOYEES OR REPRESENTATIVES BY ANY GOVERNMENTAL
AUTHORITY, RELATING TO THIS AGREEMENT OR INCOME ATTRIBUTED TO SELLER'S
EMPLOYEES OR REPRESENTATIVES.
6. TITLE TO WORK PRODUCT. ALL INFORMATION AND DATA SELLER DEVELOPS OR ACQUIRES
IN PERFORMING CONTRACT SERVICES SHALL BELONG TO BUYER, WITHOUT FURTHER
CONSIDERATION, AND SHALL BE DELIVERED TO BUYER UPON COMPLETION OF THIS
AGREEMENT OR EARLIER IF REQUESTED. BUYER SHALL BE FREE TO USE AND DISCLOSE
TO OTHERS INFORMATION AND DATA DELIVERED HEREUNDER.
7. WORK FOR HIRE. ANY WORK OF AUTHORSHIP CREATED BY SELLER IN PERFORMING
THE SERVICES HEREUNDER SHALL BE CONSIDERED AS A SPECIALLY ORDERED OR
COMMISSIONED "WORK FOR HIRE" AND ALL COPYRIGHTS FOR SUCH WORKS OF AUTHORSHIP
SHALL BEAR A VALID COPYRIGHT NOTICE DESIGNATING FORD MOTOR COMPANY AS THE
COPYRIGHT OWNER. IN THE EVENT ANY PORTION OF THE WORK OF AUTHORSHIP CREATED BY
THE SELLER IN PERFORMING THE SERVICES HEREUNDER DOES NOT QUALIFY AS "WORK FOR
HIRE", SELLER SHALL ACQUIRE TITLE TO THE COPYRIGHT FOR SUCH PORTION AND ASSIGN
ALL ACQUIRED TITLE AND INTEREST TO BUYER.
8. TITLE TO INVENTIONS. EVERY INVENTION, DISCOVERY AND IMPROVEMENT MADE,
CONCEIVED OR REDUCED TO PRACTICE IN PERFORMING CONTRACT SERVICES BELONGS TO
BUYER, WITHOUT FURTHER CONSIDERATION, AND SHALL BE REPORTED TO BUYER PROMPTLY.
UPON REQUEST, SELLER SHALL EXECUTE ALL DOCUMENTS AND PAPERS, AND SHALL FURNISH
ALL REASONABLE ASSISTANCE REQUIRED (I) TO ESTABLISH IN BUYER TITLE TO SUCH
INVENTIONS, DISCOVERIES AND IMPROVEMENTS AND (II) TO ENABLE BUYER TO APPLY FOR
UNITED STATES AND FOREIGN PATENTS THEREON.
9. COPYRIGHT LICENSE. SELLER HEREBY GRANTS TO BUYER AND TO ITS DOMESTIC
AND FOREIGN SUBSIDIARIES, A PERMANENT, NONEXCLUSIVE, PAID-UP WORLDWIDE LICENSE
UNDER EACH COPYRIGHT OWNED OR CONTROLLED OR HAVE THE RIGHT TO LICENSE IN EACH
WORK OF AUTHORSHIP FIXED IN ANY TANGLIBLE MEDIUM OF EXPRESSION FURNISHED TO
BUYER OR ITS DESIGNEE IN PERFORMING CONTRACT SERVICES,
TO USE SUCH WORK FOR BUYER'S INTERNAL PURPOSES, AND TO REPRODUCE SUCH WORK, TO
PREPARE DERIVATIVE WORKS, DISTRIBUTE COPIES OF SUCH WORK TO THE PUBLIC, AND TO
PERFORM AND DISPLAY SUCH WORK PUBLICLY.
10. CONFIDENTIALITY. SELLER AND ITS EMPLOYEES SHALL USE THE INFORMATION
AND DATA ACQUIRED FROM BUYER OR THIRD PARTIES UNDER THIS AGREEMENT ONLY IN
PERFORMING THE CONTRACT SERVICES, AND SHALL NOT DISCLOSE TO ANY THIRD PARTY,
DURING THE PERIOD OF THIS AGREEMENT AND THEREAFTER, ANY SUCH INFORMATION AND
DATA THAT IS NOT IN THE PUBLIC DOMAIN.
11. LIABILITY FOR PERSONAL INJURIES AND PROPERTY DAMAGE. SELLER SHALL BE
RESPONSIBLE FOR AND SHALL HOLD BUYER HARMLESS FROM ALL EXPENSES, INCLUDING
LEGAL FEES, WHICH ARISE FROM ITS PERFORMANCE HEREUNDER AND WHICH ARE FOR ACTUAL
OR ALLEGED INJURY TO ANY PERSON OR DAMAGE TO ANY PROPERTY, INCLUDING BUYERS
PROPERTY, EXCEPT TO THE EXTENT THAT SUCH EXPENSES ARE ATTRIBUTABLE TO BUYER'S
NEGLIGENCE OR WILLFUL MISCONDUCT.
12. EMPLOYMENT: THIRD PARTIES. IN PERFORMING THE CONTRACT SERVICES,
SELLER SHALL EMPLOY ONLY SUCH EMPLOYEES AND THIRD PARTIES AS BUYER SHALL HAVE
APPROVED IN WRITING IN ADVANCE. SELLER SHALL REQUIRE EACH EMPLOYEE AND
Page 5
<PAGE> 6
ORDER DATE: 01/06/96 BLANK ET ORDER NO. FMOFB BKBO 058368
THIRD PARTY APPROVED BY BUYER AN AGREEMENT UNDER WHICH THE THIRD PARTY IS BOUND
TO THE TERMS SET FORTH IN PARAGRAPHS 5 THROUGH 13 HEREOF. IN THE EVENT THAT,
FOR ANY REASON, BUYER IS NOT SATISFIED WITH THE PERFORMANCE OF ANY EMPLOYEE OF
SELLER, SELLER SHALL REPLACE SUCH EMPLOYEE WITH ANOTHER
QUALIFIED EMPLOYEE.
13. COMPLIANCE WITH LAW AND GOVERNING LAW. SELLER AND ITS EMPLOYEES SHALL
COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN PERFORMING THE SERVICES
UNDER THIS AGREEMENT. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN. LITIGATION IN CONTRACTUAL
CAUSES ARISING FROM THIS AGREEMENT SHALL BE BROUGHT ONLY IN A FEDERAL DISTRICT
COURT LOCATED IN MICHIGAN OR IN A COURT OF THE STATE OF MICHIGAN.
14. OVERTIME RATES. STRAIGHT TIME RATES PER HOUR ARE APPLICABLE TO EIGHT
(8) HOURS WORK EACH WORKING DAY OF THE SELLER'S NORMAL FORTY (40) HOUR
WORK WEEK, EXCEPT HOLIDAYS, REGARDLESS OF THE TIME THE SELLER'S BEGIN THEIR
WORK DAYS. WORK SHALL BE AT STRAIGHT TIME RATES UNLESS BUYER APPROVES HIGHER
RATES IN WRITING IN ADVANCE. TIME AND ONE-HALF OVERTIME RATES PER HOUR ARE
APPLICABLE TO HOURS WORKED IN EXCESS OF EIGHT (10) HOURS STRAIGHT TIME EACH DAY
OF THE NORMAL WORK WEEK AND ALL HOURS WORKED ON THE SIXTH WORK DAY, AS LONG AS
40 TOTAL WORK HOURS HAVE BEEN EXCEEDED. APPROVED VACATION AND SICK TIME COUNTS
TOWARD THE 40 TOTAL HOURS. DOUBLE-TIME RATES APPLY TO ALL HOURS WORKED ON
HOLIDAYS AND THE SEVENTH WORK DAY OF A WEEK. RECOGNIZED HOLIDAYS FOR THE
PURPOSES OF THIS PURCHASE ORDER ARE THE TEN PRIMARY FORD HOLIDAYS AS SCHEDULED
AT THE BEGINNING OF THE CALENDAR YEAR. (NEW YEAR'S DAY, MARTIN LUTHER KING, JR.
DAY, GOOD FRIDAY, EASTER MONDAY, MEMORIAL DAY, JULY 4TH, LABOR DAY,
THANKSGIVING DAY, THANKSGIVING FRIDAY AND CHRISTMAS DAY). BILLING RATE FOR
TIME AND ONE-HALF HOURS = 1.25 X THE STRAIGHT TIME BILLING
RATE AND THE BILLING RATE FOR DOUBLE TIME HOURS = 1.5 X THE STRAIGHT TIME
BILLING RATE. THE OVERTIME AND DOUBLE TIME BILLING RATE FACTOR FOR SYSTEMS
POSITIONS IS 1.0.
15. AMERICANS WITH DISABILITIES ACT COMPLIANCE. SELLER SHALL COMPLY WITH
THE AMERICAN'S WITH DISABILITIES ACT.
16. AUDIT. BUYER'S PAYMENT OBLIGATION SHALL BE NO MORE THAN THE SPECIFIED
MAXIMUM, IF ANY FOR SELLER'S ACTUAL TIME AT SPECIFIED RATES AND ACTUAL COSTS OF
PURCHASED MATERIALS AND SERVICES. SELLER SHALL ESTABLISH A REASONABLE
ACCOUNTING SYSTEM AND BUYER MAY AUDIT SELLER'S RECORDS, AT ANY TIME PRIOR TO
TWO YEARS AFTER FINAL PAYMENT, TO VERIFY BUYER'S PAYMENT OBLIGATION TO SELLER.
17. HIRING OF CURRENTLY CONTRACTED EMPLOYEES TO FORD MOTOR COMPANY. IN
THE EVENT SELLER HIRES AN INDIVIDUAL WHO IS ON A PROJECT ASSIGNMENT TO BUYER AT
THE TIME OF SUCH HIRING, SELLER SHALL NOT PROVIDE SUCH INDIVIDUAL TO BUYER FOR
ANY ASSIGNMENT FOR A PERIOD OF 90 DAYS.
18. HIRE OPTION. FORD MOTOR COMPANY AND ANY FORD SUBSIDIARY SHALL HAVE AN
UNEQUIVOCAL RIGHT TO HIRE ONE OR MORE OF SELLER'S EMPLOYEES AFTER THE EMPLOYEES
HAVE BEEN WORKING AT A FORD FACILITY FOR MORE THAN SIX (6) MONTHS. SELLER
UNDERSTANDS THAT THIS RIGHT SHALL SUPERSEDE ANY RESTRICTIVE AGREEMENTS THAT
EXIST BETWEEN SELLER AND ITS EMPLOYEES AND SHALL SURVIVE ANY TERMINATION OF THE
PURCHASE (BLANKET) ORDER.
19. DRUG FREE ENVIRONMENT. SELLER IS RESPONSIBLE AND ACCOUNTABLE FOR
PROVIDING FORD WITH DRUG-FREE CONTRACT PERSONNEL.
20. SHIFT PREMIUMS. UNDER THIS PURCHASE ORDER SHIFT PREMIUMS MUST BE
APPROVED IN ADVANCE BY THE FORD REQUESTING MANAGER AND INDICATED ON THE CPO
AUTHORIZATION. WHEN AUTHORIZED, SHIFT PREMIUMS WILL BE COMPUTED TO A MAXIMUM
OF:
AFTERNOON SHIFT BILLING RATE - (APPLICABLE STANDARD BILLING RATE) X 1.035
MIDNIGHT SHIFT BILLING RATE - (APPLICABLE STANDARD BILLING RATE) X 1.070.
SHIFT PREMIUMS FOR OVERTIME HOURS WILL BE COMPUTED BY FIRST MULTIPLYING THE
STANDARD BILLING RATE BY THE APPLICABLE OVERTIME MULTIPLIER AND THEN
MULTIPLYING THE RESULT BY THE APPROPRIATE SHIFT PREMIUM. FORD WILL NOT BE
RESPONSIBLE FOR RATES COMPUTED UNDER ANY OTHER METHOD OR ASSUMPTION.
TOTAL NUMBER OF ITEMS = 0
Page 6
<PAGE> 1
EXHIBIT 11 -- STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
------------- ------------ -------------
<S> <C> <C> <C>
Primary
Average shares outstanding 11,204,971 10,339,072 7,987,800
Net effect of dilutive stock options and warrants -
based on the treasury stock
method using average market price 155,797 642,111 1,318,455
------------- ------------ -------------
Total 11,360,768 10,981,183 9,306,255
------------- ------------ -------------
Net income $ 2,399,067 $ 1,971,049 $ 1,672,413
============= ============ =============
Per share amount $ 0.21 $ 0.18 $ 0.18
============= ============ =============
Fully Diluted
Average shares outstanding 11,204,971 10,339,072 7,987,800
Net effect of dilutive stock options and warrants -
based on the treasury stock
method using the quarter-end market price,
if higher than average market price 155,797 740,064 1,535,140
------------- ------------ -------------
Total 11,360,768 11,079,136 9,522,940
============= ============ =============
Net income $ 2,399,067 $ 1,971,049 $ 1,672,413
============= ============ =============
Per share amount $ 0.21 $ 0.18 $ 0.18
============= ============ =============
</TABLE>
29
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,717,543
<SECURITIES> 0
<RECEIVABLES> 13,624,827
<ALLOWANCES> 200,000
<INVENTORY> 769,545
<CURRENT-ASSETS> 16,191,444
<PP&E> 7,458,571
<DEPRECIATION> 2,898,257
<TOTAL-ASSETS> 22,285,523
<CURRENT-LIABILITIES> 3,838,529
<BONDS> 0
0
0
<COMMON> 114,077
<OTHER-SE> 17,777,889
<TOTAL-LIABILITY-AND-EQUITY> 22,285,523
<SALES> 1,959,363
<TOTAL-REVENUES> 41,787,462
<CGS> 1,705,303
<TOTAL-COSTS> 32,337,016
<OTHER-EXPENSES> 5,349,034
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,109
<INCOME-PRETAX> 4,077,303
<INCOME-TAX> 1,678,236
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,399,067
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
