<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 15, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MEDIALINK WORLDWIDE INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C> <C> <C>
DELAWARE 52-1481284
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
4899
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
------------------------
708 THIRD AVENUE
NEW YORK, NY 10017
(212) 682-8300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
LAURENCE MOSKOWITZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MEDIALINK WORLDWIDE INCORPORATED
708 THIRD AVENUE
NEW YORK, NY 10017
(212) 682-8300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
THEODORE WM. TASHLIK, ESQ. WILLIAM N. DYE, ESQ.
MARTIN M. GOLDWYN, ESQ. WILLKIE FARR & GALLAGHER
TASHLIK, KREUTZER & GOLDWYN P.C. ONE CITICORP CENTER
833 NORTHERN BOULEVARD 153 EAST 53RD STREET
GREAT NECK, NY 11021 NEW YORK, NY 10022
(516) 466-8005 (212) 821-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM OFFERING PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock,
($.01 par value).................. 2,300,000 Shares $11.00 $25,300,000 $7,667
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
Dated October 15, 1996
2,000,000 SHARES
[LOGO]
COMMON STOCK
------------------------
All of the 2,000,000 shares being offered hereby are being sold by Medialink
Worldwide Incorporated ('Medialink' or the 'Company'). Up to 300,000
additional shares may be sold by certain of the Company's stockholders
(the 'Selling Stockholders') in the event that the Underwriters
exercise their over-allotment option. The Company will not receive
any proceeds from the sale of shares by the Selling Stockholders.
See 'Principal and Selling Stockholders.'
------------------------
Prior to the offering, there has been no public market for the Common Stock. It
is currently estimated that the initial public offering price will be between
$9.00 and $11.00 per share. See 'Underwriting.' Application has been
made to have the Common Stock approved for quotation on the Nasdaq
National Market under the symbol 'MDLK.'
------------------------
SEE 'RISK FACTORS' BEGINNING ON PAGE 7 HEREOF FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
PER SHARE $ $ $
TOTAL(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See 'Underwriting.'
(2) Before deduction of expenses payable by the Company estimated at $ .
(3) The Selling Stockholders have granted the several Underwriters a 30-day
option to purchase up to an additional 300,000 shares of Common Stock solely
to cover over-allotments, if any. If such option is exercised in full, the
total price to public, underwriting discounts and commissions and proceeds
to the Selling Stockholders will be $ , $ and $ ,
respectively. The proceeds to the Company will not change from the amount
set forth above. See 'Underwriting.'
------------------------
The Common Stock is being offered by the Underwriters named herein when, as
and if received and accepted by them, subject to their right to reject orders
in whole or in part and subject to certain other conditions. It is expected
that delivery of the shares will be made in New York, New York on or
about , 1996.
------------------------
DEAN WITTER REYNOLDS INC. WHEAT FIRST BUTCHER SINGER
, 1996
<PAGE>
Tap the Power of photo of person
videotaping
GLOBAL MEDIA
photo of
computer screen
We broadcast the stories
and project the images
that make the news on
television and radio, in the
workplace and in the home.
VIDEO NEWS RELEASES SATELLITE MEDIA
TOURS reaching Television Viewers
AUDIO NEWS RELEASES RADIO MEDIA
TOURS reaching Radio Listeners
VIDEO CONFERENCES LIVE BROADCASTS
reaching Internal Audiences
PUBLIC RELATIONS RESEARCH PRESS CLIPPING
ANALYSIS proving the Value of
Communications
PRESS RELEASE DISTRIBUTION reaching
Trade and Newspaper Readers
AUDIO/VIDEO VIA THE INTERNET reaching
On-line Newsrooms and the Public
photo of satellite
|
|
photo of hand at electronic board
|
|-------------------------------
| photo of a newscaster |
| |
- ----------------------------------------------------
photo of | photo of person in | photo of |
globe | control room | |
| | persons |
| | |
- -------------------------------------| hand on a |----------------------------
photo of audio photo of | MEDIALINK |
broadcaster globe radio knob | |
- --------------------------------------------------------------------------------
| |
| Worldwide Communications Solutions |
------------------------------------------
HEADQUARTERS
New York
OFFICES
London
Atlanta
Chicago
Dallas
Los Angeles
Norwalk, CT
Washington
AFFILIATES
Brussels
Dubai
Geneva
Hamburg
Hong Kong
Johannesburg
Madrid
Melbourne
Oslo
Paris
Rome
San Juan/Miami
Seoul
Stockholm
Tel Aviv
Tokyo
Toronto
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH MAY STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR SINCE THE DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 4
Risk Factors................................... 7
Use of Proceeds................................ 12
Dividend Policy................................ 12
Dilution....................................... 13
Capitalization................................. 14
Selected Financial Information................. 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 16
<CAPTION>
PAGE
----
<S> <C>
Business....................................... 21
Management..................................... 33
Certain Transactions........................... 39
Principal and Selling Stockholders............. 40
Description of Capital Stock................... 42
Shares Eligible for Future Sale................ 45
Underwriting................................... 46
Legal Matters.................................. 47
Experts........................................ 47
Additional Information......................... 47
Index to Financial Statements.................. F-1
</TABLE>
------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus.
THE COMPANY
Medialink is a leading worldwide provider of video and audio production and
distribution services for businesses and other organizations seeking to
communicate their news through television, radio and other media. The Company's
principal services are based on its core business -- the satellite distribution
of video news releases (VNRs) and the electronic monitoring of their broadcast
on television. A VNR is the video equivalent of a conventional press release and
is used for the same purposes, such as to introduce a new product or service,
explain a technological breakthrough, communicate during a crisis or advocate a
position on an issue of public concern. VNRs are produced for easy integration
into newscasts and are distributed to the media for their use in complete or
edited form. The Company began offering video production services in 1994 and
has since developed a full range of video, audio and print services which it now
provides on a global basis. Services introduced since 1994 accounted for
approximately 25% of revenues for the six months ended June 30, 1996. Medialink
enables its clients to reach more than 3,000 newsrooms at television and radio
networks, local stations, cable channels, direct broadcast satellite systems, as
well as on-line services, including those available on the Internet.
The Company has provided its services to more than 1,100 clients over the
last twenty-four months. The Company's clients include corporations such as
General Motors, IBM, Johnson & Johnson, Sony and Ciba Geigy/Sandoz;
organizations such as the American Association of Retired Persons and the
AFL-CIO; and the world's largest marketing communications firms such as
Burson-Marsteller, Hill & Knowlton, Edelman Public Relations Worldwide and the
Shandwick Group. No single client accounted for more than 4% of the Company's
revenues in 1995. Materials distributed by the Company have aired on ABC, CBS,
NBC and their affiliates, as well as CNN and CNBC in the United States, and the
BBC, CNN International, Sky News, RAI (Italy) and NHK (Japan) internationally.
Organizations that conduct public relations campaigns, including most
marketing communications agencies, do not generally find it cost-effective to
maintain the facilities and personnel necessary to produce material suitable for
use on news broadcasts and distribute it to the media, especially on a global
basis. As a result, it is often more economical to outsource such services from
a specialist firm such as the Company, which can provide the necessary talent
and production, distribution and monitoring facilities. While the Company serves
a global marketplace, it believes that the North American and United Kingdom
markets for its services total approximately $500 million.
Medialink's competitive advantages include its extensive operating history
with media outlets, key industry relationships, prominent client base,
combination of professional skills, ability to integrate new technology and
worldwide distribution and production capabilities. The Company has an exclusive
agreement with the Associated Press (the 'AP') to use the AP's dedicated links
to notify U.S. television and radio newsrooms of upcoming satellite
transmissions. The Company has agreements with the AP and ABC Radio Networks
Inc. ('ABC Radio') for satellite transmission of audio services to radio
stations in the U.S. The Company also has an agreement with Nielsen Media
Research and uses Competitive Media Reporting to monitor domestic television
station usage of video services. Internationally, the Company has a network of
17 affiliates in Europe, Latin America, South Africa, Asia and the Pacific Rim.
International revenues increased approximately 317% from $360,000 in 1993 to
$1.5 million in 1995.
The Company plans to expand its business by (i) developing new services;
(ii) leveraging its client relationships by cross-marketing services to its
clients; (iii) continuing its global expansion; and (iv) pursuing acquisitions
and strategic alliances with other companies that can add to the Company's
service capabilities or geographic scope. In July 1996 the Company acquired
certain assets of PR Data Systems, Inc. (the 'PR Data Acquisition') to expand
its research capabilities and to add print news release distribution services.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company..................... 2,000,000 shares
Common Stock to be outstanding after the Offering....... 5,047,933 shares(1)
Use of Proceeds......................................... For general corporate purposes and possible
acquisitions. See 'Use of Proceeds.'
Nasdaq National Market symbol........................... MDLK
</TABLE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------------- ---------------------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- --------------------- --------- ---------------------
PRO PRO
ACTUAL FORMA(2) ACTUAL ACTUAL FORMA(2)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................... $ 4,891 $ 5,802 $ 6,065 $ 7,548 $ 10,625 $ 12,237 $ 4,937 $ 7,431 $ 8,212
Gross profit............... 3,024 3,577 3,435 4,509 6,071 7,492 2,732 4,223 4,949
Operating income (loss).... 87 140 (215) 440 698 705 255 823 839
Net income (loss).......... $ 21(3) $ 144(3) $ (231) $ 1,464(4) $ 381 $ 374 $ 140 $ 495 $ 498
Net income (loss) before
tax valuation
reversal(4).............. $ 21(3) $ 144(3) $ (231) $ 222(4) $ 381 $ 374 $ 140 $ 495 $ 498
Pro forma net income per
share(5)................. $ 0.11 $ 0.04 $ 0.14
Shares used to compute pro
forma net income per
share(5)................. 3,453 3,453 3,453
OTHER DATA:
Number of offices.......... 4 4 5 6 7 8 6 7 8
Average revenues per sales
employee................. $326,000 $322,000 $347,000 $414,000 $ 506,000 $532,000
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(2) AS ADJUSTED(2)(6)
------ ------------ -----------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital........................................................ $2,115 $1,828 $19,728
Total Assets........................................................... 5,555 6,688 24,588
Long-term debt, net of current portion................................. -- 293 293
Stockholders' Equity................................................... 2,929 3,084 20,984
</TABLE>
- ------------------
(1) Does not include an aggregate of (i) 569,594 shares of Common Stock issuable
upon exercise of options outstanding under the Company's Amended and
Restated Stock Option Plan ('Stock Option Plan') and (ii) 62,400 shares of
Common Stock reserved for issuance upon exercise of options outstanding
under the 1996 Directors Stock Option Plan ('Directors Stock Option Plan').
(2) Gives effect to PR Data Acquisition as if the transaction occurred at the
beginning of the period for statement of operations data and at June 30,
1996 for balance sheet data. The Company paid for the PR Data Acquisition
through the payment of $120,000 cash, the issuance of 24,000 shares of
Common Stock and the assumption of certain liabilities not to exceed the
book value of the assets acquired by $372,000. The pro forma financial
information is not necessarily indicative of the operating results which
would have been achieved had the acquisition occurred at the beginning of
the period presented or the results to be achieved in the future.
(3) Includes a loss of $40,000 from discontinued operations in 1991 and the
utilization of net operating losses resulting in tax benefits of $12,000 in
1991 and $49,000 in 1992.
(4) In accordance with Statement of Financial Accounting Standards No. 109, the
Company reversed its valuation allowance against deferred tax assets in the
amount of $1,242,000 in 1994. See Note 5 to the Company's Financial
Statements.
(5) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the number of shares.
(6) Gives effect to the offering of 2,000,000 shares of Common Stock (at an
assumed price of $10.00 per share) and the estimated net proceeds of $17.9
million, as if the offering occurred on June 30, 1996.
5
<PAGE>
Medialink is headquartered in New York and maintains offices in Washington,
D.C., Chicago, Dallas, Los Angeles, Atlanta and Norwalk, Connecticut. Its
international activities are coordinated from its London office. Medialink was
incorporated under the laws of the State of Delaware in 1986. The Company
maintains its principal offices at 708 Third Avenue, New York, New York 10017.
The Company's telephone number is 212-682-8300. The Company's Internet address
is www.medialinkworldwide.com. Information contained in the Company's World Wide
Web ('Web') site shall not be deemed part of this Prospectus.
------------------------
Unless otherwise indicated, all information in this Prospectus (i) assumes
no exercise of the Underwriters' over-allotment option, (ii) reflects a 1.2 for
1 stock split of the Common Stock effected in the form of a stock dividend on
July 31, 1996 and (iii) gives effect to the automatic conversion of all
outstanding shares of Series A, Series B and Series C Preferred Stock into an
aggregate of 2,111,669 shares of Common Stock to be effective upon the closing
of this offering (the 'Preferred Stock Conversions'). See 'Description of
Capital Stock.' Medialink is a service mark of the Company.
6
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. The following factors, in addition to the other information in
this Prospectus, should be carefully considered in evaluating the Company and
its business before purchasing the shares of Common Stock offered hereby. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results in the future could differ
significantly from the results discussed in such forward-looking statements.
Factors that could cause or contribute to such a difference include, but are not
limited to, those discussed in 'Risk Factors' below, 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and 'Business,'
as well as those discussed elsewhere in this Prospectus.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY OF BUSINESS
The Company experiences quarterly seasonal variations in revenues as a
result of many factors, including its clients' business cycles and timing of
product introductions. As a result, the Company's revenues are typically lower
during the first and third quarters of the Company's fiscal year. The Company
expects this seasonality to continue in the future. In addition, other factors
that may cause the Company's quarterly results to fluctuate include timing of
the completion, material reduction or cancellation of projects or timing of the
receipt of new business, timing of the hiring or loss of sales personnel, the
relative profit mix of projects, strategic pricing decisions of the Company and
costs relating to the expansion of operations and other factors. Events which
dominate news broadcasts may cause the Company's clients to delay their use of,
or not use, the Company's services for a particular project as such clients may
determine that their messages may not receive adequate attention in light of the
coverage of other news events. Such circumstances could have a material adverse
effect on the Company's business, operating results and financial condition. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continuing
contributions of, and on its ability to attract and retain, qualified management
and sales, operations, marketing and technical personnel. In particular, the
loss of the services of its founders, Laurence Moskowitz, the Company's Chairman
of the Board, President and Chief Executive Officer, or J. Graeme McWhirter, its
Executive Vice President and Chief Financial Officer, could have a material
adverse effect upon the Company. There can be no assurance that an adequate
replacement could be found if the Company were to lose the services of Mr.
Moskowitz or Mr. McWhirter. There can be no assurance that the Company will be
able to continue to attract and retain qualified management and sales,
operations, marketing and technical personnel in the future. The Company's
failure to attract and retain key personnel would have a material adverse effect
on its business, operating results and financial condition. The Company is the
beneficiary of a $2 million key man life insurance policy on the life of
Laurence Moskowitz. The Company has entered into employment agreements with its
executive officers which will become effective upon the consummation of this
offering. See 'Management.'
DEPENDENCE ON CERTAIN SUPPLIERS
The Company has an exclusive agreement with the AP for the operation of the
AP Express/Medialink Newswire serving approximately 740 television stations
across the U.S. The Company believes that its agreement with the AP gives it a
competitive advantage because of this ability to notify television stations of
upcoming video transmissions, and the termination of such agreement could have a
material adverse effect on the Company's business, operating results and
financial condition. The Company's agreement with the AP expires in November
1997 and the Company is currently negotiating an extension of such agreement.
There can be no assurance that such agreement will be extended, or if extended,
on terms favorable to the Company. The Company also has an agreement with
Nielsen Media Research and uses Competitive Media Reporting for electronic
monitoring of video television broadcasts. In addition, the Company has
agreements with the AP and ABC Radio for satellite transmissions of audio
services to radio stations in the U.S. The termination of any of these services
could have a material adverse effect on the Company's business, operating
results and financial condition. The Company benefits from favorable volume
pricing agreements with certain suppliers for satellite transmission services.
The inability in the future to obtain sufficient supply or service from these
and other
7
<PAGE>
vendors, or to develop alternative sources, could result in price increases,
delays or reductions in services which could have a material adverse effect on
the Company's business, operating results and financial condition.
The Company's ability to distribute material to media outlets in accordance
with its clients' requirements depends on a number of factors. Some of these
factors are outside of the Company's control, including equipment failure and
interruption in services by its telecommunications service providers. The
Company's failure to make timely distributions could have a material adverse
effect on the Company's business, operating results and financial condition. The
Company has experienced increases in satellite transmission costs during the
past two years. The inability or unwillingness of the Company to pass such cost
increases to its clients could have a material adverse effect on the Company's
business, operating results and financial condition.
DEPENDENCE ON VIDEO NEWS RELEASES
A substantial portion of the Company's revenues to date has been derived
from the production, distribution and monitoring of VNRs in the U.S. and
overseas. A decline in demand for, or reduction in average prices charged by the
Company for, VNR services, whether as a result of competition, technological
change or otherwise, would have a material adverse effect on the Company's
business, operating results and financial condition. Additionally, the Company
is dependent upon the willingness of the media outlets to which it supplies VNRs
to actually use them on their news broadcasts. Should these media outlets reduce
the use of VNRs, there would be a material adverse effect on the Company's
business, operating results and financial condition. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
'Business.'
DEPENDENCE ON NEW SERVICES FOR GROWTH
The Company believes that its growth will depend, in part, on its ability
to effectively market recently introduced services and to develop new services
in a timely and cost-effective manner. There can be no assurance that the
Company will be successful in marketing and developing these recently introduced
services or other new services or that if such development is completed, the
Company's planned introduction of these services will realize market acceptance
or will meet the technical or other requirements of its clients. If the Company
is unable to effectively market new services, there could be a material adverse
effect on the Company's business, operating results and financial condition. See
'Business.'
RISKS ASSOCIATED WITH ACQUISITIONS
The Company's growth strategy includes pursuing acquisitions in the
communications services industry. The success of this strategy depends not only
upon the Company's ability to identify and acquire suitable businesses on a
cost-effective basis, but also upon its ability to integrate acquired personnel,
operations, products, services and technology into its organization effectively,
to retain and motivate key personnel and to retain the clients of acquired
firms. There can be no assurance that the Company will be able to achieve any of
the foregoing. The Company competes for acquisition opportunities with other
companies that have significantly greater financial and other resources than
those of the Company. The Company may use Common Stock and/or Preferred Stock
(which could result in dilution to the purchasers of the Common Stock offered
hereby) or may incur long-term indebtedness or a combination thereof for all or
a portion of the consideration to be paid in future acquisitions. The Company
has no current plans, agreements or commitments and is not currently engaged in
any negotiations with respect to any acquisitions.
GLOBAL EXPANSION
The Company plans to continue its international expansion through direct
operations and foreign affiliations. There can be no assurance, however, that
the Company's services will achieve market acceptance in other countries. The
Company's ability to successfully enter these new markets will depend, in part,
on its ability to attract personnel with experience in these locations and to
attract partners with the necessary local business relationships. Changes in
government policies and regulations in foreign countries could require the
Company's services to be redesigned or could restrict the Company's ability to
deliver its material. Telecommunications standards in foreign countries differ
from those in the U.S. and may require the Company to incur substantial costs
and expend significant managerial resources to comply with such standards.
Furthermore, international business is subject to country-specific risks and
circumstances, including different tax laws, difficulties in expatriating
profits, currency exchange rate fluctuations, increases in duties, price
controls and the complexities
8
<PAGE>
of administering business abroad. These and other related risks and
circumstances could have a material adverse effect on the Company's business,
operating results and financial condition.
ABILITY TO INTEGRATE NEW TECHNOLOGY
The communications industry is characterized by rapidly changing
technology. The Company's ability to remain competitive will depend in
significant part upon its ability to continue to integrate new technology into
its services. New technologies, as well as the introduction of services
embodying new technologies, could render the Company's existing services
obsolete or unmarketable. There can be no assurance that the Company will be
successful in identifying and developing new services that respond to
technological change, that the Company will not experience difficulties that
could delay or prevent the successful development, introduction and marketing of
these services or that its new or enhanced services will adequately meet the
requirements of the marketplace and achieve market acceptance. See 'Business.'
COMPETITION
The markets for the Company's services are highly competitive. The
principal competitive factors affecting the Company are effectiveness,
reliability, price, technological sophistication and timeliness. Numerous
specialty companies compete with the Company in each of its business lines
although no single company competes across all service lines. Many of the
Company's competitors or potential competitors have longer operating histories,
longer client relationships and significantly greater financial, management,
technological, sales, marketing and other resources than the Company. In
addition, clients could perform internally all or certain of the services
provided by the Company rather than outsourcing such services. The Company
expects that competition will increase substantially as a result of industry
consolidations and alliances, as well as through the emergence of new
competitors. The Company believes that the market for communications services
may become increasingly concentrated in the future as a result of the
acquisition and integration of smaller service providers, which are likely to
permit many of the Company's competitors to devote significantly greater
resources to the development and marketing of new competitive services. There
can be no assurance that existing or future competitors will not develop or
offer communications services that provide significant performance, price,
creative or other advantages over those offered by the Company. The Company
could face competition from companies in related communications markets which
could offer services that are similar or superior to those offered by the
Company. In addition, national and regional telecommunications providers could
enter the market with materially lower electronic delivery costs, and radio and
television networks could also begin transmitting business communications
separate from their news programming. The Company's ability to maintain and
attract clients depends to a significant degree on the quality of services
provided and its reputation among its clients and potential clients as compared
to that of competitors. There can be no assurance that the Company will not face
increased competition in the future or that such competition will not have a
material adverse effect on the Company's business, operating results and
financial condition.
MANAGEMENT OF GROWTH; RISKS ASSOCIATED WITH EXPANSION
The Company's business has grown rapidly in recent years. The Company's
expansion has resulted, and is expected in the future to result, in substantial
growth in the number of its employees and in increased responsibility for both
existing and new management personnel. The Company's success depends to a
significant extent on the ability of its executive officers and other members of
senior management, only one of whom has any executive management experience with
a public company, to manage that growth and operate effectively, both
independently and as a group. See 'Management.'
In addition, the Company plans to expand its services and open new offices.
There can be no assurance that the Company will be able to manage its recent or
any future expansion effectively and profitably, and any inability to do so
would have a material adverse effect on the Company's business, operating
results and financial condition. There also can be no assurance that the Company
will be able to sustain the rates of growth that it has experienced in the past.
9
<PAGE>
ABSENCE OF LONG-TERM CONTRACTS
The Company's clients generally retain the Company on a project-by-project
basis rather than under long-term contracts. As a result, there can be no
assurance that a client will engage the Company for further services once a
project is completed. To the extent that a large number of the Company's current
clients do not continue to use the Company's services, and the Company is unable
to attract new clients, there would be a material adverse effect on the
Company's business, operating results and financial condition.
SUSCEPTIBILITY TO GENERAL ECONOMIC CONDITIONS
The Company's revenues are affected by its clients' marketing
communications spending and advertising budgets. The Company's revenues and
results of operations may be subject to fluctuations based upon general economic
conditions in the geographic locations where it distributes its material. If
there were to be a general economic downturn or a recession in these geographic
locations, then the Company expects that business enterprises, including its
clients and potential clients, could substantially and immediately reduce their
marketing and communications budgets. In the event of such an economic downturn,
there would be a material adverse effect on the Company's business, operating
results and financial condition.
CONCENTRATION OF STOCK OWNERSHIP; POTENTIAL ISSUANCE OF PREFERRED STOCK;
PROVISIONS WITH POTENTIAL ANTI-TAKEOVER EFFECTS
Upon completion of this offering, the executive officers and directors of
the Company and their affiliates and other holders of 5% or more of the Common
Stock will beneficially own approximately 38.4% of the Common Stock
(approximately % if the Underwriters' over-allotment option is exercised in
full). As a result, these stockholders will be able to control or significantly
influence all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. Such concentration
of ownership may have the effect of delaying or preventing a change in control
of the Company. See 'Principal Stockholders.'
In addition, the Company's Board of Directors has the authority to issue up
to 1,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions thereof, including voting rights,
without any further vote or action by the Company's stockholders. Although the
Company has no current plans to issue any shares of Preferred Stock, the rights
of the holders of Common Stock would be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. Issuance of Preferred Stock could have the effect of delaying,
deferring or preventing a change in control of the Company. Furthermore, certain
provisions of the Company's Amended and Restated Certificate of Incorporation
and Amended and Restated Bylaws and of Delaware law could have the effect of
delaying, deferring or preventing a change in control of the Company. See
'Management,' 'Certain Transactions,' 'Principal and Selling Stockholders' and
'Description of Capital Stock.'
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law which prevent certain Delaware corporations, including
those whose securities are listed on the Nasdaq National Market, from engaging,
under certain circumstances, in a 'business combination' with any 'interested
stockholder' for three years following the date that such stockholder became an
'interested stockholder.' A Delaware corporation may 'opt out' of this law with
an express provision in its original certificate of incorporation or an
amendment either to its certificate of incorporation or to its by-laws approved
by a majority of the outstanding voting shares. The Company has not opted out of
the law which may inhibit a third party 'interested stockholder' from commencing
a 'business combination.'
DISCRETION IN USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Common
Stock offered hereby for general corporate purposes and possible acquisitions.
The Company, however, has not designated any specific use for these proceeds.
Accordingly, the Company will have complete discretion with respect to the use
of these proceeds and there can be no assurance that they can or will be
invested to yield a significant return. See 'Use of Proceeds.'
10
<PAGE>
NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this offering there has been no public market for the Company's
Common Stock and, although the Company has applied to have the Common Stock
approved for quotation and trading on the Nasdaq National Market, there can be
no assurance that an active trading market will develop or be sustained after
this offering. The initial public offering price of the Common Stock offered
hereby will be determined through negotiations among the Company and the
Representatives of the Underwriters and may not be indicative of future market
prices. There can be no assurance that the market price of the Common Stock will
not decline below the initial public offering price. The trading prices of the
Common Stock may be highly volatile and subject to wide fluctuations in response
to a number of factors, including variations in operating results, limited
trading volume, failure to meet expectations of, or a change in recommendation
by, securities analysts, announcements of extraordinary events such as
litigation or acquisitions, announcements of technological innovations or new
services by the Company or its competitors, as well as trends in the Company's
industry and general market conditions. In addition, stock markets have
experienced extreme price and volume fluctuations in recent years. This
volatility has had a substantial effect on the market prices of securities of
many companies for reasons frequently unrelated to the operating performance of
the specific companies. These broad market fluctuations may adversely affect the
market price of the Company's Common Stock. See 'Underwriting.'
IMMEDIATE AND SUBSTANTIAL DILUTION
Assuming an initial public offering price of $10.00 per share, investors
participating in this offering will incur immediate, substantial dilution of
approximately $6.14 in the net tangible book value per share. To the extent
outstanding options to purchase the Company's Common Stock are exercised, there
will be further dilution to such investors. See 'Dilution.'
SHARES ELIGIBLE FOR FUTURE SALES
Sales of a substantial number of shares of Common Stock in the public
market following this offering or the prospect of such sales could adversely
affect the market price of the Common Stock prevailing from time to time.
Upon completion of this offering, the Company will have 5,047,933 shares of
Common Stock outstanding. Of these shares, 2,000,000 shares of Common Stock
offered hereby will be freely transferable without restriction unless purchased
by 'affiliates' of the Company as that term is defined under Rule 144 ('Rule
144') promulgated under the Securities Act of 1933, as amended (the 'Securities
Act'). The remaining shares will be 'restricted securities' as that term is
defined in Rule 144 under the Securities Act and may not be sold other than
pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption from such registration requirement. Subject to the
contractual restrictions discussed below, 3,023,933 shares of Common Stock will
be eligible for sale under Rule 144 from the date of this Prospectus. 2,111,669
of such shares are entitled to certain registration rights. See 'Description of
Capital Stock.' Certain of the Company's stockholders are subject to lock-up
agreements under which they have agreed not to sell or otherwise dispose of any
shares of Common Stock without the prior written consent of Dean Witter Reynolds
Inc. for a period of 180 days after the date of this Prospectus whether now
owned or hereafter acquired by such stockholders or with respect to which such
stockholders have or hereafter acquire the power of disposition or enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock or any Common Stock deemed to be beneficially owned by such
stockholders, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. Such stockholders
also have agreed not to exercise their registration rights for 180 days after
the date of this Prospectus and have granted Dean Witter Reynolds Inc. the right
of first refusal to be engaged as the lead manager of the underwritten public
offering of their shares if registration rights are exercised following the
expiration of the lock-up period until the date that is 12 months from the date
of this Prospectus. The Company has consented to any such engagement of Dean
Witter Reynolds Inc. The Company has agreed not to issue or sell any shares of
Common Stock, without the prior written consent of Dean Witter Reynolds Inc. for
a period of 180 days after the date of this Prospectus other than the issuance
of shares upon the exercise of stock options. Upon the expiration of the 180-day
lock-up period, certain of the shares of Common Stock subject to the lock-up
agreements will become eligible for sale in the public market subject to the
conditions of Rule 144. See 'Underwriting' and 'Shares Eligible For Future
Sales.'
11
<PAGE>
The Company intends to file a Registration Statement on Form S-8 to
register the 850,808 shares of Common Stock issuable upon the exercise of
options granted under the Stock Option Plan and the Directors Stock Option Plan.
Following the filing of the Form S-8, shares of Common Stock issued upon the
exercise of options granted under the Stock Option Plan and the Directors Stock
Option Plan will be available for sale in the public market upon vesting of such
options, subject to Rule 144 volume limitations applicable to affiliates.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby are estimated to be $17.9 million,
assuming a public offering price of $10.00 per share, and after deducting the
Underwriters' discounts and commissions and the estimated offering expenses
payable by the Company.
The Company intends to use the net proceeds of this offering for general
corporate purposes and possible acquisitions. No portion of the proceeds of this
offering has been allocated to any specific acquisition. Although the Company
reviews and considers possible acquisitions on an on-going basis, no specific
acquisitions are planned as of the date of this Prospectus. Pending such uses,
the Company plans to invest the net proceeds of this offering in short-term,
interest-bearing investment grade securities. See 'Business.'
DIVIDEND POLICY
The Company has never paid dividends on its Common Stock. The Company
intends to retain any earnings to provide funds for utilization in its business
and does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. The Company's loan agreement contains provisions which
prohibit the payment of cash dividends by the Company.
12
<PAGE>
DILUTION
At June 30, 1996 the pro forma net tangible book value of the Company, as
adjusted to give effect to PR Data Acquisition and the Preferred Stock
Conversions as if such acquisition and the Preferred Stock Conversions had
occurred on June 30, 1996, was $1,577,445 or $0.52 per share of Common Stock
outstanding. 'Pro Forma net tangible book value' per share represents the total
amount of the Company's tangible assets less total liabilities, divided by the
number of shares of Common Stock outstanding prior to the offering. After giving
effect to the sale by the Company of the 2,000,000 shares of Common Stock
offered hereby (at an assumed initial public offering price of $10.00 per share
and after deducting estimated underwriting discounts and offering expenses), the
pro forma net tangible book value of the Company at June 30, 1996 would have
been $19,477,445 or $3.86 per share. This amount represents an immediate
increase of $3.34 per share to existing stockholders and an immediate dilution
of $6.14 per share to new investors. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Common Stock....................... $10.00
Pro forma net tangible book value per share before the offering.................. $0.52
Increase per share attributable to the offering.................................. 3.34
-----
Pro forma net tangible book value per share of Common Stock after the offering........ 3.86
------
Dilution per share to new investors in the offering................................... $ 6.14
------
------
</TABLE>
The following table sets forth, on a pro forma basis at June 30, 1996,
after giving effect to the PR Data Acquisition, the Preferred Stock Conversions
and the offering, the number of shares of Common Stock purchased from the
Company, the total consideration paid and the average price per share paid by
the existing stockholders and by the investors purchasing shares of Common Stock
offered hereby (assuming an initial public offering price of $10.00 per share
before deducting underwriting discounts and offering expenses):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).................. 3,047,933 60.4% $ 3,879,606 16.2% $ 1.27
New investors(1).......................... 2,000,000 39.6 20,000,000 83.8 10.00
---------- ------- ----------- -------
Total..................................... 5,047,933 100.0% $23,879,606 100.0%
---------- ------- ----------- -------
---------- ------- ----------- -------
</TABLE>
- ------------------
(1) If the over-allotment option is exercised in full, sales by Selling
Stockholders will reduce the number of shares held by the existing
stockholders to 2,747,933 shares or approximately 54.4% of the total shares
of Common Stock outstanding and will increase the number of shares held by
new investors to 2,300,000 or approximately 45.6% of the total shares of
Common Stock outstanding after this offering. See 'Principal and Selling
Stockholders.'
The foregoing computations assume no exercise of options to purchase
569,594 shares of Common Stock reserved for issuance under the Company's Stock
Option Plan at a weighted average exercise price of $3.16 per share and 62,400
shares of Common Stock reserved for issuance under the Directors Stock Option
Plan at an exercise price of $3.54 per share. To the extent that any outstanding
options are exercised, there will be further dilution to new investors. See
'Management.'
13
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) on an
actual basis as of June 30, 1996 and (ii) pro forma as adjusted after giving
effect to the PR Data Acquisition, the Preferred Stock Conversions and the
issuance and sale by the Company of the 2,000,000 shares of Common Stock offered
hereby, at an estimated initial public offering price of $10.00 per share, and
the receipt of the estimated net proceeds therefrom, after deducting the
underwriting discounts and commissions and estimated offering expenses payable
by the Company. This table should be read in conjunction with the Financial
Statements and related Notes thereto, 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and the Unaudited Pro Forma
Condensed Combined Financial Statements appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
PRO FORMA
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Current portion of long-term debt........................................ $ -- $ 36,709
---------- -----------
---------- -----------
Long-term debt........................................................... $ -- $ 293,291
Stockholders' equity(1)
Preferred Stock, $.01 par value, 1,000,000 shares authorized; none
issued and outstanding, actual and pro forma as adjusted............ -- --
Series A, 10% Cumulative Convertible Preferred Stock, $1.50 par value;
655,417 shares authorized, issued and outstanding actual; none
issued and outstanding pro forma as adjusted........................ 983,126 --
Series B, 10% Cumulative Preferred Stock, $1.35 par value; 475,185
shares authorized, issued and outstanding actual; none issued and
outstanding pro forma as adjusted................................... 641,500 --
Series C, 10% Cumulative Convertible Preferred Stock, $2.75 par value;
645,455 shares authorized; 629,130 shares issued and outstanding
actual; none issued and outstanding pro forma as adjusted........... 1,730,107 --
Common Stock, $.01 par value, 15,000,000 shares authorized; 912,264
shares issued and outstanding actual; 5,047,933 shares issued and
outstanding pro forma as adjusted................................... 9,123 50,479
Additional paid-in capital............................................... 360,750 21,729,127
Accumulated deficit...................................................... (794,612) (794,612)
Equity adjustment for foreign currency translation....................... (634) (634)
---------- -----------
Total stockholders' equity............................................. 2,929,360 20,984,360
---------- -----------
Total capitalization..................................................... $2,929,360 $21,277,651
---------- -----------
---------- -----------
</TABLE>
- ------------------
(1) Does not include an aggregate of (i) 569,594 shares of Common Stock issuable
upon exercise of options outstanding under the Company's Stock Option Plan
at a weighted average exercise price of $3.16 per share of Common Stock and
(ii) 62,400 shares of Common Stock reserved for issuance upon exercise of
options outstanding under the Directors Stock Option Plan, at an exercise
price of $3.54 per share.
14
<PAGE>
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
The following selected historical financial information presented below as
of and for each of the five years ended December 31, 1995 have been derived from
financial statements of the Company audited by KPMG Peat Marwick LLP,
independent certified public accountants. The financial statements as of
December 31, 1994 and 1995 and for each of the years in the three year period
ended December 31, 1995 are included elsewhere in this Prospectus. The selected
unaudited historical information presented below for the six month periods ended
June 30, 1995 and 1996 and as of June 30, 1996, are derived from the unaudited
financial statements of the Company included elsewhere in this Prospectus. In
the opinion of management of the Company, the unaudited financial information
reflects all adjustments, consisting of normal recurring adjustments, necessary
to present fairly the financial information for such periods and as of such
date. The results of the six month periods ended June 30, 1995 and 1996 are not
necessarily indicative of results to be expected for the full year.
The unaudited pro forma information gives effect to the PR Data Acquisition
and the Preferred Stock Conversions as if each had occurred on or at the
beginning of the period presented. The pro forma information is not necessarily
indicative of the results of operations or the financial condition that would
have been reported if the PR Data Acquisition had occurred during those periods,
or as of those dates, or that may be reported in the future.
This data should be read in conjunction with the historical financial
statements of the Company and PR Data Systems Inc. ('PR Data') and the Unaudited
Pro Forma Condensed Combined Financial Statements of the Company appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------------------- ---------------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------------------- ------ ------------------
PRO PRO
ACTUAL FORMA ACTUAL ACTUAL FORMA
-------- --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................... $ 4,891 $ 5,802 $ 6,065 $ 7,548 $ 10,625 $ 12,237 $4,937 $7,431 $ 8,212
Direct costs................... 1,867 2,225 2,629 3,039 4,553 4,745 2,205 3,208 3,263
-------- -------- -------- -------- -------- --------- ------ ------ ---------
Gross profit................... 3,024 3,577 3,435 4,509 6,071 7,492 2,732 4,223 4,949
General and administrative
expenses..................... 2,937 3,437 3,651 4,069 5,373 6,787 2,477 3,400 4,110
-------- -------- -------- -------- -------- --------- ------ ------ ---------
Operating income (loss)........ 87 140 (215) 440 698 705 255 823 839
Other income (expense)......... (12) 18 (3) 1 15 (11) 8 13 (9)
-------- -------- -------- -------- -------- --------- ------ ------ ---------
Income (loss) before income
taxes........................ 75 158 (218) 441 713 694 263 836 830
Income tax expense (benefit)... 26 63 13 (1,023)(1) 332 320 123 341 332
-------- -------- -------- -------- -------- --------- ------ ------ ---------
Income (loss) from continuing
operations before
discontinued operations and
extraordinary
item......................... 49 95 (231) 1,464(1) 381 374 140 495 498
Net income (loss).............. $ 21(2) $ 144(2) $ (231) $ 1,464(1) $ 381 $ 374 $ 140 $ 495 $ 498
-------- -------- -------- -------- -------- --------- ------ ------ ---------
-------- -------- -------- -------- -------- --------- ------ ------ ---------
Net income (loss) applicable to
common stock................. $ (295)(2) $ (184)(2) $ (566) $ 1,129 $ 46 $ 374 $ (28) $ 327 $ 498
Net income (loss) before tax
valuation reversal(1)........ $ 21 (2) $ 144 (2) $ (231) $ 222 $ 381 $ 374 $ 140 $ 495 $ 498
Pro forma net income per
share(3) $ 0.11 $ 0.11 $0.04 $0.14 $ 0.14
Shares used to compute pro
forma net income per
share(3)..................... 3,453 3,485 3,453 3,453 3,485
OTHER DATA:
Number of offices.............. 4 4 5 6 7 8 6 7 8
Average revenues per sales
employee..................... $326,000 $322,000 $347,000 $414,000 $506,000 $532,000
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1996
---------------------------------------------- -------------------
1991 1992 1993 1994 1995 ACTUAL PRO FORMA
------ ------ ------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................... $ 248 $ 370 $ 218 $ 887 $1,722 $2,115 $ 1,828
Total assets....................................... 1,399 1,483 1,683 3,237 4,387 5,555 6,688
Long-term debt, net of current portion............. 30 -- -- -- -- -- 293
Stockholders' equity............................... 488 750 557 2,017 2,425 2,929 3,084
</TABLE>
- ------------------
(1) In accordance with Statement of Financial Accounting Standards No. 109, the
Company reversed its valuation allowance against deferred tax assets in the
amount of $1,242,000 in 1994. See Note 5 to the Company's Financial
Statements.
(2) Includes a loss of $40,000 from discontinued operations in 1991 and the
utilization of net operating losses resulting in tax benefits of $12,000 in
1991 and $49,000 in 1992.
(3) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the number of shares.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion of the Company's historical results of operations
and of its liquidity and capital resources should be read in conjunction with
the Selected Financial Information of the Company and the Financial Statements
of the Company and the Notes thereto included elsewhere in the Prospectus.
The Company was formed in September 1986 and initially concentrated on the
satellite distribution of VNRs and the electronic monitoring of their broadcast
on television. The Company has grown as a result of the introduction of new
services and domestic and international expansion. The Company now provides a
wide array of services on a worldwide basis. These services include video
distribution and monitoring (introduced in 1987), live broadcasts, including
satellite media tours and video conferencing (1988), video production, research
and analysis of marketing communications campaigns and programs (1994) and audio
distribution and production (1996). Services introduced since 1994 (video
production, audio distribution and production, and research and analysis)
accounted for approximately 25% of revenues for the six months ended June 30,
1996. The PR Data Acquisition in July 1996 has expanded the Company's research
capabilities and added print news release distribution services. The following
table illustrates on a percentage of revenues basis the changing mix of the
Company's revenues since 1992:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED
JUNE 30,
---------------------------- ----------------
SERVICES 1992 1993 1994 1995 1996
- --------------------------------------- ---- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C>
Video distribution and monitoring...... 73% 75% 73% 61% 53%
Video production....................... -- NM 7 12 20
Live broadcasts........................ 27 25 20 22 22
Audio distribution and production...... -- -- -- -- 2
Research and analysis.................. -- -- NM 5 3
</TABLE>
The Company launched its international services and established an office
in London in 1993. The Company has since developed 17 affiliate relationships
which enable the Company to provide global production and distribution.
International revenues more than quadrupled from $360,000 in 1993 to $1.5
million in 1995. International revenues increased by $836,000, or 131.7% from
$635,000 for the six months ended June 30, 1995 to $1.5 million for the six
months ended June 30, 1996.
In addition to adding new services, the Company has continued to expand
geographically by adding new offices, most recently in Dallas in 1994 and
Atlanta in 1995, and by adding personnel to existing offices. Each new office
has resulted in the development of new client relationships.
Clients pay for production, distribution, monitoring and live broadcasts on
a fixed-fee basis. The Company does not charge the media for airing the clients'
material. The Company's revenues do not depend on the usage by the media of the
clients' material. The Company's production department specifies in advance of
each project the services to be provided for the specified fee. In the event
that a project requires additional services, the client incurs additional fees.
Research is conducted pursuant to contracts and on a project basis. These
contracts and projects are priced on a fixed-fee basis. Distribution and live
broadcast revenues are recognized upon the completion of the project. Video
production and research revenues are recognized on the percentage of completion
basis. Generally, video production projects are completed within one month from
the time they are initiated; research projects can last for up to one year.
Direct costs include costs associated with the use of the AP
Express/Medialink Newswire, satellite transmission, electronic monitoring,
production crews, editing, studios, tabulation services and sales commissions.
Satellite transmission costs have increased during the past two years. During
the third quarter of 1995 the Company began to pass such increase in costs to
its clients. General and administrative expenses include all salary-related
costs as well as general overhead costs such as advertising, travel and
entertainment expenses, and rent.
16
<PAGE>
The Company experiences quarterly seasonal variations in revenues as a
result of several factors, including its clients' business cycles and timing of
product introductions. Accordingly, since the Company's salary and overhead
costs are relatively stable from quarter to quarter, the Company's results from
operations have been higher in the second and fourth quarters of the fiscal
year. In addition, the Company's gross profit margins reflect the mix of
business between the Company's services.
The Company consummated the PR Data Acquisition in July 1996. PR Data had
revenues of approximately $1.7 million in 1995. The Company paid for the PR Data
Acquisition through the payment of $120,000 cash, the issuance of 24,000 shares
of Common Stock and the assumption of certain liabilities not to exceed the book
value of the assets acquired by $372,000. In addition, the Company will make
payments in the aggregate amount of $410,000 payable over the next five years
under the terms of non-compete agreements with certain officers and stockholders
of PR Data. The transaction was accounted for as a purchase.
GENERAL
Results of Operations
The following table sets forth for the periods indicated certain components
of the Company's statement of operations as a percentage of revenues.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1994 1995
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Revenues...................................... 100.0% 100.0% 100.0%
Direct costs.................................. 43.4 40.3 42.9
------ ------ ------
Gross profit.................................. 56.6 59.7 57.1
General and administrative expenses........... 60.2 53.9 50.6
------ ------ ------
Operating income (loss)....................... (3.6) 5.8 6.5
Other income.................................. -- -- 0.1
------ ------ ------
Income (loss) before income taxes............. (3.6) 5.8 6.6
Income tax expense (benefit).................. 0.2 (13.6)(1) 3.1
------ ------ ------
Net income (loss)............................. (3.8)% 19.4%(1) 3.5%
------ ------ ------
------ ------ ------
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------
1995 1996
------------- -------------
<S> <C> <C>
Revenues...................................... 100.0% 100.0%
Direct costs.................................. 44.7 43.2
------ ------
Gross profit.................................. 55.3 56.8
General and administrative expenses........... 50.2 45.8
------ ------
Operating income (loss)....................... 5.1 11.2
Other income.................................. 0.1 0.2
------ ------
Income (loss) before income taxes............. 5.2 10.8
Income tax expense (benefit).................. 2.4 4.6
------ ------
Net income (loss)............................. 2.8% 6.6%
------ ------
------ ------
</TABLE>
- ------------------
(1) In accordance with Statement of Financial Accounting Standards No. 109, the
Company reversed its valuation allowance against deferred tax assets in the
amount of $1,242,000 in 1994. See Note 5 to the Company's Financial
Statements.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995
Revenues. Revenues increased by $2.5 million, or 50.5%, from $4.9 million
for the six months ended June 30, 1995 (the 'June 1995 Period') to $7.4 million
for the six months ended June 30, 1996 (the 'June 1996 Period'). This increase
was primarily due to increased sales of VNR production services, which increased
by $1.0 million, increased sales of VNR distribution services, which increased
by $902,000, and live broadcast services, which increased by $370,000.
International revenues contributed $836,000 to this growth.
Direct Costs. Direct costs increased by $1.0 million, or 45.5%, from $2.2
million for the June 1995 Period to $3.2 million for the June 1996 Period.
Direct costs as a percentage of revenues decreased to 43.2% of revenues for the
June 1996 Period from 44.7% of revenues for the June 1995 Period, reflecting an
increase in business activity and the mix of business during the period.
General and Administrative Expenses. General and administrative expenses
increased by $920,000, or 37.3%, from $2.5 million for the June 1995 Period to
$3.4 million for the June 1996 Period. General and administrative expenses as a
percentage of revenues decreased to 45.8% for the June 1996 Period from 50.2%
for the June 1995 Period. Salary-related costs increased by $500,000 as the
Company strengthened its upper and mid-level management and expanded its sales
staff. In addition, sales and marketing costs increased by $116,000 for the June
1996 Period.
17
<PAGE>
Operating Income. As a result of the foregoing, operating income increased
by $568,000, or 222.7% from $255,000 for the June 1995 Period to $823,000 for
the June 1996 Period. As a percentage of revenues, operating income for the June
1996 Period was 11.0% as compared with 5.1% for the June 1995 Period.
Income Tax Expense (Benefit). Income tax expense reflects an allocation
based on the full year anticipated tax expense. Combined federal, state and
local taxes were estimated at 40.8% for the June 1996 and June 1995 Periods.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER 31, 1994
Revenues. Revenues increased by $3.1 million, or 40.7%, from $7.5 million
for the year ended December 31, 1994 to $10.6 million for the year ended
December 31, 1995. The increase was primarily due to increased sales of VNR
distribution services, which increased by $930,000, VNR production services,
which increased by $780,000, live broadcast services, which increased by
$780,000, and research and analysis services, which increased by $500,000. These
increases were primarily attributable to international revenue growth which
increased by $650,000, improved productivity of the Company's sales and
marketing team, the growth of U.S. production services and the introduction of
research and analysis services at the end of 1994.
Direct Costs. Direct costs increased by $1.6 million, or 49.9%, from $3.0
million in 1994 to $4.6 million in 1995. Direct costs as a percentage of
revenues increased from 40.3% of revenues for 1994 to 42.9% of revenues for
1995. This increase was attributable to a change in the mix of the Company's
business and an increase in satellite costs.
General and Administrative Expenses. General and administrative expenses
increased by $1.3 million, or 32.0%, from $4.1 million in 1994 to $5.4 million
in 1995. General and administrative expenses as a percentage of revenues
decreased to 50.6% in 1995 from 53.9% in 1994. Salary-related costs increased by
$700,000 in 1995 as the Company increased its staff to respond to the increased
demand for the Company's services and sales and marketing costs increased by
$100,000 in 1995.
Operating Income. As a result of the foregoing, operating income increased
by $258,000, or 58.6%, from $440,000 in 1994 to $698,000 in 1995. As a
percentage of revenues, operating income for 1995 was 6.5% as compared with 5.8%
for 1994.
Income Tax Expense (Benefit). In 1994 the income tax benefit resulted
primarily from the reversal of the balance of the Company's valuation allowance
on deferred tax assets in accordance with SFAS No. 109 as a result of the
Company's determination that it had become more likely than not that such
deferred tax assets would be realized.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO THE YEAR ENDED DECEMBER 31, 1993
Revenues. Revenues increased by $1.5 million, or 24.4%, from $6.0 million
for the year ended December 31, 1993 to $7.5 million in the year ended December
31, 1994. This increase was primarily due to increased sales of VNR distribution
services which increased by $1.0 million, and VNR production services which
increased by $490,000. These increases were primarily attributable to improved
productivity of the Company's sales and marketing team, the introduction of VNR
production services in the U.S. and international revenue growth which increased
by $475,000.
Direct Costs. Direct costs increased by $409,000, or 15.6%, from $2.6
million in 1993 to $3.0 million in 1994. Direct costs as a percentage of
revenues decreased to 40.3% in 1994 from 43.3% in 1993. The gross margin
improved as a result of the change in the mix in the Company's business.
General and Administrative Expenses. General and administrative expenses
increased by $418,000, or 11.5%, from $3.7 million in 1993 to $4.1 million in
1994. General and administrative expenses as a percentage of revenues decreased
to 53.9% in 1994 from 60.2% in 1993. Salary-related costs increased by $219,000
in 1994 and sales and marketing costs increased by $84,000 in 1994.
Operating Income (Loss). As a result of the foregoing, operating income
increased by $656,000, from an operating loss of $215,000 in 1993 to an
operating profit of $440,000 in 1994. As a percentage of revenues, operating
income for 1994 was 5.8% as compared with a loss of 3.5% for 1993.
18
<PAGE>
Income Tax Expense (Benefit). Income tax expense reflected on the
statement of operations represents federal, state and local taxes. In 1994 the
income tax benefit resulted primarily from the reversal of the Company's
valuation allowance on deferred tax assets in accordance with SFAS No. 109. In
1993, income tax expense reflected state and local taxes as the Company had
determined that, based on its operating losses and the level of its deferred tax
assets, it was unable to conclude that it was more likely than not that such
deferred tax assets would be realized in the future.
QUARTERLY RESULTS
The Company experiences quarterly seasonal variations in revenues as a
result of several factors, including its clients' business cycles and timing of
product introductions. Accordingly, since the Company's salary and overhead
costs are relatively stable from quarter to quarter, the Company's results from
operations have been higher in the second and fourth quarters. The following
table presents the Company's operating results for the eight quarters ended June
30, 1996. The information for each of these quarters is unaudited but has been
prepared on the same basis as the Company's audited financial statements and in
the opinion of the Company's management reflects all the adjustments made in
conjunction with the Company's audited financial statements and notes thereto
appearing elsewhere in the prospectus. Operating results for any quarter are not
indicative of results for any future periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1994 1994 1995 1995 1995 1995 1996
------------- ------------ --------- -------- ------------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................... $ 1,773 $ 2,126 $ 2,018 $ 2,920 $ 2,445 $ 3,242 $ 3,329
Direct costs.................. 756 860 876 1,329 1,078 1,270 1,439
------------- ------------ --------- -------- ------------- ------------ ---------
Gross profit.................. 1,017 1,266 1,142 1,591 1,367 1,972 1,890
General and administrative
expenses.................... 1,020 1,099 1,192 1,284 1,319 1,578 1,568
------------- ------------ --------- -------- ------------- ------------ ---------
Operating income (loss)....... (3) 167 (50) 307 48 394 322
Other income.................. 1 2 3 4 5 3 7
------------- ------------ --------- -------- ------------- ------------ ---------
Income (loss) before taxes.... (2) 169 (47) 311 53 397 329
Income tax expense
(benefit)................... (1) 69 (22) 145 25 185 134
------------- ------------ --------- -------- ------------- ------------ ---------
Net income (loss)............. $ (1) $ 100 $ (25) $ 166 $ 28 $ 212 $ 195
------------- ------------ --------- -------- ------------- ------------ ---------
------------- ------------ --------- -------- ------------- ------------ ---------
Pro forma net income (loss)
per share(1)................ $ -- $ 0.03 $ (0.01) $ 0.05 $ 0.01 $ 0.06 $ 0.05
<CAPTION>
JUNE 30,
1996
--------
<S> <C>
Revenues...................... $ 4,102
Direct costs.................. 1,769
--------
Gross profit.................. 2,333
General and administrative
expenses.................... 1,832
--------
Operating income (loss)....... 501
Other income.................. 6
--------
Income (loss) before taxes.... 507
Income tax expense
(benefit)................... 207
--------
Net income (loss)............. $ 300
--------
--------
Pro forma net income (loss)
per share(1)................ $ 0.09
</TABLE>
<TABLE>
<CAPTION>
AS A PERCENTAGE OF REVENUES
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct costs.................. 42.6 40.5 43.4 45.5 44.2 39.2 43.2
------------- ------------ --------- -------- ------------- ------------ ---------
Gross profit.................. 57.4 59.5 56.6 54.5 55.8 60.8 56.8
General and administrative
expenses.................... 57.6 51.6 59.0 44.0 53.9 48.7 47.1
------------- ------------ --------- -------- ------------- ------------ ---------
Operating income (loss)....... (0.2) 7.9 (2.4) 10.5 1.9 12.1 9.7
Other income.................. -- -- 0.1 0.1 0.2 0.1 0.2
------------- ------------ --------- -------- ------------- ------------ ---------
Income (loss) before taxes.... (0.2) 7.9 (2.3) 10.6 2.1 12.2 9.9
Income tax expense
(benefit)................... (0.1) 3.2 (1.1) 5.0 1.0 5.7 4.0
------------- ------------ --------- -------- ------------- ------------ ---------
Net income (loss)............. (0.1)% 4.7% (1.2)% 5.6% 1.1% 6.5% 5.9%
------------- ------------ --------- -------- ------------- ------------ ---------
------------- ------------ --------- -------- ------------- ------------ ---------
<CAPTION>
<S> <C>
Revenues...................... 100.0%
Direct costs.................. 43.1
--------
Gross profit.................. 56.9
General and administrative
expenses.................... 44.7
--------
Operating income (loss)....... 12.2
Other income.................. 0.1
--------
Income (loss) before taxes.... 12.3
Income tax expense
(benefit)................... 5.0
--------
Net income (loss)............. 7.3%
--------
--------
</TABLE>
- ------------------
(1) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the number of shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through cash generated
from operations. Since the end of 1994, the Company's cash balance has increased
by approximately $231,000 from $262,000 as of December 31, 1994 to $493,000 as
of June 30, 1996 as a result of continued profitability. The Company has no
capital expenditure plans other than in the ordinary course of business
consistent with its prior practices. Capital expenditures were approximately
$394,000 for 1995 and $288,000 for the six months ended June 30, 1996. The
Company believes that the net proceeds from the offering and cash flow from
operations will be sufficient to fund its cash needs for at least the next
twelve months.
19
<PAGE>
The Company has a $500,000 line of credit facility secured by the Company's
accounts receivable which matures on February 28, 1997, bears interest at the
prime rate plus 1% and is payable monthly. Under the terms of the line of
credit, the Company is prohibited from paying cash dividends on its stock. As of
June 30, 1996 the Company had no borrowings outstanding on the line of credit.
EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
Long-Lived Assets. In March 1995, the Financial Accounting Standards Board
('FASB') issued SFAS No. 121, 'Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of.' This statement is effective
for fiscal years beginning after December 15, 1995. The adoption of this
statement in fiscal 1996 did not have a material effect on the Company's
financial statements.
Stock-Based Compensation. In October 1995, the FASB issued SFAS No. 123,
'Accounting for Stock-Based Compensation,' which requires adoption of the
disclosure provisions no later than fiscal years beginning after December 15,
1995 and adoption of the measurement and recognition provisions for non-employee
transactions no later than after December 15, 1995. The new standard defines a
fair value method of accounting for the issuance of stock options and other
equity instruments. Under the fair value method, compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. Pursuant to SFAS No.
123, companies are encouraged, but not required, to adopt the fair value method
of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principles Board Opinion ('APB') No. 25, 'Accounting for Stock Issued to
Employees,' but would be required to disclose in a note to the financial
statements pro forma net income and per share amounts as if the company had
applied the new method of accounting. SFAS No. 123 also requires increased
disclosures for stock-based compensation arrangements regardless of the method
chosen to measure and recognize compensation for employee stock-based
arrangements. The Company has elected to continue to account for such
transactions under APB No. 25 and will disclose the required pro forma effect on
net income and earnings per share in its annual financial statements.
20
<PAGE>
BUSINESS
Medialink is a leading worldwide provider of video and audio production and
distribution services for businesses and other organizations seeking to
communicate their news through television, radio and other media. The Company's
principal services are based on its core business -- satellite distribution of
VNRs and the electronic monitoring of their broadcast on television. A VNR is
the video equivalent of a conventional press release and is used for the same
purposes, such as to introduce a new product or service, explain a technological
breakthrough, communicate during a crisis or advocate a position on an issue of
public concern. VNRs are produced for easy integration into newscasts and are
distributed to the media for their use in complete or edited form.
The Company began offering video production services in 1994 and has since
developed a full range of video, audio and print services which it now provides
on a global basis. Medialink enables its clients to reach more than 3,000
newsrooms at television and radio networks, local stations, cable channels,
direct broadcast satellite systems, as well as on-line services, including those
available on the Internet. The Company also coordinates live television
interviews through satellite media tours (SMTs) and produces live broadcasts of
newsworthy events for its clients. Similar to its video services, the Company
also offers its clients audio news releases (ANRs) and radio media tours (RMTs).
The Company believes that its proprietary database of over 40,000 news contacts,
which includes their editorial preferences and technical requirements, increases
the Company's efficiency.
The Company has provided its services to more than 1,100 clients over the
last twenty-four months. The Company's clients include corporations such as
General Motors, IBM, Johnson & Johnson, Sony and Ciba Geigy/Sandoz;
organizations such as the American Association of Retired Persons and the
AFL-CIO; and the world's largest marketing communications firms such as
Burson-Marsteller, Hill & Knowlton, Edelman Public Relations Worldwide and the
Shandwick Group. No single client accounted for more than 4% of the Company's
revenues in 1995. Materials distributed by the Company have aired on ABC, CBS,
NBC and their affiliates, as well as CNN and CNBC in the United States, and the
BCC, CNN International, Sky News, RAI (Italy) and NHK (Japan) internationally.
As an integral part of its services, the Company monitors media usage of
the material it distributes. Television usage is monitored using electronic
technology and data provided by several independent services, including Nielsen
Media Research and Competitive Media Reporting. Radio usage is monitored using
data provided by independent news tracking services, as well as data collected
automatically when radio stations call in to the Company's automated digital ANR
retrieval system. The Company provides its clients with monitoring reports which
include the date and time at which the clients' material was used, the media and
markets in which it was used and a report on the size and demographic
composition of the audience. The Company believes that this ability to
accurately monitor and report usage on a timely basis is critical to its
success. The Company also offers research and analysis services which provide
customized studies to measure the results of clients' public relations programs,
analyze competitive trends and measure return on investment of their marketing
communications efforts. As a result of the PR Data Acquisition in July 1996, the
Company expanded its research capabilities and added print news release
distribution services. In August 1996 the Company changed its corporate name
from Video Broadcasting Corporation to Medialink Worldwide Incorporated.
INDUSTRY BACKGROUND
While the Company serves a global marketplace, it believes that the North
American and United Kingdom markets for its services total approximately $500
million. The Company believes that the following trends have created growing
opportunities for its services in domestic and international markets:
Increasing Importance of Television as a Communications Medium. The
average amount of time that Americans over the age of 18 spend watching
television has increased by 5% over the last five years to 30 hours per week per
person and is projected to grow an additional 5% over the next five years
according to a regularly published industry source. At the same time, the
average time spent by that same group reading newspapers has declined nearly 5%
over this period to 3.25 hours per week and is expected to continue to decline
over the next five years according to the same source. In addition, a 1994
survey by the Roper organization indicates that 72% of Americans get most of
their news from television.
21
<PAGE>
Growing Number of Media Outlets. As the number of traditional media
outlets (broadcast, cable television and radio) has increased and as new media
outlets (on-line and Internet) develop, there has also been a proliferation of
news programs such as MSNBC and CNNfn. As a result, it has become more difficult
to deliver newsworthy material effectively to all media outlets. Increasingly,
organizations and their marketing communications firms are looking for
cost-effective and efficient ways of reaching all of these media outlets.
Outsourcing of Communications Services. At the same time that new
technologies and new media outlets have rendered marketing communications more
complex, few organizations have developed the capacity to provide key marketing
communications services (including video production and distribution)
internally. Many organizations have also followed the trend of reducing their
marketing communications staffs and now often outsource these functions. Outside
service providers offer several advantages, including: the ability to reach a
greater share of the available media; the avoidance of costs such as hiring
additional staff; and the opportunity to act quickly by utilizing the outside
service providers' distribution channels that could take months or years to
develop internally.
THE COMPANY'S COMPETITIVE ADVANTAGES
The Company believes that it is strategically positioned to benefit from
industry trends because of its ability to provide a wide array of video and
audio production, distribution, monitoring and research services on a worldwide
basis. The Company's competitive advantages include its extensive operating
history with media outlets, key industry relationships, prominent client base,
combination of professional skills, ability to integrate new technology and
worldwide production and distribution capabilities.
Extensive Operating History with Media Outlets. The Company has completed
more than 10,000 projects over the course of its ten years of operations and, as
a result, has developed strong relationships with both television and radio
newsrooms worldwide. As evidenced by the frequent usage of its news releases by
media outlets, the Company believes that it has developed a reputation as a
reliable producer of newsworthy, broadcast-quality VNRs and ANRs. In addition,
the Company has created a proprietary database of information about more than
740 television stations, more than 2,300 radio stations in the U.S. and 300
other media outlets worldwide. This database contains historical usage patterns
of the stations, information preferences demonstrated by the stations' news
directors and editors and incorporates underlying demographic data describing
the audiences reached by each station.
Key Industry Relationships. The Company has established key relationships
with prominent news distribution and support services companies. For the past
nine years, the Company has benefited from an exclusive arrangement with the AP
for the use of its dedicated links to newsroom computers at television and,
recently, radio stations in the U.S., to notify stations of upcoming video and
audio satellite transmissions. This system is the largest advisory service for
satellite-delivered news, and is relied upon by television and radio stations
across the U.S. The Company also uses the AP for audio transmissions by
satellite. In addition, through an agreement with ABC Radio, the Company's audio
services reach more than 2,300 radio stations in the U.S. Medialink primarily
monitors domestic television station usage of VNRs, SMTs and live broadcast
events under an agreement with Nielsen Media Research and also uses Competitive
Media Reporting's monitoring services.
Prominent Client Base. The Company has provided its services to more than
1,100 clients worldwide since 1994. The Company has developed client
relationships with such companies as AT&T, Columbia Tristar Pictures, Federal
Express, General Mills, Hasbro, Intel, MCI and Toyota. The Company also works
with the world's largest public relations firms, not-for-profit organizations
and government entities. The clients for the Company's research and analysis
services include corporations such as GTE, General Motors, Kraft Foods, Miller
Brewing and NYNEX. Repeat assignments from established clients represented a
significant portion of the Company's revenues for fiscal 1995 and the six months
ended June 30, 1996, accounting for 63% and 73%, respectively. The Company
believes that the prominence of its client base enhances its reputation among
news professionals and helps it attract new clients.
Combination of Professional Skills. The Company's staff is comprised of
professionals from the fields of public and investor relations, broadcast and
print journalism, production and distribution technology and media and marketing
research. This combination of skills enhances the Company's understanding of the
communications services industry and has enabled the Company to develop its
wide-ranging expertise. The
22
<PAGE>
public relations skills of its staff helps the Company to effectively articulate
the messages that its clients want to communicate. The broadcast and print
journalism background of its employees provides the Company with the ability to
translate the messages into video and audio content in a broadcast style that is
familiar to the news media and that can be easily integrated into news
programming. The production and distribution technology background of the
Company's operations staff contributes a broad understanding of newsrooms'
technical requirements which enables the Company to adapt its services to
changes in hardware and transmission systems. The media and marketing background
of the Company's research personnel enables Medialink to integrate sophisticated
market research techniques into its services.
Ability to Integrate New Technology. The Company's ability to integrate
new technology into its services significantly enhances its high-quality,
cost-effective services worldwide. Medialink adapts and implements new
technology through internal development and deployment, strategic alliances and
marketing and vendor agreements. Currently, the Company is experimenting with
digital video and audio transmission and retrieval systems. The Company
continuously monitors technological developments that have the potential to
enhance the value of its services.
Worldwide Distribution and Production. The Company offers its services on
a worldwide basis through all of its offices and through a network of 17
affiliates. The affiliates are independently owned companies which possess
production and marketing capabilities as well as demonstrated working
relationships with local media. All affiliates are trained in the Company's
methods of operation. In Asia, the Pacific Rim, South Africa and Latin America,
the affiliates market the Company's services and provide the Company's clients
with production, distribution and monitoring services. In Europe, the affiliates
market the Company's services to their own clients and provide production
services for the Company's clients.
STRATEGY
The Company's strategy is to maintain and leverage its leading position in
video distribution to become the premiere provider of production, distribution
and monitoring services for its clients' news across all media. The Company
believes that it can continue to broaden its communications services and reach
its strategic objective by (i) developing new services; (ii) leveraging its
client relationships by cross-marketing services to its clients; (iii)
continuing its global expansion; and (iv) pursuing acquisitions and strategic
alliances with companies that can add to the Company's service capabilities or
geographic scope. The following are the key elements of the Company's strategy:
Develop New Services. In recent years the Company has expanded its
services beyond its original video distribution and live broadcast services.
Video production, introduced in 1994, contributed 20% of revenues in the first
six months of 1996; and research and analysis, and audio production and
distribution services, introduced in 1994 and 1996, respectively, contributed 5%
of revenues during such periods. The Company developed its audio services to
satisfy the demand of existing clients and to offer its services to an expanded
range of clients. With the PR Data Acquisition in July 1996, the Company
expanded its research capabilities and added print news release distribution
services. The Company is currently developing digital video and audio
distribution services for the Internet.
Leverage Client Relationships through Cross-Marketing. The Company's
client relationships typically begin with a single project, but often develop to
a point where a client may use several of the Company's services on multiple
occasions. The Company intends to leverage its client relationships by selling
its clients additional communications services, including the production of VNRs
and the production and distribution of ANRs. At present, fewer than 20% of the
Company's clients use its video production services and fewer than 2% use its
audio production and distribution services. The Company also intends to market
its expanded research and analysis service to its clients and to offer its
existing services to PR Data clients. Because production and research services
require a higher degree of collaboration between the Company and its clients and
are typically delivered over a longer period of time, the Company believes that
these services contribute to developing closer client relationships, thus
increasing the Company's opportunity to sell clients a broader range of
services.
Continue to Expand Globally. Since the Company established operations in
London, approximately 30% of the Company's annual revenue growth has been from
international operations. The Company has expanded and will continue to expand
its client base through aggressive marketing, the establishment of additional
sales
23
<PAGE>
offices in the U.S., the expansion of its international affiliate network,
particularly in Asia and the Pacific Rim, and the hiring of additional
personnel.
Pursue Acquisitions and Strategic Alliances. The Company operates within a
fragmented industry that includes competitors which do not have the resources to
take advantage of emerging technologies or to offer a full range of integrated
communications support services. At the same time, the Company believes that its
clients are increasingly demanding a full array of integrated services on a
worldwide basis. The Company believes that these trends will encourage
consolidation within the industry and create opportunities for acquisitions and
strategic alliances. No specific acquisitions are planned as of the date of this
Prospectus. There can be no assurance that the Company will be successful in
acquiring and then integrating acquired operations and personnel. See 'Risk
Factors.'
MEDIALINK CLIENTS AND SERVICES
The Company offers its clients a wide array of services which may be
purchased individually or in a customized package. The Company's services
include the following:
VIDEO SERVICES
------------------------------------
Video News Release Distribution
and Monitoring:
Domestic
International
Electronic Press Kits
Internet Delivery
(under development)
Live Broadcasts:
Satellite Media Tours
Special Event Broadcasts
Video Conferences
Video News Release Production:
Domestic
International
Public Service Announcements
AUDIO SERVICES
------------------------------------
Audio News Release Distribution
and Monitoring:
Domestic
International
Radio Media Tours
Audio Conferences
Public Service Announcements
Internet Delivery
(under development)
RESEARCH AND
ANALYSIS SERVICES
AND OTHER SERVICES
------------------------------------
News Coverage Analysis
Campaign Effectiveness
Assessment
Competitive Analysis
Performance Benchmarking
Press Release Distribution
<PAGE>
CLIENTS
The Company has a wide variety of clients, either directly or through the
client's marketing communications support firms. Clients range from Fortune 100
companies to trade associations, government entities and not-for-profit
organizations. Client relationships generally begin with a limited assignment
and have often grown to the provision of a variety of integrated services. The
following chart demonstrates the breadth of services that the Company offers to
a representative list of clients. Some of the clients listed are parent
companies of subsidiaries who use the Company's services. Unless otherwise
indicated, all of the clients listed in the table below are direct clients of
the Company. For the fiscal year ended 1995, no client accounted for more than
4% of the Company's revenues.
<TABLE>
<CAPTION>
CLIENTS SERVICES PROVIDED
- ----------------------------------------------- -------------------------------------------------------------------------
CORPORATIONS, TRADE ASSOCIATIONS VIDEO VIDEO LIVE RESEARCH
AND NOT-FOR-PROFIT ORGANIZATIONS DISTRIBUTION PRODUCTION BROADCAST AND ANALYSIS AUDIO PRINT
- ----------------------------------------------- ------------ ---------- --------- ------------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
COMPUTER/ELECTRONICS
AT&T........................................... o o o
Ameritech...................................... o o
Cable & Wireless............................... o o
Ericsson, Inc.*................................ o
GTE............................................ o o
IBM............................................ o o o o
Intel.......................................... o
Hewlett Packard................................ o o
MCI............................................ o o o o
Microsoft*..................................... o
NYNEX.......................................... o o
Packard Bell*.................................. o
Sega........................................... o o
SONY*.......................................... o o o o o
Sprint*........................................ o
ENTERTAINMENT
Buena Vista Home Video......................... o
Castle Rock Entertainment...................... o o
Disney......................................... o
MCA Universal.................................. o
National Basketball Association................ o
Time Warner*................................... o o o
20th Century Fox............................... o o o
CONSUMER PRODUCTS
Federal Express*............................... o o o
General Mills*................................. o o
Hasbro*........................................ o o
Heinz*......................................... o o o
Kraft Foods*................................... o o o o o
Lever Bros.*................................... o o
Miller Brewing*................................ o o o o
Pepsi*......................................... o o o o
Phillip Morris*................................ o
VISA USA....................................... o o
HEALTH AND PHARMACEUTICAL
Abbott Laboratories*........................... o o
Ciba Geigy/Sandoz.............................. o o
Glaxo-Wellcome*................................ o
Janssen Pharmaceutica*......................... o
Johnson & Johnson.............................. o o o
Merck*......................................... o o o
Smith Kline/Beecham*........................... o o
</TABLE>
(table continued on next page)
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<TABLE>
<CAPTION>
CLIENTS SERVICES PROVIDED
- ----------------------------------------------- -------------------------------------------------------------------------
CORPORATIONS, TRADE ASSOCIATIONS VIDEO VIDEO LIVE RESEARCH
AND NOT-FOR-PROFIT ORGANIZATIONS DISTRIBUTION PRODUCTION BROADCAST AND ANALYSIS AUDIO PRINT
- ----------------------------------------------- ------------ ---------- --------- ------------ ----- -----
MANUFACTURING
<S> <C> <C> <C> <C> <C> <C>
BMW*........................................... o o o
Boeing*........................................ o
Dupont*........................................ o
Eastman-Kodak*................................. o
Ford Motor Company............................. o o o
General Motors................................. o o o o
Jaguar......................................... o o
Owens Corning*................................. o
Toyota......................................... o o
Volkswagen..................................... o
PUBLIC RELATIONS FIRMS
Burson-Marsteller.............................. o o o
Edelman Public Relations Worldwide............. o o
Fleishman-Hillard.............................. o o
Golin/Harris................................... o o
Hill & Knowlton................................ o o
Ogilvy Adams & Rinehart........................ o o o
Porter/Novelli................................. o o o
Shandwick Group................................ o o o
<CAPTION>
INDEPENDENT PRODUCERS
- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Corporate Television Group..................... o o
Perri Productions.............................. o
Robert Chang Productions....................... o
Washington Independent Productions............. o o o
GOVERNMENT AGENCIES/NOT-FOR-PROFIT
ORGANIZATIONS
American Assoc. of Retired Persons............. o o
British Department of the Environment.......... o o
European Commission............................ o o
Labor Institute for Public Affairs
(AFL-CIO)*................................... o o o
National Institutes of Health.................. o
U.S. Dept. of Labor............................ o
U.S. Federal Reserve........................... o o
U.S. Fish & Wildlife Service................... o
</TABLE>
- ------------------
* Some or all of the projects were received indirectly through a marketing
communications firm or an independent producer.
SERVICES
Video Services
Each of the Company's video services is composed of a combination of three
basic elements: notification, distribution and monitoring. Notification is the
process of informing newsrooms that material will be available, when it will be
available and how it will be delivered. Distribution is the process of
delivering the material, usually by satellite. Monitoring is the process of
collecting data on its usage and analyzing and reporting that usage back to the
client.
VNR Distribution. VNRs are the video equivalents of a conventional press
release and are used for the same purposes, such as to introduce a new product
or service, explain a technological breakthrough, communicate during a crisis or
advocate a position on an issue of public concern. VNRs are produced on
deadlines ranging from a few hours to a few weeks. VNRs are distributed to
broadcasters and formatted in broadcast-news style for easy integration, in
complete or edited form, into television and cable news programs. A VNR package
(fully narrated story with announce track) usually runs from 90 seconds to two
minutes. A VNR
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package also includes, in certain cases, B-roll (supplemental video to help
television news producers customize the story), which may also be distributed
separately.
An example of a VNR project distributed domestically and monitored by the
Company is Pepsi's broadcast campaign to counter rumors that syringes had been
found in soft drink cans. Pepsi produced four VNRs which aired in one week and
countered the rumors by showing the viewing public how difficult it would be to
tamper with the canning process. The Company's electronic monitoring indicated a
cumulative audience of 500 million over the one-week period, including airings
on ABC, NBC, CBS, CNN and CNBC.
The price for the domestic distribution and monitoring of a VNR typically
ranges from approximately $4,500 to $10,000, depending on project
specifications. The price for international distribution and monitoring of a VNR
typically ranges from approximately $8,000 to $30,000, depending on project
specifications.
VNR Production. The Company also produces VNRs. The VNR production process
begins with a consultation between the client and a Company producer following
which the producer and the client agree on the concept, a deadline and a
production budget. The producer prepares a script, schedules a freelance camera
crew, edits the videotape and submits it for client approval prior to
distribution.
The Company produced and distributed a VNR for the Hard Rock Cafe of the
opening of the Hard Rock Hotel and Casino in Las Vegas. The Company's electronic
monitoring indicated a cumulative audience of more than 36 million from 190
airings on 137 television stations or network news programs, including CNN, Hard
Copy, Inside Edition, WWOR, WABC in New York, KNBC in Los Angeles, WLS in
Chicago, WCAU in Philadelphia, WCVB in Boston, KDFW and WFAA in Dallas, KTRK in
Houston and WJW in Cleveland.
The price for domestic distribution and production of a VNR typically
ranges from approximately $9,000 to $30,000, depending on project
specifications. The price for international distribution and production of a VNR
typically ranges from approximately $12,000 to $40,000, depending on project
specifications.
Electronic Press Kits. The Company also produces and distributes
Electronic Press Kits (EPKs) for entertainment clients. EPKs are longer version
VNRs promoting upcoming feature films and home video cassettes which are
distributed to entertainment reviewers and reporters at television stations for
airing as part of their film reviews. EPKs include a trailer previewing scenes
from the film, location shots of the film sets and interviews of the stars and
director.
Buena Vista Pictures retained the Company in June 1996 to distribute an EPK
to promote the opening of The Hunchback of Notre Dame. The Company's monitoring
of the EPK indicated a cumulative audience of more than 47 million on more than
500 television news broadcasts. Portions of the EPK aired on networks and
stations such as CNN, WWOR in New York, KABC and KCBS in Los Angeles, WBBN and
WGN in Chicago, WPVI in Philadelphia, KRON in San Francisco, WMUR in Boston,
WJLA and WRC in Washington, DC and WFAA in Dallas.
The price for EPK production and distribution typically ranges from
approximately $7,500 to $25,000, depending on project specifications.
Live Broadcast Services. Live broadcast services include Satellite Media
Tours (SMTs), news conferences and special-event broadcasts. SMTs consist of a
sequence of one-on-one satellite interviews with a series of pre-booked
television reporters typically at 12 to 20 stations across the country or around
the world. Typical SMT applications include, among others, an interview with a
celebrity or author promoting an upcoming event, product, movie or book release.
SMTs generally are conducted from a studio but can originate from remote
locations. SMTs may be aired live by the television station or recorded for
later airing.
An example of a SMT coordinated by the Company was the American Egg Board's
promotion of the benefits of eggs in the diet featuring a National Football
League star. The Company's monitoring of the SMT indicated a cumulative audience
of 3.5 million. Portions of the SMT aired on 20 television stations or cable
systems, including WNBC in New York, Newschannel 8 in Washington, DC, KTVU in
San Francisco, WAGA in Atlanta, WEWS in Cleveland, WTHR in Indianapolis and WTNH
in Hartford.
The price for a SMT typically ranges from approximately $9,000 to $21,000,
depending on project specifications.
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Other live broadcast services include interviews, news conferences and
interactive video conferences. Examples of these include: coverage from the
floor the New York Stock Exchange of the first day of trading of Revlon's shares
and production of a major international video conference for Johnson & Johnson,
featuring primary speakers in Orlando, Florida, an interactive presentation from
a speaker in Zurich, Switzerland, as well as elements from news programs that
originated in many of the conference participants' home countries.
The price for live broadcast distribution ranges from approximately $10,000
to $200,000, depending on project specifications.
Audio Services
ANRs. ANRs are used for the same purposes as VNRs. ANRs are distributed to
radio stations for news, public affairs and 'talk radio' programs. ANRs are
produced on deadlines ranging from less than an hour to several days. ANRs are
produced for easy integration into a station's programming and are formatted for
their use in complete or edited form. Usage monitoring is conducted by telephone
surveys, traditional clipping services that monitor radio news in selected major
markets and an automated digital telephone retrieval system.
An example of an ANR produced and distributed by the Company was the
promotion of the initial availability of Nicotrol(Registered), an
over-the-counter nicotine patch distributed by McNeil Consumer Products.
Monitoring of the ANR indicated a cumulative audience of 3.8 million for
portions of the ANR from airings on 102 stations or networks nationwide
including Bloomberg Business News and in major markets such as New York,
Chicago, Boston, Detroit, Houston, Atlanta, Cleveland and Baltimore.
The price for domestic production and distribution of an ANR typically
ranges from approximately $3,500 to $5,500, depending on project specifications.
The price for international production and distribution of an ANR typically
ranges from approximately $10,000 to $20,000, depending on project
specifications.
RMTs. Medialink also offers RMTs. Similar to SMTs, RMTs consist of a
sequence of one-on-one interviews with a series of pre-booked radio stations
across the country or around the world. RMTs generally are conducted by
telephone from a studio, often in conjunction with a SMT. In October 1996 the
Company produced a RMT for 20th Century Fox in which actor Tom Hanks promoted
his new feature film 'That Thing You Do.' The RMT originated from the Company's
digital radio studio in its New York office. The monitoring of this RMT
indicated a cumulative audience of 1.4 million. The RMT was aired nationwide,
including radio stations in New York, Chicago, San Francisco, Detroit, Dallas,
Washington, Miami, Atlanta, Seattle, San Diego and Minneapolis.
The price for a RMT typically ranges from approximately $4,900 to $6,900,
depending on project specifications.
Research and Analysis Services
Through its Medialink Public Relations Research division, the Company
provides customized studies which clients use to gauge the effectiveness of
their public relations efforts. Based on data provided by electronic monitoring
and press clipping services, the Company uses statistical analyses to measure
the quantity and quality of the client's print and broadcast news coverage. The
reports include a digest of newspaper, magazine and broadcast coverage;
circulation and viewership totals; a qualitative scoring of the tone and content
of the coverage; and, upon request, an estimate of the price that equivalent
exposure would have cost if paid advertising were used.
Medialink also offers interpretive analyses that provide an overall
appraisal of the efficiency and impact of a client's communications efforts; a
comparison of the client's news coverage with that of its competitors; a
benchmark against which future efforts can be measured; and a gauge of return on
investment for marketing communications programs. In some cases the Company
conducts field research, interviewing journalists to ascertain their attitudes
toward a client company. Certain projects require the Company to survey the
public to determine how a client's reputation may have been affected by the
client's public relations efforts. Clients use these reports to continually
refine their public relations programs.
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The division's clients include AT&T, General Motors, GTE, Miller Brewing,
Kodak, Nynex and Kraft Foods. Research and analysis projects vary widely in
price depending on specifications and can range in price from $5,000 for a
single project to an annual retainer of $200,000.
Other Services. Medialink's other services include production and
distribution of Public Service Announcements (PSAs), distribution of photographs
and other graphic material to television stations and the distribution of
conventional press releases. PSAs are video messages in the public interest,
generally produced for non-profit organizations, that are aired by television
stations as a public service. The Company also transmits still photos or
graphics that are distributed with a press release to visually enhance the story
and are used as illustrations in newscasts while a news announcer reads the
story. Medialink also provides print distribution services, which includes the
distribution of conventional press releases via facsimile and mail.
Services Under Development. The Company is experimenting with an Internet
audio service called 'Medialink News Now.' The Company posts digital audio files
at www.medialinkvideonews.com. Although the service is intended primarily for
radio stations, any computer user with the appropriate equipment can retrieve
broadcast-quality audio from this Web site. In addition, the Company is testing
various technologies that might provide the basis for a service that delivers
video via the Web. This experiment could evolve into a system that allows
television stations to preview VNRs.
CASE STUDIES
The following case studies illustrate the Company's marketing
communications solutions for certain of the Company's clients, in each case
indicating the message to be conveyed to the public, the manner in which the
Company's services were employed and the results the services achieved.
General Mills. The Betty Crocker Products division of General Mills sought
to generate maximum publicity for a complete makeover of Betty Crocker, a
consumer icon celebrating its 75th anniversary. General Mills had, periodically,
updated the look of this fictional character in order to keep the symbol of the
Betty Crocker brand contemporary. Along with a wide range of public relations
activities undertaken by the client to maximize consumer awareness of the
brand's changes, the client employed a suite of video services, including a live
satellite transmission of the introduction ceremony, a SMT and a VNR.
The live broadcast was hosted by a key brand manager for the Betty Crocker
brand, who introduced the artists and several of the 75 women who inspired the
new composite Betty Crocker portrait. Corporate executives discussed the brand's
heritage and demonstrated how Betty Crocker's appearance had changed over the
years. Immediately following this event, Medialink coordinated a SMT during
which newscasters from 23 stations interviewed the artist and the brand
executive. In addition, video from the introduction ceremony was incorporated
into a VNR that was carried by major-market television stations and on ABC's
'Good Morning America' and 'World News Tonight.'
The Company's monitoring of the live broadcast, SMT and VNR indicated a
cumulative audience of 42 million. This project demonstrates the Company's
ability to orchestrate several of its services in a manner intended to amplify
the public exposure of a significant corporate event.
Web-TV. In July 1996 Web-TV introduced the first product to provide
consumers with access to the Internet via household television sets. The system
is based on a set-top box manufactured by Sony and Philips that allows users to
navigate the Web with a device that resembles a television remote control.
Medialink produced a VNR in which the company's founder demonstrated the system
and coordinated a SMT that was featured on the news broadcasts of 22 stations,
as well as CNN and CNBC. To broaden exposure for this development, Medialink
created an ANR using the audio component of the television release. The ANR was
carried by all-news radio stations in New York, Los Angeles and Philadelphia,
among others.
The Company's monitoring of the VNR, SMT and ANR indicated a cumulative
audience of 12.5 million. This project demonstrates Medialink's ability to
produce material for one medium and readily adapt it to others, in this instance
from television to radio.
Speedo International. Speedo International, a major manufacturer of
aquatic sporting gear, sought to capitalize on the interest in competitive
swimming surrounding the 1996 summer Olympics, as it introduced a
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new line of swimsuits. The swimsuits were made from Aquablade(Registered), a
proprietary material, that, according to scientific tests reported by Speedo,
added as much as 8% to a swimmer's speed.
The client sought television news coverage in Europe, Australia and Latin
America. Medialink's London office coordinated the production of a VNR, which
included footage of scientific testing, 3-D computer animation and underwater
photography. Segments were produced using athletes from various countries and in
various languages so that broadcasters could select an interview to give the
story a local appearance. The VNR was distributed through Medialink's affiliate
network.
The Company's monitoring of the VNR indicated a cumulative audience of 182
million in 12 countries. This project demonstrates the Company's ability to
support a client's global requirements and to provide appropriate material to
media in several countries around the world.
DISTRIBUTION AND MONITORING SYSTEMS
Video. The Company provides VNR notification advisories to U.S. television
newsrooms through the exclusive AP Express/Medialink Newswire. These
notification advisories include a description and script of the VNR, as well as
the technical satellite transmission information needed by stations to receive
the material. Medialink typically distributes the VNR by satellite transmission
or by fiber optic cable. To monitor domestic broadcasts of VNRs, the Company
encodes each transmission using technologies provided by Nielsen Media Research
and Competitive Media Reporting. This encoding enables Nielsen Media Research
and Competitive Media Reporting to electronically monitor the broadcasts.
Monitoring data is then analyzed by the Company and combined with relevant
additional information collected by Medialink, audience ratings from Nielsen
Media Research and audience demographics. Medialink packages this information
for the client into daily monitoring reports for the first five days after a VNR
is distributed. Reports are then provided on a weekly basis for the next three
weeks and a final comprehensive report is presented to the client five weeks
after the VNR's distribution.
The Company coordinates international distribution through its London
office. Notification advisories are provided by broadcast fax and telephone.
Distribution is primarily by satellite, although most international VNR
distributions also require cassette delivery by overnight courier. The Company
monitors international broadcasts through a combination of telephone surveys and
analysis of clipping services data.
The Company uses the AP Express/Medialink Newswire, faxes and telephone
calls to notify television stations of the availability of a SMT. SMTs are
conducted by satellite. The Company's media relations department schedules
interviews with each of the stations participating in the SMT. SMTs are
monitored in the same manner as are VNRs.
Audio. The Company uses the AP Express/Medialink Radio Newswire, broadcast
fax and telephone calls, as appropriate, to notify more than 2,300 radio
stations. This group of stations includes virtually all radio stations with
significant news or talk-centered programming. Medialink uses the satellite
transmission facility of the AP to transmit ANRs and RMTs to stations that
subscribe to this AP service.
Medialink also has an agreement with ABC Radio for the satellite
transmission of ANRs. ABC Radio offers this service on a common-carrier basis
which allows for the receipt of this material by ABC Radio network affiliates
and otherwise unaffiliated stations. Medialink also stores and distributes ANRs
on a digital system that can be called by radio stations using a toll-free
number. ANR monitoring is performed by telephone surveys, by analyzing data
provided by third party monitoring services and tabulating station calls to the
digital system.
The Company distributes RMTs in the U.S. by telephone. The scheduling of
interviews with stations is arranged by the Company's media relations
department. RMTs are monitored by the Company in the same manner as it monitors
ANRs.
Other. The Company continues to enhance its existing, and develop new,
electronic distribution capabilities by employing and integrating new
technology. The Company intends to capitalize on the commercial development of
the Internet as a promotional tool and as an additional distribution channel.
The Company created a Web site which contains the Company's promotional and
educational material (www.medialinkworldwide.com). The Company has also created
an additional Web site for broadcast journalists, editors and producers which
contains notification information and links to other Web sites with more
in-depth information concerning the Company's clients and their communication
releases (www.medialinkvideonews.com).
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Currently, the Company is developing Internet audio services. In addition, the
Company is testing other Internet technologies to expand its video service
offerings.
SALES AND MARKETING
As of October 1, 1996 the Company employed a team of 31 sales, marketing
and sales support personnel in seven U.S. offices and in London. Services are
also marketed internationally by the Company's 17 affiliates located in Europe,
Asia, the Pacific Rim, South Africa and Latin America. Each salesperson receives
a base salary but is compensated primarily through a commission structure that
is based on sales volume and profitability. Each salesperson participates in
ongoing training programs in sales techniques and communications technology.
Details regarding the Company's operations by geographic area are included in
Note 6 to the Company's Financial Statements.
The sales force concentrates on cultivating long-term relationships with
clients. Certain sales personnel specialize in particular industries, such as
the pharmaceutical or high-tech industries, developing an in-depth knowledge of
the industry. The support personnel screen prospects so that the sales personnel
can focus their efforts on presenting the Company's services in an appropriate
manner. Sales personnel are trained to represent all of the Company's service
offerings and are encouraged to create opportunities to sell multiple services.
The Company's marketing programs are designed to position the Company as a
leading provider of integrated video, audio and research services.
Company-sponsored workshops, typically attended by 60 clients and potential
clients, are central to the Company's marketing efforts. At these workshops,
outside authorities and Company personnel make presentations concerning current
developments in the news and public relations industries. In addition, the
Company is able to discuss its services and demonstrate how these services can
serve the needs of workshop attendees. The workshops are held around the world
and cover such subjects as combining radio and television techniques;
international opportunities; and obtaining news exposure for health and medical
projects. Management believes that these workshops are an efficient way to
strengthen the bonds between its sales force and its clients, and that this has
contributed to the increase in the average revenues per salesperson/sales
assistant from $347,000 in 1993 to $506,000 in 1995. The Company also uses
brochures, video tapes, advertisements in trade publications and its Web sites
as marketing tools.
COMPETITION
The markets for the Company's services are highly competitive. The
principal competitive factors affecting the Company are effectiveness,
reliability, price, technological sophistication and timeliness. Numerous
specialty companies compete with the Company in each of its business lines
although no single company competes across all service lines. Many of the
Company's competitors or potential competitors have longer operating histories,
longer client relationships and significantly greater financial, management,
technological, sales, marketing and other resources than the Company. In
addition, clients could perform internally all or certain of the services
provided by the Company rather than outsourcing such services. The Company
expects that competition will increase substantially as a result of industry
consolidations and alliances, as well as through the emergence of new
competitors. The Company believes that the market for communications services
may become increasingly concentrated in the future as a result of the
acquisition and integration of smaller service providers, which are likely to
permit many of the Company's competitors to devote significantly greater
resources to the development and marketing of new competitive products and
services. There can be no assurance that existing or future competitors will not
develop or offer services that provide significant performance, price, creative
or other advantages over those offered by the Company. The Company could face
competition from companies in related communications markets which could offer
services that are similar or superior to those offered by the Company. In
addition, national and regional telecommunications providers could enter the
market with materially lower electronic delivery costs, and radio and television
networks could also begin transmitting business communications separate from
their news programming. The Company's ability to maintain and attract clients
depends to a significant degree on the quality of services provided and its
reputation among its clients and potential clients as compared to that of
competitors. There can be no assurance that the Company will not face increased
competition in the future or that such competition will not have a material
adverse effect on the Company's business, operating results and financial
condition. See 'Risk Factors.'
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EMPLOYEES
As of October 1, 1996, the Company had approximately 103 employees
including 56 in operations, 31 in sales and marketing and 18 in administration.
None of the Company's employees is represented by a labor union. Management
believes that its employee relations are good. The Company also engages on a
part-time, project-by-project basis, independent production crews at various
locations worldwide. These crews have the skills, training and experience which
the Company requires for its production services.
The Company's staff of professionals come from a variety of backgrounds in
the fields of public and investor relations, broadcast and print journalism,
production and distribution technology and media and marketing research. As a
result of downsizing in the broadcast journalism industry, the Company has been
able to attract experienced personnel from this industry. The Company seeks and
hires staff with appropriate credentials and relevant experience in the fields
of journalism, media and marketing, video and audio production, distribution,
research and analysis, and public and investor relations services. Personnel
have experience with organizations including ABC News, CBS News, the BBC, Time
Warner, Dow Jones, The New York Times, PR Newswire, Knight Ridder, United Press
International, CNBC, The Times of London and Edelman Public Relations Worldwide.
FACILITIES
The Company's New York City headquarters consist of approximately 15,000
square feet of leased space and the Company's international office located in
London, England, consists of approximately 1,500 square feet of leased space.
The Company also maintains leased offices in Washington, D.C.; Los Angeles,
California; Chicago, Illinois; Norwalk, Connecticut; Dallas, Texas and Atlanta,
Georgia. The Company believes that its facilities are adequate to meet its
current requirements.
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Laurence Moskowitz........................ 45 Chairman of the Board, President and Chief Executive Officer
J. Graeme McWhirter....................... 40 Executive Vice President, Chief Financial Officer and Assistant
Secretary
David Davis............................... 60 Senior Vice President/International, Director
Nicholas F. Peters........................ 45 Senior Vice President/Operations
Mark Manoff............................... 44 Senior Vice President/Sales
Mark Weiner............................... 41 Vice President/Research and Media Relations
Mary Buhay................................ 31 Vice President/Sales and Special Services
Harold Finelt(1)(2)(3).................... 36 Director
Donald Kimelman(2)(3)..................... 49 Director
James J. O'Neil(1)........................ 58 Director
Gerald P. Rodeen.......................... 49 Director
Theodore Wm. Tashlik(2)(3)................ 56 Director
</TABLE>
- ------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Stock Option Committee
Laurence Moskowitz, the founder of Medialink, has served as Chairman,
President and Chief Executive Officer of the Company since its inception in
1986. He began his professional career as a reporter for United Press
International in Pittsburgh before being promoted to an editor for UPI in
Philadelphia. In 1976 Mr. Moskowitz founded Mediawire, a Philadelphia-based
regional public relations newswire which was merged into PR Newswire, a unit of
United News & Media plc, where he was Vice President until leaving to form
Medialink.
J. Graeme McWhirter, a co-founder of Medialink, has served as Chief
Financial Officer since 1986 and has been Executive Vice President since 1992.
From 1984 to 1988, Mr. McWhirter was Executive Vice President and Chief
Financial Officer of Commonwealth Realty Trust, a publicly quoted Real Estate
Investment Trust. From 1976 to 1984, Mr. McWhirter was with KPMG Peat Marwick in
London and Philadelphia as a manager.
David Davis has been a member of Medialink's Board of Directors since
September 1992 and in 1996 became Senior Vice President/International. From
September 1992 to the date of this offering, The Davis Partnership, a
partnership beneficially owned by Mr. Davis, served as a consultant to the
Company. From 1968 to 1992, Mr. Davis was employed by Edelman Public Relations
Worldwide. During such period, Mr. Davis was a manager responsible for Europe
and Asia Pacific and served as Vice Chairman at Daniel J. Edelman, Inc. From
1951 to 1968, Mr. Davis was a journalist for Britain's national Press
Association, Universal News Services (Britain's first business newswire), and
the Times of London.
Nicholas F. Peters has served as Senior Vice President/Operations since
January 1996. From April 1992 to January 1996, Mr. Peters was Vice
President/Operations and from October 1987 to April 1992, he was Executive
Editor and then Vice President/Sales & Marketing. From April 1983 to October
1987, Mr. Peters was a newswriter and producer at CBS News, working with Dan
Rather and Charles Osgood. From May 1979 to April 1983, he was News Director at
WHYY, the National Public Radio affiliate in Philadelphia. From February 1973 to
May 1979, he was a newspaper reporter with the Indianapolis Star, Raleigh (N.C.)
Times and Philadelphia Bulletin.
Mark Manoff has served as Senior Vice President/Sales since January 1996.
From April 1992 to January 1996, Mr. Manoff served as Vice President/Sales and
from February 1989 to April 1992 he served as its Vice President/Operations. Mr.
Manoff opened Medialink's Washington, D.C. office in November 1987 and served as
its general manager until February 1989. Mr. Manoff was chief political
correspondent for the Philadelphia Daily News from January 1979 to March 1983.
Mr. Manoff served as a political consultant in New York and
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Washington from March 1983 to January 1986 and was an editor in the Dow Jones
Community newspaper group.
Mark Weiner joined Medialink in September 1994 as Vice President/Research
and Media Relations. From April 1986 to September 1992, Mr. Weiner served as a
Managing Partner of PR Data. From September 1992 to September 1993, Mr. Weiner
served as Senior Vice President of Copernicus: The Marketing Investment Strategy
Group, a marketing and research consultancy. He was a columnist with McNaught
Newspaper Syndicate and the New York Times News Service from 1979 to 1984.
Mary Buhay has served as Vice President/Sales and Special Services since
July 1996. Ms. Buhay joined Medialink in March 1993 as Sales Manager, in October
1993 she was promoted to New York Bureau Manager and in August 1995 she was
appointed Associate Vice President for eastern and mid-western sales. From 1988
to 1993, Ms. Buhay held sales management positions in the news and advertising
division of Radio TV Reports, a broadcast research firm owned by the Arbitron
Company.
Harold Finelt has served as a director of the Company since 1987. Mr.
Finelt joined American Research & Development, a private venture capital firm,
as an associate in 1986 and he has been a Vice President of such firm since
1990. He is a general partner of American Research & Development's venture funds
and a general partner of Hospitality Technology Funds, L.P.
Donald Kimelman has served as a director of the Company since 1987. Mr.
Kimelman has been the Pennsylvania editor of the Philadelphia Inquirer
responsible for supervising state and suburban coverage since January 1996. Mr.
Kimelman worked for the Annapolis Evening Capital and the Baltimore Sun prior to
joining The Philadelphia Inquirer. At the Inquirer, he had local, national,
foreign and investigative assignments prior to becoming an editor. From 1981 to
1983, he was a national correspondent and from 1983 to 1987 he was Moscow bureau
chief. Mr. Kimelman was deputy editor of the editorial page of The Philadelphia
Inquirer from 1987 to 1993 and became foreign editor in August 1994.
James J. O'Neil has served as a director of the Company since 1994. Since
1995 he has acted as a private financial consultant. From 1990 to 1995 Mr.
O'Neil served as a Senior Vice President of Rothschild Inc.
Gerald P. Rodeen has served as a director of the Company since 1986. Mr.
Rodeen has been a partner of the law firm of Dilks, Rodeen, Gibson & Smith Ltd.
for more than five years.
Theodore Wm. Tashlik has served as a director of the Company since 1992.
Mr. Tashlik has been a member of the law firm of Tashlik, Kreutzer & Goldwyn
P.C., which represents the Company in certain matters, for more than five years.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Compensation and Stock Option Committees. The
Audit Committee consists of Harold Finelt and James J. O'Neil and the
Compensation and Stock Option Committees consists of Harold Finelt, Donald
Kimelman and Theodore Wm. Tashlik. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Company's
internal controls. The Compensation Committee is responsible for establishing
salaries, bonuses, and other compensation for the Company's officers, and the
Stock Option Committee is responsible for administering the Company's stock
option plans.
CLASSIFICATION OF BOARD OF DIRECTORS
The seven directors comprising the Board of Directors are divided into
three classes, each class with as equal a number of directors as possible.
Messrs. Rodeen and O'Neil constitute Class I and will stand for election at the
annual meeting of stockholders to be held in 1997. Messrs. Tashlik and Davis
constitute Class II and will stand for election at the annual meeting of
stockholders to be held in 1998. Messrs. Finelt, Kimelman and Moskowitz
constitute Class III and will stand for election at the annual meeting of
stockholders to be held in 1999. After their initial term following the
offering, directors in each class will serve three year terms. All directors
will serve until successors have been duly elected and qualified. Officers are
chosen by and serve at the discretion of the Board of Directors. There are no
family relationships among the directors and executive officers of the Company.
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<PAGE>
COMPENSATION OF DIRECTORS
Directors do not receive any compensation for their services. Directors
receive reimbursements of expenses incurred in attending meetings and are
eligible to participate in the Company's Directors Stock Option Plan. The
Directors Stock Option Plan provides that each non-employee director shall
automatically be granted options to purchase 3,000 shares of Common Stock upon
his election as a director, at an exercise price equal to the fair market value
of the Common Stock. Thereafter, each non-employee director shall be granted
options to purchase 3,000 shares of Common Stock on the anniversary of the
election or appointment of such director. Through the date hereof the Company
has granted non-qualified options to purchase an aggregate of 62,400 shares of
Common Stock to the directors at an exercise price of $3.54 per share.
EXECUTIVE COMPENSATION
The following table shows compensation paid for the year ended December 31,
1995 to (i) the Chief Executive Officer and (ii) the Company's four other most
highly compensated individuals who were serving as officers on December 31, 1995
and whose salary plus bonus exceeded $100,000 for the year ended December 31,
1995 (collectively, the 'Named Executive Officers').
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
----------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION SALARY ($)(1) BONUS ($)(1) OPTIONS (#)
- --------------------------------------------------------------------- ------------- ------------ ------------
<S> <C> <C> <C>
Laurence Moskowitz
Chairman of the Board,
President and Chief Executive Officer.............................. $ 132,203 $ 24,000 9,600
J. Graeme McWhirter
Executive Vice President,
Chief Financial Officer and Assistant Secretary.................... 118,926 6,000 8,400
Nicholas F. Peters
Senior Vice President/Operations................................... 100,983 8,200 7,200
Mark Manoff
Senior Vice President/Sales........................................ 101,699 8,200 7,200
Mary Buhay
Vice President of Sales/Special Services........................... 47,351 70,455(2) 3,600
</TABLE>
- ------------------
(1) All figures are rounded down to the nearest whole dollar.
(2) Includes sales commission of $70,255.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning stock option grants
made to each of the Named Executive Officers in 1995. No stock appreciation
rights were granted to these individuals during such year.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS (1) VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------
NAME GRANTED(#) FISCAL YEAR(2) SHARE DATE 5%($) 10%($)
- ---------------------------------------- ----------- -------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Laurence Moskowitz...................... 9,600 12.8% $2.29 6/30/2005 $35,810 $57,021
J. Graeme McWhirter..................... 8,400 11.2 2.29 6/30/2005 31,333 49,893
Nicholas F. Peters...................... 7,200 9.6 2.29 6/30/2005 26,857 42,766
Mark Manoff............................. 7,200 9.6 2.29 6/30/2005 26,857 42,766
Mary Buhay.............................. 3,600 4.8 2.29 6/30/2005 13,429 21,383
</TABLE>
(Footnotes on next page)
35
<PAGE>
(Footnotes from previous page)
- ------------------
(1) These options have a term of 10 years, subject to earlier termination upon
certain events related to termination of employment and amendment or
termination of the Plan. Each of these options was granted at an exercise
price equal to the estimated fair market value of the underlying stock on
the date of the grant, as determined by the Board of Directors. The option
shares vested 20% on the date of grant and will vest 20% on each anniversary
date thereafter.
(2) Based on options granted for an aggregate of 75,000 shares during the year
ended December 31, 1995.
(3) The 5% and 10% assumed compounded annual rates of stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
ten-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Common Stock appreciates
over the option term, no value will be realized from the option grants made
to the Named Executive Officers.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information concerning option exercises and
option holdings for the year ended December 31, 1995 with respect to each of the
Named Executive Officers. No Named Executive Officers exercised any options
during such year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS ON DECEMBER 31, IN-THE-MONEY OPTIONS ON
1995(#) DECEMBER 31, 1995 ($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Laurence Moskowitz......................................... 10,560 8,340 $22,186 $11,111
J. Graeme McWhirter........................................ 10,320 7,380 21,886 9,911
Nicholas F. Peters......................................... 8,160 6,240 17,189 8,299
Mark Manoff................................................ 8,160 6,240 17,189 8,299
Mary Buhay................................................. 720 2,880 900 3,600
</TABLE>
- ------------------
(1) Based on the fair market value of the Company's Common Stock at December 31,
1995, of $3.54 per share (as determined by the Company's Board of Directors)
less the exercise price payable for such shares.
EMPLOYMENT CONTRACTS
Each of the Company's executive officers has entered into an employment
agreement with the Company which commences on the date of the closing of this
offering.
The employment agreements with Messrs. Moskowitz and McWhirter provide for
an annual base salary of not less than $150,000 and $135,000, respectively, plus
a bonus to be awarded annually at the discretion of the Compensation Committee.
The employment agreements have a term of three years.
The employment agreements with Messrs. Peters, Manoff and Ms. Buhay provide
for annual base salaries of not less than $108,500, $108,500 and $80,000,
respectively, plus bonuses to be awarded annually at the discretion of the
Compensation Committee. In addition, Ms. Buhay is entitled to receive certain
sales commissions. The employment agreements have a term of two years.
The employment agreement with Mr. David Davis provides for an annual base
salary of $135,000 plus a bonus based upon the Company's European pre-tax
profits as compared to targeted levels. The employment agreement has a term of
two years. Prior to the effectiveness of such agreement, Mr. Davis was a partner
in a consultant to the Company. See 'Certain Transactions.'
The employment agreements entitle these executive officers to participate
in the health, insurance, pension and other benefits, if any, generally provided
to employees of the Company.
The employment agreements contain covenants prohibiting the solicitation of
employees and the solicitation of clients and vendors during certain periods and
covenants prohibiting the improper disclosure of confidential information at any
time. The employment agreements also provide that the executive officer, with
certain exceptions, until two years after the termination of his or her
employment with the Company, would not participate in any capacity in any
business activities with respect to the production of video and audio public
36
<PAGE>
relations materials for distribution to news media, the distribution of public
relations text, audio and video to news media and the general public via
satellite, cassette, wire or other means, the maintenance of data bases of media
contacts for and on behalf of clients, the analysis and written appraisal of
public relations and public affairs campaigns as determined through press
clipping review or electronic data base searches, and such other businesses as
the Company may conduct from time to time.
The Company may terminate the employment of the executive officers upon the
death or extended disability of the executive officer or for cause (as defined).
If the employment of the executive officer is terminated by the Company without
cause, the employment agreements require the Company to continue to pay the
executive officer's salary and health and insurance benefits for a period of one
year after such termination in the case of Messrs. Moskowitz and McWhirter and a
period of between three to six months in all other cases, or until the
termination of the employment agreement or the commencement of employment
elsewhere, if earlier.
STOCK OPTION PLANS
THE AMENDED AND RESTATED STOCK OPTION PLAN
The Company's Amended and Restated Stock Option Plan ('Stock Option Plan')
provides for options for a total of 670,808 shares of Common Stock authorized to
be granted under the Stock Option Plan. The Stock Option Plan provides for the
grant of options to its employees, directors and consultants in order to provide
them with financial incentives to promote the success of the Company's long term
business objectives and to increase their proprietary interest in the success of
the Company. The Stock Option Plan provides for a fifteen year expiration period
for non-qualified stock options and ten years for incentive stock options
granted thereunder and allows for the exercise of options by delivery by the
optionee of previously owned Common Stock of the Company having a fair market
value equal to the option price, or by delivery by the optionee of exercisable
options valued at the excess of the aggregate fair market value of the Common
Stock subject to such options over the aggregate exercise price of such options,
or by a combination of cash and Common Stock. During 1995, the Company granted
options to purchase 75,000 shares of Common Stock at exercise prices of $2.29
and having an expiration date of June 30, 2005. During 1995, 4,800 options were
exercised and 204,548 shares were available for future grant under the Stock
Option Plan. At September 30, 1996 63,054 options were available for grant.
During 1996 the Company granted options to purchase 411,494 shares at an average
exercise price ranging from $3.54 to $6.46 per share.
The Stock Option Plan is administered by the Stock Option Committee of the
Board of Directors. The Committee has broad discretion in determining the
recipients of options and numerous other terms and conditions of the options.
The exercise price for shares purchased upon the exercise of non-qualified stock
options granted under the Plan is determined by the Stock Option Committee as of
the date of the grant. The exercise price of an incentive stock option must be
at least equal to the fair market value of the Common Stock on the date such
option is granted (110% of the fair market value for shareholders who, at the
time the option is granted, own more than 10% of the total combined classes of
stock of the Company or any subsidiary). No employees may be granted incentive
stock options in any year for shares having a fair market value, determined as
of the date of grant, in excess of $100,000.
No incentive option may have a term of more than ten years, five years for
shareholders holding 10% or more of the Common Stock of the Company. Options
generally may be exercised only if the option holder remains continuously
associated with the Company or a subsidiary from the date of grant to the date
of exercise. However, options may be exercised upon termination of employment or
upon the death or disability of any employee within certain specified periods.
1996 DIRECTORS STOCK OPTION PLAN
The Company's 1996 Directors Stock Option Plan ('Directors Stock Option
Plan') provides for options for a total of 180,000 shares of Common Stock
authorized to be granted under the Directors Stock Option Plan. Pursuant to the
Directors Stock Option Plan, the Company has granted to each non-employee
director non-qualified options to purchase 2,400 shares of Common Stock for each
year that such individual was a member of the Board of Directors prior to 1996;
provided, however, that in no event shall the number of options granted for
service prior to 1996 exceed 14,400 shares. Through the date hereof the Company
has granted non-qualified
37
<PAGE>
options to purchase an aggregate of 62,400 shares of Common Stock to
non-employee directors at an exercise price of $3.54 per share.
The Directors Stock Option Plan provides for the automatic annual grant of
options to non-employee directors and is administered by the Board of Directors.
Commencing January 31, 1997, and as of each anniversary date thereafter, each
non-employee director who was in office as of the effective date of the
Directors Stock Option Plan will be automatically granted an option to purchase
3,000 shares of Common Stock. Each non-employee director who was not a director
as of the effective date of the Directors Stock Option Plan shall be granted, as
of the date of his election, options to purchase 3,000 shares of Common Stock
and shall be granted as of each anniversary date thereafter, options to purchase
an additional 3,000 shares of Common Stock.
To remain eligible, a non-employee director must continue to be a member of
the Board of Directors. Options granted to directors for services prior to 1996
are all vested and exercisable; each option granted thereafter is exercisable in
increments of 33 1/3% per year commencing on the first anniversary date of the
date of grant. The exercise price for all options may not be less than the fair
market value of the Common Stock on the date of grant. Options under the
Directors Stock Option Plan have a term of 15 years and may be exercised for
limited periods after a person ceases to serve as a director.
401(K) PLAN
The Company has a 401(k) tax deferred savings plan (the '401(k) Plan'). All
Company employees are eligible to participate in the 401(k) Plan and may make
elective salary reduction contributions to the 401(k) Plan of up to 15% of their
annual compensation, subject to a dollar limit established by law. In addition,
the Company may provide, in its discretion, a matching contribution equal to a
percentage of the employee's contribution. Participants are fully vested at all
times in the amounts they contribute to the 401(k) Plan. Only participants who
have completed a year of service during the 401(k) Plan year and are actively
employed on the last day of such year are vested in the Company's matching
contributions for such year. The Company's contributions are tax deductible to
the Company. Benefits under the 401(k) Plan generally become payable upon
retirement, death or disability.
38
<PAGE>
CERTAIN TRANSACTIONS
Pursuant to a consulting agreement, dated March 1, 1994, between the
Company and The Davis Partnership, a partnership which is beneficially owned by
Mr. Davis, served as a consultant to the Company. Mr. David Davis, on behalf of
The Davis Partnership, provides services to the Company based in its London
office, including planning, marketing, staffing and operations, and developing
strategic partnerships in the United Kingdom and Europe. For such services, the
Davis Partnership received $93,611 and $76,385 for the fiscal years ended
December 31, 1995 and December 31, 1994, respectively. The term of this
Consulting Agreement was automatically renewed on January 1, 1996 for a twelve
month period. Upon the completion of this offering, the Consulting Agreement
will be terminated and Mr. Davis will enter into an employment agreement with
the Company. See 'Management.'
The Company believes that material affiliated transactions between the
Company and its directors, officers, principal stockholders or any affiliates
thereof have been, and will be in the future, on terms no less favorable than
could be obtained from unaffiliated third parties.
39
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information as of the date hereof
regarding the beneficial ownership of the Company's Common Stock prior to and
upon completion of the offering, assuming no exercise of the Underwriters'
over-allotment option, (i) by each of the Company's directors and Named
Executive Officers, (ii) by all directors and Named Executive Officers as a
group, (iii) by each person who is known by the Company to own beneficially more
than 5% of the Company's Common Stock, and (iv) by each of the Selling
Stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO PERCENTAGE OF
DIRECTORS, OFFERING(1) NUMBER OF SHARES
NAMED EXECUTIVE OFFICERS -------------------- SHARES SUBJECT BENEFICIALLY OWNED
AND 5% STOCKHOLDERS NUMBER PERCENT TO OVER-ALLOTMENT AFTER OFFERING(2)
- ------------------------------------------------------ --------- ------- ----------------- ------------------
<S> <C> <C> <C> <C>
American Research & Development II, L.P.(3) .......... 595,070 19.5% 11.8%
c/o American Research & Development Corp.
45 Milk Street
Boston, MA 02109
New York State Business Venture Partnership .......... 440,506 14.5 8.7
c/o Rothschild Inc.
1251 Avenue of the Americas
51st Floor
New York, NY 10020
Laurence Moskowitz(4) ................................ 411,474 13.4 8.1
c/o Medialink Worldwide Incorporated
708 Third Avenue
New York, NY 10017
Harriet Himmel Gilman ................................ 270,667 8.9 5.4
c/o The Chase Manhattan Private Bank
(Florida), N.A.
218 Royal Palm Way
Palm Beach, FL 33480
Henry L. Kimelman(5) ................................. 171,111 5.6 3.4
P.O. Box 301709
St. Thomas, Virgin Islands 00803
J. Graeme McWhirter(6)................................ 98,519 3.2 1.9
Nicholas F. Peters(7)................................. 20,960 * *
Mark Manoff(8)........................................ 39,644 1.3 *
Mary Buhay(9)......................................... 2,800 * *
Harold Finelt(10) .................................... 609,470 19.9 12.0
c/o American Research & Development Corp.
45 Milk Street
Boston, MA 02109
Donald Kimelman(11)................................... 56,400 1.8 1.1
James J. O'Neil(9).................................... 4,800 * *
Gerald P. Rodeen(12).................................. 97,722 3.2 1.9
Theodore Wm. Tashlik(12).............................. 46,221 1.5 *
David Davis(9)........................................ 14,281 * *
All Named Executive Officers and Directors
as a Group (11 Persons)............................. 1,402,291 43.5 26.9
</TABLE>
(Footnotes on next page)
40
<PAGE>
(Footnotes from previous page)
- ------------------
<TABLE>
<S> <C>
* Represents less than 1% of the outstanding shares of Common Stock including shares issuable to such
beneficial owner under options which are presently exercisable or will become exercisable within 60 days.
(1) Unless otherwise indicated, each person has sole voting and investment power with respect to the shares
shown as beneficially owned by such person.
(2) If the over-allotment option is exercised in full, the percentage of shares beneficially owned after
offering of , and will be reduced to , and , respectively.
(3) Francis J. Hughes, Jr. and Harold Finelt are the individual general partners of ARD Partners USA, L.P., a
general partner of ARD Master, L.P., the sole general partner of American Research & Development II, L.P.,
and as such may be deemed to beneficially own all shares held by American Research & Development II, L.P.
Each of such general partners disclaims beneficial ownership of a portion of such shares.
(4) Includes 31,620 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(5) Does not include an aggregate of 144,000 shares of Common Stock held by the Charlotte Kimelman Charitable
Remainder Trust, Henry L. Kimelman Charitable Remainder Trust, Henry L. Kimelman Family Foundation and SDJ
Family Trust as to which Mr. Kimelman disclaims beneficial ownership.
(6) Includes 27,939 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days. Also includes 6,000 shares owned by the
McWhirter Family LLC which may be deemed to be beneficially owned by Mr. McWhirter.
(7) Includes 17,960 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(8) Includes 18,020 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(9) Represents shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
(10) Includes 595,070 shares of Common Stock held by American Research Development II, L.P. Francis J. Hughes,
Jr. and Harold Finelt are the individual general partners of ARD Partners USA, L.P., a general partner of
ARD Master, L.P., the sole general partner of American Research & Development II, L.P., and as such may be
deemed to beneficially own all shares held by American Research & Development II, L.P. Each of such general
partners disclaims beneficial ownership of a portion of such shares. Also includes 14,400 shares of Common
Stock which may be acquired upon the exercise of stock options which are presently exercisable or will
become exercisable within 60 days.
(11) Includes 14,400 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days. Also includes 42,000 shares of Common Stock
held by SDJ Family Trust as to which Mr. Kimelman has voting power and beneficial ownership of 33% of such
shares.
(12) Includes 14,400 shares of Common Stock which may be acquired upon the exercise of stock options which are
presently exercisable or will become exercisable within 60 days.
</TABLE>
41
<PAGE>
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Amended and Restated Certificate of Incorporation of the Company
authorizes the issuance of up to 15,000,000 shares of Common Stock, par value of
$.01 per share. Upon completion of the offering, there will be 5,047,933 shares
of Common Stock issued and outstanding. As of the date of this Prospectus, there
are 3,047,933 shares of Common Stock outstanding held of record by 70
stockholders. To date, there has been no public market for the Common Stock.
Holders of Common Stock ('Holders') are entitled to one vote per share for
each share held of record on all matters submitted to a vote of the
stockholders. Holders are entitled to receive ratably such dividends as may be
declared by the Board on the Common Stock out of funds legally available
therefor. The Holders have no preemptive rights, cumulative voting rights, or
rights to convert shares of Common Stock into any other securities, and are not
subject to future calls or assessments by the Company. All shares of Common
Stock of the Company issued in connection with the offering will be fully paid
and nonassessable.
PREFERRED STOCK
The Amended and Restated Certificate of Incorporation authorizes the Board
of Directors to issue up to an aggregate of 1,000,000 shares of preferred stock
(the 'Preferred Stock'), to establish one or more series of Preferred Stock and
to determine, with respect to each such series, the preferences, rights and
other terms thereof. The authorized class of Preferred Stock may be issued in
series from time to time with such designations, relative rights, priorities,
preferences, qualifications, limitations and restrictions thereof as the Board
of Director determines. The rights, priorities, preferences, qualifications,
limitations and restrictions of different series of Preferred Stock may differ
with respect to dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund provisions and other
matters. The Board of Directors may authorize the issuance of Preferred Stock
which ranks senior to the Common Stock with respect to the payment of dividends
and the distribution of assets on liquidation. In addition, the Board of
Directors is authorized to fix the limitations and restrictions, if any, upon
the payment of dividends on Common Stock to be effective while any shares of
Preferred Stock are outstanding. The Board of Directors, without stockholder
approval, can issue Preferred Stock with voting and conversion rights which
could adversely affect the voting power of the holders of Common Stock. Upon
completion of the offering, no shares of Preferred Stock will be outstanding and
the Board of Directors has no present plans to issue any such shares.
In accordance with their terms, the outstanding shares of the Series A,
Series B and Series C Preferred Stock will, upon the closing of this offering,
convert into an aggregate of 2,111,669 shares of Common Stock.
STOCK MARKET LISTING
Application has been made to have the Common Stock approved for quotation
on the Nasdaq National Market under the symbol 'MDLK.'
REGISTRATION RIGHTS
The holders of 2,111,669 shares of Common Stock are entitled to certain
rights with respect to the registration of such shares under the Securities Act.
Under the terms of agreements between the Company and these holders, if the
Company proposes to register any of its securities under the Securities Act,
either for its own account or the account of other security holders exercising
registration rights, such holders are entitled to notice of such registration
and are entitled to include at the Company's expense shares of such Common Stock
therein; provided, among other conditions, that the underwriters of any offering
have the right to limit the number of such shares included in such registration.
In addition, such holders may require the Company, on not more than two
occasions and only in the event the aggregate offering price of such shares is
greater than $5 million, to file a registration statement under the Securities
Act at the Company's expense with respect to such shares, and the Company is
required to use its best efforts to effect such registration, subject to certain
conditions and limitations. Further, these holders may require the Company to
register all or a portion of their shares with registration rights on Form S-3,
when the Company is eligible to use such form, subject to certain conditions and
limitations.
42
<PAGE>
CERTAIN ANTITAKEOVER PROVISIONS
Preferred Stock. The Amended and Restated Certificate of Incorporation
authorizes the Board of Directors to establish one or more series of Preferred
Stock and to determine, with respect to any series of Preferred Stock, the
preferences, rights and other terms of such series. See 'Preferred Stock.' The
Company believes that the ability of the Board of Directors to issue one or more
series of Preferred Stock will provide the Company with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
corporate needs. The authorized shares of Preferred Stock, as well as shares of
Common Stock, would be available for issuance without further action by the
Company's stockholders, unless such action is required by applicable law or the
rules of any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. Although the Board of Directors has no
present intention to do so, it could, in the future, issue a series of Preferred
Stock which, due to its terms, could impede a merger, tender offer or other
transaction that some, or a majority, of the Company's stockholders might
believe to be in their best interests.
Section 203 of the Delaware General Corporation Law. The Company is
subject to the provisions of Section 203 of the Delaware General Corporation Law
(the 'Antitakeover Law') regulating corporate takeovers. The Antitakeover Law
prevents certain Delaware corporations, including those whose securities are
listed on the Nasdaq National Market, from engaging, under certain
circumstances, in a 'business combination' (which includes a merger or sale of
more than 10% of the corporation's assets) with any 'interested stockholder' (a
stockholder who acquired 15% or more of the corporation's outstanding voting
stock without the prior approval of the corporation's Board of Directors) for
three years following the date that such stockholder became an 'interested
stockholder.' A Delaware corporation may 'opt out' of the Antitakeover Law with
an express provision in its original certificate of incorporation, or an express
provision in its certificate of incorporation or by-laws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares. The Company has not 'opted out' of the application of the
Antitakeover Law.
Classified Board of Directors. The Company's Amended and Restated
Certificate of Incorporation provides for the Board of Directors to be divided
into three classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors will be elected each year.
Classification of the Board of Directors expands the time required to change the
composition of a majority of directors and may tend to discourage a takeover bid
for the Company. Moreover, under the General Corporation Law of the State of
Delaware, in the case of a corporation having a classified Board of Directors,
the stockholders may remove a director only for cause. The provisions of
Delaware law, when coupled with provisions of the Company's Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws authorizing only
the Board of Directors to fill vacant directorships, will preclude stockholders
of the Company from removing incumbent directors without cause and
simultaneously gaining control of the Board of Directors by filling the
vacancies with their own nominees.
Certain Other Provisions. The Company's Amended and Restated Certificate
of Incorporation does not provide for cumulative voting in the election of
directors. The Company's Amended and Restated By-Laws provide that stockholders
must own fifty percent of the Common Stock to be permitted to call a special
meeting of the stockholders.
Reference is made to the full text of the Company's Amended and Restated
Certificate of Incorporation and its Amended and Restated By-Laws and the
foregoing statute for their entire terms. The partial summary contained above is
not intended to be complete. See 'Risk Factors--Concentration of Stock
Ownership; Potential Issuance of Preferred Stock; Provisions with Potential
Anti-Takeover Effects.'
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation limits the
liability of directors for monetary damages to the maximum extent permitted by
Delaware law. Such limitation of liability has no effect on the availability of
equitable remedies, such as injunctive relief or rescission.
The Company's Amended and Restated By-Laws provide that the Company will
indemnify its directors, officers, employees and agents (including persons
serving at the request of the Company as a director, officer, employee or agent
of another organization, including service with respect to an employee benefit
plan and any
43
<PAGE>
former director, officer, employee or agent, or other such person) against
certain liabilities to the fullest extent permitted by Delaware law. The Company
is also empowered under its Amended and Restated By-Laws to purchase insurance
on behalf of any person whom it is required or permitted to indemnify. The
Company has entered into indemnification agreements with each of its current
directors and officers, which provide for indemnification of, and advancement of
expenses to, such persons to the greatest extent permitted by Delaware law,
including by reason of action or inaction occurring in the past and
circumstances in which indemnification and advancement of expenses to such
persons is permitted or is discretionary to the greatest extent permitted by
Delaware law. These provisions may have the practical effect in certain cases of
eliminating the ability of stockholders to collect monetary damages from
directors. The Company believes that theses provisions will assist the Company
in attracting and retaining qualified individuals to serve as directors or
officers. It is the opinion of the staff of the Securities and Exchange
Commission that indemnification provisions such as those contained in these
agreements have no effect on a director's or officer's liability under the
federal securities laws.
At the present time, there is no pending litigation or proceeding involving
a director, officer, employee or other agent of the Company in which
indemnification would be required or permitted. The Company is not aware of any
threatened litigation or proceeding which may result in a claim for such
indemnification.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock will be ChaseMellon
Shareholder Services, 450 West 33rd Street, New York, New York 10001.
44
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market following this offering or the prospect of such sales could adversely
affect the market price of the Common Stock prevailing from time to time.
Upon completion of this offering, the Company will have 5,047,933 shares of
Common Stock outstanding. Of these shares, 2,000,000 shares of Common Stock
offered hereby will be freely tradable without restriction unless purchased by
'affiliates' of the Company as that term is defined under Rule 144 promulgated
under the Securities Act of 1933. The remaining shares will be 'restricted
securities' as that term is defined in Rule 144 under the Securities Act and may
not be sold other than pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from such registration requirement.
Subject to the contractual restrictions discussed below, 3,023,933 shares of
Common Stock will be eligible for sale under Rule 144 from the date of this
Prospectus. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rule 144,
144(k) or 701 promulgated under the Securities Act, which rules are summarized
below.
Certain of the Company's stockholders are subject to lock-up agreements
under which they have agreed not to sell or otherwise dispose of any shares of
Common Stock without the prior written consent of Dean Witter Reynolds Inc. for
a period of 180 days after the date of this Prospectus whether now owned or
hereafter acquired by such stockholders or with respect to which such
stockholders have or hereafter acquire the power of disposition or enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock or any Common Stock deemed to be beneficially owned by such
stockholders, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. Such stockholders
also have agreed not to exercise their registration rights for 180 days after
the date of this Prospectus and have granted Dean Witter Reynolds Inc. the right
of first refusal to be engaged as the lead manager of the underwritten public
offering of their shares if registration rights are exercised following the
expiration of the lock-up period until the date that is 12 months from the date
of this Prospectus. The Company has consented to any such engagement of Dean
Witter Reynolds Inc. The Company has agreed not to issue or sell any shares of
Common Stock, without the prior written consent of Dean Witter Reynolds Inc. for
a period of 180 days after the date of this Prospectus other than the issuance
of shares upon the exercise of stock options. Upon the expiration of the 180-day
lock-up period, certain of the shares of Common Stock subject to the lock-up
agreements will become eligible for sale in the public market subject to the
conditions of Rule 144. See 'Underwriting.'
In general, under Rule 144 as currently in effect, an affiliate of the
Company, or person (or persons whose shares are aggregated) who has beneficially
owned restricted securities for at least two years but less than three years,
will be entitled to sell in any three-month period a number of shares that does
not exceed the greater of (i) 1% of the then outstanding shares of Common Stock
(5,047,933 shares immediately after this offering) or (ii) the average weekly
trading volume during the four calendar weeks immediately preceding the date on
which notice of the sale is filed with the Securities and Exchange Commission.
Sales pursuant to Rule 144 are subject to certain requirements relating to
manner of sale, notice and availability of current public information about the
Company. A person (or persons) whose shares are aggregated who is not deemed to
have been an affiliate of the Company at any time during the 90 days immediately
preceding the sale and who has beneficially owned his or her shares for a least
three years is entitled to sell such shares pursuant to Rule 144(k) without
regard to the limitations described above. In general, under Rule 701 under the
Securities Act as currently in effect, any employee, consultant or advisor of
the Company who purchases shares from the Company in connection with a
compensatory stock or option plan or other written agreement related to
compensation is eligible to resell such shares 90 days after the effective date
of this offering in reliance on Rule 144, but without compliance with certain
restrictions contained in Rule 144. Rule 701 is available for stockholders of
the Company as to all shares issued pursuant to stock option exercises occurring
on or after May 20, 1988 (the effective date of the Rule) of options granted
prior to the offering.
The Company intends to file a Registration Statement on Form S-8 to
register the 850,808 shares of Common Stock issuable upon the exercise of
options granted under the Stock Option Plan and the Directors Stock Option Plan.
Following the filing of the Form S-8, shares of Common Stock issued upon the
exercise of options granted under the Stock Option Plan and the Directors Stock
Option Plan will be available for sale in the public market upon vesting of such
options, subject to Rule 144 volume limitations applicable to affiliates.
45
<PAGE>
UNDERWRITING
The Underwriters named below, for whom Dean Witter Reynolds Inc. and Wheat,
First Securities, Inc. are acting as representatives (the 'Representatives'),
have severally agreed, subject to the terms and conditions of an underwriting
agreement (the 'Underwriting Agreement'), to purchase from the Company the
number of shares of Common Stock set forth opposite their respective names
below:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Dean Witter Reynolds Inc....................................................
Wheat, First Securities, Inc................................................
----------------
Total..................................................................
----------------
----------------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligation is such that they must purchase all of the shares of Common Stock
offered to the public (other than those covered by the over-allotment option
described below), if any of such shares are purchased.
Prior to the offering, there has been no public market for the shares of
Common Stock. The initial public offering price for the shares of Common Stock
was determined through agreement among the Company and the Representatives.
Among the factors considered in making such determination were the prevailing
market conditions and general economic conditions, the market prices of
securities and certain financial and operating information of publicly traded
companies which the Company and the Representatives believed to be comparable to
the Company, the earnings and certain other financial and operating information
of the Company in recent periods, the future prospects of the Company and its
industry in general and other factors deemed relevant.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock directly to the public at the
initial public offering price set forth on the cover page of this Prospectus and
to certain dealers (who may include Underwriters) at the public offering price
less a concession not to exceed $ per share. Such dealers may reallow a
concession not to exceed $ per share in sales to other dealers. After the
initial public offering, the public offering price and concessions and
reallowances to dealers may be changed by the Underwriters.
The Selling Stockholders have granted the Underwriters an option
exercisable for 30 days from the date of this Prospectus to purchase up to
300,000 additional shares of Common Stock at the initial public offering price
less the underwriting discounts and commissions, solely to cover
over-allotments. To the extent such option is exercised, each Underwriter will
be obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares of Common Stock as the number of shares of
Common Stock set forth opposite each Underwriter's name in the preceding table
bears to the total number of shares of Common Stock listed in such table.
The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
The Company, the Company's officers and directors, and certain holders of
Common Stock have agreed not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or any right to acquire Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent (which consent may be given without notice to the
Company's stockholders or other public announcement) of Dean Witter Reynolds
Inc. Dean Witter Reynolds Inc. has advised the Company that it has no present
intention of releasing any of the Company's stockholders from such lock-up
agreements until the expiration of such 180-day period. See 'Shares Eligible for
Future Sale.'
46
<PAGE>
The Representatives have advised the Company and the Selling Stockholders
that the Underwriters do not intend to confirm sales to any account over which
they exercise discretionary authority.
The Company, each of its directors and executive officers and certain other
stockholders of the Company have agreed with the Underwriters that they will not
offer, sell or contract to sell, or otherwise dispose of or enter into any
agreement to sell, directly or indirectly, any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 180 days
after the date of this Prospectus without the prior written consent of Dean
Witter Reynolds Inc. See 'Shares Eligible for Future Sale.'
At the Company's request, the Representatives have reserved up to
shares of Common Stock for sale at the initial public offering price to the
Company's employees and other persons having certain relationships with the
Company. The number of shares of Common Stock available for sale to the general
public will be reduced to the extent these persons purchase such reserved
shares. Any reserved shares not purchased will be offered by the Underwriters to
the general public on the same terms as the other shares offered hereby.
LEGAL MATTERS
Certain legal matters with respect to the legality of the securities
offered hereby will be passed upon for the Company by Tashlik, Kreutzer &
Goldwyn P.C., Great Neck, New York. Theodore Wm. Tashlik, a member of Tashlik,
Kreutzer & Goldwyn P.C. and a director of the Company, beneficially owns 31,821
shares of the Company's Common Stock and stock options to purchase 14,400 shares
of Common Stock. Certain legal matters will be passed upon for the Underwriters
by Willkie Farr & Gallagher, New York, New York.
EXPERTS
The financial statements of the Company as of December 31, 1994 and 1995
and for each of the years in the three-year period ended December 31, 1995 and
the financial statements of PR Data Systems, Inc. as of December 31, 1994 and
1995 and for the years then ended have been included herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') in Washington, D.C., a Registration Statement on Form S-1 under
the Securities Act, relating to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in exhibits and schedules to the Registration
Statement as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract,
agreement or any other document referred to herein are not necessarily complete.
Where such contract, agreement or other document is an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matter involved, each such statement being qualified in all
respects by such reference. For further information regarding the Company and
the securities offered hereby, reference is made to the Registration Statement
and to the exhibits filed as a part thereof, which may be inspected at the
office of the Commission without charge or copies of which may be obtained
therefrom upon request to the Commission and payment of the prescribed fee.
A copy of the Registration Statement and the exhibits thereto may be
inspected without charge at the public reference facilities maintained by the
Commission's Headquarters at 450 Fifth Street, Room 1024, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the Commission's Regional Offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7
World Trade Center, 13th Floor, New York, New York 10048, and copies of all or
any part of the Registration Statement may be obtained from such offices upon
the payment of the fees prescribed by the Commission. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding the Company. The address of such Web site is
http://www.sec.gov.
The Company intends to furnish to its stockholders annual reports
containing financial statements audited by independent auditors and quarterly
reports containing unaudited financial data for the first three quarters of each
fiscal year.
47
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Historical
Medialink Worldwide Incorporated
Independent Auditors' Report............................................................................... F-2
Balance Sheet.............................................................................................. F-3
Statements of Operations................................................................................... F-4
Statements of Stockholders' Equity......................................................................... F-5
Statements of Cash Flows................................................................................... F-6
Notes to Financial Statements.............................................................................. F-7
PR Data Systems, Inc.
Independent Auditors' Report............................................................................... F-13
Balance Sheet.............................................................................................. F-14
Statements of Operations and Accumulated Deficit........................................................... F-15
Statements of Cash Flows................................................................................... F-16
Notes to Financial Statements.............................................................................. F-17
Pro Forma
Medialink Worldwide Incorporated
Unaudited Pro Forma Condensed Combined Financial Statements................................................ F-21
Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 1996................................... F-22
Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 1996...... F-23
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 1995........ F-24
Notes to Unaudited Pro Forma Condensed Combined Financial Statements....................................... F-25
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Medialink Worldwide Incorporated:
We have audited the accompanying balance sheets of Medialink Worldwide
Incorporated as of December 31, 1994 and 1995, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 financial position of Medialink Worldwide
Incorporated as of December 31, 1994 and 1995, and the results of its operations
and its cash flows for each of the years in the three-year period ended December
31, 1995, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
August 16, 1996
New York, New York
F-2
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................ $ 262,414 $ 306,678 $ 492,550
Accounts receivable, less allowance for doubtful accounts
of $87,584, $161,367 and $218,260 in 1994, 1995 and
1996, respectively (Note 2)........................... 1,335,339 2,418,029 3,558,888
Prepaid expenses and other current assets................ 167,317 262,492 158,821
Deferred tax asset--current portion (Note 5)............. 333,697 617,314 480,197
----------- ----------- -----------
Total current assets.................................. 2,098,767 3,604,513 4,690,456
----------- ----------- -----------
Property and Equipment:
Furniture and fixtures................................... 143,717 184,292 272,566
Office equipment......................................... 621,919 604,599 735,838
Leasehold improvements................................... 101,969 174,621 242,985
----------- ----------- -----------
867,605 963,512 1,251,389
Less accumulated depreciation and amortization........... 547,667 419,132 505,947
----------- ----------- -----------
Net property and equipment............................ 319,938 544,380 745,442
Due from officers.......................................... 6,532 6,532 6,532
Deferred tax asset (Note 5)................................ 714,286 134,389 --
Other assets............................................... 97,676 97,518 112,922
----------- ----------- -----------
Total assets.......................................... $ 3,237,199 $ 4,387,332 $ 5,555,352
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable......................................... $ 1,065,072 $ 1,586,561 $ 1,604,039
Accrued expenses......................................... 113,203 229,009 853,408
Income taxes payable..................................... 33,945 67,132 118,236
----------- ----------- -----------
Total current liabilities............................. 1,212,220 1,882,702 2,575,683
Deferred rent payable...................................... 8,433 79,878 50,309
----------- ----------- -----------
STOCKHOLDERS' EQUITY (Note 4):
Series A, 10% cumulative convertible preferred stock,
$1.50 par value. Authorized; issued and outstanding
655,417 shares........................................ 983,126 983,126 983,126
Series B, 10% cumulative convertible preferred stock,
$1.35 par value. Authorized; issued and outstanding
475,185 shares........................................ 641,500 641,500 641,500
Series C, 10% cumulative convertible preferred stock,
$2.75 par value. Authorized 645,455 shares; issued and
outstanding 629,130 shares............................ 1,730,107 1,730,107 1,730,107
Common stock, $.01 par value. Authorized 15,000,000
shares; issued and outstanding 901,943, 906,743 and
912,264 shares in 1994, 1995 and 1996, respectively... 9,019 9,067 9,123
Additional paid-in capital............................... 346,572 352,524 360,750
Accumulated deficit...................................... (1,671,117) (1,289,882) (794,612)
Equity adjustment for foreign currency translation....... (22,661) (1,690) (634)
----------- ----------- -----------
Total stockholders' equity............................ 2,016,546 2,424,752 2,929,360
----------- ----------- -----------
Total liabilities and stockholders' equity............ $ 3,237,199 $ 4,387,332 $ 5,555,352
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues............................... $ 6,064,569 $ 7,547,761 $10,624,680 $ 4,936,917 $7,431,490
Direct costs (Note 7).................. 2,629,114 3,038,503 4,553,349 2,204,650 3,208,140
----------- ----------- ----------- ----------- ----------
Gross profit...................... 3,435,455 4,509,258 6,071,331 2,732,267 4,223,350
General and administrative expenses
(Note 3)............................. 3,650,569 4,068,786 5,373,307 2,476,850 3,400,180
----------- ----------- ----------- ----------- ----------
Operating (loss) income........... (215,114) 440,472 698,024 255,417 823,170
Other income (expense):
Interest expense..................... (12,332) (6,205) -- -- --
Interest and other income............ 9,259 7,062 15,273 7,400 13,200
----------- ----------- ----------- ----------- ----------
(Loss) income before income
taxes........................... (218,187) 441,329 713,297 262,817 836,370
Income tax expense (benefit)
(Note 5)............................. 13,222 (1,022,963) 332,062 123,000 341,100
----------- ----------- ----------- ----------- ----------
Net (loss) income................. $ (231,409) $ 1,464,292 $ 381,235 $ 139,817 $ 495,270
----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------
Net (loss) income applicable to common
stock................................ $ (566,882) $ 1,128,819 $ 45,762 $ (27,920) $ 327,533
----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------
Pro forma net income per common
and common equivalent
share--unaudited (Note 9)....... $ 0.11 $ 0.04 $ 0.14
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A, 10% SERIES B, 10% SERIES C, 10%
CUMULATIVE CUMULATIVE CUMULATIVE
CONVERTIBLE CONVERTIBLE CONVERTIBLE
COMMON STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
-------------------- -------------------- -------------------- ---------------------
NO. OF NO. OF NO. OF NO. OF
SHARES PAR VALUE SHARES PAR VALUE SHARES PAR VALUE SHARES PAR VALUE
------- --------- ------- --------- ------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992.................... 879,650 $ 8,796 655,417 $ 983,126 475,185 $ 641,500 629,130 $1,730,107
Issuance of common stock.. 19,293 193 -- -- -- -- -- --
Stock options exercised... 3,000 30 -- -- -- -- -- --
Net loss.................. -- -- -- -- -- -- -- --
Translation adjustment.... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at December 31,
1993.................... 901,943 9,019 655,417 983,126 475,185 641,500 629,130 1,730,107
Net income................ -- -- -- -- -- -- -- --
Translation adjustment.... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at December 31,
1994.................... 901,943 9,019 655,417 983,126 475,185 641,500 629,130 1,730,107
Stock options exercised... 4,800 48 -- -- -- -- -- --
Net income................ -- -- -- -- -- -- -- --
Translation adjustment.... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at December 31,
1995.................... 906,743 9,067 655,417 983,126 475,185 641,500 629,130 1,730,107
Stock option exercised--
unaudited............... 5,521 56 -- -- -- -- -- --
Net income--unaudited..... -- -- -- -- -- -- -- --
Translation adjustment--
unaudited............... -- -- -- -- -- -- -- --
------- --------- ------- --------- ------- --------- ------- ----------
Balance at June 30, 1996--
unaudited............... 912,264 $ 9,123 655,417 $ 983,126 475,185 $ 641,500 629,130 $1,730,107
------- --------- ------- --------- ------- --------- ------- ----------
------- --------- ------- --------- ------- --------- ------- ----------
<CAPTION>
EQUITY
ADJUSTMENT
FOR
ADDITIONAL FOREIGN TOTAL
PAID-IN ACCUMULATED CURRENCY STOCKHOLDERS'
CAPITAL DEFICIT TRANSLATION EQUITY
---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balance at December 31,
1992.................... $318,928 $(2,904,000) $(28,131) $ 750,326
Issuance of common stock.. 23,924 -- -- 24,117
Stock options exercised... 3,720 -- -- 3,750
Net loss.................. -- (231,409) -- (231,409)
Translation adjustment.... -- -- 10,176 10,176
---------- ----------- ---------- -------------
Balance at December 31,
1993.................... 346,572 (3,135,409) (17,955) 556,960
Net income................ -- 1,464,292 -- 1,464,292
Translation adjustment.... -- -- (4,706) (4,706)
---------- ----------- ---------- -------------
Balance at December 31,
1994.................... 346,572 (1,671,117) (22,661) 2,016,546
Stock options exercised... 5,952 -- -- 6,000
Net income................ -- 381,235 -- 381,235
Translation adjustment.... -- -- 20,971 20,971
---------- ----------- ---------- -------------
Balance at December 31,
1995.................... 352,524 (1,289,882) (1,690) 2,424,752
Stock option exercised--
unaudited............... 8,226 -- -- 8,282
Net income--unaudited..... -- 495,270 -- 495,270
Translation adjustment--
unaudited............... -- -- 1,056 1,056
---------- ----------- ---------- -------------
Balance at June 30, 1996--
unaudited............... $360,750 $ (794,612) $ (634) $ 2,929,360
---------- ----------- ---------- -------------
---------- ----------- ---------- -------------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income................................ $ (231,409) $1,464,292 $ 381,235 $139,817 $ 495,270
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:
Depreciation and amortization.................... 117,547 127,377 148,509 69,800 86,815
Provision for bad debts.......................... 58,105 5,601 74,701 35,500 56,893
Equity adjustment for foreign currency
translation.................................... 10,176 (4,706) 20,971 (1,589) 1,056
Loss on disposal of assets....................... -- -- 22,489 -- --
Deferred income taxes............................ -- (1,047,983) 296,280 123,000 271,506
Deferred rent payable............................ (9,666) (5,951) 71,445 22,567 (29,569)
Increase in accounts receivable.................. (211,067) (375,383) (1,154,422) (491,149) (1,197,752)
Decrease in due from officers.................... 3,000 -- -- -- --
(Increase) decrease in prepaid expenses and other
current assets................................. (67,696) (41,993) (94,713) 22,453 103,671
Increase in accounts payable and accrued
expenses....................................... 226,491 261,133 635,325 476,290 641,877
(Decrease) increase in income taxes payable...... (3,199) 23,313 33,187 (3,402) 51,104
---------- ---------- ---------- -------- ----------
Total adjustments.............................. 123,691 (1,058,592) 53,772 253,470 (14,399)
---------- ---------- ---------- -------- ----------
Net cash (used in) provided by operating
activities................................... (107,718) 405,700 435,007 393,287 480,871
---------- ---------- ---------- -------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment.............. (62,420) (127,407) (394,496) (243,826) (287,877)
Increase in other assets......................... (4,049) (60,117) (2,247) 5,582 (15,404)
---------- ---------- ---------- -------- ----------
Net cash used in investing activities.......... (66,469) (187,524) (396,743) (238,244) (303,281)
---------- ---------- ---------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options................ -- -- 6,000 -- 8,282
Proceeds from issuance of common stock........... 27,867 -- -- -- --
Borrowings under note payable--bank.............. 250,000 -- -- -- --
Repayments of note payable--bank................. (70,000) (180,000) -- -- --
---------- ---------- ---------- -------- ----------
Net cash provided by (used in) financing
activities................................... 207,867 (180,000) 6,000 -- 8,282
---------- ---------- ---------- -------- ----------
Net increase in cash and cash equivalents...... 33,680 38,176 44,264 155,043 185,872
CASH AND CASH EQUIVALENTS at beginning of
period....................................... 190,558 224,238 262,414 262,414 306,678
---------- ---------- ---------- -------- ----------
CASH AND CASH EQUIVALENTS at end of period..... $ 224,238 $ 262,414 $ 306,678 $417,457 $ 492,550
---------- ---------- ---------- -------- ----------
---------- ---------- ---------- -------- ----------
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE SIX MONTHS ENDED
JUNE 30, 1995 AND 1996 IS UNAUDITED.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Medialink Worldwide Incorporated (the 'Company') is a Delaware corporation
incorporated on September 24, 1986. In August 1996 the Company changed its name
from Video Broadcasting Corporation. The Company is a worldwide provider of
video and audio production and distribution services for business and other
organizations that seek to communicate their news through television, radio and
other media. The Company has six offices in the United States and one office in
the United Kingdom ('UK').
(b) Revenue Recognition
Fees earned from the distribution and monitoring of video news releases are
recognized in the period that the release is distributed. Fees earned for
satellite media tours and producing video news releases and live broadcasts are
recognized in the period that services are performed.
(c) Property and Equipment
Property and equipment are stated at cost. Depreciation on property and
equipment is computed on the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are amortized over the shorter of
the lease term or estimated useful life of the asset.
(d) Deferred Rent Payable
In accordance with Statement of Financial Accounting Standards No. 13,
'Accounting for Leases,' the Company recognizes rental costs on a straight-line
basis over the fixed term of the lease period. Deferred rent payable represented
the excess of rental expense recorded over rental payments to date.
(e) Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. At December 31, 1994
and 1995, cash equivalents consisted of amounts on deposit in money market
accounts amounting to $186,776 and $109,159, respectively.
(f) Foreign Currency Translation
Foreign operations' financial statements are translated to U.S. dollars in
accordance with Statement of Financial Accounting Standards No. 52, 'Foreign
Currency Translation.' Assets and liabilities of the foreign bureau are
translated into U.S. dollars at year-end rates of exchange. Statements of
operations accounts are translated at the average exchange rate prevailing
during the year. Resulting translation adjustments are reported as a separate
component of stockholders' equity.
(g) Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, 'Accounting for Income Taxes' (Statement
109). Under the asset and liability method of Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under Statement
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
F-7
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE SIX MONTHS ENDED
JUNE 30, 1995 AND 1996 IS UNAUDITED.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
(h) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(i) Fair Value of Financial Instruments
The carrying values of financial instruments approximate their estimated
fair value because of the short maturity of these instruments.
(j) Unaudited Interim Financial Statements
In the opinion of management, the unaudited interim balance sheet as of
June 30, 1996 and the related statements of operations, stockholders' equity and
cash flows for the six months ended June 30, 1995 and 1996 have been prepared on
the same basis as the audited financial statements contained herein and include
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the financial information set forth therein. The results
of operations for the six months ended June 30, 1996, are not necessarily
indicative of the results that may be expected for the year end December 31,
1996.
(2) NOTE PAYABLE--BANK
In March 1995, the Company entered into a line of credit with a bank. Under
this agreement, the Company can borrow the lesser of $500,000 or 70% of the
eligible accounts receivable, as defined in the agreement, through February 28,
1997. The interest rate for the bank borrowings is the prime rate plus 1.00% and
is payable monthly. No borrowings were outstanding under this agreement at
December 31, 1994 and 1995. The loan agreement requires the Company to meet
certain financial ratio tests and prohibits the payment of cash dividends.
Borrowings in 1993 and 1994 under a previous line of credit with another
bank bore interest at the prime rate plus 1 3/4%.
(3) LEASE COMMITMENTS
The Company has several noncancelable operating leases for office space
expiring at various dates through 2004. Future minimum lease payments under
noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 AMOUNT
- ----------------------- ----------
<S> <C>
1996............................................................................ $ 482,000
1997............................................................................ 442,000
1998............................................................................ 445,000
1999............................................................................ 374,000
2000............................................................................ 295,000
Thereafter...................................................................... 1,106,000
----------
$3,144,000
----------
----------
</TABLE>
Total rent expense for operating leases in 1993, 1994 and 1995 was
$362,993, $368,171 and $326,916, respectively.
F-8
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE SIX MONTHS ENDED
JUNE 30, 1995 AND 1996 IS UNAUDITED.
(4) STOCKHOLDERS' EQUITY
Stock Split
In July 1996, the Company effected a 1.2 for one stock split. In addition,
the Company restated its Certificate of Incorporation to increase its authorized
capitalization from 5,000,000 shares of common stock, par value $.01 per share
('Common Stock'), to 15,000,000 shares. These changes resulted in an increase in
Common Stock and corresponding decrease in additional paid-in capital. All per
share data and references to numbers of shares have been restated for all
periods presented to reflect these changes.
Preferred Shares
Annual dividends on the Series A, 10% cumulative convertible preferred
stock, Series B, 10% cumulative convertible preferred stock and Series C, 10%
cumulative convertible preferred stock are cumulative, commencing July 1, 1989
for Series A and Series B and October 31, 1989 for Series C, until declared and
paid at the discretion of the Board of Directors. At December 31, 1995,
dividends in arrears on the Series A, Series B and Series C cumulative
convertible preferred stock amounted to approximately $639,000, $417,000 and
$1,017,000, respectively.
Each share of Series A, Series B and Series C cumulative convertible
preferred stock is convertible at any time at the option of the stockholder into
1.2 shares of Common Stock and will convert into 1.2 shares of Common Stock upon
the closing of an initial public offering pursuant to which the Company receives
net cash proceeds of at least $5 million, and in which the public price per
share is at least $5.50.
Stock Option Plan for Employees
The Company has a stock option plan (the 'Stock Option Plan') that provides
for the granting of options to employees to purchase shares of the Common Stock.
The Company has reserved 490,808 shares for the exercise of these options. In
January 1996, the Company increased the shares reserved for grant by 180,000.
The option price under the Plan shall not be less than 85% of the fair market
value of such share of Common Stock on the date of the grant as determined by
the Company. Under the Stock Option Plan, options issued are exercisable at such
times as determined by the Company but no later than ten years after the date of
the grant.
Options to purchase 251,100 shares of Common Stock at $1.25 and $2.29 per
share were granted and are outstanding at December 31, 1995. Twenty percent of
the options become exercisable each July 1, commencing in the year the options
are granted. The options expire six years from the date of grant. However, upon
the termination of employment of any person, the options will expire 90 days
after the termination date, but no later than the specified expiration date.
In February and July of 1996, 387,494 and 24,000 options were granted at
exercise prices of $3.54 and $6.46, respectively, with a five-year term pursuant
to the Stock Option Plan.
F-9
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE SIX MONTHS ENDED
JUNE 30, 1995 AND 1996 IS UNAUDITED.
(4) STOCKHOLDERS' EQUITY--(CONTINUED)
Activity under the plan is summarized as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Outstanding options at January 1............................. 277,500 262,500 213,600
Granted--option prices ranging from $1.25 per share in 1993,
$1.25 per share in 1994 and $2.29 per share in 1995........ -- 14,400 75,000
Exercised.................................................... (3,000) -- (4,800)
Cancelled and expired........................................ (12,000) (63,300) (32,700)
------- ------- -------
Outstanding (in 1995, exercisable at $1.25 to $2.29 per
share) at December 31...................................... 262,500 213,600 251,100
------- ------- -------
------- ------- -------
Exercisable (in 1995, exercisable at $1.25 to $2.29 per
share) at December 31...................................... 201,480 208,740 214,140
------- ------- -------
------- ------- -------
Available for grant at December 31........................... 17,948 66,848 204,548
------- ------- -------
------- ------- -------
</TABLE>
Stock Option Plan for Directors
In February 1996, the Company established a stock option plan (the
'Directors Stock Option Plan') that provides for the granting of options to
non-employee members of the Company's Board of Directors to purchase shares of
the Common Stock. The Company has reserved 180,000 shares for the exercise of
these options. The option price under the Directors Stock Option Plan shall not
be less than the fair market value of such share of Common Stock on the date of
the grant as determined by the Company. Under the Directors Stock Option Plan,
options issued are exercisable at such times as determined by the Company but no
later than fifteen years after the date of the grant.
Options to purchase 62,400 shares of Common Stock at $3.54 per share were
granted to non-employee directors in February 1996 for services rendered prior
to 1996. No individual directors' grant exceeded 14,400 shares. The options
expire fifteen years from the date of grant. However, upon the termination of
board membership of any person, the options will expire 90 days after the
termination date, but no later than the specified expiration date. These
directors will be eligible for additional grants of 3,000 shares per year in
future years if they continue to serve the Company in that capacity. Such future
grants would become exercisable over a three-year period.
Common Stock Warrants
In 1989, the Company issued warrants to purchase 10,110 shares of its
Common Stock at $2.50 per share. Such warrants expired in 1994.
Deferred Compensation Plan
The Company has a 401(k) plan (the '401(k) Plan') covering all eligible
employees. The 401(k) Plan is currently funded by voluntary salary deductions by
plan members and is limited to the maximum amount that can be deducted for
Federal income tax purposes. The Company is not required to make contributions
to the 401(k) Plan; however, employer contributions may be made on a
discretionary basis. For the three years ended December 31, 1995, the Board of
Directors authorized matching of plan member contributions in the amounts of
$16,186, $20,320 and $27,233 for 1993, 1994 and 1995, respectively, which is
reflected in general and administrative expenses in the accompanying financial
statements.
F-10
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE SIX MONTHS ENDED
JUNE 30, 1995 AND 1996 IS UNAUDITED.
(5) INCOME TAXES
The provision for income taxes expense (benefit) consists of the following:
<TABLE>
<CAPTION>
1993 1994 1995
-------- ----------- --------
<S> <C> <C> <C>
Current:
Federal........................................................ $ -- $ 12,393 $ 20,000
State and local................................................ 13,222 12,627 15,782
-------- ----------- --------
13,222 25,020 35,782
Deferred:
Federal........................................................ -- (783,341) 221,462
State and local................................................ -- (264,642) 74,818
-------- ----------- --------
-- (1,047,983) 296,280
-------- ----------- --------
$ 13,222 $(1,022,963) $332,062
-------- ----------- --------
-------- ----------- --------
</TABLE>
Income tax (benefit) expense differs from the amount computed by
multiplying the statutory rate of 34% to income before income taxes due to the
following:
<TABLE>
<CAPTION>
1993 1994 1995
-------- ----------- --------
<S> <C> <C> <C>
Income tax (benefit) expense at statutory rate................... $(74,184) $ 150,052 $242,929
Increase (reduction) in income taxes resulting from:
State and local income taxes, net of Federal income tax
benefit..................................................... 13,222 40,717 59,796
Nondeductible expenses......................................... -- 16,159 9,337
Increase (reduction) in valuation allowance.................... 74,184 (1,242,284) --
Other.......................................................... -- 12,393 20,000
-------- ----------- --------
$ 13,222 $(1,022,963) $332,062
-------- ----------- --------
-------- ----------- --------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 1994 and 1995 are presented
below:
<TABLE>
<CAPTION>
1994 1995
---------- --------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts..... $ 35,857 $ 46,114
Leasehold improvements, principally due to differences in amortization...... 12,202 4,457
Equipment, principally due to differences in depreciation................... 26,063 33,441
Net operating loss carryforward............................................. 973,861 667,691
---------- --------
Net deferred tax asset........................................................ $1,047,983 $751,703
---------- --------
---------- --------
</TABLE>
Upon the adoption of Statement 109 in 1993, because of its operating losses
and the level of deferred tax assets, the Company could not conclude that it was
more likely than not that its deferred tax assets would be realized and,
consequently, set up a valuation allowance. At December 31, 1994, based on its
earnings for the year and expectations of future earnings, the Company
determined that it was more likely than not that its deferred tax assets would
be realized and, consequently, reversed the remaining valuation allowance.
F-11
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE SIX MONTHS ENDED
JUNE 30, 1995 AND 1996 IS UNAUDITED.
(6) FOREIGN OPERATIONS
Selected financial information regarding the Company's UK office as of and
for the years ended December 31, is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
--------- -------- ----------
<S> <C> <C> <C>
Total assets..................................................... $393,878 $ 560,295
-------- ----------
-------- ----------
Total liabilities................................................ $156,233 $ 327,818
-------- ----------
-------- ----------
Revenues......................................................... $ 360,074 $834,749 $1,484,670
--------- -------- ----------
--------- -------- ----------
Operating loss................................................... $ 281,081 $103,341 $ 21,606
--------- -------- ----------
--------- -------- ----------
</TABLE>
(7) COMMITMENTS
On April 30, 1990, the Company entered into an agreement for communications
services. The agreement, which was amended and restated on November 1, 1993,
extends until November 1, 1997. The agreement provides for guaranteed minimum
payments which currently approximate $516,000 per year. Charges included in
direct costs on the accompanying statement of operations under this agreement
amounted to $516,344, $497,617 and $526,516 for the years ended December 31,
1993, 1994 and 1995, respectively.
(8) SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest and income taxes during the years ended December 31,
1993, 1994 and 1995 was as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
<S> <C> <C> <C>
Interest.................................................................. $12,332 $6,205 $ --
Income taxes.............................................................. $16,421 $2,868 $3,733
</TABLE>
(9) UNAUDITED PRO FORMA INFORMATION
Pro forma net income per common and common equivalent share is calculated
using the weighted average number of shares of Common Stock outstanding during
the period, plus Common Stock issuable pursuant to options granted under the
Stock Option Plan at prices below the assumed initial public offering price per
share during the twelve-month period immediately preceding the initial filing
date of the Company's Registration Statement for its public offering, assuming
such Common Stock was outstanding for all periods presented. In addition, shares
of Common Stock issuable upon the conversion of all shares of Series A, Series B
and Series C Preferred Stock into shares of Common Stock are included in the
calculation as if they were outstanding for all periods presented. The weighted
average number of common equivalent shares outstanding during the period ended
December 31, 1995, after reflecting a 1 for 1.2 stock split effective July 31,
1996 was 3,453,109.
(10) SUBSEQUENT EVENT
On July 18, 1996, the Company entered into an asset purchase agreement (the
'Agreement') with PR Data Systems, Inc. ('PR Data') and its stockholders. Under
the terms of the Agreement, the Company acquired all of PR Data's tangible and
intangible assets for cash of $120,000 and through the issuance of 24,000 shares
of the Common Stock valued at $155,000. The Company also assumed certain of the
obligations and liabilities of PR Data as at the closing date with the exception
that such obligations and liabilities assumed could not exceed the book value of
assets acquired by more than $372,000.
The Company also entered into non-compete agreements with the principal
officers and stockholders of PR Data. These agreements are for periods of five
years and provide for quarterly payments aggregating $410,000 during this
period.
F-12
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS
PR DATA SYSTEMS, INC.:
We have audited the accompanying balance sheets of PR Data Systems, Inc. as
of December 31, 1994 and 1995, and the related statements of operations and
accumulated deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 financial position of PR Data Systems, Inc. as of
December 31, 1994 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepeted accounting
principles.
/s/ KPMG Peat Marwick LLP
New York, New York
August 22, 1996
F-13
<PAGE>
PR DATA SYSTEMS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash....................................................................... $ 5,083 $ 4,008 $ --
Accounts receivable net of allowance for doubtful accounts of $25,000 and
$18,000 in 1994 and 1995, respectively.................................. 219,838 248,229 252,320
Prepaid expenses........................................................... 3,104 2,707 1,284
-------- -------- -----------
Total current assets.................................................... 228,025 254,944 253,604
Property and equipment, net of accumulated depreciation of $238,027 and
$216,540 in 1994 and 1995, respectively (Note 2)........................... 54,892 90,301 77,576
Security deposits............................................................ 6,035 7,731 7,731
Deferred loan costs.......................................................... 7,044 5,166 4,227
-------- -------- -----------
Total assets............................................................ $295,996 $358,142 $ 343,138
-------- -------- -----------
-------- -------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current installments of obligations under capital leases (Note 3).......... 8,307 11,699 11,699
Current installments of long-term debt (Note 4)............................ 136,455 104,442 87,513
Loans payable (Note 5)..................................................... -- 11,500 --
Accounts payable........................................................... 136,361 133,160 129,717
Amounts payable to related parties (Note 5):
Accrued interest........................................................ 49,785 76,910 90,107
Accrued rent............................................................ 30,922 43,470 27,962
Accrued salaries........................................................... 29,390 30,535 32,598
Other accrued expenses....................................................... 1,488 235 1,888
Deferred revenue........................................................... 51,806 54,056 --
Income taxes payable......................................................... 895 615 349
-------- -------- -----------
Total current liabilities............................................... 445,409 466,622 381,833
Obligations under capital leases, excluding current installments (Note 3).... 36,390 38,541 31,876
Long-term debt, payable to related parties (Note 4).......................... 287,362 293,107 353,607
-------- -------- -----------
Total liabilities....................................................... 769,161 798,270 767,316
-------- -------- -----------
Commitments (Notes 3 and 5)
STOCKHOLDERS' DEFICIT:
Common stock, no par value. Authorized, issued and outstanding 200
shares.................................................................. 17,000 17,000 17,000
Accumulated deficit........................................................ (490,165) (457,128) (441,178)
-------- -------- -----------
Total stockholders' deficit............................................. (473,165) (440,128) (424,178)
-------- -------- -----------
Total liabilities and stockholders' deficit............................. $295,996 $358,142 $ 343,138
-------- -------- -----------
-------- -------- -----------
</TABLE>
See accompanying notes to financial statements.
F-14
<PAGE>
PR DATA SYSTEMS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
-------------------------- ----------------------
1994 1995 1995 1996
----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.............................. $ 1,669,783 $ 1,691,603 $ 808,557 $ 843,788
Direct expenses....................... 344,961 263,133 141,947 116,006
----------- ----------- --------- ---------
Gross profit..................... 1,324,822 1,428,470 666,610 727,782
Selling, general and administrative
expenses............................ 1,377,169 1,354,019 657,611 681,763
----------- ----------- --------- ---------
Operating (loss) income.......... (52,347) 74,451 8,999 46,019
Interest expense...................... (38,401) (40,799) (33,410) (29,486)
----------- ----------- --------- ---------
(Loss) income before income
taxes.......................... (90,748) 33,652 (24,411) 16,533
Income taxes (Note 6)................. 624 615 365 583
----------- ----------- --------- ---------
Net (loss) income................ (91,372) 33,037 (24,776) 15,950
Accumulated deficit at beginning of
period.............................. (398,793) (490,165) (490,165) (457,128)
----------- ----------- --------- ---------
Accumulated deficit at end of
period.............................. $ (490,165) $ (457,128) $(514,941) $(441,178)
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
See accompanying notes to financial statements.
F-15
<PAGE>
PR DATA SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.)
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
-------------------- --------------------
1994 1995 1995 1996
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income................................................ $(91,372) $ 33,037 $(24,776) $ 15,950
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization................................. 10,118 17,840 10,620 13,664
Provision for doubtful accounts............................... 22,000 21,007 9,667 658
Loss on disposition of equipment and vehicles................. 675 1,143 1,143 --
Decrease (increase) in accounts receivable.................... 5,523 (49,398) 77,798 (4,749)
Decrease in prepaid expenses.................................. 745 397 1,561 1,423
(Decrease) increase in accounts payable....................... (11,309) (3,201) 4,975 (3,443)
Increase in amounts payable to related parties................ 31,925 39,673 (57,556) (2,311)
(Decrease) increase in accrued salaries....................... (888) 1,145 (169) 2,063
Decrease in other accrued expenses............................ (2,060) (1,253) 13,512 1,653
Increase in deferred revenue.................................. 51,806 2,250 (5,534) (54,056)
Increase (decrease) in income taxes payable................... 645 (280) (530) (266)
Increase in security deposits................................. (4,237) (1,696) (1,696) --
-------- -------- -------- --------
Net cash provided by operating activities................ 13,571 60,664 29,015 (29,414)
-------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures for property and equipment.................. -- (35,554) (13,684) --
-------- -------- -------- --------
Net cash used in investing activities.................... -- (35,554) (13,684) --
-------- -------- -------- --------
Cash flows from financing activities:
Proceeds of borrowings from stockholders......................... 71,410 45,240 745 60,500
Proceeds of other borrowings..................................... 24,900 63,000 -- --
Principal payments on borrowings from stockholders............... (56,400) (39,495) -- --
Principal payments on loan from Small Business Administration.... (29,760) (32,013) (15,592) (16,929)
Principal payments under capital lease obligations............... (693) (11,417) (5,567) (6,665)
Principal payments on other borrowings........................... (24,900) (51,500) -- (11,500)
-------- -------- -------- --------
Net cash used in financing activities.................... (15,443) (26,185) (20,414) 25,406
-------- -------- -------- --------
Net decrease in cash..................................... (1,872) (1,075) (5,083) (4,008)
Cash at beginning of period........................................ 6,955 5,083 5,083 4,008
-------- -------- -------- --------
Cash at end of period.............................................. $ 5,083 $ 4,008 $ -- $ --
-------- -------- -------- --------
-------- -------- -------- --------
Supplemental schedule of noncash investing and financing
activities:
Acquisition of equipment under capital lease.................. $ 45,389 $ 16,960
-------- --------
-------- --------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest...................................................... $ 15,298 $ 29,343
-------- --------
-------- --------
Income taxes.................................................. $ 250 $ 250
-------- --------
-------- --------
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
PR Data Systems, Inc. ('PR Data') is engaged in public relations services,
including the distribution of news releases to media and reporting on the
effectiveness of such releases in meeting the customers' requirements.
(b) Revenue Recognition
Fees earned for the distribution of news releases are recognized when the
services are performed and billed. PR Data typically enters into annual
agreements with customers under which it reports on the effectiveness of news
releases. Fees earned under these arrangements are recognized ratably over the
term of the agreement.
(c) Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated
principally on a straight-line basis over the estimated useful lives of the
assets. Equipment held under capital leases is amortized on a straight-line
basis over the lease term. Costs paid to a consultant to develop certain
databases used by PR Data have been deferred and are being amortized over five
years.
(d) Deferred Loan Costs
Costs incurred in obtaining a loan from the Small Business Administration
have been deferred and are being amortized over the term of the loan (six
years).
(e) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. PR Data makes an allowance for deferred tax assets to the extent
that management considers that some portion or all of such assets will not be
realized.
(f) Financial Instruments
The fair value of financial instruments at December 31, 1994 and 1995
approximates cost due to the relatively short maturities of such instruments.
(g) Use of Estimates
Management of PR Data has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(h) Unaudited Interim Financial Statements
In the opinion of management, the unaudited interim balance sheet as of
June 30, 1996 and the related statements of operations and accumulated deficit
and cash flows for the six months ended June 30, 1995 and 1996 have been
prepared on the same basis as the audited financial statements contained herein
and include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial information set forth
therein. The results of operations for the six months ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year end
December 31, 1996.
F-17
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(2) PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Copier equipment held under capital leases......................... $ 45,389 $ 62,349
Office furniture................................................... 20,982 22,332
Office and computer equipment and software......................... 226,548 222,160
--------- ---------
292,919 306,841
Less accumulated depreciation...................................... (238,027) (216,540)
--------- ---------
$ 54,892 $ 90,301
--------- ---------
--------- ---------
</TABLE>
Depreciation expenses amounted to $10,118 and $17,840 in 1994 and 1995,
respectively.
(3) OBLIGATIONS UNDER CAPITAL LEASES
Minimum future lease payments under capital leases at December 31, 1995
are:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ---------------------------------------------------------------
<S> <C>
1996........................................................... $14,963
1997........................................................... 14,963
1998........................................................... 14,963
1999........................................................... 17,919
2000........................................................... 351
-------
Total minimum lease payments................................... 63,159
Less amount representing interest.............................. (12,919)
-------
Present value of net minimum lease payments.................... $50,240
Less amount currently due...................................... (11,699)
-------
$38,541
-------
-------
</TABLE>
(4) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Small Business Administration loan due August 31, 1998................ $136,455 $104,442
Stockholders' loans................................................... 287,362 293,107
-------- --------
423,817 397,549
Less current portion.................................................. 136,455 104,442
-------- --------
Long-term portion, net................................................ $287,362 $293,107
-------- --------
-------- --------
</TABLE>
The Small Business Administration loan bears interest at 2 1/4% over prime
(10 3/4% at December 31, 1995) and is payable in monthly installments over the
term of the loan. The loan is guaranteed by the officers and secured by third
mortgages on their residences and assignment of proceeds under the officers'
life insurance policies. Restrictive covenants include maintaining a current
ratio of not less than 1.5 to 1 at the end of any fiscal quarter and contain
limits as to officers' salary increases and paydowns on stockholder loans. PR
Data did not meet the current ratio requirement at December 31, 1994 or 1995.
Consequently, the entire loan balance is classified as a current liability on
the accompanying balance sheets.
The stockholders' loans bear interest at 8 1/2% or 2% over prime (10 1/2%
at December 31, 1995) and have been classified as long term as the shareholders
agreed not to demand repayment before January 1, 1997.
F-18
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(5) RELATED PARTY TRANSACTIONS
During March 1992, PR Data entered into a five-year lease expiring in
September 1996 for office space from a partnership 50% owned by certain
stockholders. The lease agreement calls for a monthly base rent of $12,175 plus
escalation charges for real estate taxes. These escalation charges totaled
$17,894 and $19,794 in 1994 and 1995, respectively. PR Data negotiated a
reduction in the monthly payments to $10,175 for the period April 1, 1994
through March 31, 1995.
During 1995, a partnership, 50% owned by certain stockholders of PR Data,
advanced funds without interest to cover short-term working capital needs of PR
Data.
At December 31, 1994 and 1995, amounts payable to related parties included
rent payable to a partnership 50% owned by certain stockholders of $30,922 and
$43,370, respectively, and interest on stockholders' loans of $49,785 and
$76,910, respectively.
(6) INCOME TAXES
Income tax expense attributable to income from continuing operations
consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1994:
Federal............................................... $ -- $ -- $ --
State and local....................................... 624 -- 624
------- -------- -----
$ 624 $ -- $ 624
------- -------- -----
------- -------- -----
Year ended December 31, 1995:
Federal............................................... -- -- --
State and local....................................... 615 -- 615
------- -------- -----
$ 615 $ -- $ 615
------- -------- -----
------- -------- -----
</TABLE>
Income tax expense differs from the amount computed by multiplying the
statutory rate of 34% to income (loss) before income taxes due to the following:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Income tax (benefit) expense at statutory rate............... $(30,854) $ 11,442
Increase (reduction) in income taxes resulting from:
State taxes, net of Federal tax deduction.................. (4,244) 1,827
Nondeductible expenses..................................... 218 1,507
Increase (decrease) in valuation allowance................. 35,873 (15,447)
Other...................................................... (369) 1,286
-------- --------
$ 624 $ 615
-------- --------
-------- --------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1994 and 1995 are presented below:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........................ $ 133,512 $ 125,780
Accounts receivable principally due to allowance for
doubtful accounts.................................... 10,356 7,729
Property and equipment, due to differences in
depreciation for book and tax purposes............... 4,509 4,824
Other................................................... 1,350 1,350
--------- ---------
149,727 139,683
--------- ---------
</TABLE>
F-19
<PAGE>
PR DATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INFORMATION AS OF JUNE 30, 1996 AND INFORMATION RELATING TO THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED.
(6) INCOME TAXES--(CONTINUED)
<TABLE>
<CAPTION>
1994 1995
--------- ---------
Deferred tax liabilities:
<S> <C> <C>
Software development costs.............................. -- (5,403)
--------- ---------
-- (5,403)
--------- ---------
Net deferred tax assets.............................. 149,727 134,280
Less valuation allowance................................ (149,727) (134,280)
--------- ---------
Deferred tax assets, net of valuation allowance...... $ -- $ --
--------- ---------
--------- ---------
</TABLE>
At December 31, 1995, PR Data has net operating loss carryforwards for
Federal income tax purposes of $243,482 which are available to offset future
Federal taxable income, if any, through 2009.
The net change in the total valuation allowance for the years ended
December 31, 1994 and 1995 was an increase of $35,873 and a decrease of $15,447,
respectively. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities and projected
future taxable income in making this assessment. In order to fully realize the
deferred tax assets, PR Data will need to generate future taxable income of
approximately $324,000 prior to the expiration of the net operating loss
carryforwards in 2009. Based upon the level of historical taxable income (loss)
and projection for future taxable income over the periods in which the deferred
tax assets are deductible, management could not conclude that it is more likely
than not that PR Data will be able to realize the benefits of these deductible
differences and, accordingly, has provided a valuation allowance equal to the
excess of deferred tax assets over deferred tax liabilities.
(7) BUSINESS CONCENTRATION
During 1994 and 1995, PR Data generated revenue of $481,400 and $479,000,
respectively, from services provided to two customers. The total accounts
receivable balance at December 31, 1994 and 1995 relating to these customers was
$34,302 and $64,528, respectively.
(8) SUBSEQUENT EVENT
On July 18, 1996, PR Data completed an asset purchase agreement (the
'Agreement') with Medialink Worldwide Incorporated, formerly known as Video
Broadcasting Corporation ('Medialink'), a Delaware corporation, and Medialink PR
Data Corporation (the 'Purchaser'), a Delaware corporation which is a wholly
owned subsidiary of Medialink.
Under the terms of the Agreement, the Purchaser acquired all of PR Data's
tangible and intangible assets for cash of $120,000 and through the issuance of
24,000 shares of Common Stock valued at $155,000. The purchaser also assumed all
of the obligations and liabilities of PR Data as at the closing date with the
exception that such obligations and liabilities assumed could not exceed the
book value of assets acquired by more than $372,000.
The Purchaser also entered into noncompete agreements with PR Data's
principal officers and stockholders. These agreements are for periods of five
years and provide for quarterly payments aggregating $410,000 during this
period.
F-20
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Balance Sheet of
Medialink Worldwide Incorporated (the 'Company' or 'Medialink') as of June 30,
1996 and unaudited Pro Forma Condensed Combined Statements of Operations for the
six months ended June 30, 1996 and the year ended December 31, 1995 illustrates
the effect of the PR Data Acquisition. The Unaudited Pro Forma Condensed
Combined Balance Sheet assumes that the PR Data Acquisition occurred on June 30,
1996 and the Unaudited Pro Forma Condensed Combined Statements of Operations
assumes that the PR Data Acquisition occurred at the beginning of the periods
presented.
Pursuant to the terms of the PR Data Acquisition, the Company issued 24,000
shares of Common Stock, made a cash payment of $120,000 and assumed certain
liabilities not to exceed the book value of assets acquired by more than
$372,000. In addition, the Company will make quarterly payments in the aggregate
amount of $410,000 payable over the next five years under the terms of
non-compete agreements with certain officers and stockholders of PR Data. The
transaction will be accounted for as a purchase. The Unaudited Pro Forma
Condensed Combined Financial Statements also reflect the pay down of PR Data's
existing Small Business Administration loan in the amount of approximately
$89,000 and the conversion of long-term debt and certain other obligations of PR
Data to its stockholders into a new note in the amount of $330,000 which
occurred immediately following the consummation of the PR Data Acquisition.
The pro forma adjustments are based upon currently available information
and upon certain assumptions that management believes are reasonable. The PR
Data Acquisition will be recorded based upon the estimated fair market value of
the net tangible and intangible assets acquired at the date of the acquisition.
The adjustments included in the Unaudited Pro Forma Condensed Combined Financial
Statements represent management's preliminary determination of these adjustments
based upon available information. There can be no assurance that the actual
adjustments will not differ significantly from the pro forma adjustments
reflected in the pro forma financial information.
The Unaudited Pro Forma Condensed Combined Financial Statements are not
necessarily indicative of either future results of operations or results that
might have been achieved if the foregoing transaction had been consummated as of
the indicated dates. The Unaudited Pro Forma Condensed Combined Financial
Statements should be read in conjunction with the historical financial
statements of Medialink and PR Data included elsewhere herein, together with the
related notes thereto.
F-21
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
MEDIALINK PR DATA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------- ----------- ----------
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................. $ 492,550 $ -- $(120,000)(1) $ 285,037
(87,513)(2)
Accounts receivable........................................ 3,558,888 252,320 3,811,208
Prepaid expenses and other current assets.................. 158,821 1,284 160,105
Deferred tax asset......................................... 480,197 -- 480,197
----------- ---------- ----------- ----------
Total current assets................................... 4,690,456 253,604 (207,513) 4,736,547
Property and equipment--net.................................. 745,442 77,576 823,018
Due from officers............................................ 6,532 -- 6,532
Intangible assets--net....................................... -- -- 997,138(1) 997,138
Other assets................................................. 112,922 11,958 124,880
----------- ---------- ----------- ----------
Total assets........................................... $ 5,555,352 $ 343,138 $ 789,625 $6,688,115
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Account payable............................................ $ 1,604,039 $ 129,717 $ $1,733,756
Accrued expenses........................................... 853,408 34,486 30,000(1) 891,771
(26,123)(1)
Capital leases--current.................................... -- 11,699 11,699
Long-term debt--current.................................... -- 87,513 (87,513)(3) 36,709
36,709(1)
Amounts payable to related parties......................... -- 118,069 (2,448)(1) 115,621
Income taxes payable....................................... 118,236 349 118,585
----------- ---------- ----------- ----------
Total current liabilities.............................. 2,575,683 381,833 (49,375) 2,908,141
Deferred rent payable........................................ 50,309 -- 50,309
Capital leases--excluding current............................ -- 31,876 31,876
Long-term debt--excluding current............................ -- 353,607 (23,607)(1) 293,291
(36,709)(3)
Commitment under covenant not to compete--net................ -- -- 320,138(1) 320,138
STOCKHOLDERS' EQUITY:
Series A Preferred Stock................................... 983,126 -- 983,126
Series B Preferred Stock................................... 641,500 -- 641,500
Series C Preferred Stock................................... 1,730,107 -- 1,730,107
Common stock............................................... 9,123 17,000 (17,000) 9,363
240(1)
Additional paid-in capital................................. 360,750 -- 154,760(1) 515,510
Accumulated deficit........................................ (794,612) (441,178) 441,178(1) (794,612)
Equity adjustment for foreign currency translation......... (634) -- (634)
----------- ---------- ----------- ----------
Total stockholders' equity............................. 2,929,360 (424,178) 579,178 3,084,360
----------- ---------- ----------- ----------
Total liabilities and stockholders' equity............. $ 5,555,352 $ 343,138 $ 789,625 $6,688,115
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F-22
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
------------------------------------------------------
MEDIALINK PR DATA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues.................................................. $7,431,490 $ 843,788 $ (2,133)(4) $8,212,048
(61,097)(5)
Direct costs.............................................. 3,208,140 116,006 (61,097)(5) 3,263,049
---------- ---------- ----------- ----------
Gross profit............................................ 4,233,350 727,782 (2,133) 4,948,999
General and administrative expenses....................... 3,400,180 681,763 19,571(6) 4,110,242
25,000(7)
(16,272)(8)
---------- ---------- ----------- ----------
Operating income........................................ 823,170 46,019 (30,432) 838,757
Other income (expense)
Interest expense........................................ -- (29,486) 3,212(9) (21,654)
4,620(10)
Interest and other income............................... 13,200 -- 13,200
---------- ---------- ----------- ----------
Income before income taxes.............................. 836,370 16,533 (22,600) 830,303
Income tax expense........................................ 341,100 583 (9,221)(11) 332,462
---------- ---------- ----------- ----------
Net income................................................ $ 495,270 $ 15,950 $ (13,379) $ 497,841
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
Pro forma net income per common and common equivalent
share................................................... $ 0.14(12)
----------
----------
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F-23
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------
MEDIALINK PR DATA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues.............................................. $10,624,680 $1,691,603 $ (8,229)(4) $12,237,144
(70,910)(5)
Direct costs.......................................... 4,553,349 263,133 (70,910)(5) 4,745,572
----------- ---------- ----------- -----------
Gross profit........................................ 6,071,331 1,428,470 (8,229) 7,491,572
General and administrative expenses................... 5,373,307 1,354,019 39,143(6) 6,786,155
50,000(7)
(30,314)(8)
----------- ---------- ----------- -----------
Operating income.................................... 698,024 74,451 (67,058) 705,417
Other income (expense)
Inerest expense..................................... -- (40,799) 4,972(9) (26,587)
9,240(10)
Interest and other income........................... 15,273 -- 15,273
----------- ---------- ----------- -----------
Income before income taxes.......................... 713,297 33,652 (52,846) 694,103
Income tax expense.................................... 332,062 615 (12,696)(11) 319,981
----------- ---------- ----------- -----------
Net income............................................ $ 381,235 $ 33,037 $ (40,150) $ 374,122
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
Pro forma net income per common and common equivalent
share............................................... $ 0.11(12)
-----------
-----------
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
F-24
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) Reflects the purchase price in connection with the PR Data Acquisition as
follows:
<TABLE>
<S> <C> <C>
Cash paid at closing $120,000
Medialink shares issued 155,000
Net liabilities assumed:
Actual at June 30, 1996 424,178
Cash overdraft not assumed (26,123)
Long-term debt not assumed (23,607)
Amounts payable to related parties
not assumed (2,448)
--------
372,000
Present value of payments totaling $410,000
Under non-compete agreements 320,138
Estimated transaction costs 30,000
--------
$997,138
--------
--------
</TABLE>
The purchase price has been allocated in the Pro Forma Condensed Combined
Financial Statements as follows:
<TABLE>
<S> <C> <C>
Covenant not to compete $320,138
Goodwill and other tangibles 677,000
--------
$977,138
--------
--------
</TABLE>
(2) Reflects the payoff of PR Data's Small Business Association loan in the
amount of $87,513 immediately following the consummation of the PR Data
Acquisition.
(3) To reflect conversion of long-term debt and certain other obligations of PR
Data to a stockholder into a new note in the amount of $330,000 bearing an
interest rate of 8% and amortizing over seven years.
(4) Reflects the elimination of management fee income of PR Data from a related
party that will no longer be earned after the PR Data Acquisition.
(5) Reflects the elimination of fees for services paid to PR Data by Medialink.
(6) Reflects the amortization expenses of the excess of cost over the fair
value of the net tangible liabilities acquired in the PR Data Acquisition
by use of the straight-line method over 15 years.
(7) Reflects the amortization of the value assigned to various non-compete
agreements with certain officers and stockholders of PR Data.
(8) Reflects the adjustment to the salaries of the former officers and
stockholders of PR Data under the terms of their new employment agreements
with Medialink effective after the PR Data Acquisition.
(9) Reflects the effect of interest due on the note due to a stockholder of PR
Data in the principal amount of $330,000.
(10) Reflects the reduction in interest expense as a result of the payoff of the
Small Business Administration loan at the closing of the PR Data
Acquisition.
(11) Reflects the tax effect of the pro forma adjustments at Medialink's
effective tax rate.
(12) See Note 9 to the Company's Financial Statements for an explanation of the
method used to determine the pro forma net income per common and common
equivalent share.
F-25
<PAGE>
CASE STUDIES
PEPSI
Illustration shows man standing in front of assembly line on which soft drink
cans are being filled.
Pepsi was the target of rumors regarding product tampering in its soft drink
cans. Pepsi decided to counter these allegations by showing the public the
conditions under which the beverage was manufactured and packaged. VNRs were
produced to accomplish that, and were distributed by Medialink to TV stations
nationwide. Medialink's monitoring indicated that the releases achieved a
cumulative audience of 500 million over a one-week period.
GENERAL MILLS
General Mills wished to celebrate the 75th anniversary of the Betty Crocker
brand by unveiling the latest modernization "makeover" of the Betty Crocker
image. This was a significant corporate event, and management sought to
generate a maximum amount of news coverage. Medialink broadcast the ceremony at
which the new likeness was presented; conducted a Satellite Media Tour that
reached TV stations around the nation; and produced a VNR to extend the story's
reach. Medialink's monitoring indicated a cumulative audience of 42 million.
Illustration shows man standing in front of framed portrait of likeness of Betty
Crocker.
SPEEDO INTERNATIONAL
Illustration shows newscaster with three women in swimsuits.
This major swimwear manufacturer sought to introduce products made from a new
proprietary fabric, Aquablade(R), that, according to scientific tests reported
by Speedo, could increase a swimmer's speed by as much as 8%. This line was set
for release in Europe, Australia and Latin America. The challenge was to prepare
and distribute "master" material that could be readily adapted by TV stations
in numerous countries taking into account local languages and customs. This was
accomplished by coordinating the efforts of Medialink's international network of
affiliates. Medialink's monitoring indicated a cumulative audience of 182
million in 12 countries.
MEDIALINK
<PAGE>
[LOGO]
2,000,000 SHARES
COMMON STOCK
PROSPECTUS
DEAN WITTER REYNOLDS INC.
WHEAT FIRST BUTCHER SINGER
, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of the Common Stock being registered. All items are estimated
except the SEC registration and NASD and NASDAQ filing fees.
<TABLE>
<S> <C>
SEC registration fee........................................... $ 7,667
NASD filing fee................................................ 3,030
NASDAQ fee..................................................... 30,120
Blue Sky fees and expenses..................................... *
Printing and engraving expenses................................ *
Legal fees and expenses........................................ *
Accounting fees and expenses................................... *
Transfer agent fees............................................ *
Miscellaneous.................................................. *
-------
Total..................................................... $ *
-------
-------
</TABLE>
- ------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the 'DGCL') provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation--a
'derivative action'), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement or
otherwise.
Article Ninth of the Company's Amended and Restated Certificate of
Incorporation provides that each person who was or is made a party to (or is
threatened to be made a party to) or is otherwise involved in any civil or
criminal action, suit or proceeding by reason of the fact that such person is or
was a director or officer of the Company shall be indemnified and held harmless
by the Company to the fullest extent authorized by Section 145 of the DGCL
against all expense, liability and loss (including without limitation attorneys'
fees) incurred by such person in connection therewith.
Article Ninth of the Company's Amended and Restated Certificate of
Incorporation provides that, to the fullest extent permitted by the DGCL, the
Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from a breach of their fiduciary
duty as directors. However, nothing contained in such Article Ninth shall
eliminate or limit the liability of directors (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Article XI of the Registrant's Amended and Restated By-Laws provides that
each person who was or is made a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a
II-1
<PAGE>
director, officer, employee or agent of the Registrant or is or was serving at
the request of the Registrant as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Registrant to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists or may hereafter be
amended, against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith. Such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
The Company has entered into indemnification agreements with each of its
current directors and officers, which provide for indemnification of, and
advancement of expenses to, such persons to the greatest extent permitted by
Delaware law, including by reason of action or inaction occurring in the past,
and circumstances in which indemnification and advancement of expenses to such
persons are permitted or are discretionary to the greatest extent under Delaware
law.
Subsequent to the consummation of this offering, the Company intends to
maintain directors and officers liability insurance covering all directors and
officers of the Company against claims arising out of the performance of their
duties.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following information is furnished with regard to all securities sold
by the Company within the past three years which were not registered under the
Securities Act. Amounts have been restated to reflect a 1.2 for 1 stock split of
the Common Stock effected in the form of a stock dividend on July 31, 1996.
These transactions were private transactions not involving a public offering and
were exempt from the registration provisions of the Securities Act pursuant to
Section 4(2) or Rule 701 thereof. Options granted to employees were granted
pursuant to the Company's stock option plans. Options granted to non-employee
directors were granted pursuant to the Directors Stock Option Plan.
On July 18, 1996, the Company granted to William Wubbenhorst, Jack
Schoonover and Nancy Schoonover stock options to purchase an aggregate of 24,000
shares of Common Stock at an exercise price of $6.46 per share, pursuant to
stock option agreements executed in connection with the PR Data Acquisition.
On July 18, 1996, the Company issued to William Wubbenhorst, Jack
Schoonover and Nancy Schoonover an aggregate of 24,000 shares of Common Stock,
valued at an aggregate of $155,000, pursuant to the Asset Purchase Agreement
executed in connection with the PR Data Acquisition.
On February 15, 1996, the Company granted to non-employee directors of the
Company stock options to purchase 62,400 shares of Common Stock at an exercise
price of $3.54 per share
On July 1, 1995 and February 1, 1996, the Company granted to Laurence
Moskowitz stock options to purchase 9,600 and 92,400 shares of Common Stock,
respectively, at exercise prices of $2.29 and $3.54 per share, respectively.
On July 1, 1995 and February 1, 1996, the Company granted to J. Graeme
McWhirter stock options to purchase 8,400 and 76,394 shares of Common Stock,
respectively, at exercise prices of $2.29 and $3.54 per share, respectively.
On July 1, 1995 and February 1, 1996, the Company granted to Mark Manoff
stock options to purchase 7,200 and 39,700 shares of Common Stock, respectively,
at exercise prices of $2.29 and $3.54 per share, respectively.
On July 1, 1995 and February 1, 1996, the Company granted to Nicholas F.
Peters stock options to purchase 7,200 and 39,400 shares of Common Stock,
respectively, at exercise prices of $2.29 and $3.54 per share, respectively.
II-2
<PAGE>
On July 1, 1995 and February 1, 1996, the Company granted to Mary Buhay
stock options to purchase 3,600 and 6,800 shares of Common Stock, respectively,
at exercise prices of $2.29 and $3.54 per share, respectively.
On February 1, 1996, the Company granted to employees stock options to
purchase 132,800 shares of Common Stock at an exercise price of $3.54 per share.
On July 1, 1995, the Company granted to employees stock options to purchase
39,000 shares of Common Stock at an exercise price of $2.29.
On March 1, 1994, the Company granted to David Davis stock options to
purchase 14,400 shares of Common Stock at an exercise price of $1.25 per share.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
<S> <C>
*1.1 -- Form of Underwriting Agreement.
*3.1 -- Amended and Restated Certificate of Incorporation of Medialink Worldwide Incorporated (the
'Company').
3.2 -- Amended and Restated By-Laws of the Company.
*4.1 -- Specimen Stock Certificate.
*5.1 -- Legal Opinion of Tashlik, Kreutzer & Goldwyn P.C.
10.1 -- Asset Purchase Agreement, dated July 18, 1996, between Medialink PR Data Corporation, Video
Broadcasting Corporation, PR Data Systems, Inc., Jack Schoonover, William Wubbenhorst and Nancy
Schoonover.
*10.2 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Laurence Moskowitz.
*10.3 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and J. Graeme McWhirter.
*10.4 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and David Davis.
*10.5 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Nicholas F. Peters.
*10.6 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Mark Manoff.
*10.7 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Mark Weiner.
*10.8 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Mary Buhay.
10.9 -- Non-Negotiable Subordinated Promissory Note, dated July 18, 1996, between Medialink PR Data
Corporation and William Wubbenhorst.
10.10 -- Lease, dated July 18, 1996, between Oakwood Avenue Partners and Medialink PR Data Corporation.
10.11 -- Lease, dated September 21, 1994, between Clemons Properties Partner and Video Broadcasting
Corporation.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
<S> <C>
10.12 -- First Lease Modification Agreement, dated December , 1995 between Clemons Properties Partners
and Video Broadcasting Corporation.
10.13 -- Second Lease Modification Agreement, dated March 4, 1996, between Clemons Properties Partners and
Video Broadcasting Corporation.
10.14 -- Third Lease Modification Agreement, dated May, 1996, between Clemons Properties Partners and Video
Broadcasting Corporation.
10.15 -- Sublease, dated April 1, 1996, between Video Broadcasting Corporation and Media on Demand, Inc.
10.16 -- Lease, dated October 1, 1990, between 1401 New York Avenue, Inc. and Video Broadcasting
Corporation.
10.17 -- First Amendment of Lease, dated March 25, 1996, between 1401 New York Avenue, Inc. and Video
Broadcasting Corporation.
10.18 -- Lease, dated January 3, 1994, between Continental Bank, N.A., as Trustee for the Allstate
Retirement Plan and Continental Bank, N.A., as Trustee for the Agents Pension Plan and Video
Broadcasting Corporation.
10.19 -- Office Lease, dated June 7, 1989, between Teachers' Retirement System of the State of Illinois and
Video Broadcasting Corporation.
10.20 -- First Amendment to Lease, dated June 1, 1994 between Teachers' Retirement System of the State of
Illinois and Video broadcasting Corporation.
10.21 -- Office Lease, dated May 5, 1994, between Copperfield Investment & Development Company and Video
Broadcasting Corporation.
10.22 -- First Amendment to Lease, dated September 15, 1994, between Copperfield Investment & Development
Company and Video Broadcasting Corporation.
10.23 -- Lease Agreement, dated November 14, 1994, between City & Corporate Counsel Limited and Video
Broadcasting Corporation Inc.
10.24 -- Underlease, dated February 9, 1995, between City & Corporate Counsel Limited and Video
Broadcasting Corporation Inc.
10.25 -- Agreement, dated March 6, 1996, between Medialink, Inc. and ABC Radio Networks, Inc.
10.26 -- Agreement, dated February 9, 1993, between Video Broadcasting Corporation and
NewsWorthy(Registered).
10.27 -- Renewal of Agreement, dated February 21, 1995, between Video Broadcasting Corporation and
NewsWorthy(Registered).
10.28 -- Amended and Restated AP Express Agreement, dated November 1, 1992, between Press Association, Inc.
and Video Broadcasting Corporation.
10.29 -- Addendum, dated February 21, 1996, to the AP Express Agreement, between Press Association, Inc.
and Video Broadcasting Corporation.
10.30 -- Satellite Services Agreement, dated January 1, 1996, between Global Access Telecommunication
Services, Inc. and Medialink.
10.31 -- Nielsen Sigma Service Agreement, dated September 14, 1994, between Video Broadcasting Corp. and
A.C. Nielsen Company.
10.32 -- Loan Modification Agreement, dated February 28, 1996, between Video Broadcasting Corporation and
Silicon Valley Bank.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C>
10.33 -- Video Broadcasting Corporation 401(k) Tax Deferred Savings Plan.
10.34 -- Amended and Restated Stock Option Plan and form of Stock Option Agreement.
10.35 -- Video Broadcasting Corporation 1996 Directors Stock Option Plan and form of 1996 Directors Stock
Option Agreement.
10.36 -- Form of Indemnification Agreement.
10.37 -- Consulting Agreement by and between Video Consulting Agreement and Davis Partnership dated March
1, 1994.
*10.38 -- Tower Place Office Lease by and between Tower Place, L.P. and Medialink Worldwide Incorporated,
dated , 1996.
21.1 -- List of Subsidiaries of the Company.
23.1 -- Consent of KPMG Peat Marwick LLP.
*23.2 -- Consent of Tashlik, Kreutzer & Goldwyn P.C. (contained in the opinion to be filed as Exhibit 5.1
hereto).
24.1 -- Power of Attorney.
</TABLE>
- ------------------
* To be filed by amendment
(b) Financial Statement Schedules
Not applicable
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 15th day of October, 1996.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ LAURENCE MOSKOWITZ
--------------------------------
Laurence Moskowitz
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on the 15th day of October, 1996.
<TABLE>
<S> <C>
/s/ LAURENCE MOSKOWITZ Chairman of the Board, President and Chief Executive Officer
- ---------------------------------------- (Principal Executive Officer)
Laurence Moskowitz
/s/ J. GRAEME MCWHIRTER Executive Vice President, Chief Financial Officer and Assistant
- ---------------------------------------- Secretary (Principal Financial and Accounting Officer)
J. Graeme McWhirter
/s/ DAVID DAVIS Senior Vice President/International, Director
- ----------------------------------------
David Davis
/s/ HAROLD FINELT Director
- ----------------------------------------
Harold Finelt
/s/ DONALD KIMELMAN Director
- ----------------------------------------
Donald Kimelman
/s/ JAMES J. O'NEIL Director
- ----------------------------------------
James J. O'Neil
/s/ GERALD P. RODEEN Director
- ----------------------------------------
Gerald P. Rodeen
/s/ THEODORE WM. TASHLIK Director
- ----------------------------------------
Theodore Wm. Tashlik
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
<S> <C>
*1.1 -- Form of Underwriting Agreement.
*3.1 -- Amended and Restated Certificate of Incorporation of Medialink Worldwide Incorporated (the
'Company').
3.2 -- Amended and Restated By-Laws of the Company.
*4.1 -- Specimen Stock Certificate.
*5.1 -- Legal Opinion of Tashlik, Kreutzer & Goldwyn P.C.
10.1 -- Asset Purchase Agreement, dated July 18, 1996, between Medialink PR Data Corporation, Video
Broadcasting Corporation, PR Data Systems, Inc., Jack Schoonover, William Wubbenhorst and Nancy
Schoonover.
*10.2 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Laurence Moskowitz.
*10.3 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and J. Graeme McWhirter.
*10.4 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and David Davis.
*10.5 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Nicholas F. Peters.
*10.6 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Mark Manoff.
*10.7 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Mark Weiner.
*10.8 -- Employment Agreement, dated , 1996 by and between Medialink Worldwide Incorporated
and Mary Buhay.
10.9 -- Non-Negotiable Subordinated Promissory Note, dated July 18, 1996, between Medialink PR Data
Corporation and William Wubbenhorst.
10.10 -- Lease, dated July 18, 1996, between Oakwood Avenue Partners and Medialink PR Data Corporation.
10.11 -- Lease, dated September 21, 1994, between Clemons Properties Partner and Video Broadcasting
Corporation.
10.12 -- First Lease Modification Agreement, dated December , 1995 between Clemons Properties Partners
and Video Broadcasting Corporation.
10.13 -- Second Lease Modification Agreement, dated March 4, 1996, between Clemons Properties Partners and
Video Broadcasting Corporation.
10.14 -- Third Lease Modification Agreement, dated May, 1996, between Clemons Properties Partners and Video
Broadcasting Corporation.
10.15 -- Sublease, dated April 1, 1996, between Video Broadcasting Corporation and Media on Demand, Inc.
10.16 -- Lease, dated October 1, 1990, between 1401 New York Avenue, Inc. and Video Broadcasting
Corporation.
10.17 -- First Amendment of Lease, dated March 25, 1996, between 1401 New York Avenue, Inc. and Video
Broadcasting Corporation.
10.18 -- Lease, dated January 3, 1994, between Continental Bank, N.A., as Trustee for the Allstate
Retirement Plan and Continental Bank, N.A., as Trustee for the Agents Pension Plan and Video
Broadcasting Corporation.
10.19 -- Office Lease, dated June 7, 1989, between Teachers' Retirement System of the State of Illinois and
Video Broadcasting Corporation.
10.20 -- First Amendment to Lease, dated June 1, 1994 between Teachers' Retirement System of the State of
Illinois and Video broadcasting Corporation.
10.21 -- Office Lease, dated May 5, 1994, between Copperfield Investment & Development Company and Video
Broadcasting Corporation.
10.22 -- First Amendment to Lease, dated September 15, 1994, between Copperfield Investment & Development
Company and Video Broadcasting Corporation.
10.23 -- Lease Agreement, dated November 14, 1994, between City & Corporate Counsel Limited and Video
Broadcasting Corporation Inc.
10.24 -- Underlease, dated February 9, 1995, between City & Corporate Counsel Limited and Video
Broadcasting Corporation Inc.
10.25 -- Agreement, dated March 6, 1996, between Medialink, Inc. and ABC Radio Networks, Inc.
10.26 -- Agreement, dated February 9, 1993, between Video Broadcasting Corporation and
NewsWorthy(Registered).
10.27 -- Renewal of Agreement, dated February 21, 1995, between Video Broadcasting Corporation and
NewsWorthy(Registered).
10.28 -- Amended and Restated AP Express Agreement, dated November 1, 1992, between Press Association, Inc.
and Video Broadcasting Corporation.
10.29 -- Addendum, dated February 21, 1996, to the AP Express Agreement, between Press Association, Inc.
and Video Broadcasting Corporation.
10.30 -- Satellite Services Agreement, dated January 1, 1996, between Global Access Telecommunication
Services, Inc. and Medialink.
10.31 -- Nielsen Sigma Service Agreement, dated September 14, 1994, between Video Broadcasting Corp. and
A.C. Nielsen Company.
10.32 -- Loan Modification Agreement, dated February 28, 1996, between Video Broadcasting Corporation and
Silicon Valley Bank.
10.33 -- Video Broadcasting Corporation 401(k) Tax Deferred Savings Plan.
10.34 -- Amended and Restated Stock Option Plan and form of Stock Option Agreement.
10.35 -- Video Broadcasting Corporation 1996 Directors Stock Option Plan and form of 1996 Directors Stock
Option Agreement.
10.36 -- Form of Indemnification Agreement.
10.37 -- Consulting Agreement by and between Video Consulting Agreement and Davis Partnership dated March
1, 1994.
*10.38 -- Tower Place Office Lease by and between Tower Place, L.P. and Medialink Worldwide Incorporated,
dated , 1996.
21.1 -- List of Subsidiaries of the Company.
23.1 -- Consent of KPMG Peat Marwick LLP.
*23.2 -- Consent of Tashlik, Kreutzer & Goldwyn P.C. (contained in the opinion to be filed as Exhibit 5.1
hereto).
24.1 -- Power of Attorney.
</TABLE>
- ------------------
* To be filed by amendment
<PAGE>
AMENDED AND RESTATED
BY-LAWS
OF
MEDIALINK WORLDWIDE INCORPORATED
ARTICLE I
Stockholders' Meetings
1. Places of meetings. All meetings of stockholders shall be
held at such place or places in or outside of the State of Delaware as the
board of directors may from time to time determine or as may be designated
in the notice of meeting or waiver of notice thereof, subject to any
provisions of the laws of the State of Delaware.
2. Annual meetings. Unless otherwise determined from time to
time by the board of directors, the annual meeting of stockholders shall be
held each year for the election of directors and the transaction of such
other business as may properly come before the meeting on the second
Tuesday in the sixth month following the close of the fiscal year of the
corporation commencing at some time between 10 A.M. and 3 P.M., if not a
legal holiday, and if such day is a legal holiday, then the annual meeting
shall be held on the day following at the same time. If the annual meeting
is not held on the date designated, it may be held as soon thereafter as
convenient and shall be called the annual meeting. Written notice of the
time and place of the annual meeting shall be given by mail to each
stockholder entitled to vote
<PAGE>
at his address as it appears on the records of the corporation not
less than the minimum nor more than the maximum number of days
permitted under the laws of the State of Delaware prior to the
scheduled date thereof, unless such notice is waived as provided by
Article VIII of these By-Laws.
3. Special meetings. A special meeting of stockholders may
be called at any time by order of the board of directors or the executive
committee and shall be called by the president or secretary or an assistant
secretary at the written request of the holders of a number of shares of
stock then outstanding which represent at least 50% of the total number of
votes entitled to be cast, stating the specific purpose or purposes
thereof. Written notice of the time, place and specific purposes of such
meetings shall be given by mail to each stockholder entitled to vote
thereat at his address as it appears on the records of the corporation not
less than the minimum nor more than the maximum number of days prior to the
scheduled date thereof permitted under the laws of the State of Delaware,
unless such notice is waived as provided in Article VIII of these By-Laws.
4. Meetings without notice. Meetings of the stockholders may
be held at any time without notice when all the stockholders entitled to vote
thereat are present in person or by proxy.
5. Voting. At all meetings of stockholders, each stockholder
entitled to vote on the record date as determined under Article V Section 3
of these By-Laws or if not so determined as prescribed under the laws of
the State of Delaware shall be entitled to one vote for each share of stock
standing on record in his name, subject to
2
<PAGE>
any restrictions or qualifications set forth in the Certificate of
Incorporation or any amendment thereto.
6. Quorum. At any stockholders' meeting, a number of shares
of stock outstanding and representing a majority of the total number of
votes entitled to be cast, present in person or by proxy, shall constitute
a quorum, but in the absence of such a quorum a smaller interest may
adjourn any meeting from time to time, and the meeting may be held as
adjourned without further notice, subject to such limitation as may be
imposed under the laws of the State of Delaware. When a quorum is present
at any meeting, a majority of the number of shares of stock entitled to
vote present thereat shall decide any question brought before such meeting
unless the question is one upon which a different vote is required by
express provision of the laws of the State of Delaware, the Certificate of
Incorporation or these By-Laws, in which case such express provision shall
govern.
7. List of stockholders. At least ten days before every
meeting, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of and the
number of shares registered in the name of each stockholder, shall be
prepared by the secretary or the transfer agent in charge of the stock
ledger of the corporation. Such list shall be open for examination by any
stockholder as required by the laws of the State of Delaware. The stock
ledger shall be the only evidence as to who are the stockholders entitled
to examine such list or the books of the corporation or to vote in person
or by proxy at such meeting.
3
<PAGE>
8. Consents in lieu of meeting. Unless otherwise provided in
the Certificate of Incorporation or any amendment thereto or by the laws of
the State of Delaware, any action required by the laws of the State of
Delaware to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and
without a vote, if: (i) a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less
than a minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the corporation by delivery to
its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded; and
(ii) prompt notice of the taking of such action by less than unanimous
written consent is given to the other stockholders to the extent and in the
manner required by the laws of Delaware.
ARTICLE II
Board of Directors
1. Number and qualification. A board of directors shall be
elected at each annual meeting of stockholders, each director so elected to
serve until the election and qualification of his successor or until his
earlier resignation or removal as provided in these By-Laws. The initial
number of directors shall be such as may be determined by the
incorporator(s) unless the initial directors are named in the
4
<PAGE>
Certificate of Incorporation, and thereafter the number of directors
shall be such as may be determined from time to time by the
stockholders, or by the board of directors, but in no event shall the
number be less than the minimum required under the laws of the State
of Delaware. In case of any increase in the number of directors
between elections by the stockholders, the additional directorships
shall be considered vacancies and shall be filled in the manner
prescribed in Article IV of these By-Laws. Directors need not be
stockholders. The initial board of directors shall be elected by the
incorporators, unless such directors are named in the Certificate of
Incorporation.
(2) Classified Board of Directors.
(a) At each annual meeting of stockholders, directors of
the Corporation shall be elected to hold office until the expiration of the
term for which they are elected, and until their successors have been duly
elected and qualified; except that if any such election shall be not so
held, such election shall take place at a stockholders' meeting called and
held in accordance with the Delaware General Corporation Law. The directors
of the Corporation shall be classified into three classes as nearly equal
in size as is practicable, hereby designated Class I, Class II and Class
III. The term of office of the initial Class I directors shall expire at
the next succeeding annual meeting of stockholders of the Corporation; the
term of office of the initial Class II directors shall expire at the second
succeeding annual meeting of stockholders of the Corporation; and the term
of office of the initial Class III directors shall expire at the third
succeeding annual meeting of the stockholders of the Corporation. For the
purposes hereof, the initial Class I, Class II and Class III directors
shall be those directors so designated and elected at the first annual
meeting
5
<PAGE>
of stockholders. At each annual meeting after the first annual meeting
of stockholders of the Corporation, directors to replace those of a
Class whose terms expire at such annual meeting shall be elected to
hold office until the third succeeding annual meeting and until their
respective successors shall have been duly elected and qualified. If
the number of directors is hereafter changed, any newly created
directorships or decrease in directorships shall be so apportioned
among the classes as to make all classes as nearly equal in number as
if practicable.
(b) The number of directors which constitute the whole
Board of Directors of the Corporation shall be designed in the Bylaws
of the Corporation.
(c) Vacancies occurring on the Board of Directors for any
reason may be filled by vote of a majority of the remaining members of
the Board of Directors, although less than a quorum, at any meeting of
the Board of Directors. A person so elected by the Board of Directors
to fill a vacancy shall hold office until the next succeeding annual
meeting of stockholders of the Corporation and until his or her
successor shall have been duly elected and qualified.
3. Powers. The business and affairs of the corporation shall
be carried on by or under the direction of the board of directors, which
shall have all the powers authorized by the laws of the State of Delaware,
subject to such limitations as may be provided by the Certificate of
Incorporation or these By-Laws.
4. Compensation. The board of directors may from time to
time by resolution authorize the payment of fees or other compensation to
the directors for services as such to the corporation, including, but not
limited to, fees for attendance at all meetings of the board or of the
executive or other committees, and determine the
6
<PAGE>
amount of such fees and compensation. Directors shall in any event be
paid their traveling expenses for attendance at all meetings of the
board or of the executive or other committees. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor
in amounts authorized or otherwise approved from time to time by the
board or the executive committee.
5. Meetings and quorum. Meetings of the board of directors
may be held either in or outside of the State of Delaware. A quorum shall
be a majority of the then authorized number of directors, but not less than
two directors unless a board of one director is authorized under the laws
of the State of Delaware in which event one director shall constitute a
quorum. A director will be considered present at a meeting, even though not
physically present, to the extent and in the manner authorized by the laws
of the State of Delaware.
The board of directors elected at any annual stockholders'
meeting shall, at the close of that meeting and without further notice if a
quorum of directors be then present or as soon thereafter as may be
convenient, hold a meeting for the election of officers and the transaction
of any other business. At such meeting they shall elect a president, a
secretary and a treasurer, and such other officers as they may deem proper,
none of whom except the chairman of the board, if elected, need be members
of the board of directors.
The board of directors may from time to time provide for the
holding of regular meetings with or without notice and may fix the times
and places at which such meetings are to be held. Meetings other than
regular meetings may be called at
7
<PAGE>
any time by the president or the chairman of the board and must be called
by the president or by the secretary or an assistant secretary upon the
request of any director.
Notice of each meeting, other than a regular meeting (unless
required by the board of directors), shall be given to each director by
mailing the same to each director at his residence or business address at
least two days before the meeting or by delivering the same to him
personally or by telephone or telegraph at least one day before the meeting
unless, in case of exigency, the chairman of the board, the president or
the secretary shall prescribe a shorter notice to be given personally or by
telephone, telegraph, cable or wireless to all or any one or more of the
directors at their respective residences or places of business.
Notice of any meeting shall state the time and place of such
meeting, but need not state the purposes thereof unless otherwise required
by the laws of the State of Delaware, the certificate of incorporation,
these By-Laws or the board of directors.
6. Chairman of the Board. The board of directors may elect
one of its members as the chairman of the board. The chairman of the board,
when present, shall preside at all meetings of the stockholders and of the
board of directors and, subject to the control and direction of the board
of directors, shall have such other powers and perform such other duties as
the board of directors may prescribe from time to time.
7. Executive Committee. The board of directors may by
resolution passed by a majority of the whole board provide for an executive
committee of two or
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more directors and shall elect the members thereof to
serve during the pleasure of the board and may designate one of such
members to act as chairman.
The board may at any time change the membership of the
executive committee, fill vacancies in it, designate alternate members to
replace any absent or disqualified members at any meeting of the committee,
or dissolve it.
During the intervals between the meetings of the board of
directors, the executive committee shall possess and may exercise any or
all of the powers of the board of directors in the management or direction
of the business and affairs of the corporation and under these By-Laws to
the extent authorized by resolution adopted by a majority of the whole
board of directors and subject to such limitations as may be imposed by the
laws of the State of Delaware.
The executive committee may determine its rules of procedure
and the notice to be given of its meetings, and it may appoint such
committees and assistants as it shall from time to time deem necessary. A
majority of the members of the committee shall constitute a quorum.
8. Other committees. The board of directors may by resolution
provide for such other committees as it deems desirable and may discontinue
the same at its pleasure. Each such committee shall have the powers and
perform such duties, not inconsistent with law, as may be assigned to it by
the board.
9. Conference telephone meetings. Any one or more
members of the board or any committee thereof may participate in meetings
by means of a conference telephone or similar communication equipment.
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10. Action without meetings. Any action required or
permitted to be taken at any meeting of the board of directors or any
committee thereof may be taken without a meeting to the extent and in the
manner authorized by the laws of the State of Delaware.
ARTICLE III
Officers
1. Titles and election. The officers of the
corporation shall be the president, a secretary and a treasurer, who
shall initially be elected as soon as convenient by the board of
directors and thereafter, in the absence of earlier resignations or
removals, shall be elected at the first meeting of the board following
any annual stockholders' meeting, each of whom shall hold office at
the pleasure of the board except as may otherwise be approved by the
board or executive committee, or until his earlier resignation,
removal under these By-Laws or other termination of his employment.
Any person may hold more than one office if the duties can be
consistently performed by the same person, to the extent permitted by
the laws of the State of Delaware.
The board of directors, in its discretion, may also
at any time elect or appoint one or more vice presidents, assistant
secretaries and assistant treasurers and such other officers as it may
deem advisable, each of whom shall hold office at the pleasure of the
board, except as may otherwise be approved by the board or executive
committee, or until his earlier resignation, removal or other
termination of employment, and shall have such authority and shall
perform such duties as shall be
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prescribed or determined from time to time by the board or, if not so
prescribed or determined by the board, as the president or the then senior
executive officer may prescribe or determine. The board of directors may
require any officer or other employee or agent to give bond for the
faithful performance of his duties in such form and with such sureties as
the board may require.
2. Duties. Subject to such extension, limitations,
and other provisions as the board of directors or these By-Laws may from
time to time prescribe or determine, the following officers shall have the
following powers and duties:
(a) President. Subject to the board of directors
and the provisions of these By-Laws, the president shall exercise the
powers and authority and perform all of the duties commonly incident to his
office, shall in the absence of the chairman of the board, if elected,
preside at all meetings of the stockholders and of the board of directors
if he is a director, and shall perform such other duties as the board of
directors or the executive committee shall specify from time to time. The
president, the chief executive officer or a vice president, unless some
other person is thereunto specifically authorized by the board of directors
or executive committee, shall sign all bonds, debentures, promissory notes,
deeds and contracts of the corporation.
(b) Chief Executive Officer. Subject to the board
of directors and the provisions of these By-Laws, the chief executive
officer shall be charged with general supervision of the management and
policy of the corporation and shall exercise the powers and authority and
perform all of the duties commonly incident to his office and shall perform
such other duties as the board of directors or the
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executive committee shall specify from time to time. In the absence or
disability of the president, unless otherwise determined by the board, the chief
executive officer shall exercise the powers and perform the duties pertaining to
the office of president.
(c) Vice President. The vice president or vice
presidents shall perform such duties as may be assigned to them from time
to time by the board of directors or by the president if the board does not
do so. In the absence or disability of the president and the chief
executive officer, the vice presidents in order of seniority may, unless
otherwise determined by the board, exercise the powers and perform the
duties pertaining to the office of president, except that if one or more
executive vice presidents has been elected or appointed, the person holding
such office in order of seniority shall exercise the powers and perform the
duties of the office of president.
(d) Secretary. The secretary or in his absence an
assistant secretary shall keep the minutes of all meetings of stockholders
and of the board of directors, give and serve all notices, attend to such
correspondence as may be assigned to him, keep in safe custody the seal of
the corporation, and affix such seal to all such instruments properly
executed as may require it, and shall have such other duties and powers as
may be prescribed or determined from time to time by the board of directors
or by the president if the board does not do so.
(e) Treasurer. The treasurer, subject to the order
of the board of directors, shall have the care and custody of the moneys,
funds, valuable papers and documents of the corporation (other than his own
bond, if any, which shall be in the custody of the president), and shall
have, under the supervision of the board of directors, all the powers and
duties commonly incident to his office. He shall deposit
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all funds of the corporation in such bank or banks, trust company or trust
companies, or with such firm or firms doing a banking business as may be
designated by the board of directors or by the president if the board does
not do so. He may endorse for deposit or collection all checks, notes, and
similar instruments payable to the corporation or to its order. He shall
keep accurate books of account of the corporation's transactions, which
shall be the property of the corporation, and together with all of the
property of the corporation in his possession, shall be subject at all
times to the inspection and control of the board of directors. The
treasurer shall be subject in every way to the order of the board of
directors, and shall render to the board of directors and/or the president
of the corporation, whenever they may require it, an account of all his
transactions and of the financial condition of the corporation. In addition
to the foregoing, the treasurer shall have such duties as may be
prescribed or determined from time to time by the board of directors or by
the president if the board does not do so.
3. Delegation of authority. The board of
directors or the executive committee may at any time delegate the powers
and duties of any officer for the time being to any other officer, director
or employee.
4. Compensation. The compensation of the chairman of the
board, if elected, and all officers shall be fixed by the board of
directors and the fact that any officer is a director shall not preclude
him from
receiving compensation. Any director who is an officer shall recuse himself
from the board of directors vote upon the resolution fixing his
compensation.
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ARTICLE IV
Resignations, Vacancies and Removals
1. Resignations. Any director or officer may resign
at any time by giving written notice thereof to the board of
directors, the president or the secretary. Any such resignation shall
take effect at the time specified therein or, if the time be not
specified, upon receipt thereof; and unless otherwise specified
therein, the acceptance of any resignation shall not be necessary to
make it effective.
2. Vacancies.
(a) Directors. When the office of any director
becomes vacant or unfilled, whether by reason of death, resignation,
removal, increase in the authorized number of directors or otherwise, such
vacancy or vacancies may be filled by the remaining director or directors,
although less than a quorum. Any director so elected by the board shall
serve until the election and qualification of his successor or until his
earlier resignation or removal as provided in these By-Laws. The directors
may also reduce their authorized number by the number of vacancies in the
board, provided such reduction does not reduce the board to less than the
minimum authorized by the laws of the State of Delaware.
(b) Officers. The board of directors may at any time or from
time to time fill any vacancy among the officers of the corporation.
3. Removals.
(a) Directors. Except as may otherwise be prohibited or
restricted under the laws of the State of Delaware, the stockholders
may, at any annual meeting or any special meeting called for the
purpose or by consent of the
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stockholders in lieu of a meeting, remove any director from office,
with or without cause, and may elect his successor. Except as may
otherwise be prohibited or restricted under the laws of the State of
Delaware, the board of directors at any meeting called for the purpose
by vote of a majority of the then total authorized number of directors
may remove from office for cause any director and may elect his
successor, and by similar vote may remove from office without cause
any director elected by the board, and may elect his successor.
(b) Officers. Subject to the provisions of any validly
existing agreement, the board of directors may at any meeting remove from
office any officer, with or without cause, and may elect or appoint a
successor; provided that if action is to be taken to remove the president
the notice of meeting or waiver of notice thereof shall state that one of
the purposes thereof is to consider and take action on his removal.
ARTICLE V
Capital Stock
1. Certificate of stock. Every stockholder shall be
entitled to a certificate or certificates for shares of the capital
stock of the corporation in such form as may be prescribed or
authorized by the board of directors, duly numbered and setting forth
the number and kind of shares represented thereby. Such certificates
shall be signed by the chairman of the board, the president or a vice
president and by the treasurer or an assistant treasurer or by the
secretary or an assistant secretary.
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Any or all of such signatures may be in facsimile if and to the extent
authorized under the laws of the State of Delaware.
In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed on a certificate has
ceased to be such officer, transfer agent or registrar before the
certificate has been issued, such certificate may nevertheless be issued
and delivered by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
2. Transfer of stock. Shares of the capital stock of the
corporation shall be transferable only upon the books of the corporation
upon the surrender of the certificate or certificates properly assigned and
endorsed for transfer. If the corporation has a transfer agent or agents or
transfer clerk and registrar of transfers acting on its behalf, the
signature of any officer or representative thereof may be in facsimile.
The board of directors may appoint a transfer agent and
one or more co- transfer agents and a registrar and one or more
co-registrars of transfer and may make or authorize the transfer agents to
make all such rules and regulations deemed expedient concerning the issue,
transfer and registration of shares of stock.
3. Record dates.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change,
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conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix in advance a record date which,
in the case of a meeting, shall not be less than the minimum nor more
than the maximum number of days prior to the scheduled date of such
meeting permitted under the laws of the State of Delaware and which,
in the case of any other action, shall be not more than the maximum
number of days prior to any such action permitted by the laws of the
State of Delaware.
(b) If no such record date is fixed by the board,
the record date shall be that prescribed by the laws of the State of
Delaware.
(c) A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
4. Lost certificates. In case of loss or mutilation or
destruction of a stock certificate, a duplicate certificate may be issued
upon such terms as may be determined or authorized by the board of
directors or executive committee or by the president if the board or the
executive committee does not do so.
ARTICLE VI
Fiscal Year, Bank Deposits, Checks, etc.
1. Fiscal year. The fiscal year of the corporation shall
commence or end at such time as the board of directors may designate.
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2. Bank deposits, checks, etc. The funds of the corporation
shall be deposited in the name of the corporation or of any division
thereof in such banks or trust companies in the United States or elsewhere
as may be designated from time to time by the board of directors or
executive committee, or by such officer or officers as the board or
executive committee may authorize to make such designations.
All checks, drafts or other orders for the
withdrawal of funds from any bank account shall be signed by such
person or persons as may be designated from time to time by the board
of directors or executive committee. The signatures on checks, drafts
or other orders for the withdrawal of funds may be in facsimile if
authorized in the designation.
ARTICLE VII
Books and Records
1. Place of keeping books. Unless otherwise expressly
required by the laws of the State of Delaware, the books and records of the
corporation may be kept outside of the State of Delaware.
2. Examination of books. Except as may otherwise be
provided by the laws of the State of Delaware, the Certificate of
Incorporation or these By-Laws, the board of directors shall have power to
determine from time to time whether and to what extent and at what times
and places and under what conditions any of the accounts, records and books
of the corporation are to be open to the inspection of any stockholder. No
stockholder shall have any right to inspect any account or book or
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document of the corporation except as prescribed by statute or
authorized by express resolution of the stockholders or of the board
of directors.
ARTICLE VIII
Notices
1. Requirements of notice. Whenever notice is required to be
given by statute, the Certificate of Incorporation or these By-Laws, it
shall not mean personal notice unless so specified, but such notice may be
given in writing by depositing the same in a post office, letter box, or
mail chute postpaid and addressed to the person to whom such notice is
directed at the address of such person on the records of the corporation,
and such notice shall be deemed given at the time when the same shall be
thus mailed.
2. Waivers. Any stockholder, director or officer may, in
writing or by telegram or cable, at any time waive any notice or other
formality required by statute, the Certificate of Incorporation or these
By-Laws. Such waiver of notice, whether given before or after any meeting
or action, shall be deemed equivalent to notice. Except as provided by law,
presence of a stockholder either in person or by proxy at any stockholders'
meeting and presence of any director at any meeting of the board of
directors shall constitute a waiver of such notice as may be required by
any statute, the Certificate of Incorporation or these By-Laws.
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ARTICLE IX
Seal
The corporate seal of the corporation shall consist of
two concentric circles between which shall be the name of the corporation
and the date of its incorporation, and in the center of which shall be
inscribed "Corporate Seal, Delaware."
ARTICLE X
Powers of Attorney
The board of directors or the executive committee may
authorize one or more of the officers of the corporation to execute powers
of attorney delegating to named representatives or agents power to
represent or act on behalf of the corporation, with or without power of
substitution.
In the absence of any action by the board or the
executive committee, the president, any vice president, the secretary or
the treasurer of the corporation may execute for and on behalf of the
corporation waivers of notice of stockholders' meetings and proxies for
such meetings in any company in which the corporation may hold voting
securities.
ARTICLE XI
Indemnification of Directors and Officers
(a) Right to Indemnification. Each person who was
or is made a party or is threatened to be made a party to or is otherwise
involved in any
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threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter, a
"proceeding"), by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
an employee benefit plan (hereinafter, an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as
a director, officer, employee or agent or in any other capacity while
serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists
or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the corporation to
provide broader indemnification rights than permitted prior thereto),
against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an
indemnitee who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the indemnitee's heirs, executors
and administrators.
(b) Right to Advancement of Expenses. The right to
indemnification conferred upon directors and officers in paragraph (a) of
this Section shall include the right to be paid by the corporation the
expenses (including attorneys' fees) incurred in defending any proceeding
for which such right to indemnification is applicable in advance of its
final disposition (hereinafter, an "advancement of
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expenses"); provided, however, that an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to
an employee benefit plan), shall be made only upon delivery to the
corporation of an undertaking (hereinafter, an "undertaking") by or on
behalf of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which
there is no further right to appeal (hereinafter, a "final
adjudication") that such indemnitee is not entitled to be indemnified
for such expenses under this Section or otherwise. The corporation
may, to the extent authorized from time to time by the board of
directors, grant rights to the advancement of expenses (including
attorneys' fees), to any employee or agent of the corporation to the
fullest extent of the provisions of this Section with respect to
advancement of expenses to directors and officers of the corporation.
(c) Right of Indemnitee to Bring Suit. The rights
to indemnification and to the advancement of expenses (including attorneys'
fees) conferred in paragraphs (a) and (b) of this Section shall be contract
rights. If a claim under paragraph (a) or (b) of this Section is not paid
in full by the corporation within sixty days after a written claim has been
received by the corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be
twenty days, the indemnitee may at any time thereafter bring suit against
the corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit brought by the corporation
to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee
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shall be entitled to be paid also the expense of prosecuting or
defending such suit. In (i) any suit brought by the indemnitee to
enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit by the
corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the corporation shall be entitled to recover
such expenses upon a final adjudication that, the indemnitee has not
met any applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the
corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to
the commencement of such suit that indemnification of the indemnitee
is proper under the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard
of conduct, shall create a presumption that the indemnitee has not met
the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to
an advancement of expenses hereunder, or by the corporation to recover
an advancement of expenses pursuant to the terms of an undertaking,
the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Section or
otherwise shall be on the corporation.
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(d) Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred in this
Section shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, the corporation's certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(e) Insurance. The corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or
agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such
person against such expense, liability or loss under the Delaware General
Corporation Law.
ARTICLE XII
Amendments
These By-Laws may be amended or repealed either:
(a) at any meeting of stockholders at which a quorum
is present by vote of a majority of the number of shares of stock entitled
to vote present in person or by proxy at such meeting as provided in
Article I Sections 5 and 6 of these By-Laws, or
(b) at any meeting of the board of directors by a
majority vote of the directors then in office; provided the notice of such
meeting of stockholders or directors or waiver of notice thereof contains a
statement of the substance of the proposed amendment or repeal.
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of July 18, 1996 by and among
MEDIALINK PR DATA CORPORATION, a Delaware corporation with offices at 708 Third
Avenue, New York, New York 10017 ("Purchaser"), VIDEO BROADCASTING CORPORATION,
a Delaware corporation with offices at 708 Third Avenue, New York, New York
10017 ("Medialink"), PR DATA SYSTEMS, INC., a Connecticut corporation with
offices at 15 Oakwood Avenue, Norwalk, Connecticut 06850 ("Seller"), JACK
SCHOONOVER, an individual residing at 351 Hillside Road, Fairfield, Connecticut
06430 ("JS"), WILLIAM WUBBENHORST, an individual residing at 20 Rowayton Avenue,
Rowayton, Connecticut 06853 ("WW") and NANCY SCHOONOVER, an individual residing
at 351 Hillside Road, Fairfield, Connecticut 06430 ("NS" and, collectively with
JS and WW, referred to herein as the "Shareholders").
W I T N E S S E T H:
WHEREAS, Medialink owns all of the issued and outstanding shares of capital
stock of Purchaser; and
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase all of Seller's tangible and intangible assets.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
Section 1. Definitions. For purposes of this Agreement, the words and terms
listed below shall have the following meanings:
(a) "Business" means the business of Seller as conducted by Seller
immediately prior to the date hereof;
(b) "Closing" means the events which take place on the Closing Date
for the purpose of consummating this Agreement.
(c) "Closing Date" means July 18, 1996, or such other date as the
parties shall mutually agree upon.
<PAGE>
(d) "Environmental Laws" means all laws, regulations, rules and
ordinances of any relevant State or any political subdivision thereof and the
United States of America respecting the environment, including without
limitation the Resource Conservation and Recovery Act (42 U.S.C. ss.6901 et.
seq.), and the Comprehensive Environmental Responsibility Compensation and
Liability Act, as amended (42 U.S.C. ss.9601 et. seq.).
(e) "Facility" means the offices of Seller located at 15 Oakwood
Avenue, Norwalk, Connecticut 06850.
(f) "Fair Market Value" means (i) if the Common Stock, as defined
herein, is publicly traded, the average of the closing bid and asked quotations
per share as furnished by the National Association of Securities Dealers, Inc.
through NASDAQ, the OTC Bulletin Board or similar organization for the ten (10)
trading days immediately preceding the date of determination, or if the Common
Stock is not publicly traded, the Fair Market Value of the Common Stock shall be
deemed to be $6.00 per share.
(g) "Hazardous Substances" means any pollutants and dangerous
substances including without limitation radon and any hazardous waste or
hazardous substances as defined in any of the Environmental Laws.
(h) "Non-Compete Agreements" means those three non- compete
agreements, dated of even date herewith, by and between Purchaser and each of
JS, NS and WW.
(i) "Transaction Documents" means the Employment Agreements and the
Non-Compete Agreements, as such terms are defined herein.
ARTICLE II
Section 2. Purchase and Sale. Seller hereby agrees to sell, assign,
transfer, convey and deliver to Purchaser, and Purchaser hereby agrees to
purchase and accept from Seller, on the Closing Date all of the assets of Seller
(the "Assets"), free and clear of all liens and encumbrances, including but not
limited to those Assets listed as follows:
(a) All machinery and equipment, as more specifically described in
Schedule 2(a) attached hereto;
(b) All accounts receivable of Seller as set forth on Schedule 2(b)
attached hereto and all accounts receivable of Seller as of the Closing Date as
set forth on Schedule 2(b) updated as of the Closing Date;
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(c) All inventory, as more specifically described in Schedule 2(c)
attached hereto;
(d) All Intellectual Property (as defined in Section 5.8) used in or
held for use in the Business;
(e) All books (excluding minute book, stock books and stock record
books and stock ledgers), papers, records, files, including without limitation,
all correspondence, customer lists, credit and sales reports, data processing
records, documents and records relating to the Assets;
(f) All leasehold improvements, as more specifically described in
Schedule 2(f) attached hereto;
(g) All rights of the Seller and Shareholders under property,
equipment and other leases of the Business, as more specifically described in
Schedule 2(g) attached hereto; and
(h) All advertising, brochures, catalogs and promotional materials;
and
(i) All rights to the name "PR Data".
It is hereby expressly understood and agreed that the foregoing Assets are
to be transferred and conveyed to Purchaser as above specified, by good and
sufficient bill of sale, and other documents of transfer, as provided in Section
12 hereof, free and clear of all liens, charges, encumbrances, debts,
liabilities and obligations whatsoever, except obligations which are expressly
assumed by Purchaser hereunder.
ARTICLE III
Section 3. Assumption of Liabilities; Assumption and Payment of Certain
Obligations.
3.1. Assumption of Liabilities by Purchaser. Purchaser will, on behalf of
Seller, prepare an unaudited balance sheet and income statement of Seller for
the period April 1, 1996 through the Closing Date (the "Closing Date Stub
Financials") in accordance with generally accepted accounting principles,
subject to the absence of notes that would customarily be included in a
financial statement prepared in accordance with generally accepted accounting
principles. Purchaser shall assume, pay, perform and discharge, and, as the case
may be, take subject to, the obligations and liabilities of Seller as
specifically set forth in the Closing Date Stub Financials; provided, however,
that Purchaser shall not be responsible in any manner whatsoever for (i)
obligations and liabilities of Seller which exceed the assets of Seller
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by $372,000; (ii) obligations and liabilities of Seller related in any manner
whatsoever to a breach by Seller or the Shareholders of any of their
representations and warranties set forth herein; (iii) any and all taxes
assessed on either Seller or the Shareholders relating to the transactions
contemplated hereby; or (iv) any and all legal, accounting and other
professional fees of the professionals representing Seller and the Shareholders
in the transactions contemplated hereby. Seller expressly acknowledges and
agrees that in the event any receivables listed in the Closing Date Stub
Financials are not collected within 90 days of the Closing Date, such
receivables shall not be deemed an asset of Seller for the purposes of this
Agreement.
3.2. Assumption and Payment of Certain Obligations.
(a) Small Business Administration Loan. Seller is presently indebted
to the U.S. Small Business Administration and Lafayette Bank & Trust Co. in the
original principal amount of $200,000 plus interest, as evidenced by a
promissory note (the "SBA Loan"), a copy of which is attached hereto as Schedule
3.2(a). Purchaser shall pay the $84,979.98 balance of the SBA Loan in full at
the Closing.
(b) Indebtedness of Seller to WW. Seller is presently indebted to WW
in the principal amount of $330,000 (the "WW Indebtedness"). Purchaser agrees to
assume the WW Indebtedness and shall execute a non-negotiable subordinated
promissory note in a principal amount equal to the WW Indebtedness between
Purchaser, as maker, and WW, as payee (the "New WW Note"). In the event the WW
Indebtedness is evidenced by a promissory note, such note shall be cancelled at
Closing. The New WW Note will bear interest at eight (8%) percent per annum and
be amortized by quarterly payments of $15,506.59 each over a seven (7) year
period, commencing three months from the date hereof. The form of the New WW
Note is attached hereto as Exhibit A.
(c) Certain Other Obligations. Purchaser shall assume the liabilities
relating to the Assets, including any contracts assigned as part of the Assets,
incurred in the ordinary course of business consistent with past practice, and
obligations under the equipment leases described in Schedule 2(g) accruing after
the Closing.
ARTICLE IV
Section 4. Purchase Price.
4.1. Payment Terms. In reliance upon the representations and warranties of
Seller contained herein, and subject to the terms and conditions of this
Agreement, Purchaser hereby agrees to purchase the Assets for the aggregate
purchase price below (the "Purchase Price").
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(a) One Hundred Twenty Thousand ($120,000) Dollars (the "Cash"),
payable on the Closing Date by wire transfer or certified funds;
(b) Twenty Thousand (20,000) shares (the "Shares") of the common
stock, par value $.01 ("Common Stock") of Medialink. In order to secure the
indemnity and set off obligations of each Shareholder pursuant to Sections 10
and 11 hereof, each Shareholder hereby further agrees that on the Closing Date
he shall deliver to the Escrow Agent (as defined in Section 11.2 hereof) the
Shares which shall be held by the Escrow Agent pursuant to the terms of an
escrow agreement (the "Escrow Agreement") in the form attached hereto as Exhibit
B.
4.2. Allocation of Purchase Price. The Purchase Price described in Section
4.1 hereof will be allocated as set forth in Schedule 4.2. Seller and Purchaser
each represent, warrant and agree that the allocation set forth in Schedule 4.2
was determined through arm's length negotiation. The Shareholders and Purchaser
agree that (i) the Shares which shall be delivered by Purchaser to the Escrow
Agent are subject to various restrictions under the Escrow Agreement and
therefore they have agreed to have the valuation of such Shares set forth on
Schedule 4.2, which valuation was determined through arm's length negotiation.
Seller and Purchaser each agree that it will adopt and utilize the amounts
allocated to each asset or class of assets set forth in Schedule 4.2 for
purposes of all federal, state and other income tax returns filed by each of
them, file all such documents and statements required by Section 1060 of the
Internal Revenue Code of 1986 (the "Code") reflecting the allocations set forth
in Schedule 4.2 and that each of them will not voluntarily take any position
inconsistent therewith upon examination of any such tax return, in any refund
claim, in any litigation or otherwise with respect to such income tax returns.
Seller and Purchaser each agree to provide the other with a copy of the
allocation schedule which they file in connection with Section 1060 of the Code
unless such schedule contains information unrelated to the transaction
contemplated by this Agreement. In such event, Seller or Purchaser, as the case
may be, shall provide the other with a statement from its accountants confirming
that such filing has been made in accordance with this Schedule 4.2.
4.3. Reliance on the Non-Compete Agreements. JS, NS and WW hereby
acknowledge that Purchaser would not have entered into this Agreement but for
the execution by them of the Non-Compete Agreements in the form attached hereto
as Exhibits C-1, C-2 and C-3. JS, NS and WW are the principal and majority
shareholders and executive officers of Seller and Purchaser will be irreparably
harmed if JS, NS and/or WW do not abide by the terms of the Non-Compete
Agreements. Pursuant to his Non-Compete Agreement, WW will receive a non-compete
fee of $205,000 and pursuant to their Non-Compete Agreements, JS and NS will
each receive a non-compete fee of $102,500. The terms of the Non-Compete
Agreements are incorporated herein by reference and made a part hereof.
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ARTICLE V
Section 5. Representations and Warranties by Seller and the Shareholders.
Seller and the Shareholders jointly and severally represent and warrant to
Purchaser and Medialink as set forth below:
5.1. Organization, Existence and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Connecticut and has and will have at the time of Closing all
corporate power to execute, deliver and perform this Agreement and the other
agreements and instruments to be executed and delivered by Seller and the
Shareholders pursuant hereto and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement by Seller and
the Shareholders does not, and the consummation of the transactions contemplated
hereby will not, violate any provisions of Seller's Certificate of Incorporation
or By-Laws or of any law or regulation applicable to Seller or the Shareholders
or of any agreement, mortgage, license, lease, arrangement, instrument, order,
arbitration award, judgment or decree to which Seller or the Shareholders is a
party or by which Seller or the Shareholders is bound or result in the creation
of any Lien (as hereinafter defined), on the Assets.
5.2. Power and Authority. On or prior to the Closing Date all corporate
acts and other proceedings required to be taken by or on the part of Seller to
authorize it to carry out this Agreement and such other agreements and
instruments and the transactions contemplated hereby and thereby will have been
duly and properly taken. This Agreement has been duly executed and delivered by
Seller and the Shareholders and constitutes, and such other agreements and
instruments when duly executed and delivered by Seller and the Shareholders will
constitute, legal, valid and binding obligations enforceable in accordance with
their respective terms. The execution, delivery and performance by Seller and
the Shareholders of this Agreement and such other agreements and instruments and
the consummation of the transactions contemplated hereby and thereby will not
violate, conflict with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or result in the creation of a Lien on the Assets of Seller under any agreement
by which any of the Assets, may be bound or affected.
5.3. Consents. No consent, filing or approval of any federal, state or
local governmental agency or department or any other person not a party to this
Agreement is required or necessary in connection with the execution, delivery
and performance under this Agreement or to consummate the transactions
contemplated hereby.
5.4. Title. Except as provided in Schedule 5.4 hereof (all of which Liens
will be released and discharged on the Closing Date) Seller now is, and on the
Closing Date will be, the owner of the Assets free and clear of all liens,
encumbrances, claims, security interests, charges and restrictions on the right
to transfer, of any kind whatsoever ("Liens"). The machinery and equipment
described in
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Schedule 2(a) will be transferred to Purchaser on the Closing Date in good
working order.
5.5. Compliance with Agreements. Set forth on Schedule 5.5 is a complete
and accurate list of all contracts and other agreements, oral and written, to
which Seller is a party. Seller and the Shareholders do not know of any fact,
circumstance, or condition amounting to a default under any of such contracts or
other agreements. All such contracts and other agreements will be in full force
and effect at the time of Closing, unless by their terms they expire prior
thereto. Other than such enumerated contracts and other agreements, Seller has
no other presently existing contract or agreement, oral or written, relating to
the Assets.
5.6. Taxes. Seller has timely paid, or will timely pay on or before
Closing, all federal, state and municipal income, manufacturer's excise, federal
and state withholding, FICA, FUTA, state unemployment taxes, state and municipal
sales and use taxes, license fees and other taxes, fees, or charges levied or
imposed upon Seller as the result of its ownership of the Assets ("Taxes") that
are payable prior to the Closing Date. Seller is not delinquent in the payment
of any tax, assessment or governmental charge or in the filing of any tax return
in any case where such delinquency could result in a penalty and no deficiencies
for any tax, assessment or governmental charge have been claimed, proposed or
assessed against Seller. Seller has not filed or waived any extensions of time
for any returns, has not incurred any tax liability, including interest,
penalties or assessments which may result in the imposition of any lien, charge,
security interest or any other encumbrance on the Assets and Seller and the
Shareholders have no reason to believe that any taxing authority will assess any
additional tax, fines, penalties or other charges. There are no outstanding
fines, liens or disputes between Seller and any taxing authority which relate to
the Assets.
5.7. Litigation, Proceedings and Disputes. Except as set forth in Schedule
5.7, there are no suits, actions, administrative, arbitration or other
proceedings, (including proceedings concerning product liability, municipal or
other governmental laws or regulations, labor disputes or grievances or union
recognition) or governmental investigations by any Federal, state, or local
agency or prosecutor's office or of any other kind pending or threatened against
or affecting Seller or the Assets. Except as set forth in Schedule 5.7, there
are no unsatisfied judgments, orders, stipulations, injunctions, decrees or
awards (whether by a court, administrative agency, arbitration, grievance
procedure) against Seller relating to such Assets. Seller and the Shareholders
agree to cause any matter set forth in Schedule 5.7 to be satisfied at or prior
to the Closing Date.
5.8. Business Rights. Seller owns free and clear of any rights or claims of
others, the name "PR Data", the right to use the names in its databases,
processes, trademarks, trade names, trade secrets, patents, copyrights, service
marks, rights and all technical know-how accruing to the benefit of Seller
related to the Assets ("Intellectual Property"), without any conflict or
infringement with the right of
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others, including officers, directors or employees of Seller and Seller has not
received or been threatened with notice of any outstanding claim or assertion
that any of the Assets now materially infringe or conflict with the rights of
others. Seller will transfer to Purchaser, on and as of the Closing Date, sole
and full ownership of all of Seller's Intellectual Property, including Seller's
technology and know-how as related to the machinery and equipment described in
Schedule 2(a).
5.9. Employees. Subject to the exceptions set forth in the following
sentence, Schedule 5.9 hereto lists all employees and consultants of the Seller
and indicates their salaries, fees, commissions and most recent bonuses, if any,
their rights to future bonuses (or deferred portions of prior bonuses), if any,
vacation, severance, insurance and other benefits and their respective job
titles, dates of hire and social security numbers. Except as disclosed on
Schedule 5.9, there are no written or oral commitments by Seller to any of its
employees relating to employment, compensation, wages, bonuses, raises,
vacations, severance pay, benefits or similar matters. Seller will pay, through
the Closing Date, all salary, wages, bonuses, severance, commissions, accrued
vacation and sick days. Purchaser agrees that it shall employ substantially all
of the employees of Seller after Closing, provided that to the extent Purchaser
does not continue the employment of certain employees of the Seller, Purchaser
shall pay within a reasonable time after Closing, the severance benefits, if
any, to such employees, other than those severance benefits disclosed on
Schedule 5.9, all of which are the sole responsibility of Seller. Seller has
paid all unemployment insurance payments due and payable through the Closing
Date and does not have a negative account balance with any unemployment taxing
authority. Except as disclosed in Schedule 5.9, there are no union plans or
collective bargaining agreements.
5.10. Employee Plans.
(a) For purposes of this Agreement, the term "Employee Plan" means
each employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and each other bonus,
incentive compensation, deferred compensation, severance or similar plan, policy
or payroll practice providing compensation or employee benefits maintained by
Seller or to which Seller is a participating employer or is obligated to
contribute or has any legally enforceable liability and under which any person
presently employed by Seller as an employee or consultant (an "Employee") or
formerly employed by Seller or its predecessors as an employee or consultant (a
"Former Employee") participates or has accrued any rights or under which Seller
is liable in respect of an Employee or Former Employee. The terms "Employee" and
"Former Employees, will include, where applicable, the beneficiaries, spouses
and dependents of an Employee or Former Employee. Schedule 5.10 lists or
describes all Employee Plans of Seller. Each Employee Plan has been maintained
in all respects in accordance with its terms and with applicable law. Except as
set forth on Schedule 5.10, each Employee Plan (including the related trust)
which is intended to qualify under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), or comparable foreign law,
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does so qualify and is exempt from taxation pursuant to Section 501(a) of the
Code. None of the Employee Plans listed on Schedule 5.10 are Multi-employer
Plans (as defined within the meaning of Section 3(37) of ERISA) and Seller has
no liability under or with respect to, and does not contribute to, any
Multi-employer Plan.
(b) As of the Closing Date, Seller will have made or will make full
payment by direct contributions of all amounts which Seller is required to make
under the terms of each Employee Plan in respect of periods ending on or prior
to the Closing Date.
(c) There is no accumulated funding deficiency (as defined in Section
412 of the Code), waived funding deficiency (as defined in Section 412 of the
Code), or failure to make any payment on or before a required installment due
date (as defined in Section 412(m) of the Code) with respect to any defined
benefit plan (as defined in Section 3(35) of ERISA) maintained by Seller or any
member of the controlled group (within the meaning of Sections 414(b), (c), (m),
(n) and (o) of the Code ("Controlled Group") of which Seller is a member, that
is or could after the Closing Date become a liability of Purchaser.
(d) Neither Seller nor any member of Seller's Controlled Group has
incurred or reasonably expects to incur any liability under Title IV of ERISA
(or comparable foreign law) arising in connection with the termination of, or
withdrawal from, any plan covered or previously covered by Title IV of ERISA (or
comparable foreign law) that is or could become a liability of Purchaser after
the Closing Date.
(e) No event has occurred that could subject Seller or Purchaser to an
excise tax under Section 4975 of the Code or a civil penalty under Section
502(i) of ERISA or any comparable section under any foreign law.
(f) There exists no condition or set of circumstances which could
result in the imposition of any liability under ERISA (including, without
limitation, Title I or Title IV thereof), the Code or other applicable law with
respect to the Employee Plans. From and after the Closing, Seller and the
Shareholders shall, subject to Section 10 hereof, indemnify and hold Purchaser
harmless from, all liabilities and obligations arising at any time with respect
to Employees or Former Employees of Seller under Employee Plans (and all related
reporting requirements), and any other employee benefits mandated by law,
regardless of the applicable funding arrangements, attributable to periods of
employment by Seller of its employees prior to the Closing Date.
5.11. Compliance with Laws. Seller has not received any notice, and in the
event it has received a notice, has satisfied the deficiencies set forth in such
notice, alleging that it is in violation of any applicable federal, state, local
or foreign law, regulation or order or any other requirement of any
governmental, regulatory or administrative agency or authority or court or other
tribunal relating to them ("Laws"). Except as set forth in Schedule 5.11, Seller
is not now charged with,
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nor to the knowledge of Seller, is Seller now under investigation with respect
to, any material possible violation of any Law and Seller has filed all reports
required to be filed with any governmental authority and taken all other actions
required by any Law.
5.12. Obligation to Update Schedules. Seller shall promptly disclose to
Purchaser any information contained in its representations and warranties or
Schedules which, because of an event occurring after the date hereof, is
materially incomplete or is no longer materially correct as of all times after
the date hereof until the Closing Date or any material adverse development
affecting the results of operations of the Business; provided, however, that
none of such disclosures shall be deemed to modify, amend or supplement the
representations and warranties of Seller or the Schedules attached hereto unless
Purchaser shall have consented thereto in writing.
5.13. Facility.
(a) The Facility is presently leased to Seller.
(b) The Facility is in material compliance with all, and is not in
violation of any, applicable Federal, state or local statute, ordinance, order,
requirement, law, rule or regulation (including without limitation any
applicable covenant, condition, restrictions or easement), nor has any notice of
violation of any applicable Federal, state or local statute, law, ordinance,
rule, regulation, order or requirement, or of any covenant, condition,
restriction or easement affecting the Facility been given to Seller by any
governmental authority or by any person entitled to enforce same.
(c) The Facility is not subject to zoning, use or building code
restrictions which prohibits, and, no state of facts relating to the actions or
inaction of Seller exists which prevents, the continued effective leasing or use
of such Facility property for the Business consistent with the manner in which
the Seller has conducted its Business.
(d) No permit, approval, certificate or consent of any governmental
authority or public or private utility is required by Purchaser to occupy and
utilize the Facility as presently utilized by Seller consistent with the past
conduct of the business.
5.14. Customers and Suppliers. Set forth on Schedule 5.14 is an accurate
list of each customer and of each supplier which was responsible for,
respectively, at least 5% of the gross revenues or 5% of the gross purchases of
the Seller during the calendar years ended December 31, 1995 and 1994.
5.15. Environmental Matters. Except as set forth on Schedule 5.15, Seller
and the Shareholders have not and have no knowledge that there has been
generated, stored, treated, discharged, handled, refined, spilled,
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released or disposed any Hazardous Substances in violation of any applicable law
or regulation at or on the Facility. Except as set forth on Schedule 5.15, to
Seller's and the Shareholders' knowledge, no underground storage tanks exist or
have existed at the Facility. Seller and the Shareholders have no knowledge of
any Hazardous Substances on or in the Facility in violation of any applicable
law or regulation and has received no notice, nor is it on notice of, any claim,
investigation, litigation or administrative proceeding, actual or threatened, or
any order, writ or judgment that relates to any discharge, spill, handling,
refining, release, emission, leaching or disposal of pollutants of any kind
(including any Hazardous Substances) at the Facility.
5.16. Financial Information. Seller has delivered to Purchaser unaudited
balance sheets of Seller as at December 31, 1994 and 1995 and the related income
statements and statements of stockholders' equity and cash flows for the years
then ended and unaudited balance sheets of Seller for the three month period
ended March 31, 1996 and the related income statements of stockholders' equity
and cash flows for such three month period (collectively, "Financial Data"). The
Financial Data has been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
("GAAP"), presents fairly in all material respects and was prepared from the
books and records of Seller, and, except as set forth on Schedule 5.16, fairly
presents in all material respects the assets and liabilities of the Seller at
the dates specified and the results of operations, stockholders' equity and cash
flows for the years then ended. The Financial Data accurately reflect and
record, in all material respects, insofar as required in accordance with GAAP,
all of the assets used in or held for use in the Business, all transactions
between Seller and any affiliates and related parties and all expenses of or
relating to the Business, whether incurred or paid by the Seller or any of its
affiliates or related parties. The unaudited balance sheets of Seller for the
three month period ended March 31, 1996 and the related income statements of
stockholders' equity and cash flows for such three month period are subject to
the absence of notes that would customarily be included in a financial statement
prepared in accordance with GAAP. Seller has also delivered to Purchaser
accurate financial information regarding the period from April 1, 1996 through
the Closing Date in order to enable Seller to prepare the Closing Date Stub
Financials and Seller expressly acknowledges the accuracy of, and accepts as
valid and binding, the Closing Date Stub Financials. Notwithstanding anything to
the contrary set forth herein, in the event any receivables listed in the
Closing Date Stub Financials are not collected within 90 days of the Closing
Date, such receivables shall not be deemed an asset of Seller for the purposes
of this Agreement.
5.17. Financial Condition. Since March 31, 1996 and through the Closing
Date:
(a) There has been and will be no material adverse change in the
financial condition, intangibles, results of operations, Business, properties,
Assets or liabilities of the Seller.
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(b) The operations and Business of the Seller have been and will be
conducted only in the ordinary course.
(c) There has been and will be no accepted purchase order or
quotation, arrangement or understanding for future sale of the products or
services of the Seller which is not in the ordinary course of business and
consistent with past practices.
(d) Seller has not suffered and will not suffer an extraordinary loss
(whether or not covered by insurance) or waived any right of substantial value.
(e) There is no fact known to Seller or the Shareholders which
materially adversely affects the financial condition, results of operations,
Business, properties, Assets or liabilities of the Seller other than as set
forth in this Agreement.
5.18. Non-Distributive Intent. The Shareholders are acquiring the Shares to
be issued and delivered hereunder for their own account (and not for the account
of others) for investment and not with a view to the distribution thereof. The
Shareholders will not sell or otherwise dispose of the Shares (whether pursuant
to a liquidating dividend or otherwise) without registration under the
Securities Act of 1933 or an exemption therefrom, and the certificate or
certificates representing the Shares may contain a legend to the foregoing
effect. The Shareholders understand that they may not sell or otherwise dispose
of the Shares in the absence of either a registration statement under the
Securities Act of 1933 or an exemption from the registration provisions of the
Securities Act of 1933.
5.19. Representations and Warranties. Neither the representations and
warranties of Seller and the Shareholders contained (i) herein nor (ii) in any
certificate, Exhibit, Schedule or other writing required by the terms hereof to
be delivered by Seller contain any untrue statements of a material fact or taken
together omit to state a material fact necessary in order to make the statements
herein and therein not misleading in light of the circumstances in which made.
ARTICLE VI
Section 6. Representations and Warranties by Medialink and Purchaser. Each
of Medialink and Purchaser represents and warrants to Seller and the
Shareholders as set forth below:
6.1. Organization, Existence and Authority of Medialink and Purchaser. Each
of Medialink and Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has and will have
at the time of Closing, all corporate power to execute, deliver and perform
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this Agreement and the other agreements and instruments to be executed and
delivered by each of Medialink and Purchaser pursuant hereto and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement by each of Medialink and Purchaser does not, and the consummation
of the transactions contemplated hereby will not, violate any provision of
Medialink's or Purchaser's certificate of incorporation or by-laws or of any law
or regulation applicable to Medialink or Purchaser or of any agreement,
mortgage, license, lease, arrangement, instrument, order, arbitration award,
judgment or decree to which Medialink or Purchaser is a party or by which
Medialink or Purchaser is bound.
6.2. Power and Authority. On or prior to the Closing Date all corporate
acts and other proceedings required to be taken by or on the part of each of
Medialink and Purchaser to authorize them to carry out this Agreement and such
other agreements and instruments and the transactions contemplated hereby and
thereby will have been duly and properly taken. This Agreement has been duly
executed and delivered by each of Medialink and Purchaser and constitutes, and
such other agreements and instruments when duly executed and delivered by each
of Medialink and Purchaser will constitute, legal, valid and binding obligations
enforceable in accordance with their respective terms. The execution, delivery
and performance by each of Medialink and Purchaser of this Agreement and such
other agreements and instruments and its consummation of the transactions
contemplated hereby and thereby will not violate, conflict with or result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or result in the creation of a lien
or encumbrance under any agreement by which Medialink or Purchaser may be bound
or affected.
6.3. Consents. No consent, filing or approval of any federal, state or
local governmental agency or department or any other person not a party to this
Agreement is required or necessary in connection with the execution, delivery
and performance under this Agreement or to consummate the transactions
contemplated hereby.
6.4. Financial Information. Medialink has delivered to Seller unaudited
balance sheets of Medialink as at December 31, 1994 and 1995 and the related
income statements and statements of stockholders' equity and cash flows for the
years then ended and unaudited balance sheets of Medialink for the three month
period ended March 31, 1996 and the related income statements of stockholders'
equity and cash flows for such three month period (collectively, "Medialink
Financial Data"). The Medialink Financial Data has been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved ("GAAP"), presents fairly in all material respects and was
prepared from the books and records of Medialink, and, except as set forth on
Schedule 6.4, fairly presents in all material respects the assets and
liabilities of Medialink at the dates specified and the results of operations,
stockholders' equity and cash flows for the years then ended. The Medialink
Financial Data accurately reflect and record, in all material respects, insofar
as required in accordance with GAAP, all of the assets used in or
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held for use in the business of Medialink, all transactions between Medialink
and any affiliates and related parties and all expenses of or relating to the
business of Medialink, whether incurred or paid by Medialink or any of its
affiliates or related parties.
6.5. Financial Condition. Since March 31, 1996 and through the Closing
Date:
(a) There has been and will be no material adverse change in the
financial condition, intangibles, results of operations, business, properties,
assets or liabilities of Medialink.
(b) The operations and business of Medialink have been and will be
conducted only in the ordinary course.
(c) There is no fact known to Medialink which materially adversely
affects the financial condition, results of operations, business, properties,
assets or liabilities of Medialink other than as set forth in this Agreement.
6.6. Representations and Warranties. Neither the representations and
warranties of Medialink or Purchaser contained (i) herein nor (ii) in any
certificate, Exhibit, Schedule or other writing required by the terms hereof to
be delivered by Medialink or Purchaser (and so delivered) contained any untrue
statement of a material fact or taken together omit to state a material fact
necessary in order to make the statements herein and therein not misleading in
light of the circumstances in which made.
ARTICLE VII
Section 7. Additional Covenants and Agreements.
7.1. Access. Prior to the Closing, Seller will provide Purchaser with
copies of all documents which are reasonably necessary to facilitate the
transaction contemplated by this Agreement. Purchaser shall hold the information
set forth in such documents in confidence, provided that such information has
not previously been in the public domain. Prior to the Closing, Seller will, at
its expense, afford the officers, employees, attorneys, agents, accountants and
other representatives of the Purchaser free and full access to the records of
Seller which are related to the Assets and/or which aid Purchaser in responding
to governmental inquiries, will permit them to make extracts from and copies of
such records, and will from time to time furnish the Purchaser with such
additional information as the Purchaser from time to time may reasonably
request. Seller agrees to store such records after Closing, at its expense, for
the applicable statute of limitations period and to apprise Purchaser of the
location of such storage facility.
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7.2. Conduct of Business Pending the Closing. Since March 31, 1996 and
through the Closing Date, Seller has conducted the Business only in the ordinary
course and has:
(a) preserved intact the Assets and its current business operations
and properties;
(b) taken no action or failed to take such action the consequence of
which will cause a breach of or default in any contract, agreement, commitment
or obligation to which it is a party or by which it may be bound;
(c) kept at all times full and complete books and records, consistent
with past practices for the Seller; and
(d) paid its accounts payable in the ordinary course.
7.3. Compliance. Seller and Purchaser will use their best efforts to comply
with any and all requirements imposed by applicable federal, state and local law
which are necessary to authorize and validate the sale, transfer and assignment
of the Assets to be transferred and assigned to Purchaser, and otherwise to
effectuate the purposes of this Agreement.
7.4. Employment Agreements. On the Closing Date, Purchaser will enter into
one (1) year employment agreements (the "Employment Agreements") with WW, JS and
NS with annual salaries of $47,000, $35,500 and $67,500, respectively. A form of
the Employment Agreements is attached hereto as Exhibits D-1, D-2 and D-3.
7.5. Lease. Seller is presently a tenant at the Facility pursuant to a
lease dated September 30, 1991, between Seller, as tenant, and Oakwood Avenue
Partners, an affiliate of Seller, as landlord. The term of such lease expires on
September 30, 1996. Seller shall cause Oakwood Avenue Partners to terminate such
lease effective as of the Closing Date and to enter into a lease (the "Lease")
with Purchaser for a five (5) year term commencing on the Closing Date. A form
of the Lease is attached hereto as Exhibit E.
7.6. Corporate Name. At or prior to Closing, Seller shall file a
certificate of amendment to its certificate of incorporation whereby it shall
change its name to a name that is not similar in any way to PR Data Systems or
any derivative thereof.
7.7. Address. At or prior to Closing, Seller shall change its office
address.
7.8. Medialink Guarantee. On the Closing Date Medialink will deliver to
Seller a guarantee (the "Guarantee") in the form attached hereto as
15
<PAGE>
Exhibit G, pursuant to which Medialink guarantees the performance of Purchaser
under the Transaction Documents, the New WW Note and the Lease.
ARTICLE VIII
Section 8. Bulk Sales. The parties agree that compliance with the bulk
sales laws of the State of Connecticut is waived and Seller and Shareholders
hereby jointly and severally indemnify, subject to the provisions of Section 10,
and hold Purchaser harmless from any and all Indemnified Amounts, as defined
herein, arising from any creditor claims as a result of such bulk transfer which
were not disclosed pursuant to any Schedule or Exhibit to this Agreement.
ARTICLE IX
Section 9. Closing.
9.1. Location of The Closing. The Closing shall be held at the offices of
Tashlik, Kreutzer & Goldwyn P.C., 833 Northern Boulevard, Great Neck, New York
11021.
9.2. Documents to be Delivered by Seller and the Shareholders. On the
Closing Date, Seller and the Shareholders shall deliver to Purchaser:
(a) the Employment Agreements executed by WW, JS and NS;
(b) the Lease executed by Oakwood Avenue Partners;
(c) the Non-Compete Agreements executed by WW JS and NS;
(d) the Escrow Agreement executed by WW, JS and NS;
(e) A certificate of the Secretary of Seller as to the resolutions
duly adopted by the Board of Directors of Seller authorizing the execution,
delivery and performance of this Agreement by Seller; the incumbency and
signatures of officers of Seller; and a certificate stating that the resolutions
authorizing the execution, delivery and performance of this Agreement are in
full force and effect;
(f) A Bill of Sale;
16
<PAGE>
(g) An opinion of counsel for Seller, reasonably satisfactory to
Purchaser's counsel, dated as of the Closing Date;
(h) A cross receipt evidencing receipt by Seller of the Purchase
Price;
(i) Cancellation of the note, if any, which evidences the WW
Indebtedness; and
(j) Any other document or instrument of conveyance and transfer
necessary to implement and consummate this Agreement or any other documents
which may be reasonably requested by Purchaser to consummate the transactions
contemplated herein.
9.3. Documents to be Delivered by Purchaser and Medialink. On the Closing
Date, Medialink and Purchaser shall deliver to the Seller or the applicable
Shareholders, as the case may be:
(a) The Cash to Seller and stock certificates representing the Shares,
which, for convenience, will be registered in the names of the Shareholders in
recognition of the Seller's plan to dissolve following the Closing and
distribute the Shares to the Shareholders, subject to their obligation to
deliver the Shares to the Escrow Agent;
(b) Executed original New WW Note;
(c) Executed original Non-Compete Agreements;
(d) Executed original Employment Agreements;
(e) Executed Lease;
(f) The opinion of counsel for Medialink and Purchaser, reasonably
satisfactory to Seller's counsel, dated as of the Closing Date;
(g) The Guarantee of Medialink;
(h) The resolutions duly adopted by the Boards of Directors of
Purchaser and Medialink authorizing the execution, delivery and performance of
this Agreement by Purchaser and Medialink, certified by the Secretary of
Purchaser and Medialink; a certificate of the Secretaries of Purchaser and
Medialink as to the incumbency and signatures of officers of Purchaser and
Medialink; and a certificate stating that the resolutions authorizing the
execution, delivery and performance of this Agreement are in full force and
effect;
17
<PAGE>
(i) A cross receipt evidencing delivery of the Assets to Purchaser;
and
(j) Any other documents which may be reasonably required to consummate
the transactions contemplated herein or any other documents reasonably requested
by Seller in connection with the transactions contemplated herein.
Unless otherwise provided in this Agreement, all documents and
instruments delivered shall be dated the Closing Date and shall be reasonably
satisfactory as to form and content to each party and its respective counsel.
ARTICLE X
Section 10. Indemnification; Survival.
10.1. Survival; Remedy for Breach. The representations and warranties of
the parties hereto contained herein or in any certificate, Schedule or other
writing attached hereto, or required by the terms hereof to be delivered (and so
delivered), by parties as communicated as of the Closing Date shall survive the
Closing Date for a period of two (2) years, except as to tax matters as set
forth in Section 5.6, litigation matters as set froth in Section 5.7,
environmental matters as set forth in Section 5.15 and pension matters as set
forth in Section 5.10, all of which shall survive for a period equal to the
applicable statute of limitations. Notwithstanding the preceding sentence, the
right to indemnity with respect to any representation or warranty in respect of
which indemnity may be sought under Section 10 hereof shall survive the time at
which it would otherwise terminate if notice of the inaccuracy or breach
thereof, which shall include with reasonable specificity the elements of such
claim, shall have been given to the party against whom such indemnity may be
sought prior to such time.
10.2. Indemnification by Seller and the Shareholders.
(a) Seller and the Shareholders hereby jointly and severally indemnify
Purchaser and Medialink and their respective officers, directors, controlling
persons (if any), employees, attorneys, agents and stockholders (the
"Indemnitees") against and agree to hold each of them harmless from any and all
damage, loss, liability, expense (including, without limitation, reasonable
out-of-pocket expense of investigation and attorneys' fees and expenses in
connection with any action, suit or proceeding brought by, against or involving
any Indemnitee) and cost (collectively, "Indemnified Amounts") incurred or
suffered by any Indemnitee arising out of (i) any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by Seller or the
Shareholders pursuant to this Agreement; and (ii) the failure of Seller to
comply with the Bulk Sales Laws. The agreements and indemnities
18
<PAGE>
of Seller and the Shareholders contained herein shall be cumulative, except that
the Indemnitees shall not recover more than once for the same Indemnified
Amount.
(b) The Indemnitees each agree to give notice to Seller and the
Shareholders promptly, but in no event later than sixty (60) days after receipt,
after learning of the assertion of any claim, or the commencement of any suit,
action or proceeding, in respect of which indemnity may be sought hereunder.
(c) Seller and the Shareholders shall not be liable under this Section
10.2 for any settlement effected without their consent of any claim, litigation
or proceeding in respect of which indemnity may be sought hereunder, which
consent may not be unreasonably withheld.
(d) The amount required to be paid to an Indemnitee by Seller and the
Shareholders for any Indemnified Amounts hereunder shall be the amount which,
after taking into account the effect of federal, state and local tax laws,
places the Indemnitee in the same position as if the matter giving rise to the
indemnification had not occurred and such payment had not been received. Subject
to the right of set-off set forth in Section 11 hereof, which may be made at any
time, such amounts shall be paid not later than fifteen (15) days after receipt
by Seller and the Shareholders of written notice from the Indemnitee stating
that such Indemnified Amounts are due and payable and the amount thereof and of
the related indemnity payment; provided, however, that any disputed amounts
shall be due and payable within thirty (30) days after such amounts are finally
determined by mutual agreement or a court of competent jurisdiction to be owing
by Seller or the Shareholders to the Indemnitees.
10.3. Indemnification by Medialink and Purchaser.
(a) Each of Medialink and Purchaser hereby indemnifies Seller and the
Shareholders against and agrees to hold them harmless from any and all damage,
loss, liability, expense (including, without limitation, reasonable
out-of-pocket expense of investigation and attorney fees and expenses in
connection with any action, suit or proceeding brought by or against Seller
and/or the Shareholders (collectively, "Indemnified Amounts") incurred or
suffered by Seller and/or the Shareholders arising out of any misrepresentation
or breach of warranty, covenant or agreement made or to be performed by
Medialink or Purchaser pursuant to this Agreement. The agreements and
indemnities of Medialink and Purchaser contained herein shall be cumulative,
except that Seller shall not recover more than once for the same Indemnified
Amount.
(b) Seller agrees to give notice to Medialink and Purchaser promptly,
but in no event later than sixty (60) days after receipt, after learning of the
assertion of any claim, or the commencement of any suit, action or proceeding,
in respect of which indemnity may be sought hereunder.
19
<PAGE>
(c) Medialink and Purchaser shall not be liable under this Section
10.3 for any settlement effected without their consent of any claim, litigation
or proceeding in respect of which indemnity may be sought, which consent may not
be unreasonably withheld.
(d) The amount required to be paid to Seller by Medialink and
Purchaser for any Indemnified Amounts hereunder shall be the amount which, after
taking into account the effect of United States, state and local tax laws,
places Seller in the same position as if the matter giving rise to the
indemnification had not occurred and such payment had not been received. Such
amounts shall be paid not later than fifteen (15) days after receipt by
Medialink and Purchaser of written notice from Seller stating that such
Indemnified Amounts are due and payable and the amount thereof and of the
related indemnity payment; provided, however, that any disputed amounts shall be
due and payable within thirty (30) days after such amounts are finally
determined by mutual agreement or a court of competent jurisdiction to be owing
by Medialink and Purchaser to Seller.
10.4. Limitations on Indemnification.
(a) Notwithstanding anything to the contrary contained herein, neither
Seller and the Shareholders nor Medialink and Purchaser shall be entitled to any
recovery from the other with respect to any breach of warranty or representation
set forth herein or the indemnification provided for in Sections 10.2 or 10.3
hereof unless and until the aggregate amount of the applicable Indemnified
Amounts suffered, sustained or incurred by the asserting party, or to which such
party becomes subject, by reason of such breach or indemnity, shall exceed in
the aggregate Fifteen Thousand ($15,000) Dollars (the "Cushion Amount"). In the
event that the sum of the applicable Indemnified Amounts for which no
indemnification has been made hereunder (the "Aggregate Indemnified Amount")
shall exceed the Cushion Amount, the indemnification obligations imposed herein
shall apply to all amounts in excess of the Cushion Amount.
(b) Notwithstanding anything to the contrary contained herein, the
Cushion Amount set forth herein shall not apply in the event that the Seller,
the Shareholders, Medialink or Purchaser, as the case may be, fraudulently (i)
omitted a material fact or (ii) misrepresented or breached any representation or
warranty in this Agreement or in any agreement or schedule required to be
delivered by Seller, the Shareholders, Medialink or Purchaser, as the case may
be.
10.5. Conduct of Litigation. Each party indemnified under the provisions of
this Agreement, upon receipt of written notice of any claim or the service of a
summons or other initial legal process upon it in any action instituted against
it, in respect of the agreements contained in this Agreement, shall promptly
give written notice of such claim, or the commencement of such action, or threat
thereof, to the party from whom indemnity shall be sought hereunder. Each
indemnifying party shall be entitled at its own expense to participate in the
defense of such claim or action, or,
20
<PAGE>
if it shall elect, to assume such defense, in which event such defense shall be
conducted by counsel chosen by such indemnifying party, unless the indemnified
party reasonably objects to the use of such counsel, in such event counsel may
be any counsel reasonably satisfactory to the indemnified party against whom
such claim is asserted or who shall be the defendant in such action, and such
indemnified party shall bear all fees and expenses of any additional counsel
retained by it or them; provided, however, that if the indemnified party
reasonably determines that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense of such
action or that there are legal defenses available to such indemnified party
different from or in addition to those available to the indemnifying party, then
counsel for the indemnified party shall be entitled, if the indemnified party so
elects, to conduct the defense to the extent reasonably determined by such
counsel to be necessary to protect the interests of the indemnified party, at
the expense of the indemnifying party. If the indemnifying party shall elect not
to assume the defense of such claim or action, such indemnifying party will
reimburse such indemnified party for the reasonable fees and expenses of any
counsel retained by it, and shall be bound by the results obtained by the
indemnified party; provided, however, that no such claim or action shall be
settled without the written consent of the indemnifying party.
ARTICLE XI
Section 11. Right of Set-Off.
11.1. Set-Off for Indemnified Amounts.
(a) Subject to the provisions of Section 11.2, Medialink and/or
Purchaser may at any time, set-off from the consideration, whether the Shares,
any stock options granted by Medialink to the Shareholders, as evidenced by
stock option agreements (the "Stock Option Agreements") or the non-compete
payments (the "Payment Amounts"), due and payable to Seller and/or any of the
Shareholders of Seller, any amount or amounts which Medialink and/or Purchaser,
in their sole and absolute discretion, shall determine may be necessary to
satisfy (i) any Indemnified Amount due to any Indemnitee or (ii) any
prospective, pending or threatened loss, liability, expense or cost which may
reasonably be expected to give rise to an indemnity obligation of Seller or any
of the Shareholders (collectively, a "Set-Off Amount"). Any Set-Off Amounts
shall be delivered and paid into an interest bearing escrow account to be
established pursuant to the terms of the Escrow Agreement. The terms of the
Escrow Agreement shall provide that Purchaser's counsel shall serve as escrow
agent thereunder (the "Escrow Agent").
(b) In addition to the right of set-off set forth in subsection (a)
above, Medialink and/or Purchaser may at any time direct the Escrow Agent to
retain from the Shares held by the Escrow Agent, any Shares or proceeds of the
sale of such Shares which Medialink and/or Purchaser in their sole and absolute
21
<PAGE>
discretion shall determine may be necessary to satisfy any Indemnified Amount or
Set-Off Amount; such Set-Off Amount to be determined by Medialink and/or
Purchaser in their sole and absolute discretion, subject to the provisions of
the Escrow Agreement. Medialink and/or Purchaser shall exercise such right of
retention against all or a portion of the Shares by giving written notice of the
exercise of such right of retention to the Shareholders. Such Shares shall
remain in escrow and be designated set-off shares and shall only be released
from escrow upon the agreement of the parties hereto or by order of a court of
competent jurisdiction.
11.2. Directions on Payment of Indemnified Amounts. In the event Medialink
and/or Purchaser seeks to recover Indemnified Amounts or Set-Off Amounts from
time to time from Seller and/or the Shareholders, as the case may be, pursuant
to Sections 10 or 11, Medialink and/or Purchaser must, prior to any set-off for
payments from the Payment Amounts, first notify Seller and the Shareholders in
writing as to the reason for such set-off and then seek to set-off against the
Shares held under the Escrow Agreement so long as the Fair Market Value of the
Shares is in excess of the outstanding Indemnified Amounts sought; provided
however, that if the Indemnified Amounts are in excess of such Fair Market
Value, Medialink and/or Purchaser shall seek to recover against the Shares the
Indemnified Amounts, prior to any set-off, up to the amount of the Fair Market
Value of the Shares and any excess shall be recovered, by set-off or otherwise,
against the consideration due under the Employment Agreements, the Non-Compete
Agreements and/or the Stock Option Agreements. The Fair Market Value of the
Shares shall be determined as of the date of set-off. Nothing herein shall be
deemed to impair, diminish, or restrict Medalink's and/or Purchaser's
indemnification rights or set-off rights.
ARTICLE XII
Section 12. Miscellaneous.
12.1. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if sent by nationally recognized overnight
courier or by registered or certified mail, postage prepaid, addressed as
follows:
To Seller:
351 Hillside Road
Fairfield, Connecticut 06430
Attention: Jack Schoonover
To Shareholders:
Jack Schoonover
351 Hillside Road
Fairfield, Connecticut 06430
22
<PAGE>
William Wubbenhorst
20 Rowayton Avenue
Rowayton, Connecticut 06853
Nancy Schoonover
351 Hillside Road
Fairfield, Connecticut 06430
Copy to:
Neville Shaver Kelly & McLean
Three Landmark Square
Stamford, Connecticut 06901
Attention: Richard M. Neville, Esq.
To Medialink:
Video Broadcasting Corporation
708 Third Avenue
New York, New York 10017
Attention: Mr. J. Graeme McWhirter
To Purchaser:
Medialink PR Data Corporation
708 Third Avenue
New York, New York 10017
Attention: Mr. J. Graeme McWhirter
Copy to:
Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Blvd.
Great Neck, New York 11021
Attention: Theodore Wm. Tashlik, Esq.
or such other addresses as shall be furnished by like notice by such party. Any
such notice or communication shall be effective two days after it is sent.
12.2. Brokers. Seller, Medialink and Purchaser each represents to the other
that it has not dealt with any broker for this transaction and has not employed
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission upon consummation of the transactions contemplated hereby. Medialink,
Purchaser and Seller agree to indemnify and hold each other harmless from and
against any and all loss, damage, liability, cost or expense (including
attorneys' fees) suffered or incurred as a result of any breach of the foregoing
representations by the other party.
23
<PAGE>
12.3. Expenses. All legal, accounting and other costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses.
12.4. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors. The
parties may not assign this Agreement.
12.5. Entire Agreement; Amendment. This Agreement embodies the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings with respect thereto. This
Agreement may be amended, and any provision hereof waived, but only in writing
signed by the party against whom such amendment or waiver is sought to be
enforced.
12.6. Counterparts. This Agreement may be executed in counterparts, all of
which shall together constitute one and the same instrument.
12.7. Agreement to Take Necessary and Desirable Actions. Seller, Medialink
and Purchaser each agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be reasonably necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
12.8. Headings. The headings of Articles and Sections herein are inserted
for convenience of reference only and shall be ignored in the construction or
interpretation hereof.
12.9. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of New York applicable to contracts made and to be
performed therein without giving effect to the principles of conflict of laws
thereof. Except in respect of any action commenced by a third party in another
jurisdiction, the parties hereto agree that any legal suit, action, or
proceeding against them arising out of or relating to this Agreement shall be
brought exclusively in the United States Federal Courts or New York Supreme
Court, in the State of New York. The parties hereto hereby accept the
jurisdictions of such courts for the purpose of any such action or proceeding,
and agree that venue for any action or proceeding brought in the State of New
York shall lie in the Southern District of New York or Supreme Court, New York
County, as the case may be. Each of the parties hereto hereby irrevocably
consents to the service of process in any action or proceeding in such courts by
the mailing thereof by United States registered or certified mail postage
prepaid at its address set forth herein.
12.10. Consents. Seller, Medialink and Purchaser shall, on or prior to the
Closing Date, use their best efforts to obtain from each person, firm,
association, corporation and governmental authority all consents and approvals
which
24
<PAGE>
are necessary to authorize and validate the sale, transfer and assignment of the
assets, property and contracts to be transferred and assigned to Purchaser, and
otherwise to effectuate the purposes of this Agreement; provided, however, that
any expense that may be incurred in obtaining consents to the assignment of any
agreements being assigned hereunder by Seller shall be the sole obligation of
Seller.
12.11. No Implied Waiver. No failure or delay on the part of the parties
hereto to exercise any right, power or privilege hereunder or under any
instrument executed pursuant hereto shall operate as a waiver; nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. All rights and remedies granted herein shall be in addition to other
rights and remedies to which the parties may be entitled at law or in equity.
12.12. No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of each
of the parties hereto by their duly authorized officers as of the day and year
first above written.
SHAREHOLDERS:
Jack Schoonover
William Wubbenhorst
Nancy Schoonover
PR DATA SYSTEMS, INC.
By: s/Jack Schoonover
_______________________________
President
MEDIALINK PR DATA CORPORATION
By: s/J. Graeme McWhirter
_______________________________
Vice President
VIDEO BROADCASTING CORPORATION
By: s/J. Graeme McWhirter
_______________________________
Executive Vice President
25
<PAGE>
SCHEDULE 2(a)
Machinery and Equipment
<PAGE>
SCHEDULE 2(b)
Accounts Receivable
<PAGE>
SCHEDULE 2(c)
Inventory
<PAGE>
SCHEDULE 2(d)
Patents, Trademarks, Trade Names, Service Marks and Copyrights
<PAGE>
SCHEDULE 2(f)
Leasehold Improvements
<PAGE>
SCHEDULE 2(g)
Property and Equipment Leases
<PAGE>
SCHEDULE 3.2(a)
SBA Loan
<PAGE>
SCHEDULE 4.2
Purchase Price Allocation
1. Non-Compete $410,000
2.
3.
<PAGE>
SCHEDULE 5.4
Liens
<PAGE>
SCHEDULE 5.5
Material Contracts
<PAGE>
SCHEDULE 5.7
Litigation
<PAGE>
SCHEDULE 5.9
Employees
<PAGE>
SCHEDULE 5.10
Employee Plans
<PAGE>
SCHEDULE 5.11
Compliance with Laws
<PAGE>
SCHEDULE 5.14
Customers and Suppliers
<PAGE>
SCHEDULE 5.15
Environmental Matters
<PAGE>
SCHEDULE 5.16
Financial Statements
<PAGE>
SCHEDULE 6.4
Medialink Financial Information
<PAGE>
EXHIBIT A
New WW Note
<PAGE>
EXHIBIT B
Escrow Agreement
<PAGE>
EXHIBIT C-1
JS Non-Compete Agreement
<PAGE>
EXHIBIT C-2
NS Non-Compete Agreement
<PAGE>
EXHIBIT C-3
WW Non-Compete Agreement
<PAGE>
EXHIBIT D-1
JS Employment Agreement
<PAGE>
EXHIBIT D-2
NS Employment Agreement
<PAGE>
EXHIBIT D-3
WW Employment Agreement
<PAGE>
EXHIBIT E
Lease
<PAGE>
EXHIBIT F
Medialink Guarantee
<PAGE>
NON-NEGOTIABLE SUBORDINATED PROMISSORY NOTE
$330,000.00 July 18, 1996
FOR VALUE RECEIVED, the undersigned MEDIALINK PR DATA CORPORATION, a
Delaware corporation having an office at 708 Third Avenue, New York, New York
10017 ("Maker"), hereby unconditionally promises and agrees to pay to WILLIAM
WUBBENHORST, an individual residing at 20 Rowayton Avenue, Rowayton, Connecticut
06853 ("Payee"), in lawful money of the United States of America, the principal
sum of THREE HUNDRED THIRTY THOUSAND AND 00/100 ($330,000.00) DOLLARS, plus
interest at the rate of 8% per annum, payable in consecutive equal quarterly
installments of principal and interest in the amount of $15,506.59 over a seven
(7) year period commencing three (3) months after the date hereof. The entire
unpaid principal balance of this Note together with any unpaid accrued interest
shall be paid on the seventh anniversary date of this Note.
Payment of the principal and interest of this Note shall be subordinate to
all Senior Debt (as hereinafter defined); provided, however, that interest and
principal hereunder shall be timely paid as and when due unless the holders of
the Senior Debt to which this Note is subordinate shall declare a default of
such debt.
"Senior Debt" shall mean all debt of the Maker, whether now or hereinafter
incurred, owing by the Maker to any financial institution and all advances and
readvances thereunder, and all renewals, extensions, modifications, amendments
and refinancings thereof.
The Maker shall have the privilege of prepaying the unpaid principal
balance of this Note, and any interest accrued thereon, in whole or in part, at
any time without penalty or premium.
Payment of principal and interest on this Note shall be made in lawful
money of the United States of America at the residence of Payee, or at such
other place within the United States of America as any holder of this Note may
designate.
The following shall constitute events of default under this Note: (i) the
application for the appointment of a receiver for the Maker or for the property
of the Maker; (ii) the filing by the Maker of a petition in bankruptcy; (iii)
the assignment for the benefit of creditors by the Maker; (iv) the termination
of the existence, the dissolution or the insolvency of the Maker; or (v) the
failure of Maker to make any payment of principal or interest on this Note after
fifteen (15) days written notice that such payment is past due.
Upon the occurrence of one or more of the foregoing events of default, the
entire unpaid principal balance of this Note and all accrued and unpaid interest
thereon, shall immediately become due and payable at the election of Payee.
<PAGE>
The Maker and all endorsers, guarantors, sureties, accommodation parties
hereof and all other persons liable or to become liable for all or any part of
this indebtedness agree to pay all costs of collection in the event the unpaid
principal balance of this Note is not paid when due.
This Note may not be amended, modified or changed, nor shall any waiver of
any provisions hereof be effective, except only by an instrument in writing
signed by the party against whom enforcement of any waiver, amendment, change,
modification or discharge is sought.
Any failure by the Payee to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right at
any time.
Maker waives presentment, demand for payment, notice of dishonor, notice of
protest, and, except as herein otherwise expressly provided, all other notices
or demands or other communications in connection with the delivery, acceptance,
performance, default, endorsement or guarantee of this Note shall be in writing
and shall be deemed to have been given when delivered personally or when sent by
certified mail, return receipt requested or by overnight air delivery, addressed
to the address indicated at the head of this Note.
Whenever used herein, the words "Maker" and "Payee" shall be deemed to
include their respective heirs and personal representatives.
This Note shall be construed according to and governed by the laws of the
State of New York without giving effect to the principles of conflict of laws
thereof. Except in respect of any action commenced by a third party in another
jurisdiction, the parties hereto agree that any legal suit, action, or
proceeding against them arising out of or relating to this Note shall be brought
exclusively in the United States Federal Courts or New York Supreme Court, in
the State of New York. The parties hereto hereby accept the jurisdictions of
such courts for the purpose of any such action or proceeding, and agree that
venue for any action or proceeding brought in the State of New York shall lie in
the Southern District of New York or Supreme Court, New York County, as the case
may be. Each of the parties hereto hereby irrevocably consents to the service of
process in any action or proceeding in such courts by the mailing thereof by
United States registered or certified mail postage prepaid at its address set
forth herein.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first above
written.
MEDIALINK PR DATA CORPORATION
/s/ J. Graeme McWhirter
By:_______________________________
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OAKWOOD AVENUE PARTNERS,
Landlord
To
MEDLALINK PR DATA CORPORATION,
Tenant
LEASE
Portion of 15 Oakwood Avenue
Norwalk, CT
Dated as of July 18, 1996
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TABLE OF CONTENTS
ARTICLE 1. THE PARTIES, THE PREMISES AND
DEMISE OF THE PREMISES ....................................... 1
Section 1.1 The Parties .............................................. 1
Section 1.2 The Premises ............................................. 1
Section 1.3 Demise ................................................... 1
ARTICLE 2. PREPARATION OF THE PREMISES .................................... 2
Section 2.1 "As Is" Condition ........................................ 2
Section 2.2 Fixtures and Improvements ................................ 2
ARTICLE 3. TERM ........................................................... 2
Section 3.1 The Term Defined; Extensions of the Term ................. 3
Section 3.2 Holdover ................................................. 3
ARTICLE 4. RENT ........................................................... 3
Section 4.1 General Clauses Relating to Rent ......................... 3
Section 4.2 Basic Rent ............................................... 4
Section 4.3 Additional Rent .......................................... 5
ARTICLE 5. THE PREMISES ................................................... 8
Section 5.1 Use of the Premises ...................................... 8
Section 5.2 Indemnification .......................................... 8
Section 5.3 Liens .................................................... 8
Section 5.4 Repairs, Compliance, Surrender ........................... 8
Section 5.5 Alterations .............................................. 9
Section 5.6 Tenant's Equipment ....................................... 9
Section 5.7 Insurance ................................................ 10
Section 5.8 Damage ................................................... 11
Section 5.9 Taking of the Premises ................................... 13
Section 5.10 Disposition of Insurance Proceeds and Awards ............. 13
Section 5.11 Reentry and Reserved Easements ........................... 15
Section 5.12 Signs on the Premises .................................... 16
ARTICLE 6. COMMON AREA .................................................... 17
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Section 6.1 The Common Area Defined .................................. 17
Section 6.2 Tenants Easement to Use the Common Area .................. 17
Section 6.3 Common Area Maintenance .................................. 17
Section 6.4 Indemnification .......................................... 18
Section 6.5 Insurance of Common Area ................................. 18
ARTICLE 7 INTEREST IN PREMISES TRANSFERS OF INTEREST ...................... 18
Section 7.1 Assignment of Tenant's Interest .......................... 19
Section 7.2 Covenants of Title and Use ............................... 20
Section 7.3 Estoppel Certificates .................................... 20
Section 7.4 Subordination and Nondisturbance ......................... 21
Section 7.5 Transfer of Landlord's Interest .......................... 21
ARTICLE 8. DEFAULTS, RIGHTS AND REMEDIES .................................. 21
Section 8.1 Events of Default of Tenant .............................. 21
Section 8.2 Rights and Remedies Upon Default ......................... 22
Section 8.3 Landlord's Right to Cure Potential Defaults .............. 23
Section 8.4 Limitations on Landlord's Liability ...................... 24
Section 8.5 Waivers .................................................. 25
ARTICLE 9. NOTICES, INTERPRETATION AND GOVERNING LAW ...................... 25
Section 9.1 Notices .................................................. 25
Section 9.2 Interpretations .......................................... 25
Section 9.3 Binding Effect ........................................... 26
Section 9.4 Governing Law ............................................ 26
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LEASE
LEASE dated as of July 18, 1996 between OAKWOOD AVENUE PARTNERS, as landlord,
and MEDIALINK PR DATA CORPORATION, as tenant, covering the premises located at
15 Oakwood Avenue, Norwalk, CT, and defined as the "Premises" in Section 1.2
hereof.
ARTICLE 1. THE PARTIES OF THE PREMISES AND
DEMISE OF THE PREMISES
Section 1.1 The Parties
(a) OAKWOOD AVENUE PARTNERS ("Landlord") is a Connecticut partnership with
offices at 15 Oakwood Avenue, Norwalk, CT.
(b) MEDIALINK PR DATA CORPORATION ("Tenant"), is a Delaware corporation
with offices at 708 Third Avenue, New York, NY 10017
Section 1.2 The Premises
The premises hereby leased to Tenant are a portion of the building situated
at 15 Oakwood Avenue, Norwalk, CT (the "Building") as follows:
(a) 6,500 square feet on the first floor, as shown on the floor plan
annexed hereto as Exhibit A-1;
(b) 2,680 square feet on the second floor, as shown on the floor plan
annexed hereto as Exhibit A-2; and
(c) 2,100 square feet in the basement of the Building, as shown on the
floor plan annexed hereto as Exhibit A-3.
Said premises, together with all fixtures or equipment now on hereafter attached
(except items not deemed to be included herein and removable by the Tenant in
accordance with this lease) are hereinafter referred to as the "Premises". The
Building, together with adjacent sidewalks, grounds, parking areas and the real
property upon which all of them are situated are hereinafter referred to as the
"Property".
Section 1.3 Demise
Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord the
Premises, for the term, at the rental and subject to the terms and conditions
hereinafter provided in this
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lease.
ARTICLE 2. PREPARATION OF THE PREMISES
Section 2.1 "As Is" Condition
(a) Tenant has examined the Premises and agrees to accept the same in their
condition and state of repair existing on the date hereof, subject to normal
wear and tear and to the removal therefrom of the property of the existing
tenant or occupant, and understands and agrees that the Landlord shall not be
required to perform any work, supply any materials or incur any expense to
prepare the Premises for Tenant's occupancy except as provided in section
2.1(c). The Premises shall be deemed ready for occupancy on the date hereof.
(b) Notwithstanding the foregoing, Landlord represents and warrants that,
on the date hereof,
(i) the heating, ventilating, air conditioning and plumbing systems
serving the Premises are in working order and the roof of the Building is free
of leaks, and
(ii) to the best of Landlord's knowledge, the Building is in material
compliance with the requirements of the Americans With Disabilities Act, as now
in effect, and Landlord agrees to indemnify Tenant for any costs which Tenant
may be obligated to incur to remedy any noncompliance existing on the date
hereof.
(c) Landlord agrees that it shall be, within 60 days after the Tenant
occupies the Premises, have the hallways within the Premises painted (in a color
selected by Tenant and reasonably acceptable to Landlord) and re-carpeted (using
a carpeting of equivalent quality to that presently in the hallways, in a color
selected by Tenant and reasonably acceptable to Landlord). The cost of materials
and labor for performance of such work by Landlord shall not be included in
Building Expenses for the Base Year (as such terms are defined below).
Section 2.2 Fixtures and Improvements
(a) All fixtures, equipment, improvements and appurtenances attached to or
build into the Premises shall be deemed a part of the Premises and shall be
deemed the property of the Landlord.
(b) All movable partitions, other business and trade fixtures, furnishings,
furniture, machinery and equipment located in the Premises and acquired by the
Tenant without expense to the Landlord ("Tenant's Property"), which can be
removed without damage to the Building, shall
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remain the property of the Tenant and, except as otherwise prohibited by this
lease and so long as Tenant is not in default hereunder, may be removed by
Tenant at any time during the term of this lease, provided, however, that if any
Tenant's Property is removed, Tenant shall promptly upon demand of Landlord pay
the cost of repairing any damage to the Premises or to the Building resulting
from such removal.
ARTICLE 3. TERM
Section 3.1 The Term Defined; Extensions of the Term
(a) The Term shall begin on the date of this Lease (the "Commencement
Date") and shall end on the third anniversary of the Commencement Date (the
"Expiration Date").
(b) Tenant shall have the option to extend the Term for a period of 2 years
by giving notice of the exercise of the option at any time prior to the 180th
day before the originally fixed Expiration date. Except as otherwise provided,
all provisions of this Lease shall prevail during each extension period.
Notwithstanding anything to the contrary, after the expiration of the extension
period, Tenant shall have no further option to extend the Term. If this Lease is
validly cancelled, Tenant's option to extend the Term shall be cancelled also.
(c) If the Term is extended, "Expiration Date" shall mean the date to which
it is extended. If this Lease is cancelled before the Expiration Date either as
originally fixed or as extended, "Expiration Date" shall mean the effective
date of the cancellation.
Section 3.2 Holdover
If Tenant shall continue its occupancy of the Premises after the Expiration
Date, the occupancy shall not be deemed to extend or renew the Term, and the
tenancy shall constitute a tenancy from month to month on all of the terms of
this Lease, except that Basic Rent shall be charged at the rate equal to 150% of
the Basic Rent herein for each month, or portion thereof, of continued
occupancy.
ARTICLE 4. RENT
Section 4.1 General Clauses Relating to Rent
(a) "Rent" means Basic Rent and Additional Rent.
(b) Rent shall be paid without notice, demand, counterclaim, offset,
deduction, defense, or abatement.
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(c) Rent shall be payable at Landlord's address set forth in Section 1.1 or
at any other address Landlord designates by written notice to Tenant.
(d) "Lease Year" shall mean each of the following periods. The first Lease
Year shall begin on the Commencement Date and end on the last day of the month
in which the first anniversary of the Commencement Date occurs. Each subsequent
Lease Year shall begin on the day after the expiration of the previous Lease
Year and, except for the last Lease Year, shall end on the first anniversary of
the day on which the previous Lease Year expires. The last Lease Year shall end
on the Expiration Date.
Section 4.2 Basic Rent
Tenant shall pay Basic Rent to Landlord in accordance with the following:
(a) Basic Rent shall be payable during each Lease Year of the Term at the
following annual rates:
Applicable Lease Year Amount Monthly
--------------------- ------ -------
First, second and third $174,000 $14,500
Fourth and fifth 174,000 14,500
(extension term if elected)
(b)(i) Basic Rent shall be payable in equal monthly installments as set
forth above except for installments prorated for partial months.
(ii) If the Commencement Date is the first day of a month, each
installment shall be due in advance on the first day of each month during the
Term.
(iii) If the Commencement Date is not the first day of a month, the
following shall apply:
(x) The installment of Basic Rent for the period that begins on
the Commencement Date and ends on the last day of the month in which the
Commencement Date occurs shall be paid on the Commencement Date. That
installment shall be the portion of a full month's installment that the
number of days of that month which occur during the Term bear to the number
of days of that month.
(y) Each subsequent installment shall be due in advance on the
first day of each month during the Term.
(iv) If the Expiration Date is not the last day of a month, the
following shall apply:
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The installment of Basic Rent for the period that begins on the first day
of the last month of the Term and ends on the Expiration Date shall be the
portion of a full month's installment that the number of days of that month
which occur during the Term bear to the number of days of that month.
Section 4.3 Additional Rent
Tenant shall pay Additional Rent to Landlord during the Term in accordance
with the following:
(a) (i) "Additional Rent" means Tenant's Pro Rata Share of Impositions and
Building Expenses (as such terms are defined below) in excess of Impositions and
Building Expenses paid or incurred by the Landlord during the Base Year.
(ii) "Base Year" means the fiscal year from July 1, 1996, to June 30,
1997.
(iii) "Pro Rata Share" is a fraction, the numerator of which is the
floor area of the Premises and the denominator of which is the floor area of all
rentable space within the Building. Landlord and Tenant acknowledge and agree
that, as of the Commencement Date, Tenant's Pro Rata Share is 86%.
(b) (i) "Impositions" means real estate taxes, assessments and governmental
charges assessed, levied or imposed against the Property. Impositions include
real estate taxes, assessments, and other governmental charges which are
special, extraordinary, and unforeseen.
(ii) Assessments shall be included in, or excluded from, Impositions
in accordance with the following principles:
(x) "Impositions" shall exclude assessments with respect to
public improvements made before the date of this lease and any assessment
which is a lien against the Property as of the date of this Lease. Landlord
represents that it is not aware of any assessments pending on the date
hereof, and that there are no tax abatements or concessions affecting the
Building which are scheduled to expire during the term of this Lease (or
any extension thereof).
(y) If an assessment that is not excluded from Impositions by
clause (x) is payable in installments and Landlord elects the installment
method of payment, Impositions shall include only the installments that
come due during the Term and interest payable with respect to these
installments. If an assessment that is not excluded from Impositions by
clause (x) is payable in installments and Landlord does not elect the
installment method of payment, Impositions shall include only an amount
equal to the installments that would have come due during the Term had
Landlord elected the installment method of payment and interest that would
have been payable with respect to
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these installments.
(iii) (x) "Impositions" shall exclude income, excess profits, excise,
gift, franchise, estate, transfer, recording, mortgage or inheritance taxes
other than "substitute taxes" as defined in clause (y). Impositions shall
include substitute taxes.
(y) A "substitute tax" is a tax or governmental charge imposed on
property owners as a class as a complete or partial substitute for real
estate taxes or betterment assessments.
(iv) Tenant's Pro Rata Share of Impositions payable with respect to
any period during which the term of this Lease begins or ends shall be
apportioned equitably between Landlord and Tenant.
(c) (i) "Building Expenses" means one hundred (100%) percent of bona fide
expenses incurred in connection with the operation of the Building and the
maintenance of the Common Area. These expenses include the cost of repairs,
liability and property insurance, illumination, cleaning of the Common Area,
landscape maintenance, snow removal and sanding; the cost of all charges for
heat, ventilation and air conditioning, including any gas or fuel oil; the cost
of water, sewer and electrical charges for the Building that are not allocable
to the consumption or use of an occupant of the Building; painting of
non-tenanted areas; paving and repair of parking lot, steps and walks; cost of
compliance with any Federal, state, local or municipal laws or ordinances
affecting the Property; and the cost of performing any other services
customarily performed by landlords with respect to common areas of similar
buildings that Landlord performs with respect to the Common Area; except that
Building Expenses shall not include the cost of a managing agent.
(ii) (x) Landlord shall furnish copies of invoices with respect to
Building Expenses to Tenant within a reasonable time after Tenant requests
them.
(y) Landlord shall maintain accurate records of Building
Expenses. The records may be kept in the form of books of account, cash
register tapes or computer memory. The records shall be kept at Landlord's
principal office. Landlord shall advise Tenant of the location of
Landlord's principal office promptly after Tenant requests the information.
Records shall be maintained until the first anniversary of the date on
which Landlord sends its statement with respect to the annual charges for
Building Expenses pursuant to part (iii).
(iii) Within ninety days after each Lease Year, Landlord shall send a
statement to Tenant setting forth the amount of Building Expenses and
Impositions, the amount of the increase, if any, over Building Expenses and
Impositions during the Base Year and Tenant's Pro Rata Share of such increased
amount. The statement shall be certified as complete and correct by an officer
of a corporate landlord or a partner of a partnership landlord.
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(iv) Until the first anniversary of the date on which each statement
is rendered, Tenant shall have the right to inspect and audit all records of
Landlord with respect to Building Expenses and Impositions for the period as to
which the statement is rendered. If Tenant's representatives request printouts
of any such records maintained in computer memory during any inspection or
audit, Landlord shall deliver the printouts to Tenant's representatives.
Tenant's representatives may make copies of extracts from Landlord's records
during the course of any inspection or audit. Tenant shall reimburse Landlord
for the reasonable cost of the printouts and copies.
(v) If Tenant shall fail to inspect or audit the records for any Lease
Year before the first anniversary of the date on which Landlord renders the
statement for the Lease Year, the statement shall be deemed to be accurate
conclusively. If Tenant shall inspect or audit the records for any Lease Year
before the first anniversary of the date on which Landlord renders the statement
for the Lease year, the statement for the Lease Year shall be deemed to be
accurate conclusively on the first anniversary date except with respect to any
issues arising from the inspection or audit as to which Tenant shall have given
notice to Landlord before the first anniversary date.
(vi) If the amount of Impositions and/or Building Expenses indicated
on any statement is overstated by more than five (5%) percent, Landlord shall
promptly reimburse Tenant for the reasonable cost of the audit and inspection.
Landlord shall promptly reimburse Tenant for any amount paid by Tenant and which
should not have been paid with interest at the "Applicable Rate" (as defined in
Section 8.3).
(d) Installments of Additional Rent shall be paid to Landlord as follows:
(i) Tenant shall pay monthly installments to Landlord on account of
Additional Rent. The installments shall be paid on the first day of each month
during the Term, beginning with the first month of the second Lease Year. During
the portion of the second and subsequent Lease Years prior to the furnishing by
the Landlord of the statement of increases in Building Expenses and Impositions
pursuant to section 4.3(c)(iii), installments shall be determined by Landlord in
Landlord's reasonable discretion based upon Landlord's estimate of the increase
in Impositions and Building Expenses over the amount of such costs during the
Base Year. Upon furnishing of said statement, the amount of installments of
Additional Rent for the remainder of the Second Lease Year shall be adjusted to
reflect overpayments or underpayments.
(ii) If the installments payable with respect to any Lease Year shall
exceed Additional Rent for the Lease Year, Landlord shall refund the excess to
Tenant promptly after Additional Rent for the Lease Year is determined. If
Additional Rent for any Lease Year shall exceed the installments payable with
respect to the Lease Year, Tenant shall reimburse Landlord for the excess
promptly after Landlord renders a bill for the excess.
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ARTICLE 5. THE PREMISES
Section 5.1 Use of the Premises
(a) Tenant shall use and occupy the Premises for executive and general
offices for the transaction of Tenant's business, and for no other purpose.
(b) If any governmental license or permit shall be required for the proper
and lawful conduct of Tenant's business in the Premises, and of failure to
secure such license or permit would in any way affect Landlord or the Property,
then Tenant, at its sole cost and expense, shall duly procure and thereafter
maintain such license or permit and submit the same for inspection by the
Landlord. Tenant shall at all times comply with the terms and conditions of such
license or permit.
(c) Tenant shall not at any time use or occupy, or permit anyone to use or
occupy, the Premises, or do or permit anything to be done in the Premises, in
violation of the certificate of occupancy of the Building. Landlord represents
and warrants that the use of the Premises for executive and general office
purposes is not in violation of the certificate of occupancy of the Building.
Section 5.2 Indemnification
(a) Tenant indemnifies Landlord, each partner of Landlord, and each
employee of Landlord against any loss, liability, or damages to third parties as
a result of any personal injury or property damage that occurs in the Premises
except to the extent that the same is a result of Landlord's negligence.
(b) Tenant shall defend any lawsuits with respect to claims for loss,
liability or damages against which the indemnity provided in subsection (a)
applies and shall pay any judgments which result from the lawsuits. "Lawsuits"
includes arbitration proceedings and administrative proceedings and all other
governmental and quasi-governmental proceedings. "Liabilities" includes the fees
and disbursements of attorneys and witnesses.
Section 5.3 Liens
If a lien shall encumber the Premises or the Property as a result of work
done or authorized by Tenant, Tenant shall discharge the lien within thirty days
after Tenant becomes aware of the existence of the lien by paying the amount
claimed to be due or by procuring the discharge of such lien by deposit or
bonding proceedings.
Section 5.4 Repairs, Compliance, Surrender
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(a) Except as provided in subsection (b) and in Sections 5.8 and 5.9,
Tenant shall make all nonstructural repairs and comply with all legal
requirements and Insurance Requirements applicable to the Premises. "Insurance
Requirements" is defined in Section 5.7. Landlord shall be responsible for all
structural repairs.
(b) On the Expiration Date, Tenant shall surrender the Premises in the same
state of repair as Tenant is required to maintain them in accordance with this
Section except for ordinary wear and tear and damage by fire or catastrophe.
Upon surrender, Tenant shall comply with subsections 5.6(c) and 5.6(d).
(d) "Repair" means repair and replace or repair and replacement as context
may require.
Section 5.5 Alterations
(a) Except as provided in subsection (b), Tenant shall be entitled to make
nonstructural alterations to the Premises. Tenant shall not make structural
alterations to the Premises.
(b) (i) Tenant shall not make any alteration to the Premises which impairs
the safety of the Premises, which violates any legal requirement or Insurance
Requirement, or which materially changes the character or materially lessens the
value of the Building.
(ii) Tenant shall not make any alteration to the Premises unless it
gives Landlord at least thirty days' prior notice. The notice shall be
accompanied by detailed specifications and working drawings describing and
illustrating the proposed alteration.
(c) All alterations performed by Tenant shall be performed in a good and
workmanlike manner.
(d) Within thirty days after the substantial completion of any alteration,
Tenant shall prepare a set of "as built" plans and specifications describing and
illustrating the effect of the alteration on the Premises in reasonable detail.
The "as built" plans and specifications shall be delivered to Landlord within
sixty days after substantial completion of the alteration.
(e) Alterations shall be considered to be part of the Premises but shall be
the property of Tenant until the Expiration Date. Upon the Expiration Date,
alterations shall become the property of Landlord.
Section 5.6 Tenant's Equipment
(a) "Tenant's Equipment" means all fixtures, machinery, equipment,
furniture and furnishings (whether or not affixed to the Premises) installed and
maintained by Tenant for use in
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connection with the operation of its business as distinguished from the
operation of the Premises as a real estate unit. Heating, ventilating, air
conditioning, plumbing, electrical, detection, and illumination equipment shall
not be considered to be Tenant's Equipment.
(b) Tenant shall be entitled to affix Tenant's Equipment to, install
Tenant's Equipment in, and remove Tenant's Equipment from, the Premises.
Tenant's Equipment shall be the property of Tenant and shall not be part of the
Premises or subject to this Lease.
(c) Tenant shall remove Tenant's Equipment from the Premises on or before
the Expiration Date.
(d) Upon removal of Tenant's Equipment, Tenant shall repair any damage to
the Premises which shall have resulted from affixing, installing, or removing
Tenant's Equipment.
Section 5.7 Insurance
(a) Landlord shall carry an "All Risk" insurance policy or a fire insurance
policy with respect to the Premises. If Landlord elects to carry a fire
insurance policy Landlord shall also carry the following types of coverage
pursuant to endorsements or separate policies: "Extended Coverage," "Vandalism
and Malicious Mischief," and "Difference in Conditions."
(b) Tenant shall maintain public liability and property damage insurance
with respect to the Premises. The insurance policy that provides this coverage
shall include a contractual liability endorsement. The coverage limits shall be
at least One Million ($1,000,000.00) Dollars for each occurrence with respect to
bodily injury and wrongful death coverage and at least Five Hundred Thousand
($500,000.00) Dollars for each occurrence with respect to property damage
coverage.
(c) (i) Each insurance policy obtained by Landlord or Tenant hereunder or
under any other provision of this lease shall be issued by an insurance company
reasonably satisfactory to Landlord and Tenant. An insurance company shall be
deemed to be satisfactory to Landlord and Tenant if A.M. Best Company of
Oldwick, New Jersey rates it as having a policyholder's rating of B+ or better.
Each insurance policy shall be reasonably satisfactory to Landlord and Tenant in
form and substance. Insurance carried pursuant to subsection (a) shall be
carried in favor of Landlord, any Mortgagee, and Tenant as their interests may
appear. Landlord shall be named as an additional insured with respect to
insurance carried under subsection (b). The insurance required by this Section
may be included in general coverage under policies which also include the
coverage of other property in which Landlord or Tenant has, or Landlord's or
Tenant's affiliates have, an insurable interest.
(ii) Each insurance policy may contain customary "deductible"
provisions that are reasonably satisfactory to Landlord and Tenant.
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(d) Each insurance policy carried under subsection (a) or a certificate
with respect to the policy shall be delivered to Tenant. Each insurance policy
carried under subsection (b) or a certificate with respect to the policy shall
be delivered to Landlord.
(e) (i) Each insurance policy and certificate shall provide, in effect,
that the policy may not be cancelled, reduced in amount, or modified by the
insurer until at least thirty days after the insurer shall have notified
Landlord, Tenant, and any Mortgagee in writing by certified mail, return receipt
requested.
(ii) Each insurance policy and certificate shall provide, in effect,
that the policy will be renewed and further renewed on substantially the same
terms and conditions unless the insurer shall give Landlord, Tenant, and any
Mortgagee at least thirty days notice in writing, by certified mail, return
receipt requested, of the insurer's unwillingness to renew.
(f) Each Insurance policy shall contain provisions to the following effect:
(i) Losses shall be payable despite the negligence of any person
having an insurable interest in the Premises.
(ii) Losses shall be adjusted by Landlord subject to the approval of
Tenant and any Mortgagee, and "Insured Proceeds" shall be payable as provided in
Section 5.10.
(g) (i) "Insurance Requirements" means the requirements of an insurance
company that issues the fire insurance policy or All Risk policy required by
subsection (a).
(ii) "Insurance Proceeds" means the proceeds received on insurance
required by subsection (a) with respect to any damage to the Premises and any
amount excluded from the proceeds pursuant to any "deductible" provision of the
applicable policy less all expenses incurred in connection with collecting the
proceeds including the reasonable fees and disbursements of attorneys,
adjusters, appraisers, and expert witnesses. Landlord represents that on the
date hereof its insurance policy provides for a $1,000 deductible.
Section 5.8 Damage
If the Premises are damaged by fire or other catastrophe, the following
shall apply:
(a) Tenant shall notify Landlord of the damage promptly after the
occurrence.
(b) (i) If the damage occurs when the unexpired portion of the Term as then
constituted is more than twelve but less than twenty-four months and a
reasonable estimate of the cost of replacing the damage exceeds fifty (50%)
percent of a reasonable estimate of the cost of replacing all of the Premises,
each party shall have the option to cancel this Lease. If the damage occurs when
less than twelve months remain in the unexpired portion of the Term as then
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constituted and a reasonable estimate of the cost of replacing the damage
exceeds twenty-five (25%) percent of a reasonable estimate of the cost of
replacing all of the Premises, each party shall have the option to cancel this
Lease; provided, however, that if Tenant shall have exercised its option to
extend the term hereof prior to the date when such damage occurs, then the
provisions of the first sentence of this section 5.8(a)(i) shall apply.
(ii) A party may exercise an option granted pursuant to clause (x)
only by giving notice to the other on or before the sixtieth day after the
occurrence.
(c) (i) If this Lease is not cancelled Landlord shall repair the damage.
The repair shall be commenced promptly after the damage occurs and shall be
prosecuted diligently. However, if a party shall have the option to cancel with
respect to the occurrence, Landlord may delay the commencement of the repair
until the option is waived or until the time within which the option may be
exercised expires.
(ii) Landlord's liability pursuant to part (i) shall be limited to the
Insurance Proceeds with respect to the damage.
(d) Rent shall not abate even if the Premises are damaged.
(e) Insurance Proceeds shall be paid over to the Landlord in accordance
with Section 5.10.
(f) (i) (x) Landlord releases Tenant and Tenant's officers, directors,
employees, and agents from liability or responsibility for any loss or
damage to the Property which may arise as a result of a fire or any
other event with respect to which insurance is required to be carried
pursuant to subsection 5.7(a).
(y) Tenant releases Landlord, Landlord's partners and Landlord's
employees from liability or responsibility for any loss or damage to the
Premises. Tenant's Equipment and any of Tenant's merchandise or other
property which may arise as a result of a fire or any other event with
respect to which insurance is required to be carried pursuant to subsection
5.7(b).
(ii) (x) The releases shall apply not only to the liability and
responsibility of the parties to each other; they shall also extent to the
liability and responsibility of anyone claiming through or under a party as
a result of a right of subrogation.
(y) The releases shall not apply to loss or damage except loss or
damage with respect to which Insurance Proceeds are actually recovered.
(iii) (x) A release shall apply to an insurance policy only if the
policy contains a clause or endorsement to the effect that the release
shall not adversely affect or
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impair the policy. This clause or endorsement is referred to below as a
"waiver of subrogation."
(y) As long as the insurer of a party is willing to include a waiver
of subrogation in the policies insuring against the loss or damage referred
to in part (i) of this subsection without an extra charge, the party shall
cause the waiver of subrogation to be included in the policy. If an insurer
of a party is willing to include a waiver of subrogation in an insurance
policy only if an extra charge is paid, the party carrying the insurance
shall be required to cause the waiver of subrogation to be included in the
policy only if the other party pays the extra charge.
Section 5.9 Taking of the Premises
(a) (i) "Taking" means the taking or, or damage to, property as a result
of the exercise of a power of eminent domain or purchase under threat of the
exercise.
(ii) "Taking Date" means the date on which a condemning authority
shall have the right of possession of property pursuant to a Taking.
(iii) "Award" means the award for, or proceeds of, a Taking less all
fees and expenses incurred in connection with collecting the award or proceeds
including the reasonable fees and disbursements of attorneys, appraisers, and
expert witnesses.
(b) The following shall apply if all or part of the Premises are Taken:
(i) Landlord shall be entitled to the entire Award for any Taking of
the Premises.
(ii) Tenant waives any right to the value of its estate in the
Premises under this Lease.
(iii) Tenant shall be entitled to, and does not waive, its interest in
any Award with respect to moving and relocation expenses.
(iv) Tenant shall be entitled to, and does not waive its interest in
any Award for the value of its trade fixtures.
(v) Tenant shall be entitled to make a separate claim in any
condemnation proceeding with respect to the items referred to in section
5.9(b)(iii) and (iv).
(c) (i) If all of the Premises are Taken, this Lease shall be cancelled as
of the Taking Date.
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(ii) If any part of the Premises is Taken, Tenant shall have the
option to cancel this Lease by giving Landlord notice of cancellation within
ninety days after Landlord gives Tenant notice of the Taking.
(iii) (x) If part of the Premises is Taken when the unexpired portion
of the Term as then constituted is more than twelve but less than
twenty-four months and a reasonable estimate of the "cost of restoration"
exceeds fifty (50%) percent of a reasonable estimate of the "cost of
replacement" of all of the Premises, Landlord shall have the option to
cancel this Lease. If part of the Premises is Taken when the unexpired
portion of the Term as then constituted is less than twelve months and a
reasonable estimate of the "cost of restoration" exceeds twenty-five (25%)
percent of a reasonable estimate of the "cost of replacement" of all of the
Premises, Landlord shall have the option to cancel this Lease.
(y) Landlord may exercise an option to cancel pursuant to clause
(x) only by giving notice of exercise to Tenant on or before the ninetieth
day next following the Taking Date.
(z) The "cost of restoration" means the cost of restoring the
Premises in the portion of the Building that will not have been Taken to an
architectural unit that serves the same function as the Premises as
constituted immediately prior to the Taking with materials of like kind and
quality. The "cost of replacement" means the cost of replacing the Premises
with materials of like kind and quality. The cost of restoration and the
cost of replacement shall be determined as of the Taking Date. The cost of
restoration and replacement shall be determined by a professional cost
estimator selected by Landlord.
(d) The following shall apply if all or part of the Premises are Taken and
this lease is not cancelled.
(i) (x) Landlord shall restore the Premises to an architectural unit
as near as possible to its function and condition immediately prior to the
Taking. The restoration shall begin promptly after the Taking Date and
shall be prosecuted diligently. But if a party shall have an option to
cancel with respect to the Taking, Landlord may delay the beginning of the
restoration until the option is waived or until the time within which the
option may be exercised expires.
(y) Landlord's liability under clause (x) shall be limited to the
Award.
(ii) The Award shall be paid to the Landlord in accordance with
Section 5.10.
(iii) The annual rate of Basic Rent shall be reduced by a fraction,
the numerator of which shall be the difference between the floor area of the
Premises immediately prior to the Taking and the floor area of the Premises
after giving effect to the Taking and the denominator of
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which shall be the floor area of the Premises immediately prior to the Taking.
(iv) (x) If Tenant is deprived of the use of a part of the Premises
during the course of restoration, Basic Rent shall abate in accordance with
the following. A fraction of Basic Rent shall abate, the numerator of which
shall be the floor area of the part of the Premises which shall not have
been Taken but, which Tenant shall be prevented from using as a result of
the restoration, and the denominator of which shall be the floor area of
the Premises immediately after the Taking. The Rent abatement shall begin
on the first day on which Tenant is prevented from using that part of the
Premises and shall end on the earlier to occur of the sixtieth day next
following substantial completion of the restoration or the date on which
Tenant resumes the use of that part of the Premises for any purpose.
(y) If Tenant is not reasonably able to conduct business from the
Premises at all during the course of the restoration and if Tenant
completely discontinues the conduct of business from the Premises during
the course of the restoration, all Rent shall abate. The abatement shall
begin when the conduct of business is completely discontinued and shall end
on the earlier to occur of the sixtieth day next following substantial
completion of the restoration or the date on which Tenant resumes doing
business from any portion of the Premises.
Section 5.10 Disposition of Insurance Proceeds and Awards
(a) A "Mortgage" is a mortgage on the Property, the Building or the
Premises granted to a bank, insurance company, trust company, savings and loan
association, real estate investment trust, pension trust, governmental entity,
or similar institution or a private real estate lender. A "Mortgagee" is the
holder of Mortgage of the Property or Premises.
(b) Unless this lease is cancelled all Insurance Proceeds and Awards shall
be paid to the Landlord and shall be applied solely in accordance with this
Section.
(c) Unless this lease is cancelled, Landlord shall apply all Insurance
Proceeds and Awards first to the payment of the costs of repairs and/or the
costs of restoration which Landlord is obligated to make pursuant to this lease.
(d) Any balance of Insurance Proceeds or Awards after the cost of any
repair or restoration shall have been paid in full to Landlord and shall be
the sole property of Landlord.
Section 5.11 Reentry and Reserved Easements
(a) (i) Landlord may inspect the Premises during normal business hours
after giving reasonable notice to Tenant.
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(ii) Landlord may inspect the Premises at will if an Event of Default
shall have occurred and not have been cured.
(b) Landlord and any Mortgagee shall each be entitled to access to the
Premises for the purpose of carrying out Landlord's obligations under this Lease
and Landlord's obligation to comply with the provisions of any Mortgage.
(c) Landlord reserves an easement to use, replace, repair, alter and
maintain existing pipes, lines and conduits that are situated in the Premises
and that extend to other parts of the Building. Landlord reserves an easement to
determine that these existing pipes, lines and conduits shall remain in the
parts of the Premises in which they are now situated. Landlord reserves an
easement to install, use, replace, repair, alter, and maintain new pipes, lines
and conduits for utility services for the Building in the parts of the Premises
above the ceiling and behind sheetrock walls.
(d) Landlord and any Mortgagee may enter the Premises after Delivery of
Possession for the purposes specified in subsections (a), (b) and (c). Any entry
after Delivery of Possession shall be conducted with due regard for the business
being conducted in the Premises by Tenant. No entry after Delivery of Possession
shall unreasonably interfere with the conduct of Tenant's business. Except in an
emergency, a right of entry may be exercised after Delivery of Possession only
during business hours and only after five days notice to Tenant. References to
"Landlord" and to a "Mortgagee" in this section also embrace their employees,
contractors, and sub-contractors and employees of their contractors and
subcontractors.
Section 5.12 Signs on the Premises
(a) (i) Tenant may not display signs on the exterior of the Premises
without Landlord's consent, which consent shall not be unreasonably withheld or
delayed.
(ii) Tenant may provide interior signage, at Tenant's sole cost and
expense, of a size and character consistent with interior signage presently in
use in the Building.
(iii) If Landlord maintains a building directory inside or outside of
the Building, Landlord shall cause Tenant and its affiliates to be listed
thereon.
(b) Tenant shall not permit any sign situated in the interior or on the
exterior of the Premises to have blinking or flashing illumination that is
visible from the exterior of the Premises.
(c) Tenant shall obtain all permits and licenses required in connection
with any signs attached to the Premises. Landlord appoints Tenant as its
attorney-in-fact to execute any applications for the permits and licenses to the
extent Landlord's execution of the applications is required by law.
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ARTICLE 6. COMMON AREA
Section 6.1 The Common Area Defined
(a) "Common Area" means all interior and exterior common areas including,
without limitation, parking areas, driveways, building signs, landscaped areas,
paving, sidewalks, hallways, stairways, escalators, elevators, lobbies,
restrooms and other similar public areas and access ways, that are designated by
Landlord for the non-exclusive use of the tenants of the Building.
Section 6.2 Tenant's Easement to Use the Common Area
(a) (i) Landlord grants Tenant a nonexclusive easement to use the Common
Area and to permit Tenant's customers, employees and invitees to use the Common
Area. The easement may be exercised only in common with the other occupants of
the Building and their respective customers, employees and invitees. The
easement shall be subject to rights that are reserved by Landlord in accordance
with this section, to rights that have been granted to others in accordance with
this Lease, and to rights that may be granted in the future in accordance with
this Section. Landlord may not permit any other person to use the Common Area
except as provided in part (ii).
(ii) Landlord reserves the right to use, and to permit the holder of
any Mortgage to use, the Common Area in common with Tenant and other persons
authorized to use the Common Area. Landlord may permit employees, contractors
and invitees of Landlord and the holder of any Mortgage to use the Common Area
in common. Landlord may also grant utility easements over and under portions of
the Common Area to utility companies and governmental entities and to their
employees and contractors.
(b) Any use of the Common Area pursuant to this Section shall be conducted
with due regard for the business being conducted in the Premises and the other
premises situated in the Building.
Section 6.3 Common Area Maintenance
(a) (i) Landlord shall maintain the Common Area including its lighting
system, drainage system and pavement in good order and repair. Landlord shall
comply with all legal requirements and Insurance Requirements applicable to the
Common Area. Landlord shall keep the parts of the sanitary sewage and water
service systems of the Property that are situated in the Common Area in good
order and repair and in compliance with applicable legal requirements and
Insurance Requirements. Landlord shall provide customary janitorial, cleaning
and rubbish
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removal services for the Common Area.
(ii) Landlord shall remove snow and ice from the Common Area as
required for the business operations of the Tenant and other tenants in the
Building but only to the extent practicable under the circumstances. Landlord
may deposit accumulated ice and snow on portions of the Common Area as may be
appropriate under the circumstances. If ice removal is not practicable under the
circumstances, it will be sufficient for Landlord to spread sand, another
abrasive substance, or saline solution over the ice.
(b) Landlord shall keep the Common Area illuminated every day during which
Tenant is open for business from one-half hour before dusk until the earlier to
occur of 10:00 p.m. or one-half hour after all of Tenant's employees have
departed from the Premises.
Section 6.4 Indemnification
(a) (i) Except as provided in part (ii), Landlord shall indemnify Tenant
and its affiliates, officers, directors, stockholders and employees against any
loss, liability, or damages to third parties as a result of any personal injury
or property damage that occurs in the Common Area.
(ii) The indemnity shall not apply to loss, liability or damages with
respect to vehicles except for vehicles owned or operated by Landlord,
Landlord's employees, or Landlord's agents; to loss, liability or damages with
respect to arrests or apprehensions in the Common Area; or to loss, liability or
damages with respect to products.
(b) Landlord shall defend any lawsuits with respect to claims for loss,
liability or damages against which the indemnity provided in subsection (a)
applies and pay any judgments which result from the lawsuits. "Lawsuits"
includes arbitration proceedings and administrative proceedings and all other
governmental and quasi-governmental proceedings. "Liabilities" includes the fees
and disbursements of attorneys and witnesses.
Section 6.5 Insurance for Common Area
Landlord shall maintain public liability and property damage insurance with
respect to the Common Area. The insurance policy that provides this coverage
shall include a contractual liability endorsement. The coverage limits shall be
at least Two Million ($2,000,000.00) Dollars for each occurrence with respect to
bodily injury coverage and at least Five Hundred Thousand ($500,000.00) Dollars
for each occurrence with respect to property damage coverage.
ARTICLE 7. INTEREST IN THE PREMISES
TRANSFERS OF INTEREST
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Section 7.1 Assignment of Tenant's Interest
(a) (i) Tenant may not assign its leasehold estate under this Lease or
sublet all or any part of the Premises without Landlord's consent, which shall
not be unreasonably withheld or delayed. No assignment or subletting shall
relieve Tenant of any obligation under this Lease.
(ii) A sublease of all or more than fifty (50%) percent of the
Premises shall be regarded as an assignment of Tenant's leasehold estate in the
context of this Section.
(iii) (x) Except as provided in clause (y), the sale of any of the
stock of Tenant shall constitute an assignment of the leasehold estate in
the context of this Section if, after giving effect to all previous
transfers of the stock after the date of this Lease, more than fifty (50%)
percent of the stock of Tenant shall have been transferred.
(y) Clause (x) shall not apply to the sale of stock or to a
merger or consolidation of a public corporation; to the sale of a
subsidiary of a public corporation to its parent or another subsidiary of
the public corporation; to a merger or consolidation of a public
corporation with one or more of its subsidiaries; to a merger or
consolidation of one or more subsidiaries of a public corporation with each
other; to a transfer of shares among the then shareholders of Tenant or any
partnership, corporation or other entity controlled by, controlling or
under common control with Tenant; to any member of a shareholder's family
or any trust or partnership organized primarily for the benefit of such
shareholder's family; or pursuant to a public offering of the capital stock
of Tenant or Tenant's parent corporation.
(b) (i) If Tenant wishes to assign its interest hereunder or sublet all or
any part of the Premises, Tenant shall give notice to Landlord. The notice shall
specify the name and address of the proposed assignee/subtenant, any
consideration for the assignment, the period during which the consideration is
to be paid, any work or allowances to which the assignee may be entitled, and
true copies of all documents relating to the proposed transaction. In the case
of a sublease that constitutes an assignment under subsection (a), the notice
shall also specify the rent and other charges payable and the term of the
sublease.
(ii) Landlord shall have the option to cancel this Lease during the
sixty day period after the date on which it receives notice of the proposed
assignment. The option may be exercised only by giving notice to Tenant.
(c) Notwithstanding anything to the contrary, no assignment of the Tenant's
leasehold estate under this Lease to a subsidiary or affiliate of a public
corporation shall be valid unless the parent corporation guarantees full
compliance by the assignee of all of the obligations of the Tenant under this
Lease, and no assignment to any person shall be valid unless the assignee
assumes all of the obligations of the Tenant under this Lease.
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Section 7.2 Covenants of Title and Use
Landlord represents and warrants to Tenant as follows:
(a) Landlord owns a fee simple estate in the Property subject to no liens
other than the exceptions set forth in Exhibit B.
(b) Landlord has the right to execute this Lease.
(c) The execution of this Lease by Landlord does not require the approval
or joinder of any other person.
(d) Unless an Event of Default shall occur, Tenant may peaceably and
quietly occupy the Premises in accordance with the terms of this Lease without
hindrance or molestation. Landlord shall defend Tenant's right to occupy and use
the Premises.
Section 7.3 Estoppel Certificates
(a) A party shall deliver an Estoppel Certificate to the other party within
twenty days after the other party requests it.
(b) An Estoppel Certificate shall set forth the following statements to the
best of the knowledge of the person certifying.
(c) (i) An Estoppel Certificate shall state whether this Lease shall have
been supplemented or amended. If this Lease shall have been supplemented or
amended, the certificate shall specify the manner in which it shall have been
supplemented or amended.
(ii) An Estoppel Certificate shall state whether this Lease is in full
force and effect. If the certificate shall state that this Lease is not in full
force and effect, it shall also state why it is not.
(iii) An Estoppel Certificate shall specify the date to which Rent and
other charges have been paid.
(iv) An Estoppel Certificate shall state whether the party contends
that an Event of Default shall have occurred and continues to exist with respect
to the other party. If the certificate states that an Event of Default shall
have occurred and continues to exist with respect to the other party, the
certificate shall also specify the nature and extent of the Event of Default.
(d) An Estoppel Certificate may be relied upon by the party requesting it
or by any other person to which it may be exhibited or delivered. The contents
of an Estoppel Certificate shall be binding on the party on behalf of which it
shall have been executed.
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Section 7.4 Subordination and Nondisturbance
(a) Tenant shall subordinate the lien of this Lease to the lien of each
Mortgage which may encumber the Premises from time to time, and agree to attorn
to the first Mortgagee as long as the Mortgagee executes a subordination and
attornment agreement that contains the nondisturbance agreement provided for in
subsection (b).
(b) The nondisturbance agreement provisions required by subsection (a)
shall contain the following provision: "As long as an Event of Default shall not
have occurred under the Lease, the following shall apply:
(i) Mortgagee recognizes the Lease and shall not disaffirm the Lease
even if Mortgagee shall foreclose the Mortgage or the Premises shall be
sold pursuant to a foreclosure sale.
(ii) Tenant shall be entitled to use and occupy the Premises and use
the Common Area in accordance with the terms of the Lease.
(iii) Tenant shall be entitled to all of its rights under the Lease.
(iv) Insurance Proceeds and Awards shall be disbursed as provided in
the Lease.
(v) Tenant's possession of the Premises shall not be disturbed by
Mortgagee or by any person whose rights are acquired as a result of
foreclosure proceedings."
Section 7.5 Transfer of Landlord's Interest
Each person who owns the Property and sells the Property to a purchaser
that assumes all of the liabilities of Landlord under this Lease from and after
the date of the transfer other than accrued liabilities shall be relieved of all
liabilities under this Lease from and after the date of the transfer other than
accrued liabilities.
ARTICLE 8. DEFAULTS, RIGHTS AND REMEDIES
Section 8.1 Events of Default of Tenant
(a) Each of the following events shall constitute an "Event of Default" by
Tenant under this Lease:
(i) If Tenant fails to pay any Rent when due and the failure continues
for five
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days after Landlord gives notice of the failure to Tenant.
(ii) If Tenant fails to comply with any of its other obligations under
this Lease and the failure continues for a "Cure Period" after Landlord gives
notice of the failure to Tenant.
(b) (i) Except as provided below, the "Cure Period" of part (ii) of
subsection (a) shall be thirty days.
(ii) If Tenant is unable to begin to cure the failure within thirty
days by the exercise of reasonable diligence, the Cure Period shall begin on the
date the notice of failure is given, and the Cure Period shall continue as long
as Tenant takes all steps that are practical under the circumstances to begin
the cure and thereafter diligently prosecutes the cure to completion.
(iii) The following shall apply if Tenant is able to begin to cure the
failure but is unable to complete the cure within thirty days by the exercise of
reasonable diligence. The Cure Period shall begin on the earlier to occur of the
date on which Tenant begins to cure the failure or the thirtieth day after the
notice of failure is given. If Tenant begins to cure the failure within thirty
days after the date on which the notice of failure is given, the Cure Period
shall continue as long as Tenant diligently prosecutes the cure; otherwise, the
Cure Period shall end on the thirtieth day after the notice of failure is given.
Section 8.2 Rights and Remedies Upon Default
If an Event of Default occurs with respect to Tenant, Landlord shall be
entitled to take any action it deems advisable under one or more of the
provisions of this Section 8.2.
(a) Landlord may proceed as it deems advisable to enforce the provisions of
this Lease at law or in equity.
(b) Landlord may give notice to Tenant that the term of this Lease shall
end on a date specified in the notice. If Landlord gives the notice, the term of
this Lease including Tenant's rights under subsection 3.1(b) shall end on the
date specified, and this Lease shall terminate on the date specified.
Notwithstanding the expiration of the term and the termination of the Lease,
Tenant's liability for its failure to comply with all provisions of this Lease
shall continue.
(c) Landlord may reenter the Premises and may repossess the Premises. The
reentry and/or repossession may be effected by summary proceedings, ejectment or
otherwise. Landlord may dispossess Tenant and may remove Tenant from the
Premises without further notice to Tenant. Tenant waives any right to notice of
Landlord's intention to reenter provided for by any present or future law.
Tenant waives any right to reenter the Premises or restore the operation of this
Lease.
(d) Landlord may relet all or part of the Premises. The term of the
reletting may be as
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long as Landlord may determine. A lease executed by Landlord in accordance with
this subsection may provide for extensions or renewals of the term. The term of
any reletting and the period by which the term may be extended may be longer or
shorter than the period which would have constituted the balance of the Term of
this Lease if this Lease had not been terminated. Landlord shall not be required
to relet the Premises or to collect any rent in connection with a reletting.
(e) (i) Tenant shall pay liquidated and agreed "Current Damages" to
Landlord. "Current Damages" shall be paid on the first day of each month during
the period beginning on the effective date of the termination and ending on the
first day of the month next following the date that would have been the
Expiration Date if this Lease had not been terminated.
(ii) (x) "Current Damages" for each month shall be the difference
between "Current Debits" and Current Credits."
(y) "Current Debits" means the sum of (1) the installment of
Basic Rent which would have been payable on the first day of any month; (2)
any Rent payable with respect to any period before the effective date of
termination that shall have been still unpaid; (3) any unpaid Additional
Rent or charges which would have been payable by Tenant on or before that
date if this Lease had not been terminated; and (4) Landlord's unreimbursed
expenses of reentering, repossessing and reletting the Premises. Expenses
of reentering, repossessing and reletting include attorneys' reasonable
fees and disbursements; brokerage commissions; and the cost of painting,
altering and dividing.
(z) "Current Credits" means any rent received by Landlord during
the previous month with respect to reletting the Premises.
Section 8.3 Landlord's Right to Cure Potential Defaults
(a) (i) If Tenant shall fail to perform any of its obligations under this
Lease, and the failure shall continue after the expiration of a "Self Help
Period," Landlord shall have the right to perform the obligation for the account
and at the expense of Tenant.
(ii) (x) Except as provided below, a "Self-Help Period" shall be
thirty days after Landlord gives notice of the failure to Tenant.
(y) The following shall apply in the case of an emergency:
(1) Except as provided in subdivision (3), the Self-Help
Period shall begin when Landlord gives notice of the failure to Tenant
and shall end when appropriate under the circumstances.
(2) Notices need not be given in accordance with Section
9.1,
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and telephone or oral notice to Tenant's office manager shall be
sufficient.
(3) If there is a reasonable danger of irreparable harm
unless prompt action is taken and it is impractical to give any notice
under the circumstances, no notice shall be necessary, and the
Self-Help Period shall be waived.
(z) The following shall apply if the failure cannot be cured in
thirty days by the exercise of reasonable diligence except in the case of
an emergency:
(1) If Tenant is unable to begin the cure within thirty days
by the exercise of reasonable diligence, the Self-Help Period shall
begin when Landlord gives notice of the failure to Tenant and shall
continue as long as Tenant takes all practical steps to begin the cure
and thereafter diligently prosecutes the cure to completion.
(2) The following shall apply if Tenant is able to begin the
cure within thirty days by the exercise of reasonable diligence. The
Self-Help Period shall begin when Landlord gives notice of the failure
to Tenant. If Tenant begins the cure within thirty days, the Self-Help
Period shall continue as long as Tenant diligently prosecutes the
cure. If Tenant does not begin the cure within thirty days, the
Self-Help Period shall end on the thirtieth day after Landlord gives
notice of the failure to Tenant.
(b) The following shall apply if Landlord performs any of Tenant's
obligations in accordance with subsection (a): Tenant shall reimburse Landlord
for the expenses of performing the obligation. Landlord shall be entitled to
interest at the "Applicable Rate" on the expenses of performing the obligation.
Interest shall be payable from the dates on which Landlord shall have incurred
the applicable expenses to the date of reimbursement.
(c) If Tenant fails or refuses to reimburse Landlord for the expenses with
interest at the Applicable Rate, the reasonable expenses and interest shall be
added to the next installment of Basic Rent.
(d) "Applicable Rent" means the lower of (i) a fluctuating rate equal to
four (4%) percent per annum plus the published prime rate of Chase Manhattan
Bank, N.A. or (ii) the highest rate legally permissible under the circumstances.
Section 8.4 Limitation on Landlord's Liability
(a) Landlord shall have no personal liability with respect to any of the
provisions of this Lease or any obligation arising from, or in connection with,
this Lease. If Landlord or any successor in interest shall be a joint venture,
tenancy-in-common, firm, or partnership, the mem-
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bers of the joint venture, tenancy-in-common, firm or partnership shall have no
personal liability with respect to any of the provisions of this Lease or any
obligation arising from or in connection with this Lease.
(b) If Tenant shall assert a claim against Landlord and Landlord is the
owner of the Property at the time the claim is asserted, Tenant shall look
solely to the Landlord's ownership estate in the Property for the satisfaction
of all remedies of Tenant. If Tenant shall assert a claim against Landlord and
Landlord is the owner of a leasehold estate in the Property at the time the
claim is asserted, Tenant shall look solely to Landlord's leasehold estate in
the Property for the satisfaction of all remedies of Tenant.
Section 8.5 Waivers
Tenant waives any right of redemption on reentry. Landlord and Tenant waive
any right to trial by jury.
ARTICLE 9. NOTICES; INTERPRETATION AND GOVERNING LAW
Section 9.1 Notices
(a) Notices given under this instrument shall be valid only if they are in
writing and properly mailed. A notice shall be properly mailed only if it is
mailed by certified or registered mail, if postage is prepaid, and if the notice
is properly addressed. A notice to a party shall be properly addressed only if
it is addressed to the address of the party set forth in Section 1.1 or to any
other address the party may designate by giving notice to the other party.
(b) Properly mailed notices that are delivered to the place to which they
are properly addressed shall be effective when received. If a properly mailed
notice is delivered to the place to which it is properly addressed and is
refused, the notice shall be effective when delivered nevertheless.
Section 9.2 Interpretation
Captions and headings used in this instrument are for reference only. A
male or female person may be referred to in this instrument by a neuter pronoun.
A provision of this instrument which requires a party to perform an action shall
be construed so as to require the party to perform the action or to cause the
action to be performed. A provision of this instrument which prohibits a party
from performing an action shall be construed so as to prohibit the party from
performing the action or permitting others to perform the action. "Including"
means "including but not limited to". The singular includes the plural, and the
plural includes the singular. "Any" means "any and all". This instrument may not
be changed or cancelled orally. All exhibits to this instrument shall be deemed
to be a part of this instrument.
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Section 9.3 Binding Effect
This instrument shall be binding upon the parties and their respective
successors and assigns. The submission of an unexecuted copy of this instrument
shall not constitute an offer to be legally bound by the provisions of the
document submitted, and no party shall be bound by this instrument until it is
executed by both parties. This instrument has been executed in counterparts, and
each counterpart constitutes an original document.
Section 9.4 Governing Law
This instrument shall be governed by, and construed in accordance with, the
laws of the State of Connecticut.
IN WITNESS WHEREOF, each Landlord and Tenant has caused this Lease to be
executed, ensealed, and attested to by its respective duly authorized officers.
Landlord: OAKWOOD AVENUE PARTNERS
By: /s/ William Wubbenhorst
--------------------------------
Witness: General Partner
Attest:
Tenant: MEDIALINK PR DATA CORPORATION
By: /s/ J. Graeme McWhirter
--------------------------------
Witness:
Attest:
26
<PAGE>
Diagram of First Floor Plan
<PAGE>
Diagram of Second Floor Plan
<PAGE>
Diagram of Basement Plan
<PAGE>
INDEX
Lease dated September 21, 1994, Between
CLEMONS PROPERTIES PARTNERS, a limited partnership, as Agent, Landlord and
VIDEO BROADCASTING CORPORATION, as Tenant at
PREMISES: 708 Third Avenue, New York, New York
Portion of 9th Floor
Printed Provisions
- ------------------
Article Page
- ------- ----
Granting Clause (i)
1 Rent (i)
2 Use (i)
3 Alterations (i)
4 Repairs (ii)
5 Window Cleaning (ii)
6 Requirements of Law, Fire Insurance Floor Loads (iii)
7 Subordination (iii)
8 Property-Loss, Damage, Reimbursement, Indemnity (iv)
9 Destruction, Fire and Other Casualty (iv)
10 Eminent Domain (v)
11 Assignment, Mortgage, Etc. (v)
12 Access to Premises (v)
13 Vault, Vault Space, Area (vi)
14 Occupancy (vi)
15 Bankruptcy (vi)
16 Default (vii)
17 Remedies of Landlord and Waiver of Redemption (vii)
18 Fees and Expenses (viii)
19 No Representation by Landlord (viii)
20 End of Term (ix)
21 Quiet Enjoyment (ix)
22 Failure to Give Possession (ix)
23 No Waiver (ix)
24 Waiver of Trial by Jury (ix)
25 Inability to Perform (x)
26 Bills and Notices (x)
27 Services Provided by Landlord -
Water, Elevators, Heat, Cleaning, Air Conditioning (x)
28 Captions (xi)
29 Definitions (xi)
30 Adjacent Excavation-Shoring (xi)
31 Rules and Regulations (xi)
32 Security (xii)
33 Successors and Assigns (xii)
<PAGE>
Rider
Article Page
- ------- ----
35 Application of this Rider 1
36 Additional Definitions 1
37 Tenant's Changes - Supplementing Article 3 2
38 Adjustment of Rent 2
39 Determination of Dispute 5
40 Electricity 5
41 Assignment and Subletting 7
42 Air Conditioning - Supplement Article 28 9
43 Estoppel Certificate, Memorandum 9
44 Notice to Superior Lessors and Mortgagees 10
45 Qualifications to Use 10
46 Liability of Landlord 11
47 Consents 11
48 Preparation of the Demised Premises 11
49 Readiness for Occupancy 12
50 Brokers 12
51 Corporate Tenant and Agent of Landlord 12
52 Delivery and Execution of Lease 13
53 Renewal Term 13
54 Right of First Refusal 14
Exhibit A - Floor Plan
Exhibit B - Tenant's Plans
Exhibit C - Cleaning Specifications
<PAGE>
AGREEMENT OF LEASE, made as of this 21 day of September, 1994, between CLEMONS
PROPERTIES PARTNERS, a New York limited partnership, with offices at 708 Third
Avenue, New York, New York 10017, hereinafter referred to as LANDLORD, and VIDEO
BROADCASTING CORPORATION, a Delaware corporation, with offices at 708 Third
Avenue, New York, New York 10017, hereinafter referred to as TENANT.
Witnesseth: Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord that portion of the Tenant Occupancy Area on the ninth (9th) floor, as
per the Plan annexed hereto as Exhibit A, indicated by cross-hatch markings,
hereinafter called the "Demised Premises" or "Premises", consisting of an agreed
upon area of 10,220 rentable square feet in the Building known as 708 Third
Avenue, in the Borough of Manhattan, City of New York, for a term of ten (10)
years from the Substantial Completion Date (as defined in Article 49) (or until
such term shall sooner cease and expire as hereinafter provided) and to end on
the last day of the month in which the tenth anniversary of the Substantial
Completion Date occurs (the "Expiration Date") at an annual rental of Two
Hundred Twenty Thousand Seven Hundred Sixty-Four ($220,764) Dollars commencing
on the Substantial Completion Date (including Twenty-Eight Thousand Five Hundred
Nine ($28,509) Dollars for the value of electricity) through the day preceding
the first anniversary of the Substantial Completion Date; Three Hundred
Thirty-Two Thousand One Hundred Twenty-Four ($332,124) Dollars commencing on the
first anniversary of the Substantial Completion Date (including Twenty-Eight
Thousand Five Hundred Nine ($28,509) Dollars for the value of electricity) per
annum on a pro rata basis through September 30, 1996; Two Hundred Seventy-Four
Thousand Four Hundred Seven ($274,407) Dollars commencing on October 1, 1996
(including Twenty-Nine Thousand One Hundred Twenty-Seven ($29,127) Dollars for
the value of electricity) through the day preceding the sixth anniversary of the
Substantial Completion Date; and Two Hundred Ninety-Four Thousand Eight Hundred
Forty-Seven ($294,847) Dollars commencing on the sixth anniversary of the
Substantial Completion Date (including Twenty-Nine Thousand One Hundred
Twenty-Seven ($29,127) Dollars for the value of electricity) through the
Expiration Date. All rent for a partial month shall be prorated on a per diem
basis, which Tenant agrees to pay in lawful money of the United States (which
shall be legal tender in payment of all debts and dues, public and private, at
the time of payment) in equal monthly installments in advance on the first day
of each month during said term, at the office of Landlord or such other place as
Landlord may designate, without any set off or deduction, except as otherwise
provided in this Lease, except that Tenant shall pay the first monthly
installment on the execution hereof (unless this lease be a renewal).
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
RENT
1. Tenant shall pay the rent as above and as hereinafter provided.
OCCUPANCY
2. Tenant shall use and occupy Demised Premises for executive, general and
administrative purposes and as further described in Article 56.
ALTERATIONS
3. (a) Tenant shall make no changes in or to the Demised Premises of any
nature without Landlord's prior written consent. Subject to the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed, and to the provisions of this article, Tenant at Tenant's expense, may
make alterations, installations, additions or improvements which are
non-structural and which do not adversely affect the proper functioning of
utility services or plumbing and electrical lines, in or to the interior of the
Demised Premises by using contractors or mechanics first approved by Landlord.
All fixtures and all paneling, partitions, railings and like installations,
installed in the Premises at any time, either by Tenant or by Landlord in
Tenant's behalf, shall, upon installation become the property of Landlord and
shall remain upon and be surrendered with the Demised Premises. Nothing in this
article shall be construed to give Landlord title to or to prevent Tenant's
removal of trade fixtures, moveable office furniture and equipment, but upon
removal of any such from the Premises, Tenant shall immediately and at its
expense, repair any damage to the Demised Premises or the Building due to such
removal, reasonable wear and tear and casualty covered by insurance excepted.
All
(i)
<PAGE>
property required to be removed by Tenant at the end of the term remaining in
the Premises after Tenant's removal shall be deemed abandoned and may, at the
election of Landlord, either be retained as Landlord's property or may be
removed from the Premises by Landlord at Tenant's expense. Tenant shall, before
making any alterations, additions, installations or improvements, at its
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
approvals and certificates to Landlord and Tenant agrees to carry and will cause
Tenant's contractors and sub-contractors to carry such worker's compensation,
general liability, personal and property damage insurance as Landlord may
reasonably require. If any mechanic's lien is filed against the Demised
Premises, or the Building of which the same forms a part, for work claimed to
have been done for, or materials furnished to, Tenant, whether or not done
pursuant to this article, the same shall be discharged by Tenant within thirty
(30) days after notice at Tenant's expense, by filing the bond required by law.
(b) On the Expiration Date, Tenant, at Landlord's option, provided
Tenant has received fifteen (15) days' notice from Landlord, Tenant shall remove
from the Demised Premises computer installations, communication installations,
security systems, vaults, internal stairways, dumbwaiters, vertical and
horizontal transportation systems and other alterations or installations of a
similar character made by Tenant in the Demised Premises and Tenant shall
immediately, at its expense, repair any damage to the Demised Premises or the
Building due to such removal.
REPAIRS
4. Landlord shall maintain and repair the public portions of the Building,
both exterior and interior and make all structural repairs. Tenant shall,
throughout the term of this lease, take good care of the Demised Premises and
the fixtures and appurtenances therein and at Tenant's sole cost and expense,
make all non-structural repairs thereto as and when needed to preserve them in
good working order and condition, reasonable wear and tear, obsolescence and
damage from the elements, fire or other casualty and damage caused by Landlord
and its agents, employees or licensees, excepted. Notwithstanding the foregoing,
all damage or injury to the Demised Premises or to any other part of the
Building, or to its fixtures, equipment and appurtenances, whether requiring
structural or non-structural repairs, caused by or resulting from the negligence
or willful misconduct of Tenant, Tenant's servants, employees, invitees or
licensees, shall be repaired promptly by Tenant at its sole cost and expense, to
the satisfaction of Landlord reasonably exercised. Tenant shall also repair all
damage to the Building and the Demised Premises caused by the moving of Tenant's
fixtures, furniture or equipment. All the aforesaid repairs shall be of quality
or class equal to that existing immediately prior to such damage. If Tenant
fails after ten (10) business days' notice to proceed with due diligence to make
repairs required to be made by Tenant, the same may be made by the Landlord at
the reasonable expense of Tenant and the expenses thereof incurred by Landlord
shall be collectible as additional rent within thirty (30) days after rendition
of a bill or statement therefor. Tenant shall give Landlord notice of any
defective condition in any plumbing, heating system or electrical lines located
in, servicing or passing through the Demised Premises promptly after Tenant
becomes aware of same 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 as aforesaid. Except as specifically
provided in Article 9 or elsewhere in this lease, there shall be no allowance to
Tenant for a diminution 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 Demised
Premises or in and to the fixtures, appurtenances or equipment thereof. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other casualty which are dealt with in Article 9
hereof.
WINDOW CLEANING
5. Tenant will not clean, nor require, permit, suffer or allow any window
in the Demised Premises to be cleaned, from the outside in violation of Section
202 of the Labor Law or any other applicable law or of the rules of the Board of
Standards and Appeals, or of any other board or body having or asserting
jurisdiction.
(ii)
<PAGE>
REQUIREMENTS OF LAW, FIRE INSURANCE, FLOOR LOADS
6. Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws after the
Substantial Completion Date, orders and regulations of all state, federal,
municipal and local governments, departments, commissions and boards and any
direction of any public officer pursuant to law, and all orders, rules and
regulations of the New York Board of Fire Underwriters or any similar body which
shall impose any violation, order or duty upon Landlord or Tenant with respect
to the Demised Premises whether or not arising out of Tenant's use or manner of
use of the Premises. Landlord shall be responsible to comply with all present
and future laws, orders and regulations with regard to the areas of the Building
outside of the Demised Premises. Notwithstanding the foregoing, nothing herein
shall require Tenant to make structural repairs or alterations unless Tenant has
by its use, its manner of use of the Demised Premises or method of operation
therein, violated any such laws, ordinances, orders, rules, regulations or
requirements with respect thereto. Tenant may, after securing Landlord to
Landlord's satisfaction against all damages, interest, penalties and expenses,
including, but not limited to, reasonable attorneys' fees, by cash deposit or by
surety bond in an amount and in a company satisfactory to Landlord, contest and
appeal any such laws, ordinances, orders, rules, regulations or requirements
provided same is done with all reasonable promptness and provided such appeal
shall not subject Landlord to prosecution for a criminal offense or constitute a
default under any lease or mortgage under which Landlord may be obligated, or
cause the Demised Premises or any part thereof to be condemned or vacated.
Tenant shall not do or permit any act or thing to be done in or to the Demised
Premises which is contrary to law, or which will invalidate or be in conflict
with public liability, fire or other policies of insurance at any time carried
by or for the benefit of Landlord with respect to the Demised Premises or the
Building of which the Demised Premises form a part, or which shall or might
subject Landlord to any liability or responsibility to any person or for
property damage, nor shall Tenant keep anything in the Demised Premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization or other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the Building, nor use the
Premises in a manner which will increase the insurance rate for the Building or
any property located therein over that in effect on the commencement of Tenant's
occupancy. 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 article and if by reason of such failure the fire
insurance rate shall, at the beginning of this lease or at any time thereafter
be higher than it otherwise would be, then Tenant shall reimburse Landlord, as
additional rent hereunder, for that portion of all fire insurance premiums
thereafter paid by Landlord which shall have been charged because of such
failure by Tenant, and shall make such reimbursement upon the first day of the
month following such outlay by Landlord. In any action or proceeding wherein
Landlord and Tenant are parties a schedule or "make-up" of rate for the Building
or Demised Premises issued by the New York Fire Insurance Exchange, or other
body making fire insurance rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rate then applicable to said premises. Tenant shall not place a
load upon any floor of the Demised 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 installations shall be placed and
maintained by Tenant, at Tenant's expense, in settings sufficient, in Landlord's
reasonable judgment, to absorb and prevent vibration, noise and annoyance.
SUBORDINATION
7. This lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may now or hereinafter affect such leases or the real
property of which Demised Premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgage. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessee or by any mortgagee, affecting any lease or the real property
of which the Demised Premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Landlord may request.
(iii)
<PAGE>
PROPERTY -- LOSS, DAMAGE, REIMBURSEMENT, INDEMNITY
8. Landlord or its agents shall not be liable for any damage to property of
Tenant or of others entrusted to employees of the Building, nor for loss or
damage to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Landlord, its agents, servants or
employees; nor shall Landlord or its agents be liable for any such damage caused
by other tenants or persons in, upon or about said building or caused by
operations in construction of any private, public or quasi public work. If at
any time any windows of the Demised Premises are temporarily closed or darkened
by reason of repairs or maintenance to the Building (or permanently closed,
darkened or bricked up, if required by law), Landlord shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction,
provided that, in the case of a temporary closing or darkening, Landlord shall
act diligently to reduce the duration of such closing or darkening and minimize
any interference with the conduct of Tenant's business during such period.
Tenant shall not move any safe, heavy machinery, heavy equipment, bulky matter,
or fixtures into or out of the Building without Landlord's prior written
consent. If such safe, machinery, equipment, bulky matter or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto and shall be done during such hours as Landlord may
designate. Tenant shall indemnify and save harmless Landlord against and from
all liabilities, obligations, damages, penalties, claims, costs and expenses for
which Landlord shall not be reimbursed by insurance, including reasonable
attorneys' fees, paid, suffered or incurred as a result of any breach by Tenant,
Tenant's agents, contractors, employees, invitees, or licensees, of any covenant
or condition of this lease, or the carelessness, negligence or improper
misconduct of the Tenant, Tenant's agents, contractors, employees, invitees or
licensees. Tenant's liability under this lease extends to the acts and omissions
of any subtenant, and any agent, contractor, employee, invitee or licensee of
any subtenant. In case any action or proceeding is brought against Landlord by
reason of any such claim, Tenant, upon written notice from Landlord, will, at
Tenant's expense, resist or defend such action or proceeding by counsel
approved by Landlord in writing, such approval not to be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY
9. (a) If the Demised Premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give notice thereof to Landlord promptly after
Tenant becomes aware of same and this lease shall continue in full force and
effect except as hereinafter set forth. (b) If the Demised Premises are
partially damaged or rendered partially unusable by fire or other casualty, the
damages thereto shall be repaired by and at the expense of Landlord and the rent
and additional rent, until such repair shall be substantially completed and the
Demised Premises made accessible to Tenant, shall be apportioned from the date
following the casualty according to the part of the Premises which is
usable.(c) If the Demised Premises are totally damaged or rendered wholly
unusable by fire or other casualty, then the rent and additional rent shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the Premises shall have been repaired and restored by
Landlord and the Demised Premises have been made accessible to Tenant, subject
to Landlord's right to elect not to restore the same as hereinafter provided.
(d) If the Building shall be so damaged that Landlord shall decide to demolish
it or to rebuild it, then, in any of such events, Landlord may elect to
terminate this lease by written notice to Tenant given within ninety (90) days
after such fire or casualty specifying a date for the expiration of the lease,
which date shall not be more than ninety (90) days after the giving of such
notice, and upon the date specified in such notice the term of this lease shall
expire as fully and completely as if such date were the date set forth above for
the termination of this lease and Tenant shall forthwith quit, surrender and
vacate the Premises without prejudice however, to Landlord's rights and remedies
against Tenant under the lease provisions in effect prior to such termination,
and any rent and additional rent owing shall be paid up to such date and any
payments of rent and additional rent made by Tenant which were on account of any
period subsequent to such date shall be returned to Tenant. Unless Landlord
shall serve a termination notice as provided for herein, Landlord shall make the
repairs and restorations under the conditions of (b) and (c) hereof, with all
reasonable expedition subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Landlord's control. After any such casualty,
Tenant shall cooperate with Landlord's restoration by removing from the Premises
as promptly as reasonably possible, all of Tenant's movable
(iv)
<PAGE>
equipment, furniture, and other property. Tenant's liability for rent shall
resume fifteen (15) business days after written notice from Landlord that the
Premises are substantially ready for Tenant's occupancy. (e) Nothing contained
hereinabove shall relieve Tenant from liability that may exist as a result of
damage from fire or other casualty. Notwithstanding the foregoing, each party
shall look first to any insurance in its favor before making any claim against
the other party for recovery for loss or damage resulting from fire or other
casualty, and to the extent that such insurance is in force and collectible and
to the extent permitted by law, Landlord and Tenant each hereby releases and
waives all of them by way of subrogation or otherwise. The foregoing release and
waiver shall be in force only if both releasors' insurance policies contained a
clause providing that such a release or waiver shall not invalidate the
insurance and also, provided that such a policy can be obtained without
additional premiums. 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. (f) Tenant
hereby waives the provisions of Section 227 of the Real Property Law and agrees
that the provisions of this article shall govern and control in lieu thereof.
Notwithstanding anything to the contrary contained in this Article 9, if the
Demised Premises are partially damaged or rendered partially unusable by fire or
other casualty and Tenant is unable to conduct business in the Demised Premises,
the rent and additional rent shall be fully abated, provided Tenant does not
occupy the Premises, provided, however, that Tenant's liability for rent shall
resume fifteen (15) days after written notice from Landlord that the Premises
are substantially ready for Tenant's occupancy.
In the event Landlord is unable to substantially complete the repairs to
the Demised Premises within one hundred eighty (180) days from the date of the
fire or other casualty, Tenant at the expiration of the one hundred eighty day
(180) period shall have the option to terminate this Lease upon thirty (30)
days' written notice to Landlord.
EMINENT DOMAIN
10. If the whole or any part of the Demised Premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease and rent shall be prorated to such
date.
ASSIGNMENT, MORTGAGE, ETC.
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the Demised Premises or any part thereof to be used by others, without
the prior written consent of Landlord in each instance. If this lease be
assigned, or if the Demised Premises or any part thereof be underlet or occupied
by anybody other than Tenant, Landlord may, after default by Tenant, collect
rent from the assignee, under-tenant or occupant, and apply the net amount
collected to the rent herein reserved, but no such assignment, underletting,
occupancy or collection shall be deemed a waiver of this covenant, or the
acceptance of the assignee, under-tenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant
herein contained. The consent by Landlord to an assignment or underletting shall
not in any wise be construed to relieve Tenant from obtaining the express
consent in writing of Landlord to any further assignment or underletting.
ACCESS TO PREMISES
12. Landlord or Landlord's agents shall have the right (but shall not be
obligated) to enter the Demised Premises in any emergency at any time, and, at
other reasonable times upon reasonable notice to Tenant, to examine the same and
to make such repairs, replacements and improvements as Landlord may deem
necessary and reasonably desire to the Demised Premises or to any other portion
of the Building or which Landlord may elect to perform following Tenant's
failure to make repairs or perform any work which Tenant is obligated to perform
under this lease, or for the purpose of complying with laws, regulations and
other directions of governmental authorities. Tenant shall permit Landlord to
use and maintain and replace pipes and conduits in and through the Demised
Premises and to erect new pipes and conduits therein provided that the same are
concealed and do not interfere with the conduct of
(v)
<PAGE>
Tenant's business operations. Landlord shall use its reasonable efforts not to
interfere or interrupt Tenant's business operations. Landlord may, during the
progress of any work in the Demised Premises, take all necessary materials and
equipment into said premises without the same constituting an eviction nor shall
the Tenant be entitled to any abatement of rent while such work is in progress
nor to any damages by reason of loss or interruption of business or otherwise,
provided that Landlord shall exercise due diligence to minimize any interference
with the conduct of Tenant's business operations. Throughout the term hereof
Landlord shall have the right to enter the Demised Premises at reasonable hours
for the purpose of showing the same to prospective purchasers or mortgagees of
the Building, and during the last six (6) months of the term for the purpose of
showing the same to prospective tenants. If Tenant is not present to open and
permit an entry into the Premises, Landlord or Landlord's agents may enter the
same whenever such entry may be necessary or permissible by master key or in the
case of an emergency forcibly and provided reasonable care is exercised to
safeguard Tenant's property and such entry shall not render Landlord or its
agents liable therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term Tenant shall have
removed all or substantially all (at least ninety (90%) percent) of Tenant's
property therefrom, Landlord may immediately enter, alter, renovate or
redecorate the Demised Premises without limitation or abatement of rent, or
incurring liability to Tenant for any compensation and such act shall have no
effect on this lease or Tenant's obligations hereunder. Landlord shall have the
right at any time, without the same constituting an eviction and without
incurring liability to Tenant therefor to change the arrangement and/or location
of public entrances, passageways, doors, doorways, corridors, elevators, stairs,
toilets, or other public parts of the Building and to change the name, number of
designation by which the Building may be known, provided that access to the
Demised Premises and the Building shall not be impaired and reasonable advance
notice is given to Tenant.
VAULT, VAULT SPACE, AREA
13. No vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the Building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan or anything contained
elsewhere in this lease to the contrary notwithstanding. Landlord makes no
representation as to the location of the property line of the Building. All
vaults and vault spaces and all such areas not within the property line of the
Building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Landlord shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant.
OCCUPANCY
14. Tenant will not at any time use or occupy the Demised Premises in
violation of the certificate of occupancy issued for the Building of which the
Demised Premises are a part. Landlord shall not amend the certificate of
occupancy during the term of this Lease to preclude the use of the Demised
Premises for the use permitted by this Lease or to reduce the number of persons
who may occupy the Demised Premises. Tenant has inspected the Premises and
accepts them as is, subject to the riders annexed hereto with respect to
Landlord's Work, if any.
BANKRUPTCY
15. (a) If at the date fixed as the commencement of the term of this lease
or if at any time during the term hereby demised there shall be filed by or
against Tenant in any court pursuant to any statute either of the United States
or of any state, a petition in bankruptcy or insolvency or for reorganization or
for the appointment of a receiver or trustee of all or a portion of Tenant's
property, and within sixty (60) days thereof, Tenant fails to secure a dismissal
thereof, or if Tenant make an assignment for the benefit of creditors or
petition for or enter into an arrangement, this lease, at the option of
Landlord, exercised within a reasonable time after notice of the happening of
any one or more of such events, may be canceled and terminated by written notice
to the Tenant and whether such cancellations and termination occur prior to or
during the term, neither Tenant nor any person claiming through or under Tenant
by virtue of any statute or of any order of any court, shall be entitled to
possession or to remain in possession of the Premises, demised but shall
forthwith quit and surrender the Premises, and
(vi)
<PAGE>
Landlord, in addition to the other rights and remedies Landlord has by virtue of
any other provision herein or elsewhere in this lease contained or by virtue of
any statute or rule of law, may retain as liquidated damages, any rent, security
deposit or moneys received by it from Tenant or others in behalf of Tenant. If
this lease shall be assigned in accordance with its terms, the provisions of
this Article 15 shall be applicable only to the party then owning Tenant's
interest in this lease.
(b) It is stipulated and agreed that in the event of the termination
of this lease pursuant to (a) hereof, Landlord shall forthwith, notwithstanding
any other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the Demised Premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four (4%) percent per annum. If such premises or any
part thereof be re-let by the Landlord for the unexpired term of said lease, or
any part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such re-letting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the Premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Landlord to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
DEFAULT
16. (a) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
Demised Premises are abandoned; or if any execution or attachment shall be
issued against Tenant or any of Tenant's property whereupon the Demised Premises
shall be taken or occupied by someone other than Tenant; or if Tenant shall make
default with respect to any other lease between Landlord and Tenant; then, in
any one or more of such events, upon Landlord serving a written three (3) days'
notice upon Tenant in the case of Tenant's failure to pay rent or additional
rent, and a written fifteen (15) days' notice specifying the nature of any other
default and upon the expiration of said notice period, if Tenant shall have
failed to comply with or remedy such default, or (other than a default in rent
or additional rent) if the said default or omission complained of shall be of a
nature that the same cannot be completely cured or remedied within said fifteen
(15) day period, and if Tenant shall not have diligently commenced curing such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith proceed to remedy or cure such default,
then Landlord may serve a written five (5) days' notice of cancellation of this
lease upon Tenant, and upon the expiration of said five (5) days, this lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the Demised Premises to Landlord but Tenant shall remain
liable as hereinafter provided.
(b) If the notice provided for in (a) hereof shall have been given,
and the grace period shall have expired without Tenant curing or commencing to
cure such default, then the term shall expire as aforesaid; then and in any of
such events Landlord may without notice, re-enter the Demised Premises, and
dispossess Tenant by summary proceedings, and the legal representative of Tenant
or other occupant of Demised Premises and remove their effects and hold the
Premises as if this lease had not been made, and Tenant hereby waives the
service of notice of intention to re-enter or to institute legal proceedings to
that end.
REMEDIES OF LANDLORD AND WAIVER OF REDEMPTION
17. In case of any such default, re-entry, expiration and/or
dispossess by summary proceedings (a) the rent shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, together
with such expenses as Landlord may incur for legal expenses, reasonable
attorneys' fees, brokerage, and/or putting the Demised Premises in good order,
or for preparing the same for re-rental; (b) Landlord may re-let the Premises or
any part or parts thereof, either in the name of Landlord or otherwise, for a
term or terms, which may at Landlord's option be less than or exceed the period
which would otherwise have constituted
(vii)
<PAGE>
the balance of the term of this lease and may grant concessions or free rent or
charge a higher rental than that in this lease, and/or (c) Tenant or the legal
representatives of Tenant shall also pay Landlord as liquidated damages for the
failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between the rent hereby reserved and/or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
lease or leases of the Demised Premises for each month of the period which would
otherwise have constituted the balance of the term of this lease. The failure of
Landlord to re-let the Premises or any part or parts thereof shall not release
or affect Tenant's liability for damages. In computing such liquidated damages
there shall be added to the said deficiency such expenses as Landlord may incur
in connection with re-letting, such as legal expenses, reasonable attorneys'
fees, brokerage, advertising and for keeping the Demised Premises in good order
or for preparing the same for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent day specified in this lease
and any suit brought to collect the amount of the deficiency for any month shall
not prejudice in any way the rights of Landlord to collect the deficiency
for any subsequent month by a similar proceeding. Landlord, in putting the
Demised Premises in good order or preparing the same for re-rental may, at
Landlord's option, make such alterations, repairs, replacements, and/or
decorations in the Demised Premises as Landlord, in Landlord's sole judgment,
considers advisable and necessary for the purpose of re-letting the Demised
Premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Landlord shall in no event be liable in any way
whatsoever for failure to re-let the Demised Premises, or in the event that the
Demised Premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rent collected over the sums payable by Tenant to Landlord
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Landlord shall have the right of injunction and
the right to invoke any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not herein provided for. Mention in
this lease of any particular remedy, shall not preclude Landlord from any other
rights of redemption granted by or under any present or future laws in the event
of Tenant being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of Demised Premises, by reason of the violation by
Tenant of any of the covenants and conditions of this lease, or otherwise.
FEES AND EXPENSES
18. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease and such default shall
continue after the expiration of any applicable grace period, then, unless
otherwise provided elsewhere in this lease, Landlord may immediately or at any
time thereafter and without notice in the case of an emergency, and upon notice
in all other cases, perform the obligation of Tenant thereunder, and if
Landlord, in connection therewith or in connection with any default by Tenant in
the covenant to pay rent hereunder, makes any expenditures or incurs any
obligations for the payment of money, including, but not limited to reasonable
attorneys' fees, in instituting, prosecuting or defending any action or
proceeding, such sums so paid or obligations incurred with interest and costs
shall be deemed to be additional rent hereunder and shall be paid by Tenant to
Landlord within fifteen (15) days of rendition of any bill or statement to
Tenant therefor, and if Tenant's lease term shall have expired at the time of
making of such expenditures or incurring of such obligations, such sums shall be
recoverable by Landlord as damages.
NO REPRESENTATIONS BY LANDLORD
19. Neither Landlord nor Landlord's agents have made any representations or
promises with respect to the physical condition of the Building, the land upon
which it is erected or the Demised Premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the Premises
except as herein expressly set forth and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the Building and the Demised
Premises and is thoroughly acquainted with their condition, and except as
otherwise provided in this Lease agrees to take the same "as is" and
acknowledges that the taking of possession of the Demised Premises by Tenant
shall be conclusive evidence that the said premises and the Building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understandings and
agreements heretofore made
(viii)
<PAGE>
between the parties hereto are merged in this contract, which alone fully and
completely expresses the agreement between Landlord and Tenant and any executory
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of it in whole or in part, unless such executory agreement
is in writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
END OF TERM
20. Upon the expiration or other termination of the term of this lease,
Tenant shall quit and surrender to Landlord the Demised Premises, broom clean,
in good order and condition, ordinary wear and damage by fire, other casualty
and the negligence or willful misconduct of Landlord, its agents, employees and
licensees excepted, and Tenant shall remove all its personal property. Tenant's
obligation to observe or perform this covenant shall survive the expiration or
other termination of this lease. If the last day of the term of this lease or
any renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
QUIET ENJOYMENT
21. Landlord covenants and agrees with Tenant that upon Tenant paying the
rent and additional rent and observing and performing all the terms, covenants
and conditions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the Premises hereby demised, subject, nevertheless,
to the terms and conditions of this lease including, but not limited to, Article
29 hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
FAILURE TO GIVE POSSESSION
22. If Landlord is unable to give possession of the Demised Premises on the
date of the commencement of the term hereof, for any reason, Landlord shall not
be subject to any liability for failure to give possession on said date and the
validity of the lease shall not be impaired under such circumstances, nor shall
the same be construed in any wise to extend the term of this lease, but the rent
payable hereunder shall be abated (provided Tenant is not responsible for the
inability to obtain possession) until after Landlord shall have given Tenant
written notice that the Premises are substantially ready for Tenant's occupancy.
NO WAIVER
23. The failure of Landlord or Tenant to seek redress for violation of, or
to insist upon the strict performance of any covenant or condition of this lease
or, in the case of Landlord, 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
or Tenant unless such waiver be in writing signed by Landlord or Tenant, as the
case may be. No payment by Tenant or receipt by Landlord of a lesser amount than
the monthly rent herein stipulated shall be deemed to be other than on account
of the earliest stipulated rent, nor shall any endorsement or statement of any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy in this lease provided. No act or thing done by Landlord or
Landlord's agents during the term hereby demised shall be deemed an acceptance
of a surrender of said premises and no agreement to accept such surrender shall
be valid unless in writing signed by Landlord. No employee of Landlord or
Landlord's agent shall have any power to accept the keys of said premises prior
to the termination of the lease and the delivery of keys to any such agent or
employee shall not operate as a termination of the lease or a surrender of the
Premises.
WAIVER OF TRIAL BY JURY
24. It is mutually agreed by and between Landlord and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury
(ix)
<PAGE>
or property damage) on any matters whatsoever arising out of or in any way
connected with this lease, the relationship of Landlord and Tenant, Tenant's use
of or occupancy of said premises, and any emergency statutory or any other
statutory remedy. It is further mutually agreed that in the event Landlord
commences any summary proceeding for possession of the Premises, Tenant will not
interpose any counterclaim of whatever nature or description in any such
proceeding.
INABILITY TO PERFORM
25. This lease and the obligation of Tenant to pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of Tenant to
be performed shall in no wise be affected, impaired or excused because Landlord
is unable to fulfill any of its obligations under this lease or 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 repair, 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 reason of strike
or labor troubles or 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 or
by reason of any other cause beyond Landlord's reasonable control.
BILLS AND NOTICES
26. Except as otherwise in this lease provided, a bill, statement, notice
or communication which Landlord may desire or be required to give to Tenant,
shall be deemed sufficiently given or rendered if, in writing, delivered to
Tenant personally, with receipt acknowledged or sent by registered or certified
mail, return receipt requested, addressed to Tenant at the Building of which the
Demised Premises form a part, Attention: MR. GRAEME McWHIRTER, with a copy to
JEFFREY HERZ, ESQ. at TASHLIK, KREUTZER & GOLDWYN, P.C., located at 833 Northern
Boulevard, Great Neck, New York 11021, and the time of the rendition of such
bill or statement and of the giving of such notice or communication shall be
deemed to be the time when the same is delivered to Tenant or two (2) business
days after mailed. Any notice by Tenant to Landlord must be served by registered
or certified mail, return receipt requested, addressed to Landlord at the
address first hereinabove given or at such other address as Landlord shall
designate by written notice.
SERVICES PROVIDED BY LANDLORD --
WATER, ELEVATORS, HEAT, CLEANING, AIR CONDITIONING
27. As long as this Lease is in full force and effect, Landlord shall
provide: (a) necessary elevator facilities on business days from 8:00 a.m. to
6:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m. and have one elevator
subject to call at all other times; (b) heat to the Demised Premises when and as
required by law, on business days from 8:00 a.m. to 6:00 p.m. and on Saturdays
from 8:00 a.m. to 1:00 p.m.; (c) water for ordinary lavatory and cleaning
purposes, but if Tenant uses or consumes water for any other purposes or in
unusual quantities, Landlord may install a water meter at Tenant's expense which
Tenant shall thereafter maintain at Tenant's expense in good working order and
repair to register such water consumption and Tenant shall pay for water
consumed as shown on said meter as additional rent within thirty (30) days
after, and on Tenant's default in making such payment, Landlord may pay such
charges and collect the same from Tenant. Such a meter shall also be installed
and maintained at Tenant's expense if required by Law or Government Order.
Tenant, if a water meter is so installed, covenants and agrees to pay its
proportionate share of the sewer rent and all other rents and charges which are
now or hereafter assessed, imposed or may become a lien on the Demised Premises
or the realty of which they are a part; (d) the cleaning specifications annexed
to this Lease as Exhibit C. If applicable, air conditioning/cooling will be
furnished from May 1st through September 30th on business days (Mondays through
Fridays, holidays excepted) from 8:00 a.m. to 6:00 p.m.; and ventilation will be
furnished on business days during the aforesaid ours except when air
conditioning/cooling is being furnished as aforesaid. If Tenant requires air
conditioning/cooling or ventilation for more extended hours or on Saturdays,
Sundays or on holidays, as defined under Landlord's contract with Operating
Engineers Local 94-94A. Landlord will furnish the same at Tenant's expense. (f)
Landlord shall have no responsibility or liability for failure to supply the
services agreed to herein. Landlord reserves the right to stop services of the
heating, elevators, plumbing, air conditioning, power systems
(x)
<PAGE>
or cleaning or other services, if any, when necessary by reason of accident or
for repairs, alterations, replacements or improvements necessary or desirable in
the judgment of Landlord for as long as may be reasonably required by reason
thereof or by reason of strikes, accidents, laws, order or regulations or any
other reason beyond the control of Landlord. If the Building of which the
Demised Premises are a part supplies manually-operated elevator service,
Landlord at any time may substitute automatic-control elevator service and upon
ten (10) days' written notice to Tenant, proceed with alterations necessary
therefor without in any wise affecting this lease or the obligations of Tenant
hereunder. The same shall be done with a minimum of inconvenience to Tenant and
Landlord shall pursue the alteration with due diligence. Tenant shall have
access to the Demised Premises and passenger elevators seven (7) days per week,
twenty-four (24) hours per day.
CAPTIONS
28. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEFINITIONS
29. The term "office", or "offices", wherever used in this lease, shall not
be construed to mean premises used as a store or stores, for the sale or
display, at any time, of goods, wares or merchandise, of any kind, or as a
restaurant, shop, booth, bootblack or other stand, barber shop, or for other
similar purposes or for manufacturing. The term "Landlord" as used in this lease
means only the owner, or the mortgagee in possession, for the time being of the
land and building (or the owner of a lease of the Building or of the land and
building) of which the Demised Premises form a part, so that in the event of any
sale or sales of said land and building or of said lease, or in the event of a
lease of said building, or of the land and building, the said Landlord shall be
and hereby is entirely freed and relieved of all covenants and obligations of
Landlord hereunder, and it shall be deemed and construed without further
agreement between the parties or their successors in interest, or between the
parties and the purchaser, at any such sale, or the said lessee of the Building,
or of the land and building, that the purchaser or the lessee of the Building
has assumed and agreed to carry out any and all covenants and obligations of
Landlord, hereunder accruing prior or after the date of sale. The words
"re-enter" and "re-entry" as used in this lease are not restricted to their
technical legal meaning. The term "business days" as used in this lease shall
exclude Saturdays (except such portion thereof as is covered by specific hours
in Article 27 hereof), Sundays and all days observed by the State or Federal
Government as legal holidays and those designated as holidays by the applicable
building service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service.
ADJACENT EXCAVATION -- SHORING
30. If an excavation shall be made upon land adjacent to the Demised
Premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
Demised Premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the Building of which Demised Premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Landlord, or diminution or abatement
of rent.
RULES AND REGULATIONS
31. Tenant and Tenant's servants, employees, agents, visitors, and
licensees shall observe faithfully, and comply with, the Rules and Regulations
and such other and further reasonable Rules and Regulations as Landlord or
Landlord's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given as Landlord may elect pursuant to Article 26 of the
Lease. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Landlord or Landlord's agents, the
parties hereto agree to submit the question of the reasonableness of such Rule
or Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by giving of notice thereof. Nothing in this lease contained shall be
construed to
(xi)
<PAGE>
impose upon Landlord any duty or obligation to enforce the Rules and Regulations
or terms, covenants or conditions in 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.
Landlord shall not enforce the Rules and Regulations against Tenant in a
discriminatory manner. In case of a conflict or inconsistency between the Rules
and Regulations and any other provision of this Lease, the provision of this
Lease shall govern and the conflicting or inconsistent Rule or Regulation shall
be deemed amended accordingly.
SECURITY
32. Tenant has deposited with Landlord the sum of Seventy-Six Thousand Four
Hundred ($76,400) Dollars (including monies previously deposited as security
with Landlord) as security for the faithful performance and observance by Tenant
of the terms, provisions and conditions of this lease; it is agreed that in the
event Tenant defaults in respect of any of the terms, provisions and conditions
of this lease, including, but not limited to, the payment of rent and additional
rent after notice and the expiration of the applicable grace period, Landlord
may use, apply or retain the whole or any part of the security so deposited to
the extent required for the payment of any rent and additional rent or any other
sum as to which Tenant is in default or for any sum which Landlord may expend or
may be required to expend by reason of Tenant's default in respect of any of the
terms, covenants and conditions of this lease, including, but not limited to,
any damages or deficiency in the re-letting of the Premises, whether such
damages or deficiency accrued before or after summary proceedings or other
re-entry by Landlord. In the event that Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this lease, the
security shall be returned to Tenant after the date fixed as the end of the
lease and after delivery of entire possession of the Demised Premises to
Landlord. In the event of a sale of the land and building or leasing of the
Building, of which the Demised Premises form a part, Landlord shall have the
right to transfer the security to the vendee or lessee and Landlord shall
thereupon be released by Tenant from all liability for the return of such
security; and Tenant agrees to look to the new landlord solely for the return of
said security; and it is agreed that the provisions hereof shall apply to every
transfer or assignment made of the security to a new landlord. Tenant further
covenants that it will not assign or encumber or attempt to assign or encumber
the monies deposited herein as security and that neither Landlord nor its
successor or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance. Provided that Tenant is in
compliance with the terms and conditions of the Lease, Landlord shall reduce the
security by Twenty Thousand ($20,000) Dollars on the second anniversary from the
Substantial Completion Date and by Twenty Thousand ($20,000) Dollars on the
third anniversary of the Substantial Completion Date. Reimbursement of each
Twenty Thousand ($20,000) Dollar payment to Tenant shall include any interest
earned on such amount less administrative charges.
Monies held as security under this article shall be placed in an
interest-bearing account. Interest on the principal balance shall accrue for the
benefit of Tenant less one (1%) percent of the principal balance which Landlord
shall be entitled to retain for administrative purposes.
SUCCESSORS AND ASSIGNS
33. 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, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
SEE RIDER ATTACHED HERETO.
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and sealed
this lease as of the day and year first above written.
Witness for Owner: CLEMONS PROPERTIES PARTNERS, as Agent {Corp. Seal}
/s/ Selma Weiss By: /s/ Signature [L.S.]
- ------------------- ---------------------------------------
Witness for Tenant: VIDEO BROADCASTING CORPORATION {Corp. Seal}
/s/ Signature By: /s/ J. Graeme McWhirter [L.S.]
- ------------------- ---------------------------------------
(xii)
<PAGE>
IMPORTANT -- PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 31.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress to and egress from
the Demised Premises and for delivery of merchandise and equipment in a prompt
and efficient manner using elevators and passageways designated for such
delivery by Landlord. There shall not be used in any space, or in the public
hall of the Building, either by any Tenant or by jobbers or others, in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and sideguards. If said premises are situate on the ground floor of
the Building Tenant thereof shall further, at Tenant's expense, keep the
sidewalks and curb in front of said premises clean and free from ice, snow, dirt
and rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the Building, and no Tenant shall sweep or throw or permit to be swept
or thrown from the Demised Premises any dirt or other substances into any of the
corridors or halls, elevators or out of the doors or windows or stairways of the
Building and Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Demised Premises or permit or suffer the Demised
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise, odors and/or
vibrations, or interfere in any way with other Tenants or those having business
therein, nor shall any animals or birds be kept in or about the Building.
Smoking or carrying lighted cigars or cigarettes in the elevators of the
Building is prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the Building without the prior written consent of Landlord.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside of the
Demised Premises or the Building without the prior written consent of Landlord,
except that the name of Tenant may appear on the entrance door of the Premises.
In the event of the violation of the foregoing by any Tenant, Landlord may
remove same without any liability, and may charge the expense incurred by such
removal to Tenant or Tenants violating this rule.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the Demised Premises or the Building of which they form a part except with
the prior consent of Landlord. No boring, cutting or stringing of wires shall be
permitted, except with the prior written consent of Landlord. No Tenant shall
lay linoleum, or other similar floor covering, so that the same shall come in
direct contact with the floor of the Demised Premises, and, if linoleum or other
similar floor covering is desired to be used an interlining of builder's
deadening felt shall be first affixed to the floor, by a paste or other
material, soluble in water, the use of cement or other similar adhesive material
being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof except if said locks or bolts are part of the master key
system of the Building. Each Tenant must, upon the termination of its Tenancy,
restore to Landlord all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Landlord the cost
thereof.
(xiii)
<PAGE>
8. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the Premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Landlord. Landlord reserves the right
to inspect all freight to be brought into the Building and to exclude from the
Building all freight which violates any of these Rules and Regulations or the
lease of which these Rules and Regulations are a part.
9. Landlord reserves the right to exclude from the Building between the
hours of 6:00 p.m. and 8:00 a.m. and at all hours on Sundays, and legal holidays
all persons who do not present a pass to the Building signed by Landlord.
Landlord will furnish passes to persons for whom any Tenant requires same in
writing. Each Tenant shall be responsible for all persons for whom it requests
such pass and shall be liable to Landlord for all acts of such persons.
10. Landlord shall have the right to prohibit any advertising by any Tenant
which, in Landlord's opinion, tends to impair the reputation of the Building or
its desirability as a building for offices, and upon written notice from
Landlord, Tenant shall refrain from or discontinue such advertising.
11. Tenant shall not bring or permit to be brought or kept in or on the
Demised Premises any inflammable, combustible or explosive fluid, material,
chemical or substance or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the Demised Premises.
12. If the Building contains central air conditioning and ventilation
Tenant agrees to keep all windows closed at all times and to abide by all rules
and regulations issued by the Landlord with respect to such services. If Tenant
requires air conditioning or ventilation after the usual hours, Tenant shall
give notice in writing to the Building superintendent prior to 3:00 p.m. in the
case of services required on week days, and prior to 3:00 p.m. on the day prior
in the case of after hours service required on weekends or on holidays.
(xiv)
<PAGE>
Address 708 Third Avenue
New York, New York
Premises Portion of Ninth (9th) Floor
- --------------------------------------------------------------------------
CLEMONS PROPERTIES PARTNERS, as Agent
TO
VIDEO BROADCASTING CORPORATION
- --------------------------------------------------------------------------
STANDARD FORM OF
OFFICE LEASE
The Real Estate Board of New York, Inc.
[c]Copyright 1973. All Rights Reserved.
Reproduction in whole or in part prohibited.
- --------------------------------------------------------------------------
Dated September 21, 1994.
Rent Per Year $220,764 commencing on the Substantial
Completion Date (including $28,509 for the value of
electricity) through the day preceding the first
anniversary of the Substantial Completion Date;
$332,124 commencing on the first anniversary of the
Substantial Completion Date (including $28,509 for the
value of electricity) per annum on a pro rata basis
through September 30, 1996;
$274,407 commencing on October 1, 1996 (including
$29,127 for the value of electricity) through the day
preceding the sixth anniversary of the Substantial
Completion Date; and
$294,847 commencing on the sixth anniversary of the
Substantial Completion Date (including $29,127 for
the value of electricity) through the Expiration
Date.
Rent per Month
Term Ten (10) Years from Substantial Completion Date
From September 21, 1994
To On the last day of the month in which the tenth
anniversary of the Substantial Completion Date occurs
(the "Expiration Date")
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(xv)
<PAGE>
RIDER attached to and forming part of Lease dated September 21, 1994
between CLEMONS PROPERTIES PARTNERS, a limited partnership, as Agent,
Landlord and VIDEO BROADCASTING CORPORATION, as Tenant at
PREMISES: 708 Third Avenue, New York, New York
Portion of 9th Floor
35. Application of this Rider.
Rider Provisions Paramount. If and to the extent that any of the provisions
of this Rider conflict or are otherwise inconsistent with any of the preceding
printed provisions of this Lease, or of the Rules and Regulations attached to
this Lease, whether or not such inconsistency is expressly noted in this Rider,
the provisions of this Rider shall prevail, and in case of inconsistency with
said Rules and Regulations, it shall be deemed a waiver of such Rules and
Regulations with respect to Tenant to the extent of such inconsistency.
36. Additional Definitions
For the purposes of this Lease and all agreements supplemental to this
Lease, and all communications with respect thereto, unless the context otherwise
requires:
(1) The term "fixed rent" shall mean rent at the annual rental rate or
rates provided for in the granting clause appearing at the beginning of
this Lease.
(2) The term "additional rent" shall mean all sums of money, other
than fixed rent, as shall become due and payable from Tenant to Landlord
hereunder, and Landlord shall have the same remedies therefor as for a
default in payment of fixed rent.
(3) The terms "rent" and "rents" shall mean and include fixed rent
and/or additional rent hereunder.
(4) The terms "Commencement Date" and "Expiration Date" shall mean the
dates fixed in this Lease, or to be determined pursuant to the provisions
of this Lease, respectively, as the beginning and the end of the term for
which the Demised Premises are hereby leased.
(5) Any provision in this Lease that one party or the other or both
shall do or not do or shall cause or permit or not cause or permit a
particular act, condition or circumstance shall be deemed to mean that such
party so covenants or both parties so covenant, as the case may be.
Tenant's obligations hereunder shall be construed in every instance as
conditions as well as covenants.
(6) The term "Tenant" shall mean Tenant herein named or any assignee
or other successor in interest (immediate or remote) of Tenant herein
named, when Tenant herein named or such assignee or other successor in
interest, as the case may be, is in possession of the Demised Premises as
owners of the Tenant's estate and interest granted by this Lease, and also,
if Tenant is not an individual or corporation, all of the individuals,
firms and/or corporations or other entities comprising Tenant.
(7) If Landlord named herein, or any assignee of the interest of
Landlord herein, shall be named as agent, the term "Landlord" as used
herein shall be deemed to include the principal(s) of such agent, whether
disclosed or undisclosed.
(8) Any transfer by operation of law or otherwise, of Tenant's
interest in this Lease or of a fifty (50%) percent or greater interest in
Tenant (whether stock, partnership interest or otherwise) in a single
transaction or a related series of transactions, shall be deemed an
assignment of this Lease within the meaning of Article 11. Notwithstanding
the provision hereof to the contrary, a transfer of stock interest in
Tenant between family members or existing shareholders or to any
partnership or entity more than fifty (50%) percent controlled by a
shareholder or shareholders shall not be deemed an assignment
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<PAGE>
of this Lease; provided, that said new holder shall have a financial net
worth equal to Tenant's net worth on the date of the execution hereof.
Furthermore, a transfer pursuant to a public offering of Tenant's capital
stock shall not be deemed an assignment of this Lease.
(9) All references in this Lease to numbered Articles and lettered
Exhibits are references to Articles of this Lease and Exhibits annexed to
(and thereby made part of) this Lease, as the case may be, unless expressly
otherwise designated in the context.
37. Tenant's Changes - Supplementing Article 3
Landlord's consent shall not be required for non-structural alterations
that do not affect any Building systems and which are merely decorative or
cosmetic in nature, including painting, wall-covering and carpeting. Tenant
covenants and agrees that Tenant will make no other alterations, decorations,
installations, repairs, additions, improvements or replacements (hereinafter
collectively called "Tenant's Changes") in, to or about the Demised Premises
without Landlord's prior written consent (which consent shall not be
unreasonably withheld or delayed), and then only by contractors or mechanics
approved by Landlord. Landlord shall review and respond to a request for consent
to alterations within ten (10) days after submission of such request and to
request for approval of any contractor within five (5) days after submission.
Tenant's Changes shall be done at Tenant's sole expense and at such times and in
such manner as Landlord may from time to time designate. Prior to the
commencement of any Tenant's Changes, Tenant shall submit to Landlord, for
Landlord's written approval, plans and specifications (to be prepared by and at
the expense of Tenant) of such proposed Tenant's Changes in detail satisfactory
to Landlord. In no event shall any material or equipment be incorporated in or
to the Demised Premises in connection with any such Tenant's Changes which is
subject to any lien, security agreement, charge, mortgage or encumbrance of any
kind whatsoever or is subject to any conditional sale or other similar or
dissimilar title retention agreement. Any mechanic's lien filed against the
Demised Premises or the Building for work done at Tenant's expense, or claimed
to have been done at Tenant's expense, or materials furnished to or claimed to
have been furnished to Tenant, shall be discharged by Tenant within twenty (20)
days after Tenant receives notice of same, at Tenant's expense, by filing the
bond required by law or otherwise. All Tenant's Changes shall at all times
comply with (1) laws, rules, orders and regulations of governmental authorities
having jurisdiction thereof, (2) rules and regulations of Landlord generally
applied by Landlord to all tenants within the Building, and (3) if applicable,
plans and specifications prepared by and at the expense of Tenant theretofore
submitted to Landlord for Landlord's prior written approval. No Tenant's Changes
shall be undertaken, started or begun by Tenant or by its agents, employess,
contractors or any one else acting for or on behalf of Tenant until Landlord has
approved such plans and specifications, and no amendments or additions to such
plans and specifications shall be made without the prior written consent of
Landlord. Tenant agrees that it will not at any time prior to or during the term
of this Lease, either directly or indirectly, use any contractors and/or labor
and/or materials if the use of such contractors and/or labor and/or materials
would or will create any difficulty with other contractors, and/or labor engaged
by Tenant or Landlord or others engaged in the construction, maintenance and/or
operation of the Building or any part thereof.
38. Adjustment of Rent
For the period from the Substantial Completion Date through September 30,
1996:
(i) the Demised Premises (which are comprised from approximately 10,220
square feet) shall be divided into three portions as follows: Portion A
comprised of 4,275 feet, Portion B comprised of 1,305 feet and Portion C
comprised of 4,640 feet;
(ii) the term "Present Taxes" for Portion A shall mean taxes imposed on the
Real Property for the fiscal year from July 1, 1986 through June 30, 1987;
(iii) the term "Present Taxes" for the Portion B shall mean taxes imposed
on the Real Property for the fiscal year July 1, 1992 through June 30, 1993;
and,
(iv) the term "Present Taxes" for Portion C shall mean taxes imposed on the
real property for the fiscal year from July 1, 1994 through June 30, 1995.
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<PAGE>
(v) the percentage multiplier as set forth in Article 38A and Article
38B for Portion A shall be 1.464%; for Portion B .447%; and, for Portion C
1.191%;
(vi) the "Base Year for Operating Costs" pursuant to Article 38B shall
be 1986 for Portion A, 1992 for Portion B; and, 1995 for Portion C.
For the period from October 1, 1996 through the Expiration Date:
(i) the percentage multiplier as set forth in Article 38A of 3.102% shall
be applicable; and,
(ii) the term "Present Taxes" for the Demised Premises shall mean Taxes
imposed on the Real Property for fiscal year July 1, 1994 through June 30, 1995
and the Base Year for Operating Costs under Article 38B shall be the year ending
December 31, 1995.
For both of these periods all other provisions of Article 38A and 38B shall
be applicable.
A. Taxes
1. In the event that the amount of Future Taxes (as hereinafter
defined) which may hereafter be levied or assessed against the Land and/or upon
the Building (hereafter collectively referred to as the "Real Property") shall
be greater than the amount of Present Taxes (as hereinafter defined) on the Real
Property, then Tenant shall pay to Landlord, as additional rent hereunder, an
amount equal to such increase multiplied by three and one hundred and two
thousandths (3.102%) percent. As used in this Article, the term "Taxes" shall
mean real estate taxes, assessments, sewer rents, rates and charges, county
taxes, transit taxes or any other governmental charge of a similar nature,
whether general, special, ordinary or extraordinary, foreseen or unforeseen
(and, in the event the present method of taxation or assessment for real estate
in the Borough of Manhattan should be so changed that there shall be substituted
for the whole or any part of Taxes a capital tax or other tax imposed on the
rents received by landlord from the tenants of the Building, then such other
taxes to the extent that they are substituted, shall be included in the
definition of "Taxes"). As used in this Article, the term "Present Taxes" for
the purposes of this Lease shall be the "mean" of the Taxes imposed upon said
"Real Property" for the fiscal tax years from July 1, 1994 through June 30, 1995
(hereinafter referred to as the "First Tax Year"). As used in this Article, the
term "Future Taxes" shall mean actual Taxes attributable to any tax year
subsequent to the First Tax Year.
2. Any amounts due the Landlord under the provisions of Section 1
shall be paid within thirty (30) days after the Landlord shall have submitted a
tax bill issued by the taxing authority and statement to Tenant showing, in
reasonable details, the computation of the amount due Landlord. Any such tax
increase for the year falling in part within the tax year in which this Lease
shall end shall be apportioned so that the Tenant shall pay its aforesaid share
of only that portion thereof which corresponds with the portion of said tax year
which is within the Term. The amount of Taxes for the First Tax Year against
which the Tenant's liability for additional rent in subsequent years is
determined, shall be the amount thereof finally determined to be legally payable
by legal proceedings or otherwise. Landlord shall furnish Tenant with copies of
bills for Taxes received by Landlord.
3. If Landlord shall receive any tax refund for any tax year following
the First Tax Year with respect to which Tenant shall have paid any monies
pursuant to Section 1, Landlord may retain out of such tax refund any reasonable
expenses incurred by it in obtaining such tax refund and out of any of the
remaining balance of such refund, Landlord shall pay to Tenant an amount equal
to such remaining balance of such tax refund multiplied by the percent set forth
in Section 1, which obligation shall survive the expiration or termination of
this Lease.
B. Operating Costs
1. In the event that the "Operating Costs" in the building, as
hereinafter defined, for any calendar year of the Term (hereinafter referred to
as "Subsequent Cost Year") subsequent to the "Base Year for Operating Costs",
shall exceed the "Base Operating Costs", as hereinafter defined, then Tenant
shall pay to Landlord, as additional rent hereunder (i) the amount equal to such
excess for such year multiplied by three and one hundred and two
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<PAGE>
thousandths (3.102%) percent (hereinafter referred to as "Tenant's Proportionate
Share") or (ii) if only a part of such Subsequent Cost Year is included in the
term of this Lease, a fraction of such excess corresponding to the fraction of
such Subsequent Cost Year. Tenant shall pay Tenant's Proportionate Share of such
excess or fraction thereof promptly after Landlord determines and submits a
statement with respect to such excess. When such statement is presented for the
first Subsequent Cost Year, Tenant shall also pay additional rent for that part
of the second Subsequent Cost Year, Tenant shall also pay additional rent for
that part of the second Subsequent Cost Year to the end of the month in which
such statement is rendered, in an amount equal to the fraction of a year
represented by such part of the second Subsequent Cost Year multiplied by the
amount of the additional rent payable by Tenant for the entire first Subsequent
Cost Year and attributable to Operating Costs. For the entire first Subsequent
Cost Year and for each Subsequent Cost Year thereafter, Tenant shall pay
additional rent monthly with each installment of fixed rent in an amount equal
to one-twelfth (1/12th) of the additional rent determined by Landlord's
statement for the preceding Subsequent Cost Year. Adjustments for underpayment
or overpayment resulting from such monthly payments shall be made with respect
to the second and each later Subsequent Cost Year and Tenant shall pay Landlord
the amount of any underpayment or Landlord will credit the amount of any
overpayment against the next ensuing installments of fixed rent.
2. "Operating Costs" for a particular year in question shall mean the
aggregate of those expenses incurred by Landlord in the respective calendar year
in connection with the operation, maintenance and repair of the Building in
accordance with sound management and accounting principles and practices
generally accepted with respect to the operation, maintenance and repair of
first-class office buildings in the City of New York, including without
limitation, premiums for insurance carried by Landlord relating to the Building,
materials and supplies used in the operation, maintenance and repair of the
Building, industry standard management fees, wages and salaries paid to all
persons of the rank of building manager or lower, all fees and contract costs
paid to independent contractors engaged in such operation, maintenance and
repair and the cleaning of the Building and so-called "fringe benefits",
including, without limitation, all social security taxes, unemployment insurance
taxes, cost for providing compensation for disability taxes, cost of any life
insurance, hospital or welfare plan or any federal or like expenses included
under the provisions of any collective agreement covering employees of the
Building, or any other cost or expense which Landlord in good faith pays to
provide benefits for such employees of the Building. Operating expenses shall
not include expenses incurred for capital improvements, for work performed for
other tenants in the Building, for brokerage commissions incurred in obtaining
other tenants in the Building, for legal expenses incurred with respect to other
tenants in the Building, for mortgage interest and amortization, for
depreciation, for the cost of repairs or restoration of damage or destruction
caused by fire, the elements or other hazard, for Taxes included in Article 38A,
for assuming other Lease obligations of other tenants in the Building or for
concession packages for new tenants. "Base Operating Costs" shall mean the
annual Operating Costs for the Base Year for Operating Costs, which shall be the
calendar year ending December 31, 1995.
3. In determining the amount of Operating Costs either for the Base
Year for Operating Costs or for any Subsequent Cost Year, if less than one
hundred (100%) percent of the Building Tenant Occupancy Area shall have been
occupied by tenants and fully used by them, at any time during the year,
Operating Costs shall be deemed for the purposes of this Article to be increased
to any amount equal to the like operating costs which would normally be expected
to be incurred, had such occupancy been one hundred (100%) percent and had such
full utilization been made during the entire period.
C. Submission of Statements
1. All statements furnished by the Landlord pursuant to this Article
shall be certified by an officer of the Landlord. If Tenant shall dispute such
statement it shall have due right, during business hours at Landlord's place of
business in the City of New York, to examine Landlord's books and records with
respect to such statement in dispute on net less than ten (10) days' notice in
writing to Landlord, such examination to take place within a period of sixty
(60) days after such statement is submitted by Landlord to Tenant.
-4-
<PAGE>
2. The right of Tenant to such examinations shall be limited to one
examination with respect to each statement and shall be made and completed
within sixty (60) days after such statement shall have been furnished to Tenant,
at the office of the Landlord in the City of New York, New York, at such times
and on such days as are reasonably convenient to Landlord and Tenant after
written notice to Landlord requesting such examination. Tenant may, within
thirty (30) days after the completion of such examination, give notice to
Landlord disputing the amount and propriety of any item appearing or excluded
from such statement, including any amount of additional rent alleged to be owing
under any Section hereof, and if Tenant shall fail to give such notice within
such period of thirty (30) days, its right to dispute the same shall
conclusively be deemed waived. If Landlord and Tenant cannot agree upon any such
item as to which Tenant shall have given such notice, the dispute shall be
determined in accordance with Article 39 hereof.
39. Determination of Dispute
Notwithstanding anything to the contrary provided elsewhere in this Lease,
either party may elect, in the manner hereinafter provided, to have any dispute
determined by the Supreme Court of New York, New York County, under the New York
Simplified Procedure for Court Determination of Disputes pursuant to Section
3031 of the Civil Practice Law and Rules of the State of New York. Such election
may be exercised by either party (i) giving the other party a notice requesting
such judicial determination of the matter in dispute, which shall include an
express statement of the election making specific reference to this Article 39
and (ii) at the same time serving the other party with the judicial process for
submission of such dispute for such determination pursuant to said Section 3031.
In such event, each party shall be empowered to do all acts and to make all
motions consistent with the New York Simplified Procedure for Court
Determination of Disputes, including without limitation, the motion to settle
the terms of the statement specified in Section 3034 thereof.
40. Electricity
A. Landlord shall furnish the electric energy that Tenant shall reasonably
require in the Demised Premises on a "rent inclusion" basis. That is, there
shall be no separate charge to Tenant for such electric energy by way of
measuring the same on a meter but the value of such electric energy shall be
included in the fixed rent reserved hereunder. Commencing with the Substantial
Completion Date through September 30, 1996 the fixed rent specified in the
granting clause of this Lease shall include Twenty-Eight Thousand and Five
Hundred Nine ($28,509) Dollars per annum for the value of electricity to be
furnished to the Demised Premises, subject to periodic adjustments as
hereinafter provided. Commencing on October 1, 1996 through the Expiration Date
the fixed rent specified in the granting clause of this Lease shall include
Twenty-Nine Thousand One Hundred Twenty-Seven ($29,127) Dollars per annum for
the value of electricity to be furnished to the Demised Premises, subject to
periodic adjustment as hereinafter provided.
B. Landlord may from time to time select a reputable independent electrical
consultant ("Landlord's Engineer") to make surveys in the Demised Premises of
the electrical equipment and fixtures and the use of electric current. If such
survey shall disclose installation and/or use of additional fixtures, appliances
or equipment (other than lamps, typewriters, personal computers and similar
office machines, hereinafter called "Ordinary Equipment") or use of electric
current in excess of the value of electricity set forth in Article 40A hereof
(the value of the electricity included in the fixed rent) fixed rent shall be
increased by an amount which will reflect the value of such additional
electricity service furnished by Landlord and consumed by Tenant. The value of
the additional electricity service used by Tenant shall be computed on an annual
basis by applying to the additional electrical demand and consumption estimated
by the Engineer, the public utility rate schedule then applicable to Landlord
for the purchase of electricity for the Building, but without regard for the
electricity used outside the Demised Premises. The dollar amount so determined
shall be added to and incorporated in the fixed rent reserved hereunder with
respect to the Demised Premises, in place of the amount provided for in 40A
above, effective from the date such additional electricity service is used or
made available, and shall be reflected in a supplementary agreement amending
this Lease. All additional risers or other electrical conductors or equipment
required to provide any increase in electricity service to the Demised Premises
shall be provided by Landlord and the cost thereof shall be paid by Tenant on
Landlord's demand. The determination by Landlord's Engineer shall
-5-
<PAGE>
be binding on Tenant from and after the delivery of copies of such determination
to Tenant, unless, within fifteen (15) days after the delivery thereof, Tenant
disputes such determination. If Tenant shall dispute the determination, it
shall, at its own cost and expense, obtain from a reputable independent
electrical consultant its own determination of electrical consumption on the
Premises. Landlord's Engineer and Tenant's consultant shall then seek to agree
and if they cannot agree, they shall choose a third reputable electrical
consultant whose cost shall be shared equally by the parties, to make similar
determinations which shall be controlling. If they cannot agree on such a third
consultant within ten (10) days, then either party may apply to the Supreme
Court of the County of New York for such appointment.
C. If at any time or times after the date of this Lease Tenant shall wish
to connect any additional fixtures, appliances or equipment, other than
"Ordinary Equipment", to the Building electric distribution system or otherwise
to substantially increase its use of electricity in the Demised Premises over
that contemplated by the initial installation of lighting fixtures and power
receptacles or over that then prevailing, Tenant shall first request Landlord's
consent. Landlord shall not unreasonably withhold or delay any such consent.
However, as a condition to such consent, Landlord may require Tenant to agree to
an increase in the fixed rent by the amount which will reflect the value of such
additional electricity to be furnished by Landlord. Upon such request from
Tenant, Landlord at Tenant's expense, shall retain a reputable, independent
electrical consultant selected by Landlord to conduct a survey to determine the
value of such additional electricity to be furnished by the Landlord. The amount
of increase in the fixed rent to be charged to Tenant and the rights of the
parties if they do not agree upon the fixed rent increases shall both be
determined in accordance with Article 40B hereof.
D. If at any time or times after the date of this Lease the rates at which
Landlord purchases electricity from the public utility serving the Building
shall be increased or decreased (including without limitation, by reason of fuel
adjustment) or any charge or tax shall be imposed upon Landlord in connection
therewith or shall be increased or decreased (all of which are hereinafter
called a "rate change"), the fixed rent hereunder shall be increased or
decreased, as the case may be, effective as of the date of the rate change, upon
the demand of either party, in an annual amount which shall reflect the
resulting estimated increase or decrease in the annual cost to Landlord of
furnishing electricity to Tenant under the provisions of this Article. Such
increase or decrease in cost shall be calculated and reflected in the fixed rent
in the following manner: First: the average monthly number of kilowatts of
demand and the average monthly number kilowatt hours of consumption (or at the
option of Landlord only the average monthly number of kilowatt hours of
consumption) shall first be determined for the electricity used in the entire
Building over the 12 monthly period immediately preceding the rate change.
Second: the cost thereof to Landlord shall be calculated at the rates in effect
immediately prior to the rate change and at the rates in effect immediately
after the rate change. Third: the percentage by which such cost after the rate
change is greater or less than such cost before the rate change shall be
determined. Fourth: the amount than included in the fixed rent hereunder for the
value of electricity service shall be increased or decreased by the same
percentage, as the case may be. At the request of either party, the resulting
increase or decrease in fixed rent and in the amount included in the fixed rent
for electricity shall be recorded in a memorandum signed by the parties and from
time to time as appropriate may be incorporated in a supplementary agreement
modifying this Lease to reflect the then current amount included in the fixed
rent for electricity.
E. Landlord reserves the right to discontinue furnishing electricity to
Tenant in the Demised Premises on not less than forty-five (45) days' notice to
Tenant, or upon such shorter notice as may be required by the public utility
serving the Building, provided that Landlord shall not act in a discriminatory
manner towards Tenant in this regard. If Landlord exercises such right to
discontinue, or is compelled to discontinue furnishing electricity to Tenant,
this Lease shall continue in full force and effect and shall be unaffected
thereby, except only that from and after the effective date of such
discontinuance, Landlord shall not be obligated to furnish electricity to Tenant
and the fixed rent payable under this Lease shall be reduced by the amount then
included therein for electricity. If Landlord so discontinues furnishing
electricity to Tenant, Tenant shall arrange to obtain electricity directly from
the public utility serving the Building. Such electricity may be furnished to
Tenant by means of the then existing building system feeders, risers and wiring
to the extent that the same are available, suitable and safe for such purposes.
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<PAGE>
F. Landlord shall not be liable to Tenant in any way for any failure or
defect in the supply or character of electricity furnished to the Demised
Premises by reason of any requirement, act or omission of the public utility
serving the Building with electricity or for any reason not attributable to
Landlord. Tenant's use of electricity in the Demised Premises shall not at any
time exceed the capacity of any of the electrical conductors and equipment in or
otherwise serving the Demised Premises. Tenant shall furnish and install, at its
expense, all original and replacement lighting tubes, lamps, bulbs, and ballasts
required in the Demised Premises. The electrical system serving the Demised
Properties will have a capacity of six (6) watts per rentable square foot.
G. In no event shall Landlord be required to furnish electric energy to the
Demised Premises at less than one hundred ten (110%) percent of Landlord's "Base
Cost". Landlord's Base Cost shall be deemed to be Landlord's average cost per
kilowatt of demand and per kilowatt hour of consumption of electricity purchased
from the public utility for the entire Building, applied to the estimated
kilowatts of demand and kilowatt hours of consumption of electricity in the
Demised Premises.
41. Assignment and Subletting
Notwithstanding the provisions of Article 11 and in modification and
amplification thereof:
A. If Tenant shall desire to assign this Lease or to sublet all or any
portion of the Demised Premises as a whole, Tenant shall submit to Landlord a
written request for Landlord's consent to such assignment or subletting, which
request shall contain or be accompanied by the following information: (i) the
name and address of the proposed assignee or subtenant; (ii) a description
identifying the space to be sublet and Tenant's improvements included therein;
(iii) the terms and conditions of the proposed assignment or subletting; (iv)
the nature and character of the business of the proposed assignee or subtenant
and of its proposed use of the Demised Premises; and (v) current financial
information and any other information Landlord may reasonably request with
respect to the proposed assignee or subtenant. Landlord may then by notice to
such effect given to Tenant within thirty (30) days after receipt of Tenant's
request for consent and of such further information as Landlord may reasonably
request pursuant to clause (v) above, terminate this Lease (without a penalty
payment by Tenant to Landlord) on a date to be specified in said notice (the
"Termination Date") which shall not be earlier than one (1) day before the
effective date of the proposed assignment or subletting or later than thirty-one
(31) days after said effective date. Tenant shall then vacate and surrender the
Demised Premises on or before the Termination Date and the term of this Lease
shall end on the Termination Date as if that were the Expiration Date. Landlord
shall be free to, and shall have no liability to Tenant, if Landlord should
lease the Demised Premises to Tenant's prospective assignee or subtenant.
B. If Landlord shall not exercise its option to terminate this Lease
pursuant to Part A above, Landlord shall not unreasonably withhold or delay its
consent to the proposed assignment or subletting referred to in Tenant's notice
given pursuant to said Part A, provided that the following further conditions
shall be fulfilled.
(1) The Demised Premises shall not have been listed or otherwise
publicly advertised for assignment or subletting, without prior notice to
Landlord or at a rental rate less than the rate of fixed rent and
additional rent then payable hereunder therefor. However, this shall not be
deemed to prohibit Tenant from negotiating or consummating a sublease at a
lower rental rate, if and only if Tenant shall first have offered, on at
least twenty (20) days' written notice, to sublet the space involved to
Landlord for the same rents and term.
(2) Tenant shall not then be in default hereunder beyond the time
herein provided to cure such default.
(3) The proposed assignee or subtenant shall have a financial
standing, be of a character, be engaged in a business, and propose to use
the Demised Premises in a manner in keeping with the standards in such
respects of the other tennancies in the Building and the proposed assignee
or subtenant shall not then be a Tenant of any space in the Building other
than of space included in the Demised Premises. The proposed use
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of the Demised Premises by the proposed assignee or subtenant shall
not be likely to increase Landlord's operating expenses beyond that which
would be incurred for use by Tenant or for use in accordance with the
standards of use of other tenancies in the Building.
(4) In case of a subletting, it shall be expressly subject to all of
the obligations of Tenant under this Lease and the further condition and
restriction that the sublease shall not be assigned, encumbered or
otherwise transferred or the subleased premises further sublet by the
sublessee in whole or in part, or any part thereof suffered or permitted by
the sublessee to be used or occupy by others, without the prior written
consent of Landlord in each instance.
(5) The proposed assignee or subtenant shall have a net worth of not
less than Five Hundred Thousand ($500,000) Dollars.
(6) No subletting shall end later than one (1) day before the
Expiration Date of this Lease or shall be for a term of less than two (2)
years unless it ends not more than one month before the Expiration Date.
C. Every subletting hereunder is subject to the express condition, and by
accepting a sublease hereunder each subtenant shall be conclusively deemed to
have agreed, that if this Lease should be terminated prior to the Expiration
Date or if Landlord should succeed to Tenant's estate in the Demised Premises,
then at Landlord's election the subtenant shall attorn to and recognize Landlord
as the subtenant's Landlord under the sublease and the subtenant shall promptly
execute and deliver any instrument Landlord may reasonably request to evidence
such attornment.
D. Tenant shall furnish Landlord with a counterpart (which may be a
conformed or reproduced copy) of each sublease or assignment made hereunder
within ten (10) days after the date of its execution. Tenant shall remain fully
liable for the performance of all Tenant's obligations hereunder notwithstanding
any subletting provided for herein, and without limiting the generality of the
foregoing, shall remain fully responsible and liable to Landlord for all acts
and omissions of any subtenant or anyone claiming under or through any subtenant
which shall be in violation of any of the obligations of this Lease and any such
violation shall be deemed to be a violation by Tenant. Tenant shall pay Landlord
on demand any reasonable expense which Landlord may reasonably be required to
incur in acting upon any request for consent to assignment or subletting
pursuant to this Article.
E. Notwithstanding any assignment and assumption by the assignee of the
obligations of Tenant hereunder, Tenant herein named, and each immediate or
remote successor in interest of Tenant herein named, shall remain liable jointly
and severally (as a primary obligor) with its assignee and all subsequent
assignees for the performance of Tenant's obligations hereunder, and, without
limiting the generality of the foregoing, shall remain fully and directly
responsible and liable to Landlord for all acts and omissions on the part of any
assignee subsequent to it in violation of any of the obligations of this Lease.
F. Notwithstanding anything to the contrary hereinabove set forth, no
assignment of this Lease shall be binding upon Landlord unless the assignee
shall execute and deliver to Landlord an agreement, in recordable form, whereby
such assignee agrees unconditionally to be bound by and to perform all of the
obligations of Tenant hereunder and further expressly agrees that
notwithstanding such assignment the provisions of this Article shall continue to
be binding upon such assignee with respect to all future assignments and
transfers. A failure or refusal or such assignee to execute or deliver such an
agreement in recordable form shall not release the assignee from its liability
for the obligations of Tenant hereunder assumed by acceptance of the assignment
of this Lease.
G. If Tenant shall receive any consideration from its assignee (other than
a related corporation) for or in connection with assignment of this Lease,
Tenant shall account to Landlord therefor and shall pay over to Landlord as and
when received fifty (50%) percent of such consideration as shall not be
expressly and specifically designated by the assignee as paid for the purchase
of Tenant's property in the Demised Premises. If Tenant shall sublet the Demised
Premises to anyone (other than a related corporation) for rents which for any
period
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shall exceed the fixed rent and additional rent payable under this Lease for the
same period, Tenant shall pay Landlord, as additional rent hereunder, fifty
(50%) percent of such excess within five (5) days after such excess is received
by Tenant. Notwithstanding the foregoing, Tenant may deduct its reasonable
expenses incurred in making an assignment or a subletting from the amount
required to be paid over to Landlord under this Part G, including brokerage
commissions paid by Tenant, advertising costs and reasonable legal fees paid in
connection with such subletting or assignment.
H. Tenant may, upon prior notice to Landlord, but without Landlord's prior
written consent, assign this Lease or sublet in whole the Demised Premises to a
corporation or other entity (herein called a "related corporation") which shall
control, be controlled by, or be under common control with Tenant, for any of
the purposes permitted to Tenant. As used herein, in defining a related
corporation, control shall be deemed established by ownership of more than fifty
(50%) percent of the stock or other voting interest of the controlled
corporation or of the partnership interests in a partnership.
42. Air Conditioning - Supplement Article 28
Landlord has heretofore furnished and installed an air conditioning system
with duct work in the Demised Premises and agrees to maintain the same in
reasonably good condition for the proper distribution of cooled, de-humidified
and filtered air during the period from May 1st to September 30th; and tempered
outside air during the heating season to the office and reception areas in the
Demised Premises on business days from 8:00 a.m. to 6:00 p.m. except on
Saturdays, when the hours shall be 8:00 a.m. to 1:00 p.m. The Tenant agrees to
use its best efforts to keep and cause to be kept closed all windows in the
Demised Premises whenever the air cooling system is in operation, and the Tenant
at all times agrees to cooperate fully with the Landlord and to abide by all the
regulations and requirements which the Landlord may reasonably prescribe for the
proper functioning and protection of said air cooling system. The Landlord
reserves the right to interrupt, curtail, stop or suspend such air cooling when
necessary by reason of accident or of repairs, alterations or improvements which
in the judgment of the Landlord are desirable or necessary to be made; or of
difficulty or inability in securing supplies or labor, or of strikes, or of any
other cause beyond the reasonable control of the Landlord. Landlord's agents or
contractors shall be permitted at any time (in an emergency) and from time to
time (on prior notice) to enter the Demised Premises at any hour to make or
facilitate repairs or replacements to the said air cooling system or any part or
parts thereof, whether in or outside of the Demised Premises, its supply lines,
connections and equipment in the Building of which the Demised Premises are a
part, or to make repairs or replacements to the equipment upon the Demised
Premises; and Landlord may in an emergency, forcibly break into and enter any
portions of the Premises reasonably necessary for such purposes without
liability and without affecting the obligations under the terms of the Lease. No
diminution or abatement of rent or other compensation shall be or will be
claimed by the Tenant, nor shall this Lease or any of the obligations of the
Tenant be affected or reduced by reason of interruption or curtailment or
stoppage or suspension due to accident, or to repairs, alterations or
improvements, or to difficulty or inability in securing supplies or labor, or to
strikes or to any other cause beyond the reasonable control of the Landlord.
43. Estoppel Certificate, Memorandum
A. Each party shall, at any time and from time to time, at the request of
the other party, upon not less than five (5) days' notice, if given in person,
or ten (10) days' notice, if given by mail, execute and deliver to the other a
statement certifying that this Lease is unmodified and in full force and effect
(or if there have been modifications, that the same is in full force and effect
as modified and stating the modifications), certifying the dates to which the
fixed rent and additional rent have been paid, and stating whether or not, to
the best knowledge of the signer, the other party is in default in performance
of any of its obligations under this Lease, and if so, specifying each such
default of which the signer may have knowledge, it being intended that any such
statement delivered pursuant hereto may be relied upon by others with whom the
party requesting such certificate may be dealing.
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B. At the request of either party, Landlord and Tenant shall promptly
execute, acknowledge and deliver a memorandum with respect to this Lease
sufficient for recording. Such memorandum shall not in any circumstances be
deemed to change or otherwise affect any of the obligations or provisions of
this Lease.
44. Notice to Superior Lessors and Mortgagees
A. The ground and underlying Leases and mortgages referred to in Article 7,
to which this Lease is subject and subordinate, are hereinafter sometimes called
"superior Leases" and "superior mortgages", respectively, and the lessor of a
superior Lease or its successor in interest at the time referred to is
hereinafter sometimes called the "lessor" of such superior Lease. No prepayment
of more than one month's fixed rent shall be valid or binding upon the holder of
a superior mortgage or the lessor of a superior Lease unless expressly approved
in writing by such holder or lessor or any of its predecessors in interest.
B. In the event of any act or omission of Landlord which would give Tenant
the right, immediately or after lapse of a period of time, to cancel or
terminate this Lease, or claim a partial or total eviction, Tenant shall not
exercise such right (i) until it has given written notice of such act or
omissions to the holder of each superior mortgage and the lessor of each
superior Lease whose name and address shall previously have been furnished to
Tenant in writing, and (ii) unless such act or omission shall be one which is
not capable of being remedied by Landlord or such mortgage holder or lessor
within a reasonable period of time, until a reasonable period for remedying such
act or omission shall have elapsed following the giving of such notice and
following the time when such holder or lessor shall have become entitled under
such superior mortgage or superior Lease, as the case may be, to remedy the same
(which reasonable period shall in no event be less than the period to which the
Landlord would be entitled under this Lease or otherwise, after similar notice,
to effect such remedy), provided such holder or lessor shall with due diligence
give Tenant written notice of its intention to, and commence and continue to
remedy such act or omission.
C. If the lessor of a superior Lease or the holder of a superior mortgage
shall succeed to Landlord's estate in the Building or the rights of Landlord
under this Lease, whether through possession or foreclosure action or delivery
of a new Lease or a deed or otherwise, then at the election of such party so
succeeding to Landlord's rights (herein sometimes called "Successor Landlord"),
Tenant shall attorn to and recognize such Successor Landlord as Tenant's
landlord under this Lease, and shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such attornment.
Tenant hereby waives any right Tenant may have under any present or future law
to terminate this Lease or surrender the Demised Premises by reason of the
institution of any proceeding to terminate a superior Lease or action to
foreclose a superior mortgage and this Lease shall not be affected by any such
proceeding or action.
D. If in connection with the procurement, continuation or renewal of any
financing for which the Land and/or the Building or the interest of the lessee
therein under a superior lease represents collateral in whole or in part, an
institutional lender shall request reasonable modifications of this Lease as a
condition of such financing, Tenant will not withhold its consent thereto
provided that such modifications do not increase any of Tenant's financial or
other obligations of Tenant under this Lease or materially and adversely affect
any rights of Tenant under this Lease.
45. Qualifications to Use
The use of the Demised Premises for the purposes specified in Article 2
shall not in any event be deemed to include, and Tenant shall not use, or permit
the use of, the Demised Premises or any part thereof for:
(a) sale of, or traffic in, any spirituous liquors, wines, ale or beer
kept in the Demised Premises, except as incidental to the service of food
to Tenant's officers, employees and guests in its dining facilities in the
Demised Premises;
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(b) sale at retail of any other products kept in the Demised Premises,
except sale to Tenant's employees, by vending machines or otherwise, of
such items as it has been or may become Tenant's custom and practice to
sell in its offices;
(c) the rendition of medical, dental or other diagnostic or
therapeutic services (except for the maintenance of a medical department
for Tenant's employees), or the conduct of any business or occupation which
predominantly involves direct patronage of the general public in the
Demised Premises; or
(d) the conduct of a public auction of any kind;
(e) the use by any Federal, State, local or foreign governmental
agency;
(f) the conduct of a school of any kind.
46. Liability of Landlord
Tenant shall look only to Landlord's estate and interest in the Land and
Building (or the proceeds thereof) and if and to the extent expressly provided
for in this Lease offset against the rents payable under this Lease, for the
satisfaction of Tenant's remedies for the collection of any judgment (or other
judicial process) requiring the payment of money by Landlord in the event of any
default by Landlord under this Lease, and no other property or other assets of
Landlord shall be subject to levy, execution or other enforcement procedure for
the satisfaction of Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder or Tenant's use and occupancy of
the Demised Premises.
47. Consents
Wherever it is specifically provided in this Lease that a party's consent
is not to be unreasonably withheld, a response to a request for such consent
shall also not be unreasonably delayed.
48. Preparation of the Demised Premises
A. The Demised Premises shall be prepared for Tenant's occupancy by
OESTREICHER CONSTRUCTION CORPORATION ("OCC") as Tenant's General Contractor, at
Tenant's sole cost and expense. The installations, facilities, materials and
work to be installed and performed in the Demised Premises except as set forth
in Article 48B hereof shall be hereinafter referred to as "Tenant's Work".
Landlord agrees to contribute the sum of Four Hundred Twenty-Nine Thousand Two
Hundred Forty ($429,240) Dollars toward the cost of Tenant's Work ("Landlord's
Construction Allowance"). Payment shall be made against invoices for work
performed within twenty (20) days after receipt by Landlord of such invoices.
Tenant shall submit to Landlord on or before October 14, 1994, for Landlord's
approval, plans reflecting Tenant's Work to be performed in the Demised Premises
("Tenant's Plans"). Tenant shall pay any cost for Tenant's Work in excess of
Landlord's Construction Allowance. OCC shall perform Tenant's Work based on
commercially competitive charges and in accordance with Tenant's Plans and shall
obtain competitive bids from subcontractors.
B. Tenant shall have the right to apply up to fifteen (15%) percent of
Landlord's Construction Allowance towards construction fees, architectural fees,
engineering fees, moving fees, telecommunication equipment and fees and
furniture.
C. Landlord agrees that it will perform in the Demised Premises the
following work at Landlord's sole cost and expense (hereinafter referred to as
"Landlord's Work"):
(i) demolish walls in the Demised Premises as per Tenant's Plans and
deliver the Demised Premises in broom clean condition;
(ii) refurbish existing windows in the Demised Premises and deliver
windows in fully operating condition;
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(iii) wash and clean bathrooms and bathroom fixtures; paint and
re-lamp bathrooms and replace any fixtures which are broken;
(iv) provide and install in code complying condition all life safety
signs, illuminated exit signs, speakers, strobes, alarms and pull
boxes and tie in Tenant's fire and safety systems into the
Building's "Class E" system;
(v) provide a minimum of six (6) watts per usable square foot
electrical service for power and lighting in the Demised
Premises;
(vi) refurbish public corridor providing access to the Demised
Premises in a Building Standard manner;
(vii) remove, treat and encapsulate any asbestos containing materials
("ACM") found in the Demised Premises and furnish Form ACP-5 to
Tenant at Landlord's expense;
(viii) if required, to make available for Tenant's use a handicap
restroom in the Building in compliance with Americans With
Disabilities Act of 1990.
49. Readiness for Occupancy
Landlord shall given Tenant fifteen (15) business days' written notice that
the Demised Premises are available for occupancy. The Demised Premises shall be
deemed ready for occupancy upon substantial completion of Landlord's Work and
Tenant's Work (hereinafter referred to as the "Substantial Completion Date").
The Demised Premises shall be deemed substantially completed notwithstanding the
fact that minor insubstantial details of construction, mechanical adjustment or
decoration remain to be performed, the completion of which does not materially
interfere with Tenant's use of the Demised Premises. In the event that Tenant
makes any changes to Tenant's Plans after Tenant's Plans have been approved by
Landlord and the performance of such changes shall delay the performance of
either Landlord's Work or Tenant's Work, then in such instance, the Demised
Premises shall be deemed ready for occupancy when they would have been but for
such delay caused by changes to Tenant's Plans and the Substantial Completion
Date shall be accelerated for each day of delay. Upon the Substantial Completion
Date, Tenant shall be deemed to have been given and taken possession of the
Demised Premises.
50. Brokers
Tenant covenants, represents and warrants that Tenant had no dealings or
negotiations with any broker, or agent other than NICOLA M. HERYET and CORMAC
BARRETT of JOSEPH HILTON & ASSOCIATES, 444 Madison Avenue, New York, New York
10022 in connection with the consummation of this Lease, and Tenant covenants
and agrees to pay, hold harmless and indemnify Landlord from and against any and
all costs, expenses (including reasonable attorney's fees) or liability for any
compensation, commissions or charges claimed by any other broker or agent with
respect to this Lease or the negotiation thereof caused by Tenant's acts.
Landlord shall pay the foregoing broker its commission pursuant to one or more
separate agreements.
51. Corporate Tenant and Agent of Landlord
If Tenant is a corporation, the persons executing this Lease on behalf of
Tenant hereby covenant, represent and warrant that Tenant is a duly incorporated
or duly qualified (if foreign) corporation and is authorized to do business in
the State of New York (a copy of evidence thereof to be supplied to Landlord
upon request), and that the person or persons executing this Lease on behalf of
Tenant is an officer or are officers of such Tenant, and that he or they as such
officers are duly authorized to execute, acknowledge and deliver this Lease to
Landlord (a copy of a resolution to that effect to be supplied to Landlord upon
request). The person or persons executing this Lease on behalf of Landlord
represent and warrant that he or they are duly authorized to execute,
acknowledge and deliver this Lease to Tenant.
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52. Delivery and Execution of Lease
This Lease shall not be effective to vest an interest in Tenant unless
executed by Landlord and delivered to Tenant. Upon Tenant occupying the Demised
Premises, all other leases for office space entered into between Tenant and
Landlord shall be deemed terminated, provided, however, Tenant shall remain
obligated to pay to Landlord all monies due under such lease including
Additional Rent through the date of termination.
53. Renewal Term
A. Tenant shall have the option (the "Renewal Option") to extend the term
of this Lease for an additional period of five (5) years (the "Renewal Term"),
which Renewal Term shall commence on the date immediately succeeding the
Expiration Date and end on the day immediately preceding the fifth (5th)
anniversary of the Expiration Date, provided that (i) this Lease shall have not
been previously terminated; (ii) no default of which Tenant shall have been
notified shall have occurred and be continuing (1) on the date Tenant gives
Landlord written notice (the "Renewal Notice") of Tenant's election to exercise
the Renewal Option and (2) on the Expiration Date. The Renewal Option may be
exercised by delivering the Renewal Notice to Landlord at least nine (9) months
prior to the Expiration Date. Time is of the essence with respect to the giving
of the applicable Renewal Notice.
B. If Tenant exercises the Renewal Option, the Renewal Term shall be upon
the same terms, covenants and conditions as those contained in this Lease,
except that (i) the rent shall be deemed to mean the fair market rent for such
space as determined by Landlord and set forth in a written notice to Tenant,
which determination shall be as of the date occurring six (6) months prior to
the commencement date of the Renewal Term (the "Determination Date"), (ii)
Tenant shall not be entitled to any further credit against the rent, and (iii)
the Premises shall be delivered in "as is" condition.
C. In the event Tenant gives the Renewal Notice in accordance with the
provisions of Article 53A hereof and Tenant disputes the fair market rent as
determined by Landlord pursuant to Article 53A hereof then at any time on or
before the date occurring twenty (20) days after Tenant has been notified by
Landlord of the fair market rent, Tenant may initiate the appraisal process
provided for herein by giving notice to that effect to Landlord, and if Tenant
so initiates the appraisal process such notice shall specify the name and
address of the person designated to act as an arbitrator on its behalf. Within
twenty (20) days after the designation of Tenant's arbitrator, Landlord shall
give notice to Tenant specifying the name and address of the person designated
to act as an arbitrator on its behalf. The two arbitrators so chosen shall meet
within ten (10) days after the second arbitrator is appointed, and if, within
twenty (20) days after the second arbitrator is appointed, the two arbitrators
shall not agree upon a determination in accordance with this Article, they shall
together appoint a third arbitrator. In the event of their being unable to agree
upon such appointment within thirty (30) days after the appointment of the
second arbitrator, the third arbitrator shall be selected by the parties
themselves if they can agree thereon within a further period of fifteen (15)
days. If the parties do not agree, then either party, on behalf of both and on
notice to the other, may request such appointment by the American Arbitrator
Association (or any organization successor thereto) in accordance with its rules
then prevailing or if the American Arbitration Association (or successor
organization) shall fail to appoint said third arbitrator within fifteen (15)
days after such request is made, then either party may apply, on notice to the
other, to the Supreme Court, New York County, New York (or any other court
having jurisdiction and exercising functions similar to those now exercised by
said Court) for the appointment of such third arbitrator.
D. Each party shall pay the fees and expenses of the one of the two
original arbitrators appointed by or for such party, and the fees and expenses
of the third arbitrator and all other expenses (not including the attorneys
fees, witness fees and similar expenses of the parties which shall be borne
separately by each of the parties) of the arbitration shall be borne by the
parties equally.
E. The majority of the arbitrators shall determine fair market rent of the
Demised Premises and render a written certified report of their determination to
both Landlord and Tenant within sixty (60) days of the appointment of the first
two arbitrators or sixty (60) days from the appointment of the third arbitrator
if such third arbitrator is appointed pursuant to this Article
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53C; and the fair market rent, so determined, shall be applied to determine, as
above provided, the base rent (exclusive of electricity) pursuant to Article 53A
hereof for the Renewal Term.
F. Each of the arbitrators selected as herein provided shall have at least
ten (10) years experience in the leasing and renting of office space in Class A
office buildings in New York County.
54. Right of "First" Refusal
During the term of this Lease, in the event Landlord receives an acceptable
offer to lease any portion of the ninth (9th) floor premises (the "Refusal
Premises") from any third party, Landlord shall notify Tenant of said acceptable
offer (the "Offer") including the terms and conditions thereof ("Landlord's
Notice"). Tenant within a period of seven (7) business days after delivery of
Landlord's Notice shall have the right to lease the Refusal Premises from
Landlord on the same terms and conditions as set forth in the Offer, provided
that Tenant exercises its right by giving Landlord written notice within this
time period. If Tenant shall fail to respond to Landlord's Notice, time being of
the essence, Landlord shall be free to lease the Refusal Premises to said third
party offeree. If said third party offeree fails to enter into a lease for the
Refusal Premises, then Tenant's rights hereunder shall again come into existence
as to the next proposed offer for the Refusal Premises received by Landlord.
CLEMONS PROPERTIES PARTNERS, as Agent
By: /s/Signature
---------------------------------
VIDEO BROADCASTING CORPORATION
By: /s/J. Graeme McWhirter
---------------------------------
Executive Vice President
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LEASE MODIFICATION AGREEMENT
LEASE MODIFICATION AGREEMENT made this ___ day of
December, 1995, between Clemons Properties Partners, as Agent, with
offices at 708 Third Avenue, New York, New York, (hereinafter referred
to as "Landlord") and Video Broadcasting Corporation, a Delaware
corporation with offices at 708 Third Avenue, New York, New York,
(hereinafter referred to as "Tenant").
W I T N E S S E T H:
WHEREAS, by lease dated the 21st day of September,
1994 (the "Lease") Landlord leased to Tenant a portion of the tenant
occupancy area on the ninth (9th) floor, as shown on the plan annexed
to the Lease as Exhibit A (the "Demised Premises") in the building
known as 708 Third Avenue in the Borough of Manhattan, City and State
of New York, for a term of ten (10) years; and
WHEREAS, the parties are presently negotiating the
terms of a new lease (or Lease Modification Agreement) for an
additional two thousand nine hundred eighty-five (2,985) square foot
portion of the ninth (9th) floor in the Building (the "New Ninth Floor
Lease"); and
WHEREAS, until the parties consummate the New Ninth
Floor Lease and occupy the additional premises on the ninth (9th)
floor (the "New Ninth Floor Premises"), Tenant desires to occupy
temporary premises on the eighteenth (18th) floor of the Building as
shown on the floor plan annexed hereto as Exhibit A and as indicated
by hatch marks (the "Temporary Premises"); and
<PAGE>
WHEREAS, the Lease and this Lease Modification
Agreement are hereinafter referred to as the "Lease".
NOW, THEREFORE, the parties hereto for good and
valuable considerations, hereby agree to modify the Lease as follows:
1. Leased Premises.
The Granting Clause of the Lease is hereby
amended to provide that the Demised Premises hired by the Tenant under
the Lease are hereby enlarged effective December 10, 1995 to include
the Temporary Premises. The Demised Premises and the Temporary
Premises are hereinafter sometimes referred to as the "Demised
Premises".
2. Term.
The term of occupancy for the Temporary
Premises shall be on a month to month basis and may be terminated by
Landlord: (a) upon thirty (30) days' written notice to Tenant in the
event Tenant fails to execute the New Ninth Floor Lease within a
reasonable time period from the date hereof; (b) if Tenant is in
default under the term of the Lease; or (c) if Landlord leases the
Temporary Premises to a third party. The term of occupancy for the
Temporary Premises may be terminated by Tenant on thirty (30) days'
written notice to Landlord.
3. Annual Rent for the Temporary Premises.
In addition to the fixed rent payable by Tenant under the Granting
Clause of the Lease commencing December 1, 1995, Tenant shall pay to
Landlord during the term hereof the amount of Two Thousand Seven
Hundred Eighteen Dollars and 17/100 ($2,718.17) per month as fixed
rent for the Temporary Premises (including
<PAGE>
Three Hundred Twenty-Six Dollars and 25/100 ($326.25) for the value of
electricity provided to the Temporary Premises). In the event Tenant
executes the New Ninth Floor Lease then the fixed rent for the
Temporary Premises paid by Tenant less the monthly charge for the
value of electricity ($326.25) from December 10, 1995 through March 8,
1996 shall be credited by Landlord against the payments due from
Tenant under the New Ninth Floor Lease.
4. "As Is" Condition.
Tenant shall occupy the Temporary Premises
in an "as is" condition. Tenant acknowledges that the Temporary
Premises are a part of larger premises on the eighteenth (18th) floor
and that Tenant shall limit its occupancy and use solely to the
Temporary Premises.
5. Failure to Vacate.
In the event that (i) Tenant fails to
execute the New Ninth Floor Lease and to occupy the New Ninth Floor
Premises for any reason whatsoever, (ii) Landlord notifies Tenant that
it has leased the Temporary Premises to a third party or (iii) Tenant
is in default under the Lease, Tenant shall immediately surrender and
vacate the Temporary Premises. The parties recognize and agree that
the damages to Landlord resulting from any failure by Tenant to timely
surrender and vacate possession of the Temporary Premises as provided
for in this Agreement will be extremely substantial, will exceed the
amount of monthly rent therefore payable under the Lease and will be
impossible of accurate measurement. Tenant therefore agrees that if
possession of the Temporary Premises is not surrendered to Landlord in
accordance with the terms of this Agreement that Tenant shall pay to
Landlord as
<PAGE>
liquidated damages for each month and for each portion of any month
during which Tenant holds over in the Temporary Premises, a sum equal
to three times the rent which was payable per month under the Lease
for the Temporary Premises. Tenant agrees that it shall indemnify and
save Landlord harmless against any costs, including reasonable legal
fees, resulting from unreasonable delay by Tenant in surrendering the
Temporary Premises.
6. Miscellaneous.
The covenants, conditions, and agreements
contained in this Lease Modification shall bind and inure to the
benefit of Landlord and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as
otherwise provided in the Lease, their assigns.
It is expressly understood that in all
other respects, the terms and conditions of the Lease shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have
respectfully signed and sealed this Lease Modification Agreement as of
the day and year first above written.
CLEMONS PROPERTIES PARTNERS, as Agent
By: Signature
General Partner
VIDEO BROADCASTING CORPORATION
By:J. Graeme McWhirter
<PAGE>
SECOND LEASE MODIFICATION
SECOND LEASE MODIFICATION AGREEMENT made as of this 4th day of March, 1996,
between Clemons Properties Partners, as Agent, with offices at 708 Third Avenue,
New York, New York, (hereinafter referred to as "Landlord") and Video
Broadcasting Corporation, a Delaware corporation with offices at 708 Third
Avenue, New York, New York, (hereinafter referred to as "Tenant").
W I T N E S S E T H
WHEREAS, by lease dated the 21st day of September, 1994 (the "Lease")
Landlord leased to Tenant the tenant occupancy area on the ninth (9th) floor
(the "Exhibit A Premises"), in the Building known as 708 Third Avenue in the
Borough of Manhattan, City and State of New York, as shown on the plan annexed
to the Lease as Exhibit A, as indicated by cross hatching, for a term commencing
February 3, 1995 and ending February 2, 2005; and
WHEREAS, as of the __ day of December, 1995, Landlord and Tenant entered
into a First Lease Modification Agreement; and
WHEREAS, Landlord and Tenant desire to further modify the Lease.
NOW, THEREFORE, the parties hereto for good and valuable considerations,
hereby agree to further modify the Lease as follows:
1. Enlargement of the Leased Premises. The Granting Clause of the Lease is
hereby amended to provide that Tenant hereby hires from Landlord the additional
premises on the ninth (9th) floor in the Building as shown on the floor plan
annexed hereto as Exhibit B, as indicated by cross hatching (the "Additional
Premises"). The Exhibit B Premises and the Additional Premises are hereinafter
collectively referred to as the "Demised Premises".
2. Preparation of the Additional Premises. A. The Additional Premises shall
be prepared for Tenant's occupancy by OESTREICHER CONSTRUCTION CORPORATION
("OCC") as Tenant's General Contractor, at Tenant's sole cost and expense. The
installations, facilities, materials and work to be installed and performed in
the Additional Premises shall be
<PAGE>
hereinafter referred to as "Tenant's Work". Landlord agrees to contribute the
sum of One Hundred Twenty-Five Thousand Three Hundred Seventy ($125,370) Dollars
towards the cost of Tenant's Work ("Landlord's Construction Allowance"). Payment
shall be made against invoices for work performed within twenty (20) days after
receipt by Landlord of such invoices. Tenant shall submit to Landlord on or
before March 15, 1996, for Landlord's approval, which shall not be unreasonably
withheld or delayed, plans reflecting Tenant's Work to be performed in the
Additional Premises ("Tenant's Plans"). Tenant shall pay any cost for Tenant's
Work in excess of Landlord's Construction Allowance. OCC shall perform Tenant's
Work based on commercially competitive charges and in accordance with Tenant's
Plans and shall obtain competitive bids from subcontractors.
B. The Additional Premises shall be deemed ready for occupancy when OCC
shall have substantially completed Tenant's Work in the Additional Premises in
accordance with Tenant's Plans and shall have given five (5) days' written
notice to Tenant to such effect (the "Substantial Completion Date"). The demised
premises shall be deemed substantially completed notwithstanding the fact that
minor insubstantial details of construction, mechanical adjustment or decoration
remain to be performed, the non-completion of which does not materially
interfere with Tenant's use of the Additional Premises.
3. Fixed Rent. The Granting Clause of the Lease is hereby amended to
provide that upon the occurrence of the Substantial Completion Date for the
Additional Premises, the fixed rent payable by Tenant for the Demised Premises
through February 3, 1996 shall be Two Hundred Twenty Thousand Seven Hundred
Sixty-Four ($220,764) Dollars including Twenty-Eight Thousand Five Hundred Nine
($28,509) Dollars for the value of electricity provided to the Demised Premises;
and the fixed rent payable for the Demised Premises for the period February 4,
1996 through April 30, 1996 shall be at the rate of Three Hundred Thirty-Two
Thousand One Hundred Twenty-Four ($332,124) Dollars including Twenty-Eight
Thousand Five Hundred Nine ($28,509) Dollars for the value of electricity
provided to the Demised Premises; and the fixed rent payable for the Demised
Premises for the period May 1, 1996 through September 30, 1996 shall be at the
rate of Four Hundred Twelve Thousand Two Hundred Seventy-One Dollars and 25/100
($412,271.25) including Thirty Seven Thousand Sixteen Dollars and 25/100
($37,016.25)
<PAGE>
for the value of electricity provided to the Demised Premises; and the fixed
rent payable for the Demised Premises commencing October 1, 1996 through
February 2, 2000 shall be Three Hundred Fifty-Four Thousand Five Hundred
Fifty-Four Dollars and 25/100 ($354,554.25) including Thirty-Seven Thousand Six
Hundred Thirty-Four Dollars 25/100 ($37,634.25) for the value of electricity
provided to the Demised Premises; and the fixed rent payable commencing February
3, 2000 through February 2, 2005 Three Hundred Eighty Thousand Nine Hundred
Sixty Four Dollars and 25/100 ($380,964.25) Thirty Seven Thousand Six Hundred
Thirty-Four Dollars 25/100 ($37,634.25) for the value of electricity provided to
the Demises Premises.
In the event that OCC's construction work in Portion D is delayed due to
circumstances beyond the control of OCC or landlord or OCC fails to complete the
construction on a timely basis, the rent for Portion D shall be abated from May
1, 1996 until such time the work is completed in accordance with Article 2(b)
above.
4. Adjustment of Rent. Article 38A and Article 38B of the lease are amended
as follows:
A. For the Period from the Substantial Completion Date of the Additional
Premises through September 30, 1996:
(i) the Demised Premises (which are comprised from approximately 13,205
square feet) shall be divided into four portions as follows: Portion A comprised
of 4,275 feet, Portion B comprised of 1,305 feet, Portion C comprised of 4,640
feet, and Portion D comprised of 2,985 feet;
(ii) the term "Present Taxes" for Portion A shall mean taxes imposed on the
Real Property for the fiscal year from July 1, 1986 through June 30, 1987;
(iii) the term "Present Taxes" for Portion B shall mean taxes imposed on the
Real Property for the fiscal year from July 1, 1992 through June 30, 1993;
(iv) the term "Present Taxes" for Portion C and Portion D shall mean taxes
imposed on the Real Property for the fiscal year from July 1, 1994 through June
30, 1995;
(v) the percentage multiplier as set forth in Article 38A and Article 38B
for Portion A shall be 1.464%; for Portion B .447%; for Portion C 1.191%; and
for Portion D .894%; and,
(vi) the "Base Year for Operating Costs" pursuant to Article 38B shall be
1986 for Portion A; 1992 for Portion B; and 1995 for Portion C and Portion D.
<PAGE>
B. For the Period from October 1, 1996 through the Expiration Date:
(i) the percentage multiplier 3.996% shall be applicable; and,
(ii) the term "Present Taxes" for the Demised Premises shall mean Taxes
imposed on the Real Property for fiscal year July 1, 1994 through June 30, 1995
and the Base Year for Operating Costs under Article 38B shall be the year ending
December 31, 1995.
For both of these periods all other provisions of Article 38A and 38B of
the Lease shall be applicable.
5. Electricity. Effective as of the Substantial Completion Date through
September 30, 1996, Article 40 of the Lease is modified to provide that the
fixed annual rent specified in the Granting Clause, shall include Thirty Seven
Thousand Sixteen Dollars and 25/100 ($37,016.25) for the value of electricity to
be furnished to the Demised Premises; and effective October 1, 1996 through the
Expiration Date Thirty-Seven Thousand Six Hundred Thirty-Four Dollars 25/100
($37,634.25) for the value of electricity provided to the Demised Premises.
6. Delivery and Execution.
Submission by Landlord of this Second Lease Modification Agreement for
execution by Tenant shall confer no rights or impose any obligations on either
party unless and until both Landlord and Tenant shall have executed this Lease
and duplicate originals thereof shall have been
7. Miscellaneous.
The covenants, condition, and agreements contained in this lease
modification agreement shall bind and inure to the benefit of Landlord and
Tenant and their respective distributees, executors, administrators, successors,
and except as otherwise provided in the Lease, their assigns.
It is expressly understood that in all other respects, the terms and
conditions of the Lease shall remain in full force and effect.
8. Brokers.
Tenant covenants, represents and warrants that Tenant had no dealings or
negotiations
<PAGE>
with any broker, or agent in connection with the consummation of this Lease, and
Tenant covenants and agrees to pay, hold harmless and indemnify Landlord from
and against any and all costs, expenses (including reasonable attorney's fees)
or liability for any compensation, commissions or charges claimed by any broker
or agent with respect to this lease or the negotiation thereof caused by
Tenant's acts. Landlord shall pay the foregoing broker its commission pursuant
to one or more separate agreements.
Landlord covenants, represents and warrants that Landlord had no dealings
or negotiations with any broker, or agent in connection with the consummation of
this Lease, and Landlord covenants and agrees to pay, hold harmless and
indemnify Tenant from and against any and all costs, expenses (including
reasonable attorney's fees) or liability for any compensation, commissions or
charges claimed by any broker or agent with respect to this lease or the
negotiation thereof caused by Landlord's acts. Tenant shall pay the foregoing
broker its commission pursuant to one or more separate agreements.
IN WITNESS WHEREOF, the parties hereto have respectfully signed and sealed
this Second Lease Modification Agreement as of the day and year above written.
CLEMONS PROPERTIES PARTNERS, as Agent
By: [Signature]
---------------------------------
General Partner
VIDEO BROADCASTING CORPORATION
By /s/ J. Graeme McWhirter EVP
<PAGE>
THIRD LEASE MODIFICATION AGREEMENT
THIRD LEASE MODIFICATION AGREEMENT made as of this ____ day of May, 1996,
between Clemons Properties Partners, as Agent, with offices at 708 Third Avenue,
New York New York, (hereinafter referred to as "Landlord") and Video
Broadcasting Corporation, a Delaware corporation with offices at 708 Third
Avenue, New York, New York, (hereinafter referred to as "Tenant").
W I T N E S S E T H:
WHEREAS, by lease dated the 21st day of September, 1994 (the "Lease")
Landlord leased to Tenant the tenant occupancy area on the ninth (9th) floor
(the "Exhibit A Premises"), in the Building known as 708 Third Avenue in the
Borough of Manhattan, City and State of New York, as shown on the plan annexed
to the Lease as Exhibit A, as indicated by cross hatching, for a term commencing
February 3, 1995 and ending February 2, 2005; and
WHEREAS, as of the ____ day of December, 1995 Landlord and Tenant entered
into a First Lease Modification Agreement to the Lease; and
WHEREAS, as of the 4th day of March, 1996, Landlord and Tenant entered into
a Second Lease Modification Agreement to the Lease enlarging the Demised
Premises, as shown on the Plan annexed hereto as Exhibit A-1; and
WHEREAS, Landlord and Tenant desire to further modify the Lease.
NOW, THEREFORE, the parties hereto for good and valuable considerations,
hereby agree to further modify the Lease as follows:
1. Enlargement of the Leased Premises. The Granting Clause of the Lease is
hereby amended to provide that Tenant hereby hires from Landlord the premises on
the ninth (9th) floor in the Building, as shown on the floor plans annexed
hereto as Exhibit A-2 and Exhibit A-3 and, indicated by cross hatching (and
referred to collectively as the "Exhibit A-2 and Exhibit A-3 Premises" and
individually as the "Exhibit A-2 Premises" and the "Exhibit A-3 Premises"). The
Exhibit A, A-1, A-2 and A-3 Premises are hereinafter collectively referred to as
the "Demised Premises".
<PAGE>
2. Preparation of the Exhibit A-2 and Exhibit A-3 Premises.
A. The Exhibit A-2 Premises shall be prepared for Tenant's occupancy
by OESTREICHER CONSTRUCTION CORPORATION ("OCC") as Tenant's General Contractor,
at Tenant's sole cost and expense. The installations, facilities, materials and
work to be installed and performed in the Exhibit A-2 Premises shall be
hereinafter referred to as "Tenant's Work". Landlord agrees to contribute the
sum of Eighteen Thousand Six Hundred and Ninety Dollars and 00/100 ($18,690.00)
towards the cost of Tenant's Work ("Landlord's Construction Allowance"). Payment
shall be made against invoices for work performed within twenty (20) days after
receipt by Landlord of such invoices. Tenant shall submit to Landlord, for
Landlord's approval, on or before May 3, 1996, plans reflecting Tenant's Work to
be performed in the Exhibit A-2 Premises ("Tenant's Plans"). Tenant shall pay
any cost for Tenant's Work in the Exhibit A-2 Premises in excess of Landlord's
Construction Allowance. OCC shall perform Tenant's Work based on commercially
competitive charges and in accordance with Tenant's Plans and shall obtain
competitive bids from subcontractors. The Exhibit A-2 Premises shall be deemed
ready for occupancy when OCC shall have substantially completed Tenant's Work in
the Exhibit A-2 Premises in accordance with Tenant's Plans and shall have given
five (5) days' notice to Tenant to such effect (the "Substantial Completion
Date"). OCC's work in the Exhibit A-2 Premises shall be deemed substantially
completed notwithstanding the fact that minor insubstantial details of
construction, mechanical adjustment or decoration remain to be performed, the
non-completion of which does not materially interfere with Tenant's use of the
Exhibit A-2 Premises.
B. Tenant shall accept possession of the Exhibit A-3 Premises in "as
is" condition.
3. Fixed Rent. The Granting Clause of the Lease is hereby amended to
provide that commencing June 1, 1996, the fixed rent payable by Tenant for the
Demised Premises through September 30, 1996 shall be Four Hundred Forty Thousand
Four Hundred Eighty-Six Dollars and 25/100 ($440,486.25) including Thirty-Eight
Thousand Three Hundred Fifty-One Dollars
-2-
<PAGE>
and 25/100 ($38,351.25) for the value of electricity provided to the Demised
Premises; and the fixed rent payable for the Demised Premises for the period
October 1, 1996 through February 2, 2000 shall be at the rate of Three Hundred
Eighty-Two Thousand Seven Hundred Sixty-Nine Dollars and 25/100 ($382,769.25)
including Thirty-Eight Thousand Nine Hundred Sixty-Nine Dollars and 25/100
($38,969.25) for the value of electricity provided to the Demised Premises; and
the fixed rent payable for the Demised Premises commencing February 3, 2000
through February 2, 2005 shall be Four Hundred Ten Thousand Sixty-Nine Dollars
and 25/100 ($410,069.25) including Thirty-Eight Thousand Nine Hundred Sixty-Nine
Dollars and 25/100 ($38,969.25) for the value of electricity provided to the
Demised Premises.
4. Adjustment of Rent. Article 38A and Article 38B of the Lease are
amended as follows:
A. For the period June 1, 1996 through September 30, 1996:
(i) the Demised Premises (which are comprised from approximately
15,000 square feet) shall be divided into six portions as
follows: Portion 1 comprised of 4,275 square feet, Portion 2
comprised of 1,305 square feet, Portion 3 comprised of 4,640
square feet; Portion 4 comprised of 2,985 square feet, Portion
5 comprised of 445 square feet; and Portion 6 comprised of
1,350 square feet.
(ii) the term "Present Taxes" for Portion 1 shall mean taxes
imposed on the Real Property for the fiscal year from July 1,
1986 through June 30, 1987;
(iii) the term "Present Taxes" for Portion 2 shall mean taxes
imposed on the Real Property for fiscal year July 1, 1992
through June 30, 1993;
(iv) the term "Present Taxes" for Portions 3, 4, 5 and 6 shall
mean taxes imposed on the real property for the fiscal year
from July 1, 1994 through June 30, 1995;
(v) the percentage multiplier as set forth in Article 38A and
Article 38B for Portion 1 shall be 1.464%; for Portion 2 shall
be .447%; for Portion 3 shall be 1.191%; for Portion 4 shall
be .894%; for the Portion 5 shall be .101%, and for Portion 6
shall be .394%.
(vi) the "Base Year for Operating Costs" pursuant to Article 38B
shall be 1986 for Portion 1; 1992 for Portion 2; and, 1995
for Portions 3, 4, 5 and 6.
-3-
<PAGE>
B. For the period from October 1, 1996 through the Expiration Date:
(i) the percentage multiplier of 4.097% shall be applicable
(this percentage does not include .394% for Portion 6); and,
(ii) the term "Present Taxes" for the Demised Premises shall mean
Taxes imposed on the Real Property for fiscal year July 1,
1994 through June 30, 1995 and the Base Year for Operating
Costs under Article 38B shall be the year ending December 31,
1995.
During the periods set forth in Paragraph 4A and 4B hereof all other
provisions of Article 38A and 38B of the Lease shall be applicable.
5. Electricity. Effective as of June 1 through September 30, 1996, Article
40 of the Lease is modified to provide that the fixed annual rent specified in
the Granting Clause shall include Thirty-Eight Thousand Three Hundred Fifty-One
Dollars and 25/100 ($38,351.25) for the value of electricity to be furnished to
the Demised Premises; and effective October 1, 1996 through the Expiration Date
the fixed annual rent specified in the Granting Clause shall include
Thirty-Eight Thousand Nine Hundred Sixty-Nine Dollars and 25/100 ($38,969.25)
for the value of electricity provided to the Demised Premises.
6. The Exhibit A-3 Premises.
Tenant shall have the right to use the Exhibit A-3 Premises for its
own storage purposes only. In the event Tenant shall elect to use the Exhibit
A-3 Premises for office use (or for a use other than for storage) Tenant must do
the following:
A. Tenant shall notify Landlord of its desire to change the use of the
Exhibit A-3 Premises ("Tenant's Notice");
B. Tenant shall retain the services of OCC as its general contractor
at tenant's sole cost and expense to do the installations, and work to be
performed in the Exhibit A-3 premises (the "Tenant's A-3 Premise Work").
Provided that Tenant notifies Landlord of its desire to change the use of the
Exhibit A-3 Premises, Landlord agrees to contribute towards the
-4-
<PAGE>
cost of Tenant's work an amount equal to 11% of Fifty-Six Thousand Seven Hundred
Dollars and 00/100 ($56,700.00) for each full year of the term that remains
after the date of Tenant's Notice ("Landlord's Exhibit 3-A Construction
Allowance"). Payment will be made against invoices for work performed within
twenty (20) days after receipt by Landlord of such invoices. Tenant shall submit
to Landlord for Landlord's approval plans reflecting Tenant's work to be
performed in the Exhibit A-3 Premises ("Tenant's A-3 Plans"). Tenant shall pay
any cost for Tenant's work in excess of Landlord's Exhibit A-3 Construction
Allowance. OCC shall perform Tenant's work based on commercially competitive
charges and in accordance with Tenant's plans and shall obtain competitive bids
from subcontractors. The provisions of Paragraph 2B and 2C shall apply with
regard to the completion of Tenant's work in the Exhibit A-3 Premises, where
applicable. Any portion of Landlord's Exhibit A-3 Construction Allowance not
utilized by Tenant in connection with work to be performed in the Exhibit A-3
Premises shall be credited by Landlord against fixed rent due under the Lease.
C. The Substantial Completion Date for Tenant's work in the Exhibit
A-3 Premises shall be five (5) days after Tenant has received notice that OCC
shall have substantially completed Tenant's work in the Exhibit A-3 Premises in
accordance with Tenant's plans. Upon the Substantial Completion Date for the
Exhibit A-3 Premises, (i) the fixed rent provided for in the Granting Clause of
the Lease shall be increased by the amount off Twenty Thousand Two Hundred Fifty
Dollars and 00/100 ($20,250.00) per year, including Four Thousand Fifty Dollars
and 00/100 ($4,050.00) for the value of electricity to be provided to the
Exhibit A-3 Premises through February 2, 2000 and Twenty-Two Thousand Nine
Hundred Fifty Dollars and 00/100 ($22,950.00) per year including the value of
electricity of Four Thousand Fifty Dollars and 00/100 ($4,050.00) from February
3, 2000 through the Expiration Date; and, (ii) the percentage multiplier of
4.097% shall be increased by .394% to 4.491%.
-5-
<PAGE>
D. Pursuant to Paragraph 3 hereof, Tenant is paying to Landlord
Sixteen Thousand Two Hundred Dollars and 00/100 ($16,200.00) as fixed rent for
the Exhibit A-3 Premises. In the event Landlord receives Tenant's Notice within
one (1) year from the Substantial Completion Date for the Exhibit A-2 Premises,
Landlord shall increase the amount of Landlord's Exhibit 3-A Construction
Allowance by fifty (50%) percent of that portion of the Sixteen Thousand Two
Hundred Dollars and 00/100 ($16,200.00) paid by Tenant to Landlord as fixed rent
through the date of receipt of Tenant's Notice.
7. Delivery and Execution.
Submission by Landlord of this Third Lease Modification Agreement for
execution by Tenant shall confer no rights or impose any obligations on either
party unless and until both Landlord and Tenant shall have executed this Lease
and duplicate originals thereof shall have been delivered to the respective
parties.
8. Miscellaneous.
The covenants, conditions, and agreements contained in this Lease
Modification shall bind and inure to the benefit of Landlord and Tenant and
their respective heirs, distributees, executors, administrators, successors, and
except as otherwise provided in the Lease, their assigns.
It is expressly understood that in all other respects, the terms and
conditions of the Lease shall remain in full force and effect.
9. Brokers.
Tenant covenants, represents and warrants that Tenant had no dealings
or negotiations with any broker, or agent in connection with the consummation of
this Lease, and Tenant covenants and agrees to pay, hold harmless and indemnify
Landlord from and against any and all costs, expenses (including reasonable
attorney's fees) or liability for any
-6-
<PAGE>
compensation, commissions or charges claimed by any broker or agent with respect
to this Lease or the negotiation thereof caused by Tenant's acts. Landlord
covenants represents and warrants that Landlord had no dealings or negotiations
with any broker, or agent in connection with the consummation of this Lease, and
Landlord covenants and agrees to pay, hold harmless and indemnify Tenant from
and against any and all costs, expenses (including reasonable attorneys' fees)
or liability for any compensation, commissions or charges claimed by any broker
or agent with respect to this Lease or the negotiation thereof caused by
Landlord's acts.
IN WITNESS WHEREOF, the parties hereto have respectfully signed and sealed
this Third Lease Modification Agreement as of the day and year first above
written.
CLEMONS PROPERTIES PARTNERS, as Agent
By: /s/ Signature
------------------------------
General Partner
VIDEO BROADCASTING CORPORATION
By: /s/ J. Graeme McWhirter
------------------------------
<PAGE>
Diagram of
708 THIRD AVENUE
9TH FLOOR PLAN
EXHIBIT "A" - ALL FIGURES AND DIMENSIONS ARE APPROXIMATE.
<PAGE>
Diagram of
708 THIRD AVENUE
9TH FLOOR PLAN
EXHIBIT "A-1" - ALL FIGURES AND DIMENSIONS ARE APPROXIMATE.
<PAGE>
Diagram of
708 THIRD AVENUE
9TH FLOOR PLAN
EXHIBIT "A-2" - ALL FIGURES AND DIMENSIONS ARE APPROXIMATE.
<PAGE>
Diagram of
708 THIRD AVENUE
9TH FLOOR PLAN
EXHIBIT "A-3" - ALL FIGURES AND DIMENSIONS ARE APPROXIMATE.
<PAGE>
SUBLEASE
Sublease, dated as of April 1, 1996 by and between VIDEO BROADCASTING
CORPORATION, a Delaware corporation with offices at 708 Third Avenue, New York,
New York 10017 (the "Landlord"), and MEDIA ON DEMAND, INC., a New York
corporation with offices at 708 Third Avenue, New York, New York, 10017 (the
"Tenant").
W I T N E S S E T H
1. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
following space in the building known as and by the street number 708 Third
Avenue, New York, New York 10017 (hereinafter referred to as the "Building"):
The portion of the Building's 9th floor shown in diagonal lines on the
floor plan annexed hereto as "Exhibit A", which premises are hereinafter
called the "Demised Premises."
The Demised Premises, described as a portion of the 9th floor (consisting of
approximately 1,266 square feet of rentable area) are leased together with the
appurtenances, including the right to use in common with others the lobby,
public entrances, public stairways, public elevators (except elevators
specifically assigned for the exclusive use of other tenants of the Building)
and other public portions of the Building.
TO HAVE AND TO HOLD the same unto Tenant for a term of two (2) years (the
"Term") commencing on the Substantial Completion Date as defined in the Second
Lease Modification Agreement to the Prime Lease ("Commencement Date"), and
ending two (2) years thereafter, paying the rents hereinafter set forth,
pursuant to the covenants, conditions, and agreements stated herein.
Tenant shall use the Demised Premises solely as executive, general and
administrative offices in connection with its multimedia development business.
2. The Demised Premises subleased hereunder are part of the premises referred to
in that certain lease dated September 21, 1994 between CLEMONS PROPERTIES
PARTNERS, as the landlord therein (herein the "Prime Landlord") and VIDEO
BROADCASTING CORPORATION, as the tenant therein (such lease and exhibits and
schedules and any amendments thereto attached is herein referred to as the
"Prime Lease"). Landlord represents that a copy of the Prime Lease has been
delivered to Tenant or its agent, receipt of which is hereby acknowledged by
Tenant. The terms, covenants, provisions and conditions of the Prime Lease as
modified by this Sublease are hereby incorporated herein and shall be binding
upon the parties hereto, those applying to the Prime Landlord therein shall
apply to the Landlord herein and those applying to the Prime Tenant therein
shall apply to the Tenant herein. In addition to the modifications and
amendments made elsewhere in this Sublease, the following terms hereby are
specifically modified:
<PAGE>
(a) Any reference to Exhibit A or Demised Premises in the Prime Lease shall
be deemed a reference to Exhibit A to this Sublease and the Demised
Premises herein, respectively.
(b) Any reference to "Lease" in the Prime Lease shall be deemed a reference
to this Sublease; any reference to "Landlord" or "Tenant" in the Prime
Lease shall mean only Landlord herein and Tenant herein, respectively,
except as provided in subparagraph (c) below.
(c) In the event the Prime Landlord withholds its consent to any proposed
act of Tenant, the Landlord's withholding of its consent to such proposed
act shall not be deemed unreasonable.
(d) The Tenant shall not have an option to renew or a right of first
refusal in connection with the Demised Premises.
3. During the term of this Sublease, Tenant covenants and agrees to pay Landlord
an annual basic fixed rent ("Rent") of Thirty One Thousand Six Hundred Fifty
($31,650) Dollars in equal monthly installments of Two Thousand Six Hundred
Thirty Seven and 50/100 ($2,637.50) Dollars.
Tenant shall also pay an additional rent ("Additional Rent") as specified
herein as and when the same shall become due and payable.
Tenant hereby acknowledges that the Rent and Additional Rent due hereunder shall
be subject to periodic adjustment when and as set forth in the Prime Lease.
Tenant: hereby expressly acknowledges, notwithstanding anything to the contrary
contained in the Prime Lease, that it is not entitled to any abatements,
adjustments or credits of Rent or Additional Rent.
4. Rent shall be payable in equal monthly installments in advance on or before
the first day of each month during the Term and Additional Rent within five (5)
days after being billed by Landlord, all at the office of the Landlord or at
such other place as Landlord may designate from time to time, without any set
off or deduction whatsoever.
5. Tenant shall pay Landlord, on the Substantial Completion Date the first
month's rent in the sum of Two Thousand Six Hundred Thirty Seven and 50/100
($2,637.50) Dollars.
6. Tenant acknowledges that its pro rata share ("Pro Rata Share") is 42.41% of
Portion D as defined in the Second Lease Modification Agreement to the Prime
Lease. Tenant agrees to pay Landlord as Additional Rent, during the Term of the
Sublease on the same terms and conditions as set forth in the Prime Lease, its
Pro rata Share of (i) the increases in the real estate taxes, as set forth in
Section 38 of the Prime Lease; and (ii) any ad valorem assessments or
impositions against the real property of which the Demised Premises form a part
and its proportionate share of any taxes which shall be imposed in lieu of any
ad valorem real property tax as the same is
2
<PAGE>
presently considered.
7. The Tenant shall pay Landlord as Additional Rent, during the Term of the
Sublease on the same terms and conditions as set forth in the Prime Lease, its
pro rata share of operating expenses as set forth in Section 38 of the Prime
Lease.
8. The Tenant shall pay Landlord as Additional Rent, during the Term of the
Sublease its pro rata share of electric costs related to the Demised Premises at
the rate of $2.75 per square foot.
9. Whenever and as often as the Prime Landlord shall give the Landlord notices,
such notices will be deemed to have been given to the Tenant on the date such
notice was given to the Landlord provided the Tenant actually receives such
notice from Landlord by the next business day thereafter. Any notice, demand, or
other communication shall be in writing, addressed to the respective parties at
the Building, or at such other address as may be designated by the parties in
writing and shall be deemed sufficiently given on the day of delivery if
delivered by hand or three (3) business days following mailing if sent by
certified mail, return receipt requested to the address set forth above or one
(1) business day following mailing by special overnight delivery. All notices to
Tenant shall be sent to Charles Saracino and all notices to Landlord shall be
sent to J. Graeme McWhirter, with a copy to Jeffrey Herz, Esq., at Tashlik,
Kreutzer & Goldwyn P.C., 833 Northern Boulevard, Great Neck, New York 11021.
10. This is a sublease and Tenant shall look only to the Prime Landlord for the
provision of the services and the performance of the obligations of the Prime
Landlord under the Prime Lease, but in that connection all communications by
Tenant shall be made through Landlord who shall promptly forward such
communications to the Prime Landlord when appropriate. Any failure by the Prime
Landlord to provide such services or perform such obligations shall not
constitute a breach by Landlord hereunder or result in an abatement of rent
unless and then only to the extent of Tenant's proportionate share of any
abatement of Rent under the Prime Lease that Landlord itself in fact receives.
In the event of such a failure, Landlord shall assign any right to Tenant to
assert claims against the Prime Landlord with respect to such specific failure
to the extent Landlord shall not pursue claims in its own name.
11. This Sublease, along with the documents incorporated herein by reference,
sets forth the full terms of the parties' agreement, which may not be modified
except in writing executed by the parties hereto. To the extent the provisions
of this Sublease and those of the Prime Lease are inconsistent, the provisions
of this Sublease shall control.
12. In the event that the Tenant shall remain in the Demised Premises after the
expiration of the Term, such holding over shall not constitute a renewal or
extension of this Sublease. The Landlord may construe such holding over as a
tenancy from month to month, subject to all the terms and conditions of this
Sublease, except as to duration, in which event, the Tenant shall pay monthly
rent in advance at twice the rate provided herein as in effect during the last
month of the Term. In view of the difficulty of accurately ascertaining the loss
Landlord shall suffer by reason of Tenant's failure to vacate and surrender
possession upon the expiration of the term of this Sublease, or, if applicable,
upon the termination of the month to month tenancy, the holdover
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damages shall be deemed Landlord's entire liquidated damages suffered thereby.
However, payment of holdover damages by Tenant shall in no event be deemed or
construed to extend the term of this Sublease or create a month to month
tenancy.
13. Tenant covenants, represents and warrants that Tenant has not had any
dealings or negotiations with any broker, finder, or agent in connection with
the negotiation or consummation of this Sublease and Tenant covenants and agrees
to hold harmless and indemnify Landlord from and against all damages, liability,
costs and expenses (including reasonable attorneys fees) arising from any claim
for compensation, commissions or charges by any broker, finder, agent or any
other person other than the broker based upon dealings with Tenant with respect
to this Sublease or the negotiation thereof, or the Demised Premises.
14. All of the terms, covenants and conditions of this Sublease shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties hereto.
15. Tenant expressly covenants that it shall not assign, mortgage or encumber
this Sublease, nor underlet or permit the Demised Premises or any part thereof
to be used by others without the prior written consent of Landlord and Prime
Landlord in each instance, which consent may be withheld in the sole discretion
of Landlord or Prime Landlord.
16. This Sublease is subject to the Landlord's obtaining the prior written
consent of the Prime Landlord.
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed this Sublease
as of the day and year first above written.
VIDEO BROADCASTING CORPORATION MEDIA ON DEMAND, INC.
LANDLORD TENANT
By: /s/ J. Graeme McWhirter By: /s/ Charles Saracino
J. Graeme McWhirter
Executive Vice President
Consented to this 1 day of
April 1996
CLEMONS PROPERTIES PARTNERS
By: /s/ Signature
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[9th floor diagram of 708 Third Avenue]
Exhibit "B" - ALL FIGURES AND DIMENSIONS ARE APPROXIMATE
<PAGE>
LEASE
1401 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20005
THIS LEASE, made this 1st day of October, 1990 by and between 1401 NEW YORK
AVENUE, INC., or its successor in title ("Lessor"), and VIDEO BROADCASTING
CORPORATION, d/b/a Medialink and/or Programlink, a Delaware corporation
("Lessee").
WITNESSETH:
1. Demise; Term; Basic Monthly Rental: For and in consideration of the
covenants and agreements hereinafter set forth and the rent hereinafter
reserved, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
certain premises described as follows: Suite 520 located on the fifth (5th)
floor in the building (the "Building") on the land (the "Land") at 1401 New York
Avenue, N.W., Washington, D.C. (the Building and the Land hereinafter referred
to together as the "Property"), which premises consist of approximately Two
Thousand One Hundred Twelve (2,112) rentable square feet of space, including
Lessee's proportionate share of Common Areas, as more fully set forth in Exhibit
"A" attached hereto and made part hereof (The "Demised Premises"), for the term
(the "Term") of five and one half (5 1/2) years (or until such term shall sooner
cease and expire as hereinafter provided), commencing on the 1st day of
November, 1990 (the "Lease Commencement Date"), and ending at 11:59 p.m. on the
30th day of April, 1996 (the "Lease Termination Date"), both dates inclusive,
Lessee yielding and paying as rent therefor the sum of Three Hundred
Twenty-Seven Thousand Three Hundred Sixty and no/100 Dollars ($327,360.00) plus
the CPI Adjustments provided for in Article 4 hereof, without offset,
counterclaim or other deduction and without demand, payable in advance, in equal
monthly installments (pro-rated for any partial month at the commencement or
termination of the term of the Lease) of Five Thousand Four Hundred Fifty-Six
and no/100 ($5,456.00) Dollars as adjusted in accordance with Section 4 hereof
(The "Basic Monthly Rental"). The first installment and Reserve Deposit, as
hereinafter set forth, shall be payable on the execution of this Lease, and the
remaining installments shall be payable in advance on the first day of each
month during the said term to Lessor, c/o American Security Bank, Lock Box 238,
Washington, D.C. 20005, or at such other place or to such other person or entity
as Lessor may from time to time designate in writing.* Neither the dollar amount
of the Basic
* Notwithstanding the foregoing, provided Lessee has made said first installment
of Basic Monthly Rental and paid the Reserve Deposit, Lessee shall be entitled
to occupy the Demised Premises without making any installments of Basic Monthly
Rent for months 2, 3, 4, 5, 6 and 7 of the Term.
<PAGE>
Monthly Rental nor any of Lessee's proportionate shares of increases in
Operating Costs, Electricity Costs or Real Estate Taxes payable pursuant to
Article 3 hereof shall be adjusted as a result of any subsequent measurement of
the Demised Premises or the Building.
2. Reserve Deposit: Lessee shall deposit with Lessor at the time of
execution of this Lease the amount of Five Thousand Four Hundred Fifty-Six and
no/100 ($5,456.00) Dollars as a reserve deposit (hereinafter the "Reserve
Deposit"), to be held by Lessor in an interest-bearing account, said interest,
less any administrative fee to which Lessor is entitled by law (which fee shall
not exceed one percent of the Reserve Deposit), to be credited or paid to Lessee
on an annual basis, in order to secure Lessor against any damages arising from
Lessee's breach of any of the terms, covenants or conditions of this Lease,
including but not limited to Lessee's failure to pay its proportionate shares of
increases in Operating Costs, Electricity Costs and Real Estate Taxes payable
pursuant to Article 3 below, or any other additional rent. The Reserve Deposit,
plus any accrued but unpaid interest, shall be held by Lessor until such
damages, if any, arising from Lessee's breach have been assessed. It is hereby
expressly understood that Lessor is entitled to hold the Reserve Deposit until
the expiration of the period within which Lessee must pay additional rental
amounts arising from any increases in Operating Costs, Electricity Costs and
Real Estate Taxes, as set forth in Article 3 below, and that, in the event of
sale of the Building, Lessor shall have the right to transfer any and all
amounts being held by it as Reserve Deposits to the new owner of the Building
following any such sale, and, in the case of any such transfer, Lessor shall be
relieved of any obligations to Lessee or otherwise with respect to said amounts,
in accordance with Article 32, below.
3. Operating Costs, Electricity Costs and Real Estate Tax Increases: a) In
the event that the Operating Costs (as hereinafter defined) of Lessor's
operation of the Building for any calendar year during which this Lease is in
effect (a "Lease Year") shall exceed the average of the Operating Costs for
calendar years 1990 and 1991 ("Base Operating Costs"), Lessee shall pay the
Lessor, as additional rent, its proportionate share of the increase in such
Operating Costs. Lessee's proportionate share shall be One and 29/100 percent
(1.29%) of such Operating Costs increase, being the proportion that the rentable
floor area of the Demised Premises bears to the total rentable office floor area
of the Building. Any such additional rent shall be computed and paid in the
manner and at the times set forth in Article 3(e) below.
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The term "Operating Costs" is defined hereby as including, for each Lease
Year, all heat, ventilation and air conditioning, gas, water, sewer and other
utility charges (except Electricity Costs, as hereinafter defined); security
services; premiums and other charges incurred by Lessor with respect to all
insurance relating to the Building and the operation and maintenance thereof,
including, without limitation, all risk of physical damage or fire and extended
coverage insurance, public liability insurance, elevator insurance, boiler and
machinery insurance, sprinkler leakage insurance, rent insurance, use and
occupancy insurance; governmental permit or license fees or taxes; personal
property tax levies; management fees provided such management fees shall not
exceed those customarily charged in similar first class office buildings in
Washington, D.C., which fees for the first year of this Lease shall not exceed
three (3%) percent of gross rentals; accounting and legal fees incurred with
respect to the Building and/or the Land and not with respect to any tenant or
prospective tenant; mail chute rental; vault rental; charges under janitorial
and cleaning service contracts; salaries, wages, fringe benefits and other
direct or indirect personnel costs (including welfare benefits, health, accident
and group life insurance, pension payments and workers' compensation insurance)
of engineers, superintendents, guards, watchmen, porters, lobby attendants and
other building employees; charges under maintenance and service contracts for
HVAC equipment, chillers, boilers, controls and/or elevators, exterior window
cleaning and building maintenance; and all other maintenance, repair and
replacement expenses, and all supplies, which are deducted for such Lease Year
for Federal income tax purposes; expenditures for capital improvements and
capital equipment which under generally applied real estate practice are
expensed or regarded as deferred expenses which expenditures shall be amortized
and/or depreciated for such Lease Year in accordance with the provisions of the
Internal Revenue Code of 1986, as amended and which expenditures shall include
those which result in the reduction of Operating Costs or Electricity Costs or
energy consumption or labor expenses; all miscellaneous taxes (including,
without limitation, all sales and excise taxes on the expenditures enumerated
in this Article 3(a)) applicable to the Building; the costs of any additional
services not provided to the Building at the Lease Commencement Date but
thereafter provided by Lessor in the prudent management of the Building; and any
other costs and expenses incurred by Lessor in maintaining or in operating the
Building which costs and expenses are customary for similar first class office
buildings in Washington, D.C. Operating Costs of the Building shall not include
payments of principal and interest on any loans secured by mortgages, deeds of
trust or other encumbrances upon the Building, payment of ground rent under the
ground lease of the underlying property, if any, leasing commissions, tenant
work, and taxes based upon the net income of the Lessor from the operation of
the Building.
b) In the event that the Electricity Costs (as hereinafter defined) of
Lessor's operation of the Building for any Lease Year shall exceed the average
of the Electricity Costs for calendar years 1990 and 1991 ("Base Electricity
Costs"), Lessee shall pay to Lessor, as additional rent, its proportionate share
of the increase in such Electricity Costs. Lessee's proportionate share shall be
one and 60/100 percent (1.60%) of such Electricity Costs increase, being the
proportion that the rentable floor area of the Demised Premises bears to the
total rentable floor area of the Building not separately metered for
electricity. Any such additional rent shall be computed and paid in a manner and
at the times set forth in Article 3(3) below.
The term "Electricity Costs" is defined hereby as Lessor's cost to provide
electricity for the operation of the Building exclusive of electricity
separately metered and paid for directly by other tenants in the Building.
c) Notwithstanding anything herein to the contrary, in the event that the
Building is less than ninety percent (90%) occupied during any Lease Year,
including the Lease Year during which the Lease Commencement Date occurs,
Operating Costs and Electricity Costs for such year shall be adjusted to reflect
Operating Costs and Electricity Costs as if the Building were ninety percent
(90%) occupied during any such Lease Year but such adjustment shall not affect
Lessee's respective proportionate shares of such costs. If during all or part of
any such Lease Year, Lessor shall not furnish any particular item of work or
service (which would otherwise constitute an Operating Cost of Electricity Cost
hereunder) to any portion of the Building due to the fact that (a) such portion
of the Building is not occupied or leased, (b) such item of work or service is
not required or desired by the lessee of such portion, (c) such lessee is itself
obtaining and providing such item of work or service or (d) for any other
reason, then, for the purposes of computing Operating Costs and/or Electricity
Costs, the cost of such item for such period shall be deemed to be increased by
an amount equal to the additional costs and expenses which would reasonably have
been incurred during such period by Lessor if it had at its own expense
furnished such item of work or service. The purpose of the foregoing sentence is
to ensure that the comparison of Base Operating Costs and Base Electricity Costs
with Operating Costs and Electricity Costs in subsequent Lease Years will be
based on comparable numbers and use and occupancy within the Building so that
neither party is treated unfairly.
d) In the event that the Real Estate Taxes (as hereinafter defined) for any
Lease Year shall exceed the average of the Real
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<PAGE>
Estate Taxes for calendar years 1990 and 1991 ("Base Real Estate Taxes"), Lessee
shall pay to Lessor, as additional rent, its proportionate share of the increase
in such Real Estate Taxes. Lessee's said proportionate share shall be one and
12/100 percent (1.12%) of such increase, being the proportion that the rentable
floor area of the Demised Premises bears to the total rentable floor area of the
Building. Any such additional rent shall be computed and paid in the manner and
at the times set forth in Article 3(e) below.
The term "Real Estate Taxes" is defined hereby as including, for each Lease
Year, the total amount of all taxes and assessments, general and special,
ordinary and extraordinary, foreseen and unforeseen, now or hereafter assessed,
levied or imposed upon the Building and the Land, or the sidewalks, plazas,
streets or alleys adjacent thereto, together with any tax in the nature of a
real estate tax, ad valorem tax on rent or any tax if imposed in lieu of or in
addition to real estate taxes and assessments and any taxes or assessments which
may hereafter by substituted for real estate taxes. Real Estate Taxes shall be
deemed to be the taxes or assessments actually payable during each Lease Year
during the Term, even though the levy or imposition thereof may be applicable to
different tax years. In the event that any business, rent or other taxes which
are now or hereafter levied upon Lessee's use or occupancy of the Demised
Premises, on Lessee's leasehold improvements, on Lessee's business at the
Demised Premises or on Lessor by virtue of Lessee's occupancy of the Demised
Premises, are enacted, changed or altered so that any of such taxes are levied
against Lessor or in the event that the mode of collection of such taxes is
changed so that Lessor is responsible for collection or payment of such taxes,
any and all such taxes shall be deemed to be a part of the increase in Real
Estate Taxes and Lessee shall pay to Lessor Lessee's proportionate share of
the full amount of all such taxes. Lessee shall in no event be liable for any
income tax imposed upon or payable by Lessor unless such tax is imposed in
lieu of or as an addition to Real Estate Taxes.
e) As soon as reasonably practical after the close of each Lease Year
(including the Lease Years during which the Lease Commencement Date and Lease
Termination Date occur), Lessor shall furnish Lessee a statement (the "Annual
Statement"), setting out the amount Lessor estimates in good faith will be the
Operating Costs, Electricity Costs and Real Estate Taxes for the current Lease
Year, and Lessee's proportionate shares of the amounts, if any, by which such
Operating Costs, Electricity Costs and Real Estate Taxes exceed Base Operating
Costs, Base Electricity Costs and Base Real Estate Taxes, respectively.
Beginning with the next installment of Basic Monthly Rental due following
Lessee's receipt of the Annual Statement, and monthly thereafter until Lessee's
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<PAGE>
receipt of the net Annual Statement, Lessee shall pay Lessor, as additional
rent,an amount (the "Monthly Escalation Payment") equal to one twelfth (1/12th)
of its proportionate shares of said excess amounts, together with the aggregate
amount of Monthly Escalation Payments, or increases therein, as the case may be,
applicable to the period from the end of the previous Lease Year to the date the
current Lease Year's Monthly Escalation Payments become effective. Lessor shall
also set out in the Annual Statement Lessee's protiontionate shares of the
previous Lease Year's actual Operating Costs, actual Electricity Costs and
actual Real Estate Taxes and the aggregate amount of Monthly Escalation
Payments, if any, made by Lessee for such previous Lease Year. If the aggregate
of Lessee's proportionate shares of actual Operating Costs, actual Electricity
Costs and actual Real Estate Taxes exceeds the sum of (i) Lessee's proportionate
shares of Base Operating Costs, Base Electricity Costs and Base Real Estate
Taxes and (ii) the aggregate amount of Monthly Escalation Payments so made by
Lessee, Lessee shall pay Lessor such excess amount, and all other amounts due
hereunder, with the next installment of Basic Monthly Rental due. If the
aggregate of Lessee's proportionate shares of actual Operating Costs, actual
Electricity Costs and actual Real Estate Taxes is less than the sum of (i)
Lessee's proportionate shares of Base Operating Costs, Base Electricity Costs
and Real Estate Taxes and (ii) the aggregate amount of Monthly Escalation
Payments so made by Lessee, Lessee shall receive a credit therefor to be applied
to Monthly Escalation Payments next becoming due. Failure of Lessor to give
Lessee the Annual Statement within the time period set forth above shall not
be a waiver of Lessor's right to receive said addtional rent.
f) Each Annual Statement shall be conclusive and binding upon Lessee unless
(i) within thirty (30) days after receipt thereof, Lessee shall notify Lessor
that it disputes the correctness thereof, specifying the particular respects in
which the same is claimed to be incorrect and (ii) if the parties shall not
resolve such dispute within ninety (90) days thereafter, then either party may
refer the matter or matters in dispute to a reputable independent firm of
certified public accountants selected by Lessor, subject to Lessee's reasonable
approval. The decision of such accountants shall be conclusive and binding upon
the parties. Lessee recognizes and agrees that Lessor's books and records, and
those of Lessor's agents with respect to the operation of the Building, are
confidential and that Lessee shall have no right to inspect them. If any such
accountant shall not then be Lessor's accountant, Lessor agrees, at reasonable
times and upon reasonable notice to give such accountant access to the books and
records of Lessor and Lessor's agents. The fees and expenses of said accountants
shall be borne by the unsuccessful party (and if both parties are partially
unsuccessful, the accountants shall apportion the fees and disbursements
between the parties based upon the degree of success of each party). Pending
the determination of such dispute, Lessee shall pay additional rent in
accordance with the applicable Annual Statement.
g) With respect to any Lease Year at the commencement or expiration of the
Term of this Lease during which Lessee is in possession of the Demised Premises
for less than a full twelve (12) month period, additional rent to cover
increases in Operating Costs, Electricity Costs and Real Estate Taxes shall be
appropriately pro-rated and adjusted. Lessee's and Lessor's obligations with
respect to payments and adjustments of increases in Operating Costs, Electricity
Costs and Real Estate Taxes for any Lease Year shall survive the expiration or
termination of this Lease. Following such expiration or termination, should
Lessee become entitled to a credit for Monthly Escalation Payments paid during a
Lease Year in excess of Lessee's proportionate shares of increases in actual
Operating Costs, actual Electricity Costs and actual Real Estate Taxes for such
Lease Year, Lessor shall pay Lessee in cash promptly the full amount of such
credit.
h) Notwithstanding anything to the contrary contained in this Article 3,
Lessee shall not be obligated to pay its respective proportionate shares of
increases in Operating Costs, Electricity Costs and Real Estate Taxes until
September 1, 1991 and such additional rent shall be appropriately pro-rated.
4. CPI Adjustment: In addition to the foregoing, the Basic Monthly Rental
payable by Lessee for the last month of each Lease Year shall be adjusted as of
the first day of each succeeding Lease Year by adding to it thirty percent (30%)
of the amount computed by multiplying said Basic Monthly Rental by the
percentage increase, if any, in the index now known as "United States Bureau of
Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U), for the
Washington, D.C. Standard Metropolitan Statistical Area (SMSA), 'all items'
(1982-84=100)" (the "Index"). Any such percentage increase in the Index shall be
determined by dividing the amount, if any, by which the Index published for the
period that includes the last month of the Lease Year just ended exceeds the
corresponding Index published for the period that includes the month immediately
preceding the commencement of the Lease Year just ended, by said latter
corresponding Index. Lessor shall provide Lessee, during the last month of each
Lease Year, written notice of Lessor's reasonable estimate of the adjustment to
the Basic Monthly Rental due to increases in the Index, and Lessee shall begin
paying the estimated adjusted Basic Monthly Rental as of the first month of the
immediately succeeding Lease Year. The computation of the actual amount of any
such adjustment to the Basic Monthly Rental shall be contained in the Annual
Statement furnished to Lessee as set forth in Article 3(e) above. Promptly after
receipt of the Annual Statement, the difference between the estimated monthly
payments paid by Lessee and the actual amount of Basic Monthly Rental shall be
determined. If the estimated payments by Lessee exceed the actual amount
determined to be owing, the excess shall be credited against the next
installment of Basic Monthly Rental falling due hereunder. If the actual amount
determined to be owing is greater than Lessee's estimated payments, the
deficiency shall be paid by Lessee together with the next installment of Basic
Monthly Rental due hereunder. Thereafter Lessee shall pay the new Basic Monthly
Rental until receipt of the next written notice of the estimated adjustment to
Basic Monthly Rental from Lessor. The amount payable by Lessee as Basic Monthly
Rental for any Lease Year, as adjusted according to this Article 4 (exclusive of
any separate step-up), shall in no case be less than the Basic Monthly Rental,
as so adjusted, payable during the preceding Lease Year (exclusive of any
separate step-up), and shall not affect in any way Lessee's continuing
obligation to pay any and all sums payable as additional rent under this Lease.
If such Index shall be discontinued, with no successor or comparable successor
index, the parties shall attempt to agree upon a substitute formula; but if the
parties are unable to agree upon a substitute formula, then the matter shall be
determined by arbitration in accordance with the rules of the American
Arbitration Association then prevailing.
Notwithstanding anything to the contrary contained in this Article 4,
Lessee's Basic Monthly Rental shall not be adjusted pursuant to this Article 4
until September 1, 1991 at which time the increase to said Basic Monthly Rental
which would have been effective January 1, 1991 shall become effective. In no
event shall any annual increase in Basic Monthly Rental pursuant to this Article
4 exceed three (3%) percent of the Basic Monthly Rental for the immediately
preceding Lease Year.
5. Lessee Takes Demised Premises: Lessee does hereby take and hold the
Demised Premises at the rent hereinabove specifically reserved and payable as
aforesaid, and upon and subject to the terms and conditions herein contained.
6. Use of Premises; Compliance With Laws; Expenses: a) Lessee shall use
and occupy the Demised Premises for professional, executive and administrative
offices and for no other purpose whatsoever without the prior written consent of
Lessor. Lessee will not abuse the Demised Premises or permit any waste therein,
nor use or permit the Demised Premises or any part thereof to be used for any
disorderly, unlawful or extra-hazardous purpose, nor for any other purpose than
herein specified; and will not manufacture any commodity or prepare or dispense
any food or beverage therein
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without the prior written consent of the Lessor. Lessee will not do or permit
anything to be done in the Demised Premises or the Building or bring or keep
anything therein which shall in any way obstruct or interfere with the rights of
other tenants, or in any way injure or annoy them, or those having business with
them, or conflict with them.
b) Lessee shall abide by and take all necessary action to comply with any
and all present and future laws, ordinances (including zoning ordinances and
land use requirements), regulations and orders of all governmental and
quasi-governmental authorities having jurisdiction over the Demised Premises,
including without limitation fire and environmental laws or regulations enacted
or established by the government of the District of Columbia or by the federal
government provided such compliance is necessitated by i) Lessee's use or manner
of use of the Demised Premises other than as set forth in Article 6(a) hereof or
(ii) a condition created by or at the instance of Lessee, or (iii) a breach of
Lessee's obligations under this Lease or (iv) the act, omission or negligence of
Lessee or any person or entity claiming through or under Lessee.
c) Lessee, at its expense, shall cooperate with Lessor in complying with
all existing and future mandatory and optional recycling programs and shall
separate, bundle and containerize waste products produced in the Demised
Premises as directed by Lessor.
d) Lessor hereby represents and warrants to Lessee as follows: (i) Lessor
shall obtain all permits, approvals, certificates and consents of any
governmental authority or public or private utility which are required before
Lessee may occupy and utilize the Demised Premises to conduct the business as
presently conducted; and (ii) Lessor has received no notice of any condemnation
or eminent domain proceedings for the purchase of the Building in lieu of
condemnation, and Lessor has no knowledge that any condemnation or eminent
domain proceedings or negotiations have been commenced or threatened against the
Building or any part thereof which would affect the Building, the Demised
Premises or any part thereof.
7. Maintenance and Repairs: a) Lessee agrees that it will keep the Demised
Premises and the fixtures and equipment therein in good order and condition and
will, at the expiration or other termination of the Term hereof, surrender and
deliver up the same in like good order and condition as the same shall be at the
commencement of the Term hereof, ordinary wear and tear and damage by the
elements, fire, and other casualty not due to the negligence of Lessee excepted.
All breakage, injury or damage to the Demised Premises or the Building or
Lessor's equipment therein caused by
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<PAGE>
Lessee, its agents, servants, employees, contractors, invitees, licensees or
concessionaires, shall be repaired promptly, at Lessee's reasonable expense,
either by Lessor or, at Lessor's option, by Lessee subject to Lessor's direction
and supervision (and in accordance with Article 9 below).
b) If Lessee shall fail to make any repairs or to perform any maintenance
which it is obligated to make or perform under this Lease, excluding repairs or
maintenance occasioned by Lessor's negligence, within ten (10) days after
written notice from Lessor to do so, or to commence the making of such repairs
or the performing of such maintenance and to proceed diligently to complete such
repairs or maintenance if such repairs and maintenance cannot be completed
within ten (10) days, or in the event of any emergency, Lessor may make or
perform the same for the account of Lessee, without liability to Lessee for any
loss or damage that may accrue to lessee's property or business by reason
thereof, except for any loss or damage occurring as a result of Lessor's
negligence, and Lessee shall pay, as additional rent, within ten (10) days after
Lessor shall have billed Lessee therefor, Lessor's cost for making such repairs
and performing such maintenance (which such cost may include a reasonable amount
for Lessor's overhead). Nothing herein contained shall imply any duty on the
part of Lessor to do any such work which under any provision of this Lease
Lessee may be required to do, nor shall its constitute a waiver of Lessee's
default in failing to do the same. Notwithstanding anything to the contrary,
Lessee shall not be liable for any repairs or for failure to make repairs
whenever such repairs are occasioned by Lessor's negligence.
c) Lessor shall make all necessary repairs to the structure of the Building
and the mechanical, electrical, plumbing, heating and air conditioning systems
therein, except with respect to any items installed or constructed by Lessee and
except where the repair has been made necessary by misuse or neglect by Lessee
or Lessee's agents, servants, employees, contractors, invitees, licensees or
concessionaires. This obligation to repair does not impose upon Lessor any
obligation to make repairs other than during normal business hours. Lessor will
use reasonable efforts to make such repairs in a timely fashion. In the event
that Lessee is denied access to the Demised Premises because of Lessor's
performance of repairs, except with respect to any item or items installed or
constructed by Lessee or except where the repair has been made necessary by
misuse or neglect by Lessee or Lessee's agents, servants, employees,
contractors, invitees, licensees or concessionaires, Lessee shall be entitled to
an abatement of Basic Monthly Rental, as adjusted according to Article 4 above,
and of Lessee's obligation to pay increases in Operating Costs, Electricity
Costs and Real Estate Taxes from the date such access
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denied through the date of restoration of access to the Demised Premises.
d) If Lessor does not proceed promptly subject to force majeure, to
commence making repairs required to be made by Lessor hereunder within fifteen
(15) days after receiving written notice from Lessee, or as soon as feasible
after receiving notice by telephone in the event of emergencies, or to complete
adequately such repairs promptly thereafter, Lessee may, after giving Lessor
five (5) days written notice thereof, at its option, perform the work specified
in such notice without liability on the part of the Lessee, and Lessor agrees,
to pay promptly upon demand all reasonable costs and expenses incurred by Lessee
in doing such work. In the event Lessor does not pay such costs and expenses,
Lessee may offset such costs and expenses against next rental payments then
coming due.
8. Subletting and Assignment: a) Lessee shall not, directly or indirectly,
sublet the Demised Premises or any part thereof, including desk space, or
transfer possession or occupancy thereof to any person, firm, corporation, or
other entity, or transfer or assign, mortgage or otherwise encumber this Lease
without the prior written consent of Lessor, nor shall any transfer, subletting
or assignment hereof be effected, directly or indirectly, by operation of law or
otherwise than by the prior written consent of Lessor. Any such assignment,
subletting or occupancy without the written consent of Lessor shall constitute a
breach of this Lease by Lessee.
b) Subject to the provisions of Article 8(c) hereof, lessor shall not
unreasonably withhold its consent hereunder to any sublease by Lessee provided
that all of the following conditions are met:
(i) The sublessee must have a credit rating satisfactory to Lessor (in
Lessor's reasonable judgment);
(ii) The sublease must be expressly subject and subordinate to this Lease,
must require that any sublessee must comply with and abide by all of
the terms of this Lease and must provide that any termination of this
Lease shall extinguish the sublease as well;
(iii) The sublessee may not change the use of the premises or propose to
conduct its business in a manner which in Lessor's reasonable judgment
is not appropriate for a first class office building in Washington,
D.C.;
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d) Notwithstanding the provisions of this Lease, Lessor shall not
unreasonably withhold its consent to an assignment by Lessee provided Lessee
gives Lessor prior written notice thereof and such other reasonable information
as Lessor may request. It shall not be deemed an assignment of this Lease as to
which Lessor's consent is required if at any time the then Lessee, or any person
owning a majority of the stock of, or directly or indirectly controlling the
Lessee transfers its stock resulting in the person(s) whose shall have owned a
majority of such shares of stock ceasing to own a majority of such shares of
stock; provided, that such transfer is (i) among the then shareholders of the
Lessee or any partnership, corporation or other entity controlling, controlled
by or under common control with the Lessee, (ii) to any member of a
shareholder's family or any trust or partnership's family, (iii) to a
corporation which merges into Lessee or into which the Lessee is merged,
consolidated or reorganized or (iv) pursuant to a public offering of the
Lessee's capital stock. Any sale or transfer other than as described herein
shall be deemed an assignment of this Lease, subject to the terms of this
Article 8.
e) Lessee shall reimburse Lessor on demand for any reasonable costs that
may be incurred by Lessor in connection with said assignment or sublease,
including, without limitation, the costs of making investigations as to the
acceptability of the proposed assignee or sublessee and reasonable legal costs
incurred in connection with any requested consent.
f) Every subletting hereunder is subject to the express condition, and by
accepting a sublease hereunder such sublessee shall be conclusively deemed to
have agreed, that if this Lease should be terminated for any reason prior to the
Lease Termination Date or if Lessor should succeed to Lessee's estate in the
Demised Premises, then, at Lessor's election, the sublessee shall either
surrender to Lessor the portion of the Demised Premises which has been sublet
within thirty (30) days of Lessor's request therefor, or attorn to and recognize
Lessor as the sublessee's lessor under the sublease and sublessee shall promptly
execute and deliver any instrument Lessor may reasonably request to evidence
such attornment, in which event Lessor shall provide to any sublessee all of the
same rights and services that Lessor provides to Lessee. Prior to any
termination of this Lease prior to the Lease Termination Date, Lessor shall give
notice thereof to any sublessee whose sublease was consented to by Lessor
hereunder.
g) If Lessor shall decline to give its consent to any proposed assignment
or sublease as provided herein, or if Lessor shall
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exercise any of its options under this Article 8, Lessee shall indemnify, defend
and hold Lessor harmless against and from any and all loss, liability, claims,
damages and reasonable expenses (including attorneys fees and disbursements)
resulting from any claims that may be made against Lessor by the proposed
assignee or sublessee or by any brokers or other persons claiming a commission
or similar compensation in connection with the proposed assignment or sublease.
h) If Lessee's interest in this Lease be assigned, or if the Demised
Premises or any part thereof be sublet or occupied by anyone other than Lessee,
Lessor may collect rent from the assignee, subtenant or occupant and apply the
net amount collected to the rent payable herein, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver of the provisions
of this Article 8 or of any default hereunder or the acceptance of the assignee,
subtenant or occupant as Lessee, or a release of Lessee from the further
observance or performance by Lessee of all covenants, conditions, terms and
provisions on the part of Lessee to be performed or observed.
9. Alterations: a) Lessee will not make any material alterations,
installations, changes, replacements, additions, or improvements, structural or
otherwise ("Alterations"), in or to the Demised Premises or the Building, or any
parts thereof, without the prior written consent of Lessor which consent shall
not be unreasonably withheld except that if such Alterations affect the
structure of the Building, its exterior components or the Building systems,
Lessor may withhold its consent in its sole discretion. Lessee will provide
Lessor with all plans, drawings and specifications for any such Alterations for
Lessor's approval prior to undertaking any work and shall also deliver copies of
all necessary permits for any such Alterations. Lessee agrees to obtain and
deliver to Lessor written and unconditional waivers of mechanic's and
materialmen's liens upon the Land, the Building and the Demised Premises for all
work, labor and services performed and materials furnished by contractors,
subcontractors, materialmen and laborers in connection with any such
Alterations. If, however, any such materialmen's or mechanic's lien shall be
filed against the Demised Premises, the Land, or the Building, such lien shall
be discharged by lessee within thirty (30) days thereafter, at Lessee's sole
expense, by the payment thereof or by filing of appropriate bond. If Lessee
shall fail to discharge any such mechanic's or materialmen's lien, Lessor may,
at its option, discharge the same and treat the cost thereof as additional rent
hereunder payable with the monthly installment of rent next becoming due; and
such discharge by Lessor shall not be deemed to waive the default of Lessee in
not discharging the same. Lessee will indemnify and hold Lessor harmless from
and against any and
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all reasonable expenses (including attorney's fees), liens, claims or damages to
any person or property which may or might arise by reason of the making by
Lessee of any Alterations. Lessor shall have the right to have the making of any
Alterations supervised by its architects, contractors or workmen. All
Alterations which affect or in any way relate to the mechanical, electrical,
plumbing, heating, air conditioning, or structural systems of the Building shall
be done only by Lessor or Lessor's contractor or agent at Lessee's reasonable
expense.
b) All Alterations in or to the Demised Premises (whether with or without
the Lessor's consent) shall remain upon the Demised Premises and be surrendered
with the Demised Premises at the expiration or other termination of this Lease
without disturbance, molestation or injury unless Lessor shall give no less than
sixty (60) days written notice to Lessee prior to the Lease Termination Date
that such Alterations shall be removed and the Demised Premises restored. If
Lessor elects that Alterations be removed upon the expiration or other
termination of this Lease or of any renewal period hereof, Lessee hereby agrees
to cause same to be removed at Lessee's sole cost and expense, and should Lessee
fail to remove the same, then and in such event Lessor shall cause same to be
removed at Lessee's expense, and the Lessee hereby agrees to reimburse Lessor
for the reasonable cost of such removal together with any and all damages which
Lessor may suffer and sustain by reason of the failure of Lessee to remove the
same.
11. Advertisements: Lessee further agrees that no sign, advertisement or
notice shall be inscribed, painted or affixed on any part of the outside or
inside of the Demised Premises or the Building, except on the directories and
doors of offices, and then only in such size, color and style as Lessor has
approved in
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writing; that Lessor shall have the right to prohibit any advertisement within
the Building or the Demised Premises by Lessee which in Lessor's opinion tends
to impair the reputation of the Building or its desirability as a building for
offices or for financial, professional, insurance or other institutions,
practices and businesses of like nature, and upon written notice from Lessor,
Lessee shall remove and refrain from and discontinue any such advertisement.
12. Moving; Repairs: Lessor shall have the right to prescribe the weight
and method of installation and position of safes, heavy fixtures, shelving,
files, equipment or machinery and Lessee will not install any such items which
would place a load upon any floor exceeding the floor load per square foot that
such floor was designed to carry. Lessor represents that the Demised Premises
may carry up to 75 p.s.f. live load and 25 p.s.f. partition load. No freight,
furniture or other bulky matter of any description will be received into the
Building or carried in the elevators, except as reasonably approved by Lessor.
All moving of furniture, material and equipment shall be under the direct
control and supervision of Lessor who shall, however, not be responsible for any
damage to or charges for moving same except to the extent of Lessor's
negligence. Lessee agrees promptly to remove from the public area adjacent to
the Building any of Lessee's merchandise, goods or property there delivered or
deposited. All injury to the Demised Premises or the Building caused by moving
the property of Lessee into, in or out of the Building and all breakage done by
Lessee, its agents, servants, employees or contractors, shall be repaired by
Lessee at its expense. In the event that Lessee shall fail to do so, then
Lessor, after reasonable written notice to Lessee, shall have the right to make
such necessary repairs, alterations and replacements, whether structural or
non-structural, and any charge or cost so incurred by Lessor shall be paid by
Lessee with the right on the part of Lessor to elect in its discretion to regard
the same as additional rent, in which event such cost or charge shall become
additional rent payable with the installment of rent next becoming due
under the terms of this Lease. This provision shall be construed as an
additional remedy granted to Lessor and not in limitation of any other rights
and remedies which Lessor has or may have in said circumstances.
13. Special Equipment: Lessee shall not install or operate in the Demised
Premises any equipment of any kind or nature whatsoever which will or may
necessitate any changes, replacements or additions to, or require the use of,
the water system, plumbing system, heating system, air conditioning system or
the electrical system serving the Demised Premises without the prior written
consent of Lessor, which consent shall not be unreasonably withheld but which
consent may be conditioned upon the payment by Lessee of
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additional rent in compensation for such excess consumption of water and/or
electricity, or installation of additional or specialized wiring, as may be
occasioned by the operation of said equipment or machinery including, but not
limited to, the installation of such separate submeters as Lessor shall deem
necessary. All work described in the foregoing sentence shall be performed only
by Lessor or Lessor's contractor or agent at Lessee's expense which expense
Lessor agrees shall be reasonable with respect to the installation of submeters.
In addition, Lessee shall not install any equipment from which noise or
vibration may be transmitted to the structure of the Building or to the premises
of other tenants of the Building. Maintenance and repair of such special
equipment, whether or not such consent has been given by Lessor, such as kitchen
fixtures, separate air conditioning equipment, or any other type of special
equipment, whether installed by Lessee or by Lessor on behalf of Lessee, shall
be the sole responsibility of Lessee, and lessor shall have no obligation in
connection therewith.
14. Lessors's Right to Enter, Repair and Renovate: a) Lessee will allow
Lessor, its agents or employees, to enter the Demised Premises at all reasonable
times on reasonable prior written notice, or in an emergency, at any time, to
examine, inspect or to protect the same or prevent damage or injury to the same,
or to make such alterations and repairs as Lessor may deem necessary, or to
exhibit the same to prospective tenants, lenders or purchasers of the Building.
b) Lessee understands and agrees that Lessor may, at any time or from time
to time during the term of this Lease, perform substantial repair or renovation
work in and to the Building or the mechanical systems serving the Building
(which work may include, but need not be limited to, the repair or replacement
of the Building's exterior facade, exterior window glass, elevators, electrical
systems, air conditioning and ventilating systems, plumbing system, common
hallways, or lobby), any of which work may require access to the same from
within the Demised Premises. Lessee agrees that Lessor shall have access to the
Demised Premises at all reasonable times, upon reasonable written notice, for
the purpose of performing such work, and that Lessor shall incur no liability to
Lessee, its servants, agents, employees, contractors, invitees, licensees, or
concessionaires, except for any damage or loss occasioned by Lessor's
negligence, nor shall Lessee be entitled to any abatement of rent on account of
any noise, vibration, or other disturbance to Lessee's business at the Demised
Premises (provided that Lessee is not denied access to the Demised Premises),
which shall arise out of said access by Lessor or by the performance by Lessor
of the aforesaid repair or renovations at the Building provided that Lessor
shall remain liable for its negligence.
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Lessor shall use reasonable efforts (which shall not include any obligation to
employ labor at overtime rates) to avoid and minimize disruption of Lessee's
business during any such entry upon the Demised Premises or during the
performance of any such work by Lessor.
15. Rules and Regulations: Lessee, its agents, servants, employees,
contractors, invitees, licensees and concessionaires, shall abide by and observe
such rules and regulations as may be promulgated from time to time by Lessor for
the operation and maintenance of the Building. A copy of the presently
applicable Rules and Regulations is attached hereto as Exhibit "B," and made a
part hereof. Nothing contained in this Lease shall be construed to impose upon
Lessor any duty or obligation to enforce such rules and regulations, or the
terms, conditions or covenants contained in any other lease, as against any
other lessee, and Lessor shall not be liable to Lessee for violation of the same
by any other lessee, or such other lessee's agents, servants, employees,
contractors, invitees, licensees or concessionaires.
16. Allocation of Risks and Liability: a) Lessee shall indemnify Lessor and
save it harmless from any loss, damage, liability, claim and expense (including
reasonable attorney's fees) in connection with loss of life, personal injury or
property damage arising from or out of any occurrence within the Demised
Premises or the occupancy or use by Lessee of the Demised Premises or any part
thereof, including but not limited to Lessee's alterations or improvements to
the Demised Premises, or occasioned wholly or in part by any negligent or
willful act or omission of Lessee, its agents, servants, employees, contractors,
invitees, licensees or concessionaires, either within the Demised Premises or
other areas of the Property.
b) Any use or occupancy by Lessee of, or storage of its property in, the
Demised Premises or elsewhere within the Property shall be at its own risk.
Lessor assumes no liability or responsibility whatever with respect to the
conduct and operation of the business to be conducted in the Demised Premises
nor for any loss or damage of whatsoever kind or by whomsoever caused, to
Lessee's furnishings, fixtures, equipment, documents, records, monies or other
personal property of Lessee or to Lessee's business, except that Lessor shall be
liable for its negligence.
c) Lessor shall not be responsible or liable to Lessee or to those claiming
by, through or under Lessee, for any loss or damage to either the person or
property of Lessee that may be occasioned by or through the acts or omissions of
persons using or occupying other areas within the Property.
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d) Lessee is familiar with the Demised Premises and accepts same as
suitable for the purposes for which they are leased. Lessee acknowledges that
the Demised Premises are received by Lessee in good state of repair and are
accepted by Lessee in the condition in which they are as of the commencement of
the term of this Lease subject to the substantial completion by Lessor of minor
or insubstantial details of construction, decoration or mechanical adjustment
("punchlist items") following the substantial completion of Lessor's Work and
subject to latent defects of which Lessor has received written notice from
Lessee within (A) one (1) year after the date of Lessee's occupancy of the
Demised Premises with respect to defects in the heating, ventilating and air
conditioning system and (B) sixty (60) days after the date of Lessee's occupancy
of the Demised Premises for all other defects, all of which defects Lessor shall
cure within a reasonable time after receipt of such notice. Lessor and Lessor's
agents, servants and employees shall not be liable for, and Lessee waives all
claims against them for, loss or damage to Lessee's business or damage to person
or property sustained by Lessee or Lessee's agents, servants, employees,
contractors, invitees, licensees or concessionaires, or anyone claiming through
any of them, resulting from any accident or occurrence within the Demised
Premises or elsewhere in the Property due to condition, design or defect in the
Demised Premises or in other portions of the Property or which may now exist or
hereafter occur, including but not limited to, (i) any defect in or failure of,
or defective installation of, any equipment or appurtenances, including
elevators, plumbing, heating, ventilating or air conditioning equipment,
including but not limited to disruption of same caused by strikes, accidents,
Federal, state or local regulations, or unavailability at reasonable cost of
electricity, coal, fuel oil or other suitable fuel or energy source; (ii) any
defect in, failure of, or defective design or installation of electric wiring,
gas, water and steam pipes, stairs, porches, railings or walks; (iii) broken
glass; (iv) the backing up of any sewer pipe or downspout; (v) the bursting,
leaking or running of any tank, tub, washstand, water closet, waste pipe, drain
or any other pipe or tank within the Demised Premises or other portions of the
Property; (vi) the escape of steam or hot water; (vii) water, snow, or ice being
upon or coming through the roof, stairs, doorways, windows, walks or any other
place upon or near the Demised Premises or other portions of the Property;
(viii) the falling of any fixture, plaster or tile; and (ix) any act, omission
or negligence of other tenants or any other persons at any time present in or on
the Property or any adjacent or contiguous property, or of owners of adjacent or
contiguous property. Notwithstanding the foregoing provisions of this Article 16
(d), but subject to any and all other limitations on Lessor's liability set
forth in this Lease, Lessor shall not be released from liability to Lessee, its
agents, servants and employees, for any
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damage or injury resulting from the negligence or willful misconduct of Lessor,
its agents, servants or employees.
e) Lessee shall give prompt notice to Lessor in case of accidents or
occurrences in the Demised Premises or in other portions of the Property or of
defects or defective conditions or design therein, known to Lessee, of the
nature described in Article 16(d) above, in order that the same may be remedied
by Lessor, subject, however, to the provisions of this Lease.
17. Insurance: a) Lessor, at its own cost and expense, shall procure and
maintain insurance covering the Property for fire and such other risks as are
from time to time included in standard "all risk" insurance in adequate amounts.
Lessor, at its own cost and expense, shall also obtain and maintain public
liability insurance in adequate amounts against claims for property damage,
bodily injury and death occurring on or arising out of any use of the common
areas of the Building. Lessor shall be deemed to have complied with the
provisions of this Article 17(a) in the event it elects to carry such insurance
through a so-called "Blanket Policy."
b) Lessee, at its own cost and expense, shall obtain and maintain in full
force and effect during the original term of this Lease, and any renewals or
extensions hereof, policies of insurance in form acceptable to lessor covering
the following risks: (i) fire and extended coverage insurance covering all of
Lessee's property, furnishings, fixtures and equipment placed by Lessee in or
upon the Demised Premises or elsewhere within the Property, and any and all
Alterations made by Lessee thereto, in an amount not less than one hundred
percent (100%) of their full replacement cost without deduction for
depreciation; and (ii) comprehensive General Public Liability Insurance on an
occurrence basis with minimum limits of liability in an amount of not less than
$1,000,000.00 combined single limit coverage, which insurance shall contain,
among other things required by Lessor, a contractual liability endorsement
covering the matters set forth in Article 16 hereof. It is understood and agreed
that liability coverage provided for hereunder shall extend beyond the Demised
Premises to portions of the common areas of the Building used from time to time
by Lessee, its agents, servants, employees, contractors, invitees, licensees and
concessionaires.
c) All policies of insurance to be obtained and furnished by Lessee
hereunder shall be issued and carried in the name of Lessee with Lessor named as
an additional insured, as their respective interests may appear, together with
such other party or parties as may be designated by Lessor, as their interests
may appear. All such policies of insurance (i) shall be issued by a financially
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responsible company or companies reasonably acceptable to Lessor, authorized to
issue such policy or policies, and licensed to do business in the District of
Columbia; (ii) shall be written as primary policy coverage and not contributing
with or in excess of any coverage which Lessor may carry; (iii) shall contain an
express waiver of right of subrogation by the insurance company against Lessor
and its agents, servants and employees; (iv) shall provide that the policy may
not be cancelled, terminated or materially changed unless Lessor shall have
received thirty (30) days prior written notice thereof by registered or
certified mail; and (v) shall provide that Lessor, and any other parties in
interest, shall be entitled to recover under said policies for any loss or
damage occasioned to them, their agents, servants and employees, by reason of
the negligence of Lessee or Lessee's agents, servants, employees, contractors,
invitees, licensees or concessionaires. The original policy or policies or duly
executed certificates for the same, and satisfactory evidence of payment of the
premium thereof, shall be delivered to Lessor on or before the Lease
Commencement Date, and upon renewals of such policies, not less than fifteen
(15) days prior to expiration of the term of any such coverage. The minimum
limits of any insurance coverage required herein to be carried by Lessee shall
not limit Lessee's liability under Article 16 hereof. Lessee may carry any
insurance coverage required of it hereunder pursuant to blanket policies of
insurance so long as the coverage afforded Lessor thereunder shall not be less
than the coverage which would be provided by direct policies.
d) Lessee shall not do or keep, or suffer to be done or kept, anything
within the Demised Premises or elsewhere within the Property which will
contravene the coverage of Lessor's policies as set out above, or which will
prevent Lessor from procuring such policies from companies acceptable to Lessor.
If anything be so done, kept or suffered to be done or kept by lessee that shall
cause the rate of such insurance on the Demised Premises or the Property in
companies acceptable to Lessor to be increased beyond the minimum rate from time
to time applicable to the Demised Premises for use for the purpose permitted
under this Lease, or on the other portions of the Property for the use or uses
made thereof, Lessee shall pay the amount of such increase promptly upon
Lessor's demand as additional rent.
e) In the event that the Lessee at any time or times shall fail to obtain
or maintain in full force and effect any or all of the insurance policies and
coverages required of it under this Article 17, or should Lessee violate any of
the provisions of Paragraph (d) above, then, and in any of such events, Lessor
at its election, after ten (10) days' written notice to Lessee, and as agent for
Lessee, may obtain such insurance or coverage, or additional insurance or
coverage as the case may be, pay the
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premiums thereon, or take such other steps as may be necessary to effectuate the
equivalent of Lessee's obligations under this Article, and may thereafter obtain
full reimbursement of the costs thereof from Lessee promptly upon Lessor's
demand, as additional rent.
f) Notwithstanding anything contained in this Lease, Lessee and Lessor each
release the other and their respective agents, servants, employees, contractors,
licensees and invitees, from any claims for injury to or death of persons, or
damage or loss to any person or to the Demised Premises, the Building, the Land
and any property contained therein or thereon, or any other property, caused by
or resulting from any risks insured against under any insurance policies carried
by Lessor or Lessee and in force at the time of damage or loss, regardless of
the cause of damage or loss, to the extent the damaged or liable party is
reimbursed therefor by insurance, or would have been eligible for reimbursement
had insurance coverage required hereunder been maintained. The applicable
insurance policies shall contain a clause to the effect that this release shall
not affect the right of the insured to recover under such policies.
18. Utilities and Services; Security: a) Lessor shall furnish electricity,
water, janitor service, elevator service, and, during the appropriate respective
seasons for same, heat and air conditioning during the hours of 8:00 a.m. to
6:00 p.m., Monday through Friday, and 9:00 a.m. to 1:00 p.m. on Saturday,
exclusive of legal holidays, without additional cost to Lessee, provided,
however, that Lessor shall not be liable for failure to furnish or for delay in
furnishing any of such services caused by maintenance or repair work or strike,
riot, civil commotion, or any causes beyond the control of the Lessor.
b) Lessor agrees, at its option, to provide a security system or guard
service for the Building during the term of the Lease; provided, however, that
Lessor makes no representation or warranty with respect to adequacy,
completeness or integrity of the security system or guard service and any
failure of the security stems or guard service in any way shall not modify or
affect any of the terms of this Lease with respect to Lessor's liability to
Lessee. Lessor reserves the right to modify, supplement or revise the security
system or guard service at any time in its sole judgment.
19. Bankruptcy and Insolvency: a) If a petition is filed by, or an order
for relief is entered against, Lessee under Chapter 7 of the Bankruptcy Code (11
U.S. Code Section 101 et seq.) and the trustee of Lessee elects to assume this
Lease for the purpose of assigning it, the election or assignment, or both, may
be made only if all of the terms and conditions of Paragraphs (b) and (d) of
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this Article 19 are satisfied. If the trustee fails to elect to assume this
Lease for the purpose of assigning it within sixty (60) days after his
appointment, this Lease will be deemed to have been rejected. Lessor shall then
immediately be entitled to possession of the Demised Premises without further
obligation to Lessee or the trustee, and this Lease will be canceled. Lessor's
right to be compensated for damages in said bankruptcy proceeding, however,
shall survive.
b) If Lessee files a petition for reorganization under Chapters 11 or 13 of
the Bankruptcy Code, or if a proceeding that is filed by or against Lessee under
any other chapter of the Bankruptcy Code is converted to a Chapter 11 or 13
proceeding and Lessee's trustee or Lessee as a debtor-in-possession fails to
assume this Lease within sixty (60) days from the date of the filing of the
petition or the conversion, as the case may be, the trustee or the
debtor-in-possession will be deemed to have rejected this Lease. To be
effective, an election to assume this Lease must be in writing and addressed to
Lessor and, in Lessor's business judgment, all of the following conditions,
which Lessor and Lessee acknowledge to be commercially reasonable, must have
been satisfied:
(i) The trustee or the debtor-in-possession has cured or has provided
the Lessor adequate assurance, as defined in sub-paragraph (iv) of this
Paragraph (b), that:
(A) the trustee will cure all monetary defaults under this Lease
within thirty (30) days from the date of the assumption; and
(B) the trustee will cure all non-monetary defaults under this Lease
within thirty (30) days from the date of the assumption or, if such defaults are
curable but not within said thirty (30) day period, the trustee shall have
commenced, and is diligently prosecuting the cure of such non-monetary defaults.
(ii) The trustee or the debtor-in-possession has compensated Lessor, or
has provided to Lessor adequate assurance that within thirty (30) days from the
date of the assumption Lessor will be compensated, for any pecuniary loss it
incurred arising from the default of Lessee, the trustee, or the debtor-in-
possession as recited in Lessor's written statement of pecuniary loss sent to
the trustee or the debtor-in-possession.
(iii) The trustee or the debtor-in-possession has provided Lessor with
adequate assurance of the future performance of each of Lessee's obligations
under the Lease and, in addition, has deposited with Lessor, as security for the
timely payment of
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rent, an amount equal to two months' Basic Monthly Rental, as adjusted as of
said date, together with two months' Monthly Escalation Payments (as defined in
Article 3 of this Lease), said obligations imposed upon the trustee or the
debtor-in-possession hereunder to continue for Lessee after the completion of
bankruptcy proceedings.
(iv) For purposes of this Paragraph (b), "adequate assurance" means
that:
(A) Lessor determines that the trustee or the debtor-in- possession
has, and will continue to have, sufficient unencumbered assets after the payment
of all secured obligations and administrative expenses to assure Lessor that the
trustee or the debtor-in-possession will have sufficient funds to fulfill
Lessee's obligations under this Lease; and
(B) An order will have been entered segregating sufficient cash
payable to Lessor and/or a valid and perfected first lien and security interest
will have been granted in property of Lessee, trustee, or debtor-in-possession
that is acceptable for value and kind to Lessor, to secure to Lessor the
obligation of the trustee or debtor-in-possession to cure the monetary and
non-monetary defaults under this Lease within the time periods set forth above.
(c) In the event that this Lease is assumed by a trustee appointed for
Lessee or by Lessee as debtor-in-possession under the provisions of Paragraph
(b) of this Article 19 and, thereafter, Lessee is either adjudicated a bankrupt
or files a subsequent petition for arrangement under Chapter 11 of the
Bankruptcy Code, then Lessor may terminate, at its option, this Lease and all
Lessee's rights under it, by giving written notice of Lessor's election to
terminate.
(d) If the trustee or the debtor-in-possession has assumed the Lease, under
the terms of Paragraphs (a) or (b) of this Article 19, to assign or to elect to
assign Lessee's interest under this Lease or the estate created by that interest
to any other person, that interest or estate may be assigned only if Lessor
acknowledges in writing that the intended assignee has provided adequate
assurance of future performance, as defined in this Paragraph (d), of all of the
terms, covenants, and conditions of this Lease to be performed by Lessee. For
the purposes of this Paragraph (d), "adequate assurance of future performance"
means that Lessor has determined that each of the following conditions has been
satisfied:
(i) The assignee has submitted a current financial statement by a
certified public accountant, that shows a net worth
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and working capital in amounts sufficient to assure the future performance by
the assignee of Lessee's obligation under this Lease;
(ii) If requested by Lessor, the assignee will obtain guarantees, in
form and substance satisfactory to Lessor, from one or more persons who satisfy
Lessor's standard of creditworthiness; and
(iii) Lessor has obtained all consents or waivers from any third party
required under any lease, mortgage, financing arrangement or other agreement by
which Lessor is bound, to enable Lessor to permit the assignment.
(e) When, pursuant to the Bankruptcy Code, the trustee or the
debtor-in-possession is obligated to pay reasonable use and occupancy charges
for the use of all or part of the Demised Premises, the charges will not be less
per month than the sum of Basic Monthly Rental, as adjusted to said date, and
the Monthly Escalation Payment then applicable according to the provisions of
Article 3 of this Lease.
(f) Neither Lessee's interest in the Lease nor any estate of Lessee created
in the Lease will pass to any trustee, receiver, assignee for the benefit of
creditors, or any other person or entity, or otherwise by operation of law under
the laws of the District of Columbia or any state having jurisdiction of the
person or property of Lessee, unless Lessor consents in writing to such
transfer. Lessor's acceptance of rent or any other payments from any trustee,
receiver, assignee, person or other entity will not be deemed to have waived, or
waive, the need to obtain Lessor's consent or Lessor's right to terminate this
Lease for any transfer of Lessee's interest hereunder without said consent.
(g) By written notice to Lessee, Lessor, at its option, may terminate this
Lease and all of Lessee's rights under this Lease if any of the following events
occurs:
(i) Lessee's estate created by this Lease is taken in execution or by
other process of law;
(ii) Lessee or any guarantor of Lessee's obligations under this Lease
(hereinafter "Guarantor") is adjudicated insolvent pursuant to the provisions of
any present or future insolvency law under the laws of the District of Columbia
or of any state having jurisdiction;
(iii) Any proceedings are filed by or against Guarantor under the
Bankruptcy Code or any similar provisions of any future
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federal bankruptcy law which are not dismissed within ninety (90) days;
(iv) A receiver or trustee of the property of Lessee or Guarantor is
appointed under the law of the District of Columbia or of any state having
jurisdiction by reason of Lessee's or Guarantor's insolvency or inability to pay
its debts as they become due or otherwise and the appointment of such receiver
or trustee is not vacated within ninety (90) days; or
(v) Any assignment for the benefit of creditors is made of Lessee's or
Guarantor's property under the law of the District of Columbia or any state
having jurisdiction.
20. Remedies upon Default; Waiver: a) If Lessee shall (i) fail to pay the
Basic Monthly Rent or any installments thereof as aforesaid at the time the same
shall become due and payable, and/or any additional rent as herein provided,
and/or such amounts as may be due pursuant to Paragraph (d) below, and/or any
late fee, and such default shall continue for more than ten (10) days after the
date such payment is due, although no demand shall have been made for the same;
or (ii) default in the material performance of any of the covenants, conditions
and agreements herein contained on the part of the Lessee to be kept and
performed, and such default shall continue for more than ten (10) days after
written notice of such default from Lessor unless Lessee shall have commenced
and is diligently pursuing the cure of such non-monetary default; or (iii)
abandon the Demised Premises during the term of this Lease; then, upon the
occurrence of each and every such event or failure from that time forward, at
the option of Lessor, Lessee's right of possession shall thereupon cease and
determine, and Lessor shall be entitled to the possession of the Demised
Premises and to re-enter the same without demand of rent or demand of possession
and may forthwith proceed to recover possession of the Demised Premises by
process of law or otherwise, any notice to quit, or of Lessor's intention to
re-enter the same, being hereby expressly waived by Lessee. And, in the event of
Lessor's re-entry, Lessee nevertheless agrees to remain answerable for any and
all damage, deficiency or loss of rent which Lessor may sustain by reason of any
default by Lessee hereunder, as set out in Paragraph (b) below, and the mention
of any particular remedy in this Lease shall not preclude Lessor from any other
remedy. For purposes of this Article 20, Lessee shall not be deemed to have
abandoned or vacated the Demised Premises if Lessee ceases its physical
occupancy of the Demised Premises during the term of this Lease provided that
Lessee continues during such period to pay the rent called for hereunder when
due.
b) If Lessee's right of possession of the Demised Premises
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shall so cease and determine during the term of this Lease without Lessee having
paid in full the rents for the entire term, then, in such event, Lessor shall
have the right at its option to take possession of the Demised Premises, to
re-let the same, as set forth in the following sentence, for the benefit of
Lessee and apply the proceeds received from such re-letting toward the payment
of the rent of Lessee under this Lease. Lessor may relet the Demised Premises or
any part thereof, alone or together with other premises, for such term(s) (which
may be greater or less than the period which otherwise would have constituted
the balance of the term of this Lease) and on such terms and conditions (which
may include concessions of free rent and alterations of the Demised Premises) as
Lessor, in its sole discretion, may determine, but Lessor shall not be liable
for, not shall Lessee's obligations hereunder be diminished by reason of, any
failure by Lessor to relet the Demised Premises or any failure by Lessor to
collect any rent due upon such reletting. Such re-entry and re-letting shall not
discharge Lessee from liability (i) for rent to date of such re-taking
(including, but not limited to, additional rent based on increases, if any, in
Operating Costs and Real Estate Taxes, as set forth in Article 3 above,
applicable to the period prior to such re-taking), (ii) for any deficiency or
loss of rent sustained by Lessor in respect of the balance of the term, and
(iii) for any other loss, damage or reasonable expense incurred or suffered by
Lessor as a result of such cessation and determination of Lessee's right of
possession or in connection with such re-taking and re-letting (including, but
not limited to, reasonable attorney's fees, brokerage fees or commissions,
advertising costs, costs to prepare the Demised Premises for any such new tenant
and other costs and expenses incurred by Lessor in pursuit of its remedies
hereunder). Any such deficiency or loss of rent for the balance of the term
shall be payable monthly by Lessee in advance in the same manner that rent
hereunder is to be paid, and Lessor shall have the right to recover any such
loss of rent monthly whether or not the Demised Premises have ben re-let; and
any such other loss, damage or expense of Lessor resulting from such cessation
and determination of Lessee's right of possession or in connection with such
retaking and re-letting shall be payable by Lessee immediately upon being
incurred or suffered by Lessor.
c) If under the provisions hereof summary process shall be served, and a
compromise or settlement thereof shall be made, it shall not be considered as a
waiver of any breach of any covenant, condition or agreement herein contained;
and no waiver of any breach of any covenant, condition or agreement herein
contained shall operate as a waiver of the covenant, condition or agreement
itself or of any subsequent breach thereof. No provision of this Lease shall be
deemed to have been waived by Lessor unless such waiver shall be in writing
signed by Lessor. No payment by Lessee
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or receipt by Lessor of a lesser amount than the Basic Monthly Rental, and/or
any additional rent, provided for herein 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 Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such rent or pursue any
other remedy in this Lease or by law provided.
d) If Lessee shall fail to pay any installments of Basic Monthly Rental, or
any additional rent due under this Lease, within ten (10) days of the date when
such payment is due, for three (3) times in any period of twelve (12)
consecutive months, then Lessor may, by giving notice to Lessee, exercise any of
the following options: (i) declare the rent reserved in this Lease for the next
six (6) months (or less, at Lessor's option) to be due and payable within ten
(10) days of such notice; or (ii) required an additional reserve deposit to be
paid to Lessor within ten (10) days of such notice, in an amount not to exceed
six (6) installments of Basic Monthly Rental.
e) In the event of the employment of an attorney or attorneys by lessor or
its agent because of the violation by Lessee of any term or provision of this
Lease, including non-payment of rent as due, Lessee shall pay and hereby agrees
to pay reasonable attorney's fees and all other costs incurred by Lessor as a
result of such violation, provided a judgment or award in favor of Lessor is
rendered by a court of competent jurisdiction or equivalent body whereunder
Lessor obtains all or a substantial part of the relief sought by lessor through
the services of the attorney(s) so employed. In the event of any settlement
outside of court, each party shall be responsible for paying its own attorneys
fees and other costs.
f) The parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaims brought be either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of landlord and tenant, Lessee's use
or occupancy of the Demised Premises and/or any claim of injury or damage. In
the event Lessor commences any proceedings for nonpayment of rent, or additional
rent, Lessee will not interpose any set-off or counterclaim of whatever nature
or description in any such proceedings. This shall not, however, be construed as
a waiver of Lessee's right to assert such set-off or claims in any separate
action or actions brought by Lessee.
21. Late Charge; Delinquent Payments: In the event that Lessor fails to
receive any installment of rent, or any additional rent,
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within five (5) days after written notice from Lessor that the same is due and
payable, Lessee shall be obligated to pay, as additional rent, a late fee equal
to five percent (5%) of such delinquent rent, unless a lower amount is required
by law, said additional rent to be payable with the next monthly installment of
rent. In addition, (a) any installment of rent, or any additional rent, which is
not paid within thirty (30) days after the same becomes due shall bear interest
from the date due until paid at the variable rate (hereinafter the "Default
Rate") which is from time to time four percentage points (4%) in excess of the
"prime" rate announced from time to time by the Chase Manhattan Bank, N.A., New
York, New York, and (b) if Lessee defaults in the making of any other payment or
the doing of any act herein required to be made or done by Lessee then the
Lessor, after giving reasonable written notice to Lessee, may, but shall not be
required to, make such payment or do such act, and the amount of the expense
thereof, if made or done by Lessor, shall be paid by Lessee to Lessor together
with interest at the Default Rate while such expense remains unpaid. Such
expenses and interest shall constitute additional rent hereunder due and payable
with the next monthly installment of Basic Monthly Rental. In the event Lessee
pays its rent by check and said check is returned unpaid, Lessee shall pay to
Lessor, in addition to the aforesaid monthly rent payment and any late charges
and interest which may apply, the sum of Twenty Dollars ($20.00) to cover the
costs and expenses of processing the returned check. It is expressly understood
that the late charge and interest provided herein does not relieve Lessee from
its obligation to continue to make timely monthly rental payments as provided in
this Lease, and that Lessee's failure to make such timely payment shall, at
Lessor's option, constitute a violation of the terms of this Lease, entitling
Lessor to pursue any of its remedies under Article 20 hereof.
22. Fire Loss or Damage: a) In the event that the Demised Premises or the
Building (whether or not the Demised Premises are damaged) shall be partially
damaged by any casualty insured against under Lessor's "all-risk" insurance
policy, Lessor shall, upon receipt of the net proceeds from such insurance,
undertake the repair and restoration of the Demised Premises and/or the Building
to substantially the same condition as existed prior to the casualty, with such
reasonable changes as Lessor may desire to make. As used herein, the term "net
proceeds from such insurance" shall mean that portion of the proceeds of
insurance which is free and clear to Lessor after deducting all sums required to
be paid by Lessor to the holder or any mortgage on the property damaged, as well
as all expenses and legal fees incurred by Lessor to collect such insurance
proceeds. As used herein, the term "partially damaged" shall mean not more than
25% of the then cost of replacement of the Demised Premises or the Building, as
the case
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may be.
b) If (i) either the Demised Premises or the Building (whether or not the
Demised Premises shall be damaged) shall be damaged to the extent of more than
25% of the then cost of replacement thereof, respectively, or (ii) the Demised
Premises or the Building shall be damaged as a result of a risk which is not
covered by Lessor's insurance, and Lessor decides not to rebuild, then in either
such event, Lessor may terminate this Lease by notice given within thirty (30)
days after the occurrence of such event or if (iii) a substantial portion of the
Demised Premises shall become untenantable for use by Lessee as permitted under
this Lease, then Lessee may terminate this Lease by notice given within thirty
(30) days after the occurrence of such event, and upon the date specified in
such notice, which shall be not less than thirty (30) days or more than sixty
(60) days after giving of said notice, this Lease shall terminate and come to an
end, and Lessee shall vacate and surrender the Demised Premises to Lessor. If
this Lease shall not be terminated as provided in this Paragraph (b), then
Lessor shall, promptly after receipt of the new proceeds of insurance (as
defined above) undertake the repair and restoration of the Demised Premises,
and/or the Building, to substantially the same condition as existed prior to the
casualty, with such reasonable changes as Lessor may desire to make. The amount
which Lessor shall be required to expend for the repair or restoration of the
Demised Premises and/or the Building shall in o event exceed the net proceeds of
insurance (as defined above). In the event such repair and restoration of the
Demised Premises is not substantially completed with ninety (90) days after the
date the damage occurred, then either party may terminate this Lease upon giving
no less than thirty (30) days prior written notice of termination to the other
after the end of such ninety (90) day period, provided, however, that such
termination shall not occur if such repair and restoration of the Demised
Premises is substantially completed prior to said date specified for
termination.
c) If the Demised Premises are rendered untenantable for use by Lessee as
permitted under this Lease, either in whole, and the Lease is not terminated at
set forth in Paragraph (b) above, or in part, by reason of the casualty damage
or the repair or restoration work, then there shall be allowed a proportionate
abatement of the Basic Monthly Rental (as adjusted according to Article 4 above)
and of Lessee's obligation to pay increases in Operating Costs, Electricity
Costs and Real Estate Taxes from the date that the damage occurred to the date
that the required repair or restoration work is completed (or the date that
Lessee uses and occupies the Demised Premises, or portion thereof, if earlier)
or, in the event that this Lease is terminated as provided above, the effective
date of such termination. The amount by which the Basic Monthly Rental
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(as so adjusted) may be so abated shall be determined on the basis of the ratio
that the floor area rendered untenantable bears to the total floor area of the
Demised Premises, as determined by Lessor in its reasonable judgment. The
obligation of Lessee to pay amounts, other than Basic Monthly Rental and
increases in Operating Costs, Electricity Costs and Real Estate Taxes, due and
payable under this lease for any reason whatsoever shall remain unchanged and
continue in full force and effect.
d) If any loss or damage to the Demised Premises is caused by the
negligence of Lessee or its agents, servants, employees, contractors, invitees,
licensees or concessionaires, then there shall be no abatement of Basic Monthly
Rental or of Lessee's obligation to pay increases in Operating Costs,
Electricity Costs and Real Estate Taxes unless Lessor elects to cancel this
Lease.
e) Subject to Paragraph (c) above, no compensation or claim or diminution
of rent will be allowed or paid by Lessor by reason of inconvenience, annoyance
or injury to business, arising from the necessity of repairing the Demised
Premises or any portion of the Building, however the necessity may occur, except
that Lessor shall be liable for its negligence.
23. Subordination and Attornment: a) This Lease is subject to all ground or
underlying leases and to all mortgages and/or deeds of trust which may now or
hereafter affect such ground or underlying leases or the real property of which
the Demised Premises from a part, and to all renewals, replacements,
modifications, consolidations, refinancings or extensions thereof. Lessee agrees
that is any mortgagee, trustee, or purchaser at any foreclosure sale or at any
sale under a power of sale contained in any such mortgage or deed of trust shall
at its sole election so request, Lessee shall attorn to and recognize any such
mortgagee, trustee or purchaser, as the case may be, as Lessor under this Lease
for the balance then remaining of the term of this Lease, subject to all the
terms of this Lease. The aforesaid provisions shall be self-operative and no
further instrument of subordination or attornment shall be necessary unless
required by any such mortgagee, trustee or purchaser. Should Lessor or any such
mortgagee, trustee, or purchaser desire confirmation of such subordination or
attornment, as the case may be, Lessee upon written request shall execute and
deliver without charge and in a form satisfactory to Lessor or any mortgagee,
trustee or purchaser, all instruments that may be requested to acknowledge such
subordination and/or agreement to attorn, in recordable form. Notwithstanding
the above, Lessee covenants and agrees that it will, at the written request of
Lessor or any such mortgagee, trustee, or purchaser, execute, acknowledge and
deliver in recordable form any further instrument that has for its purpose
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and effect the subordination of this Lease to the lien of such mortgage or deed
of trust. Lessor agrees to give Lessee notice of any such foreclosure sale or
sale under a power of sale contained in any such mortgage or deed of trust,
provided, however, that any failure to give such notice shall not affect the
provisions of this Article.
b) In the event of any such foreclosure, cancellation or other termination
of any such ground or underlying lease, mortgage or deed of trust, the
mortgagee, trustee or purchaser becoming successor in interest shall not (i) be
liable to Lessee for any previous act or omission of Lessor under this Lease,
(ii) be subject to any offset which shall have theretofore accrued to Lessee
against Lessor, (iii) have any obligation with respect to any security deposited
under this Lease unless such security shall have been physically delivered to
such successor in interest, or (iv) be bound by any previous modification of
this Lease or by any previous payment of rent for a period greater than one (1)
month, unless such modification or prepayment shall have been expressly approved
in writing by such successor in interest.
c) Lessee shall comply with all reasonable requirements and notices of any
financial institution(s) providing funds to finance or refinance the
construction of the Property or providing funds for the permanent financing or
refinancing of the Property, respecting all matters of occupancy, use, condition
or maintenance of the Demised Premises, provided the same shall not unreasonably
interfere with the conduct of Lessee's business nor materially limit or affect
the rights of the parties under this Lease. In the event any lender reasonably
requires changes to this Lease, Lessor may submit to Lessee a written amendment
to this Lease incorporating such changes, and, provided that such changes shall
not be in material derogation or diminution of any of the rights of Lessee
hereunder, more materially increase any of the obligations or liabilities of
Lessee hereunder, Lessee hereby covenants and agrees to execute, acknowledge and
deliver such amendments to Lessor within fifteen (15) days after Lessee's
receipt thereof.
24. Condemnation: a) Lessee agrees that if the whole or a substantial part
of the Demised Premises or reasonable access thereto shall be taken or condemned
for public or quasi-public use or purpose by any competent authority, Lessee
shall have no claim against the Lessor and shall not have any right to any
portion of the amount that may be awarded as damages or paid as a result of any
such condemnation; and all right of the Lessee to damages for the unexpired
leasehold estate and leasehold improvements that are, have become, or will
become, by the terms and conditions of this Lease, the property of the Lessor,
if any, are hereby assigned by the Lessee to the Lessor; provided, however, that
Lessee shall have
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the right to make an independent claim against the condemning authority for
relocation expenses. Upon such entire or substantial condemnation or taking, the
term of this Lease shall cease and terminate from the date of such governmental
taking or condemnation, and the Lessee shall have no claim against the Lessor
for the value of any unexpired term of this Lease. If less than a substantial
part of the Demised Premises is taken or condemned by any governmental authority
for any public or quasi-public use or purpose, the rent shall be equitably
adjusted on the date when title vests in such governmental authority and the
Lease shall otherwise continue in full force and effect. For purposes of this
Article 24(a), a substantial part of the Demised Premises shall be considered to
have been taken if more than twenty-five percent (25%) of the Demised Premises
are thereafter unusable by Lessee.
b) If any part of the Building (including, without limitation, the common
areas or reasonable access) is taken by condemnation so as to render, the
remainder unsuitable for use as an office building, Lessor shall have the right
to terminate this Lease upon notice in writing to Lessee within one hundred
twenty (120) days after possession is taken by such condemnation, without any
liability to Lessee by reason of such termination. If Lessor terminates this
Lease upon a condemnation of the Building as herein provided, the Lease shall
terminate as of the day possession is taken by the condemning authority, or, at
Lessee's option, on no less than thirty (30) days prior written notice thereof
to Lessor, on the date Lessee vacates the Demised Premises, and Lessee shall pay
rent and perform all of its other obligations under this Lease up to such date
with a proportionate refund by Lessor of any rent as may have been paid in
advance for a period subsequent to such possession date.
25. Hold Over: In the event Lessee continues in possession without the
consent of Lessor after the end of the Term of this Lease or any renewal or
extension hereof, Lessee agrees to pay as monthly rental 150% of the amount
payable as rent by Lessee for the last month of the term of this lease (that is,
twice the Basic Monthly Rental as adjusted according to the provisions of
Article 4 of this Lease, and any other provisions hereof), which amount shall
become the new Basic Monthly Rental in substitution for the amount set forth in
Article 1 above, and shall be subject to the same escalation provisions as apply
to the present Basic Monthly Rental thereunder, and all other forms of
additional rent provided for under this Lease. Lessee also agrees to keep and
fulfill all of the other material covenants, conditions, and agreements hereof,
and in the case of default or breach of any of said covenants, conditions and
agreements, hereby waives its right to a thirty (30) day or any other notice to
quit; provided, however, that in the event that Lessee shall hold over after the
expiration of the term
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hereby created, or after expiration of the 30 day notice to quit referred to
above, or after breach of any of the terms and conditions of this Lease, and if
Lessor shall desire to regain possession of the Demised Premises promptly at the
expiration of the term aforesaid, or upon expiration of said 30 day notice, or
upon such breach, then, in any of said events, Lessor, at its option, may
forthwith re-enter and take possession of the Demised Premises it being
specifically understood and agreed that, in any such event, Lessor shall be
entitled to accept monthly payments in the amount of the holder over rent
provided for in this Article 25 from Lessee for such period after such
expiration of the term, or of the 30 day notice to quit, or after such breach,
as Lessee shall remain in occupancy of the Demised Premises, which payments
shall be deemed the reasonable value of the use and occupation of the Demised
Premises for the period of Lessee's continued occupancy thereof until Lessor
regains possession, and such acceptance shall not constitute a waiver of
Lessor's right to terminate the Lease, or any hold over period thereof, and
Lessor hereby disclaims any intention to waive its right to terminate the Lease,
or any hold over period thereof, by its acceptance of such payment(s).
26. Failure to Give Possession; Lessor's Inability to Perform: a) If Lessor
is unable to give possession of the Demised Premises on the Lease Commencement
Date by reason of the holding over or retention of possession of any tenant or
occupant, or if repairs or improvements to the Demised Premises required by the
terms of this Lease to be made by Lessor are not substantially completed, or for
any other reason, Lessor shall not be subject to any liability for the failure
to give possession on said date. Under such circumstances, unless any such delay
in giving possession arises from the act or omission of Lessee, its agents,
servants, employees or contractors, the rent reserved and covenanted to be paid
herein and any rental abatement provided for herein shall not commence until the
possession of Demised Premises is given or the Demised Premises are
substantially complete, whichever is earlier, and no such failure to give
possession on the Lease Commencement Date shall in any other respect affect the
validity of this Lease or the obligations of Lessee hereunder, and the Lease
Termination Date shall be extended so as to provide for the full term of this
Lease. In such circumstances, Lessee agrees to execute an addendum to this Lease
setting forth the respective Lease Commencement Date and Lease Termination Date.
If permission is given to Lessee to enter into possession of the Demised
Premises or to occupy premises other than the Demised Premises prior to the
Lease Commencement Date, Lessee covenants and agrees that such occupancy shall
be deemed to be under all the terms, covenants, conditions and provisions of
this Lease and Lessee agrees to pay rent at the rate of 1/30th of the Basic
Monthly Rental for each day of such early occupancy. For the purposes of the
foregoing, the term
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"substantially completed" shall mean that state of the completion of Lessor's
Work as described in Exhibit "C" attached hereto and made a part hereof which
will, except for any improvements or work to be performed by Lessee, a low
Lessee to utilize the Demised Premises for their intended purpose without
material interference to the customary business activities of Lessee by reason
of the completion of any work being performed by Lessor. Substantially
completion shall be deemed to have occurred notwithstanding that the punchlist
items remain to be performed.
b) Except as otherwise set forth in this Lease, this Lease and the
obligations of Lessee to pay rent and perform all of the provisions on the part
of Lessee to be performed hereunder shall in no way be affected, impaired, or
excused because Lessor, due to force majeure, (i) is unable to fulfill any of
its obligations under this Lease; (ii) is unable to supply or is delayed in
supplying any service expressly or impliedly to be supplied; (iii) is unable to
make or is delayed in making any repairs, replacements, additions, alterations
or decorations; or (iv) is unable to supply or is delayed in supplying any
improvements, equipment or fixtures. Lessor shall in each instance exercise
reasonable diligence to effect performance when and as soon as possible; however
Lessor shall be under no obligation to pay overtime labor rates.
27. Expenses on Behalf of Lessee: If Lessor shall incur any charge or
expense on behalf of Lessee under the terms of this Lease, such charge or
expense shall be considered additional rent hereunder, in addition to and not in
limitation of any other rights and remedies which Lessor may have in case of the
failure by Lessee to pay such sums when due, and any non-payment thereof shall
entitle Lessor to the remedies available to it hereunder for non-payment of
rent.
28. Lessee's Certificate: Lessee agrees from time to time, within three (3)
days after receipt of written request by Lessor, to execute, acknowledge and
deliver to Lessor a statement in writing certifying (i) if such be the case,
that this Lease is unmodified in full force and effect and that Lessee has not
defenses, offsets or counterclaims against its obligations to pay the Basic
Monthly Rental and additional rent and to perform its other covenants under this
Lease and that there are no uncured defaults of Lessor or Lessee under this
Lease (or, if there have been any modifications and, if there are any defenses,
offsets, counterclaims, or defaults, setting them forth in reasonable detail);
(ii) if such be the case, that Lessor's work has been completed and Lessor has
paid the costs thereof as set forth in Article 30 below; (iii) the dates to
which the Basic Monthly Rental, additional rent and other charges have been
paid; and (iv)
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any other statement or information as may be reasonably requested by Lessor, or
by any mortgagee, purchaser, or prospective mortgagee or purchaser of the
Property or any part thereof. Any such statement delivered pursuant to this
Article may be relied upon by any mortgagee, purchaser or prospective mortgagee
or purchaser of the Property or any part thereof.
29. Sales Use or Other Taxes: If during the term of this Lease any
governmental authority having jurisdiction levies or assesses any tax on Lessor,
the Demised Premises, the Building, the Land, and/or the rents payable
hereunder, in the nature of a sales, use, occupancy or similar other tax (except
income taxes, estate or inheritance taxes of Lessor), which tax is an obligation
of Lessee and which tax was not included as an item of Base Operating Costs or
Base Real Estate Taxes, then in such event Lessee shall pay to Lessor the amount
of such tax as additional rent within ten (10) days after receipt by Lessee of
written notice from Lessor of the amount thereof. If any such tax is levied or
assessed in such manner that the amount thereof required to be paid by Lessee is
not ascertainable because the tax relates to more than the Demised Premises or
the rents payable hereunder, then in such event Lessee shall pay upon Lessor's
request a proportionate share (as determined in good faith by Lessor) of the
total tax, calculated on such pro rata share thereof as is equitable under the
circumstances, given the nature of the tax and the property interests on account
of which the tax is assessed. Any default by Lessee in payment of any tax or tax
reimbursement required hereunder shall be deemed to be a default in payment of
rent.
30. Lessor's Work: Lessor agrees to construct and complete the Demised
Premises in accordance with the plans and the specifications set out in Exhibit
"C" hereto attached, initialed by the parties and made a part hereof. Work shall
be performed in a good and workmanlike manner prior to tender of possession of
the Demised Premises to Lessee and all costs for work in excess of that
contemplated in Exhibit "C" will be at the expense of Lessee.
31. Successors and Assigns: It is agreed that all rights, remedies and
liabilities herein given to or imposed upon either of the parties hereto shall
extend to their respective heirs, executors, administrators, successors and
assigns.
32. Lessor's Liability: It is expressly agreed that the obligations of
Lessor shall only bind the party or parties from time to time owning the
Building during their respective periods of ownership thereof so that Lessor and
its successors in interest shall cease to have any liability hereunder for
causes of action arising after they respectively cease to own the Building and
give notice thereof to Lessee, and such liability shall pass to and bind
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only the owner from time to time of the Building as landlord hereunder. Each
respective owner shall, however, be and remain liable hereunder for causes of
action arising during the period of time of each owner's ownership of the
Building up to the date of each such owner's transfer of the Building.
Notwithstanding any provision to the contrary contained herein, Lessee shall
look solely to the estate and property of Lessor in and to the Land and the
Building in the event of any claim against Lessor arising out of or in
connection with this Lease, the relationship of landlord and tenant, or Lessee's
use of the Demised Premises, and Lessee agrees that the liability of Lessor
arising out of or in connection with this Lease, the relationship of landlord
and tenant or Lessee's use of the Demised Premises, shall be limited to such
estate and property of Lessor in and to the Land and the Building. No properties
or assets of Lessor other than the estate and property of Lessor in and to the
Land and the Building and no property owned by any partner or shareholder of
Lessor shall be subject to levy, execution or other enforcement procedures for
the satisfaction of any judgment (or other judicial process) or for the
satisfaction of any other remedy of Lessee arising out of or in connection with
this Lease, the relationship of landlord and tenant or Lessee's use of the
Demised Premises.
33. Notices: All notices required or desired to be given hereunder by
either party to the other shall be given by certified or registered mail, return
receipt requested, or by overnight courier or by hand-delivery. Notices to the
respective parties shall be addressed as follows:
If to Lessor: If to Lessee:
1401 NEW YORK AVENUE, INC. VIDEO BROADCASTING CORPORATION
c/o West World Holding, Inc. 708 Third Avenue
20 Exchange Place
New York, New York 10005 New York, New York 10017
with a copy to
Jeffrey Herz, Esq.
Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Boulevard
Great Neck, N.Y. 11021
Either party may, by like written notice, designate a new address and/or
addresses to which such notice shall be directed. All such notices shall be
deemed given as of the date that the return receipt is signed or refused, in the
case of notices made by mail, or the date of actual delivery, in the case of
notices made by hand-delivery or by overnight courier.
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34. Applicable Law: This Lease shall be governed by the laws of the
District of Columbia.
35. Interpretation: Feminine or neuter pronouns shall be substituted for
those of the masculine form, and the plural shall be substituted for the
singular number, in any place or places herein in which the context logically
calls for such substitution or substitutions. Lessor herein for convenience has
been referred to in neuter form. Paragraph titles contained herein are for
convenience of reference only and are not to be interpreted as limiting or in
any way affecting the substance of the paragraphs to which they apply.
36. Unenforceable Provisions: If any provision of this Lease is determined
by a court of competent jurisdiction to be unlawful or unenforceable, completely
or in any respect, then, insofar as such provision may be lawful or enforceable
in any respect or the remainder hereof not so affected, such provision or
remainder shall be and remain in full force to the extent lawful and
enforceable.
37. Brokers: Lessor and Lessee each represent and warrant to the other that
neither of them has employed or dealt with any broker, agent or finder in
carrying on the negotiations relating to this Lease other than Leggat
McCall/Grubb & Ellis and Lang & Foster Real Estate (the "Brokers"). Lessor
agrees to pay any commission due to the Brokers pursuant to a separate written
agreement. Each party shall indemnify and hold the other harmless from and
against any claim or claims for brokerage or other commissions asserted by any
broker, agent or finder engaged by the first party or with whom such party has
dealt other than the Brokers.
38. Good Standing; Authority to Sign: Throughout the term of this Lease, if
Lessee is a corporation or limited partnership, Lessee shall remain in good
standing in the District of Columbia and, if a foreign corporation or limited
partnership, shall remain in good standing in the state of its incorporation or
formation and shall maintain a duly registered agent in the District of
Columbia. The person(s) executing this Lease on behalf of Lessee hereby
represent and warrant that such person(s) are duly authorized to execute and
deliver this Lease on behalf of Lessee.
39. Real Estate Investment Trust; Rent Adjustment. If and for so long as
Lessor shall desire to qualify for taxation as a real estate investment trust or
as a "qualified REIT subsidiary", if at any time during the term of this Lease
any portion of the rents reserved hereunder might, in the opinion of counsel to
Lessor, be held not to constitute "rents from real property" (as such term is
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defined in Section 856(d) of the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations promulgated thereunder, as amended, and as such term
may be interpreted in public and private rulings of the Internal Revenue Service
and court decisions), then, for the period of time as such may be the case: (a)
Lessee's obligation to pay for the service, material or other basis for the
portion of the rents determined not to constitute "rents from real property"
shall be suspended and such service, material or other thing shall be deemed
performed or provided without separate charge to Lessee, and (b) there shall be
added to the Basic Monthly Rental (or such portion thereof determined to
constitute "rents from real property") an amount which shall reasonably
compensate Lessor for the payment(s) suspended pursuant to subsection (a) above;
provided that nothing in this Article 39 shall increase the rents payable
hereunder over the Basic Monthly Rental and additional rent provided for herein,
as same may be adjusted in accordance with the other provisions of this Lease,
or otherwise materially adversely impact Lessee. Lessor may recompute the
adjustment provided for above from time to time, but not more frequently than at
five (5) year intervals.
40. Option to Renew. Tenant shall have the option to renew the Term of this
Lease for an additional five (5) years on the same terms and conditions as this
Lease except as modified in this Article and except that Articles 26 and 30
shall not be applicable to any renewal term. The rent for the renewal term shall
be equal to ninety (90%) percent of the then fair market rental rate for the
Demised Premises or comparable space in the Building (with a 1996 calendar year
for Base Operating Costs, Base Electricity Costs and Base Real Estate Taxes).
Such rent for the renewal term shall be as set forth by Lessor in its Rental
Notice, as hereinafter defined.
Lessee shall exercise such option by giving written notice thereof to
Lessor no later than October 16, 1995. If Lessee shall exercise such renewal
option, Lessor shall give Lessee written notice (the "Rental Notice") on or
prior to December 16, 1995, as to its proposed rental rate for the renewal term.
If Lessee shall dispute the proposed rental rate and if the parties cannot agree
upon the rental rate on or prior to February 16, 1996, then either party may
thereafter refer such dispute to arbitration in accordance with the rules of the
American Arbitration Association then prevailing. If such arbitration shall not
be concluded prior to the commencement of the renewal term, then the initial
rent for the renewal term shall be the rate proposed by Lessor in the Rental
Notice (or, if lower, such rate as Lessor shall have proposed in the
arbitration) and, if the arbitration shall result in a lower rent, Lessee shall
be entitled to a credit against the next succeeding installments of rent due
hereunder for such overpayment
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it shall have theretofore made. If the arbitration shall result in a higher
rent, Lessee shall promptly pay to Lessor the amount of the underpayment. Upon
the determination of the matters referred in this Article, Lessor and Lessee
shall enter into an agreement to supplementary to this Lease setting forth the
applicable rent for the renewal term, but the failure to enter into any such
supplementary agreement shall not affect the exercise of Lessee's option under
this Article 40.
41. Right of First Offer: Provided Lessee is not in default hereunder and
that this Lease is in full force and effect, Lessee shall have the option on the
terms and conditions hereinafter set forth to lease the Offer Space (hereinafter
defined). For purposes of this Article 41, an "Offer Space" means any space on
the fifth (5th) floor of the Building other than the Demised Premises.
(a) If, during the Term, Lessor intends to enter into a serious negotiation
with a prospective lessee to lease an Offer Space, then Lessor shall notify
Lessee, in writing (the "Offer Notice"), if any of the fact of such
negotiations, the Rentable Area and location of such Offer Space proposed to be
leased and the terms and conditions, including rent, Lessor contribution to
tenant improvements and rental abatement, if any, under which Lessor is willing
to lease such Offer Space. Lessee shall, within fifteen (15) consecutive days
thereafter, by written notice given to Lessor, elect to exercise its option to
lease, on the commencement date determined by Lessor (the "Offer Space
Commencement Date"), the Offer Space identified in the Offer Notice on the terms
set forth therein.
(b) If Lessee has validly exercised its option pursuant to this Article 41,
then effective as of the Offer Space Commencement Date, provided that Lessee is
not in default under this Lease, such Offer Space shall be included in the
Demised Premises, subject to all the agreements, terms and conditions of this
Lease with the following exceptions:
(i) the rentable area of the Demised Premises shall be increased by
the rentable area of such Offer Space which Lessee has elected to lease pursuant
to this Article 41;
(ii) the term of the demise covering such Offer Space shall commence on
the Offer Space Commencement Date and shall expire concurrently with the Term of
this Lease;
(iii) Lessee's proportionate shares of Real Estate Taxes, Operating
Costs and Electricity Costs shall be adjusted as appropriate with respect to the
increased Rentable area of the Demised Premises;
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(iv) the rent for the Offer Space shall be the amount set forth in the
Offer Notice;
(v) Lessor shall contribute towards the cost of initial improvements
of such Offer Space an allowance, if any, as set forth in the Offer Notice; and
(vi) the rent for the Offer Space shall abate for the period, if any,
as set forth in the Offer Notice.
(c) If Lessee does not timely exercise its option to lease the Offer Space,
as set forth in the Offer Notice, Lessor may subsequently enter into a lease of
such Offer Space with any lessee on any terms Lessor finds acceptable, and
Lessee shall have no further right of first offer to lease such Offer Space
under the terms and conditions of this Article 41.
42. Lessee's Federal Taxpayer Identification Number: Lessee represents that
Lessee's Federal Taxpayer Identification Number is 52-1481284.
43. Entire Agreement: This Lease contains the entire agreement of the
parties concerning the Demised Premises and the leasing thereof, and they shall
not be bound by any terms, statements, conditions or representations, verbal or
written, not herein contained. No change, waiver or modification of the terms
hereof shall be binding unless in writing and signed by the party against whom
such change, waiver or modification is sought to be enforced. All exhibits
referred to herein are expressly incorporated herein and made a part of this
Lease.
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IN WITNESS WHEREOF, Lessor has caused this Lease to be signed in its
corporate name and on its behalf by Charles Schouten, its President, and its
corporate seal to be duly affixed hereto and attested by Carmen Taveras-Cruz,
its Secretary, as of the day and year first above written.
LESSOR:
Attest: 1401 NEW YORK AVENUE, INC.
/s/ Carmen Taveras-Cruz By: /s/ Charles Schouten
- ----------------------------- -----------------------------------
Name: Carmen Taveras-Cruz Name: Charles Schouten
Title: Secretary Title: President
IN WITNESS WHEREOF, Lessee has hereunto set its hand and seal (or, if a
corporate entity, Lessee has caused this Lease to be signed in its corporate
name and on its behalf by L. Moskowitz, its President and its corporate seal to
be duly affixed hereto and attested by J. Graeme McWhirter, its Executive Vice
President as of the day and year first above written.
LESSEE:
Witness or Attest: VIDEO BROADCASTING CORPORATION
(SEAL, if corporation)
/s/ J. Graeme McWhirter /s/ Laurence Moskowitz (Seal)
- ----------------------------- --------------------------------------
Name: J. Graeme McWhirter Name: Laurence Moskowitz
Title: EVP Title: President
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EXHIBIT A
Diagram of Fifth Floor Plan
<PAGE>
EXHIBIT B
RULES AND REGULATIONS
Reference is made to a certain Agreement of Lease dated September 7, 1990
(the "Lease"), to which these Rules and Regulations are attached. Definitions of
terms are set forth in the Lease.
The following rules and regulations have been formulated for the safety and
well being of all lessees of the Building and to ensure compliance with all
municipal and other requirements. Strict adherence to these rules and
regulations is necessary to guarantee that each and every lessee will enjoy a
safe and unannoyed occupancy in the Building in accordance with the Lease. Any
continuing violation of these rules and regulations by a lessee, after notice
from Lessor, shall be deemed to be a default under the Lease.
Lessor may, upon request by any lessee, waive the compliance by such lessee
with any of these rules and regulations, provided that (i) no waiver shall be
effective unless signed by Lessor or Lessor's authorized agent, (ii) any such
waiver shall not relieve such lessee from the obligation to comply with such
rule and regulation in the future unless expressly consented to by Lessor (iii)
no waiver granted to any lessee shall relieve any other lessee from the
obligation of complying with the rules and regulations unless such other lessee
has received a similar waiver in writing from Lessor and (iv) any such waiver by
Lessor shall not relieve a lessee from any obligation or liability of a lessee
to Lessor pursuant to the Lease for any loss or damage occasioned as a result of
a lessee's failure to comply with any such rule or regulation.
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors, halls or other parts of the Building not occupied by any
lessee shall not be obstructed or encumbered by any lessee or used for any
purposes other than ingress and egress to and from the Demised Premises, and if
the Demised Premises are situated on the ground floor of the Building, the
lessee thereof shall, at said lessee's own expense, keep the sidewalks and curbs
directly in front of the Demised Premises clean and free from ice and snow.
Lessor shall have the right to control and operate the public portions of the
Building and the facilities furnished for common use of the lessees in such
manner as Lessor deems best for the benefit of the lessees generally. Under no
circumstance shall any lessee use any public portion of the Building for
storage. No lessee shall permit the visit to the Demised Premises of persons in
such numbers or under such conditions as to interfere with the use and enjoyment
by other
<PAGE>
lessees of the entrances, corridors and other public portions or facilities of
the Building.
2. No awnings or other projections shall be attached to any wall of the
Building without the prior written consent of Lessor. No drapes, blinds, shades
or screens shall be attached to or hung in, or used in connection with, any
window or door of the Demised Premises without prior written consent of Lessor.
Such awnings, projections, curtains, blinds, shades, screens or other fixtures
must be of a quality, type, design and color, and attached in the manner,
approved by Lessor.
3. No showcases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in the halls, corridors or
vestibules without the prior written consent of Lesser.
4. The water and wash closets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags, chemicals, paints, cleaning fluids or other substances
shall be thrown therein. All damages resulting from misuse of the fixtures shall
be borne by the lessee who, or whose servants, employees, agents, visitors or
licensees, shall have caused the same.
5. There shall be no marking, painting, drilling into or in any way
defacing the Building or any part of the Demised Premises visible from public
areas of the Building. No lessee shall conduct, maintain, use or operate within
the Demised Premises any electrical device, wiring or apparatus in connection
with a loud speaker or other sound system, except as reasonably required for its
communication system and approved prior to the installation thereof by Lessor.
No such loudspeaker or sound system shall be constructed, maintained, used or
operated outside of the Demised Premises.
6. No bicycles, vehicles or animals, birds or pets of any kind shall be
brought into or kept in or about the Demised Premises, and no cooking (except
for hot plates or microwave cooking by a lessee's employees for their own
consumption, the equipment for and location of which are first approved by
Lessor) shall be done or permitted by any lessee on the Demised Premises. No
lessee shall cause or permit any unusual or objectionable odors to be produced
upon or permeate from the Demised Premises.
7. No space in the Building shall be used for manufacturing of goods for
sale in the ordinary course of business, for the storage of merchandise for sale
in the ordinary course of business, or for the sale at auction of merchandise,
goods or property of any kind. Furthermore, the use of the Demised Premises by
each lessee was approved by Lessor prior to execution of the Lease and such use
may not be changed without the prior approval of Lessor.
8. No lessee shall make any unseemly or disturbing noises or
<PAGE>
disturb or interfere with occupants of the Building or neighboring buildings or
those having business with them by the use of any musical instrument, radio,
talking machine, unmusical noise, whistling, singing or in any other way. No
lessee shall throw anything out of the doors or windows or down the corridors or
stairs.
9. No flammable, combustible or explosive fluid, chemical, asbestos or
other hazardous substance or any other material harmful to lessees of the
Building shall be brought, installed in or kept upon the Demised Premises. No
space heaters, fans or individual air conditioning units may be used in the
Demised Premises. Any electrical or extension cords deemed to be a fire hazard
by Lessor in Lessor's sole discretion shall be removed.
10. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any lessee, nor shall any changes be made in existing
locks or the mechanism thereof. The doors leading to the corridors or main halls
shall be kept closed during business hours except as they may be used for
ingress or egress. Each lessee shall, upon the termination of his tenancy,
restore to the Lessor all keys of stores, offices, storage and toilet rooms
either furnished to, or otherwise procured by, such lessee, and in the event of
the loss of any keys so furnished, such lessee shall pay to Lessor the cost
thereof.
11. Lessor reserves the right to inspect all freight to be brought into the
Building and to exclude from the Building all freight which violates any of
these rules and regulations or the Lease. The hours in which deliveries may be
made to the Building shall be as set forth in Lessor's operating procedures
published from time to time.
12. No lessee shall pay any employees on the Demised Premises except those
actually working for such tenant in the Demised Premises.
13. Lessor reserves the right to exclude from the Building at all times any
person who is not known or does not properly identify himself to the Building
management, security guard on duty or security system monitor. Lessor may, at
its option, require all persons admitted to or leaving the Building between the
hours of 8:00 p.m. and 8:00 a.m., Monday through Friday, and at any hour
Saturdays, Sundays and legal holidays, to register. Each lessee shall be
responsible for all persons for whom he authorizes entry into or exit out of the
Building and shall be liable to Lessor for all acts or omissions of such
persons.
14. The Demised Premises shall not, at any time, be used for lodging or
sleeping or for any immoral or illegal purpose.
15. Each lessee, before closing and leaving the Demised Premises at any
time, shall see that all windows are closed and all lights turned off.
<PAGE>
of the Building, including without limitation an antenna, without Lessor's prior
written consent.
26. All moving of equipment, furniture or bulky matter into or out of the
Building must take place only during the hours determined by Lessor or Lessor's
agent. Each lessee shall use only the designated freight elevator and the
freight entrance only for moving all of such items. No freight of any kind may
be moved without notice to and prior written approval of Lessor.
27. If the Building or any part thereof, including the Demised Premises,
becomes infested with vermin as a result of a lessee's action or neglect, such
lessee shall reimburse Lessor for any resulting extermination expenses.
28. The lessee named in the Lease shall be entitled to a minimum of 3
spaces on the Building directory. In the event Lessor shall permit additional
directory listings, Lessor reserves the right to restrict such use of the
directory at any time to the minimum number set forth herein.
<PAGE>
EXHIBIT C
1. Lessor agrees to pay the expense of space planning, costs of
architectural drawings, plans and specifications for Lessee's partition layout,
reflected ceiling and other installations, as well as costs associated with all
District of Columbia permits in connection with Lessor's Work, defined below.
2. The below listed items includes all work which is provided by and at
the expense of the Lessor ("Lessor's Work"). All materials and appliances shall
be Building Standard unless otherwise specified. Lessor reserves the right to
substitute appliances which are substantially equal to those specified herein if
any of those specified are not available. Lessee shall select paint and carpet
colors from Lessor's Building Standard color charts within five (5) days after
the execution and delivery of this Lease.
a. All necessary demolition to include partition, ceiling grid tile
related to demising walls, windows, plumbing, flooring, doors and
electrical.
b. Drywall work as shown in attached floor plan layout to include door
to ceiling partitions; demise existing partitions to the deck by
construction above existing ceiling; cut and frame existing drywall for
cased openings, doors and sidelite; patch at door and window removal;
insulate the interior partition of corner office (shown lower right);
perform incidental patching.
c. Complete the proper patching of acoustical tile and grid which will
be disturbed by demolition and the new demising walls.
d. Relocate and provide, where needed, doors as indicated on attached
plan.
e. Relocate one large interior window with new wood frame; install
shelving in the storage room; install new countertop in room #511; install
countertop with 18" base, cabinet, 24" sink base, W1830 & W2430 Merilat
cabinets; install a closet pole and shelf; install wood frame for sidelite
at conference room door.
f. Install new safety glass at conference room sidelite.
g. Install commercial, building standard carpet and pad
<PAGE>
from selections given Lessee. Install vinyl base throughout except in
pantry which will have VCT to attempt to match that which is in the 12th
floor pantry.
h. Paint all drywall, doors, poles and shelves, window frames and
convectors within the Demised Premises; suite entry door will have letters
removed, sanded and stained. New corporate letters will be installed to
Lessees wording and to Building Standard specifications.
i. Install a fire damper in the new demising wall.
j. Install new pantry sink, faucet, disposal and General Electric
dishwater #GSD580.
k. Relocate two sprinkler heads.
l. Provide disposal connection, ground fault outlet, two dedicated
outlets, twenty two regular outlets, ten switches, power to existing 2' x
4' fixtures, twenty eight telephone outlets with ring and string, and a
maximum of four new 2' x 4' light fixtures.
m. Install one 20 pound ABC fire extinguisher under counter, General
Electric undercounter refrigerator #TA6SL and General Electric microwave
oven wall kit #JVM140.
n. Lessor will provide the Building Standard heating and cooling
system with required duct-work and thermostats. Said system shall be
capable of maintaining (with tolerances) normal cooling and heating
conditions in similar first-class office buildings in Washington, D.C.
o. Lessor will provide thin line horizontal venetian blinds for all
windows within the Demised Premises.
p. Exit lights and smoke detectors, per Washington, D.C. fire code
will be provided.
q. In addition to Building Standard HVAC system, Lessor will provide
and install one used spot cooling unit in working order, capable of cooling
the large work room. Said cooling unit shall become the property of Lessee
and Lessee shall be responsible, and shall pay, for any maintenance, repair
or replacement of said unit.
r. Test and balance HVAC system prior to Lessee's occupancy of the
Demised Premises.
<PAGE>
FIRST AMENDMENT OF LEASE
THIS FIRST AMENDMENT OF LEASE, made as of the 25th day of March, 1996,
between 1401 NEW YORK AVENUE, INC. ("Lessor"), a Delaware corporation having an
address in care of WEST WORLD HOLDING, INC., 20 Exchange Place, New York, New
York 10005, and VIDEO BROADCASTING CORPORATION D/B/A MEDIALINK ("Lessee"), a
Delaware corporation having an address at 708 Third Avenue, New York, New York
10017;
W I T N E S S E T H:
WHEREAS, by written lease dated October 1, 1990, as amended by a
Commencement Date Agreement made as of November 30, 1990 (collectively, the
"Lease"), Lessor leased to Lessee certain premises (the "Demised Premises")
located on the fifth (5th) floor of that certain building known as 1401 New York
Avenue, N.W., Washington, D.C. (the "Building"), which Demised Premises are more
particularly described in the Lease; and
WHEREAS, Lessor and Lessee wish to amend and extend the Lease on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of One Dollar ($1.00), each to the other
in hand paid, receipt of which is hereby acknowledged, and the covenants and
agreements hereinafter set forth, the parties agree as follows:
1. Except as may be otherwise set forth herein, all capitalized terms shall
have the same meanings herein as set forth in the Lease.
2. The Term of the Lease shall be extended for five (5) years (or until
such Term shall sooner ease and expire as in the Lease provided) so that the
Lease Termination Date shall be May 13, 2001.
3. Commencing May 14,1996, (a) Lessee shall pay rent for the Demised
Premises of Two Hundred Seventy-Nine Thousand Eight Hundred Forty and no/100
Dollars ($279,840.00), plus the CPI Adjustments provided in the Lease as
amended, without offset, counterclaim or other deduction and without demand,
payable in advance, in equal monthly installments of Four Thousand Six Hundred
Sixty-Four and no/100 Dollars ($4,664.00), as adjusted in accordance with
Article 4 of the Lease as amended;
(b) The asterisked language in Article 1 of the Lease which appears at the
bottom of page 1 is deleted from the Lease.
<PAGE>
4. Effective May 14, 1996, (a) the first sentence of Article 3(a) shall be
amended so that the term "Base Operating Costs" shall mean the Operating Costs
for calendar year 1996;
(b) the first sentence of Article 3(b) shall be amended so that the term
"Base Electricity Costs" shall mean the Electricity Costs for calendar year
1996;
(c) Wherever the term "ninety percent (90%)" appears in Article 3(c), it
shall be replaced by the term "ninety-five percent (95%)";
(d) the first sentence of Article 3(d) shall be amended so that the term
"Base Real Estate Taxes" shall mean the Real Estate Taxes for calendar year
1996;
(c) Article 3(h) shall be deleted.
5. Effective May 14, 1996, Article 4 shall be deleted in its entirety and
replaced by the following:
4. CPI Adjustment: In addition to the foregoing, the Basic Monthly Rental
payable by Lessee shall be adjusted each May 14th (the "Anniversary Date")
during the Term, commencing May 14,1997, by adding to it thirty percent (30%) of
the amount computed by multiplying said Basic Monthly Rental by the percentage
increase, if any, in the index now known as "United States Bureau of Labor
Statistics, Consumer Price Index for All Urban Consumers (CPI-U), for the
Washington, D.C. Standard Metropolitan Statistical Area (SMSA), "all items"
(1982-84=100)" (the "Index"). Any such percentage increase in the Index shall be
determined by dividing the amount, if any, by which the Index published for the
month of March immediately preceding the relevant Anniversary Date exceeds the
corresponding Index published for the period that includes the month of March
immediately preceding the Anniversary Date for the prior year, by said latter
corresponding Index. Lessor shall provide Lessee, during each April during the
Term written notice of the adjustment to the Basic Monthly Rental due to
increases in the Index, and Lessee shall begin paying the adjusted Basic Monthly
Rental with the next payment of Basic Monthly Rent due, retroactive, if
necessary, to the Anniversary Date. Thereafter Lessee shall pay the new Basic
Monthly Rental until receipt of the next written notice of the adjustment to
Basic Monthly Rental from Lessor. The amount payable by Lessee as Basic Monthly
Rental for any annual period hereunder, as adjusted according this Article 4,
shall in no case be less than the Basic Monthly Rental, as so adjusted, payable
during the preceding annual period, and shall not affect in any way Lessee's
continuing obligation to pay any and all sums payable as additional rent under
this Lease. If such Index shall be discontinued, with no successor or comparable
successor index, the parties shall attempt to agree upon a substitute formula;
but if the parties are unable to agree upon a substitute formula, then the
matter shall be determined by arbitration in accordance with the rules of the
American Arbitration Association then prevailing.
(2)
<PAGE>
6. Effective May 14, 1996, Articles 26(a) and 30 shall be deleted. Article
30 shall be replaced by the following:
30. Lessor's Work: Lessor agrees to perform the minor modifications to the
Demised Premises ("Lessor's Work") as described on Exhibits A and A-1 attached
hereto and made a part hereof. Such Lessor's Work shall include painting and
recarpeting of the Demised Premises. All paint, carpet and other materials used
in Lessor's Work in the Demised Premises shall be Building standard and Lessee
shall select paint and carpet colors within five (5) days after the execution
and delivery of this First Amendment of Lease from Lessor's standard color and
sample charts. Any modifications not shown on Exhibits A and A-1 shall be
subject to Lessor's prior written approval which shall not be unreasonably
withheld or delayed. Lessor shall cause Lessor's Work to be performed in such
time and manner as the parties may agree but Lessor's Work shall not be
performed using overtime labor unless Lessee pays for the cost of such overtime.
Lessee acknowledges that Lessor requires 3 to 4 weeks to complete Lessor's Work.
Lessor shall use all reasonable efforts to substantially complete Lessor's Work
prior to August 1, 1996, subject to Lessee's cooperation as set forth herein.
All Lessor's Work shall be performed in a good and workmanlike manner and any
costs in excess of those related to Lessor's Work shown on Exhibits A and A-1
shall be paid promptly by Lessee upon demand.
7. Lessor and Lessee each represent and warrant to the other that neither
of them has employed or dealt with any broker, agent or finder in carrying on
the negotiations relating to this First Amendment of Lease other than Charles E.
Smith Companies and Barnes, Morris, Pardoe & Foster, Inc. (the "Brokers").
Lessor agrees to pay any commission due to the Brokers pursuant to a separate
written agreement. Each party shall indemnify and hold the other harmless from
and against any claim or claim or claims for brokerage or other commissions
asserted by any broker, agent or finder engaged by the first party or with whom
such party has dealt other than the Brokers.
8. Effective May 14, 1996, Articles 40 and 41 of the Lease shall be
deleted.
9. The following article shall be added to the Lease effective immediately:
41. Parking. Lessee shall have the right to lease four (4) parking spaces
in the Building garage at prevailing market rates and conditions of parking as
the same may be adjusted from time to time.
10. The Lease as amended hereby is confirmed and ratified in all respects.
(3)
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this First Amendment of
Lease as of the day and year first above written.
LESSOR:
Attest: 1401 NEW YORK AVENUE, INC.
/s/ Carmen Taveras-Cruz By: /s/ Charles Schouten
- --------------------------- ---------------------------------
Carmen Taveras-Cruz Charles Schouten, President
Secretary
LESSEE:
Attest: VIDEO BROADCASTING
CORPORATION D/B/A
MEDIALINK
By: /s/ Mark Manoff
- --------------------------- ---------------------------------
Name: Name: Mark Manoff
Title: Title: Sr. VP
(4)
<PAGE>
EXHIBIT A
Lessor's Work shall be limited to the following:
1. Relocate the heat pump to the area shown as Note 1 on the plan
designated as Exhibit A-1 attached hereto and made a part hereof;
2. Construct wall as shown as Note 2 on Exhibit A-1 with one
electrical outlet per code and one computer/telephone outlet;
3. Demolish 2 walls, construct 2 walls and relocate closet door in
order to create layout as shown in Note 3 on Exhibit A-1 and add one electrical
outlet per code;
4. Relocate shelving from the closet to the workroom.
5. Furnish and install new carpet throughout the Demised Premises;
6. Paint the Demised Premises;
7. Furnish door to location designated as Note 6 on Exhibit A-1.
(5)
<PAGE>
EXHIBIT A-1
Portion of 5th Floor
1401 New York Avenue, N.W.
Diagram of Elevator Lobby
<PAGE>
LEASE BETWEEN
MEDIALINK
AND
CONTINENTAL BANK, N.A., AS TRUSTEE FOR
THE ALLSTATE RETIREMENT PLAN
AND
CONTINENTAL BANK, N.A., AS TRUSTEE FOR
THE AGENTS PENSION PLAN
FOR SPACE AT
4851 LBJ FREEWAY, DALLAS, TEXAS
JANUARY 3, 1994
DATE
<PAGE>
TABLE OF CONTENTS
PARAGRAPH PAGE
1.1 DEFINITIONS........................................................ 1
1.2 SCHEDULES AND ADDENDA.............................................. 2
2.1 LEASE OF PREMISES.................................................. 2
2.2 PRIOR OCCUPANCY.................................................... 2
3.1 RENT............................................................... 2
3.2 DEPOSIT; PREPAID RENT.............................................. 3
3.3 OPERATING COSTS.................................................... 3
3.4 TAXES.............................................................. 4
4.1 CONSTRUCTION CONDITIONS............................................ 4
4.2 COMMENCEMENT OF POSSESSION......................................... 4
5.1 PROJECT SERVICES................................................... 4
5.2 INTERRUPTION OF SERVICES........................................... 5
6.1 USE OF LEASED PREMISES............................................. 5
6.2 INSURANCE.......................................................... 6
6.3 REPAIRS............................................................ 7
6.4 ASSIGNMENT AND SUBLETTING.......................................... 7
6.5 ESTOPPEL CERTIFICATE............................................... 8
7.1 SUBSTITUTE PREMISES................................................ 8
7.2 ADDITIONAL RIGHTS RESERVED TO LANDLORD............................. 9
8.1 CASUALTY AND UNTENANTABILITY....................................... 9
9.1 CONDEMNATION....................................................... 10
10.1 WAIVER AND INDEMNITY............................................... 10
10.2 WAIVER OF SUBROGATION.............................................. 10
10.3 LIMITATION OF LANDLORD'S LIABILITY................................. 10
11.1 TENANT'S DEFAULT................................................... 11
11.2 REMEDIES OF LANDLORD............................................... 11
12.1 SURRENDER OF LEASED PREMISES....................................... 11
12.2 HOLD OVER TENANCY.................................................. 12
13.1 QUIET ENJOYMENT.................................................... 12
13.2 ACCORD AND SATISFACTION............................................ 12
13.3 SEVERABILITY....................................................... 12
13.4 SUBORDINATION AND ATTORNMENT....................................... 12
13.5 ATTORNEY'S FEES.................................................... 13
13.6 APPLICABLE LAW..................................................... 13
13.7 BINDING EFFECT; GENDER............................................. 13
13.8 TIME............................................................... 13
13.9 ENTIRE AGREEMENT................................................... 13
13.10 NOTICES............................................................ 13
13.11 HEADINGS........................................................... 14
13.12 BROKERAGE COMMISSIONS.............................................. 14
<PAGE>
LIST OF SCHEDULES
1. Description of Leased Premises
2. Rules and Regulations
3. Utility Services
4. Maintenance Services
5. Parking
6. Work Letter
7. Certificate of Acceptance
<PAGE>
LEASE
This Lease is made 1/3, 1994 between CONTINENTAL BANK, N.A., AS TRUSTEE FOR THE
ALLSTATE RETIREMENT PLAN AND CONTINENTAL BANK, N.A., AS TRUSTEE FOR THE AGENTS
PENSION PLAN ("Landlord") and Video Broadcasting Corporation dba MEDIALINK, a
Delaware Corporation ("Tenant").
ARTICLE ONE
Definitions, Schedules and Addenda
1.1 DEFINITIONS:
a. Leased Premises shall mean Suite 605, as described in Schedule 1.
b. Building shall mean 4851 LBJ Freeway located at 4851 LBJ Freeway,
Dallas, Texas.
c. Project shall mean 4851 LBJ Freeway located at 4851 LBJ Freeway, Dallas,
Texas.
d. Tenant's Square Footage shall mean 1,606 rentable square feet; Total
Square Footage of the Building shall mean 187,644 rentable square feet.
e. Lease Commencement Date shall mean April 1, 1994, which may be adjusted
pursuant to paragraph 4.2 of this Lease; Lease Expiration Date shall mean
March 31, 1999; Lease Term shall mean the period between Lease Commencement
Date and Lease Expiration Date.
f. Base Rent shall mean $22,082.50 ($13.75 per square foot of Tenant's
Square Footage) per year, payable in monthly installments of $1,840.21*,
plus applicable sales tax, if any; the total Base Rent payable over the
entire Lease Term is $108,572.29.
g. Tenant's Pro Rata Share shall mean 0.86%. Operating Cost Stop shall mean
$** per square foot of Total Square Footage per year.
h. Deposit shall mean $1,840.21; Prepaid Rent shall man $1,840.21, of which
$1,840.21 represents the first paid monthly installment of Base Rent, and
$-0- represents the last monthly installment of Base Rent.
i. Permitted Purpose shall mean general office use.
j. Authorized Number of Parking Spaces shall mean 5 spaces at a rate of
$-0- per space per month.
k. Managing Agent shall mean First Dallas Managers whose address is 5068
West Plano Parkway, Suite 245, Plano, Texas 75093.
l. Broker of Record shall mean CB Commercial Real Estate Group, Inc.
* except that the first (1st) month of the Lease will be rent free
** Actual Operating Costs for 1994.
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<PAGE>
m. Cooperating Broker shall mean CB Commercial Real Estate Group, Inc.
n. Landlord's Mailing Address: Allstate Plaza G5B, Northbrook, Illinois
60062 Attention: Real Estate Equity Investment Division.
o. Tenant's Mailing Address: 708 Third Avenue, New York, New York 10017
Attention: Graeme McWhirter.
1.2 SCHEDULES AND ADDENDA: The schedules and addenda listed below are
incorporated into this Lease by reference unless lined out. The terms of
schedules, exhibits and typewritten addenda, if any, attached or added hereto
shall control over any inconsistent provisions in the paragraphs of this Lease.
a. Schedule 1: Description of Leased Premises and/or Floor Plan
b. Schedule 2: Rules and Regulations
c. Schedule 3: Utility Services
d. Schedule 4: Maintenance Services
e. Schedule 5: Parking
f. Schedule 6: Work Letter
g. Schedule 7: Certificate of Acceptance
ARTICLE TWO
Premises
2.1 LEASE OF PREMISES: In consideration of the Rent and the provisions of
this Lease, Landlord leases to Tenant and Tenant accepts from Landlord the
Leased Premises. Tenant's Square Footage is a stipulated amount based on
Landlord's method of determining Total Square Footage for rental purposes and
may not reflect the actual amount of floor space available for Tenant's use.
2.2 PRIOR OCCUPANCY: Tenant shall not occupy the Leased Premises prior to
Lease Commencement Date except with the express prior written consent of
Landlord and in accordance with the provisions of Schedule 6. If with Landlord's
consent, Tenant occupies the Leased Premises prior to the Lease Commencement
Date, Tenant shall pay Landlord Base Rent in the amounts specified in paragraph
1.1(f), and Tenant's Pro Rata Share of Excess Operating Costs, as defined in
paragraph 3.3(b), from the first day of such occupancy. These amounts will be
payable on the first day of such occupancy and thereafter on the first day of
every calendar month until the first day of the Lease Term. A prorated monthly
installment shall be paid for the fraction of the month if Tenant's occupancy of
the Leased Premises commences on any day other than the first day of the month.
If Tenant shall occupy the Leased Premises prior to Lease Commencement Date, all
covenants and conditions of this Lease shall be binding on the parties
commencing at such prior occupancy.
ARTICLE THREE
Payment of Rent
3.1 RENT: Tenant shall pay each monthly installment of Base Rent in advance
on the first calendar day of each month, together with each monthly installment
of Tenant's Pro Rata Share of Excess Operating Costs. Monthly installments for
any fractional calendar month, at the beginning or end of the Lease Term, shall
be prorated based on the number of days in such month. Base Rent, together with
all other amounts payable by Tenant to Landlord under this Lease, including,
without limitation, any late charges and interest due Landlord for Rent not paid
when due, shall be sometimes referred to collectively as "Rent". Tenant shall
pay all Rent, without deduction or set-off, to Landlord or Managing Agent at a
place
2
<PAGE>
specified by Landlord. Rent not paid when due shall bear interest until paid, at
the rate of 2% per month, or at the maximum rate allowed by law, whichever is
less, from the date when due. Landlord agrees to waive the interest charge for
late payments of Rent twice during any twelve month period during the Lease
Term, provided any such late Rent payment is paid in full within 10 days of the
date when due.
3.2 DEPOSIT; PREPAID RENT: Tenant has paid to Landlord the Deposit and
Prepaid Rent as security for performance of Tenant's obligations under this
Lease. In the event Tenant fully complies with all the terms and conditions of
this Lease, the Deposit shall be refunded to Tenant, without interest unless
otherwise required by law, upon expiration of this Lease. Landlord may, but is
not obligated to, apply a portion of the Deposit to cure any default hereunder
and Tenant shall pay on demand the amount necessary to restore the Deposit in
full within 10 days after notice by Landlord.
3.3 OPERATING COSTS: Tenant shall pay Tenant's Pro Rata Share of any Excess
Operating Costs as follows:
a. "Operating Costs" shall mean all reasonable and actual expenses relating
to the Leased Premises, the Building or the Project, including but not
limited to: real estate taxes and assessments; gross rents, sales, use,
business, corporation, franchise or other taxes (except income taxes);
utilities not separately chargeable to other tenants; insurance premiums
and (to the extent used) deductibles; maintenance, repairs and
replacements; refurbishing and repainting; cleaning, janitorial and other
services; equipment, tools, materials and supplies; air conditioning,
heating and elevator service; property management including management fees
in line with market standards for comparable properties; security;
employees and contractors; resurfacing and restriping of walks, drives and
parking areas; signs, directories and markers; landscaping; and snow and
rubbish removal. Operating Costs shall not include expenses for legal
services, real estate brokerage and leasing commissions, Landlord's income
taxes, income tax accounting, interest, depreciation, general corporate
overhead, or capital improvements to the Building or Project except for
capital improvements installed for the purpose of reducing or controlling
expenses, or required by any government or other authority having or
asserting jurisdiction over the Building or Project. If any expense, though
paid in one year, relates to more than one calendar year, at option of
Landlord, such expense may be proportionately allocated among such related
calendar years. In the event that the Building is not fully leased during
any calendar year, Landlord may make appropriate adjustments to the
Operating Costs, using reasonable projections, to adjust such costs to an
amount that would normally be expected to be incurred if the Building were
95% leased, and such adjusted costs shall be used for purposes of this
paragraph 3.3. "Excess Operating Costs" shall mean any excess of (i)
Landlord's Operating Costs for any calendar year over (ii) the Operating
Cost Stop multiplied by Total Square Footage.
b. Tenant shall pay, in equal monthly installments, Tenant's Pro Rata Share
of any estimated Excess Operating Costs for each calendar year which falls
(in whole or in part) during the Lease Term (prorated for any partial
calendar year at the beginning or end of the Lease Term). Annually, or from
time to time, based on actual and projected Operating Cost data, Landlord
may adjust its estimate of Operating Costs upward or downward. Within 15
days after notice to Tenant of a revised estimate of Operating Costs,
Tenant shall remit to Landlord a sum equal to any shortage of the amount
which should have been paid to date for the then current calendar year
based on the revised estimate, and all subsequent monthly estimated
payments shall be based on the revised estimate.
c. As soon as possible, after the first day of each year Landlord shall
compute the actual Operating Costs for the prior calendar year, and shall
give notice thereof to Tenant. Within 30 days after receipt of such notice,
Tenant shall pay any deficiency between estimated and actual in Tenant's
Pro Rata Share of any Excess Operating Costs for the prior calendar year
(prorated for any partial calendar year at the beginning or end of the
Lease Term). In the event of overpayment by Tenant, Landlord shall apply
the excess to the next payment of Rent when due, until such excess
3
<PAGE>
is exhausted or until no further payments of Rent are due, in which case,
Landlord shall pay to Tenant the balance of such excess within 30 days
thereafter. Tenant or its representatives shall have the right, upon
reasonable notice, to examine Landlord's books and records with respect to
the Operating Costs at the management office during normal business hours
at any time within 30 days following the delivery by Landlord to Tenant of
the notice of actual Operating Costs. Tenant shall have an additional 10
days to file any written exception to any of the Operating Costs.
3.4 TAXES: In addition to Base Rent and other sums to be paid by Tenant
hereunder, Tenant shall reimburse Landlord, as additional Rent, on demand, any
taxes payable by Landlord (a) upon, measured by or reasonably attributable to
the cost or value of Tenant's equipment, fixtures and other personal property
located in the Leased Premises or by the cost or value of any leasehold
improvements made to the Leased Premises by Tenant or Landlord, regardless of
whether title to such improvements are held by Tenant or Landlord; (b) upon or
measured by the monthly rental payable hereunder, including, without limitation,
and gross receipts tax or excise tax; (c) upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Leased Premises or any portion thereof; (d) upon
this Lease or any document to which Tenant is a party creating or transferring
an interest or an estate in the Leased Premises.
ARTICLE FOUR
Improvements
4.1 CONSTRUCTION CONDITIONS: The improvements shall be constructed as
described in the work letter attached hereto as Schedule 6 (the "Improvements").
The expenses to be incurred as between Landlord and Tenant for construction of
the Improvements are specified in Schedule 6. If any act, omission or change
requested or caused by Tenant increases the cost of work or materials or the
time required for completion of construction, Tenant shall reimburse Landlord
for such increase in cost at the time the increased cost is incurred and shall
reimburse Landlord for any loss in Rent at the time the Rent would have become
due. Landlord's approval of Tenant's plans for Improvements 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.
4.2 COMMENCEMENT OF POSSESSION: If the Leased Premises are not
substantially completed by the scheduled Lease Commencement Date then the Lease
Commencement Date shall be extended to a date 5 business days after Landlord
shall notify Tenant that the Leased Premises are ready for occupancy. In such an
event the Lease Expiration Date shall remain the same. If Landlord fails to
cause the Leased Premises to be ready for occupancy at the time of the scheduled
Lease Commencement Date, Landlord and Landlord's agents, officers, employees, or
contractors shall not be liable for any damage, loss, liability or expense
caused thereby, and this Lease shall not become void or voidable unless such
failure continues for more than 120 days, in which case Tenant may terminate
this Lease upon 20 days written notice to Landlord. Prior to occupying the
Leased Premises, Tenant shall execute and deliver to Landlord a letter in the
form attached as Schedule 7, acknowledging the Lease Commencement Date and
certifying that the Improvements have been substantially completed and that
Tenant has examined and accepted the Leased Premises. If Tenant fails to deliver
such letter, Tenant shall conclusively be deemed to have made such
acknowledgement and certification by occupying the Leased Premises, except for
mutually agreed punch list items.
ARTICLE FIVE
Project Services
5.1 PROJECT SERVICES: Landlord shall furnish:
a. Utility Services: The utility services listed on Schedule 3 ("Utility
Services"). Should Tenant, in Landlord's sole judgment, use additional,
unusual or excessive Utility Services, Landlord
4
<PAGE>
reserves the right to charge for such services as determined either by a
separate submeter, installed at Tenant's expense, or by methods specified
by an engineer selected by Landlord.
b. Maintenance Services: Maintenance of all interior and exterior common
areas of the Building areas including lighting, landscaping, cleaning,
painting, maintenance and repair of the exterior of the Building and its
structural portions and roof, including all of the services listed on
Schedule 4 ("Maintenance Services").
c. Parking: Parking under the terms and conditions described in Schedule 5
("Parking").
Utility Services, Maintenance Services and Parking described above shall be
collectively referred to as "Project Services." The costs of Project Services
shall be a part of Operating Costs.
5.2 INTERRUPTION OF SERVICES: Landlord does not warrant that any of the
Project Services will be free from interruption. Any Project Service may be
suspended by reason of accident or of necessary repairs, alterations or
improvements, or by strikes or lockouts, or by reason of operation of law, or
causes beyond the reasonable control of Landlord. Subject to possible rent
abatement as may be provided pursuant to the conditions described in paragraph
8.1, any such interruption or discontinuance of such Project Services shall
never be deemed a disturbance of Tenant's use and possession of the Leased
Premises, or render Landlord liable to Tenant for damages by abatement of rent
or otherwise, or relieve Tenant from performance of Tenant's obligations under
this Lease; provided, however, that should such interruption or discontinuance
of Project Services which materially impairs Tenant's ability to conduct its
business continue for 4 consecutive business days, then beginning on the fifth
business day, Landlord shall abate Base Rent and Tenant's Pro Rata Share of
Excess Operating Costs, for that portion of the Leased Premises rendered
untenantable, from the fifth business day after said interruption or
discontinuance until the Project Services are restored. Landlord shall use its
best efforts to cause the Project Services to be promptly restored.
ARTICLE SIX
Tenant's Covenants
6.1 USE OF LEASED PREMISES: Tenant agrees to:
a. Permitted Usage: Use the Leased Premises for the Permitted Purpose only
and for no other purpose.
b. Compliance with Laws: At Tenant's expense, comply with the provisions of
all recorded covenants, conditions and restrictions and all building,
zoning, fire and other governmental laws, ordinances, regulations or rules
now in force or which may hereafter be in force relating to Tenant's use
and occupancy of the Leased Premises, the Building, or the Project and all
requirements of the carriers of insurance covering the Project.
c. Nuisances or Waste: Not do or permit anything to be done in or about the
Leased Premises, or bring or keep anything in the Leased Premises that may
increase Landlord's fire and extended coverage insurance premium, damage
the Building or the Project, constitute waste, constitute an immoral
purpose, or be a nuisance, public or private, or menace or other
disturbance to tenants of adjoining premises or anyone else.
d. Hazardous Substances: (i) comply with all Environmental Law; (ii) not
cause or permit any Hazardous Materials to be treated, stored, disposed of,
generated, or used in the Leased Premises or the Project, provided,
however, that Tenant may store, use or dispose of products customarily
found in offices and used in connection with the operation and maintenance
of property if Tenant complies with Environmental Laws and does not
contaminate the Leased Premises, Project or
5
<PAGE>
environment; (iii) promptly after receipt, deliver to Landlord any
communication concerning any past or present, actual or potential violation
of Environmental Laws, or liability of either party for Environmental
Damages. Environmental Laws mean all applicable present and future
statutes, regulations, rules, ordinances, codes, permits or orders of all
governmental agencies, departments, commissions, boards, bureaus, or
instrumentalities of the United States, states and their political
subdivisions and all applicable judicial, administrative and regulatory
decrees and judgments relating to the protection of public health or safety
or of the environment. Hazardous Materials include substances (i) which
require remediation under any Environmental Laws; or (ii) which are or
become defined as a "hazardous waste", "hazardous substance", pollutant or
contaminant under any Environmental Laws; or (iii) which are toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic or
mutagenic; or (iv) which contain petroleum hydrocarbons, polychlorinated
biphenyls, asbestos, asbestos containing materials or urea formaldehyde.
e. Alterations and Improvements: Make no alterations or improvements to the
Leased Premises without the prior written approval of Landlord and
Landlord's mortgagee, if any, such approval not to be unreasonably
withheld. Any such alterations or improvements by Tenant shall be done in a
good and workmanlike manner, at Tenant's expense, by a licensed contractor
approved by landlord in conformity with plans and specifications approved
by Landlord. If requested by Landlord, Tenant will post a bond or other
security reasonably satisfactory to Landlord to protect Landlord against
liens arising from work performed for Tenant. Landlord's approval of the
plans and specifications for Tenant's alterations or improvements shall
create no responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with all laws, rules and
regulations of governmental agencies or authorities.
f. Liens: Keep the Leased Premises, the Building and the Project free from
liens arising out of any work performed, materials furnished or obligations
incurred by or for Tenant. If, at any time, a lien or encumbrance is filed
against the Leased Premises, the Building or the Project as a result of
Tenant's work, materials or obligations, Tenant shall promptly discharge
such lien or encumbrance. If such lien or encumbrance has not been removed
within 30 days from the date it is filed, Tenant agrees to deposit with
Landlord cash or a bond, which shall be in a form and be issued by a
company acceptable to Landlord in its sole discretion, in an amount equal
to 150% of the amount of the lien, to be held by Landlord as security for
the lien being discharged.
g. Rules and Regulations: Observe, perform and abide by all the rules and
regulations promulgated by Landlord from time to time. Schedule 2 sets
forth Landlord's rules and regulations in effect on the date hereof.
h. Signage: Obtain the prior approval of the Landlord before placing any
sign or symbol in doors or windows or elsewhere in or about the Leased
Premises, or upon any other part of the Building, or Project including
building directories. Any signs or symbols which have been placed without
Landlord's approval may be removed by Landlord. Upon expiration or
termination of this Lease, all signs installed by Tenant shall be removed
and any damage resulting therefrom shall be promptly repaired, or such
removal and repair may be done by Landlord and the cost charged to Tenant
as Rent.
6.2 INSURANCE: Tenant shall, at its own expense, procure and maintain
during the Lease Term: (i) fire and extended casualty insurance covering
Tenant's trade fixtures, merchandise and other personal property located in the
Leased Premises, in an amount not less than 100% of their actual replacement
cost, and (ii) worker's compensation insurance in at least the statutory
amounts, and (iii) commercial general liability insurance with respect to the
Leased Premises and Tenant's activities in the Leased Premises and in the
Building and the Project, providing bodily injury and broad form property damage
coverage with a maximum $5,000 deductible, or such other amount approved by
Landlord in writing, and minimum coverage as follows:
6
<PAGE>
a. $1,000,000 with respect to bodily injury or death to any one person;
b. $2,000,000 with respect to bodily injury or death arising out of any one
occurrence;
c. $1,000,000 with respect to property damage or other loss arising out of
any one occurrence.
Nothing in this paragraph 6.2 shall prevent Tenant from obtaining insurance
of the kind and in the amounts provided for under this paragraph under a blanket
insurance policy covering other properties as well as the Leased Premises,
provided, however, that any such policy of blanket insurance (i) shall specify
the amounts of the total insurance allocated to the Leased Premises, which
amounts shall not be less than the amounts required by subparagraphs a. through
c. above, and (ii) such amounts so specified shall be sufficient to prevent any
one of the assureds from becoming a coinsurer within the terms of the applicable
policy, and (iii) shall, as to the Leased Premises, otherwise comply as to
endorsements and coverage with the provisions of this paragraph.
Tenants Insurance shall be with a company which has a rating equal to or
greater than Best's Insurance Reports classification of A, Class X or its
equivalent, as such classification is determined as of the Lease Commencement
Date. Landlord and Landlord's mortgagee, if any, shall be named as "additional
insureds" under Tenant's insurance, and such Tenant's insurance shall be primary
and non-contributing with Landlord's Insurance. Tenant's Insurance policies
shall contain endorsements requiring 30 days notice to Landlord and Landlord's
mortgagee, if any, prior to any cancellation, lapse or nonrenewal or any
reduction in amount of coverage.
Tenant shall deliver to Landlord as a condition precedent to its taking
occupancy of the Leased Premises certificates of Insurance (with respect to the
liability policy) and evidence of Insurance (ACCORD Number 27) or equivalent
(with respect to the property policy), or certified copies of either of the
policies.
6.3 REPAIRS: Tenant, at its sole expense, agrees to maintain the interior
of the Leased Premises in a neat, clean and sanitary condition. If Tenant fails
to maintain or keep the Leased Premises in good repair and such failure
continues for 5 business days after written notice from Landlord or if such
failure results in a nuisance or health or safety risk, Landlord may perform any
such required maintenance and repairs and the cost thereof shall be payable by
Tenant as Rent within 10 days of receipt of an invoice from Landlord. Tenant
shall also pay to Landlord the costs of any repair to the Building or Project
necessitated by any act or neglect of Tenant.
6.4 ASSIGNMENT AND SUBLETTING: Tenant shall not assign, mortgage, pledge,
or encumber this Lease, or permit all or any part of the Leased Premises to be
subleased without the prior written consent of Landlord and Landlord's
mortgagee, if any, which consent shall not be unreasonably withheld or delayed.
Any transfer of this Lease by reorganization, or liquidation of Tenant, or by
operation of law, or by change in ownership of a controlling partnership
interest in a partnership Tenant, shall constitute an assignment for the
purposes of this paragraph. Notwithstanding the foregoing, Tenant shall have the
right to assign or sublease part or all of the Leased Premises to any of its
subsidiaries, affiliates or any parent corporation of Tenant with prior written
notice to Landlord provided that (i) Tenant continues to be primarily liable on
its obligations as set forth herein; (ii) any such assignee or sublessee shall
assume and be bound by all covenants and obligations of Tenant herewith; (iii)
the proposed assignee or sublessee is, in Landlord's good faith judgment,
compatible with other tenants in the Building and seeks to use the Leased
Premises only for the Permitted Purpose and for a use that is not prohibited
under the terms of a lease with another tenant in the Building; and (iv) such
use would not result in a material change in the number of personnel working in,
or members of the general public visiting, the Leased Premises.
In addition to other reasonable bases, Tenant hereby agrees that Landlord
shall be deemed to be reasonable in withholding its consent, if: (a) such
proposed assignment or sublease is for less than the
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whole of the Leased Premises or is for a term less than the whole of the
remaining Lease Term; or (b) such proposed assignment or sublease is to any
party who is then a tenant of the Building or the Project if Landlord has
comparable area; or (c) Tenant is in default under any of the terms, covenants,
conditions, provisions and agreements of this Lease at the time of request for
consent or on the effective date of such subletting or assignment; or (d) the
proposed subtenant or assignee is, in Landlord's good faith judgment,
incompatible with other tenants in the Building, or seeks to use any portion of
the Leased Premises for a use not consistent with other uses in the Building, or
is financially incapable of assuming the obligations of this Lease; or (e) the
proposed assignee of sublessee or its business is subject to compliance with
additional requirements of the law (including related regulation) commonly known
as the "Americans with Disabilities Act" beyond those requirements which are
applicable to the Tenant, unless the proposed assignee or sublessee shall: (i)
first deliver plans and specifications for complying with such additional
requirements and obtain Landlord's consent thereto, and (ii) comply with all
Landlord's conditions for or contained in such consent, including without
limitation, requirements for security to assure the lien-free completion of such
improvements. Tenant shall submit to Landlord the name of a proposed assignee or
subtenant, the terms of the proposed assignment or subletting, the nature of the
proposed subtenant's business and such information as to the assignee's or
subtenant's financial responsibility and general reputation as landlord may
reasonably require.
No subletting or assignment, even with the consent of Landlord, shall
relieve Tenant of its primary obligation to pay the Rent and to perform all of
the other obligations to be performed by Tenant hereunder. The acceptance of
Rent by Landlord from any other person or entity shall not be deemed to be
waiver by Landlord of any provision of this Lease or to be a consent to any
assignment, subletting or other transfer. Consent to one assignment, subletting
or other transfer shall not be deemed to constitute consent to any subsequent
assignment, subletting or transfer.
In lieu of giving any consent to a sublet or an assignment of all the
Leased Premises, Landlord may, at Landlord's option, elect to terminate this
Lease. In the case of a proposed subletting of a portion of the Leased Premises,
Landlord may, at Landlord's option, elect to terminate the Lease with respect to
that portion of the Leased Premises being proposed for subletting. The effective
date of any such termination shall be 30 days after the proposed effective date
of any proposed assignment or subletting.
One-half of any proceeds in excess of Base Rent and Tenant's Pro Rata Share
of Excess Operating Costs which is received by Tenant pursuant to an assignment
or subletting consented to by Landlord, less reasonable brokerage commissions
actually paid by Tenant, and less other costs incurred by Tenant in connection
with making the space available for lease, shall be remitted to Landlord as
extra Rent within 10 days of receipt by Tenant. For purposes of this paragraph,
all money or value in whatever form received by Tenant from or on account of any
party as consideration for an assignment or subletting shall be deemed to be
proceeds received by Tenant pursuant to an assignment or subletting.
6.5 ESTOPPEL CERTIFICATE: From time to time and within 10 days after
request by Landlord, Tenant shall execute and deliver a certificate to any
proposed lender or purchaser, or to Landlord, together with a true and correct
copy of this Lease, certifying with any appropriate exceptions, (i) that this
Lease is in full force and effect without modification or amendment, (ii) the
amount of Rent payable by Tenant and the amount, if any, of Prepaid Rent and
Deposit paid by Tenant to Landlord, (iii) the nature and kind of concessions,
rental or otherwise, if any, which Tenant has received or is entitled to
receive, (iv) that Tenant has not assigned its rights under this Lease or sublet
any portion of the Leased Premises, (v) that Landlord has performed all of its
obligations due to be performed under this Lease and that there are no defenses,
counterclaims, deductions or offsets outstanding or other excuses for Tenant's
performance under this Lease, (vi) that such proposed lender or purchaser may
rely on the information contained in the certificate, and (vii) any other fact
reasonably requested by Landlord or such proposed lender or purchaser.
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ARTICLE SEVEN
Landlord's Reserved Rights
7.1 SUBSTITUTE PREMISES: Landlord shall have the right at any time, limited
to one occurrence over the primary term of the lease, upon giving Tenant 60 days
written notice, to relocate at Landlord's expense the Leased Premises on any
floor of the Building or elsewhere in the Project, provided that Tenant's Square
Footage shall be approximately the same. Should Landlord give Tenant written
notice of the relocation of the Leased Premises after Tenant has commenced or
completed the approved installation of partitions or other improvements,
Landlord shall furnish Tenant with similar partitions or other improvements of
equal quality. Landlord hereby agrees to pay expenses resulting from relocating
the Tenant including moving expenses, telephone installation, computer wires,
wiring and installation, and the cost of stationery to replace that made
obsolete as a result of the move. The relocation of the Leased Premises shall
not affect any of the clauses or conditions of this Lease, including the Rent.
7.2 ADDITIONAL RIGHTS RESERVED TO LANDLORD: Without notice and without
liability to Tenant or without effecting an eviction or disturbance of Tenant's
use or possession, Landlord shall have the right to (i) grant utility easements
or other easements in, or replat, subdivide or make other changes in the legal
status of the land underlying the Building or the Project as Landlord shall deem
appropriate in its sole discretion, provided such changes do not substantially
interfere with Tenant's use of the Leased Premises for the Permitted Purpose;
(ii) enter the Leased Premises at reasonable times and at any time in the event
of an emergency to inspect, alter or repair the Leased Premises or the Building
and to perform any acts related to the safety, protection, reletting, sale or
improvement of the Leased Premises or the Building; (iii) change the name or
street address of the Building or the Project; (iv) install and maintain signs
on and in the Building and the Project; and (v) make such rules and regulations
as, in the sole judgment of Landlord, may be needed from time to time for the
safety of the tenants, the care and cleanliness of the Leased Premises, the
Building and the Project and the preservation of good order therein.
ARTICLE EIGHT
Casualty and Untenantability
8.1 CASUALTY AND UNTENANTABILITY: If the Building is made substantially
untenantable or if Tenant's use and occupancy of the Leased Premises are
substantially interfered with due to damage to the common areas of the Building
or if the Leased Premises are made wholly or partially untenantable by fire or
other casualty, Landlord may, by notice to Tenant within 45 days after the
damage, terminate this Lease. Such termination shall become effective as of the
date of such casualty.
If the Leased Premises are made partially or wholly untenantable by fire or
other casualty and this Lease is not terminated as provided above, Landlord
shall restore the Leased Premises to the condition they were in on the Lease
Commencement Date, not including any personal property of Tenant or alterations
performed by Tenant.
If the Landlord does not terminate this Lease as provided above, and
Landlord falls within 120 days from the date of such casualty to restore the
damaged common areas thereby eliminating substantial interference with Tenant's
use and occupancy of the Leased Premises, or fails to restore the Leased
Premises to the condition they were in on the Lease Commencement Date, not
including any personal property or alterations performed by Tenant, Tenant may
terminate this Lease as of the end of such 120 day period.
In the event of termination of this Lease pursuant to this paragraph, Rent
shall be prorated on a per diem basis and paid to the date of the casualty,
unless the Leased Premises shall be tenantable, in which case Rent shall be
payable to the date of the lease termination. If the Leased Premises are
untenantable and this Lease is not terminated, Rent shall abate on a per diem
basis from the date of the casualty until the Leased Premises are ready for
occupancy by Tenant. If part of the Leased Premises are untenantable,
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Rent shall be prorated on a per diem basis and apportioned in accordance with
the part of the Leased Premises which is usable by Tenant until the damaged part
is ready for Tenant's occupancy. Notwithstanding the foregoing, if any damage
was proximately caused by an act or omission of Tenant, its employees, agents,
contractors, licensees or invitees, then, in such event, Tenant agrees that Rent
shall not abate or be diminished during the term of this Lease.
ARTICLE NINE
Condemnation
9.1 CONDEMNATION: If any part of the Leased Premises shall be taken under
power of eminent domain or sold under imminent threat to any public authority or
private entity having such power, this Lease shall terminate as the part of the
Leased Premises so taken or sold, effective as of the date possession is
required to be delivered to such authority. In such event, Base Rent shall abate
in the ratio that the portion of Tenant's Square Footage taken or sold bears to
Tenant's Square Footage. If a partial taking or sale of the Leased Premises, the
Building or the Project (i) substantially reduces Tenant's Square Footage
resulting in a substantial inability of Tenant to use the Leased Premises for
the Permitted Purpose, or (ii) renders the Building or the Project not
commercially viable to Landlord in Landlord's sole opinion , either Tenant in
the case of (i), or Landlord in the case of (ii), may terminate this Lease by
notice to the other party within 30 days after the terminating party receives
written notice of the portion to be taken or sold. Such termination shall be
effective 180 days after notice thereof, or when the portion is taken or sold,
whichever is sooner. All condemnation awards and similar payments shall be paid
and belong to Landlord, except any amounts awarded or paid specifically to
Tenant for removal and reinstallation of Tenant's trade fixtures, personal
property or Tenant's moving costs.
ARTICLE TEN
Waiver and Indemnity
10.1 WAIVER AND INDEMNITY: Except for those claims arising from Landlord's
breach of this Lease, negligence or willful misconduct, Tenant, to the extent
permitted by law, waives all claims it may have against Landlord, and against
Landlord's agents and employees for any damages sustained by Tenant or by any
occupant of the Leased Premises, or by any other person, resulting from any
cause arising at any time. Tenant agrees to hold Landlord harmless and
indemnified against claims and liability for injuries to all persons and for
damage to or loss of property occurring in or about the Leased Premises or the
Building, due to Tenant's breach of this Lease or any act of negligence or
default under this Lease by Tenant, its contractors, agents, employees,
licensees and invitees. Tenant agrees to indemnify, defend, reimburse and hold
Landlord harmless against any Environmental Damages incurred by Landlord arising
from Tenant's breach of paragraph 6.1(d) of this Lease. Environmental Damages
means all claims, judgments, losses, penalties, fines, liabilities,
encumbrances, liens, costs and reasonable expenses of investigation, defense or
good faith settlement resulting from violations of Environmental Laws, and
including, without limitation: (i) damages for personal injury and injury to
property or natural resources; (ii) reasonable fees and disbursement of
attorneys, consultants, contractors, experts and laboratories; and (iii) costs
of any cleanup, remediation, removal, response, abatement, containment, closure,
restoration or monitoring work required by any Environmental Law and other costs
reasonable to restore full economic use of the Leased Premises or Project.
10.2 WAIVER OF SUBROGATION: Tenant and Landlord release each other and
waive any right of recovery against each other for loss or damage to the waiving
party or its respective property, which occurs in or about the Leased Premises
or Building, whether due to the negligence of either party, their agents,
employees, officers, contractors, licensees, invitees or otherwise, to the
extent that such loss or damage is insurable against under the terms of standard
fire and extended coverage insurance policies. Tenant and Landlord agree that
all policies of insurance obtained by either of them in connection with the
Leased Premises shall contain appropriate waiver of subrogation clauses.
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10.3 LIMITATION OF LANDLORD'S LIABILITY: The obligations of Landlord under
this Lease do not constitute personal obligations of the individual partners,
shareholders, directors, officers, employees or agents of Landlord, and Tenant
shall look solely to Landlord's interest in the Building and land and to no
other assets of Landlord for satisfaction of any liability in respect of this
Lease. Tenant will not seek recourse against the individual partners,
shareholders, directors, officers, employees or agents of Landlord or any of
their personal assets for such satisfaction. Notwithstanding any other
provisions contained herein, Landlord shall not be liable to Tenant, its
contractors, agents or employees for any consequential damages or damages for
loss of profits.
ARTICLE ELEVEN
Tenant's Default and Landlord's Remedies
11.1 TENANT'S DEFAULT: It shall be an "Event of Default" if Tenant shall
(i) fail to pay any monthly installment of Base Rent or Tenant's Pro Rata Share
of Excess Operating Costs, or any other sum payable hereunder within 10 days
after such payment is due and payable; (ii) violate or fail to perform any
conditions, covenants, or agreements herein made by Tenant respecting Tenant's
insurance requirements as specified in paragraph 6.2, and such violation or
failure shall continue for 5 business days after written notice thereof to
Tenant by Landlord; (iii) violate or fail to perform any of the other
conditions, covenants or agreements herein made by Tenant, and such violation or
failure shall continue for 15 days after written notice thereof to Tenant by
Landlord; provided, however, if such default is of a nature that it cannot
reasonably be cured within 15 days, it shall not be an Event of Default if
Tenant commences to cure within such 15 day period and diligently prosecutes
such cure to completion within the time reasonably required for such cure, not
to exceed 60 days; (iv) make a general assignment for the benefit of its
creditors or file a petition for bankruptcy or other reorganization,
liquidation, dissolution or similar relief; (v) have a proceeding filed against
Tenant seeking any relief mentioned in (iv) above; (vi) have a trustee, receiver
or liquidator appointed for Tenant or a substantial part of its property; (vii)
abandon or vacate the Leased Premises and any portion of Rent is delinquent;
(viii) default under any other lease, if any, within the Building or the
Project; or (ix) if Tenant is a partnership, if any partner of the partnership
is involved in any of the acts or events described in subparagraphs (i) through
(viii) above.
11.2 REMEDIES OF LANDLORD: If an Event of Default occurs, Landlord, may, at
its option, within 5 days after written notice to Tenant, reenter the Leased
Premises, remove all persons therefrom, take possession of the Leased Premises,
and remove all of the Tenant's personal property at Tenant's risk and expense
and, either (i) terminate this Lease and Tenant's right of possession of the
Leased Premises or (ii) maintain this Lease in full force and effect and
endeavor to relet all or part of the Leased Premises. In the event Landlord
elects to maintain this Lease, Landlord shall have the right to relet the Leased
Premises. In the event Landlord elects to maintain this Lease, Landlord shall
have the right to relet the Leased Premises for such rent and upon such terms as
Landlord deems reasonable and necessary, and Tenant shall be liable for all
damages sustained by Landlord, including but not limited to, any deficiency in
Rent for the period of time which would have remained in the Lease Term in the
absence of any termination, leasing fees, reasonable attorneys' fees, other
marketing and collection costs, the cash value of any concessions granted to
Tenant and all expenses of placing the Leased Premises in first class rentable
condition. Landlord retains the right to terminate this Lease, at any time,
notwithstanding that Landlord fails to terminate this Lease initially. If
Landlord is unable after diligent efforts to relet the Leased Premises within 60
days after termination of this Lease, Landlord may elect at any time thereafter
to have Tenant immediately pay, as liquidated damages and not as a penalty, all
Rent then due and the present value (discounted 10%) of all Rent which would
have become due (based on Base Rent and Tenant's Pro Rata Share of Excess
Operating Costs payable at the time of such election and the cash value of any
concessions granted to Tenant) for the period of time which would have remained
in the Lease Term in the absence of any termination.
The remedies granted to Landlord herein shall be cumulative and shall not
exclude any other remedy allowed by law, and shall not prevent the enforcement
of any claim Landlord may have against Tenant for anticipatory breach of the
unexpired term of this Lease, including without limitation, a claim for
attorney's fees incurred by Landlord.
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ARTICLE TWELVE
Termination
12.1 SURRENDER OF LEASED PREMISES: On expiration of this Lease, if no Event
of Default exists, Tenant shall surrender the Leased Premises in the same
condition as when the Lease Term commenced, ordinary wear and tear or damage
from casualty excepted. Except for furnishings, trade fixtures and other
personal property installed at Tenant's expense, all alterations, additions or
improvements, whether temporary or permanent in character, made in or upon the
Leased Premises, either by Landlord or Tenant, shall be Landlord's property and
at the expiration or earlier termination of the Lease Term shall remain on the
Leased Premises without compensation to Tenant, except if requested by Landlord,
Tenant, at its expense and without delay, shall remove any alterations,
additions or improvements made to the Leased Premises by Tenant designated by
Landlord to be removed, and repair any damage to the Leased Premises or the
Building caused by such removal. If Tenant fails to repair the Leased Premises,
Landlord may complete such repairs and Tenant shall reimburse Landlord for such
repair and restoration. Landlord shall have the option to require Tenant to
remove all its property. If Tenant fails to remove such property as required
under this Lease, Landlord may dispose of such property in its sole discretion
without any liability to Tenant, and further may charge the cost of any such
disposition to Tenant.
12.2. HOLD OVER TENANCY: If Tenant shall hold over after the Lease
Expiration Date, Tenant may be deemed, at Landlord's option, to occupy the
Leased Premises as a tenant from month to month, which tenancy may be terminated
by one month's written notice. During such tenancy, Tenant agrees to pay to
Landlord, monthly in advance, an amount equal to 150% of all Rent which would
become due (based on Base Rent and Tenant's Pro Rata Share of Excess Operating
Costs payable for the last month of the Lease Term, together with all other
amounts payable by Tenant to Landlord under this Lease), and to be bound by all
of the terms, covenants and conditions herein specified. If Landlord relets the
Leased Premises or any portion thereof to a new tenant and the term of such new
lease commences during the period for which Tenant holds over, Landlord shall
also be entitled to recover from Tenant all costs and expenses, attorneys fees,
damages or loss of profits incurred by Landlord as a result of Tenant's failure
to deliver possession of the Leased Premises to Landlord when required under
this Lease.
ARTICLE THIRTEEN
Miscellaneous
13.1 QUIET ENJOYMENT: If and so long as Tenant pays all Rent and keeps and
performs each and every term, covenant and condition herein contained on the
part of Tenant to be kept and performed, Tenant shall quietly enjoy the Leased
Premises without hindrance by Landlord.
13.2 ACCORD AND SATISFACTION: No receipt and retention by Landlord of any
payment tendered by Tenant in connection with this Lease shall constitute an
accord and satisfaction, or a compromise or other settlement, notwithstanding
any accompanying statement, instruction or other assertion to the contrary
unless Landlord expressly agrees to an accord and satisfaction, or a compromise
or other settlement, in a separate writing duly executed by Landlord. Landlord
will be entitled to treat any such payments as being received on account of any
item or items of Rent, interest, expense or damage due in connection herewith,
in such amounts and in such order as Landlord may determine at its sole option.
13.3 SEVERABILITY: The parties intend this Lease to be legally valid and
enforceable in accordance with all of its terms to the fullest extent permitted
by law. If any term hereof shall be invalid or unenforceable, the parties agree
that such term shall be stricken from this Lease to the extent unenforceable,
the same as if it never had been contained herein. Such invalidity or
unenforceability shall not extend to any other term of this Lease, and the
remaining terms hereof shall continue in effect to the fullest extent permitted
by law, the same as if such stricken item never had been contained herein.
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13.4 SUBORDINATION AND ATTORNMENT: Tenant acknowledges that this Lease is
subordinate to all leases in which Landlord is lessee and to any mortgage or
deed of trust now in force against the Building and to all advances made or
hereafter to be made thereunder and, provided the holder thereof agrees in
writing for Tenant's benefit not to disturb Tenant's rights under this Lease so
long as there is no Event of Default under this Lease, Tenant agrees that this
Lease shall be subordinate to any future leases in which Landlord is lessee and
to any future first mortgage or deed of trust hereafter in force against the
Building and to all advances made or hereafter to be made thereunder (all such
existing and future leases, mortgages and deeds of trust referred to
collectively as "Superior Instruments"). Tenant also agrees that if the holder
of any Superior Instrument elects to have this Lease superior to its Superior
Instrument and gives notice of its election to Tenant, then this Lease shall be
superior to the lien of any such lease, mortgage or deed of trust and all
renewals, replacements and extensions thereof, whether this Lease is dated
before or after such lease, mortgage or deed of trust. If requested in writing
by Landlord or any first mortgagee or ground lessor of Landlord, Tenant agrees
to execute a subordination agreement required to further effect the provisions
of this paragraph.
In the event of any transfer in lieu of foreclosure or termination of a
lease in which Landlord is lessee or the foreclosure of any Superior Instrument,
or sale of the Property pursuant to any Superior Instrument, Tenant shall attorn
to such purchaser, transferee or lessor and recognize such party as landlord
under this Lease, provided such party acquires and accepts the Leased Premises
subject to this Lease. The agreement of Tenant to attorn contained in the
immediately preceding sentence shall survive any such foreclosure sale or
transfer.
13.5 ATTORNEY'S FEES: If the services of an attorney are required by any
party to secure the performance under this Lease or otherwise upon the breach or
default of the other party to the Lease, or if any judicial remedy is necessary
to enforce or interpret any provision of the Lease, the prevailing party shall
be entitled to reasonable attorney's fees, costs and other expenses, in addition
to any other relief to which such prevailing party may be entitled.
13.6 APPLICABLE LAW: This Lease shall be construed according to the laws of
the state in which the Leased Premises are located.
13.7 BINDING EFFECT; GENDER: This Lease shall be binding upon and inure to
the benefit of the parties and their successors and assigns. It is understood
and agreed that the terms "Landlord" and "Tenant" and verbs and pronouns in the
singular number are uniformly used throughout this Lease regardless of gender,
number or fact of incorporation of the parties hereto.
13.8 TIME: Time is of the essence of this Lease.
13.9 ENTIRE AGREEMENT: This Lease and the schedules and addenda attached
set forth all the covenants, promises, agreements, representations, conditions,
statements and understandings between Landlord and Tenant concerning the Leased
Premises and the Building and the Project, and there are not representations,
either oral or written between them other than those in this Lease. This Lease
shall not be amended or modified except in writing signed by both parties.
Failure to exercise any right in one or more instances shall not be construed as
a waiver of the right to strict performance or as an amendment to this Lease.
13.10 NOTICES: Any notice or demand provided for or given pursuant to this
Lease shall be in writing and served on the parties at the addresses listed in
paragraph 1.1 (n) and paragraph 1.1(o). Any notice shall be either (i)
personally delivered to the addressee set forth above, in which case it shall be
deemed delivered on the date of delivery to said addressee; or (ii) sent by
registered or certified mail/return receipt requested, in which case it shall be
deemed delivered 3 business days after being deposited in the U.S. Mail; (iii)
sent by a nationally recognized overnight courier, in which case it shall be
deemed delivered 1 business day after deposit with such courier; or (iv) sent by
telecommunication ("Fax") during normal business hours in which case it shall be
deemed delivered on the day sent, provided an original is received
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by the addressee after being sent by a nationally recognized overnight courier
within 1 business day of the Fax. The addresses and Fax numbers listed in
paragraphs 1.1(m) and 1.1(n) may be changed by written notice to the other
parties, provided, however, that no notice of a change of address or Fax number
shall be effective until the date of delivery of such notice. Copies of notices
are for informational purposes only and a failure to give or receive copies of
any notice shall not be deemed a failure to give notice.
13.11 HEADINGS: The headings on this Lease are included for convenience
only and shall not be taken into consideration in any construction or
interpretation of this Lease or any of its provisions.
13.12 BROKERAGE COMMISSIONS: Tenant and Landlord each represents to the
other that no broker or agent was instrumental in procuring or negotiating or
consummating this Lease other than Broker of Record whose compensation shall be
paid by Landlord, and Cooperating Broker, if any, whose compensation shall be
paid by Broker of Record, and Tenant and Landlord each agree to defend,
indemnify and hold harmless the other party against any loss, cost, expense or
liability for any compensation, commission, fee or charge, including reasonable
attorney's fees, resulting from any claim of any other broker, agent or finder
claiming under or through the indemnifying party if connection with this Lease
or its negotiation.
SUBMISSION OF THIS INSTRUMENT FOR EXAMINATION OR SIGNATURE 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.
This Lease is executed as of the date first written above.
TENANT: LANDLORD:
/s/ J. Graeme McWhirter
MEDIALINK CONTINENTAL BANK N.A. AS TRUSTEE FOR
- ------------------------------ THE ALLSTATE RETIREMENT PLAN
J. Graeme McWhirter
By Graeme McWhirter By /s/ Willett J. Hudson
---------------------------- ----------------------------------
Its Chief Financial Officer
By /s/ J. Graeme McWhirter By___________________________________
---------------------------- Authorized Signatories
Its Chief Financial Officer
AND
CONTINENTAL BANK N.A. AS TRUSTEE FOR
THE AGENTS PENSION PLAN
By /s/ Willett J. Hudson
----------------------------------
By __________________________________
Authorized Signatories
Where Tenant is a corporation, this Lease shall be signed by a President or Vice
President and Secretary or Assistant Secretary of Tenant. Any other signatories
shall require a certified corporate resolution.
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SPECIAL PROVISIONS
================================================================================
Right to Renew: Tenant will have one (1), three (3) year option to renew its
lease at market rate, provided that Tenant is not in default
under the lease. Tenant will provide six (6) months written
notice to Landlord indicating its desire to exercise the
expansion option.
16
<PAGE>
ACKNOWLEDGEMENTS
STATE OF _________________
COUNTY OF_________________
BE IT REMEMBERED, that on this __ day of _____, 19__, before me, the
subscriber, a Notary Public, in and for said County, personally appeared
______________, Vice President of Continental Bank, N.A., a national banking
association, and acknowledged the signing of the foregoing Lease on behalf of
said company for the uses and purposes therein mentioned.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed by
official seal on the day and year aforesaid.
_____________________________________
Notary Public
STATE OF _________________
COUNTY OF_________________
BE IT REMEMBERED, that on this __ day of _____, 19__, before me, the
subscriber, a Notary Public, in and for said County, personally appeared
______________, Vice President of Continental Bank, N.A., a national banking
association, and acknowledged the signing of the foregoing Lease on behalf of
said company for the uses and purposes therein contained.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed by
official seal on the day and year aforesaid.
_____________________________________
Notary Public
<PAGE>
STATE OF New York
COUNTY OF New York
BE IT REMEMBERED, that on this 7th day of April, 1994, before me, the
subscriber, a Notary Public, in and for said County, and State, personally
appeared the above named Video Broadcasting Corporation, dba MEDIALINK, TENANT
in the foregoing Lease, by J. Graeme McWhirter as Executive Vice President and
acknowledged the signing of the same to be _______ voluntary act and deed of the
corporation, for the uses and purposes therein contained.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed by
official seal on the day and year aforesaid.
/S/ Linda Tesser
-------------------------------------
Notary Public
LINDA TESSER
Notary Public, State of New York
NO. 31-4936548
Qualified in New York County
Commission Expires April 30, 1996
<PAGE>
Schedule 1
Diagram of 4851 LBJ FREEWAY
DALLAS, TEXAS
<PAGE>
SCHEDULE 2
RULES AND REGULATIONS
1. The sidewalks, entrances, halls, corridors, elevators and stairways of the
Building and Project shall not be obstructed or used as a waiting or lounging
place by tenants, and their agents, servants, employees, invitees, licensees and
visitors. All entrance doors leading from any Leased Premises to the hallways
are to be kept closed at all times.
2. Landlord reserves the right to refuse admittance to the Building between the
hours of 6:00 P.M. and 8:00 A.M. Monday through Saturday, and from 1:00 P.M.
Saturday to 8:00 A.M. Monday to any person not producing both a key to the
Leased Premises and/or a pass issued by Landlord. In case of invasion, riot,
public excitement or other commotion, Landlord also reserves the right to
prevent access to the Building during the continuance of same. Landlord shall in
no case by liable for damages for the admission or exclusion of any person to or
from the Building.
3. Landlord will furnish each tenant with two keys to each door lock on the
Leased Premises, and Landlord may make a reasonable charge for any additional
keys and access cards requested by any tenant. No tenant shall have any keys
made for the Leased Premises; nor shall any tenant alter any lock, or install
new or additional locks or bolts, on any door without the prior written approval
of Landlord. In the event of such alteration for installation approval by
Landlord, the tenant making such alteration shall supply Landlord with a key for
any such lock or bolt. Each tenant, upon the expiration or termination of its
tenancy, shall deliver to Landlord all keys and access cards in any such
tenant's possession for all locks and bolts in the Building.
4. In order that the Building may be kept in a state of cleanliness, each tenant
shall during the term of each respective lease, permit Landlord's employees (or
Landlord's agent's employees) to take care of and clean the Leased Premises and
tenants shall not employ any person(s) other than Landlord's employees (or
Landlord's agent's employees) for such purpose. No tenant shall cause any
unnecessary labor by reason of such tenant's carelessness or indifference in the
preservation of good order and cleanliness of the Leased Premises. Tenants will
see that (i) the windows are closed, (ii) the doors securely locked, and (iii)
all water faucets and other utilities are shut off (so as to prevent waste or
damage) each day before leaving the Leased Premises. In the event tenant must
dispose of crates, boxes, etc. which will not fit into office waste paper
baskets, it will be the responsibility of tenant to dispose of same. In no event
shall tenant set such items in the public hallways or other areas of the
Building or garage facility, excepting tenant's owned Leased Premises, for
disposal.
5. Landlord reserves the right to prescribe the date, time, method and
conditions that any personal property, equipment, trade fixtures, merchandise
and other similar items shall be delivered to or removed from the Building. No
iron safe or other heavy or bulky object shall be delivered to or removed from
the Building, except by experienced safe men, movers or riggers approved in
writing by Landlord. All damage done to the Building by the delivery or
<PAGE>
removal of such items, or by reason of their presence in the Building, shall be
paid to Landlord, immediately upon demand, by the tenant by, through, or under
whom such damage was done. There shall not be used in any space, or in the
public halls of the Building, either by tenant or by jobbers or others, in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires.
6. The walls, partitions, skylights, windows, doors and transoms that reflect or
admit light into passageways or into any other part of the Building shall not be
covered or obstructed by any of the tenants.
7. The toilet rooms, toilets, urinals, wash bowls and water apparatus shall not
be used for any purpose other than for those for which they were constructed or
installed, and no sweepings, rubbish, chemicals, or other unsuitable substances
shall be thrown or placed therein. The expense of any breakage, stoppage or
damage resulting from violation(s) of this rule shall be borne by the tenant by
whom, or by whose agents, employees, invitees, licensees or visitors, such
breakage, stoppage or damage shall have been caused.
8. No sign, name, placard, advertisement or notice visible from the exterior of
any Leased Premises, shall be inscribed, painted or affixed by any tenant on any
part of the Building or Project without the prior written approval of Landlord.
All signs or letterings on doors, or otherwise, approved by Landlord shall be
inscribed, painted or affixed at the sole cost and expense of the tenant, by a
person approved by Landlord. A directory containing the names of all tenants in
the Building shall be provided by Landlord at an appropriated place on the first
floor of the Building.
9. No signalling, telegraphic or telephonic instruments or devices, or other
wires, instruments or devices, shall be installed in connection with any Leased
Premises without the prior written approval of Landlord. Such installations, and
the boring or cutting for wires, shall be made at the sole cost and expense of
the tenant and under control and direction of Landlord. Landlord retains, in all
cases, the right to require (i) the installation and use of such electrical
protecting devices that prevent the transmission of excessive currents of
electricity into or through the Building, (ii) the changing of wires and of
their installation and arrangement underground or otherwise as Landlord may
direct, and (iii) compliance on the part of all using or seeking access to such
wires with such rules as Landlord may establish relating thereto. All such wires
used by tenants must be clearly tagged at the distribution boards and junction
boxes and elsewhere in the Building, with (i) the number of the Leased Premises
to which said wires lead, (ii) the purpose for which said wires are used, and
(iii) the name of the company operating same.
10. Tenant, their agents, servants or employees, shall not (a) go on the roof of
the Building, (b) use any additional method of heating or air conditioning the
Leased Premises, (c) sweep or throw any dirt or other substance from the Leased
Premises into any of the halls, corridors, elevators, or stairways of the
Building, (d) bring in or keep in or about the Leased Premises any vehicles or
animals of any kind, (e) install any radio or television antennae or any other
device or item on the roof, exterior walls,
<PAGE>
windows or windowsills of the Building, (f) place objects against glass
partitions, doors or windows which would be unsightly from the interior or
exterior of the Building, (g) use any Leased Premises (i) for lodging or
sleeping, (ii) for cooking (except that the use by any tenant of Underwriter's
Laboratory equipment for brewing coffee, tea and similar beverages shall be
permitted, provided that such use is in compliance with law), (iii) for any
manufacturing, storage or sale of merchandise or property of any kind, (h) cause
or permit unusual or objectionable odor to be produced or permeate from the
Leased Premises, including, without limitation, duplicating or printing
equipment fumes, and (i) install or operate any vending machines in the Leased
Premises. Tenant, its agents, servants and employees, invitees, licensees, or
visitors shall not permit the operation of any musical or sound producing
instruments or device which may be heard outside Leased Premises, Building or
garage facility, or which may emit electrical waves which will impair radio or
television broadcast or reception from or into the Building.
11. Tenants shall not store or use in any Leased Premises any (a) ether,
naphtha, phosphorous, benzol, gasoline, benzine, petroleum, crude or refined
earth or coal oils, flashlight powder, kerosene or camphene, (b) any other
flammable, combustible, explosive or illuminating fluid, gas or material of any
kind, and (c) any other fluid, gas or material of any kind having an offensive
odor, without the prior written consent of Landlord.
12. No canvassing, soliciting, distribution of hand bills or other written
material, or peddling shall be permitted in the Building or the Project, and
tenants shall cooperate with Landlord in prevention and elimination of same.
13. Tenant shall give Landlord prompt notice of all accidents to or defects in
air conditioning equipment, plumbing, electrical facilities or any part or
appurtenances of Leased Premises.
14. If any Leased Premises becomes infested with vermin, the tenant, at its sole
cost and expense, shall cause its premises to be exterminated from time to time
to the satisfaction of the Landlord and shall employ such exterminators as shall
be approved by Landlord.
15. No curtains, blinds, shades, screens, awnings or other coverings or
projections of any nature shall be attached to or hung in, or used in connection
with any door, window or wall of the premises of the building without the prior
written consent of Landlord.
16. Landlord shall have the right to prohibit any advertising by tenant which,
in Landlord's opinion, tends to impair the reputation of Landlord or of the
Building, or its desirability as an office building for existing or prospective
tenants who require the highest standards of integrity and respectability, and
upon written notice from Landlord, tenant shall refrain from or discontinue such
advertising.
17. Wherever the word "tenant" occurs, it is understood and agreed that it shall
also mean tenant's associates, employees, agents and any other person entering
the Building or the Leased Premises under the express or implied invitation of
tenant. Tenant shall cooperate with Landlord to assure compliance by all such
parties with rules and regulations.
<PAGE>
18. Landlord reserves the right to make reasonable amendments, modifications and
additions to the rules and regulations heretofore set forth, and to make
additional reasonable rules and regulations, as in Landlord's sole judgment may
from time to time be needed for the safety, care, cleanliness and preservation
of good order of the Building.
<PAGE>
SCHEDULE 3
UTILITY SERVICES
The Landlord shall provide, as part of Operating Costs, except as otherwise
provided, the following services:
(1) Air Conditioning and heat for normal purposes only, to provide in
Landlord's judgement, comfortable occupancy Monday through Friday from 8:00 a.m.
to 6:00 p.m., and Saturday from 8:00 a.m. to 12:00 p.m., Sundays and holidays
excepted. Tenant agrees not to use any apparatus or device, in or upon or about
the Leased Premises, and Tenant further agrees not to connect any apparatus or
device with the conduits or pipes, or other means by which such services are
supplied, for the purpose of using additional or unusual amounts of such
services, without written consent of Landlord. Should Tenant use such services
under this provision to excess or requests the use of these services at other
than operating hours listed above, Landlord reserves the right to charge for
such services. The charge shall be at the rate of $40.00 per hour and shall be
payable as additional rental. Should Tenant refuse to make payment upon demand
of Landlord, such excess charge constitutes breach of the obligation to pay rent
under this Lease and shall entitle Landlord to the rights hereinafter granted
for such breach.
(2) Electric power for lighting and operating of office machines, air
conditioning and heating as may be required for comfortable occupancy of the
premises between Monday and Friday from 8:00 a.m. to 6:00 p.m. and Saturdays
from 8:00 a.m. to 12:00 p.m., Sundays and holidays excepted. Electric power
furnished by Landlord is intended to be that consumed in normal office use for
the lighting, heating, ventilating, air conditioning and small office machines.
Landlord reserves the right of consumption of electricity exceeds that required
for normal office use as specified, to include a charge to be based upon the
average cost per unit of electricity for this Building applied to the excess use
as determined by a submeter to be furnished and installed at the option of the
Tenant and at its expense. If the Tenant refuses to pay upon demand of Landlord
such excess charge, such refusal shall constitute a breach of the obligation to
pay rent under this Lease, and shall entitle Landlord to the rights hereinafter
granted for such breach.
(3) Water for drinking, lavatory and toilet purposes from the regular
Building supply (at the prevailing temperature) through fixtures installed by
Landlord, (or by Tenant with Landlord's written consent).
<PAGE>
SCHEDULE 4
MAINTENANCE SERVICES
(1) Subject to the terms of the lease, Landlord shall supply Public
restroom supplies, public area lamp replacement, window washing with reasonable
frequency, and janitor services to the common areas and leased premises during
the time and in the manner that such janitor services are customarily furnished
in general office buildings in the area.
(2) Landlord agrees to maintain the exterior and interior of the Leased
Premises to include lawn and shrub care, snow removal, maintenance of the
structure, roof, mechanical and electrical equipment, architectural finish, and
so on, excluding only those items specifically excepted elsewhere in this Lease.
<PAGE>
SCHEDULE 5
PARKING
Landlord hereby grants to Tenant a license to the use during the term of
this Lease the spaces described in Article 1.1j. Said parking spaces shall be
made available to Tenant on an allocated basis and Tenant agrees to comply with
such reasonable rules and regulations as may be made by Landlord from time to
time in order to insure the proper operation of the parking facilities. In
consideration of the right to use said parking spaces, Tenant shall pay to
Landlord on the first day of each calendar month, the amount specified in
Article 1.1j, in addition to the Rent and other charges payable by Tenant under
this Lease. Tenant agrees not to overburden the parking facilities and agrees to
cooperate with Landlord and other tenants in the use of parking facilities.
Landlord reserves the right in its sole discretion to determine whether parking
facilities are becoming crowded, and in such event, to allocate specific parking
spaces among Tenant and other tenants or to take such other steps necessary to
correct such condition, including but not limited to policing and towing, and if
Tenant, its agents, officers, employees, contractors, licensees or invitees are
deemed by Landlord to be contributing to such condition, to charge to Tenant as
Rent that portion of the cost thereof which Landlord reasonably determines to be
caused thereby. Landlord may, in its sole discretion, change the location and
nature of the parking spaces available to Tenant, provided that after such
change, there shall be available to Tenant the same number of spaces as
available before such change.
<PAGE>
SCHEDULE 6
4851 LBJ Building
Dallas, Texas
Date January 3, 1994
WORK LETTER AGREEMENT
MEDIALINK
708 Third Avenue
New York, New York 10017
Re: Suite 605,
4851 LBJ Freeway Office Building
Gentlemen:
You (referred to as "Tenant"), and we (referred to as "Landlord") are executing,
simultaneously with this work letter agreement, a written lease (the "Lease")
pertaining to the space referred to above (the "Leased Premises"). This work
letter agreement is attached to the Lease as Schedule 6 and made a part thereof.
To induce Tenant and Landlord, each, to enter into the Lease (which is hereby
incorporated by reference to the extent that the provisions of this work letter
agreement may apply thereto) and in consideration of the mutual covenants
hereinafter contained, Landlord and Tenant mutually agree as follows:
1. Definitions The terms defined in this paragraph, for purposes of this work
letter agreement, shall have the meanings specified herein, and, in
addition to the terms defined herein, terms defined in the Lease shall, for
purposes of this work letter agreement, have the meanings specified
therein.
1.01 "Base Tenant Improvements" means the Building Standard items which are
supplied, installed and finished by Landlord, according to Building
Standard specifications and which shall be paid for by Landlord (subject to
the Allowance) as provided for in paragraph 2.03 below.
1.02 "Building Standard" means the quantity and quality of materials,
finishing and workmanship specified by Landlord for the Building, as set
forth on Exhibit 1 attached hereto and made a part hereof.
1.03 "Construction Documents" means the construction drawings, plans and
specifications referred to in paragraphs 2.02 and 2.03 below to be attached
hereto and made a part hereof.
<PAGE>
1.04 "Extraordinary Tenant Improvements" means any work Tenant requests
Landlord to do in connection with the Leased Premises, other than Base
Tenant Improvements.
1.05 "Leasehold Improvements" means the aggregate of Base Tenant
Improvements and Extraordinary Tenant Improvements, as contemplated by the
Construction Documents.
1.06 "Substantial Completion" means that the Leasehold Improvements have
been substantially completed according to the Construction Documents,
except for items which will not materially affect the use of the Leased
Premises or which customarily are deemed to be "punchlist work".
2. Construction Documents; Payments
2.01 The parties have approved a preliminary floor plan for the Leased
Premises, a copy of which is attached to the Lease as Schedule 1 (the
"Preliminary Plan"). The estimated cost of completing the Leasehold
Improvements according to the Preliminary Plan (the "Estimate") is $12.30
RSF. The Estimate represents Landlord's good and faith estimate of the cost
of completing the Leasehold Improvements. Landlord shall have no liability
if the Final Cost (defined in paragraph 2.03 below) is greater than the
Estimate.
2.02 Landlord, within 21 days hereof, shall at its sole expense cause the
Consultants (defined below) to prepare and Tenant's review for approval or
disapproval all drawings, plans and specifications necessary to construct
the Leasehold Improvements. The following companies shall prepare the
drawings, plans and specifications which are to comprise the Construction
Documents;
Architectural F. Brown & Assoc.
Mechanical Venture Mechanical
Electrical Leavitt Electric
Plumbing Love Field Plumbing
(collectively, the "Consultants"). The fees end expenses of the Consultants
for preparing the initial drawings, plans and specifications which are to
comprise the Construction Documents shall be included in the Final Cost
(defined in paragraph 2.03 below) and allocated accordingly between Base
Tenant Improvements and Extraordinary Tenant Improvements. Tenant shall
receive an appropriate credit for any advance payments made to the
Consultants.
2.03 Upon Tenant's review of the final form of the drawings, plans and
specifications, which when submitted by Landlord and reviewed by
<PAGE>
Tenant shall constitute the Construction Documents. Landlord shall prepare
an analysis in its sole judgment of the cost of constructing the Leasehold
Improvements according to the Construction Documents (the "Final Cost") and
submit such analysis to Tenant for its approval. The Final Cost shall be
allocated between the costs attributable to the construction of the Base
Tenant Improvements and to be paid for by Landlord (subject to the
Allowance, the "Landlord's Share") and the costs attributable to the
construction of the Extraordinary Tenant Improvements or to be otherwise
paid for by Tenant (the "Tenant's Share"). With 10 days of receipt, Tenant
shall approve the Final Cost (including the allocation thereof). If Tenant
does not approve the Final Cost, it shall promptly notify Landlord thereof;
in which case Tenant and Landlord shall use their best efforts to amend the
Construction Documents in a manner satisfactory to each. If they are unable
to do so within 10 days after Tenant notifies Landlord as provided in the
preceding sentence, either party may thereafter terminate the Lease by
delivering written notice to the other. Tenant acknowledges that Landlord's
sole obligation is to pay the costs attributable to the construction of the
Base Tenant Improvements, up to an aggregate maximum limit of $12.30 per
rentable square foot of Tenant's Square Footage (the "Allowance"), and
Tenant shall pay all other costs of the construction of the Leasehold
Improvements as the Tenant's Share. If the Construction Documents require
the construction or installation of additional improvements beyond those
regularly provided by Landlord in the core of the Building in which the
Leased Premises are located (including, without limitation, extra
sprinklers, fire hose cabinets and other safety devices), Tenant agrees to
pay all costs and expenses arising from the construction and installation
of such additional improvements. All costs attributable to changes and
variations from the Construction Documents (including, without limitation,
any fees and expenses of the Consultants and any increased costs of
construction) shall be paid by Tenant.
3. Leasehold Improvements
3.01 The following provisions shall apply to the construction of the
Leasehold Improvements:
(a) All work involved in the completion of the Leasehold Improvements
shall be carried out by Landlord and its agents and contractors under
the sole direction of Landlord. Tenant shall cooperate with Landlord
and its agents and contractors to promote the efficient and
expeditious completion of the Leasehold Improvements; and
(b) Landlord agrees to construct the Leasehold Improvements in
accordance with the Construction Documents, provided Tenant has
complied with all the applicable provisions of this work letter
agreement and the Lease.
3.02 If there are any changes in the Leasehold Improvements requested by,
or on behalf of, Tenant from the work as reflected in the Construction
Documents, each such change must receive the prior written approval of
Landlord, and Tenant shall bear the cost of all such changes.
<PAGE>
3.03 Landlord shall have no obligation to commence construction of any work
in the Leased Premises until (a) Landlord has submitted and Tenant has
approved the Construction Documents and Tenant shall have approved the
Final Cost for the construction of the Leasehold Improvements as required
by the provisions hereof, and (b) Landlord shall have received Tenant's
advance payment in an amount equal to the Tenant's Share.
4. Lease Commencement Date
4.01 Landlord shall notify Tenant when Substantial Completion has been
achieved, and thereafter the Lease Commencement Date shall be established
as set forth in the Lease. Not withstanding anything to the contrary
contained in the Lease or this work letter agreement, the Lease
Commencement Date shall not be extended for any delay in Substantial
Completion to the extent that such delay is caused in whole or in part by
any act or omission attributable to Tenant, including without limitation:
(a) Tenant's request for any Extraordinary Tenant Improvements;
(b) Tenant's failure to furnish promptly information concerning
Tenant's requirements pertaining to construction of the Leasehold
Improvements or any other information requested by the Consultants as
necessary or useful to prepare the initial drawings, plans and
specifications which are to comprise the Construction Documents;
(c) Tenant's failure to promptly approve the initial drawings, plans
and specifications which are to comprise the Construction Documents;
(d) Tenant's failure to approve promptly the Final Cost; and
(e) Tenant's request for any changes in the Leasehold Improvements
from the work as reflected in the Construction Documents.
4.02 In any event, Rent payable under the Lease shall not abate by reason
of any delay, expense or other burden arising out of or incurred in
connection with the design or construction of the Leasehold Improvements to
the extent that such delay, expense or other burden is caused in whole or
in part by any act or omission attributable to Tenant (including, without
limitation, the acts and omissions referred to in subparagraphs (a) through
(e) of paragraph 4.01 above).
5. Tenant's Access To Leased Premises
5.01 Landlord, in its sole discretion, may permit Tenant and Tenant's
agents or independent contractors to enter the Leased Premises prior to the
scheduled Lease Commencement Date in order that Tenant may do other work as
may be required by Tenant to make the Leased Premises ready for Tenant's
use and occupancy. Such permission must be in writing prior to entry. If
Landlord permits such prior entry, then such license shall be subject to
the condition that Tenant and Tenant's agents, contractors, workmen,
mechanics, suppliers, and invitees shall work in harmony and not
<PAGE>
interfere with Landlord and its agents and contractors in doing its work in
the Leased Premises or the Building or with other tenants and occupants of
the Building or the Project. If at any time such entry shall cause or
threaten to cause disharmony or interference, Landlord, in its sole
discretion, shall have the right to withdraw and cancel such license upon
notice to Tenant. Tenant agrees that any such entry into the Leased
Premises shall be deemed to be under all of the terms, covenants,
conditions and provisions of the Lease, except as to the covenant to pay
periodic Rent. Tenant further agrees that, to the extent permitted by law,
Landlord and its principals shall not be liable in any way for any injury
or death to any person or persons, loss or damage to any of the Leasehold
Improvements or installations made in the Leased Premises or loss or damage
to property placed therein or there about, the same being at Tenant's sole
risk.
5.02 In addition to any other conditions or limitations on such license to
enter the Leased Premises prior to the Lease Commencement Date, Tenant
expressly agrees that none of its agents, contractors, workmen, mechanics,
suppliers or invitees shall enter the Leased Premises prior to the Lease
Commencement Date unless and until each of them shall furnish Landlord with
satisfactory evidence of insurance coverage, financial responsibility and
appropriate written releases of mechanics' or materialmen's lien claims.
6. Miscellaneous Provisions Landlord and Tenant further agree as follows:
6.01 Except as herein expressly set forth with respect to the Leasehold
Improvements, Landlord has no agreement with Tenant and has no obligation
to do any work with respect to the Leased Premises. Any other work in the
Leased Premises which may be permitted by Landlord pursuant to the terms
and conditions of the Lease, including any alterations or improvements as
contemplated by paragraph 11 of the Lease, shall be done at Tenant's sole
cost and expense and in accordance with the terms and conditions of the
Lease.
6.02 This work letter agreement shall not be deemed applicable to: (a) any
additional space added to the original Leased Premises at any time, whether
by the exercise of any options under the Lease or otherwise, or (b) any
portion of the original Leased Premises or any additions thereto in the
event of a renewal or extension of the original Lease Term, whether by the
exercise of any options under the Lease or any amendment or supplement
thereto. The construction of any additions or improvements to the Leased
Premises not contemplated by this work letter agreement shall be effected
pursuant to a separate work letter agreement, in the form then being used
by Landlord and specifically addressed to the allocation of costs relating
to such construction.
6.03 Any person signing this work letter agreement on behalf of Tenant
warrants and represents he has authority to do so.
<PAGE>
6.04 This work letter agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
6.05 Anything in the Lease to the contrary notwithstanding, notices and
other items to be delivered pursuant to this work letter agreement shall be
effective upon receipt of same by the party to whom such notice or item is
directed.
If the foregoing correctly sets forth our understanding, kindly acknowledge your
approval in the space provided below for that purpose and return to us two
signed counterparts of this work letter agreement.
Very truly yours,
CONTINENTAL BANK, N.A., AS TRUSTEE
FOR THE ALLSTATE RETIREMENT PLAN
By: /s/ Willett J. Hudson
------------------------------
Its Vice President
and
CONTINENTAL BANK, N.A., AS TRUSTEE
FOR THE AGENTS PENSION PLAN
By: /s/ Willett J. Hudson
------------------------------
Its Vice President
AGREED TO AND ACCEPTED THIS
8th day of April, 1994
Video Broadcasting Corporation
dba MEDIALINK
a Delaware corporation
By: /s/ J. Graeme McWhirter
------------------------------
Its Chief Financial Officer
<PAGE>
EXHIBIT 1 TO WORK LETTER AGREEMENT
BUILDING STANDARD WORK
HEATING, VENTILATING AND
AIR CONDITIONING: Supply and install building standard distribution
system, variable air volume boxes and perimeter
diffusers.
ELECTRICAL LIGHT FIXTURES:
Supply and install building 2 ft. x 4 ft.
fluorescent lay in fixtures containing three tubes
and acrylic lenses, based on an allocation of one
per 85 square feet of usable area on each floor.
CEILING, TO INCLUDE GRID
AND LAY-IN TILE: Supply and install building standard 2 ft. x 2 ft.
exposed white grid and metal fiber acoustical tile
lay-in ceiling throughout the Leased Premises.
Ceiling height shall be approximately 8 ft. 6 in.
Cost to drop tile in place will be charged to the
allowance outlined in Section B hereof.
WINDOW COVERINGS: Supply and install building standard Levelor
blinds.
FIRE PROTECTION: Supply and install the building standard sprinkler
protection system based on the sprinkler design
depicted on the original or most recent fire
protection document. Relocation or additional
heads required for approval by insurance and
jurisdictional bodies due to Tenant's partition
layout will be charged as an extra to Tenant.
<PAGE>
Tenant MEDIALINK Date January 3, 1994
Location Suite 605, 4851 LBJ Freeway, Dallas, Texas
Tenant Square Footage 1,606 RSF
Cost
----
1. Partitions
Demising
Interior
2. Doors, Frames & Hardware
Entrance
Interior
3. Ceilings
4. Lighting
5. Carpeting
6. Power Distribution
7. Telephone Distribution
Total $___________
<PAGE>
EXHIBIT 2 TO WORK LETTER AGREEMENT
TENANT CONSTRUCTION
WORK ORDER
PAYMENT
A. Landlord's Share $
---------
B. Tenant's Share $ 0
---------
(i) Credits to Tenant for Advance Payments $ 0
---------
(ii) Balance to be paid by Tenant prior
to commencement of work $ 0
---------
Agreed and accepted: Tenant Landlord
/s/ J. Graeme McWhirter CONTINENTAL BANK, N.A., AS
_______________________ TRUSTEE FOR THE ALLSTATE
RETIREMENT PLAN
By /s/ Willett J. Hudson
--------------------------
Its Vice President
AND
CONTINENTAL BANK, N.A., AS
TRUSTEE FOR THE AGENTS
PENSION PLAN
By /s/ Willett J. Hudson
--------------------------
Its Vice President
<PAGE>
Schedule 7
CERTIFICATE OF ACCEPTANCE
TENANT Video Broadcasting Corp. DBA Medialink
LOCATION 4861 LBJ Freeway, Suite 606, Dallas, TX 75244
This letter is to certify that:
1. The above referenced space has been accepted by the Tenant for possession
2. The subject space is substantially complete in accordance with the plans
and specifications used in constructing the demised premises.
3. The subject space can now be used for intended purposes.
The execution of this certificate shall not relieve the Landlord of its
obligation to expeditiously complete all work in which the Tenant is entitled
under the terms of its lease with the Landlord. Neither this certificate, nor
Tenant's occupancy of the premises, shall be construed to relieve the Landlord
of its responsibility to remedy, correct, replace, reconstruct or repair any
deviation, deficiency or defect in the work or in the materials or equipment
furnished by the Landlord, without cost to Tenant. If a claim with respect
thereto is made by Tenant.
Commencement Date May 31, 1994
Expiration Date May 31, 1999
Executed this 31st day of May, 1994
Video Broadcasting Corp. DBA Medialink
TENANT
By: /s/ Mark Manoff
-------------------------------
Authorized Signature
<PAGE>
Diagram of 4851 LBJ FREEWAY
DALLAS, TEXAS
<PAGE>
Diagram of 4851 LBJ FREEWAY
DALLAS, TEXAS
<PAGE>
THE TIME & LIFE BUILDING
CHICAGO, ILLINOIS
VIDEO BROADCASTING CORPORATION
June 7, 1989
<PAGE>
541 NORTH FAIRBANKS
OFFICE LEASE
TABLE OF CONTENTS
PAGE
----
1. Basic Terms 1
2. Lease of Premises and Term 1
3. Rent 2
4. Base Rent Adjustment 2
5. Service 5
6. Condition of Premises 7
7. Inability to Deliver Possession 7
8. Care and Maintenance 8
9. Alterations 8
10. Access to Premises 9
11. Insurance 10
12. Subrogation 11
13. Untenantability 11
14. Eminent Domain 12
15. Waiver of Claims and Indemnity 12
16. Assignment/Subletting 13
17. Subordination 15
18. Certain Rights Reserved to the Landlord 15
19. Holding Over 16
20. Landlord's Remedies 17
21. Surrender of Possession 18
22. Relocation Of Tenant 19
23. Covenant Against Liens 19
24. Tenant's Payments Upon Execution 19
25. Rules And Regulations 20
26. Miscellaneous 23
27. Quiet Enjoyment 26
28. Agency 26
29. Renewal Option 26
Tenant: Video Broadcasting Corporation,
a Delaware corporation
<PAGE>
541 NORTH FAIRBANKS
OFFICE LEASE
THIS LEASE, made and entered into in Chicago, Illinois as of this 7th day
of June, 1989, by and between TEACHERS' RETIREMENT SYSTEM OF THE STATE OF
ILLINOIS (hereinafter referred to as the "Landlord"), and VIDEO BROADCASTING
CORPORATION, a Delaware corporation doing business as Media Link (hereinafter
referred to as the "Tenant");
WITNESSETH:
1. Basic Terms. This Section 1 contains the basic terms of the Lease
between Landlord and Tenant. All other provisions of this Lease are to be read
in accordance with the provisions herein contained.
A. Agent Bennett & Kahnweiler Asset
Management Company
B. Agent's Address 9700 West Bryn Mawr Avenue
Rosemont, Illinois 60018
C. Building 541 North Fairbanks Court
Chicago, Illinois
D. Commencement Date August 1, 1989
E. Cooperating Broker Sam Spiro & Associates
F. Expense Base $2,999,670.00
G. Monthly Base Rental $2,579.12 (subject to increase
pursuant to Section 3A herein)
H. Security Deposit $2,579.12
I. Tax Base $2,632,750.00
J. Tenant's Proportion .002432 (.2432%)
K. Term Five (5) years
L. Termination Date July 31, 1994
M. Total Base Rent $164,314.78
N. Use General office
2. Lease of Premises and Term. Landlord hereby leases to Tenant, and Tenant
accepts the demised premises (hereinafter known as "demised premises" or
"premises"), being described in the plan attached hereto as Exhibit "A" in the
Building for the Term as set forth in Section 1 hereof, unless sooner terminated
as provided herein, commencing on the Commencement Date set forth in Section 1
hereof and ending on the Termination Date set forth in Section 1 hereof to be
occupied and used by the Tenant for the Use as defined in Section 1 hereof and
no other purpose, subject to the agreements herein contained.
<PAGE>
3. Rent. A. The Tenant shall pay as rent hereunder the Total Base Rent plus
the Rent Adjustment, as hereinafter defined, plus all other sums herein required
to be paid to Landlord, to Agent at the Agent's Address or to such other person
or at such other place as Landlord may from time to time direct in writing.
Tenant shall pay to Landlord the Total Base Rent in equal monthly installments
in the amount of the Monthly Base Rental in advance on or before the first day
of each month of the term. The Monthly Base Rental set forth in Section 1F
hereof represents the Monthly Base Rental for the first year of the Term
commencing on the Commencement Date. The Monthly Base Rental shall increase on
each anniversary of the Commencement Date by an amount equal to three (3%)
percent of the Monthly Base Rental payable for the month prior to said
anniversary. All such rent shall be paid without any set-off or deduction
whatsoever.
Unpaid rent shall bear interest at the rate set forth in Section 26F hereof,
from the date due until paid.
B. Provided Tenant is not in default of any provision of this Lease, Total
Monthly Rent (including Base Rent and Base Rent Adjustments) for the period
commencing August 1, 1989 and ending July 31, 1990 shall be abated.
4. Base Rent Adjustment. In addition to the Total Base Rent, the Tenant
shall pay, as rent, the Rent Adjustment described in this Section 4 without set
off or deduction to the Agent.
A. For the purposes of this Lease:
(i) The term "Calendar Year" shall mean each calendar year or a
portion thereof during the Term.
(ii) The term "Expenses" shall mean and include all expenses paid or
incurred by the Landlord or its beneficiaries for managing, owning,
maintaining, operating, insuring, replacing (but excluding capitalized
expenditures) and repairing the Building, the land under the Building,
appurtenances and personal property used in conjunction therewith
(hereinafter collectively referred to as the "Project") during each
Calendar Year, or portion thereof, during the Term. Expenses shall not
include costs of alterations of the premises of tenants of the Building,
depreciation charges, interest and principal payments on mortgages, ground
rental payments, real estate brokerage and leasing commissions. If the
Building is not fully occupied during all or a portion of any year, then
Landlord may elect to make an appropriate adjustment of the Expenses for
such year employing sound accounting and management principles, to
determine the amount of Expenses that would have been paid or incurred by
the Landlord had the Building been fully occupied and the amount so
determined shall be the amount of Expenses attributable to such year;
provided, however, that any such adjustment to Expenses shall relate to
items of expense which vary with the occupancy of the Building such as, by
way of example and not limited to, cleaning services and utilities. If any
Project expense, though paid in one year, relates to more than one calendar
year, at the option of Landlord, such expenses may be proportionately
allocated among such related calendar years.
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<PAGE>
(iii) The term "Rent Adjustments" shall mean all amounts owed by
Tenant as additional rent as defined in Subparagraph 4B hereof.
(iv) The term "Rent Adjustment Deposit" shall mean an amount equal to
the estimate of Rent Adjustments due for any Calendar Year as made by
Landlord from time to time during the Term. The Rent Adjustment Deposit
shall be payable by Tenant in equal monthly installments in the same manner
as Total Base Rent on the first day of each month of the Term.
(v) The term "Taxes" shall mean real estate taxes, assessments, sewer
rents, rates and charges, transit taxes, taxes based upon the receipt of
rent, and any other federal, state or local governmental charge, general,
special, ordinary or extraordinary (but not including general income or
franchise taxes or any other taxes imposed upon or measured by income or
profits, unless the same shall be imposed in lieu of Taxes as herein
defined or unless same shall be specifically imposed upon income derived
from rents), which may now or hereafter be levied or assessed against the
Project or any portion thereof which are payable in any Calendar Year
during the Term. In case of special taxes or assessments which may be
payable in installments, only the amount of each installment and interest
paid thereon paid during a calendar year shall be included in Taxes for
that year. Taxes shall also include any personal property taxes
(attributable to the year in which paid) imposed upon the furniture,
fixtures, machinery, equipment, apparatus, systems and appurtenances used
in connection with the operation of the Building. In the event the Project
is not assessed as fully improved for any year, then Taxes shall be
adjusted to the Taxes which would have been payable in such Calendar Year
if the assessment had been made on a fully improved basis, based on
Landlord's adjustment of the "Taxes" for such year, employing sound
management principles. Taxes also include the Landlord's reasonable costs
and expenses (including reasonable attorney's fees) in contesting or
attempting to reduce any taxes. Taxes shall be reduced by any recovery or
refund received of taxes previously paid by the Landlord, provided such
refund relates to taxes paid during the term of this Lease. Notwithstanding
anything set forth above to the contrary, if at any time the method of
taxation then prevailing shall be altered so that any new or additional
tax, assessment, levy, imposition or charge or any part thereof shall be
imposed upon Landlord in place or partly in place of any Taxes or
contemplated increase therein, or in addition to Taxes, and shall be
measured by or be based in whole or in part upon the Project, the rents or
other income therefrom or any leases of any part thereof, then all such new
taxes, assessments, levies, impositions or charges or part thereof, to the
extent that they are so measured or based, shall be included in Taxes.
B. The amount of Rent Adjustment shall be calculated as follows:
(i) In the event that the amount of Expenses attributable to any
Calendar Year shall be greater than the Expense Base set forth in Section 1
hereof, then the Tenant shall pay to the Landlord the Tenant's Proportion
of such increase.
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<PAGE>
(ii) In the event that the amount of Taxes attributable to any
Calendar Year shall be greater than the Tax Base set forth in Section 1
hereof, then the Tenant shall pay to the Landlord the Tenant's Proportion
of such increase. The amount of Taxes attributable to a Calendar Year shall
be the amount payable during any such Calendar Year, even though the
assessment for such Taxes may be for a different Calendar Year.
C. Landlord shall provide Tenant with the amount of the Rent Adjustment
Deposit for the Calendar Year in which the Commencement Date occurs on or before
the Commencement Date and Tenant shall thereon pay same to Landlord in equal
monthly installments commencing on the Commencement Date.
D. As soon as reasonably feasible after the expiration of each Calendar
Year, Landlord will furnish Tenant a statement ("Adjustment Statement") showing
the following:
(i) Expenses and Taxes to the Calendar Year last ended;
(ii) The amount of Rent Adjustments due Landlord for the Calendar Year
last ended, less credits for Rent Adjustment Deposits paid, if any; and
(iii) The Rent Adjustment Deposit due in the current Calendar Year.
E. Within thirty (30) days after Tenant's receipt of each Adjustment
Statement, Tenant shall pay to Landlord:
(i) The amount of Rent Adjustment shown on said statement to be due
Landlord for the Calendar Year last ended; plus
(ii) The amount, which when added to the Rent Adjustment Deposit
theretofore paid in the current Calendar Year would provide that Landlord
has then received such portion of the Rent Adjustment Deposit as would have
theretofore been paid to Landlord had Tenant paid one twelfth (1/12) of the
Rent Adjustment Deposit, for the current Calendar Year, to Landlord monthly
on the first day of each month of such Calendar Year.
Commencing on the first day of the first month after Tenant's receipt of each
Adjustment Statement, and on the first day of each month thereafter until Tenant
receives a more current Adjustment Statement, Tenant shall pay to Landlord
one-twelfth (1/12) of the Rent Adjustment Deposit shown on said statement.
During the last complete Calendar Year, Landlord may include in the Rent
Adjustment Deposit its estimate of the Rent Adjustment which may not be finally
determined until after the expiration of the Term. The Tenant's obligation to
pay the Rent Adjustment shall survive the Term.
F. Tenant's payment of the Rent Adjustment Deposit for each Calendar Year
shall be credited against the Rent Adjustments for such Calendar Year. All Rent
Adjustment Deposits may be co-mingled and no interest shall be paid to Tenant
thereon. If the Rent Adjustment Deposit paid by Tenant for any Calendar Year
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<PAGE>
exceeds the Rent Adjustments for such Calendar Year, then Landlord shall give a
credit to Tenant in an amount equal to such excess against the Rent Adjustments
due for the next succeeding Calendar Year, except that if any such excess
relates to the last Calendar Year of the Term, then Landlord shall refund such
excess to Tenant, provided that all of the following have first occurred:
(i) The Term has expired or otherwise been terminated;
(ii) Tenant has vacated the premises and removed all of its property
and improvements therefrom in accordance with this Lease;
(iii) Tenant has surrendered the premises to Landlord in accordance
with this Lease; and
(iv) Tenant has paid all Total Base Rent and Rent Adjustments due
under this Lease and has fully performed and observed each and every
covenant and condition of this Lease required to be performed or observed
by Tenant.
G. The Tenant or its representative shall have the right to examine the
Landlord's books and records with respect to the items in the Adjustment
Statement during normal business hours at any time within ten (10) days
following the furnishing by the Landlord to the Tenant of such Adjustment
Statement. Unless the Tenant shall take written exception to any item within
thirty (30) days after the furnishing of the foregoing statement, such statement
shall be considered as final and accepted by the Tenant. Any amount due to
Landlord as shown on any such statement, whether or not written exception is
taken thereto, shall be paid by the Tenant within thirty (30) days after the
Landlord shall have submitted the statement, without prejudice to any such
written exception.
H. If the Commencement Date is on any day other than the first day of
January, or if the Termination Date is on any day other than the last day of
December, any Rent Adjustments due Landlord shall be prorated.
5. Service.
A. The Landlord shall, so long as Tenant is not in default under any
covenant or condition herein contained, furnish:
(i) Heating and air cooling when necessary to provide a temperature
condition for comfortable occupancy daily, in season, 8:00 A.M. to 9:00
P.M. and on Saturdays 8:00 A.M. to 1:00 P.M., Sunday and holidays excepted.
Wherever heat generating machines or equipment are used by Tenant in the
demised premises, which affect the temperature otherwise maintained by the
air-cooling system, Landlord reserves the right to install supplementary
air-conditioning units in the demised premises and the expense of
furnishing such units and installation thereof shall be paid by Tenant. The
expense resulting from the operation and maintenance of the supplementary
air conditioning system shall be paid by the Tenant to the Landlord as
Additional Rent at rates fixed by Landlord.
-5-
<PAGE>
(ii) Cold water in common with other tenants from City of Chicago
mains for drinking, lavatory and toilet purposes drawn through fixtures
installed by Landlord, or by Tenant with Landlord's prior written consent,
and warm water for lavatory purposes from the regular supply of the
Building. Tenant shall pay Landlord at reasonable rates fixed by Landlord
for water furnished for any other purposes, and Landlord may install a
water meter at Tenant's sole cost to measure such usage. Tenant shall not
waste or permit the waste of water. In the event Tenant shall fail to make
prompt payment to Landlord for water furnished by Landlord, Landlord, upon
ten (10) days' notice, may discontinue furnishing such service and no such
discontinuance shall be deemed an eviction or disturbance of Tenant's use
of the premises or render Landlord liable for damage or relieve Tenant from
any obligation under this Lease.
(iii) Customary janitor service and cleaning in and about the demised
premises Saturdays, Sundays and holidays, excepted. The Tenant shall not
provide any janitor services or cleaning without the Landlord's written
consent and then only subject to supervision of Landlord and at Tenant's
sole responsibility and by janitor or cleaning contractor or employees at
all times satisfactory to Landlord.
(iv) Passenger elevator service in common with Landlord and other
tenants, daily from 8:00 A.M. to 6:00 P.M. (Saturdays 8:00 A.M. to 1:00
P.M.), Sunday and holidays excepted, and daily freight elevator service in
common with Landlord and other tenants at reasonable hours to be determined
by Landlord, Saturdays, Sundays and holidays excepted. Landlord shall
provide limited passenger elevator service daily at all times during which
such normal passenger service is not furnished. Operatorless automatic
elevator service shall be deemed "elevator service" within the meaning of
this paragraph.
B. All electricity, telecommunication, signal and other similar services
used in the premises shall be supplied by the utility company serving the
Building through a separate meter and be paid for by Tenant. Except for
Landlord's gross negligence, Landlord shall not be liable or responsible to
Tenant for any loss or damage or expense which Tenant may sustain or incur if
either the quantity or character of such service is changed or is no longer
available or suitable for Tenant's requirements. If such service be
discontinued, such discontinuance shall not in any way affect this Lease or the
liability of Tenant hereunder or cause a diminution of Base Rent or Rent
Adjustments and the same shall not be deemed to be a lessening or diminution of
services within the meaning of any law, rule or regulation now or hereafter
enacted, promulgated or issued. Tenant shall receive such service directly from
the utility company and Landlord hereby permits its wires and conduits, to the
extent available, suitable and safely capable, to be used for such purposes.
C. The Landlord does not warrant that any of the services above mentioned
will be free from interruption caused by war, insurrection, civil commotion,
riots, acts of God or the enemy, governmental action, repairs, renewals,
improvements, alterations, strikes, lockouts, picketing, whether legal or
illegal,
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<PAGE>
accidents, inability of the Landlord to obtain fuel, energy or supplies or any
other cause or causes beyond the reasonable control of the Landlord. No such
interruption of service shall be deemed an eviction (or a constructive eviction)
or disturbance of Tenant's use and possession of the premises or any part
thereof, or render Landlord liable to Tenant for damages, by abatement of rent
or otherwise, or relieve Tenant from performance of Tenant's obligations under
this Lease unless caused by Landlord's gross negligence. Tenant hereby waives
and releases all claims against Landlord for damages from interruption or
stoppage of service except for claims arising by virtue of the Landlord's gross
negligence. Tenant agrees to cooperate fully with Landlord, at all times, in
abiding by all regulations and requirements which Landlord may prescribe for the
proper functioning and protection of all utilities and services reasonably
necessary for the operation of the Project and the Building.
6. Condition of Premises. Landlord agrees to construct the improvements to
the demised premises described in the Tenant Work Agreement attached hereto as
Exhibit "B" and made a part hereof. The Tenant's taking possession of the
premises shall he deemed to be Tenant's acceptance of the demised premises in
the order and condition as then exists, except for a punch list of items to be
completed or repaired, signed by Landlord and Tenant within twenty (20) days of
such possession. No promise of the Landlord to alter, remodel, decorate, clean
or improve the demised premises or the Building and no representation respecting
the condition of the demised premises or the Building have been made by the
Landlord to the Tenant, unless the same is contained herein.
7. Inability to Deliver Possession. If the Landlord shall be unable to give
possession of the demised premises on the Commencement Date for any reason the
rent reserved and covenanted to be paid herein shall not commence until the
demised premises are available for occupancy by Tenant. No such failure to give
possession on the Commencement Date of the Term hereof shall subject Landlord to
any liability for failure to give possession nor shall same affect the validity
of this Lease or the obligation of the Tenant hereunder, nor shall the same be
construed to extend the Term or Termination Date. At the option of Landlord to
be exercised within thirty (30) days of the delayed delivery of possession to
Tenant, the Lease shall be amended so that the Term shall be extended by the
period of time possession is delayed. If the demised premises are ready for
occupancy prior to the Commencement Date and Tenant occupies the premises prior
to said date, Tenant shall pay proportionate Total Base Rent and Rent
Adjustments. The demised premises shall not be deemed to be unready for Tenant's
occupancy or incomplete if only minor or insubstantial details of construction,
decoration or mechanical adjustments remain to be done in the demised premises
or any part thereof, or if the delay in the availability of the demised 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 demised 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 shall be otherwise caused
in whole or in part by delay and/or default on the part of Tenant. In the event
of any dispute as to whether the premises are ready for Tenant's occupancy, the
decision of Landlord's architect shall be final and binding
-7-
<PAGE>
on the Landlord and Tenant. Notwithstanding anything to the contrary contained
herein, Tenant may terminate this Lease if the demised premises are not
available for occupancy by October 31, 1989.
8. Care and Maintenance. Subject to the provisions of Sections 13 and 14
hereof, the Tenant shall, at the Tenant's own expense, keep the demised premises
in good order, condition and repair and shall pay for the repair of any damages
caused by Tenant, its agents, employees or invitees. Tenant shall promptly
arrange with Landlord, at Tenant's sole expense, for the repair of all damage to
the premises and the replacement or repair of all damaged or broken glass
(including signs thereon), fixtures and appurtenances (including hardware,
heating, cooling, ventilating, electrical, plumbing and other mechanical
facilities in the premises), with materials equal in quality and class to the
original materials damaged or broken, within any reasonable period of time
specified by Landlord, all repairs and replacements to be made under the
supervision and with the prior written approval of Landlord, using contractors
or persons acceptable to Landlord. If Tenant does not promptly make such
arrangements, Landlord may, but need not, make such repairs and replacements and
one hundred twenty-one (121%) percent of Landlord's cost for such repairs and
replacements shall be deemed Additional Rent reserved under this Lease
due and payable forthwith. The Tenant shall pay the Landlord or the managing
agent of the Building, as Landlord may direct, a fee for supervision and
coordination of all work performed by Tenant as well as all costs for overtime
and for any other expense incurred in the event repairs, alterations, decorating
or other work in the demised premises are not made during ordinary business
hours at the Tenant's request.
9. Alterations. The Tenant shall not do any painting or decorating, or
erect any partitions, make any alterations in or additions to the demised
premises or do any nailing, boring or screwing into the ceilings, walls or
floors, without the Landlord's prior written consent in each and every instance.
Unless otherwise agreed by Landlord and Tenant in writing, all such work shall
be performed either by or under the direction of Landlord, but at the sole cost
of Tenant. The Landlord's decision to refuse such consent shall be conclusive.
If the Landlord consents to such alterations or additions, before commencement
of the work or delivery of any materials into the demised premises or into the
Building, the Tenant shall furnish the Landlord for approval: (A) Plans and
specifications; (B) Names and addresses of contractors; (C) Copies of contracts;
(D) Necessary permits; and (E) Indemnification and insurance in form and amount
satisfactory to Landlord from all contractors performing labor or furnishing
materials, insuring against any and all claims, costs, damages, liabilities and
expenses which may arise in connection with the alterations or additions.
Landlord may withhold approval of any alteration or additions if the plans
and specifications therefor are not reasonably acceptable to the Landlord or
Landlord's architect or engineer (if any). In connection with any request for
approval of any alterations or additions by Tenant, Landlord my retain the
services of an outside architect and/or engineer and the reasonable fees of such
architect and/or engineer to Landlord shall be reimbursed to Landlord by Tenant.
Landlord's approval of any plans or specifications shall not be construed to be
an agreement
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<PAGE>
or representation on Landlord's part as to the adequacy or suitability of the
Tenant's alterations or additions.
In the event Landlord permits the alterations or additions to be completed
by Tenant's contractor, Landlord reserves the right to require that Tenant shall
terminate its contract with any such contractor in the event said contractor
shall be engaged in a labor dispute which disrupts said contractor's work.
Landlord shall also have the right to order any contractor of Tenant who
violates any of Landlord's requirements or standards of work to cease work and
to remove himself, his equipment and his employees from the Building. Landlord
or the managing agent of the Building shall be entitled to charge a fee for
supervision and coordination of all such alterations. Tenant agrees that its
contractors shall not conduct their work in such a manner so as to interfere
with or cause any interruption of either: (A) Landlord's construction; (B)
Another tenant's occupancy or construction; or (C) Other phases of Landlord's
operation of the Building.
Whether the Tenant furnishes the Landlord the foregoing or not, the Tenant
hereby agrees to indemnify and hold the Landlord, its beneficiaries, partners
and their respective agents and employees harmless from any and all liabilities
of every kind and description which may arise out of or be connected in any way
with said alterations or additions. Any mechanic's lien filed against the
demised premises, or the Real Property, for work claimed to have been furnished
to the Tenant shall be discharged of record by the Tenant within ten (10) days
thereafter, at the Tenant's expense. Upon completing any alterations or
additions, the Tenant shall furnish the Landlord with contractors' affidavits
and full and final waivers of lien and receipted bills covering all labor and
materials expended and used. All alterations and additions shall comply with all
insurance requirements and with all ordinances and regulations of any pertinent
governmental authority. All alterations and additions shall be constructed in a
good and workmanlike manner and only good grades of materials shall be used.
All additions, decorations, fixtures, hardware, non-trade fixtures and all
improvements, temporary or permanent, in or upon the demised premises, whether
placed there by the Tenant or by the Landlord, shall, unless the Landlord
requests their removal, become the Landlord's property and shall remain upon the
demised premises at the termination of this Lease, by lapse of time or
otherwise, without compensation or allowance or credit to the Tenant. Landlord
may, at its sole option, request Tenant, at Tenant's sole cost, to remove same
and if, upon the Landlord's request, the Tenant does not remove said additions,
decorations, fixtures, hardware, non-trade fixtures and improvements, the
Landlord may remove the same, and the Tenant shall pay the cost of such removal
to the Landlord upon demand.
10. Access to Premises. The Tenant shall permit the Landlord, its agents
and designees, to erect, use and maintain pipes, ducts, wiring and conduits in
and through the demised premises and to have free access to the premises and any
part thereof in the event of an emergency. Upon prior written notice (except in
emergency circumstances) the Landlord or Landlord's agents shall have the right
to enter upon the premises, to inspect the same, to perform janitorial and
cleaning
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<PAGE>
services and to make such decorations, repairs, alterations, improvements or
additions to the premises or the Project as the Landlord may deem necessary or
desirable, and the Landlord shall be allowed to take all material into and upon
said demised premises that may be required thereof without the same constituting
an eviction of the Tenant in whole or in part, and the rent reserved shall in no
way abate (except as provided in Paragraphs 13 or 14 hereof) while said
decorations, repairs, alterations, improvements, or additions are being made, by
reason of loss or interruption of business of the Tenant, or otherwise. If the
Tenant shall not be personally present to open and permit an entry into said
demised premises, at any time, when for any reason an entry therein shall be
necessary or permissible, the Landlord or Landlord's agents may enter the same
by a master key, or may forcibly enter the same, without rending the 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 the Landlord any
obligations, responsibility or liability whatsoever, for the care, supervision
or repair of the Building or any part thereof, in the exercise of any rights
herein provided. The Landlord shall also have the right at any time without the
same constituting an actual or constructive eviction and without incurring any
liability to the 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. The Landlord shall not be liable to
the 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.
11. Insurance. Tenant shall carry insurance during the entire Term hereof
insuring Tenant, and insuring, as additional named insureds, Landlord, any
beneficiary of Landlord, the managing agent for the Project and their respective
agents, partners and employees, as their interests may appear, with terms,
coverages and in companies satisfactory to Landlord, and with such increases in
limits as Landlord may from time to time request, but initially Tenant shall
maintain the following coverages in the following amounts:
A. Comprehensive public liability insurance, including the broad or
extended liability endorsement, during the entire term hereof with terms and in
companies satisfactory to Landlord to afford protection to the limits of not
less then $2,000,000 for combined single limit personal injury and property
damage liability per occurrence.
B. Insurance against fire, sprinkler leakage, vandalism, and the extended
coverage perils for the full insurable value of all additions, improvements and
alterations to the premises, and of all office furniture, trade fixtures, office
equipment, merchandise and all other items of Tenant's property on the premises
and business interruption insurance.
C. Tenant shall, prior to the commencement of the Term, and during the
Term, thirty (30) days prior to the expiration of the policies of insurance,
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furnish to Landlord certificates evidencing such coverage, which certificates
shall state that such insurance coverage may not be changed or cancelled without
at least thirty (30) days' prior written notice to Landlord and Tenant.
12. Subrogation. Landlord and Tenant agree to have all fire and extended
coverage and material damage insurance which may be carried by either of them
endorsed with a clause providing that any release from liability of or waiver of
claim for recovery from the other party or any of the parties named in Paragraph
11 above entered into in writing by the insured thereunder prior to any loss or
damage shall not affect the validity of said policy or the right of the insured
to recover thereunder, and providing further that the insurer waives all rights
of subrogation which such insurer might have against the other party or any of
the parties named in Paragraph 11 above. Without limiting any release or waiver
of liability or recovery contained in any other Section of this Lease but rather
in confirmation and furtherance thereof, Landlord and any beneficiaries of
Landlord waive all claims for recovery from Tenant, and Tenant waives all claims
for recovery from Landlord, any beneficiaries of Landlord and the managing agent
for the Project and their respective agents, partners and employees, for any
loss or damage to any of its property insured under valid and collectible
insurance policies to the extent of any recovery collectible under such
insurance policies.
Notwithstanding the foregoing or anything contained in this Lease to the
contrary, any release or any waiver of claims shall not be operative, nor shall
the foregoing endorsements be required, in any case where the effect of such
release or waiver is to invalidate insurance coverage or invalidate the right of
the insured to recover thereunder or increase the cost thereof (provided that in
the case of increased cost the other party shall have the right, within ten (10)
days following written notice, to pay such increased cost, thereby keeping such
release or waiver in full force and effect).
13. Untenantability. If in excess of thirty (30%) percent of the demised
premises or in excess of thirty (30%) percent of the Building are made
untenantable by fire or other casualty, and Landlord determines in its
reasonable judgment that the demised premises cannot be restored within one
hundred eighty (180) days of such casualty, then Landlord or Tenant may elect to
terminate this Lease as of the date of the fire or casualty by notice to the
other within sixty (60) days after that date. In the event of the termination of
this Lease pursuant to this section, rent shall be apportioned on a per diem
basis and paid to the date of the fire or other casualty.
In the event the Lease is not terminated pursuant to these provisions, then
landlord shall repair, restore or rehabilitate the Building and the demised
premises at Landlord's expense. Rent shall abate only with respect to the
portion of the demised premises rendered untenantable on a per diem basis during
the period of untenantability.
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14. Eminent Domain.
A. If a portion of the Building, or the demised premises, shall be lawfully
taken or condemned for any public or quasi-public use or purpose, or conveyed
under threat of such condemnation, and as a result thereof, the premises cannot
be used for the same purpose and with the same utility as before such taking or
conveyance, the terms of this Lease shall end upon, and not before, the date of
the taking of possession by the condemning authority, and without apportionment
of the award. Tenant hereby assigns to the Landlord, Tenant's interest in such
award, if any. Current rent shall be apportioned as of the date of such
termination. If any part of the Building shall be so taken or condemned, or if
the grade of any street or alley adjacent to the Building is changed by any
competent authority and such taking or change of grade makes it necessary or
desirable to demolish, substantially remodel, or restore the Building, the
Landlord shall have the right to cancel this Lease upon not less than ninety
(90) days' prior notice to the date of cancellation designed in the notice.
B. If a portion of the premises shall be lawfully taken or condemned or
conveyed under threat of condemnation but thereafter the premises can be used by
Tenant for the same purpose and with substantially the same utility, this Lease
shall not be terminated by Landlord and Landlord shall repair the premises, and
the Lease shall be amended to reduce the Tenant's Proportion and Base Rent in
the proportion of the amount taken. No money or other consideration shall be
payable by the Landlord to the Tenant for any right of cancellation or temporary
taking, and the Tenant shall have no right to share in any condemnation award or
in any judgment for damages caused by a change of grade.
15. Waiver of Claims and Indemnity. To the extent permitted by law, the
Tenant releases the Landlord, its beneficiaries, and their respective agents,
employees, mortgagees and partners (all of said parties are, for the purposes of
this Paragraph 15 collectively referred to as "indemnitees") from, and waives
all claims for, damage to person or property sustained by the Tenant or any
occupant of the Building or premises resulting from the Building or premises or
any part of either or any equipment or 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 the indemnitees. This Section 15 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 other tenants, occupants or servants
in the Building or of any other person, and whether such damage be caused or
result form any thing or circumstance above mentioned or referred to, or any
other thing or circumstance whether of a like nature or of a wholly different
nature, except if caused by Landlord's gross negligence or willful misconduct.
If any such damage, whether to the demised premises or to the Building or any
part thereof, or whether to the Landlord or to other tenants in the Building,
results from any act or neglect of the Tenant, its
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employees, agents, invitees and customers, the Tenant shall be liable therefor
and the Landlord may, at the Landlord's option, repair such damage and the
Tenant shall, upon demand by the Landlord, reimburse the Landlord forthwith for
the total cost of such repairs. The Tenant shall not be liable for any damage
caused by its act or neglect if the 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 the Tenant. All property belonging to the Tenant or
any occupant of the premises that is in the Building or the premises shall be
there at the risk of the Tenant or other person only, and the Landlord shall not
be liable for damage thereto or theft or misappropriation thereof.
To the extent permitted by law, Tenant agrees to indemnify and save the
indemnitees harmless against any and all claims, demands, costs and expenses,
including reasonable attorney's fees for the defense thereof, arising from
Tenant's occupation of the demised premises or from any breach or default on the
part of the 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 act
or negligence of Tenant, its agents, servants, employees or invitees, in or
about the demised premises. In case of any action or proceeding brought against
any indemnitees by reason of any such claim, upon notice from Landlord, Tenant
covenants to defend such action or proceeding by counsel reasonably satisfactory
to Landlord.
16. Assignment/Subletting.
A. Tenant shall not, without Landlord's prior written consent, which will
not be unreasonably withheld: (i) assign, transfer, hypothecate, mortgage,
encumber, or convey or subject to or permit to exist upon or be subjected to any
lien or charge this Lease or any interest under it; (ii) allow any transfer of,
or any lien upon, Tenant's interest in this Lease by operation of law; (iii)
sublet the demised premises in whole or in part; or (iv) allow the use or
occupancy of any portion of the premises for a use other than the Use or by
anyone other than Tenant or Tenant's employees.
Notwithstanding the foregoing, should any law governing Landlord's consent
to a sublease or assignment require Landlord to exercise reason in the
consideration of the granting or denying of consent, Landlord may take into
consideration the business reputation and credit worthiness of the proposed
subtenant or assignee; any alteration of the premises; 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. Provided further, however, that if Landlord does not
consent to a sublease or assignment to any subtenant or assignee which is a
governmental agency, which is a present tenant in the Building or with whom
Landlord or its agents has discussed tenancy within the Building, same shall not
be deemed to be unreasonable.
B. If Tenant shall, with Landlord's prior consent as herein required,
sublet the demised premises: (i) an amount equal to rental in excess of the Base
Rent and any Additional Rent herein provided to be paid shall be for benefit of
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Landlord and shall be paid to Landlord promptly when due under any such
subletting as Additional Rent; and (ii) Landlord shall be entitled to a fee not
greater than an amount equal to six (6) months Base Rental as consideration for
any such consent.
C. If Tenant is an entity whose ownership is not publicly held, and if
during the Term, the ownership of the control of Tenant changes, Tenant shall
notify Landlord of such change within five (5) days thereof, and Landlord, at
its option, may at any time thereafter terminate this Lease by giving Tenant
written notice of said termination at least sixty (60) days prior to the date of
termination stated in the notice. The term "control" as used herein means the
power to directly or indirectly direct or cause the direction of the management
or policies of the Tenant. A change or series of changes in ownership of stock
which would result in direct or indirect change in ownership by the stockholders
or an affiliated group or stockholders of less than fifty (50%) percent of the
outstanding stock shall not be considered a change of control.
D. Tenant shall, by notice in writing, advise Landlord of its intention
from, on and after a stated date (which shall not be less than sixty (60) days
after the date of the giving of Tenant's notice to Landlord) to assign this
Lease or sublet any part or all of the demised premises for the balance or any
part of the Term, and, in such event, Landlord shall have the right, to be
exercised by giving written notice to Tenant within thirty (30) days after
receipt of Tenant's notice, to terminate this Lease with respect to the space
described in Tenant's notice as of the date stated in Tenant's notice for the
commencement of the proposed assignment or sublease. Tenant's notice shall
include the name and address of the proposed assignee or subtenant, a true and
complete copy of the proposed assignment or sublease and sufficient information
as Landlord deems necessary to permit Landlord to determine the financial
responsibility and character of the proposed assignee or subtenant. If Tenant's
notice covers all of the demised premises and if Landlord exercises its right to
terminate this Lease as to such space, then the Term of this Lease shall expire
and end on the date stated in Tenant's notice for the commencement of the
proposed assignment or sublease as fully and completely as if that date had been
the Expiration Date. If, however, Tenant's notice covers less than all of the
demised premises, and if Landlord exercises its right to terminate this Lease
with respect to such space described in Tenant's notice, then as of the dated
stated in Tenant's notice for the commencement of the proposed sublease, the
Base Rent and the Tenant's Proportionate Share as defined herein shall be
adjusted on the basis of the number of rentable square feet retained by Tenant,
and this Lease as so amended, shall continue thereafter in full force and
effect.
E. Landlord's consent to any assignment or subletting shall not release
Tenant of liability under this Lease or permit any subsequent prohibited act,
unless specifically provided in such written consent. Tenant agrees to pay to
Landlord, on demand, all reasonable costs incurred by Landlord in connection
with any request by Tenant of Landlord in connection with any consent to any
assignment or subletting by Tenant.
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17. Subordination. Landlord may execute and deliver a mortgage or trust
deed in the nature of a mortgage (both sometimes hereinafter referred to as
"Mortgage") against the Building, the Project or any interest therein, including
a ground lease thereof ("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
or the Building, or both, now or hereafter existing and all amendments, renewals
and modifications thereto and extensions thereof, and to the lien of any
Mortgage now or thereafter encumbering any portion of the Project, and to all
advances made or hereafter to be made upon the security thereof provided that
any such subordination at all times shall be subject to the right of Tenant to
remain in possession of the demised premises under the terms of this Lease for
the Term, notwithstanding any default under the Ground Lease or Mortgage or
after termination of said Ground Lease or foreclosure of the Mortgage or any
sale pursuant thereto so long as the Tenant is not in default under this Lease.
Tenant agrees to execute and deliver such ground lease instruments subordinating
this Lease to any such ground lease and to the lien of any such Mortgage as may
be requested in writing by Landlord from time to time. Notwithstanding anything
to the contrary contained herein, any mortgagee under a Mortgage may, by notice
in writing to the Tenant, subordinate its Mortgage to this Lease.
In the event of the cancellation or termination of any such ground lease
described 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.
Tenant agrees to give the holder of any Mortgage, by registered or
certified mail, a copy of any notice of default served upon the 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 containing a request therefor.
18. Certain Rights Reserved to the Landlord. The Landlord reserves and may
exercise the following rights without affecting Tenant's obligations hereunder:
A. To change the name or street address of the Building;
B. To install and maintain a sign or signs on the interior or exterior of
the Building;
C. To have access for the Landlord and the other tenant of the Building to
any mail chutes located on the demised premises according to the rules of the
United States Postal service;
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D. To designate all sources furnishing sign painting and lettering, ice,
drinking water, towels, food, beverages, vending machines and toilet supplies,
lamps and bulbs used on the demised premises;
E. To decorate, remodel, repair, alter or otherwise prepare the demised
premises for reoccupancy if Tenant vacates the demised premises prior the
expiration of the Term;
F. To retain at all times pass keys to the demised premises;
G. To grant to anyone the exclusive right to conduct any particular
business or undertaking in the Building; provided, however, such grant does not
prohibit Tenant from pursuing the use of the demised premises granted hereunder;
H. To exhibit the demised premises to others during the last six months of
the Term;
I. To close the Building after regular working hours and on the holidays;
subject, however, to Tenant's rights to admittance, 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 identify themselves to a watchman by registration or otherwise and that
said persons establish their right to enter or leave the Building; provided,
however, Landlord shall not be liable for the failure to admit any person to the
Building;
J. To approve the weight, size and location of safes or other heavy
equipment or articles, which articles may be moved in, about, or out of the
Building or premises only at such times and in such manner as Landlord shall
direct and in all events, however, at Tenant's sole risk and responsibility;
K. To take any and all measures, including inspections, repairs,
alterations, decorations, additions and improvements to the premises or to the
Building and to close or temporarily suspend, as may be necessary or desirable
for the safety, protection or preservation of the premises or the Building or
the Landlord's interests or the interest of other tenants, or as may be
necessary or desirable in the operation of the Building.
The Landlord may enter upon the demised premises and may exercise any or
all of the foregoing rights reserved without being deemed guilty of an eviction
or disturbance of the Tenant's use or possession and without being liable in any
manner to the Tenant and without abatement of rent or affecting any of the
Tenant's obligations hereunder.
19. Holding Over. If the Tenant retains possession of the demised premises
or any part thereof after the termination of the Term or any extension thereof,
by lapse of time and otherwise, the Tenant shall pay the Landlord Monthly Base
Rent, at double the rate payable for the month immediately preceding said
holding over (including increases for Rent Adjustment which Landlord may
reasonably
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estimate), computed on a per-month basis, for each month or part thereof
(without reduction for any such partial month) that the Tenant thus remains in
possession, and in addition thereto, Tenant shall pay the Landlord all damages,
consequential as well as direct, sustained by reason of the Tenant's retention
of possession. Alternatively, at the election of Landlord expressed in a written
notice to the Tenant and not otherwise, such retention of possession shall
constitute a renewal of this Lease for one (1) year at the same terms and
conditions herein set forth except that the Monthly Base Rent during said one
(1) year period shall be equal to one hundred sixty (160%) percent of the
Monthly Base Rent for the month immediately preceding said holding over. The
provisions of this paragraph do not exclude the Landlord's rights of re-entry or
any other right hereunder. Any such extension or renewal shall be subject to all
other terms and conditions herein contained.
20. Landlord's Remedies.
A. Each of the following shall constitute a breach of this Lease by Tenant:
(i) Tenant fails to pay any installment or other payment of rent including
without limitation Total Base Rent, Rent Adjustment Deposits or Rent Adjustments
when due; (ii) Tenant fails to observe or perform any of the other covenants,
conditions or provisions of this Lease or under the Workletter to be observed or
performed by Tenant and fails to cure such default within fifteen (15) days
after written notice thereof to Tenant; (iii) the interest of Tenant in this
Lease is levied upon under execution or other legal process; (iv) 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 therefor, or to delay payment of, reduce
or modify Tenant's debts, or upon the dissolution of Tenant; (v) 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 (vi) Tenant abandons the premises.
B. 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:
(i) 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, all rent payable hereunder for
the balance and of the Term, all Landlord's expenses of reletting
(including repairs, alterations, improvements, additions, decorations,
legal fees and brokerage commissions); or
(ii) 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
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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 each such monthly period, or if the premises have been
relet, Tenant shall pay any 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 Section 20, 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 Section 21 hereof; provided,
such action 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 Term
or from any other obligation of Tenant under this Lease. Any and all property
which may be removed from the premises by the Landlord pursuant to the authority
of the Lease or of law, to which the Tenant is or may be entitled, may be
handled, removed or stored by the Landlord at the rising, cost and expense of
the Tenant, and the Landlord shall in no event be responsible for the value,
preservation or safekeeping thereof. The Tenant shall pay to the 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 the Landlord's possession
or under the Landlord's control. Any such property of the Tenant not retaken
from storage by the Tenant within thirty (30) days after the end of the Term,
however terminated, shall be conclusively presumed to have been conveyed by the
Tenant to the Landlord under this Lease as a bill of sale without further
payment or credit by the Landlord to the Tenant. Tenant hereby grants to
Landlord a first lien upon the interest of Tenant under this Lease to secure the
payment of monies due under this Lease, which lien may be enforced in equity.
Any default by Tenant of any term or condition hereof other than the payment of
sums due hereunder may be restrained or enforced by injunction.
C. Tenant shall pay upon demand, all costs and expenses, including
reasonable attorney's 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.
D. If the term of any lease, other than this Lease, made by the Tenant for
any demised premises in the Building shall be terminated or terminable after the
making of this Lease because of any default by the Tenant under such other
lease, such fact shall empower the Landlord, at the Landlord's sole opinion, to
terminate this Lease by notice to the Tenant.
21. Surrender of Possession. Upon the expiration or other termination of
the Term, Tenant shall quit and surrender to Landlord the premises, broom clean,
in good order and condition, ordinary wear excepted, surrender all keys to the
premises to Landlord, and Tenant shall remove all of its property except as
otherwise specifically provided herein.
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If the Tenant does not remove its property of every kind and description
from the demised premises prior to the end of the Term, however ended, at
Landlord's option, the Tenant shall be conclusively presumed to have conveyed
the same to the Landlord under this Lease as a bill of sale without further
payment or credit by the Landlord to the Tenant and the Landlord may remove the
same and the Tenant shall pay the cost of such removal to the Landlord upon
demand. Tenant's obligation to observe or perform this covenant shall survive
the expiration or other termination of the term of this Lease.
22. Relocation Of Tenant. Landlord shall have the right, upon thirty (30)
days written notice, to relocate Tenant to another location in the Building at
no cost or expense to Tenant and upon the condition that the new premises
designated by Landlord shall be substantially similar to the demised premises
with respect to area and configuration in the Building and shall not be smaller
in area than the demised premises. Landlord's right to relocate Tenant may be
exercised once during the Term hereof.
23. Covenant Against Liens. Tenant has no authority or power to cause or
permit any lien or encumbrance of any kind whatsoever, whether created by act of
Tenant, operation of law or otherwise, to attach to or be placed upon Landlord's
title or interest in the Building, the Project or premises, and any liens and
encumbrances created by Tenant shall attach to Tenant's interest only. Tenant
covenants and agrees not to suffer or permit any lien of mechanics or
materialmen or others to be placed against the Land, Building or the premises
with respect to work or services claimed to have been performed for or materials
claimed to have been furnished to Tenant or the premises, and in case of any
such lien attaching, Tenant covenants and agrees immediately to cause it to be
released and removed of record.
24. Tenant's Payments Upon Execution.
A. As additional security for the faithful and prompt performance of its
obligation hereunder, Tenant has concurrently with the execution of this Lease
paid to Agent the Security Deposit described in Section 1 hereof. Said Security
Deposit need not be segregated and may be applied by Landlord for the purpose of
curing any default or defaults of Tenant hereunder, in which event Tenant shall
replenish said deposit in full by promptly paying to Landlord on demand the
amount so applied. Landlord shall not pay any interest on said deposit, except
as may be required by law. If Tenant has not defaulted hereunder and Landlord
has not applied said deposit to cure a default, or Landlord has applied said
deposit to cure a default and Tenant has replenished the same, then said
deposit, or such remaining portion thereof, shall be paid to Tenant after the
termination of this Lease. Said deposit shall not be deemed an advance payment
of rent or measure of Landlord's damages for any default hereunder by Tenant.
B. Upon sale or transfer of the Building by Landlord and the concurrent
assignment of this Lease to a successor Landlord, Landlord shall be relieved of
any responsibility to Tenant to refund the Security Deposit provided said
deposit is
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transferred or assigned to the successor Landlord. Any such successor Landlord
shall thereafter be liable to Tenant for the obligations of Landlord hereunder.
C. Notwithstanding anything to the contrary herein set forth, the Monthly
Base Rent payable for the first month of the Term shall be due and paid to
Landlord concurrently upon the execution thereof by Tenant.
25. Rules And Regulations. The Tenant shall occupy and use the demised
premises during the Term for the purpose above specified and none other and
shall comply with the following provisions:
A. The Tenant will not make or permit to be made any use of the demised
premises which, directly or indirectly is forbidden by public law, ordinance, or
governmental regulation or which may be dangerous to persons or property, or
which may invalidate or increase the premium cost of any policy of insurance
carried on the Building or covering its operations; the Tenant shall not do, or
permit to be done, any act or thing upon the demised premises which will be in
conflict with fire insurance policies covering the Building. The Tenant, at its
sole expense shall comply with all rules, regulations or requirements of the
local inspection and Rating Bureau, or any other similar body, and shall not do
or permit anything to be done upon said premises or bring or keep anything
thereon in violation of rules, regulations, or requirements of the Fire
Department, local inspection and Rating Bureau, Fire Insurance Rating
Organization or other authority having jurisdiction and then only in such
quantity and manner of storage as not to increase the rate of fire insurance
applicable to the Building;
B. Any sign installed in the demised premises or anywhere within the
Building shall be installed by Landlord at Tenant's cost and in such manner,
character and style as Landlord may approve in writing;
C. The Tenant shall not advertise the business, profession or activities of
the Tenant conducted in the Building in any manner which violates the letter or
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business, profession or activities, and shall
not use the name of the Building for any purpose other than that of business
address of the Tenant, and shall never use any picture or likeness of the
Building in any circulars, notices, advertisements or correspondence without the
Landlord's express consent in writing;
D. The Tenant shall not obstruct, or use for storage, or for any purpose
other than ingress and egress, the sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways of the Building;
E. No bicycle or other vehicle and no dog, other than a seeing eye dog, or
other animal shall be brought or permitted to be in the Building or any part
thereof;
F. The Tenant shall not make or permit any noise or odor that is
objectionable to other occupants of the Building to emanate from the demised
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premises, and shall not create or maintain a nuisance thereon, and shall not
disturb, solicit or canvass any occupant of the Building, and shall not do any
act tending to injure the reputation of the Building;
G. The Tenant shall not install any musical instrument or equipment in the
Building or any antennas, aerial wires or other equipment inside or outside the
Building, without, in each and every instance, prior approval in writing by the
Landlord. The use thereof, if permitted, shall be subject to control by the
Landlord to the end that others shall not be disturbed or annoyed;
H. The Tenant shall not waste water by tying, wedging or otherwise
fastening open, any faucet;
I. No additional locks or similar devices shall be attached to any door or
window. No keys for any door or window other than those provided by the Landlord
shall be made. If more than two keys for one lock are desired by the Tenant, the
Landlord may provide the same upon payment by the Tenant. Upon termination of
this Lease or of the Tenant's possession, the Tenant shall surrender all keys of
the demised premises and shall make known to the Landlord the explanation of all
combination locks on safes, cabinets, and vaults;
J. The Tenant shall be responsible for protecting the demised premises and
all property located therein and for the safety of all persons therein;
K. If the Tenant desires telegraphic, telephonic, burglar alarm or signal
service, the Landlord will, upon request, direct where and how connections and
all wiring for such service shall be introduced and run. Without such
directions, no boring, cutting or installation of wires or cables is permitted;
L. Shades, draperies or other forms of inside window covering must be of
such shape, color and material as approved by the Landlord;
M. Tenant shall pay, as a late charge in the event any installment of Total
Base Rental, Rent Adjustments, Rent Adjustment Deposits and any other charge
owed by Tenant hereunder is not paid when due, the greater of $100.00 or an
amount equal to five (5%) percent of the amount due for each and every thirty
(30) day period that said amount remains unpaid (but in no event shall the
amount of such late charge exceed an amount based upon the highest legally
permissible rate chargeable at any time by Landlord under the circumstances).
Should Tenant make a partial payment of past due amounts, the amount of such
partial payment shall be applied first to reduce all accrued and unpaid late
charges, in inverse order of their maturity, and then to reduce all other past
due amounts, in inverse order of their maturity;
N. The Tenant shall not overload any floor. Safes, furniture and all large
articles shall be brought through the Building and into the demised premises at
such times and in such manner as the Landlord shall direct and at the Tenant's
sole risk and responsibility. The Tenant shall list all furniture, equipment and
similar articles to be removed from the Building, and the list must be approved
at
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<PAGE>
the Office of the Building or by a designated person before building employees
will permit any article to be removed;
O. Unless the Landlord gives advance written consent in each and every
instance, the Tenant shall not install or operate any steam or internal
combustion engine, boiler, machinery, refrigerating or heating device or
air-conditioning apparatus in or about the demised premises, or carry on any
mechanical business therein, or use the demised premises for housing
accommodations or lodging or sleeping purposes, or do any cooking therein or
install or permit the installation of any vending machines, or use any
illumination other than electric light, or use or permit to be brought into the
Building any inflammable oils or fluids such as gasoline, kerosene, naphtha and
benzene, or any explosive or other articles hazardous to persons or property;
P. The Tenant shall not place or allow anything to be against or near the
glass of partitions, doors or windows of the demised premises which may diminish
the light in, or be unsightly from the exterior of the Building, public halls or
corridors;
Q. The Tenant shall not install in the demised premises any equipment which
uses a substantial amount of electricity without the advance written consent of
the Landlord. The Tenant shall ascertain from the Landlord the maximum amount of
electric current which can safely be used in the demised premises, taking into
account the capability of the electric wiring in the Building and the demised
premises and the needs of other tenants in the Building and shall not use more
than such safe capacity. The Landlord's consent to the installation of electric
equipment shall not relieve the Tenant from the obligation not to use more
electricity than such safe capacity;
R. The Tenant may not install carpet padding or carpet by means of a
mastic, glue or cement without Landlord's prior written consent. Such
installation shall be by tackless strip or double-faced tape only;
S. Tenant shall not, without Landlord's prior written consent in each
instance, do any cooking, baking, heating, preparation, serving or selling of
any food or beverages in the premises, or permit the same to occur, except for
coffee service and microwave ovens to service Tenant;
T. If Tenant breaches any covenant or condition of this Section 25, then in
addition to all other liabilities, rights and remedies for breach of any
covenant of this Section 25, the Tenant shall pay to the Landlord all damages
caused by such breach and shall also pay to the Landlord as Additional Rent an
amount equal to any increase in insurance premium or premiums caused by such
breach. The Landlord shall have the right to make and Tenant shall observe, such
reasonable rules and regulations as the Landlord or its agent may from time to
time adopt on such reasonable notice to be given as the Landlord may elect.
Nothing in this lease shall be construed to impose upon the Landlord any duty or
obligation to enforce provisions of this Section 25 or any rules and regulations
hereafter adopted, or the terms, covenants or conditions of any other lease as
against any
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other Tenant, and the Landlord shall not be liable to the Tenant for violation
of the same by any other tenant, its servants, employees, agents, visitors or
licensees.
26. Miscellaneous.
A. 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 a payment 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 the
Landlord from the Tenant after the termination of this Lease or after the
service of any notice or after the commencement of any suit, or after final
judgment for possession of the demised premises shall reinstate, continue or
extend the term of this Lease or affect any such notice, demand or suit.
B. No waiver of any default of the Tenant hereunder shall be implied from
any omission by the Landlord to take any action on account of such default and
if such default be repeated, no express waiver shall affect any default other
than the default specified in the express waiver and that only for the time and
to the extent therein stated. Receipt of rent by Landlord, with knowledge of any
breach of this Lease by Tenant or of any default by Tenant in the observance or
performance of any of the conditions or covenants of this Lease, shall not be
deemed to be a waiver of any provision of this Lease.
C. The words "Landlord" and "Tenant" wherever used in the Lease shall be
construed to mean plural where necessary, and the necessary grammatical changes
required to make the provisions hereof apply either to corporations or
individuals, men or women, shall in all cases be assumed as though in each case
fully expressed. The term "Tenant" shall include the Tenant's agents, employees,
contractors, officers, invitees, successors and others using the demised
premises with the expressed or implied permission of Tenant.
D. Each provision hereof shall extend to and shall, as the case may
require, bind and inure to the benefit of the Landlord and the Tenant and their
respective heirs, legal representatives, successors and assigns in the event
this Lease has been assigned with the express written consent of the Landlord;
provided, however, this provision shall not be construed to permit any
assignment or subletting by tenant.
E. The execution of this Lease by Tenant and delivery of same to Landlord
or the Landlord's Agent 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 the Landlord's Agent shall constitute an irrevocable offer by Tenant
to lease the premises on the terms and conditions herein contained, which offer
may not be
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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 governing person or body
authorizing 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 so do.
F. All amounts (unless otherwise provided herein, and other than the Total
Base Rent and Rent Adjustment, which shall be due as hereinbefore provided) owed
by the Tenant to the Landlord hereunder shall be deemed additional rent and be
paid within ten (10) days from the date the Landlord renders statements of
account therefor. All such amounts (including Total Base Rent and Rent
Adjustment) shall bear interest from the date due until the date paid at the
rate of two (2%) percent above the prime rate of interest published by the First
National Bank of Chicago on the date that any payment is due, or at the maximum
legal rate of interest, allowed by law, if such maximum legal rate is applicable
and lower. Whenever rent is referred to in this Lease, it shall include (but not
by way of exclusion) Total Base Rent, Rent Adjustment and Additional Rent.
G. All riders and exhibits attached to this Lease referred to herein are
hereby made a part of this Lease as though inserted in this Lease.
H. The headings of sections are for convenience only and do not limit or
construe the contents of the sections.
I. If the Tenant shall occupy the premises prior to the beginning of the
term of this Lease with the Landlord's consent, all the provisions of this Lease
shall be in full force and effect as soon as the Tenant occupies the premises.
J. Should any mortgage, 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.
K. The Tenant represents that the Tenant has dealt directly with and only
with Agent and the Cooperating Broker listed in Section 1 hereof, if any, as
broker in connection with this Lease and that insofar as the Tenant knows no
other broker negotiated this Lease or is entitled to any commission in
connection therewith. Tenant indemnifies and holds Landlord, its beneficiaries,
Owner and Owner's partners and their respective agents and employees harmless
from all claims of any other broker or brokers in connection with this Lease.
L. Tenant shall at any time and from time to time upon not less than ten
(10) days prior written request from Landlord execute, acknowledge and deliver
to Landlord, in form reasonably satisfactory to Landlord and/or Landlord's
mortgagee, a written statement certifying (if true) that Tenant has accepted the
premises, that this Lease is unmodified and in full force and effect (or if
there have been
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modifications, that the came is in full force and effect as modified and stating
the modifications), that the Landlord is not in default hereunder, the date to
which the rental and other charges have been paid in advance, if any, and such
other accurate certification as may reasonably be requested by Landlord or
Landlord's mortgagee, and agreeing to give copies to any mortgagee of Landlord
of all notices by Tenant to Landlord. It is intended that any such statement
delivered pursuant to this subsection may be relied upon by any prospective
purchaser or mortgagee of the premises and their respective successors and
assigns.
M. The Landlord's or Owner's title is and always shall be paramount to the
title of the Tenant, and nothing herein contained shall empower the Tenant to do
any act which can, shall or may encumber such title.
N. The laws of the State of Illinois shall govern the validity, performance
and enforcement of this Lease.
O. If any term, covenant or condition of this Lease or 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 term, covenant
or condition of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
P. Tenant warrants and represents that it has full power and authority to
execute this Lease. In the event Tenant is a general partnership or consists of
two or more individuals, all present and future partners or individuals, as
applicable, shall be jointly and severally liable hereunder.
Q. Landlord has no obligation pursuant to this Lease except as expressly
provided for herein. Landlord's liability hereunder shall cease upon the
transfer of Landlord's interest in this Lease, except for Landlord's prior gross
negligence.
R. This Lease sets forth all the covenants, promises, agreements,
conditions and understandings between Landlord and Tenant, concerning the
demised premises and there are no covenants, promises, agreements, conditions,
or understandings, either oral or written, between them other than herein set
forth, except as herein otherwise provided, no subsequent alteration, amendment,
change or addition to this Lease shall be binding upon Landlord or Tenant unless
reduced to writing and signed by them.
S. Notices hereunder shall be in writing and shall be deemed given when
received if:
(i) Served by Landlord upon Tenant by leaving a notice at the premises
or forwarding through certified or registered mail, postage prepaid, to
Tenant at the premises.
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(ii) Served by Tenant upon Landlord when addressed to Landlord and
served by forwarding through certified or registered mail, postage prepaid,
to Landlord's agent at the address set forth in Section 1 or to such other
address and such other parties as notified by Landlord.
T. This Lease does not grant any rights to light or air over or about the
real property of Landlord. Landlord specifically excepts and reserves to itself
the use of any roofs, the exterior portions of the Project, all rights to and
the land and improvements below the improved floor level of the Project, to the
improvements and air rights above the Project and to the improvements and air
rights located outside the demising walls of the Project and to such areas
within the Project required for installation of utility lines and other
installations required to serve any occupants of the Project and to maintain and
repair same, and no rights with respect thereto are conferred upon Tenant,
unless otherwise specifically provided herein.
U. The preparation of this Lease has been a joint effort of the parties
hereto and the resulting documents shall not, solely as a matter of judicial
construction, be construed more severely against one of the parties than the
other.
27. Quiet Enjoyment. Subject to the provisions of this Lease, Landlord
covenants that Tenant, on paying the rent and performing the covenants of this
Lease on its part to be performed, shall and may peaceably have, hold and enjoy
the premises for the Term.
28. Agency. This Lease is executed by Bennett & Kahnweiler Realty Advisors,
Inc., acting solely as the duly authorized agent for the Teachers' Retirement
System of the State of Illinois, and all the terms, provisions, stipulations,
covenants and conditions to be performed by Landlord are undertaken solely as
said duly authorized agent, and not individually, and all statements herein made
by Landlord except for its authority to act as agent are made on information and
belief and are to be construed accordingly. No personal liability shall be
asserted or be enforceable against Bennett & Kahnweiler Realty Advisors, Inc. or
any of its agents, employees or shareholders by reason of any of the terms,
provisions, stipulations, covenants and/or statements contained in this
instrument.
29. Renewal Option.
A. Tenant shall have an option (hereinafter referred to as the "Renewal
Option") to renew the original Term for all of the premises then covered by this
Lease as of the expiration date of the original Term, for an additional period
of five (5) years (hereinafter referred to as the "Renewal Term") commencing on
August 1, 1994 upon the following terms and conditions:
(1) Tenant gives Landlord written notice of its exercise of the
Renewal Option on or before February 1, 1994;
(2) Tenant is not in default under this Lease either on the date
Tenant delivers the notice required under (1) above or on the expiration
date of the original Term; and
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(3) All of the terms and provisions of this Lease (except this Section
29) shall be applicable to the Renewal Term, except that Monthly Base
Rental for the Renewal Term shall be equal to the Fair Market Rental Value
of the premises as reasonably determined by Landlord. All Rent for the
Renewal Term shall be subject to immediate adjustment pursuant to Section 4
for each Calendar Year thereafter, utilizing, in lieu of the Tax Base and
Expense Base for purposes of Subparagraph 4B, a Revised Tax Base
(hereinafter referred to as the "Revised Tax Stop") and a Revised Expense
Base (hereinafter referred to as the "Revised Expense Stop") to be
determined by Landlord. If Tenant disagrees with Landlord's determination
of the Monthly Base Rent to be payable under this Lease for the Renewal
Term and notifies Landlord in writing on or before February 28, 1994 (said
date is hereinafter referred to as the "Rental Agreement Date"), then the
Fair Rental Value of the premises shall be determined by appraisal as
hereinafter set forth, provided, however, that the Monthly Base Rental for
the Renewal Term shall in no event be less than the escalated annual
Monthly Base Rental plus rent adjustments payable by Tenant under this
Lease for the last year of the original Term. Within fifteen (15) days
after the Rental Agreement Date, Landlord and Tenant shall institute an
appraisal procedure to determine the Fair Rental Value of the premises by
jointly nominating and appointing one appraiser who shall forthwith make a
determination of the Fair Rental Value of the premises. If Landlord and
Tenant fail to jointly agree on the nomination and appointment of one
appraiser within said 15-day period, each party shall then each nominate
and appoint one appraiser within thirty (30) days after the Rental
Agreement Date and give notice of such appointment to the other party. Upon
the appointment of the two appraisers as aforesaid, the two appraisers so
appointed shall forthwith jointly make a determination of the Fair Rental
Value of the premises. If either party fails to appoint an appraiser within
said 30-day period, the appraiser appointed by the other party shall
forthwith make the determination of the Fair Rental Value of the premises.
If the two appraisers are unable to agree upon a determination of the Fair
Rental Value of the premises within thirty (30) days after the appointment
of the second appraiser, the two appraisers shall jointly nominate and
appoint a third appraiser within fifteen (15) days after the expiration of
said 30-day period and give written notice of such appointment to both
parties. In the event the two appraisers fail to appoint such third
appraiser within said 15-day period, either party may thereafter apply to
the United States District Court for the Northern District of Illinois for
the appointment of such third appraiser. The third appraiser shall
forthwith make a determination of the Fair Rental Value of the premises. In
the event the three appraisers are unable to agree upon a determination of
the Fair Rental Value of the premises within thirty (30) days after the
appointment of the third appraiser, then the Fair Rental Value of the
premises shall be an amount equal to the average of the three values
contained in the respective written appraisals submitted by the appraisers.
The appraisers shall make their determination in writing and give notice
thereof to both parties. The
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Fair Rental Value of the premises shall be the rent (including rental
escalations and rent concessions) which the premises would generate for the
period of the Renewal Term in a competitive and open market lease
transaction under all conditions requisite to a fair lease and assuming
that (i) the landlord and the tenant are each acting voluntarily, prudently
and knowledgeably, (ii) the landlord and the tenant are each typically
motivated and are acting without malice, (iii) the landlord and the tenant
are each well informed or well advised and each acting in what it considers
its own best interest, and (iv) a reasonable time is allowed for exposure
in the open market. Each appraiser shall afford both parties a hearing and
the right to submit evidence, with the privilege of cross-examination in
connection with its determination of the Fair Rental Value of the premises.
In the event any appraiser appointed as aforesaid shall die or become
unable or unwilling to act before completion of the appraisal, such
appraiser's successor shall be appointed in the same manner as provided
above. Any appraiser appointed hereunder shall (x) be independent of both
parties (and of all persons and entities with interest in either party);
(y) have not less than five (5) years' experience in the appraisal of real
property; and (z) hold the professional designation M.A.I., or if the
M.A.I. ceases to exist, a comparable designation from an equivalent
professional appraiser organization. All appraisal fees and expenses shall
be borne equally by the parties.
B. Tenant agrees to accept the premises to be covered by this Lease during
the Renewal Term in an "as is" physical condition and Tenant shall not be
entitled to receive any allowance, credit or payment from Landlord for the
improvement thereof.
C. In the event Tenant exercises the Renewal Option herein set forth,
Landlord and Tenant shall mutually execute and deliver an amendment to this
Lease reflecting the renewal of the Term on the terms herein provided, which
amendment shall be executed and delivered within fifteen (15) days after the
determination of the Monthly Base Rent to be applicable to the Renewal Term as
hereinabove provided.
D. The Renewal Option herein granted shall automatically terminate upon the
earliest to occur of (i) the expiration or termination of this Lease, (ii) the
termination of Tenant's right to possession of the premises, (iii) the
assignment (or subletting with respect to any portion so sublet) by Tenant of
its interest in this Lease except as set forth and permitted in Section 16
hereof, or (iv) the failure of Tenant to timely or properly exercise the Renewal
Option.
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IN WITNESS WHEREOF, this Instrument has been duly executed by the parties
hereto, as of the day and year first above written.
LANDLORD: TEACHERS' RETIREMENT SYSTEM OF THE STATE OF
ILLINOIS
By: BENNETT & KAHNWEILER REALTY ADVISORS, INC.,
an Illinois corporation
By: Signature
---------------------------------
Its: President
TENANT: VIDEO BROADCASTING CORPORATION, a Delaware
corporation
ATTEST:
Signature By: J. Graeme McWhirster
- ---------------------------- ---------------------------------
Its: General Manager/Chicago Its: Chief Financial Officer
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EXHIBIT A
POTENTIAL TENANT PLAN
TENANT MEDIA LINK R.S.F. 1317 DATE 5.26.89
VIDEO BROADCASTING CORP
[Level 20 floor plan diagram]
<PAGE>
EXHIBIT "B"
541 FAIRBANKS
TENANT WORK AGREEMENT
Landlord: TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS
Tenant: VIDEO BROADCASTING CORPORATION, a Delaware corporation
Premises: Suite 2010
Building: 541 N. Fairbanks
Chicago, Illinois
Landlord and Tenant have executed, or are executing simultaneously with
this Tenant Work Agreement, a Lease pertaining to Premises. This Agreement is
ancillary to the Lease.
In consideration of the mutual covenants hereinafter contained, Landlord
and Tenant agree as follows:
I. TENANT'S WORK
1.1. Landlord agrees to cause the completion of the work necessary to
construct improvements to the Premises in accordance with the Tenant
Construction Plans (said work is hereinafter referred to as the "Tenant's Work")
and to pay THIRTY-TWO THOUSAND NINE HUNDRED TWENTY-FIVE AND NO/100 ($32,925.00)
DOLLARS (hereinafter referred to as the "Landlord's Contribution") of the cost
of the Tenant's Work and and to pay for the cost of the initial space plan in
connection therewith. Tenant shall pay for all necessary architectural,
mechanical (including heating, ventilating and air conditioning), electrical and
plumbing plans, drawings and specifications (hereinafter collectively referred
to as "Tenant Construction Plans") pertaining to the Tenant's Work. Tenant shall
deliver to Landlord the following Tenant Construction Plans as applicable
prepared by Perkins & Will, architects (hereinafter referred to as the
"Consultants") on or before June 15, 1989 (hereinafter referred to as the "Plans
Due Date").
A. Architectural/Engineering Plans with elevation, section and detail.
B. Reflected Ceiling Plans.
C. Power and Signal Plans.
D. Finish Plans.
1.2. All Tenant Construction Plans shall be prepared by the Consultants and
shall comply with all applicable governmental requirements and shall enable
Landlord to obtain any necessary building permits without revision. The Tenant
Construction Plans are subject to Landlord's approval, which shall not be
unreasonably withheld.
1.3. All costs of the Tenant's Work in excess of the Landlord's
Contribution shall be paid by the Tenant. Prior to commencing any Tenant's Work,
<PAGE>
Landlord shall submit to Tenant for Tenant's approval a written good faith
estimate of the cost of Tenant's Work (hereinafter referred to as the
"Estimate"). Landlord shall not be obligated to proceed with Tenant's Work until
the Estimate is approved in writing by Tenant and forty (40%) percent of the
cost set forth in the Estimate in excess of the Landlord's Contribution is paid
to Landlord pursuant to Paragraph 1.5, below. Should Tenant not approve any
Estimate within five (5) days of delivery thereof by Landlord, Tenant shall be
deemed to have rejected the Tenant's Work and to have directed the
discontinuance of such Tenant's Work.
1.4. If Tenant shall request any modifications, revisions or changes to the
Tenant's Work at any time, it shall follow the same procedure herein prescribed
for the initiation, approval and commencement of the Tenant's Work.
1.5. Tenant shall pay forty (40%) percent of the cost of Tenant's Work
payable by Tenant prior to commencement of any such work and shall pay to
Landlord within ten (10) days of being billed therefor, all such additional
costs and charges for Tenant's Work payable by Tenant hereunder set forth in
such billings, which billings shall cover the cost of such work performed to the
date thereof. Landlord shall have, in connection with such billings, all of the
rights and remedies granted under the Lease in connection with the enforcement
of the collection of rents owing to Landlord thereunder.
II. TENANT'S DELAYS
Tenant's obligation to pay rent under the Lease shall not commence until
Landlord shall have substantially completed the Tenant's Work and the
commencement of the Term of the Lease shall be delayed until the Tenant's Work
is completed; provided, however, if Landlord shall be delayed in substantially
completing the Premises as a result of any or all of the following, the
commencement of the term of the Lease and the payment of rent thereunder shall
not be affected or deferred on account of such delay:
A. Tenant's failure to furnish promptly information concerning Tenant's
requirements to Consultants or the delivery of any Tenant Construction Plans
after the Plans Due Date; or
B. Tenant's failure to approve the Estimate and pay the applicable portion
of the costs of the Tenant's Work within the applicable time set forth in
Article I hereof; or
C. Any change to the Tenant's Work; or
D. The performance or completion by Tenant, or any person, firm or
corporation employed by Tenant, of any work on or about the Premises; or
E. Any other act or omission by Tenant or its agents;
III. TENANT'S ACCESS TO PREMISES
3.1. Landlord, in its sole discretion, may permit Tenant and Tenant's
agents or independent contractors to enter the Premises prior to the
Commencement
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Date specified in the Lease in order that Tenant may do other work or
alterations as may be required by Tenant to make the Premises ready for Tenant's
use and occupancy. Such permission must be in writing. If Landlord permits such
prior entry, then such license shall be subject to the condition that Tenant and
Tenant's agents, contractors, workmen, mechanics, suppliers and invitees shall
work in harmony and not interfere with Landlord and its agents and contractors
in doing its work in the demised premises or in the above building or with other
tenants and occupants of the above building. If at any time such entry or
occupancy shall cause or threaten to cause such disharmony or interference,
Landlord, in its sole discretion, shall have the right to withdraw and cancel
such license upon twenty-four (24) hours written notice to Tenant. Tenant agrees
that any such entry into and occupancy of the Premises shall be deemed to be
under all of the terms, covenants, conditions and provisions of the Lease,
except as to the covenant to pay rent. Tenant further agrees that to the extent
permitted by law, Landlord and its principals shall not be liable in any way for
any injury or death to any person or persons, loss or damage to any of Tenant's
work and installations made in the Premises or loss or damage to property placed
therein prior to the commencement of the term of the Lease, the same being at
Tenant's sole risk.
3.2. In addition to any other conditions or limitations on such license to
enter or occupy the Premises prior to the said occupancy date, Tenant expressly
agrees that none of its agents, contractors, workmen, mechanics, suppliers or
invitees shall enter the demised premises prior to such occupancy date unless
and until each of them shall furnish Landlord with satisfactory evidence of
insurance coverage, financial responsibility and appropriate written releases of
mechanics' lien claims.
IV. MISCELLANEOUS
4.1. The Tenant's Work shall be done by Landlord, or its designees,
contractors or subcontractors, in accordance with the terms, conditions and
provisions herein contained in a good and workmanlike manner using new
materials.
4.2. Except as herein expressly set forth, Landlord has no agreement with
Tenant and has no obligation to do any other work with respect to the Premises.
Any other work in the Premises which may be permitted by Landlord pursuant to
the terms and conditions of the Lease shall be done at Tenant's sole cost and
expense and in accordance with the terms and provisions herein set forth
pertaining to Tenant's Work and such additional requirements as Landlord deems
necessary or desirable.
4.3. If the Tenant Construction Plans require the construction and
installation of more fire hose cabinets than the number regularly provided by
Landlord in the core of the Building in which the Premises are located, Tenant
agrees to pay all costs and expenses arising from the construction and
installation of such additional fire hose cabinets.
4.4. Under no circumstances shall the rent otherwise payable under the
Lease abate in whole or in part because of any delay, expense or cost arising or
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<PAGE>
incurred in connection with any modification, revision or change made by Tenant
at any time and from time to time to any or all of the Tenant's Work.
4.5. Time is of the essence under this Agreement.
4.6. Any person signing this Agreement on behalf of the Landlord and Tenant
warrants and represents he has authority to do so.
4.7. This Tenant Work Agreement shall not be deemed applicable to any
additional office space added to the original Premises at any time or from time
to time, whether by any options under the Lease or otherwise, or to any portion
of the original Premises or any additions thereto in the event of a renewal or
extension of the original term of this Lease, whether by any options under the
Lease or otherwise, unless expressly so provided in the Lease or any amendment
or supplement thereto.
4.8. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors and
assigns.
4.9. This Agreement is executed by Bennett & Kahnweiler Realty Advisors,
Inc., acting solely as the duly authorized agent for the Teachers' Retirement
System of the State of Illinois, and all the terms, provisions, stipulations,
covenants and conditions to be performed by Landlord are undertaken solely as
said duly authorized agent, and not individually, and all statements herein made
by Landlord except for its authority to act as agent are made on information and
belief and are to be construed accordingly. No personal liability shall be
asserted or be enforceable against Bennett & Kahnweiler Realty Advisors, Inc. or
any of its agents, employees or shareholders by reason of any of the terms,
provisions, stipulations, covenants and/or statements contained in this
instrument.
LANDLORD: TEACHERS' RETIREMENT SYSTEM OF THE STATE OF
ILLINOIS
By: BENNETT & KAHNWEILER REALTY ADVISORS,
INC., an Illinois corporation
By: Signature
-------------------------------
Its: President
TENANT: VIDEO BROADCASTING CORPORATION, a Delaware
corporation
ATTEST:
By: /s/ J. Graeme McWhirster
- ------------------------- -------------------------------
Its: Its: Chief Financial Officer
-4-
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "Amendment") is made as of June 1,
1994, by and between TEACHERS' RETIREMENT SYSTEM OF THE STATE OF ILLINOIS
("Landlord"), and VIDEO BROADCASTING CORPORATION, a Delaware corporation, doing
business as Medialink ("Tenant").
R E C I T A L S:
A. WHEREAS, Landlord and Tenant entered into a lease dated June 7, 1989
(the "Lease") for certain premises designated as Suite No. 2010 consisting of
approximately 1,317 rentable square feet of space (the "Premises") and located
in the building commonly known as The Time & Life Building, 541 North Fairbanks
Court, Chicago, Illinois (the "Building"); and
B. WHEREAS, the current term of the Lease (the "Original Term") is
scheduled to expire on July 31, 1994; and
C. WHEREAS, Tenant has requested and Landlord has agreed to amend the Lease
by, among other things, extending the Original Term (the Original Term, as
extended pursuant hereto, the "Term") through February 28, 1999, all on the
terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree to amend
the Lease as follows:
1. Extension of Term. The term of the Lease is hereby extended through
February 28, 1999, unless sooner terminated pursuant to the Lease or this
Amendment, subject to all of the terms and conditions of the Lease, as modified
herein.
2. Annual Base Rent. Notwithstanding the provisions of Paragraph 3 of the
Lease, commencing on March 1, 1994 (the "Extension Commencement Date"), Base
Rent shall be as follows for each twelve (12) month period beginning on the
Extension Commencement Date (or each anniversary thereof) and ending on the last
day of February of the next following calendar year (a "Lease Year"):
Lease Year Sq. Ft. Rate Monthly Base Rental Annual Base Rental
---------- ------------ ------------------- ------------------
1 $6.25 $685.94 $ 8,231.25
2 $6.75 $740.81 $ 8,889.75
3 $7.25 $795.69 $ 9,548.25
4 $7.75 $850.56 $10,206.75
5 $8.25 $905.44 $10,865.25
<PAGE>
Beginning on the Extension Commencement Date, Tenant shall pay Landlord the
Monthly Base Rental due, in advance, on the Extension Commencement Date and on
the first day of each calendar month during the Term as set forth in the
schedule above, without any notice, demand, set-off or deduction whatsoever.
Tenant shall continue to pay the Rent Adjustment and all other amounts due and
payable under or pursuant to the Lease throughout the Term.
3. Improvements. Landlord agrees, at Landlord's cost and expense, to
perform the work as set forth in the Workletter attached hereto and incorporated
herein as Exhibit A.
4. Heating and Air Cooling. Notwithstanding Article 5(A)(i) of the Lease,
so long as Tenant is not in default under any covenant or condition of the Lease
or this Amendment, Landlord shall provide heating and air cooling when necessary
to provide a temperature condition for comfortable occupancy daily, in season,
from 8:00 A.M. to 6:00 P.M. and on Saturdays from 8:00 A.M. to 1:00 P.M., Sunday
and holidays excepted.
5. Signage. Tenant shall have the right, subject to Landlord's prior
written approval, which shall not be unreasonably withheld, to install its
standard signage/graphics in a workmanlike manner upon the entrance to and
inside the Premises.
6. Condition of Premises. Except as set forth in the Workletter attached
hereto and in the Lease, Landlord shall have no obligation to make any repairs
or improvements to the Premises and Tenant accepts the Premises "AS-IS",
"WHERE-IS". Tenant acknowledges that, as of the date of Tenant's execution of
this Amendment, the condition of the Premises is acceptable to Tenant, except
for the work to be performed by Landlord pursuant to paragraph 3. No promise of
Landlord to alter, remodel, decorate, clean or improve the Premises or the
Building and no representation respecting the condition of the Premises or the
Building have been made by Landlord to Tenant, unless the same is contained
herein.
7. ADA. Landlord and Tenant acknowledge that the Americans With
Disabilities Act of 1990 (42 U.S.C. ss.12101 et seq.) and regulations and
guidelines promulgated thereunder, as all of the same may be amended and
supplemented from time to time (collectively referred to herein as the "ADA")
establish requirements under Title III of the ADA ("Title III") pertaining to
business operations, accessibility and barrier removal, and that such
requirements may be unclear and may or may not apply to the Premises and
Building depending on, among other things: (1) whether Tenant's business
operations are deemed a "place of public accommodation" or a "commercial
facility", (2) whether compliance with such requirements is "readily achievable"
or "technically infeasible", and (3) whether a given alteration affects a
"primary function area" or triggers so-called "path of travel" requirements. The
parties acknowledge and agree that Tenant has been provided an opportunity to
inspect the Premises and Building sufficient to determine whether or not the
Premises and Building in their condition current as of the date hereof deviate
in any manner from the ADA Accessibility Guidelines ("ADAAG") or any other
requirements under the ADA pertaining to the accessibility of the Premises or
the Building. Tenant further acknowledges and agrees that except as may
otherwise be specifically provided below, Tenant accepts the Premises and
Building in "as-is" condition and agrees that Landlord makes no representation
or warranty as to whether the Premises or Building conform to the requirements
of the ADAAG or any other requirements under the ADA pertaining to the acces-
2
<PAGE>
sibility of the Premises or the Building. Tenant has prepared or reviewed the
plans and specifications for the Landlord's Work and has independently
determined that such plans and specifications are in conformance with the ADAAG
and any other requirements of the ADA. Tenant further acknowledges and agrees
that to the extent that Landlord prepared, reviewed or approved any of those
plans and specifications, such action shall in no event be deemed any
representation or warranty that the same comply with any requirements of the
ADA. Notwithstanding anything to the contrary in the Lease or this Amendment,
the parties hereby agree to allocate responsibility for Title III compliance as
follows: (a) Landlord shall be responsible for performing ADA Title III
compliance work required in the common areas of the Building on the floors on
which the Premises are located, (b) Tenant shall be responsible for all Title
III compliance and costs in connection with the Premises, including work, if
any, in connection with any leasehold improvements (such as, but not limited to,
partition, curtain and other non-loadbearing walls) or work to be performed in
the Premises under or in connection with this Amendment; provided, however that
Tenant shall not be responsible for Title III compliance and costs in connection
with structural work in the Premises which relates to the structural and
mechanical building systems except to the extent such costs are included as
Expenses as defined in Paragraph 4(A)(ii) of the Lease, and (c) Landlord shall
perform, and Tenant shall be responsible for the cost of, any so-called Title
III "path of travel" requirements triggered by any construction activities or
alterations in the Premises. Except as set forth above with respect to
Landlord's Title III obligations, Tenant shall be solely responsible for all
other requirements under the ADA relating to the Tenant or any affiliates or
persons or entities related to the Tenant (collectively, "Affiliates"),
operations of the Tenant or Affiliates, or the Premises, including, without
limitation, requirements under Title I of the ADA pertaining to Tenant's
employees.
8. No Further Renewal Options. Tenant acknowledges that Tenant shall have
no further right to renew or extend the Term.
9. Brokers. Landlord and Tenant each represent and warrant to the other
that it has not dealt with any brokers, salesmen or finders in connection with
this Amendment other than Spiro Ricciardi Partners, Inc. and Miglin-Beitler,
whose commissions shall be paid by Landlord pursuant to a separate written
agreement. Landlord and Tenant each agree to defend, indemnify and hold the
other harmless from and against all claims by any broker other than Spiro
Ricciardi Partners, Inc. and Miglin-Beitler for fees, commissions or other
compensation to the extent such broker, salesman or finder alleges to have been
retained by the indemnifying party in connection with the execution of this
Amendment. The provisions of this Section 9 shall survive the expiration or
sooner termination of the Lease.
10. Hazardous Substances. As used herein, the following terms shall have
the following meanings:
"Claim" shall mean and include any demand, cause of action, proceeding
or suit for any one or more of the following: (i) actual or punitive
damages, losses, injuries to person or property, damages to natural
resources, fines, penalties, interest, contribution or settlement, (ii) the
costs of site investigations, feasibility studies, information requests,
health or risk assessments, or Response (as hereinafter defined) actions,
and (iii) enforcing insurance, contribution or indemnification agreements.
3
<PAGE>
"Environmental Law", shall mean and include all federal, state and
local statutes, ordinances, regulations and rules relating to environmental
quality, health, safety, contamination and clean-up, including, without
limitation, the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Clean
Water Act, 33 U.S.C. Section 1251 et seq., and the Water Quality Act of
1987; the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7
U. S. C. Section 136 et seq.; the Marine Protection, Research, and
Sanctuaries Act, 33 U.S.C. Section 1401 et seq.; the National Environmental
Policy Act, 42 U.S.C. Section 4321 et seq.; the Noise Control Act, 42
U.S.C. Section 4901 et seq.; the Occupational Safety and Health Act, 29
U.S.C. Section 651 et seq.; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq., as amended by the Hazardous and
Solid Waste Amendments of 1984; the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq.,
as amended by the Superfund Amendments and Reauthorization Act, the
Emergency Planning and Community Right-to-Know Act, and Radon Gas and
Indoor Air Quality Research Act; the Toxic Substances Control Act ("TSCA"),
15 U.S.C. Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section
2011 et seq., and the Nuclear Waste Policy Act of 1982, 42 U.S.C. Section
10101 et seq.; and any environmental protection, state superlien or
environmental clean-up statutes of the State of Illinois, with implementing
regulations and guidelines, as amended from time to time. Environmental
Laws shall also include all state, regional, county, municipal and other
local laws, regulations, and ordinances insofar as they are equivalent or
similar to the federal laws recited above or purport to regulate Hazardous
Materials (as hereinafter defined).
"Hazardous Materials" shall mean and include the following, including
mixtures thereof: any hazardous substance, pollutant, contaminant, waste,
by-product or constituent regulated under CERCLA; oil and petroleum
products and natural gas, natural gas liquids, liquefied natural gas and
synthetic gas usable for fuel; pesticides regulated under the FIFRA;
asbestos and asbestos-containing materials, PCBs, and other substances
regulated under the TSCA; source material, special nuclear material,
by-product material and any other radioactive materials or radioactive
wastes, however produced, regulated under the Atomic Energy Act or the
Nuclear Waste Policy Act; chemicals subject to the OSHA Hazard
Communication Standard, 29 C.F.R. ss. 1910.1200 et seq.; and industrial
process and pollution control wastes, whether or not hazardous within the
meaning of RCRA.
"Manage" or "Management" means to generate, manufacture, process,
treat, store, use, re-use, refine, recycle, reclaim, blend or burn for
energy recovery, incinerate, accumulate speculatively, transport, transfer,
dispose of, or abandon Hazardous Materials.
"Release" or "Released" shall mean any actual or threatened spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of Hazardous Materials into the
environment, as "environment" is defined in CERCLA.
4
<PAGE>
"Response" or "Respond" shall mean action taken in compliance with
Environmental Laws to correct, remove, remediate, cleanup, prevent,
mitigate, monitor, evaluate, investigate, assess or abate the Release of a
Hazardous Material.
During the Term, (a) Tenant shall comply at its own cost with all
Environmental Laws; (b) Tenant shall not Manage, or authorize the Management of,
any Hazardous Materials on the Premises, including installation of any
underground storage tanks, without prior written disclosure to and approval by
Landlord; (c) Tenant shall not take any action that would subject the Premises
to permit requirements under RCRA for storage, treatment or disposal of
Hazardous Materials; (d) Tenant shall not dispose of Hazardous Materials in
dumpsters provided by Landlord for tenant use; (e) Tenant shall not discharge
Hazardous Materials into Project drains or sewers; (f) Tenant shall not cause or
allow the Release of any Hazardous Materials on, to, or from the Project; and
(g) Tenant shall arrange at its own cost for the lawful transportation and
off-site disposal of all Hazardous Materials that it generates.
During the Term, Tenant shall provide Landlord promptly with copies of all
summons, citations, directives, information inquiries or requests, notices of
potential responsibility, notices of violation or deficiency, orders or decrees,
Claims, complaints, investigations, judgments, letters, notices of environmental
liens or Response actions in progress, and other communications, written or
oral, actual or threatened, from the United States Environmental Protection
Agency, Occupational Safety and Health Administration, or other federal, state
or local agency or authority, or any other entity or individual, concerning (a)
any Release of a Hazardous Material on, to or from the Premises; (b) the
imposition of any lien on the Premises; or (c) any alleged violation of or
responsibility under Environmental Laws. Landlord and Landlord's agents and
employees shall have the right to enter the Premises and conduct appropriate
inspections or tests in order to determine Tenant's compliance with
Environmental Laws. Upon written request by Landlord, Tenant shall provide
Landlord with the results of appropriate reports and tests, with transportation
and disposal contracts for Hazardous Materials, with any permits issued under
Environmental Laws, and with any other applicable documents to demonstrate that
Tenant complies with all Environmental Laws relating to the Premises. If
Tenant's Management of Hazardous Materials at the Premises gives rise to
liability or to a Claim under any Environmental Law, causes a significant public
health effect or creates a nuisance, Tenant shall promptly take all applicable
action in Response. Tenant shall indemnify, defend, and hold harmless Landlord,
its partners, its lenders, any managing agents and leasing agents of the
Premises, and their respective agents, partners, officers, directors and
employees, from and against any and all Claims arising from or attributable to
any breach by Tenant of any of its warranties, representations or covenants in
this Paragraph 10. Tenant's obligations hereunder shall survive the termination
or expiration of the Lease as amended by this Amendment. Landlord shall
indemnify, defend and hold harmless Tenant from and against any and all
liability arising from or in connection with Hazardous Materials, which
liability results solely from the gross negligence or willful misconduct of
Landlord.
11. Agency. This Amendment is executed by Capital Associates Realty
Advisors Corp. ("Capital") acting solely as the duly authorized agent for the
Teachers' Retirement System of the State of Illinois, and all the terms,
provisions, stipulations, covenants and conditions to be performed by Landlord
are undertaken solely as said duly authorized agent, and not
5
<PAGE>
individually, and all statements herein made by Landlord except for its
authority to act as agent are made on information and belief and are to be
construed accordingly. No personal liability shall be asserted or be enforceable
against Capital or any of its agents, employees or shareholders by reason of any
of the terms, provisions, stipulations, covenants and/or statements contained in
this instrument.
12. TRS Limitation of Liability. Without limitation of any other provision
of the Lease or this Amendment, this Amendment is being executed by and on
behalf of the Teachers' Retirement System of the State of Illinois ("TRS").
Neither TRS nor any present or future officer, director, employee, trustee,
member or agent of TRS shall have any personal liability, directly or
indirectly, and recourse shall not be had against TRS or any such officer,
director, employee, trustee, member or agent, under or in connection with this
Lease or any other document or instrument heretofore or hereafter executed in
connection with same. Tenant hereby waives and releases any and all such
personal liability and recourse. Tenant and its successors and assigns and all
other persons claiming by, through or under Tenant shall look solely to
Landlord's interest in the Building with respect to any claim against Landlord
arising under or in connection with this Amendment or any other document or
instrument heretofore or hereafter executed in connection with this Amendment.
The limitations of liability provided herein are in addition to, and not in
limitation of, any limitations of liability otherwise set forth herein or
applicable to TRS by law or in any other contract, agreement or instrument.
13. Miscellaneous. Except as modified herein, the Lease and all of the
terms and provisions thereof shall remain unmodified and in full force and
effect as originally written. All terms used herein but not defined herein which
are defined in the Lease shall have the same meaning for purposes hereof as they
do for the purposes of the Lease. To the extent of a conflict between the terms
and provisions of this Amendment and the terms and provisions of the Lease, the
terms and provisions of this Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives effective as of the date
hereinabove written.
LANDLORD: TENANT:
TEACHERS' RETIREMENT SYSTEM VIDEO BROADCASTING
OF THE STATE OF ILLINOIS CORPORATION, a Delaware
corporation, doing business as Medialink
By: CAPITAL ASSOCIATES
REALTY ADVISORS CORP., its
investment manager and duly By: /s/ J. Graeme McWhirter
authorized agent ------------------------------------
Name: J. Graeme McWhirter
----------------------------
Title: Executive Vice President
---------------------------
By: /s/ Thomas J. Pabian
------------------------------
Name: Thomas J. Pabian
----------------------
Its: Executive V.P.
----------------------
6
<PAGE>
EXHIBIT A
WORKLETTER
Landlord and Tenant hereby agree as follows:
1. Incorporation of Definitions. All capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Amendment to
which this Exhibit is attached and in which this Exhibit is incorporated.
2. Landlord's Work. Landlord, at Landlord's sole cost and expense, shall
commence and diligently prosecute to completion the work ("Landlord's Work")
described in Attachment A attached hereto and incorporated herein. Landlord's
Work shall be constructed in a good and workmanlike fashion, in accordance with
the requirements set forth herein and in compliance with all applicable laws,
ordinances, rules and other governmental requirements, including, but not
limited to, the requirements of Landlord's fire insurance underwriters and all
applicable Environmental Laws and Handicap Access Laws. Where several sets of
the foregoing laws, codes and standards must be met, the strictest shall apply
where not prohibited by another law, code or standard.
3. Contractor. Landlord shall competitively bid Landlord's Work and
Landlord agrees to allow one (1) contractor chosen by Tenant and reasonably
acceptable to Landlord to submit a bid to perform Landlord's Work. Landlord
shall select the contractor which submits the lowest bid to perform Landlord's
Work.
4. Miscellaneous. Except as expressly set forth herein or in the Amendment,
Landlord has no agreement with Tenant and has no obligation to do any work with
respect to the Premises and the Amendment sets forth the entire agreement of
Tenant and Landlord regarding Landlord's Work.
Attachments
-----------
Attachment A - Description of Landlord's Work
A-1
<PAGE>
ATTACHMENT A TO EXHIBIT A
LANDLORD'S WORK
1. Install new reception door.
2. Repair one (1) door latch.
3. Replace all damaged ceiling tile.
4. Clean and paint all HVAC vents.
5. Repaint the Premises.
6. Install new 28 ounce carpeting.
7. Install new baseboard molding.
8. Install two (2) duplex outlets.
9. Install wire shelving above sink.
10. Install shelves in three (3) closets.
11. Install one (1) shelf in each private office.
<PAGE>
COPPERFIELD INVESTMENT & DEVELOPMENT COMPANY
6430 Sunset Boulevard
Los Angeles, CA 90028
LEASE
Landlord: COPPERFIELD INVESTMENT & DEVELOPMENT COMPANY,
a California Corporation
Tenant: VIDEO BROADCASTING CORPORATION,
a Delaware Corporation
Date: May 5, 1994
<PAGE>
6430 SUNSET BOULEVARD BUILDING
OFFICE LEASE
TABLE OF CONTENTS
SECTION PAGE
----
1 Fundamental Lease Provisions......................................... 1
2 Premises............................................................. 1
3 Term................................................................. 1
4 Base Rent............................................................ 3
5 Security Deposits.................................................... 3
6 Construction and Acceptance of Premises.............................. 4
7 Holding Over......................................................... 4
8 Use of Premises...................................................... 5
9 Taxes on Tenant's Property........................................... 5
10 Alterations.......................................................... 5
11 Maintenance and Repairs.............................................. 6
12 Liens................................................................ 7
13 Building Services.................................................... 7
14 Rights Reserved by Landlord.......................................... 9
15 Indemnification and Waiver........................................... 10
16 Insurance............................................................ 11
17 Waivers of Subrogation............................................... 11
18 Damage or Destruction................................................ 12
19 Eminent Domain....................................................... 13
20 Default.............................................................. 14
21 Assignment and Subletting............................................ 16
22 Subordination........................................................ 20
23 Estoppel Certificates and Financial Statements....................... 20
24 Interest on Past Due Obligations..................................... 21
25 Sale or Transfer by Landlord......................................... 21
26 Landlord's and Lender's Right to Cure Defaults....................... 22
27 Waiver............................................................... 22
28 Force Majeure........................................................ 23
29 Parking.............................................................. 23
30 Surrender of Premises................................................ 24
31 Relocation........................................................... 25
32 Hazardous Waste...................................................... 25
33 Miscellaneous........................................................ 27
Signatures.............................................................. 29
Exhibit "A" Space Plan
Exhibit "B" Construction Exhibit
Exhibit "C" Rules and Regulations
Exhibit "D" Confirmation
Addendum
<PAGE>
OFFICE LEASE
This Lease ("Lease") is made and executed this 5th day of May, 1994, by and
between COPPERFIELD INVESTMENT & DEVELOPMENT COMPANY, a California Corporation
("Landlord", and Video Broadcasting Corporation, a Delaware Corporation,
("Tenant") who agree as follows:
1. FUNDAMENTAL LEASE PROVISIONS:
(a) Premises: Suite No. 1205 on the Twelfth floor, constituting a
Rentable Area consisting of approximately 1,500 square feet, (1,286 usable).
(b) (1) Lease Term: 60 months.
(2) Commencement Date: September 27, 1994, or on substantial
completion of Tenant Improvements, whichever is sooner.
(c) Base Rent: $ 2,250.00 * per month during months 1 thru 12:
$ Refer to 4.(b) per month during months 13 thru 60.
Base Rent shall be subject to a 5% late charge if delinquent by more
than ten (10) days.
(d) Tenant's Proportionate Share of total Rentable Area: N/A %
(e) Security Deposit: $ 2.250.00. * (See Addendum Section 34).
(f) Description of Tenant's Business or Profession:
Executive Offices.
(g) Address for Payments of Rent and Notices:
To Landlord: 6430 Sunset Boulevard
Suite 1508
Los Angeles, CA 90028
To Tenant:
(After Commencement Date:) (Prior to Commencement Date:) Video
Broadcasting Corp. Video Broadcasting Corp. 708 Third Avenue 708
3rd Avenue, 23rd Floor New York New York 10017 New York, NY 10017
23rd Floor **
(h) Guarantor: N/A
(i) Number of Parking Spaces Allocated: Four (4)
2. PREMISES. In consideration of the Tenant's agreement to pay the rent,
and the covenants and conditions herein contained, Landlord hereby leases to
Tenant and Tenant hereby hires from Landlord, upon the terms and conditions set
forth herein, that certain office space identified in Section 1(a), as
delineated and shown in the cross-hatched area on the plan designated as Exhibit
"A" attached hereto and incorporated by reference herein (herein referred to as
the "Premises") in the building (herein referred to as the "Building") the
address of which is 4929 Wilshire Boulevard, Los Angeles, California. The
Rentable Area of the Premises ("Rentable Area"), as provided in Section 1(a),
shall be determined in accordance with the BOMA (Building Owners and Managers
Association) standard method of floor measurement for office buildings, except
that a prorata share of the common area of the lobby floor has been allocated to
each of the upper floors.
* First month's rent and security deposit due on Lease execution
**Copy to: Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Blvd.
Great Neck, New York 11021
<PAGE>
the term shall commence on the Commencement Date stated in Section 1(b)(2)
hereof, on which date the Tenant Improvements (as that term is defined in
Exhibit "B"), together with the common facilities for access and service to the
Premises shall be substantially completed except for items of work and
adjustment of equipment and fixtures which can be completed after occupancy has
been taken without causing substantial interference with Tenant's use of the
Premises (i.e., so-called "punch list" or "pick up" items). The Tenant
Improvements shall be deemed to be completed upon the Substantial Completion of
Tenant Improvements as that term is defined in Exhibit "B". Promptly following
the tendering of possession of the Premises to Tenant by Landlord, Tenant shall
countersign and return to Landlord a Lease Confirmation which will be signed and
sent by Landlord to Tenant, and which will be in the form of letter attached
hereto as Exhibit "D" and incorporated herein by this reference. Tenant's
countersignature of said form shall be Tenant's confirmation of the information
therein set forth and that Landlord has fulfilled its obligations pursuant to
Exhibit "B" of this Lease.
(b) Delay. If Landlord is unable to deliver to Tenant possession of
the Premises on the Commencement Date as set forth in Section 1(b)(2), whether
as a result of the failure of Landlord substantially to complete the Tenant
Improvements or for any other reason, Landlord shall not be liable for any
damages caused thereby.* In such event, this Lease shall not be void or
voidable, provided that the Tenant Improvements are completed and possession is
tendered to Tenant within ninety (90) days after the Commencement Date set forth
in Section 1(b)(2) hereof; subject to further extensions aggregating no more
than ninety (90) days due to acts of God, war, labor strikes, and other
occurrences beyond the control of Landlord, plus any period of time due to
delays caused by Tenant. In the event of such late delivery of the Premises, the
commencement of the term of this Lease shall be postponed by the length of such
delay in delivering possession. Tenant shall be given at least five** (5) days
prior notice in which to coordinate its move into the Premises, which notice may
be given prior to actual delivery, viz., the five** (5) day period may expire on
or before the date of possession. The Commencement Date shall be redetermined as
provided in Exhibit "B", and the liability of Tenant for rent shall be postponed
until the newly determined Commencement Date. In the event that Landlord has not
tendered possession to Tenant within said period in which such delay is excused
as set forth herein, this Lease shall be voidable without further obligation at
the option of Tenant upon written notice to Landlord received within ten (10)
days after the expiration of said period; provided, however, should Landlord
anticipate that it will be unable to tender possession to Tenant until a date
subsequent to the date set forth in Section 1(b)(2) or the expiration of the
period for which such delay is excused, Landlord may, at its election, give
Tenant written notice of the date on which it can deliver possession to Tenant,
and Tenant shall then have five (5) business days in which to give written
notice to Landlord of its election to terminate this Lease. Absent Landlord's
receipt of written notice of termination within said five (5) business days,
Landlord's further delay shall be deemed excused and waived by Tenant unless
possession still is not tendered to Tenant more than thirty (30) days after the
delayed Commencement Date stated in Landlord's aforesaid notice.
(c) Early Possession. If Tenant, with Landlord's written consent,
takes possession of the Premises prior to the Commencement Date for purposes of
conducting its business, Tenant shall be subject to all the covenants and
conditions hereof, and shall pay rent at the monthly rate prescribed for the
first month of the term, prorated on the basis of a thirty (30) day month, for
the period beginning with the taking of such possession and ending with the
Commencement Date.
(d) Failure to Take Possession. Tenant's inability or failure to take
possession of the Premises when delivery is tendered by Landlord (with the
Tenant Improvements substantially completed) shall not delay the commencement of
the term of this Lease or Tenant's obligation to pay rent. Tenant acknowledges
that Landlord shall incur significant expenses upon the execution of this Lease,
even if Tenant never takes possession of the Premises, including without
limitation brokerage commissions and fees, legal and other professional fees,
the costs of space planning and the costs of construction of Tenant Improvements
in the Premises. Tenant acknowledges that all of said expenses shall be included
in measuring Landlord's damages should Tenant breach the terms of this Lease.
* Tenant shall be entitled to remain in possession of its present premises,
pursuant to that certain lease with Landlord, dated June 13, 1989.
** business
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(e) Bankruptcy Prior to Term. If at any time prior to the Commencement
Date there shall be filed by or against Tenant in any court pursuant to any
statute either of the United States or of any State a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
or conservator of all or a portion of Tenant's property, or if Tenant makes an
assignment for the benefit of creditors, this Lease shall ipso facto be canceled
and terminated and in such event neither Tenant nor any person claiming through
or under Tenant or by virtue of any statute or of an order of any court shall be
entitled to possession of the Premises. In addition to the other rights and
remedies given by Section 20 hereof or by virtue of any other provision in this
Lease contained or by virtue of any statute or rule of law, Landlord may retain
as damages any rent, security deposit or moneys received by it from Tenant or
others on behalf of Tenant.
4. BASE RENT.
(a) Initial Rate. Tenant covenants to pay to Landlord during the term
hereof, at Landlord's office at the address set forth in Section 1(g) hereof or
to such other persons or at such other places as directed from time to time by
written notice to Tenant from Landlord, a monthly rental (hereinafter referred
to as the "Base Rent") in the amount set forth in Section 1(c) hereof due and
payable without demand or offset or deduction, in advance on the first day of
each calendar month; except that if the Commencement Date occurs on a day other
than the first day of a calendar month, then the Base Rent for the fraction of
the month starting with the Commencement Date shall be paid on such Commencement
Date, prorated on the basis of a thirty (30) day month.
(b) Annual Adjustment. Absent provision for specific periodic
increases in Section 1(c), the Base Rent payable hereunder by Tenant to Landlord
shall be increased twelve (12) months after the Commencement Date hereof and
every twelve (12) months thereafter during the term hereof, including any
renewal or extension period, in an amount equal to the percentage increase in
the U.S. Bureau of Labor Statistics Consumer Price Index, Los Angeles-Anaheim-
Riverside, All Urban Consumers (1982-84=100), All Items, published one calendar
month prior to each anniversary of the Commencement Date over the corresponding
index as published one calendar month prior to the Commencement Date, and
applying such percentage increase to the Base Rent for the first year of the
term hereof. If the Bureau of Labor Statistics shall change its method of
computing said Index, the successor Index so published shall be used by applying
an appropriate conversion factor to be supplied by said Bureau. In the event the
Consumer Price Index is discontinued, a comparable publication or index will be
used to determine any increase. In no event, however, shall the Base Rent
computed above be less than four percent (4%) higher than the prior year.
Increases shall be capped at an annual 8%. Upon Landlord's completion of the
computation of the adjusted Base Rent, Landlord shall give written notice to
Tenant of the adjusted Base Rent and same shall be due and payable by Tenant,
retroactively, as of the first day of the month for which the respective
adjustment was taken, and on the first day of each month thereafter. No delay or
failure by Landlord to enforce this provision or any part thereof as to Tenant,
or to enforce similar or dissimilar provisions in other leases in use as to any
other tenants in the Building, shall be deemed to be a waiver hereof, or prevent
any subsequent or other enforcement hereof.
5. SECURITY DEPOSITS. Tenant has, upon execution of this Lease and
concurrently therewith, deposited with Landlord a security deposit as set forth
in Section 1(e) hereof as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. If the Base Rent
shall, from time to time, increase during the Lease Term, Tenant shall within
five (5) business days after written demand therefor, deposit with Landlord
additional Security Deposit so that the amount of the Security Deposit held by
Landlord shall at all times bear the same proportion to the current rate of
Base Rent as the amount of Security Deposit set forth in Section 1(e) bears to
the initial rate of Base Rent set forth in Section 1(c) hereof. If Tenant
defaults with respect to any provision of this Lease, including but not limited
to the provisions relating to the payment of rent, Landlord may use, apply, or
retain all or any part of this security deposit for the payment of any rent or
any other sum in default, or for the payment of any other amount which Landlord
may spend or become obligated to spend by reason of Tenant's default or to
compensate Landlord for any other loss, cost or damage which Landlord may
suffer by reason of Tenant's default. If any portion of said
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deposit is so used or applied, Tenant shall, within five (5) business days after
written demand therefor deposit cash with Landlord in an amount sufficient to
restore the security deposit to its original amount, and Tenant's failure to do
so shall be a material breach of this Lease. Landlord shall not be required to
keep this security deposit separate from its general funds and Tenant shall not
be entitled to interest on such deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the security
deposit or any balance thereof shall be returned to Tenant (or, at Landlord's
option, to the last transferee of Tenant's interest hereunder) within a
reasonable time after both the expiration of the Lease term and the Tenant's
delivery of the Premises to Landlord. Tenant shall not assign nor encumber its
contingent rights in the security deposit, and neither shall Landlord nor its
successors or assigns be bound by any such assignment or encumbrance. In the
event of the termination of any ground or underlying lease or foreclosure of any
mortgage or trust deed now or hereafter affecting the Premises, Building or land
upon which the same are located, Tenant shall only look to the new Landlord for
return of the security deposit if such is actually transferred to said new
Landlord. Tenant hereby waives* provisions of law (i) which provide that
Landlord may claim from a security deposit only those sums reasonably necessary
to remedy defaults in payment of rent, to repair damage caused by Tenant or to
clean the Premises, it being agreed that Landlord may in addition claim those
sums reasonably necessary to compensate Landlord for any other loss or damage,
foreseeable or unforeseeable, caused by the act or omission of Tenant or any
officer, employee, agent or invitee of Tenant; and (ii) those which provide
that, upon the termination of Landlord's interest in the Premises, Landlord
shall either transfer to Landlord's successor, or refund to Tenant, any balance
remaining from security deposits and cleaning fees, it being agreed that if
Landlord transfers its interest in the Premises and the Security Deposit and
does not refund the Security Deposit to Tenant, Tenant shall look solely to
Landlord's successor for any refund to which Tenant may be entitled.
6. CONSTRUCTION AND ACCEPTANCE OF PREMISES.
(a) Construction. The Premises shall be constructed in accordance with
Exhibit "B" attached hereto. Upon default by Tenant in payment of any amount due
from Tenant in connection with the construction of Overstandard Tenant
Improvements or Tenant's Contribution, as those terms are defined in Exhibit
"B", in addition to any other remedies available at law or in equity, Landlord
shall be entitled to the same remedies against Tenant as in the case of a
default in the payment of rent under this Lease. Absent written notice of "punch
list" or "pick up" items from Tenant to Landlord within fifteen (15) days after
Tenant's taking possession of the Premises, there shall be a conclusive
presumption that the Premises and the Tenant Improvements are in good and
tenantable condition. Notwithstanding the foregoing, with respect to Landlord
Improvements of which the Premises are a part and, as well, with respect to
Tenant Improvements constructed by Landlord, Landlord shall have an affirmative
obligation, at Landlord's cost, to correct any defects in Landlord's work in the
Premises about which it receives written notice from Tenant within said fifteen
(15) day period and, thereafter as well, to the extent the cost of remedying
such defects can be passed on to Landlord's contractors pursuant to their
respective warranty obligations.
(b) Rentable Area Confirmation. The Rentable Area of the Premises
shall be confirmed in writing by the parties (in the form set forth in Exhibit
"D" attached hereto) when Landlord tenders possession of the Premises to Tenant,
and thereupon such written confirmation shall be attached hereto and the
Rentable Area, Base Rent, and Tenant's Proportionate Share of total Rentable
Area in the Building, as set forth in Section 1 hereof shall be modified
accordingly.
7. HOLDING OVER. Should Tenant, with or without Landlord's written
consent, hold over after the expiration of the term of this Lease, such
possession by Tenant shall be deemed to be a tenancy at sufferance terminable by
notice given at any time, upon each and all of the terms herein provided as may
be applicable to a tenancy at sufferance and any such holding over shall not
constitute an extension of this Lease. During such holding over, Tenant shall
pay in advance, monthly rent equal to the product of the Rentable Area times the
Base Rent per square foot of Rentable Area being quoted, generally, by Landlord
to prospective tenants. The foregoing provisions of this Article
* those present
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are in addition to and do not affect Landlord's right of re-entry or any other
rights of Landlord hereunder or as otherwise provided by law. If Tenant fails to
surrender the Premises upon the expiration of this Lease despite demand to do so
by Landlord, Tenant shall indemnify and hold Landlord harmless from all losses
or liability, including without limitation, any claim made by any succeeding
tenant founded on or resulting from such failure to surrender, and any loss of
rent from prospective tenants.
8. USE OF PREMISES. The Premises shall be used and occupied by Tenant for
executive, professional (except medical) and/or administrative office purposes
in connection with Tenant's business or profession described in Section 1(f)
hereof, and for no other purpose whatsoever. Tenant acknowledges that, except as
herein expressly provided, neither Landlord nor any agent of Landlord has made
any representation or warranty with respect to the Premises or the Building or
with respect to the suitability of either for the conduct of Tenant's profession
or business, nor has Landlord agreed to undertake any modification, alteration
or improvement to the Premises except as provided in this Lease. If any
governmental license or permit (other than the initial certificate of occupancy
for the Premises) shall be required for the proper and lawful conduct of
Tenant's business in the Premises, Tenant shall procure and thereafter maintain
such license or permit at its own expense. At the request of Landlord, Tenant
shall furnish Landlord with a copy of said license or permit, and Tenant shall
at all times comply with the terms and conditions of each such license or
permit. Any use of the Premises in violation of the Rules and Regulations
hereinafter described in Section 33(h) is expressly prohibited.
9. TAXES ON TENANT'S PROPERTY.
(a) Tenant's Personal Property. Tenant shall be liable for and shall
pay before delinquency taxes, assessments, license fees, and other similar
charges levied against any personal property or trade fixtures placed by Tenant
or at Tenant's direction in or about the Premises. On demand by Landlord, Tenant
shall furnish Landlord with satisfactory evidence of these payments. If any such
taxes on Tenant's personal property or trade fixtures are levied against
Landlord or Landlord's property or if the assessed value of the Building is
increased by the inclusion therein of a value placed upon such personal property
or trade fixtures of Tenant and if Landlord, after written notice to Tenant,
pays such taxes based upon such increased assessment, which Landlord shall have
the right to do regardless of the validity thereof, but only under proper
protest if requested by Tenant, Tenant shall, within ten (10) days of written
demand, reimburse Landlord for the taxes so levied against Landlord, or the
proportion of such taxes resulting from such increase in the assessment;
provided that, in any such event, Tenant shall have the right, in the name of
Landlord and with Landlord's full cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of any such taxes so paid under
protest, and any amount so recovered shall belong to Tenant.
10. ALTERATIONS. Tenant shall not make or allow any alterations, additions
or improvements in or to the Premises without Landlord's prior written consent
which shall not be unreasonably withheld or delayed and, then, only by
contractors or mechanics approved in advance in writing by Landlord. Landlord
shall have broad discretion to disapprove the use of outside contractors for
alteration work on the grounds of lack of experience or reputation, financial
unreliability, union problems, or because of undue administrative problems
associated with the presence of multiple contractors or outside contractors in
the building, simultaneously;
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provided, however, that Landlord shall not disapprove all outside contractors
unless Landlord or Landlord's general contractor is agreeable to acting as
general contractor for the performance of said work at a fee not to exceed
fifteen percent (15%) of the total cost (hard and soft) of said alterations.
Landlord shall have the right to condition its consent upon Tenant's covenant to
reimburse Landlord for the cost of removal of such alterations, additions or
improvements, upon the expiration of the term. All such work shall be done by
Tenant at such times and in such manner as Landlord may from time to time
designate and under Landlord's supervision. In each instance where Tenant
requires Landlord's approval of an alteration, Tenant shall furnish Landlord
with plans showing the proposed alteration to the Premises. Tenant covenants and
agrees that all work done by or pursuant to the direction and instruction of
Tenant shall be performed in full compliance with all laws, rules, orders,
ordinances, directions, regulations and requirements of all governmental
agencies, offices, departments, bureaus and boards having jurisdiction, and in
full compliance with the rules, orders, directions, regulations, and
requirements of the Insurance Service Office, and of any similar body. Before
commencing any work, Tenant shall give Landlord at least five (5) days written
notice of the proposed commencement of such work and shall if required by
Landlord, secure at Tenant's own cost and expense, a completion and lien
indemnity bond, satisfactory to Landlord, for said work. Landlord shall have the
right at all times to post notices of non-responsibility on the Premises and
record verified copies thereof in connection with all work of any kind upon the
Premises. Landlord shall be entitled to make a reasonable and customary charge
for any supervisory services rendered hereunder.
11. MAINTENANCE AND REPAIRS.
(a) The Premises. Except as may be Landlord's responsibility pursuant
to subsection (b) hereof, Tenant shall at Tenant's sole cost and expense keep
and maintain the Premises in good condition and repair: damage thereto from
causes beyond the reasonable control of Tenant and ordinary wear and tear
excepted. Subject to the provision of Section 16(a) hereof, all damage or injury
to the Premises or the Building in which the same are located, caused by the act
or negligence of Tenant, its employees, agents or visitors shall be repaired by
Landlord at Tenant's sole cost and expense. Tenant shall upon the expiration or
sooner termination of the term hereof surrender the Premises to Landlord in the
same condition as when construction of Tenant Improvements was completed,
ordinary wear and tear and damage from causes beyond the reasonable control of
Tenant excepted. Landlord shall have no obligation to shampoo or replace the
carpeting or draperies of the Premises during the term or any extension thereof.
Landlord shall have no obligation to alter, remodel, improve, repair, decorate,
or paint the Premises or any part thereof, and the parties hereto affirm that
Landlord has made no representations to Tenant respecting the condition of the
Premises or the Building, except as specifically herein set forth.
(b) The Building. Landlord shall repair and maintain the structural
portions of the Building, including the basic plumbing, air conditioning, and
electrical systems installed or furnished by Landlord. With respect to such
maintenance and repairs within the Premises, Landlord shall undertake same
within a reasonable time after written notice of the need for such maintenance
and repairs is given by Tenant and received by Landlord, but in no event less
than ten (10) days after receipt of such notice, unless delayed due to City
Ordinance or requirements outside of Landlord's control. If such maintenance and
repairs are necessitated in part or whole by the act, neglect, fault or omission
of any duty by Tenant, its agents, servants, employees or visitors, Tenant shall
pay to Landlord upon demand the reasonable cost (or portion thereof equitably
allocated to Tenant, in Landlord's best judgment) of such maintenance and
repairs. Landlord shall not be liable for any failure to make any repairs or to
perform any maintenance unless the Premises becomes untenantable or the repair
work precludes Tenant's reasonable access thereto for a period in excess of
thirty (30) consecutive days after written notice of the need for such repairs
or maintenance is given by Tenant to Landlord (and such untenantability or
inaccessibility is not attributable in the first instance to the act, neglect,
fault or omission of any duty by Tenant, its agents, servants, employees or
visitors) in which case, as Tenant's sole remedy, the Base Rent (to the extent
covered by Landlord's rent loss insurance) shall abate with respect to the
square footage of the Premises affected. Except as aforesaid and as provided in
Section 18 hereof, there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations, or
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improvements in or to any portion of the Building or the Premises or in or to
fixtures, appurtenances, and equipment therein. If, after ten (10) days from
tenant's written notice of the need for repairs, Landlord has not made an
attempt to begin such repair, Tenant shall have the right to make the repair and
deduct the cost from the rent. Tenant shall provide Landlord with evidence or
receipt reflecting such cost.
(c) Life Safety Systems. If there now is or shall be installed in the
Building a sprinkler system, heat or smoke detection system or any other so
called life-safety system, and any such system or any of its appliances shall be
damaged or injured or not in proper working order by reason of any act or
omission of Tenant, Tenant's agents, servants, employees, contractors, visitors
or licensees, Tenant shall forthwith notify Landlord, and Landlord shall restore
the same to good working condition at Tenant's cost and expense. If the
Insurance Services Office or any other similar body, or any bureau department or
official of the state, county or city government or any governmental authority
having jurisdiction, require or recommend that any changes, modifications,
replacements, alterations, or additional equipment be made or supplied in or to
any such system by reason of Tenant's business, or the location of partitions,
trade fixtures, or other contents of the Premises, or if any such changes,
modifications, replacements, alterations or additional equipment become
necessary to prevent the imposition of a penalty or charge against the full
allowance for any such system in the insurance rate as fixed by the Insurance
Services Office or any other similar body, or by any insurance company, Landlord
shall, at Tenant's cost and expense, make and supply such changes,
modifications, replacements, alterations or additional equipment.
(d) Right of Repossession. If, in order to perform Landlord's
obligations pursuant to Subsections (b) and (c), above, or to comply with any
law now or hereafter enacted, it becomes necessary for Landlord to recover
possession of all or any portion of the Premises, Landlord shall have the right
either to terminate this Lease on at least ninety (90) days prior written notice
or to relocate Tenant into space elsewhere in the Building (irrespective of the
amount of Rentable Area in the Premises) in accordance with Section 31 of this
Lease. This shall apply no more than one time during the Lease term and Tenant
shall be given prior notice at least ten (10) business days.
12. LIENS. Tenant shall keep the Premises, the Building, and the property
upon which the Building is situated, free from any liens arising out of the work
performed, materials furnished, or obligations incurred by Tenant. Tenant
further covenants and agrees that should any mechanic's lien be filed against
the Premises or against the Building for work claimed to have been done for, or
materials claimed to have been furnished to Tenant, said lien will be discharged
by Tenant, by bond or otherwise, within ten (10) days after the filing thereof,
at the cost and expense of Tenant.
13. BUILDING SERVICES.
(a) Services. Provided that Tenant is not in default hereunder, and
subject to the Rules and Regulations described in Exhibit "C" hereof, Landlord
agrees to furnish to the Premises, Monday through Friday, excepting generally
recognized holidays, the following services:
(i) Utilities. Air conditioning and heat, elevator service,
electric current for normal lighting and fractional horsepower office machines
and, on the same floor as the Premises, water for lavatory and drinking
purposes, all in such reasonable quantities, in the judgment of Landlord, as are
necessary for the comfortable occupancy of the Premises. Due to the high
electricity and air conditioning demands of electronic office machines (e.g.,
punch card machines, computers and data processing equipment) Landlord shall
have the right to restrict the use by Tenant of any such equipment which will
require in excess of 220 volts, or which will cause Tenant to consume
electricity at a level that is in excess of what can be deemed to be a normal
consumption rate per square foot of useable area for comparable office buildings
in the City of Los Angeles.
(ii) Janitorial. Janitorial services will be furnished by
Landlord five (5) days per week. Janitorial services shall include only ordinary
dusting and cleaning and, at Landlord's option, may include shampooing of
carpets or rugs one time per calendar year. Janitorial services shall not
include cleaning of draperies or upholstered furniture, or other unusual
services. Landlord may impose a reasonable additional charge for the usage of
any additional or unusual janitorial services required because of any
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unusual Tenant Improvements in the Premises, the carelessness of Tenant, the
unusual nature of Tenant's business and the removal of any refuse and rubbish
from the Premises other than discarded material placed in waste paper baskets
and left for emptying as an incident to Tenant's normal cleaning of the
Premises. The cost of any carpet cleaning performed by Landlord shall be at
competitive rates, and shall be paid by Tenant upon receipt of Landlord's
billing therefor. If Landlord shall clean the carpet at the Premises in
conjunction with cleaning the carpeting of other tenants in the Building,
Landlord's billing to Tenant shall reflect an equitable allocation of the
cleaning cost among all such tenants.
(iii) Signs. Landlord shall also provide and install, at Tenant's
expense, near the entry door to the Premises (the precise location to be in
Landlord's discretion), a sign to identify Tenant's official name, and trade
name, and Building suite number, all of which letters and characters shall be in
the standard graphics for the Building, and no others shall be used or permitted
on the Premises. Tenant shall have the right to the listing of its name on the
Building directory board in the main lobby.
(b) Limitations. Building services are subject to the following
limitations:
(i) Additional Charges. In addition to rent and other charges
required to be paid by Tenant under this Lease, Tenant agrees to pay for all
utilities and other services not provided in accordance with Section 13(a),
above, utilized by Tenant, and for all overtime or additional Building services
furnished to Tenant not uniformly furnished to all tenants of the Building.
Landlord shall be entitled to make a reasonable charge to Tenant for air
conditioning services furnished between the hours of 6 p.m. and 7 a.m. Monday
through Friday, and during any hours on Saturdays and Sundays and generally
recognized holidays. If, in Landlord's reasonable estimation, Tenant's use of
air conditioning, heat and electric current exceeds a level which is currently
normal and customary at offices of a similar size to the Premises, Tenant shall
pay to Landlord the reasonable cost of such excess usage. In the event Tenant
objects to Landlord's estimate of Tenant's excessive electricity usage, Tenant
may, at Tenant's sole cost and expense, install a meter at the Premises on
either a permanent or a test meter basis, to determine more precisely the extent
of Tenant's usage.
(ii) Interruption of Services. Landlord shall not be liable for,
and Tenant shall not be entitled to any abatement or a reduction of rent by
reason of Landlord's failure to furnish air conditioning, heating, elevator,
plumbing or other Building services, when such failure is caused by riot,
strike, labor disputes of any character, breakdowns, necessary inspection or
repairs, breakage, accidents, the unavailability of natural or other energy
resources, or any other cause beyond Landlord's reasonable control. Landlord
shall be entitled to cooperate voluntarily with the efforts of national, state
or local governmental agencies or utilities suppliers in reducing energy use or
the consumption of any other resources. Tenant shall give Landlord written
notice (the "Interruption Notice") in the event of the interruption of any
Building Services to be provided by Landlord pursuant to this Lease, which
interruption causes the Premises or any part thereof to be untenantable or
precludes Tenant's reasonable access thereto. Tenant's Interruption Notice shall
describe with particularity the service or utility interrupted and the portion
of the Premises affected thereby. Subject to the foregoing, if Landlord is
unable to restore the service or utility or Tenant's access to the Premises
within ten (10) days following receipt of Tenant's Interruption Notice, then, to
the extent covered by Landlord's rent loss insurance, the Base Rent during the
period of such interruption shall be abated in proportion to the ratio of the
square feet of Rentable Area of the Premises that are unusable as a result of
the interruption as compared to the square feet of Rentable Area of the Premises
immediately prior to the interruption, taking into account the differences, if
any, in the rental rates being charged to Tenant for different portions of the
Premises; provided, however, that if such interruption of services cannot
reasonably be restored within said thirty (30) day period and Landlord has
diligently attempted to restore the same, rent shall not begin to abate unless
and until such interruption of services shall have lasted for a period in excess
of thirty (30) days.
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(iii) Security. Landlord shall not be obligated to provide or
maintain any security patrol or security system in or at the Building; however,
Landlord may elect to so provide. Landlord shall not be responsible for the
effectiveness of any such patrol or system which may be provided hereunder, or
for damage or injury to Tenant, its employees, invitees or others due to the
failure, action or inaction, of such patrol or system.
(iv) Year Round Access. Subject to all of the aforesaid
limitations and the Rules and Regulations (Exhibit "C"), Landlord hereby assures
Tenant that it will have access to the Premises and Building parking facilities
twenty-four (24) hours per day, throughout the year. Landlord agrees that the
quality of the Building services provided will be at least comparable to the
quality of the building services provided by other first class office buildings
in the same general locality.
14. RIGHTS RESERVED BY LANDLORD.
(a) Entry to Premises. Landlord and its agents shall have the right to
enter the Premises at all reasonable times for the purpose of cleaning the
Premises or examining or inspecting the same, posting notices of
non-responsibility, showing the same to prospective tenants, lenders or
purchasers of the Building, or in the case of an emergency, and to make such
alterations, repairs, improvements or additions to the Premises or to the
Building as Landlord may deem necessary or desirable, taking due care not to
interfere with Tenant's business. If Tenant shall not personally be present to
open and permit an entry into the Premises at any time when such an entry by
Landlord is necessary by reason of emergency, Landlord may enter by means of a
master key or pass key or may enter forcibly, without liability to Tenant except
for any failure to exercise due care for Tenant's property, and any such entry
by Landlord 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
of Tenant from the Premises or any portion thereof. If, during the last month of
the term hereof, Tenant shall have removed substantially all of its property
therefrom, Landlord may immediately enter and alter, renovate, and redecorate
the Premises without eliminating or abating any rent or incurring any liability
to Tenant.
(b) Miscellaneous. In addition to any other rights provided herein,
Landlord shall have the following rights, exercisable in a reasonable manner
without notice to Tenant and without any obligation to exercise such rights: to
change the name of the Building; to designate all persons or organizations
furnishing sign painting and lettering used or consumed in the Building; to
grant to anyone the exclusive right to conduct any business in the Building,
provided such exclusive right shall not operate to exclude Tenant from the uses
expressly permitted under this Lease; to have access to all mail chutes, if any,
according to the rules of the United States Postal Service; to require all
persons entering or leaving the Building during such hours as Landlord may from
time to time reasonably determine to identify themselves to a watchman by
registration or otherwise, establishing their right to enter or leave, and at
any time to exclude or expel any peddler, solicitor, or beggar from the Premises
or the Building; to close the Building daily at such reasonable time as Landlord
may determine, subject, however, to Tenant's right to admittance at any time
under such reasonable regulations as shall be prescribed from time to time by
Landlord; to reasonably approve the weight, size and location of safes, vaults,
computers, machinery, book shelves and other heavy equipment and articles in and
about the Premises and the Building, and to require all such items to be moved
in and out of the Building or the Premises only at such times and in such manner
as Landlord shall direct, and in all events at Tenant's sole risk and
responsibility; to designate and/or approve, prior to installation, all types of
window shades, blinds, drapes, and other similar equipment which, in all events,
shall be installed on the interior side of Landlord's drapes, and to regulate
all internal lighting that may be visible from the exterior of the Building; to
decorate, alter, repair or improve the Premises, Building and parking
facilities, or maintain any service therein, at any time, including the erection
of scaffolding, props or other mechanical devices; to shore the foundations,
footings and walls of the Building; to do or permit to be done any necessary
work in or about the Premises or the Building or the parking facilities or any
adjacent or nearby land, street or alley. Except as elsewhere in this Lease
provided, any rights so exercised by Landlord shall be without any rebate or
abatement of rent to Tenant for any loss of occupancy or quiet enjoyment of the
Premises or damage,
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injury or inconvenience thereof occasioned, provided that the business of Tenant
shall be interfered with as little as is reasonably practicable.
15. INDEMNIFICATION AND WAIVER. Tenant hereby agrees to indemnify and hold
Landlord harmless against and from any and all claims of damages or injury
arising from Tenant's use of the Premises, Building common areas and parking
facilities, or the conduct of its business or from any activity, work, or thing
done, permitted or suffered by Tenant in the Premises, Building common areas and
parking facilities, and shall further indemnify and hold harmless Landlord
against and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease, or arising from any act, neglect, fault, or omission of the
Tenant, or of its agents, employees, visitors, invitees, or licensees, and from
and against all costs, reasonable attorneys' fees, expenses, and
liabilities incurred in or about any such claim or any action or proceeding
brought thereon; and in case any action or proceeding be brought against
Landlord by reason of such claim, Tenant, upon notice from Landlord, shall
defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to Tenant's property or injury to Tenant's employees,
agents, visitors, invitees and licensees in or upon the Premises, Building and
parking facilities, and Tenant hereby waives all claims in respect thereof, from
any cause whatsoever, against Landlord, except claims for personal injury or
property damage which are caused by the failure of Landlord to observe any of
the terms and conditions of this Lease (and such failure persists for an
unreasonable period of time after written notice of such failure) and those
claims for personal injury or property damage which arise from any neglect,
fault or omission of the Landlord, or of its agents or employees. Neither party
shall be liable to the other for any unauthorized or criminal entry of third
parties into the Premises, Building, or parking facilities, or for any damage to
person or property, or loss of property in and about the Premises, Building,
parking facilities and the approaches, entrances, streets, sidewalks or
corridors thereto, by or from any unauthorized or criminal acts of third
parties, regardless of any breakdown, malfunction or insufficiency of any
security measures, practices or equipment provided by Landlord or Tenant.
Tenant shall immediately notify Landlord in writing of any breakdown or
malfunction of any security measures, practices or equipment provided by
Landlord as to which Tenant has knowledge. Landlord shall not be liable to
Tenant for interference with the light or other incorporeal hereditaments or for
any damage therefrom to Tenant or Tenant's property from any cause beyond
Landlord's reasonable control. Tenant hereby agrees that in no event shall
Landlord be liable for consequential damages, including injury to Tenant's
business or any loss of income therefrom, nor shall Landlord be liable to Tenant
for any damages caused by the act or neglect of any other tenant in the
Building.
16. INSURANCE.
(a) Tenant's Property Insurance. At all times during the term hereof,
at its own cost and expense, Tenant shall maintain in effect policies of
property damage insurance covering (i) all leasehold improvements constructed by
Tenant (including any alterations, additions or improvements as may be made by
Tenant pursuant to Section 11 hereof) in which Tenant may have an insurable
interest, and (ii) trade fixtures, merchandise and other personal property from
time to time in, on or upon the Premises, both in amounts not less than one
hundred percent (100%) of their actual replacement cost from time to time during
the term of this Lease, providing protection against any peril included within
the classification "All Risk" inclusive of standard fire and extended coverage
insurance, together with endorsements against sprinkler damage, breakage of
glass, vandalism and malicious mischief. The proceeds of such insurance shall be
used for the repair or replacement of the property so insured, and any
deficiency shall be paid for by Tenant. Upon termination of this Lease following
a casualty pursuant to Section 18 hereof, the proceeds under (i) shall be paid
to Landlord and, and the proceeds under (ii) above shall be paid to Tenant.
(b) Tenant's Liability Insurance. Tenant shall, at all times during
the term hereof and at its own cost and expense, procure and continue in force
commercial or comprehensive general liability insurance for bodily injury and
property damage, adequate to protect Tenant and all additional insured parties
against liability for injury to or death of any person and/or damage to their
property, arising in connection with the construction of
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improvements in the Premises, or the use, operation or condition of the
Premises. Such insurance shall be in an amount of not less than a combined
single limit of Two Million Dollars ($2,000,000), insuring against any and all
liability of the insured with respect to said Premises or arising out of the use
or occupancy thereof, and under which the insurer agrees to indemnify and hold
harmless Tenant and all additional insured parties from and against all cost,
expense and/or liability arising out of or based upon Tenant's indemnification
obligations pursuant to Section 15 hereof.
(c) Tenant's Other Insurance. During the term of this Lease, Tenant
shall maintain, at Tenant's expense, workers compensation and employers
liability insurance as required by law; loss of income and business interruption
insurance in such amounts as will reimburse Tenant for direct or indirect loss
of earnings, income and extra expense for at least one year attributable to all
perils commonly insured against by prudent tenants, or attributable to the
inaccessibility of or to the Premises or the Building as a result of such
perils, or otherwise, preferably by the same insurance carrier that issues
Tenant's property insurance; and any other form of insurance as Landlord and/or
Landlord's lender may reasonably require from time to time, in such form and
amounts and for such insurance risks against which a prudent tenant would
protect itself.
(d) Insurance Carriers and Policies. All insurance required to be
carried by Tenant hereunder shall be issued by responsible insurance companies,
qualified to do business in the State of California, reasonably acceptable to
Landlord and Landlord's lender. Each policy shall name Landlord and, at
Landlord's request, any mortgagee of Landlord, as an additional insured, as
their respective interests may appear, and copies of all policies or
certificates evidencing the existence and amounts of such insurance shall be
delivered to Landlord by Tenant at least ten (10) days prior to Tenant's
occupancy of the Premises. A blanket policy is acceptable. No such policy shall
be cancellable except after ten (10) days prior written notice to Landlord and
Landlord's lender. Tenant shall furnish Landlord with renewals or "binders" of
any such policy at least ten (10) days prior to the expiration thereof. Tenant
agrees that if Tenant does not take out and maintain such insurance, Landlord
may (but shall not be required to) procure said insurance on Tenant's behalf and
charge the Tenant the premiums, plus a twenty-five percent (25%) handling
charge, payable upon demand. Tenant shall have the right to provide such
insurance coverage pursuant to blanket policies obtained by Tenant, provided
such blanket policies expressly afford coverage to the Premises and to Tenant as
required by this Lease.
(e) Coverage Increases. Not less often than every two and one-half
(2-1/2) years during the term of this Lease, Tenant and Landlord shall agree in
writing on the full replacement cost of the leasehold improvements and personal
property required to be insured by Tenant pursuant to Section 16(a), above. If,
in the reasonable discretion of Landlord or Landlord's lender, the amount or
type of Tenant's liability and/or property insurance coverage, or any other
amount or type of insurance at that time, is not adequate or not provided for
herein, Tenant shall either acquire or increase the insurance coverage as
required by either Landlord or Landlord's lender.
(f) Landlord's Insurance. Landlord shall maintain in effect, at all
times during the term of this Lease, such policies of insurance, in such amounts
and subject to such deductibles, as are not less than in keeping with what is
customarily provided in first-class buildings in Hollywood ("Community
Standards"), including property insurance covering the Building, the Parking
Facilities, and all tenant improvements constructed by Landlord and in which
Landlord may have an insurable interest, providing protection against any other
peril included within the classification "All Risk" inclusive of standard fire
and extended coverage insurance (and, at Landlord's option, with endorsements
for sprinkler damage, earthquake or flood insurance, if available), up to their
full replacement value, insurance covering all liability in connection with the
Building and the Parking Facilities, with bodily injury limits and property
damage limits and deductibles in accordance with Community Standards, and a
policy or policies of insurance providing for loss of rental income for at least
twelve (12) months pertaining to the Premises. Landlord's obligation to carry
the insurance provided for herein may be brought within the coverage of any
so-called blanket policy or polices of insurance carried and maintained by
Landlord.
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17. WAIVERS OF SUBROGATION. Each of the parties hereby waives any and all
right to recovery against the other or against any other tenant or occupant of
the Building, or against the officers, employees, agents, representatives,
customers, and business visitors of such other party or of such other tenant or
occupant of the Building, for loss or damage to such waiving party or its
property or the property of others under its control, arising from any cause
insured against under the standard form of property damage insurance policy with
all permissible extensions and endorsements covering extended perils or under
any other policy of insurance carried by such waiving party in lieu thereof, to
the extent such policies then in force permit such waiver.
18. DAMAGE OR DESTRUCTION. See Page 12(a)
(a) If the Premises or the Building in which the Premises are located
are damaged by any peril covered by Landlord's property insurance (or any other
peril required to be insured against by Landlord under the terms of this Lease):
(i) In the event of total destruction of the Building, this Lease
shall automatically be terminated as of the date of such casualty.
(ii) In the event of partial damage or destruction of the
Building, or of total or partial damage or destruction of the Premises, Landlord
shall be responsible for repairing such damage or destruction and restoring the
Building or the Premises, except in the following circumstances: (A) the repair
or restoration of the Premises or the Building, in Landlord's opinion, cannot be
completed within one hundred eighty (180) days of commencement of such repair or
restoration; (B) the cost of repair or restoration in Landlord's opinion will
exceed five percent (5%) of the full replacement cost of the Building and the
estimated cost thereof exceeds the insurance proceeds, if any, available for
repair or restoration (plus the deductible, if any, on Landlord's property
insurance), plus any amount which Tenant is obligated or elects to pay for such
repair or restoration; (C) the estimated cost of repair or restoration of the
Premises or Building, even though covered by insurance, exceeds fifty percent
(50%) of the full replacement cost of the Building; or (D) the Building cannot
be restored except in a substantially different structural or architectural form
than existed before the damage and destruction. In the foregoing circumstances,
Landlord shall have the option to either terminate this Lease or to repair or
restore the Premises or the Building. In the event that Landlord elects to
terminate this Lease, Landlord shall give notice to Tenant within thirty (30)
days after the occurrence of such damage or destruction, terminating this Lease
as of the date specified in such notice, which date shall not be less than
thirty (30) nor more than ninety (90) days after the giving of such notice. In
the event such notice is given, this Lease shall expire and all interest of
Tenant in the Premises shall terminate on the date specified in the notice, and
the rent (abated proportionately in the ratio in which Tenant's use of said
Premises has been impaired since the date of such partial destruction of the
Building or of the Premises) shall be paid up to the date of termination.
Landlord shall refund to Tenant the rent theretofore paid for any Period of time
subsequent to such date.
(b) Notwithstanding anything to the contrary contained in Section
18(a), Landlord shall not have any obligation whatsoever to repair or restore
the Premises when the damage or destruction resulting from any peril covered
under Section 18(a) costs more than one month's Base Rent to repair or restore,
and occurs during the last twelve (12) months of the term of this Lease, or any
extension thereof; provided, however, that Landlord shall give Tenant notice of
such intent within thirty (30) days of the occurrence of such damage or
destruction, whereupon this Lease shall terminate effective as of the date of
such casualty, and Landlord shall refund to Tenant the rent theretofore paid for
any period of time subsequent to such date, unless within said thirty (30) day
period Tenant gives Landlord written notice of its election to pay for such
repair or restoration.
(c) In the event of either total or partial destruction of the
Premises (costing more than one month's Base Rent to repair or restore) or the
partial destruction of the Building (costing more than six (6) months scheduled
Base Rent for the entire Building to repair or restore) due to any cause other
than a peril covered by Landlord's property insurance (or any other insurance
required to be carries by Landlord under the terms of this Lease),
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<PAGE>
DAMAGE OR DESTRUCTION.
Section 18 of the Lease is hereby amended by the addition thereto of
the following paragraph:
Notwithstanding anything contained in this Lease to the contrary
but without limiting or restricting any other rights available to the Tenant
hereunder, in the event of any partial or total damage or destruction of the
Premises, the Tenant shall be entitled to a proportionate rent abatement. In
addition, if the Premises are damaged to the extent of 50% or more of the cost
of replacement thereof, Tenant shall have the right to terminate this Lease. In
the event Tenant does not elect to terminate this Lease, Tenant shall receive a
full rental abatement until the Premises are adequately repaired and restored.
- 12 (a) -
<PAGE>
if Tenant is not obligated or does not elect to pay for the repair and
restoration of same, Landlord may elect to terminate this Lease, giving notice
as required under Section 18(a).
(d) In the event Landlord is obligated to repair or restore as herein
provided, commencing five (5) days after the occurrence of such damage, the
rental to be paid under this Lease shall be abated proportionately in the ratio
which the Tenant's use of said Premises has been impaired from the date of such
partial destruction of the Building or of the Premises until such portion of the
Premises is again useable. The Tenant shall not be entitled to any compensation
or damages from Landlord for loss of the use of the whole or any part of said
Premises or for any inconvenience or annoyance occasioned by any such damage,
repair or restoration, or for any direct or indirect loss of earnings, income
and extra expense attributable thereto. Landlord shall exert reasonable efforts
to make such repair or restoration promptly and in such manner as not to
interfere unreasonably with Tenant's use and occupancy of the Premises, but
Landlord shall have no obligation to perform such work on an overtime or
premium-pay basis.
(e) Notwithstanding anything to the contrary contained in this Section
18, should Landlord be delayed or prevented from repairing or restoring said
damaged Premises or should the Premises continue to be inaccessible for Six (6)
months after the occurrence of such damage or destruction for any reason or
cause whatsoever, thereafter, but for a period of thirty (30) days, only,
Landlord and Tenant shall each have the right to terminate this Lease, effective
upon thirty (30) days prior written notice.
(f) It is hereby acknowledged that if Landlord is obligated to, or
elects to repair or restore as herein provided, Landlord shall be obligated to
make repairs or restoration only of those portions of said Building and said
Premises which were originally provided at Landlord's expense, and the repair
and restoration of items within the Premises not provided at Landlord's expense
shall be the obligation of Tenant. Tenant understands that Landlord will not
carry insurance of any kind on Tenant's furniture, furnishings, trade fixtures,
equipment or other personal property, and that Landlord shall not be obligated
to repair any damage thereto or replace the same.
(g) Notwithstanding any damage or destruction to the Premises or the
Building, including the parking facilities and interior and adjacent landscaped
areas, Tenant shall not be released from any of its obligations under this Lease
except to the extent and upon the conditions expressly stated in this Section
18.
19. EMINENT DOMAIN. If the whole of the Premises shall be taken, or such
part thereof shall be taken as shall substantially interfere with Tenant's use
and occupancy of the balance thereof, under power of eminent domain, or sold,
transferred, or conveyed in lieu thereof, either Tenant or Landlord may
terminate this Lease as of the date of such condemnation or as of the date
possession is taken by the condemning authority, whichever date occurs later. If
any part of the Building other than the Premises, including parking facilities
and interior and adjacent landscaped areas, shall be so taken, sold, transferred
or conveyed in lieu thereof, Landlord shall have the right, at its option, to
terminate this Lease as of the date of such condemnation or as of the date
possession is taken by the condemning authority. No award for any partial or
entire taking shall be apportioned, and Tenant hereby assigns to Landlord any
award which may be made in such taking or condemnation, together with any and
all rights of Tenant now or hereafter arising in or to the same or any part
thereof; provided, however, that nothing contained herein shall be deemed to
give Landlord any interest in or require Tenant to assign to Landlord any award
made to Tenant for the taking of personal property and fixtures belonging to
Tenant and removable by Tenant at the expiration of the term hereof, as provided
hereunder, or for the interruption of, or damage to Tenant's business or for
relocation expenses recoverable against the condemning authority, or for the
loss of Tenant's good will. In the event of a partial taking, or a sale,
transfer, or conveyance in lieu thereof, which does not result in a termination
of this Lease, Landlord shall, to the extent of any funds received from the
condemning authority for repair
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<PAGE>
or restoration, promptly restore the Premises substantially to their condition
prior to such partial taking and, thereafter, rent shall be abated in the
proportion which the square footage of the part of the Premises so made unusable
bears to the amount of Rentable Area immediately prior to the taking. No
temporary taking of a part of the Premises or of the Building, including parking
facilities and interior and adjacent landscaped areas, shall give Tenant any
right to terminate this Lease or to any abatement of rent hereunder. Tenant
shall have the right to pursue a separate claim against the condemning
authority.
20. DEFAULT.
(a) Definition. Any of the following events shall constitute a default
under this Lease by Tenant:
(i) Failure by Tenant to make any payment of rent or other
payment required by this Lease on the date when the same is due (after written
notice of 2 or more days) and the continuance of such failure for a period of
five (5) days;
(ii) The vacating (except as may be necessary to facilitate the
reoccupancy of the Premises for a permitted use pursuant to an assignment or
subletting authorized under the terms hereof) or the abandoning (which is deemed
to include absence from the Premises for more than thirty (30) days while in
default of any material provision of this Lease) of the Premises by Tenant;
(iii) Except as expressly permitted under this Lease, any attempted
conveyance, assignment, mortgage or subletting of this Lease;
(iv) The making by Tenant of a general assignment or general
arrangement for the benefit of creditors; the filing by or against Tenant of a
petition to have Tenant adjudged bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy and the failure of Tenant, or
Tenant's trustee-in-bankruptcy (as the case may be) to assume this Lease within
sixty (60) days after the date of the filing of the petition, (or within such
additional time as the court may fix for cause within such sixty (60) day
period), or the rejection of this Lease by Tenant or the trustee of Tenant
during such sixty (60) day period; or if this Lease is assumed, then the failure
of Tenant or the trustee to comply with the provisions of Section 21(f) hereof;
the taking of any action at the corporate level by Tenant to authorize the
filing of a petition-in-bankruptcy on behalf of Tenant; the appointment by a
court other than a bankruptcy court of a trustee or receiver to take possession
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease unless possession is restored to Tenant within thirty
(30) days; in the event this Lease is assumed by a trustee appointed for Tenant
or by Tenant as debtor-in-possession under the provisions of Section 21(f)(2)
hereof and, thereafter, the Tenant is either adjudicated a bankrupt or files a
subsequent Petition for Arrangement under Chapter 11 of the Bankruptcy Code;
(v) The attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days;
(vi) The failure by Tenant to observe or perform any covenant,
condition, or provision in this Lease not already specifically mentioned in this
Section 20(a), where such failure is material and continues for thirty (30) days
after written notice from Landlord notifying Tenant of such failure; provided,
however, that if the nature of Tenant's failure is such that more than thirty
(30) days are reasonably required for its cure, then Tenant shall not be in
default if it begins such cure within the thirty (30) day period described above
and thereafter diligently prosecutes such cure to completion.
(vii) If Tenant or any guarantor of Tenant's obligations hereunder
("Guarantor") shall be adjudicated insolvent pursuant to the provisions of any
present or future insolvency law under the laws of the State of California, or
if any proceedings are filed by or against such Guarantor under the United
States Bankruptcy Code (11 U.S.C. Section 101 et seq.), or any similar
provisions of any future federal bankruptcy law, or if a receiver or a trustee
of the property of Guarantor shall be appointed under California law by reason
of Tenant's or the Guarantor's insolvency or inability to pay its debts as they
become due or otherwise; or if any assignment shall be made of Guarantor's
property for the benefit of creditors under California law.
(b) Remedies. In the event of any default by Tenant, Landlord may
promptly or at any time thereafter, upon notice and demand and without
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limiting Landlord in the exercise of any other right or remedy which Landlord
may have by reason of such default or breach:
(i) Terminate Tenant's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event,
Landlord shall be entitled to recover from Tenant:
(A) The worth at the time of award of the unpaid rent which
had been earned at the time of termination;
(B) The worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time of
the award exceeds the amount of such rental loss;
(C) The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss;
(D) Any other amount necessary to compensate Landlord for
all detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including, but not limited to: the cost of recovering
possession of the Premises, expenses of reletting (including advertising),
brokerage commissions and fees; the cost of putting the Premises in good order,
condition and repair, including necessary renovation and alteration of the
Premises, reasonable attorney's fees, court costs; the cost of maintaining the
Premises; the cost incurred in the appointment of and performance by a receiver
to protect the Premises or Landlord's interest under the Lease; the cost of
cleanup of any hazardous substance that may have been released in the Premises
or the Building by Tenant; and any other reasonable cost.
The "worth at the time of award" of the amounts referred to in subsections (A)
and (B) above shall be computed by allowing interest at the rate of 12% per
annum. The "worth at the time of award" of the amount referred to in subsection
(C) above shall be computed by discounting such amount at one (1) percentage
point above the discount rate of the Federal Reserve Bank of San Francisco at
the time of award; or
(ii) Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the State of California.
Landlord shall first attempt to mitigate the damages by using its best efforts
to secure a new Tenant. If successful and rent is less, Tenant would be
responsible only for the difference.
(c) Alternative Remedy. Even though Tenant has breached this Lease and
abandoned the Premises, at Landlord's option this Lease shall continue in effect
for so long as Landlord does not terminate Tenant's right to possession, and
Landlord may enforce all of its rights and remedies hereunder, including the
right to recover rent as it comes due under this Lease, and in such event
Landlord will permit Tenant to sublet the Premises or to assign his interest in
the Lease, or both, with the consent of Landlord, which consent will not
unreasonably be withheld provided the proposed assignee or sublessee is
reasonably satisfactory to Landlord as to credit and will occupy the Premises
for the same purposes specified herein, and such tenancy is not inconsistent
with Landlord's commitments to other tenants in the Building. For purposes of
this subsection (c), the following shall not constitute a termination of
Tenant's right to possession: (i) acts of maintenance or preservation or efforts
to relet the Premises; or (ii) the appointment of a receiver under the
initiative of Landlord to protect Landlord's interest under this Lease.
(d) Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other charges due under this Lease will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult to ascertain. Such costs include, but are not
limited to processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other charge due from
Tenant is not received by Landlord or Landlord's designee within ten (10) days
after such amount shall be due, then, at Landlord's election and upon Landlord's
demand, Tenant shall pay to Landlord a late charge equal to five percent (5%) of
such overdue amount, and in such event the parties hereby
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<PAGE>
agree that such late charge represents a fair and reasonable estimate of the
costs Landlord will incur by reason of the late payment by Tenant. No late
charge may be imposed more than once for the same late rental payment.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant's default with respect to such overdue amount, nor prevent Landlord
from exercising any other rights and remedies granted to it hereunder.
(e) Insolvency. In the event of the occurrence of any of the events
specified in Section 20(a)(iv), if Landlord shall not choose to exercise, or by
law shall not be able to exercise, its rights hereunder to terminate this Lease
upon the occurrence of such events, then, in addition to any other rights of
Landlord hereunder or by law, (i) Landlord shall not be obligated to provide
Tenant with any of the services specified in Section 13, unless Landlord has
received compensation in advance for such services, and the parties agree that
Landlord's estimate of the compensation required with respect to such services
shall control, and (ii) neither Tenant, as debtor-in-possession, nor any trustee
or other person (hereinafter collectively called the "Assuming Tenant") shall be
entitled to assume this Lease unless, on or before the date of such assumption,
the Assuming Tenant (x) cures, or provides adequate assurance that the latter
will promptly cure, any existing default under this Lease, (y) compensates, or
provides adequate assurance that the Assuming Tenant will promptly compensate,
Landlord for any pecuniary loss (including, without limitation, reasonable
attorneys' fees and disbursements) resulting from such default, and (z) provides
adequate assurance of future performance under this Lease, it being covenanted
and agreed by the parties that, for such purposes, any cure or compensation
shall be effected by the immediate payment of any monetary default of any
required compensation, or the immediate correction or bonding of any nonmonetary
default; any "adequate assurance" of such cure or compensation shall be effected
by the establishment of an escrow fund for the amount at issue or by bonding,
and "adequate assurance" of future performance shall be effected by the
establishment of an escrow fund for the amount at issue or by bonding, it being
covenanted and agreed by Landlord and Tenant and the foregoing provision has a
material part of the consideration for this Lease.
21. ASSIGNMENT AND SUBLETTING. See Page 16(a)
(a) General Prohibition. Tenant shall not assign or transfer this
Lease, or any interest therein, and shall not sublet the Premises or any part
thereof, or any right or privilege appurtenant thereto, or suffer any other
person (the invitees, agents and servants of Tenant excepted) to occupy or use
the Premises, or any portion thereof, or agree to any of the foregoing, except
in accordance with subsection (b), below. Neither this Lease nor any interest
therein shall be assignable as to the interest of Tenant by operation of law.
Tenant shall not pledge, hypothecate or encumber this Lease, or any interest
therein, without in each case first obtaining the written consent of Landlord,
which consent shall not unreasonably be withheld. Any such assignment, transfer,
pledge, hypothecation, encumbrance, sublease or occupation of, or the use of the
Premises by any other person without such consent, shall be void. Any consent to
any assignment, transfer, pledge, hypothecation, encumbrance, sublease or
occupation or use of the Premises by any other person which may be given by
Landlord shall not constitute a waiver by Landlord of the provisions of this
Section 21 or a release of Tenant from the full performance by it of the
covenants herein contained.
(b) Consent Procedure. If Tenant desires at any time to assign this
Lease or sublet all or any portion of the Premises, Tenant shall comply with the
following terms and conditions:
(1) Tenant shall first notify Landlord at least thirty (30) days
prior to the proposed effective date of the assignment or sublease, in writing,
of its desire to do so and shall submit in writing to Landlord (1) the name of
the proposed sub-tenant or assignee, (2) the nature of the proposed sub-tenant's
or assignee's business to be carried on in the Premises, (3) the terms and
conditions of the proposed sublease or assignment and (4) financial statements
for the two most recent completed fiscal years of the proposed sub-tenant or
assignee, and a bank reference. Thereafter, Tenant shall furnish such
supplemental information as Landlord may reasonably request concerning the
proposed sub-tenant or assignee. At any time within fifteen (15) days after
Landlord's receipt of the information specified above, Landlord may by written
notice to Tenant elect to (1) consent to the sublease
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or assignment, or (2) disapprove of the sublease or assignment, setting forth in
writing Landlord's commercially reasonable grounds for doing so. Such grounds
may include, without limitation, (1) a material increase in the impact upon the
Building Services and common areas of the Building or its parking facilities,
(2) a material increase in the demands upon utilities and services supplied by
Landlord, (3) a possible material adverse effect upon the reputation of the
Building from the identity of the proposed assignee or subtenant, or from the
nature of the business to be conducted, (4) that such an assignment or
subletting with Landlord's consent may result in the breach of a provision in a
lease, deed of trust, security agreement or other financing arrangement by which
Landlord is bound, relating to the Building, (5) a reputation for financial
reliability on the part of the proposed sub-tenant or assignee which is
unsatisfactory in the reasonable judgment of Landlord, (6) that the proposed
assignee or subtenant is a branch, agency or office of any federal, state,
county, municipal or city governmental or quasi-governmental entity, or that of
any foreign government, or their offices, embassies or consuls, or (7) that the
proposed assignee or subtenant is then an existing tenant in the Building, and
Landlord then has comparable space elsewhere in the Building available to
accommodate that existing tenant's needs. If Landlord consents to the sublease
or assignment within the fifteen (15) day period, Tenant may thereafter enter
into such assignment or sublease of the Premises, or a portion thereof, upon the
terms and conditions and as of the effective date set forth in the information
furnished by Tenant to Landlord.
(2) Notwithstanding Landlord having granted its consent to any
assignment of subleasing, prior to the effective date of any assignment or the
commencement date of any sublease, Landlord shall be furnished with (A) a copy
of the fully executed sublease or assignment of lease agreement, and (B)
Tenant's written certification of the sums contributed by Tenant, if any, for
leasehold improvements to be made (by a contractor approved by Landlord) to the
subleased or assigned portion of the Premises (at no cost or expense to
Landlord) in connection with said subleasing, and any other reasonable
out-of-pocket concessions furnished to such sublessees or assignees by Tenant;
(3) No sublease of the Premises or portion thereof, or assignment
of this Lease, shall be for a period of less than one (1) year, nor shall any
sublease extend beyond the expiration date of the term of this Lease;
(4) No sublease or assignment shall permit the sublessee or
assignee to operate or use the Premises, or portion thereof; for any use or uses
for which another tenant in the Building has the exclusive right to such use or
uses in the Building;
(5) Tenant shall pay to Landlord, in addition to the Base Rent
payable hereunder, the following sums within five (5) business days following
the due dates of such sums: (a) fifty percent (50%) of the amount by which (i)
the rent payable by such assignee, sublessee or sublessees to Tenant throughout
the term exceeds (ii) the rent otherwise payable by Tenant to Landlord under
this Lease; plus (b) fifty percent (50%) of all other consideration payable for
the assignment or sublease of this Lease including, but not limited to, key
money and the purchase price paid by such assignee, sublessee or sublessees for
any personal property of Tenant to the extent it exceeds its fair market value.
The foregoing is a freely negotiated arrangement between Landlord and Tenant
respecting the allocation of appreciated rentals. This covenant shall survive
the expiration of the term of this Lease; and
(6) Any notice by Tenant to Landlord pursuant to this Section
21(b), of a proposed assignment or subletting, shall be accompanied by a payment
of $150 as a non-refundable fee for Landlord's time and the processing of
Tenant's request for Landlord's consent. In addition to said fee, Tenant shall
reimburse Landlord for reasonable attorney's fees incurred by Landlord, if any,
in connection with such review and the preparation of documents in connection
therewith, in an amount not to exceed $500.00.
(c) Assumption of Liability. Each permitted assignee, transferee or
sublessee, other than Landlord, shall assume and be deemed to have assumed this
Lease and shall be and remain liable jointly and severally with Tenant for the
payment of the rent and for the due performance or satisfaction of all of the
provisions, covenants, conditions and agreements herein contained on Tenant's
part to be performed or satisfied. No permitted assignment or
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sublease shall be binding on Landlord unless such assignee, sublessee or Tenant
shall deliver to Landlord a counterpart of such assignment or sublease which
contains a covenant of assumption by the assignee or sublessee, but the failure
or refusal of the assignee or sublessee to execute such instrument of assumption
shall not release or discharge the assignee or sublessee from its liability as
set forth above.
(d) Indirect Transfers. If Tenant is a partnership, a transfer of any
interest of a general partner, a withdrawal of any general partner from the
partnership, or the dissolution of the partnership, shall be deemed to be an
assignment of this Lease.
(e) Public Companies. If Tenant is a corporation, unless Tenant is a
public corporation, viz., whose stock is regularly traded on a national stock
exchange, or is regularly traded in the over-the-counter market and quoted on
NASDAQ, any dissolution, merger, consolidation, or other reorganization of
Tenant or sale or other transfer of a percentage of capital stock of Tenant
which results in a change of controlling persons, or the sale or other transfer
of substantially all of the assets of Tenant, shall be deemed to be an
assignment of this Lease.
(f) Bankruptcy. (1) In the event that Tenant shall file a petition, or
an order for relief is entered against the Tenant, under Chapter 7, 9, 11 or 13
of the Bankruptcy Code (11 USC Section 101 et seq.) (the "Bankruptcy Code"), and
the trustee of Tenant shall elect to assume this Lease for the purpose of
assigning the same, such assumption and/or assignment may only be made if all of
the terms and conditions of subsections (2) and (3) hereof are satisfied. If
such trustee or debtor-in-possession, as the case may require, shall fail to
elect to assume this Lease within sixty (60) days after such trustee of Tenant
shall have been appointed, or the date of filing of the petition, as the case
may be, this Lease shall be deemed to have been rejected. Landlord shall
thereupon immediately be entitled to possession of the Premises without further
obligation to the Tenant or Tenant's trustee in bankruptcy, and this Lease shall
be cancelled, but Landlord's right to be compensated for damages in such
bankruptcy proceeding shall survive such cancellation.
(2) No election to assume this Lease shall be effective unless in
writing and addressed to Landlord and unless, in the Landlord's business
judgment, all of the following conditions, which Landlord and Tenant acknowledge
to be commercially reasonable, have been satisfied:
(A) The trustee or the debtor-in-possession has cured or has
provided Landlord "adequate assurance" (as defined hereunder) that:
(i) within ten (10) days from the date of such
assumption, the trustee (or debtor-in-possession) will cure all monetary
defaults under this Lease; and
(ii) within thirty (30) days from the date of such
assumption, the trustee (or debtor-in-possession) will cure all nonmonetary
defaults under this Lease.
(B) The trustee or the debtor-in-possession has compensated,
or has provided to Landlord adequate assurance that within ten (10) days from
the date of assumption Landlord will be compensated, for any pecuniary loss
incurred by Landlord arising from the default of the Tenant, the trustee, or the
debtor-in-possession, as recited in Landlord's written statement of pecuniary
loss sent to the trustee or debtor-in-possession;
(C) The trustee or the debtor-in-possession has provided
Landlord with adequate assurance of the future performance of each of Tenant's
obligations under the Lease; provided, however, that:
(i) The trustee or debtor-in-possession shall also
deposit with Landlord, as security for the timely payment of rent, an amount
equal to three (3) months' of the then current Base Rent and other monetary
charges accruing under this Lease; and
(ii) The obligations imposed upon the trustee or
debtor-in-possession shall continue with respect to Tenant after the completion
of bankruptcy proceedings.
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(D) Landlord has determined that the assumption of the Lease
will not:
(i) Breach any provision in any other lease, mortgage,
financing agreement or other agreement by which Landlord is bound relating to
the Building; or
(ii) Disrupt, in Landlord's judgment, the reputation
and profitability of the Building.
(E) For purposes of this subsection (2), "adequate
assurance" shall mean:
(i) Landlord shall determine that the trustee or the
debtor-in-possession has and will continue to have sufficient unencumbered
assets after the payment of all secured obligations and administrative expenses
to assure Landlord that the trustee or debtor-in-possession will have sufficient
funds to fulfill the obligations of Tenant under this Lease; and
(ii) An order shall have been entered segregating
sufficient cash payable to Landlord and/or there shall have been granted a valid
and perfected first lien and security interest in property of the Tenant,
trustee or debtor-in-possession, acceptable as to value and kind to Landlord, to
secure to Landlord the obligation of the Trustee or debtor-in-possession to cure
the monetary and/or nonmonetary defaults under this Lease within the time
periods set forth above.
(3) If the Trustee or debtor-in-possession has assumed the Lease
pursuant to the terms and provisions of subsections (1) and (2) herein, for the
purpose of assigning (or election to assign) the Tenant's interest under this
Lease or the estate created thereby, to any other person, such interest or
estate may be so assigned only if Landlord shall acknowledge in writing that the
intended assignee has provided "adequate assurance" (as defined in this
subsection (3)) of future performance of all of the terms, covenants and
conditions of this Lease to be performed by Tenant. For purposes of this
Section, adequate assurance of future performance shall mean that Landlord shall
have ascertained that each of the following conditions has been satisfied:
(A) The assignee has submitted a current financial statement
audited by a Certified Public Accountant which shows a net worth and working
capital in amounts determined to be sufficient by Landlord to assure the future
performance by such assignee of the Tenant's obligations under this Lease;
(B) If requested by Landlord, the assignee shall have
obtained guarantees in form and substance satisfactory to Landlord from one or
more persons who satisfy Landlord's standards of creditworthiness;
(C) Landlord has obtained all consents or waivers from any
third party required under any lease, mortgage, financing arrangement or other
agreement by which Landlord is bound to enable Landlord to permit such
assignment;
(D) This assignee has deposited an adequate security deposit
with Landlord; and
(E) The assignee has demonstrated that its intended use of
the Premises is consistent with the terms of this Lease and will not diminish
the reputation of the Building, or violate any "exclusive" which has been
granted to another tenant in the Building.
(4) When, pursuant to the Bankruptcy Code, the trustee or
debtor-in- possession shall be obligated to pay reasonable use and occupancy
charges for the use of the Premises or any portion thereof, such charges shall
not be less than the then current Base Rent as defined in this Lease and other
monetary obligations of Tenant.
(5) Neither Tenant's interest in the Lease, nor any lesser
interest of Tenant herein, nor any estate of Tenant hereby created, shall pass
to any trustee, receiver, assignee for the benefit of creditors, or any other
person or entity, or otherwise by operation of law under the laws of any state
having jurisdiction of the person or property of the Tenant ("state law") unless
Landlord shall consent to such transfer in writing. No acceptance by
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Landlord of rent or any other payments from any such trustee, receiver,
assignee, person or other entity shall be deemed to have waived, nor shall it
waive the need to obtain Landlord's consent or Landlord's right to terminate
this Lease for any transfer of Tenant's interest under this Lease without such
consent.
(6) Any person or entity to which this Lease is assigned pursuant
to the provisions of the Bankruptcy Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Lease on or after
the date of such assignment. Any such assignee shall, upon demand, execute and
deliver to Landlord an instrument confirming such assumption.
(g) Tenant's Acknowledgment. Tenant expressly acknowledges that the
limitations and restrictions on its right to assign this Lease or to sublet the
Premises, as set forth in this Section 21, are a part of the economic terms of
this Lease that were expressly bargained for at the time this Lease was entered
into by Landlord and Tenant.
22. SUBORDINATION. This Lease is subject and subordinate to all ground or
underlying leases, mortgages, and deeds of trust which now affect the Premises,
the Building and the real property of which it is a part, and to all renewals,
modifications, consolidations, replacements, and extensions thereof. If the
lessor under any such lease or the holder or holders of any such mortgage or
deed of trust shall advise Landlord that they desire or require this Lease to be
prior and superior thereto, upon written request of Landlord to Tenant, Tenant
agrees promptly to execute, acknowledge, and deliver any and all documents or
instruments which Landlord or such lessor, holder, or holders deem necessary or
desirable for purposes thereof. Landlord shall have the right to cause this
Lease to be and become and remain subject and subordinate to any and all ground
or underlying leases, mortgages or deeds of trust which may hereafter be
executed covering the Premises, the Building and the real property of which it
is a part, or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof. Tenant agrees, within ten (10) days after Landlord's written request
therefor, to execute, acknowledge, and deliver any and all documents or
instruments requested by Landlord, or that are necessary or proper to assure the
subordination of this Lease to any such mortgages, deeds of trust, or leasehold
estates; provided, however, that the foregoing provisions with respect to such
election of subordination by Landlord shall not be effective unless the owner or
holder of any such mortgage, deed of trust, or the lessor under any such
leasehold estate shall execute with Tenant a nondisturbance agreement under
which such owner, holder, or lessor shall agree, in the event of termination of
such leasehold estate or upon the foreclosure of any such mortgage or deed of
trust, that Tenant's quiet enjoyment of the Premises will not be disturbed so
long as Tenant pays rent and observes and perform all of the provisions of this
Lease to be observed and performed by Tenant. Tenant's failure to deliver such a
document or instrument of subordination within such ten (10) day period shall,
at the option of Landlord, constitute a material breach or default under this
Lease. Notwithstanding anything to the contrary set forth in this Section 22,
Tenant hereby attorns and agrees to attorn to any person, firm, or corporation
purchasing or otherwise acquiring the Building and the real property of which it
is a part, at any sale or other proceeding or pursuant to the exercise of any
other rights, powers, or remedies under such mortgages, or deeds of trust, or
ground or underlying leases, at their option, as if such person, firm, or
corporation had been named as Landlord herein; it being intended hereby that if
this Lease is terminated, cut off, or otherwise defeated by reason of any act or
actions by the owner or holder of any such mortgage or deed of trust or the
lessor under any such leasehold estate, then, at the option of any such
person, firm, or corporation so purchasing or otherwise acquiring the Building
and the real property of which it is a part, this Lease shall continue in full
force and effect. If Tenant does not execute such subordinate document required
by this Section 22, Tenant hereby appoints Landlord the attorney-in-fact of
Tenant, irrevocably, to execute and deliver any documents provided for herein
for and in the name of Tenant; such power, being coupled with an interest, being
irrevocable.
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23. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.
(a) Estoppel Certificates. Tenant shall at any time and from time to
time, upon not less than ten (10) days' prior written notice from Landlord,
execute, acknowledge, and deliver to Landlord a statement in writing certifying,
affirming or confirming certain information including, without limitation, that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect) and the dates to which the rental, the security
deposit, if any, and other charges, if any, are paid in advance, and
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, and no events or conditions then in existence
which, with the passage of time or notice or both, would constitute a default on
the part of Landlord hereunder, or specifying such defaults, events, or
conditions, if any are claimed. Such statement may also include an
acknowledgment by Tenant that any purported cancellation of this Lease,
reduction in its effective rate of rent, shortening of its term or extension of
its term at a reduced effective rate of rent, shall not be binding upon any
encumbrancer or any other person, firm or corporation, acquiring the Building
and/or the real property of which it is a part, at any sale or other
proceedings, or pursuant to the exercise of any other rights, powers or remedies
under any mortgages or deeds of trust, without said encumbrancer's prior written
consent. It is expressly understood and agreed that any prospective purchaser or
encumbrancer of all or any portion of the Building or of the real property of
which it is a part shall be entitled to rely upon any such statement. Tenant's
failure to deliver such statement within such time shall, at the option of
Landlord, constitute a material breach or default under this Lease. If such
option is not so exercised by Landlord (and despite any later delivery by Tenant
of such statement), Tenant's failure to deliver same in a timely manner shall be
conclusive upon Tenant that (i) this Lease is in full force and effect without
modification except as may be represented by Landlord; (ii) there are no uncured
defaults in Landlord's performance; and (iii) not more than two (2) months'
rental has been paid in advance. If Tenant fails to deliver the certificate
within ten (10) days, Tenant irrevocably constitutes and appoints Landlord as
its special attorney-in-fact to execute and deliver the certificate to a third
party.
(b) Financial Statements. In order to induce Landlord to enter into
this Lease, Tenant agrees that it shall furnish Landlord from time to time (but
no more often than annually) within ten (10) days after Landlord's written
request, with financial statements reflecting Tenant's current financial
condition. Tenant represents and warrants that all financial statements, records
and information furnished by Tenant to Landlord in connection with this Lease
will be true, correct and complete in all respects, and Landlord represents and
warrants that (unless Tenant is a company whose financial status is a matter of
public record) it will treat said information with confidentiality, except that
Landlord shall be entitled to disclose such information to its lenders,
insurance carriers and prospective purchasers of the real property of which the
Premises are a part.
24. INTEREST ON PAST DUE OBLIGATIONS. Except as otherwise expressly
provided in this Lease, any amount due from Tenant to Landlord hereunder which
is not paid when due shall bear interest at the highest rate then allowed under
the usury laws of the State of California from the date due until the date paid.
25. SALE OR TRANSFER BY LANDLORD. In the event of any transfer or
transfers of Landlord's interest in the Premises, other than a transfer for
security purposes only, the transferor shall automatically be relieved of any
and all obligations and liabilities on the part of the Landlord accruing from
and after the date of such transfer; provided, however, that any funds in the
hands of Landlord in which Tenant has an interest, at the time of such transfer,
shall be turned over to the transferee and upon such transfer, Landlord shall be
discharged from any further liability with reference to such funds. The
covenants and obligations of Landlord contained in this Lease shall be binding
upon Landlord, its successors and assigns only during their respective periods
of ownership. Tenant agrees to look solely to Landlord's interest in the
Building and the real property of which it is a part (or the proceeds thereof)
for the satisfaction of any remedy of Tenant, for the collection of a judgment
(or other judicial process) requiring the payment of money by Landlord in the
event of any default by Landlord hereunder, and no
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other property or assets of Landlord shall be subject to levy, execution, or
other enforcement procedure for the satisfaction of Tenant's remedies under or
with respect to this Lease, the relationship of Landlord and Tenant hereunder,
or Tenant's use or occupancy of the Premises. If such property or assets are
insufficient for the payment of any judgment, Tenant will not institute any
further action, suit, claim or demand, in law or in equity, against Landlord for
or on account of such deficiency. The term "Landlord" for the purposes of this
Section 25 shall include any and all partners, general and limited, if any,
which comprise Landlord.
26. LANDLORD'S AND LENDERS' RIGHT TO CURE DEFAULTS.
(a) Landlord's Right to Cure. All covenants and agreements to be
performed by Tenant under any of the terms of the Lease shall be at its sole
cost and expense and, except as otherwise specifically provided herein, 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
thirty (30) days after notice thereof by Landlord, Landlord may, but shall not
be obligated so to do, and without waiving any rights of Landlord or releasing
Tenant from any obligations of Tenant hereunder, make such payment or perform
such other act at Tenant's cost. All sums so paid by Landlord and all such
necessary incidental costs together with interest thereon from the date of such
payment by Landlord in connection with the performance of any such act by
Landlord shall be considered rent hereunder. Except as otherwise in this Lease
expressly provided, such rent shall be payable to Landlord on demand, or at the
option of Landlord, in such installments as Landlord may elect and may be added
to any other rent then due or thereafter becoming due under this Lease, and
Landlord shall have (in addition to any other right or remedy of Landlord) the
same rights and remedies in the event of the nonpayment thereof by Tenant as in
the case of default by Tenant in the payment of any other rent due hereunder.
(b) Landlord's Right to Notice. Landlord shall not be deemed to be in
default in the performance of any obligation required to be performed by it
hereunder unless and until it has failed to perform such obligation for thirty
(30) days after written notice by Tenant to Landlord specifying wherein Landlord
has failed to perform such obligation; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required for
its performance then Landlord shall not be deemed to be in default if it shall
commence such performance within such thirty (30) day period and thereafter
diligently prosecute or pursue the same to completion. In no event shall Tenant
have the right to terminate this Lease as a result of Landlord's default, and
Tenant's remedies shall be limited to damages or an injunction.
(c) Lender's Right to Cure and Notice. Should Landlord fail to observe
or perform any of the covenants or conditions contained in the Lease, before
taking any action asserting the right (if any) to terminate this Lease, Tenant
shall give written notice to all beneficiaries of deeds of trust recorded
against the real property of which the Premises are a part, setting forth the
nature of Landlord's default. Such lenders shall have a reasonable period of
time to cure the default and perform any act which may be necessary to prevent
the forfeiture of the Lease. All payments made, and all acts performed by such
lenders in order to cure shall be effective to prevent a forfeiture of the
rights of Landlord under this Lease and a termination of this Lease as if the
payments and acts were performed by Landlord instead of by the lenders. If the
lenders cannot reasonably take the action required to cure Landlord's default
without foreclosing Landlord's interest and being in possession of the Building,
the time within which the default must be cured to avoid a termination or
forfeiture of the Lease shall be extended to include the period of time required
for such lenders to obtain possession and to effect a cure with due diligence if
such lender gives Tenant a written agreement to cure the default. In the absence
of the lenders' express written consent, such an agreement by the lenders shall
not be considered an assumption by the lenders of Landlord's other obligations
under the Lease and Landlord shall remain solely liable for the performance of
all terms, covenants and conditions of the Lease both prior and subsequent to
the lenders' exercise of any right to cure or related remedy. A lender's
exercise of any right to cure or related remedy shall not in any way constitute
a cure or waiver of a breach or default under the note, deed of trust, or any
other instrument given as security.
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27. WAIVER.
(a) No delay or omission in the exercise of any right or remedy by
either party to this Lease on the occurrence of any default by the other party
to this Lease shall impair such a right or remedy or be construed as a waiver.
The receipt and acceptance by Landlord of delinquent rent shall not constitute a
waiver of any other default; it shall constitute only a waiver of timely payment
for the particular rent payment involved. No act or conduct of Landlord,
including, without limitation, the acceptance of the keys to the Premises, shall
constitute an acceptance of the surrender of the Premises by Tenant before the
expiration of the term. Only written notice from Landlord to Tenant shall
constitute acceptance of the surrender of the Premises and accomplish a
termination of the Lease. Landlord's consent to or approval of any act by Tenant
requiring Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by either party of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of the
Lease.
(b) No acceptance by Landlord of a lesser sum than the Base Rent then
due shall be deemed to be other than on account of the earliest installment of
such rent due, 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 may accept such check or payment without prejudice to Landlord's
right to recover the balance of such installment or pursue any other remedy in
this Lease provided. The deliver of keys to any employee of Landlord or to an
agent of Landlord or any employee thereof shall not operate as a termination of
this Lease or a surrender of the Premises.
28. FORCE MAJEURE. Except as provided in Section 3(b) of this Lease,
whenever a day is appointed herein on which, or a period of time is appointed
within which, either party hereto is required to do or complete any act, matter
or thing, the time for the doing or completion thereof shall be extended by a
period of time equal to the number of days on or during which such party is
prevented from, or is unreasonably interfered with, the doing or completion of
such act, matter or thing because of strikes, lock-outs, embargoes,
unavailability of labor or materials, wars, insurrections, rebellions, civil
disorder, declaration of national emergencies, acts of God, or other causes
beyond such party's reasonable control (financial inability excepted); provided,
however, and nothing contained in this Section 28 shall excuse Tenant from the
prompt payment of any rental or other charge required of Tenant hereunder.
29. PARKING.
(a) Tenant's Allocation. Landlord has allocated to Tenant (and/or
Tenant's subtenants) the right to park in the parking facilities the number of
automobiles set forth in Section 1(i) hereof. Tenant shall timely pay to
Landlord (or Landlord's designated operator of the parking facilities), as
additional rent, the customary parking charges and validation fees as may from
time to time be charged by Landlord, or Landlord's concessionaire for all
parking spaces. Tenant shall have the right to reduce its allocation of parking
spaces, from time to time, thereby entitling Tenant to a corresponding reduction
of the parking charges. Should the allocation be so reduced and, thereafter,
should Tenant request an increase in its allocation of parking spaces, Landlord
shall be obligated to provide the same only upon a space available basis.
(b) Landlord's Control. Landlord, at all times, shall have sole and
exclusive control over the parking of automobiles in the parking facilities.
Landlord may at any time exclude any person from the use and occupancy thereof
except those persons using the parking facilities in accordance with the written
consent of Landlord and in accordance with all regulations established by
Landlord from time to time. Tenant agrees that Landlord assumes no
responsibility of any kind whatsoever in reference to said automobile parking
facilities or the use thereof by Tenant, its employees, agents or invitees, or
by anyone else. Landlord may, at any time, and from time to time, limit access
to the parking facilities by means of attendants and/or other devices, and make
other changes in the layout and operation of the parking facilities including,
without limiting the generality of the foregoing, changes in locations of
entrances, exits, driveways and parking spaces, and changes in the direction of
traffic flow. No delay or failure by Landlord to enforce its parking rules and
regulations or its other rights
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hereunder, and no waiver by Landlord of any breach thereof, shall be deemed to
be a waiver of any succeeding breach or prevent any subsequent or other
enforcement thereof by Landlord.
(c) Transportation Programs. Tenant agrees that it will use its best
efforts to cooperate with, including registration and attendance in, programs to
reduce traffic which may be undertaken by Landlord independently or in
cooperation with local municipalities or governmental agencies, or other
property owners in the vicinity of the Building. Such programs may include, but
shall not be limited to, car pools, van pools and other ride sharing programs,
public and private transit, flexible work hours, preferential assigned parking
programs and registrar programs to coordinate tenants of the Building with
existing or proposed traffic mitigation programs. Tenant acknowledges that as a
part of this program, Tenant may be required to distribute employee
transportation information at the Commencement Date, participate in annual
employee transportation surveys, allow employees to participate in commuter
activities, designate a liaison for commuter transportation related activities,
distribute commuter information to all employees prior to relocation and to new
employees when hired, and otherwise participate in other programs or services
initiated under the transportation management program. Landlord shall have the
right to adopt, and Tenant agrees to abide by, reasonable rules and regulations
that Landlord, in its discretion, deems appropriate and necessary to implement
such programs.
30. SURRENDER OF PREMISES.
(a) No Merger. The voluntary or other surrender of this Lease by
Tenant to Landlord, or a mutual termination thereof, shall not work a merger,
and shall at the option of Landlord, operate as an assignment to it of any or
all subleases or subtenancies affecting the Premises.
(b) Tenant's Duties. Upon the expiration or any earlier termination of
this Lease, Tenant shall quit and surrender possession of the Premises to
Landlord in as good order and condition as the same are now in now, or,
hereafter may be improved by Landlord or Tenant, excepting reasonable wear and
tear, repairs which are Landlord's obligation, and insured casualties. Without
expense to Landlord, Tenant shall remove or cause to be removed from the
Premises all debris and rubbish, all furniture, equipment, business and trade
fixtures, free-standing cabinet work, moveable partitioning and other articles
of personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises, and all similar articles of any other persons claiming
under Tenant unless Landlord exercises its option to have any subleases or
subtenancies assigned to it, and Tenant shall repair all damage to the Premises
resulting from such removal.
(c) Abandoned Property. Any property of Tenant not removed by Tenant
upon the expiration of the term of this Lease (or within forty-eight (48) hours
after a termination or re-entry by Landlord pursuant to Section 20 hereof) shall
be considered abandoned. Landlord shall give Tenant notice of its right to
reclaim abandoned property pursuant to California Civil Code Section 1980 et.
seq., and may, thereafter, remove any or all of such items and dispose of the
same in any manner or store the same in a public warehouse or elsewhere for the
account and at the expense and risk of Tenant. Tenant hereby grants to Landlord
a security interest in said abandoned property in the event it is not reclaimed
within the statutory period. If Tenant shall fail to pay the cost of storing any
such property after it has been stored for a period of thirty (30) days or more,
Landlord may sell any or all of such property at public or private sale, in such
manner and at such time and places as Landlord, in its sole discretion, may deem
proper without notice to or demand upon Tenant, and shall apply the proceeds of
such sale: first, to the costs and expenses of such sale, including reasonable
attorneys' fees actually incurred; second, to the payment of the costs for the
removal and storing of any such property; third, to the payment of any other
sums of money which may then or thereafter be due to Landlord from Tenant under
any of the terms hereof; and fourth, the balance, if any, to Tenant.
(d) Tenant Improvements. All improvements, alterations, additions,
fixed partitions and/or appurtenances attached to or built into the Premises
prior to or during the term hereof, whether by Landlord at its expense or at the
expense of Tenant or both, shall be and remain part of the Premises and shall
not be removed by Tenant at the end of the term hereof unless such removal is
required by Landlord pursuant to written notice to Tenant given at least thirty
(30) days prior to the expiration or sooner termination of the
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term of this Lease. Such improvements, fixtures, equipment, alterations,
additions, fixed partitions and/or appurtenances shall include but not be
limited to: All floor coverings, drapes, paneling, molding, doors, vaults
(exclusive of vault doors), plumbing systems, electrical systems, lighting
systems, silencing equipment, all fixtures and outlets for the systems mentioned
above and for all ratio, telecommunication, telegraph and television purposes,
and any special flooring or ceiling installations.
(e) Notice. Tenant shall, at least ninety (90) days before the last
day of the term hereof, give to Landlord a written notice of intention to
surrender the Premises on or before that date, but nothing contained herein
shall be construed as an extension of the term hereof or as consent of Landlord
to any holding over by Tenant.
31. RELOCATION. If the Rentable Area of the Premises as set forth in
Section l(a) hereof contains an area of 3,500 square feet or less of Rentable
Area, Landlord shall have the right one time only after the first year of the
term hereof, upon giving Tenant not less than sixty (60) days' prior written
notice, to provide and furnish Tenant with space elsewhere in the Building of
approximately the same Rentable Area as the Premises and remove and place Tenant
in such space, with Landlord to pay all reasonable costs and expenses incurred
as a result of such relocation of Tenant. Should Tenant refuse to permit
Landlord to move Tenant to such new space at the end of said sixty (60) day
period, Landlord shall have the right to cancel and terminate this Lease
effective up to ninety (90) days from the date of original notification by
Landlord. If Landlord moves Tenant to such new space, this Lease and each and
all of its terms, covenants, and conditions shall remain in full force and
effect and be deemed applicable to such new space, and such new space shall
thereafter be deemed to be the "Premises" as though Landlord and Tenant had
entered into an express written amendment of this Lease with respect thereto.
32. HAZARDOUS WASTE. Landlord and Tenant agree as follows with respect to
the existence or use of "Hazardous Material" (as defined in Subsection (d) of
this Section 32) on the Premises or in the Building:
(a) Prohibition. Tenant shall not cause or permit any Hazardous
Material to be brought upon, kept or used in or about the Premises or the
Building by Tenant, its agents, employees, contractors or invitees, without the
prior written consent of Landlord. If Tenant breaches the obligations stated in
the preceding sentence, or if the Presence of Hazardous Material on the Premises
or the Building caused or permitted by Tenant results in contamination of the
Premises or the Building, or if contamination of the Premises or the Building by
Hazardous Material otherwise occurs for which Tenant is legally liable to
Landlord for damage resulting therefrom, then, Tenant shall indemnify, hold
Landlord harmless, and defend Landlord (with counsel reasonably acceptable to
Landlord) from any and all claims, judgments, damages, penalties, fines, costs,
liabilities or losses (including, without limitation, diminution in value of the
Premises or the Building, damages for the loss or restriction on use of rentable
or usable space or of any amenity of the Premises or the Building, damages
arising from any adverse impact on marketing of space in the Building, and sums
paid in settlement of claims, attorneys' fees, consultant fees and expert fees)
which arise during or after the Lease Term as a result of such contamination.
This indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Material
present in the soil or ground water on or under the Premises or the Building.
Without limiting the foregoing, if the presence of any Hazardous Material on the
Premises or the Building caused or permitted by Tenant results in any
contamination of the Premises or the Building. Tenant shall promptly take all
actions at its sole expense as are necessary to return the Premises or the
Building to the condition existing prior to the introduction of any such
Hazardous Material to the Premises or the Building; provided that Landlord's
approval of such actions shall first be obtained, which approval shall not
unreasonably be withheld so long as such actions would not potentially have any
material adverse long-term or short-term effect on the Premises or the Building.
(b) Compliance Costs. Landlord and Tenant acknowledge that Landlord
may become legally liable for the costs of complying with laws relating to
Hazardous Material which are not the responsibility of Landlord or the
responsibility of Tenant pursuant to Subsection 32(a), including the
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following: (i) Hazardous Material present in the soil or ground water; (ii) a
change in Laws which relate to Hazardous Material which make such Hazardous
Material which is present on the Premises or in the Building as of the
Commencement Date, whether known or unknown to Landlord, a violation of such new
laws; (iii) Hazardous Material that migrates, flows, percolates, diffuses or in
any way moves on to or under the land; (iv) Hazardous Material present on or
under the land or in the Building as a result of any discharge, dumping or
spilling (whether accidental or otherwise) on the land or in the Building by
other lessees of the Building or their agents, employees, contractors or
invitees, or by others.
(c) Assignment. It is understood that under no circumstances shall
Landlord consent to any proposed assignment or sublease if (i) the assignee or
sublessee's anticipated use of the demised Premises involves the generation,
storage, use, treatment or disposal of Hazardous Material; (ii) the proposed
assignee or sublessee has been required by any prior landlord, lender or
governmental authority to take remedial action in connection with Hazardous
Material contaminating a property if the contamination resulted from such
assignee or sublessee's actions or use of the property in question; or (iii) the
proposed assignee or sublessee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material.
(d) Definition. As used herein, the term "Hazardous Material" means
any hazardous or toxic substance, material or waste which is or becomes
regulated by any local governmental authority, the State of California or the
United States Government. The term "Hazardous Material" includes, without
limitation, any material or substance which is (i) defined as a "hazardous
waste," "extremely hazardous waste" or "restricted hazardous waste" under
Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste
Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the
California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a
"hazardous material," "hazardous substance," or "hazardous waste" under Section
25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous. substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances),
(v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as
hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the
California Administrative Code, Division 4, Chapter 20, (viii) designated as a
"hazardous substance" pursuant to Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. Section 1317), (ix) defined as a "hazardous waste"
pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or (x) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. (42
U.S.C. Section 9601).
(e) Asbestos. The fire-proofing materials applied to certain
structural members in the Building (which structural members are primarily
located above the ceiling, behind the drywall, and behind the drywalled beams
within the air handling and telephone closets of the Building) contain asbestos.
Landlord in the process of conducting encapsulation and abatement procedures in
order to confine the locations of asbestos and the release of asbestos fibers
within the Building. In order to preserve the air quality of the Premises,
Landlord has established, and from time to time may modify, rules and
regulations governing the manner in which alterations and improvements are to be
undertaken in the areas where such fire-proofing is located. Tenants shall
comply with all such rules and regulations established by Landlord. If any
governmental entity promulgates or revises a statute, ordinance, code or
regulation, or imposes mandatory or voluntary controls or guidelines with
respect to such asbestos fire-proofing, or if Landlord is required or elects to
make alterations to or to remove the asbestos fireproofing, Landlord may, in its
sole discretion, make such alterations or remove such asbestos fire-proofing and
neither the making of such alterations,
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nor the removal of all or a portion of such asbestos fire-proofing shall, in any
event, entitle Tenant to any damages, relieve Tenant of the obligation to pay
any sums due hereunder or constitute or be construed as a constructive or other
eviction of Tenant. This subsection is intended to serve as notice regarding
asbestos on the Premises in compliance with all relevant or applicable laws,
codes, regulations and ordinances, including, but not limited to, the notice
requirements of Section 25359.7 of the California Health and Safety Code, in the
event that such section is deemed to apply to the possible release of asbestos
within the Premises. The asbestos has been removed from the Premises.
33. MISCELLANEOUS.
(a) Invalidity. Any provision of this Lease which shall prove to be
invalid, void, or illegal shall in no way affect, impair, or invalidate any
other provision hereof and such other provisions shall remain in full force and
effect.
(b) Attorneys' Fees. In the event of any litigation between Tenant and
Landlord, to enforce any provision of this Lease or any right of either party
hereto, or to secure a judicial determination of any right or obligation of
either party hereto, the unsuccessful party in such litigation shall pay to the
successful party all costs and expenses, including reasonable attorneys' fees,
incurred therein. Moreover, if either party hereto without fault is made a party
to any litigation instituted by or against any other party to this Lease, such
other party shall indemnify Landlord or Tenant, as the case may be, against and
save it harmless from all costs and expenses, including reasonable attorneys'
fees, incurred by it in connection therewith.
(c) Time Is of the Essence. Each of Tenant's covenants herein is a
condition and time is of the essence with respect to the performance of every
provision of this Lease, and the strict performance of each shall be a condition
precedent to Tenant's right to remain in possession of the Premises or to have
this Lease continue in effect.
(d) Rent Control. If the amount of rent or any other payment due under
this Lease violates the terms of any governmental restrictions on such rent or
payment, then the rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon termination
of the restrictions, Landlord shall, to the extent it is legally permitted,
recover from Tenant the difference between the amounts received during the
period of the restrictions and the amounts Landlord would have received had
there been no restrictions.
(e) Joint and Several Liability. The obligations herein imposed upon
Tenant shall be joint and several as to each of the persons, firms, or
corporations of which Tenant may be composed. The act of or notice from, or
refund to, or the signature of any one or more of such persons, firms, or
corporations of which Tenant may be composed, with respect to the tenancy or
this Lease including, but not limited to, any renewal, extension, expiration,
termination or modification of this Lease, shall be binding upon each and all of
said persons, firms or corporations executing this Lease as Tenant with the same
force and effect as if each and all of them had so acted or so given or received
such refund or so signed.
(f) Amendments. This Lease and the exhibits and any rider or addendum
attached hereto constitute the entire agreement between the parties hereto with
respect to the subject matter hereof, and no prior agreement or understanding
pertaining to any such matter shall be effective for any purpose. No provision
of this Lease may be amended or supplemented except by an agreement in writing
signed by the parties hereto or their successors in interest.
(g) No Option or Offer. The submission of this Lease by Landlord, its
agent, or representative for examination or execution by Tenant does not
constitute an option or offer to lease the Premises upon the terms and
conditions contained herein or a reservation of the Premises in favor of Tenant,
it being intended hereby that this lease shall only become effective upon the
execution hereof by Landlord and delivery of a fully executed counterpart hereof
to Tenant.
(h) Rules and Regulations. Tenant shall observe faithfully and comply
strictly with the Rules and Regulations set forth in Exhibit "C", attached
hereto and incorporated by reference herein, and such other Rules and
Regulations, modifications or amendments thereto, as Landlord may from time to
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time reasonably adopt for the safety, care, and cleanliness of the Building,
including the parking facilities and both interior and adjacent landscaped
areas, for the preservation of good order therein. Failure by Tenant to comply,
strictly, with the Rules and Regulations, at the option of Landlord, shall
constitute a material default under this Lease. Landlord shall not be liable to
Tenant for violation or non-performance of any such Rules and Regulations or,
for that matter, for the breach of any covenant or condition in any lease, by
any other tenant or occupant of the Building. Notwithstanding, Landlord agrees
to enforce the Rules and Regulations without discrimination among all tenants
similarly affected. If there is a conflict between the Rules and Regulations and
any of the provisions of this Lease, the provisions of this Lease shall prevail.
(i) California Law. This Lease shall be interpreted and enforced in
accordance with the laws of the State of California, which shall apply in all
respects, including statutes of limitation, to any disputes or controversies
arising out of or pertaining to this Lease.
(j) Quiet Enjoyment. Upon Tenant's paying the Base Rent and other sums
provided hereunder, and observing and performing all of the covenants,
conditions, and provisions on Tenant's part to be observed and performed
hereunder, Tenant shall have quiet possession of the Premises for the entire
term hereof, subject to all of the provisions of this Lease.
(k) Successors and Assigns. Except as otherwise provided in this
Lease, all of the covenants, conditions, and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, and assigns.
(l) Notices. Any notice required or permitted to be given hereunder
shall be in writing and may be given by personal delivery or by certified mail,
return receipt requested, addressed to Tenant or to Landlord at the addresses
provided in Section 1(g) hereof. Either party may by notice to the other specify
a different address for notice purposes. A copy of all notices to be given to
Landlord hereunder shall be concurrently, transmitted by Tenant to any other
party hereafter designated by notice from Landlord to Tenant. It is understood
and agreed that if there be at an, time more than one person, partner, and/or
corporation which is the Tenant under this Lease, all such persons, partners
and/or corporations shall designate in writing an agent to act as their
representative hereunder and as Tenant for purposes of serving or receiving
notices, delivery of any documents, paying rent, and any and all other purposes
under this Lease. The acts of such agent shall be binding and conclusive upon
all such persons, partners and/or corporations that comprise the Tenant
hereunder. If, within thirty (30) days after such time as there shall be more
than one such person, partner and/or corporation, and such persons, partners
and/or corporation do not give written notice to Landlord designating an agent,
Landlord may treat and regard any one of such persons, partners and/or
corporations as such agent, who shall be deemed to be such agent until such time
as Landlord shall receive written notice signed by all such persons, partners
and/or corporations, appointing a different agent to represent all such persons,
partners and/or corporations as the Tenant hereunder.
(m) Brokers. In connection with this Lease, Tenant warrants and
represents that it has had dealings only with Landlord's leasing agents, and
that it knows of no other person who is or might be entitled to a commission,
finder's fee, or other like payment in connection herewith, and does hereby
indemnify and agree to hold Landlord harmless from and against any and all loss,
liability, and expenses that Landlord may incur should such warranty and
representation prove incorrect.
(n) Lawful Tender. Base Rent and all other sums payable under this
Lease, must be paid in lawful money of the United States of America.
(o) Construction. The text of this Lease shall be construed, in all
respects, according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The section captions contained in this Lease are for
convenience and do not in any way limit or amplify any term or provision of this
Lease and shall have no affect on its interpretation. The terms "Landlord" and
"Tenant" as used herein shall include the plural as well as the singular, and
the neuter shall include the masculine and feminine genders.
(p) Corporate Resolution. If Tenant is a corporation, Tenant shall, if
so requested by Landlord, deliver to Landlord upon execution of this
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Lease a certified copy of a resolution of its board of directors authorizing the
execution of this Lease and naming the officers that are authorized to execute
this Lease on behalf of the corporation.
(q) Memorandum of Lease. This Lease shall not be recorded, except that
if Landlord requests Tenant to do so, the parties shall execute a memorandum of
this Lease in recordable form and Tenant shall execute and deliver to Landlord
on the expiration or termination of this Lease, immediately on Landlord's
request, a quitclaim deed to the Premises, in recordable form, designating
Landlord as transferee. All expenses incurred shall be borne by the party
requesting recordation of Memorandum of Lease.
(r) Consent. Except for matters which could have an adverse effect on
the Building's HVAC system, plumbing system, electrical system, life-safety
systems, elevators, or which could affect the exterior appearance of the
Building, anytime the consent of Landlord or Tenant is required, such consent
shall not unreasonably be withheld or delayed. Whenever the Lease grants the
Landlord or Tenant the right to take action, exercise discretion, establish
rules and regulations or make an allocation or other determination, Landlord and
Tenant shall act reasonably and in good faith.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.
Video Broadcasting Corporation COPPERFIELD INVESTMENT & DEVELOPMENT COMPANY, a
Delaware Corporation a California Corporation
/s/ J. Graeme McWhirter By: /s/ Daniel Lai
- ------------------------------ ------------------------------------------
EXECUTIVE VICE PRESIDENT Daniel Lai, President
7/22/94 "Tenant" "Landlord"
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ADDENDUM TO LEASE
THIS ADDENDUM TO LEASE is executed concurrently with and is made a part of that
certain Lease dated May 5, 1994 by and between COPPERFIELD INVESTMENT AND
DEVELOPMENT COMPANY, a California Corporation (Landlord) and VIDEO BROADCASTING
CORPORATION, a Delaware Corporation (Tenant) and attached hereto.
34. Landlord hereby acknowledges the sum of $2,011.20 on file as security
deposit applicable to existing Lease for Suite 1506. Tenant will pay Landlord
the sum of $238.80 upon Lease execution bringing the total security deposit to
$2,250.00.
35. Tenant shall have the option to extend the term of the Lease for a period
of Three (3) years commencing upon expiration of this Lease provided Tenant
gives Landlord written notice of its intent to exercise the Option at least 90
days prior to the expiration of the initial term of the Lease. The Option may
not be exercised or assigned should any default exist as specified in Paragraph
20 of the Lease. Any such default would require to be remedied prior to exercise
or assignment of the Option. The base rent for the Option period would be the
rent being asked by Landlord, for comparable space in the building, at the time
the Option is exercised. If Tenant does not exercise the Option in a timely
manner, as set forth in this paragraph, the Option shall become null and void.
36. Tenant will be solely responsible for all costs associated with the moving
process.
37. Upon commencement of this Lease, the Lease dated July 15, 1989 shall become
null and void. Notwithstanding such termination of Lease, any monetary sums, if
any, due prior to termination of Lease shall become immediately payable.
TENANT LANDLORD
VIDEO BROADCASTING CORPORATION COPPERFIELD INVESTMENT &
a Delaware Corporation DEVELOPMENT COMPANY, A
California Corporation
/s/ J. Graeme McWhirter By: /s/ Daniel Lai
- ------------------------------ -----------------------------
EXECUTIVE VICE PRESIDENT Daniel Lai, President
Date: 7/22/94
<PAGE> [GRAPHIC]
Suite 1205 on the 12th Floor
consisting of approximately
1500 Rentable and 1,286
Usable square feet
The exterior demising walls of the Premises and the area between the finished
ceiling of the Premises and the slab of the floor of the Building thereabove
have not been demised hereby, and the use hereof together with the right to
install, maintain, use, repair, and replace pipes, ducts, conduits and wires
leading through, under or above the Premises in locations which will not
materially interfere with Tenant's use of the Premises and serving other parts
of the Building, are hereby excepted and reserved by Landlord.
EXHIBIT "A"
<PAGE>
[GRAPHIC]
The exterior demising wall of the Premises and the area between the finished
ceiling of the Premises and the slab of the floor of the Building thereabove
have not been demised hereby, and the use hereof together with the right to
install, maintain, use, repair, and replace pipes, ducts, conduits and wires
leading through, under or above the Premises in locations which will not
materially interfere with Tenant's use of the Premises and serving other parts
of the Building, are hereby excepted and reserved by Landlord.
EXHIBIT "A"
<PAGE>
EXHIBIT "B"
CONSTRUCTION EXHIBIT
(Work Letter)
1. Landlord Improvements.
A. Landlord has constructed the Building shell, including: telephone
conduit and electricity brought to a main distribution panel room on each floor
level, but not distributed; main line heating and air conditioning system
brought to each floor level, but not distributed; ventilation air stubbed at
elevator shaft on each floor level, but not distributed; the slab floor; water
and waste pipes brought to a main distribution point on each floor level, but
not distributed; exterior Building walls and glass with exposed framing on
interior side without insulation or wall coverings; public restrooms, corridors
and lobbies; and fire sprinkler main supply stubbed at the Premises, but not
distributed, if and where it is required by the building code for the Building
shell development ("Landlord Improvements"). Distribution of some, but not all,
of the foregoing items is provided in Tenant Standard Improvements. All
improvements to the Premises (as defined in this Lease) not included in Landlord
Improvements shall be defined as "Tenant Improvements."
B. The parties acknowledge that any plans of the Premises, shown to
Tenant prior to completion of construction of the Premises, shall not be deemed
a representation by Landlord that the Premises will be constructed in every
detail as indicated thereon. Landlord reserves the right to make changes and
modifications during the course of construction.
2. Tenant Standard Improvements Provided by Landlord.
Subject to Section 6 below, Landlord shall provide certain
improvements in the Premises ("Tenant Standard Improvements") at Landlord's
expense. The Tenant Standard Improvements shall include partitions, doors,
ceilings, standard paint, window coverings and carpeting, heating and air
conditioning, electrical outlets, lighting fixtures and wall switches, telephone
outlets and related hardware.
3. Tenant Improvements, Space Planning and Final Plans.
A. Unless already accomplished, within three (3) business days after
execution of this Lease, Tenant shall meet with Landlord's space planner and
shall cooperate with Landlord and Landlord's space planner to produce a complete
and approved space plan within ten (10) business days from the date of execution
of this Lease. Within five (5) business days after completion and approval of
the space plan, Tenant shall submit to Landlord's space planner sufficient
information (including, but not limited to, electrical and telephone outlet
specifications, ceiling heights and type, flooring types, door swings, wall
openings, mechanical outlets and lighting systems) to allow Landlord's space
planner to prepare working plans. Within fifteen (15) business days after
completion and approval of the space plan, Tenant shall submit to Landlord's
space planner all material and finish specifications to allow Landlord's space
planner to complete the Final Plans (as hereinafter defined) which shall be
submitted to and approved by Landlord within twenty (20) business days of
completion and approval of the space plan.
B. Landlord shall contribute an amount not to exceed $ n/a per square
foot of usable area for the cost of space planning by the space planner made
available by Landlord. Costs of space planning in excess of Landlord's
contribution shall be paid to Landlord's space planner by Tenant upon Landlord's
approval of final plans and specifications and working drawings, including
mechanical and electrical plans, for Tenant Improvements ("Final Plans"). For
purposes of this Construction Exhibit only, the usable area of the Premises
shall be computed by measuring square footage from the interior surface of all
demising walls to the interior surface of permanent outer Building walls, less
space occupied by columns and other permanent penetrations from the floor.
4. Improvements Provided at Tenant's Expense
A. Landlord shall furnish to the Premises, at Tenant's sole cost and
expense, Tenant's identification sign, and oversized telephone conduit for
Exhibit "B"
Page 1 of 3
<PAGE>
telephones and telephone equipment backboards and energy management systems.
Tenant shall pay Landlord for the cost of the foregoing within ten (10) days
after taking occupancy of the Premises.
B. All Tenant Improvements constructed in the Premises which are
"overstandard," or, in addition to Tenant Standard Improvements, shall be
subject to approval by Landlord, and the cost therefor, including a ten percent
(10%) mark-up to Landlord's general contractor, shall be paid by Tenant.
Ordinarily, there will be no charge for Landlord's supervision and overhead.
However, any unusual overstandard items may, in Landlord's reasonable
discretion, require a fee payable to Landlord for supervision and overhead
should they involve extraordinary supervision responsibilities on the part of
Landlord. Unless otherwise agreed in writing, Tenant shall pay Landlord for the
cost of overstandard improvements, including general contractor's markup, as
aforesaid, within ten (10) days after taking occupancy of the Premises.
C. In the event, with Landlord's prior written approval, such approval
not to be unreasonably withheld or delayed, Tenant elects to use its own
contractors for any work, then, Tenant shall notify Landlord in writing ten (10)
days prior to the commencement of any work as to name, telephone number and
responsible party for each and every such contractor. Tenant shall also provide
Landlord with the appropriate insurance certificates covering liability of
Tenant's contractors and indemnifying Landlord. Tenant shall make necessary
arrangements to pay for any costs for hoisting, cleanup, trash removal, field
supervision, ordering of materials, damage to Building or Landlord's work, and
other items which Tenant's contractors may cause to be done during the course of
their work. Landlord shall be entitled to a fee for supervision equal to five
percent (5%) of the cost of work performed by Tenant's contractors, including
contractor's profit. The foregoing shall not be construed as diluting Landlord's
broad discretion to disapprove the use of outside contractors on the grounds of
lack of experience or reputation, financial unreliability, union problems, or
because of undue administrative problems associated with the presence of
multiple contractors or outside contractors in the Building, simultaneously.
5. Commencement Date.
Pursuant to Section 3(b) of the Lease, in the event construction of
Tenant Improvements is not complete as of the Commencement Date set forth in
Section 1(b)(2) of the Lease, the Commencement Date shall, provided that
Landlord gives Tenant at least five (5) business days prior written notice, be
the date Landlord delivers possession of the Premises to Tenant following
Substantial Completion of Tenant Improvements (as hereinafter defined), and
final sign-off by building inspector minus the number of days equal to the
duration of any Tenant Delays (as hereinafter defined). In the event any delay
in Landlord's completion of Tenant Improvements, or in tender of possession of
the Premises to Tenant, is occasioned by Tenant's failure timely to cooperate in
connection with the preparation, completion and governmental approval of Final
Plans; a delay in bidding out the general contract for construction of the
Tenant Standard Improvements caused by objections to costs by Tenant or Tenant's
Construction Consultant; Tenant's change orders; or delays in delivery of
unusual materials specified by Tenant ("Tenant's Delays"), the Commencement Date
shall be determined as set forth above, and the duration of any Tenant Delay,
which shall be the number of days work was delayed because of a Tenant Delay,
shall be established by Landlord's written notice of delay delivered to Tenant
within ten (10) days of commencement of a Tenant Delay. "Substantial Completion
of Tenant Improvements" shall be that degree of completion which would allow the
Tenant to occupy the Premises for its particular use, and shall not require
completion of "pick-up items" or the installation of fixtures or decorations
specified by Tenant; provided that Landlord has timely ordered such items,
installed functional temporary substitute fixtures as required for issuance of a
conditional certificate of occupancy for Tenant Improvements, and temporarily
and neatly finishes the Premises to allow occupancy. Landlord shall replace any
substitute fixtures or decorations, and shall complete all pick-up items about
which Tenant gives written notice to Landlord within thirty (30) days of the
Commencement Date, or as soon as reasonably possible thereafter.
6. Tenant Improvements Allowance.
If Landlord and Tenant have initialed this Section 6 at the places
indicated below, and the amount of the allowance has been filled in, then, in
lieu of Tenant Standard Improvements set forth in Section 2, above, and any
other allowance specified in this Construction Exhibit, Tenant shall be entitled
to receive said agreed Tenant Improvements Allowance for each square
Exhibit "B"
Page 2 of 3
<PAGE>
foot of useable area in the Premises. This allowance may be used only for the
design and installation of Tenant Improvements that constitute permanent
improvements to the Premises, including carpeting and standard window coverings,
and that become Landlord's Property upon installation, as provided in the Lease;
but not for Tenant's fixtures, furnishings or office equipment. Tenant shall be
entitled to no payment or rent reduction for any unused portion of this
allowance. In the event that the actual cost of Tenant Improvements, including
Tenant Accommodations, exceed the aforesaid allowance, the excess shall be paid
by Tenant ("Tenant's Contribution"). Tenant's Contribution shall be paid by
Tenant to Landlord, on a pro rata basis as construction progresses and within
ten (10) days after bills are rendered. At the election of Landlord, work on
Tenant Improvements may be halted pending the curing of any default in the
timely payment of such bills, and such interruption shall not postpone the
Commencement Date. The cost of any Tenant "change orders" shall be paid by
Tenant to Landlord, in advance. Landlord's contractor shall perform all Tenant
Improvements to be constructed pursuant to this Construction Exhibit.
$ N/A per square foot N/A N/A
- ------------ of usable area ------------------- -----------------
Tenant Allowance Landlord's Initials Tenant's Initials
7. Landlord shall build out the suite at his sole cost and expense in accordance
with a mutually approved set of plans. All improvements shall be made using
building standard materials.
Exhibit "B"
Page 3 of 3
<PAGE>
EXHIBIT "C"
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or used for any purpose
other than ingress and egress.
2. No sign, advertisement or notice shall be exhibited, painted or affixed
by any Lessee on any part of the Premises of the Building without the prior
written consent of the Lessor. In the event of the violation of the foregoing by
any Lessee, Lessor may remove same without any liability, and may charge the
expense incurred in such removal to the Lessee violating this rule. Interior
signs on doors and directory tablet shall be inscribed, painted or affixed for
each Lessee by the Lessor at the expense of such Lessee, and shall be of a size,
color and a type acceptable to the Lessor. The directory tablet will be provided
exclusively for the display of the name and location of Lessees only and Lessor
reserves the right to exclude any other names therefrom. Nothing may be placed
on the exterior of corridor walls or corridor walls other than Lessor's standard
lettering.
3. The water and wash closets and other plumbing fixtures shall not be used
for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the Lessee
who, or whose servants, employees, agents, visitors or licensees, shall have
caused the same.
4. No Lessee shall mark, paint, drill into, or in any way deface any part
of the Premises of the Building. No boring, cutting or stringing of wires or
laying of linoleum or other similar floor coverings shall be permitted, except
with the prior written consent of the Lessor and as the Lessor may direct.
5. No bicycles, vehicles, birds or animals of any kind shall be brought
into or kept in or about the Premises, and no cooking shall be done or permitted
by any Lessee on the Premises, except that the preparation of coffee, tea, hot
chocolate and similar items for Lessees and their employees shall be permitted
provided power shall not exceed that amount which can be provided by a 30 amp.
circuit. No Lessee shall cause or permit any unusual or objectionable odors to
be produced or permeate the Premises.
6. No Lessee shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring buildings
or premises or those having business in them, whether by the use of any musical
instrument, radio, phonograph, unusual notice, or any other way. No Lessee shall
throw anything out of doors, windows, or skylights or down the passageways.
7. No Lessee nor any of Lessee's servants, employees, agents, visitors or
licensees, shall at any time bring or keep upon the Premises any inflammable,
combustible or explosive fluid, chemical or substance.
8. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Lessee, nor shall any changes be made in existing locks
or the mechanism thereof without Lessor's approval and all such locks shall be
keyed to Building's master key system. Each Lessee must, upon termination of
this tenancy, restore to the Lessor all keys of stores, offices and toilet
rooms, either furnished to, or otherwise procured by, such Lessee and in the
event of the loss of any keys so furnished, such Lessee shall pay to the Lessor
the cost of replacing the same.
9. All removals, the carrying in or out of any safes, freight, furniture or
bulky matter of any description or the use of the Building's freight elevators
must be made upon previous notice and approval of the Building and under his or
her supervision, and the person employed by any Lessee for such work must be
acceptable to the Lessor. The Lessor reserves
Exhibit "C"
Page 1 of 4
<PAGE>
the right to inspect all safes, freight or other bulky articles to be brought
into the Building and to exclude from the Building and to exclude from the
Building all safes, freight or bulky articles which violate any of these Rules
and Regulations or the Lease of which these Rules and Regulations are a part.
The Lessor reserves the right to prescribe the weight and position of all safes,
which must be placed upon supports approved by Lessor to distribute weight. If
additional expenses are incurred by the Lessor by reason of moving of Lessee's
safes, other fixtures, equipment or bulky matter of any kind, such expenses
shall be borne by Lessee.
10. The Lessor reserves the right to exclude from the Building on Mondays
through fridays between the hours of 7 p.m. and 7 a.m. and at all hours on
Saturdays, Sundays and legal holidays all persons who have not received
clearance as a result of a written request from Lessee or who do not present a
pass to the Building signed by the Lessor. The Lessor will furnish passes or at
Lessor's option, clearances, to persons for whom any Lessee requests the same in
writing. Each Lessee shall be responsible for all persons for whom he requests
passes or clearances and shall be liable to the Lessor for all acts of such
persons. Lessor shall in no case be liable for damages for any error with regard
to the admission to or exclusion from the Building of any person. In case of an
invasion, mob riot, public excitement or other circumstances rendering such
action advisable in Lessor's opinion, Lessor reserves the right to prevent
access to the Building during the continuance of the same by closing the doors
or otherwise, for the safety of the Lessees and the protection of the Building
and the property in the Building.
11. Any persons employed by any Lessee to do janitor work, shall, while in
the Building and outside of the Premises, be subject to and under the control
and direction of the Manager of the Building (but not as an agent or servant of
said superintendent or of the Lessor), and Lessee shall be responsible for all
acts of such persons.
12. All doors opening onto public corridors shall be kept closed, except
when in use for ingress and egress.
13. The requirement of Lessee will be attended to only upon application to
the Office of the Building.
14. Canvassing, soliciting and peddling in the Building are prohibited and
each Lessee shall cooperate to prevent the same.
15. All office equipment of any electrical or mechanical nature shall be
placed by Lessee in the Premises in a manner as to not create vibration, noise
or annoyance to other Lessees.
16. There shall not be used in any space, or in the public halls of the
Building, either by any Lessee or others, any hand trucks except those equipped
with rubber tires and rubber side parts.
17. No vending machines or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent of Lessor.
18. The scheduling of moves of Lessee's furniture and equipment into or out
of the Building must be coordinated with the Building Manager.
19. The folllowing Standards for Utilities and Services are in effect.
Lessor reserves the right to adopt nondiscriminatory modifications and additions
hereto:
20. As long as Lessee is not in default under any of the terms, covenants,
conditions, provisions or agreements of this Lease, Lessor shall:
(a) Provide non-attended automatic elevator facilities Monday through
Friday, except holidays, from 7 a.m. to 7 p.m., and have one elevator available
at all other times.
Exhibit "C"
Page 2 of 4
<PAGE>
(b) Furnish Monday through Friday, except holidays, from 7 a.m. to 7
p.m., heat to warm the Premises, when and as required in the judgment of Lessor
for the comfortable use of the Premises.
(c) On Monday through Friday, except holidays, from 7 a.m. to 7 p.m.
(and at other times for a reasonable additional charge to be fixed by Lessor),
ventilate the Premises and furnish air conditioning on such days and hours when
in the judgment of Lessor it may be required for the comfortable occupancy of
the Premises. The air conditioning system achieves maximum cooling when the
drapes are closed. Lessee agrees to cooperate fully at all times with Lessor,
and to abide by all regulations and requirements which Lessor may prescribe for
the proper functioning and protection of said air conditioning system. Lessee
agrees not to connect any apparatus, device, conduit or pipe to the Building
chilled and hot water air conditioning supply lines. Lessee further agrees that
neither Lessee nor its servants, employees, agents, visitors, licensees or
contractors shall at any time enter mechanical installations or facilities of
the Building or adjust, tamper with, touch or otherwise in any manner affect
said installations or facilities.
(d) Furnish to the Premises, electric current as required by the
Building standard office and lighting and fractional horsepower office business
machines in the amount of approximately six (6) watts per square foot. The
Lessee agrees, should its electrical installation or electrical consumption be
in excess of the aforesaid quantity or extend beyond normal business hours, to
reimburse Lessor monthly for the measured consumption by said public utility
serving the neighborhood in which the Building is located. If a separate meter
is not installed at Lessee's cost, such excess cost will be established by an
estimate agreed upon by Lessor and Lessee, and if the parties fail to agree, as
established by an independent licensed engineer. Lessee agrees not to use any
apparatus or device in, or upon, or about the Premises which may increase the
amount of such services usually furnished or supplied to said Premises, and
Lessee further agrees not to connect any apparatus or device with wires,
conduits or pipes, or other means by which such services are supplied, for the
purpose of using additional or unusual amounts of such services without the
written consent of Lessor. Should Lessee use the same to excess, the refusal on
the part of the Lessee to pay upon demand of Lessor the amount established by
Lessor for such excess charge shall constitute a breach of the obligation to pay
rent under this Lease and shall entitle Lessor to the right therein granted for
such breach. At all times Lessee's use of the electric current shall never
exceed the capacity of the feeders to the Building or the risers or wiring
installation and Lessee shall not install or use or permit the installation or
use of any computer or electronic data processing equipment in the Premises
without the prior written consent of Lessor.
(e) Water will be available in public areas for lavatory purposes
only.
(f) Provide janitor service to the Premises, provided the same are
used exclusively as offices, and are kept reasonably in order by Lessee, and if
to be kept clean by Lessee, no one other than persons approved by Lessor shall
be permitted to enter the Premises for such purposes. If the Premises are not
used exclusively as offices, they shall be kept clean and in order by the
Lessee, at Lessee's expense, and to the satisfaction of Lessor, and by persons
approved by Lessor. Lessee shall pay to Lessor the cost of removal of any of
Lessee's refuse and rubbish, to the extent that the same exceeds the refuse and
rubbish usually attendant upon the use of the Premises as offices.
21. Lessor reserves the right to stop service of the elevator, plumbing,
ventilating, air conditioning and electric system, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgment of Lessor desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air conditioning or electric service, when prevented from so doing
by strike or accident or by any cause beyond Lessor's reasonable control, or by
laws, rules, orders, ordinances,
Exhibit "C"
Page 3 of 4
<PAGE>
directions, regulations or requirements of any federal, state, county or
municipal authority or failure of gas, oil or other suitable fuel supply or
inability by exercise of reasonable diligence to obtain gas, oil or other
suitable fuel. It is expressly understood and agreed that any covenants on
Lessor's part to furnish any service pursuant to any of the terms, covenants,
conditions, provisions or agreements of this Lease, or to perform any act or
thing for the benefit of Lessee, shall not be deemed breached if Lessor is
unable to furnish or perform the same by virtue of a strike or labor trouble or
any other cause whatsoever beyond Lessor's control.
22. All electric wiring and electrical outlets and connections of every
kind shall be introduced and connected only by Lessor, and no boring or cutting
for wires shall be allowed except upon the prior written consent of the Lessor.
The location of telephones, call boxes and other office equipment affixed to the
Premises shall be subject to the prior written approval of Lessor. No air
conditioning unit or other similar apparatus shall be installed or used by any
Lessee without prior written consent of Lessor.
23. Lessor reserves the right to exclude or expel from the Building and the
Premises any person who, in the judgment of Lessor is intoxicated or under the
influence of liquor and/or drugs, or who shall in any manner do any act in
violation of the RULES AND REGULATIONS.
24. Lessor shall not place any radio or television antenna on the roof or
on any part of the inside or the outside of the Building other than the inside
of the Premises without the prior written consent of the Lessor. Lessee shall
not operate or permit to be operated any musical instrument or sound producing
instrument or device inside or outside the Premises which may be heard outside
the Premises, or operate any electrical device from which may emanate electrical
waves which may interfere with or impair radio or television broadcasting or
reception from or in the Building or elsewhere, without the Lessor's prior
written consent.
25. Lessee shall comply with all rules and regulations applicable to the
parking garage as determined by the parking garage operator as they may exist
from time to time.
Exhibit "C"
Page 4 of 4
<PAGE>
LEASE CONFIRMATION
Date: ______________, 19__
TO: Video Broadcasting Corp.
708 3rd Avenue, 23rd Flr.
New York, NY 10017
"Tenant"
RE: Lease dated May 1, 1994
Suite #1205
Please acknowledge that on ___________________, 19___, the Landlord
delivered to you possession of the Premises; that the Commencement Date of the
Lease is ________________________, 19___, the expiration date of the Lease is
_____________________, 19___, the Rentable Area of the Premises is 1,500 square
feet, and your initial Base Rent is $2,250.00 per month.
Very truly yours,
COPPERFIELD INVESTMENT & DEVELOPMENT
COMPANY, a California Corporation
By:_____________________________________
Daniel Lai, President
"Landlord"
Tenant hereby confirms the information set forth above, and further acknowledges
it acceptance of possession of the Premises, as of the date indicated, and
except for so-called "punch list" and "pick-up" items set forth on Schedule "A"
attached hereto, that Landlord has fulfilled its obligations pursuant to Exhibit
"B" of the above referenced Lease.
Video Broadcasting Corporation
By:_____________________________________
Date:____________________________________
EXHIBIT "D"
<PAGE>
Revised 1/24/91
COPPERFIELD INVESTMENT & DEVELOPMENT COMPANY
6430 SUNSET BLVD., LOS ANGELES, CALIFORNIA 90028
TENANT IMPROVEMENT SPECIFICATIONS
Landlord shall perform certain work to the premises as shown on the lease.
Landlord's work shall constitute either the Building Standard Improvements or
Building Non-Standard Improvements. Landlord shall pay for all Standard
Improvements and Tenant shall pay for any Non-Standard Improvements. Tenant
shall have the option to select either Standard Improvements or Non-Standard
Improvements as Landlord's work, with Landlord's approval. Landlord's Standard
Improvements as provided for herein shall include the cost of design fees, plus
all applicable taxes, permits and fees, plus all applicable taxes, permits and
fees required by Government agencies or utilities as necessary and reasonable to
install Building Standard Improvements. Landlord reserves the right to make
reasonable substitutions for the "Building Standard Improvements." Standard
Improvements are offered without credits and any substitutions must be approved
in writing by Landlord.
A. PARTITIONS.
1. Demising Partitions
2 1/2 x 25 GA steel studs at 24" on center with R-8 insulation and
5/8" type X gypsum board each side 8' 6" Partition taped smooth to
receive paint or wall covering.
2. Interior Partitions
2 1/2 x 25 GA steel studs at 24" on center with 5/8" type X gypsum
board each side to underside of ceiling. Partition taped smooth to
receive paint or wall covering.
B. DOORS, FRAMES AND HARDWARE
1. Tenant Entry Door Assembly
a. Doors To Elevator Lobby
3'0" x 7' 6" x 1-3/4" solid core plain slice red oak with 60
minutes label. Bleached oak finish
b. Frames To Elevator Lobby
45 minute Hollow Metal Frame - with stick-on Smoke Seal.
c. Entry Door To Suite
3.0" x 7'.6" x 1 3/4" Solid Core Plain Slice Red Oak: 20 Minutes
Label with matching edge band.
d. Entry Door to Suite
3.0" x 7'6" x 4 7/8" Western Intergrated Bronze Anodized Aluminum
KD with 20 minutes Label.
e. Hardware
Butt: BB 1279-4 1/2" x 4 1/2" 10A Hager
Locksets: Schlage L9453-06/A 613
Closer: Norton 8501-CV-TRI-PK BRZ
Stop: F8061 x BBW 10B Floor
Threshold: ULTRA 3-0 DURO TH014
<PAGE>
6430 Sunset Standard
Page 2
2. Tenant Interior Door Assembly
a. Doors
3'0" x 7'0" x 1-3/4" solid core plain slice red oak. Bleached Oak
finish.
b. Frames
3.0" x 7'0" x 3 3/4" Bronze Anodized Aluminum KD frame.
c. Hardware
Butt: Hager #1279 Finish US 10A Hager
Latchsets: Schlage Latchset Dios x OLY 2 3/4 613
Stop: WC12T BBW Wall Bumper
C. CEILING SYSTEMS
1. Armstrong Cortega Minitone 24" x 24" x 5/8" Tegular Ceiling Tile, in
exposed Donn Dx24 white suspension grid, 24" x 24"
III. Lighting:
D. FLUORESCENT LIGHT FIXTURES
1. Base building standard, 2' x 4' fluorescent fixture = Lithonia #
2PM3GB-340-18D-120-ES-LPW-LST-PWS1846-LATC-JP.
2. DOWN LIGHTS NON-STANDARD.
Incandescent down light - HALO H7ICT-409P W/75W-R30 LAMP.
Incandescent wall washer - HALO H71CT-418P W/75W-R30 LAMP.
E. LIGHT SWITCH / WALL OUTLET
a. SWITCH 15 AMP 120-277V DECORA-WHITE/Leviton 5601-W
b. SWITCH 3-WAY 15 AMP 120-277V DECORA-WHITE/Leviton 5603-W
c. SWITCH 20 AMP 120-277V DECORA-WHITE/Leviton 5621-W
d. SWITCH 3-WAY 20 AMP 120-277V DECORA-WHITE/Leviton 5623-W
e. DIMMER 600 WATT 120V DECORA WHITE/Leviton 6621-W
f. DIMMER 1000 WATT 120V DECORA WHITE/P & S 91181-W
g. DIMMER 3-WAY 600 WATT 120V DECORA WHITE/Leviton 6623-W
h. DIMMER 3-WAY 1000 WATT 120V DECORA WHITE/P & S 91183-W
I. RECEPTACLE 15 AMP 120V DECORA WHITE/Leviton 5325-SW
j. RECEPTACLE 20 AMP 120V DECORA WHITE/Leviton 16452-W
k. RECEPTACLE 15 AMP GFI 120V DECORA WHITE/Leviton 6599-W
l. RECEPTACLE 20 AMP GFI 120V DECORA WHITE/Leviton 6899-W
m. RECEPTACLE 15 AMP IG 120V DECORA WHITE/P & S 1G26262
n. RECEPTACLE 20 AMP IG 120V DECORA WHITE/P & S 1G26362
o. WALL PLATE ONE DEVICE DECORA WHITE/Leviton 80401-W
p. WALL PLATE TWO DEVICE DECORA WHITE/Leviton 80409-W
q. WALL PLATE THREE DEVICE DECORA WHITE/Leviton 80411-W
r. FLOOR OUTLET W/RECEPTACLE GRAY - HUB #PT7-FGY
s. FLOOR OUTLET W/O RCPT/FURN. FEED GRAY - HUB #PT7-FFGY
<PAGE>
6430 Sunset Standard
Page 3
F. TELEPHONE WALL OUTLET
Standard gang outlet box with 3/4" conduit to 6" top of wall. White finish
cover plate. 1" conduit from suite to building backboard.
G. PAINTING
Two coats Dunne Edwards flat interior latex paint building standard color
selection.
H. CARPET, BASE AND V.C.T.
1. Carpet
"Pacific Crest" Encore - Carpet color selection by tenants (or
comparable).
"Atlas" Oxford or Mayfair - Carpet color selection by tenants.
2. Base
Burke 4" straight or coved rubber base from building standards color
selection.
3. V.C.T. - Vinyl Floor Tile
"Armstrong" Excelon, imperial texture.
12" x 12" x 1/8" from building standard colors.
I. WINDOW COVERING
Horizontal mini-blinds to fit all exterior windows of building. Color:
Polished silver. MFG. Spec. by building owner.
J. HEATING, VENTILATING AND AIR CONDITIONING
Systems to match existing distribution and zoning.
K. EXIT SIGNS
Exit lights-single face - EMERGILITE #X-42-GW-120-(*)-TBE
Exit lights-double face - EMERGILITE #X-43-GW-120-(*)-TBE
L. EMERGENCY LIGHTS
Emergency lights - LITHONIA # ELR3MC-H1212.
M. SIGNAGE
Building standard signage at principal tenant entry door to include suite
number and three lines of copy and directory strip.
N. PERMIT SERVICES
Payment of Plan Check and Building Permit Fees for value of building
standard work.
O. BUILDING STANDARDS
The extent to which any of tenant's requirements are non-building standard
work, or otherwise exceed building standard shall be determined by
Landlord's architect or engineer whose determination shall be conclusive.
<PAGE>
LEASE CONFIRMATION
Date: September 30, 1994
TO: Video Broadcasting Corp.
708 3rd Avenue, 23rd Flr.
New York, NY 10017
"Tenant"
RE: Lease dated May 1, 1994
Suite #1205
Please acknowledge that on September 27, 1994, the Landlord delivered to
you possession of the Premises; that the Commencement Date of the Lease is
September 27, 1994, the expiration date of the Lease is September 26, 1999, the
Rentable Area of the Premises is 1,472 square feet, and your initial Base Rent
is $2,208.00 per month.
Very truly yours,
COPPERFIELD INVESTMENT & DEVELOPMENT
COMPANY, a California Corporation
By: /s/ Daniel Lai
---------------------------------
Daniel Lai, President
"Landlord"
Tenant hereby confirms the information set forth above, and further
acknowledges it acceptance of possession of the Premises, as of the date
indicated, and except for so-called "punch list" and "pick-up" items set forth
on Schedule "A" attached hereto, that Landlord has fulfilled its obligations
pursuant to Exhibit "B" of the above referenced Lease.
Video Broadcasting Corporation
By: /s/ J Graeme McWhirter
---------------------------------
Date: 10/17/94
EXHIBIT "D"
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT is made and entered into as of September 15, 1994 by and
between COPPERFIELD INVESTMENT & DEVELOPMENT COMPANY, a California Corporation
("Landlord") and Video Broadcasting Corporation, a Delaware Corporation
("Tenant").
A. Landlord and Tenant made and entered into a written Lease Agreement
dated May 5, 1994, pursuant to which Tenant leased from Landlord,
1,500 rentable square feet of space on the Twelfth floor (12) of the
Building. A Letter Agreement dated July 22, 1994 added additional
tenant improvements to be provided by Landlord at Landlord's cost.
B. Landlord and Tenant agree to reduce the square footage of the Premises
to 1,472 rentable square feet.
AND WHEREAS, the parties agree to this First Amendment to Lease on the terms
hereinafter stated.
NOW, THEREFORE, in consideration of the mutual covenants herein, and in the
stated Lease contained, the parties hereby agree as follows:
1. Section 1.(a) of the Original Lease shall be amended to reflect a
rentable area of approximately 1,472 square feet and a usable area of
1,262 square feet.
2. Section 1.(b)(2) of the Original Lease shall be amended to reflect a
new Commencment date of September 27, 1994.
3. Section 1.(c) of the Original Lease shall be amended to reflect a base
rent in the amount of $2,208.00 during months one through twelve; the
remainder of Section 1.(c) is not amended.
4. Section 1.(e) of the Original Lease shall reflect a security deposit
to be held on file in the amount of $2,208.00. Tenant has paid the
amount of $238.80 on Lease execution, and this amount, together with
the sum of $2,011.20 previously on file, resulted in the Landlord's
receipt of $2,250.00. Of this amount $42.00 has been applied as rent.
5. Except as herein amended, the office Lease shall remain in full force
and effect in accordance with its original covenants, conditions and
restrictions. Except as specifically modified herein, each and all of
the provisions of the Office Lease are hereby incorporated by
reference herein and made a part hereof.
IN WITNESS WHEREOF, the parties have made and entered into this First Amendment
Agreement as of the date and year first above written.
"LANDLORD"
COPPERFIELD INVESTMENT & DEVELOPMENT COMPANY,
A California Corporation
By: /s/ Daniel Lai
-----------------------------
Daniel Lai, President
"TENANT"
Video Broadcasting Corporation,
A Delaware Corporation
By: /s/ J. Graeme McWhirter
-----------------------------
J. Graeme McWhirter
Executive Vice President
<PAGE>
Diagram of Suite 1205 on the 12th Floor
consisting of approximately
1,472 Rentable and 1,262
Usable square feet
The exterior demising walls of the Premises and the area between the finished
ceiling of the Premises and the slab of the floor of the Building thereabove
have not been demised hereby, and the use hereof together with the right to
install, maintain, use, repair, and replace pipes, ducts, conduits and wires
leading through, under or above the Premises in locations which will not
materially interfere with Tenant's use of the Premises and serving other parts
of the Building, are hereby excepted and reserved by Landlord.
EXHIBIT "A"
<PAGE>
Diagram of Finish Plan
The exterior demising walls of the Premises and the area between the finished
ceiling of the Premises and the slab of the floor of the Building thereabove
have not been demised hereby, and the use hereof together with the right to
install, maintain, use, repair, and replace pipes, ducts, conduits and wires
leading through, under or above the Premises in locations which will not
materially interfere with Tenant's use of the Premises and serving other parts
of the Building, are hereby excepted and reserved by Landlord.
EXHIBIT "A"
<PAGE>
DATED 14th November 1994
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CITY & CORPORATE COUNSEL LIMITED
- AND -
VIDEO BROADCASTING CORPORATION INC.
- --------------------------------------------------------------------------------
AGREEMENT
FOR LEASE OF FIRST FLOOR 14 SOHO SQUARE LONDON W1
- --------------------------------------------------------------------------------
MAXWELL BATLEY
SOLICITORS
27 CHANCERY LANE, LONDON WC2A 1PA
<PAGE>
AGREEMENT
DATE 14th November 1994
PARTIES
The Landlord CITY & CORPORATE COUNSEL LIMITED whose
registered office is at 61 Charterhouse
Street London EC1M 6HS
The Tenant VIDEO BROADCASTING CORPORATION INC a Company
incorporated in Delaware whose registered
office is at 708 Third Avenue New York NY
10017 United States of America
DEFINITIONS:-
1. In this Agreement the following expressions shall where the context so
admits have the following meanings
(a) "the Landlord's Surveyor" means Messrs Chesterton of 54 Brook Street
London W1A 2BU or such other firm as may
from time to time by prior notice to the
Tenant be nominated in writing by the
Landlord
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(b) "the Lease" means a lease of the Premises in the
form of the agreed draft annexed
hereto with such additions or
variations only as are hereafter
specified
(c) "the Licence" means the Licence for Fitting Out
Works to be granted by the Landlord
in the form of the agreed draft
annexed hereto
(d) "the Rent" the rent firstly reserved by the Lease
exclusive of Value Added Tax commencing upon
the Rent Commencement Date
(e) "the Rent Commencement means the date which is 5 calendar months
Date" after the First Completion Date or the
Second Completion Date (whichever is the
earlier) as hereinafter defined
(f) "the Term Commencement means the date hereof
Date"
2
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(g) "the First Completion Date" means the date which is seven days after the
later of (i) the date of grant by the
Superior Landlord of the Premises of its
consent for the Tenant to grant the Lease or
(ii) the date of the grant of the Court
Order
(h) "the Second Completion Date" means the date which is the later of (i) the
date upon which the Lease is completed or
(ii) the date upon which the Tenant gives
vacant possession of the Third Floor 14 Soho
Square London W1 to the Landlord
(i) "the Requisite Approvals" means all such planning consents licences
permissions approvals and authorisations as
are necessary for the carrying out of the
Tenant's Works
(j) "the Tenant's Works" means the fitting out and other works (an
outline description whereof is set out in
the Schedule
3
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hereto) to be carried out by the Tenant
after approval of the plans and
specifications thereof as hereinafter
provided
(k) "the Court Order" means an Order of an appropriate Court
whereby the provisions of Sections 24 to 28
of the Landlord and Tenant Act 1954 shall be
excluded from applying to the Lease
(l) "the Premises" means the First Floor 14 Soho Square London
W1 and more particularly described in the
form of lease annexed hereto
(m) "working days" shall mean Monday to Friday inclusive but
shall not include Christmas Eve Christmas
Day Boxing Day New Years Day and any public
Bank Holiday
(n) "the Surrender" means the Deed of Surrender in the form of
the agreed draft annexed
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hereto and relating to the Third Floor Lease
(o) "the Third Floor Lease" shall mean the Lease dated 17th May 1993
made between the Landlord (1) and the Tenant
(wrongly described therein as Video
Broadcasting Inc.) (2) relating to the Third
Floor 14 Soho Square London W1
2. Unless the context otherwise requires all other expressions in this
Agreement that appear also in the said agreed draft of the Lease have the
meanings given therein
3(1) Forthwith after the date hereof the parties hereto shall apply to the
Mayor's and City of London Court for the grant of the Court Order and the
parties hereto mutually agree with each other that they will each do all
acts which may be necessary and use all reasonable endeavours to obtain the
Court Order as expeditiously as possible
3(2) Subject to and conditional upon the grant of the Court Order the Landlord
agrees to grant and the Tenant agrees to accept the Lease subject to the
terms of the Agreement and in the said agreed form and the Landlord agrees
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to accept and the Tenant agrees to grant the Surrender subject to the terms
of this Agreement and in the said agreed form
3(3) Completion of the Lease shall take place at the offices of the Landlord's
solicitors on the First Completion Date when the Landlord shall grant and
the Tenant shall accept and complete the Lease Completion of the Surrender
shall take place at the offices of the Landlord's Solicitors on the Second
Completion Date
3(4) In the event that the Court Order and the Superior Landlord's consent are
not obtained on or before the 31st October 1994 then the Landlord or the
Tenant shall be at liberty at any time thereafter to rescind this Agreement
on giving written notice of intention so to do to the other and immediately
upon such notice having been served this Agreement shall terminate and be
of no effect but without prejudice to any right of action or remedy in
respect of any antecedent breach of any of the conditions of agreements
herein
3(5) The rent firstly reserved under the Lease of (pound)33,000 per annum shall
be the Rent and shall commence to be payable on and from and including the
Rent Commencement Date the first installment being for the period from and
including the Rent Commencement date up to and including the day
immediately prior to the next quarter day thereafter AND the rent reserved
by the Third Floor Lease shall cease to be payable with effect from the
date of completion of the Surrender of the Third Floor Lease
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3(6) The rents secondly thirdly and fourthly reserved by the Lease shall
commence to be payable from the dates and pursuant to the terms set out in
the Lease
3(7) The term commencement date for the purpose of the Lease shall be the Term
Commencement Date
4(1) The Tenant shall at its own cost prepare and submit to the Landlord's
Surveyor for approval within four weeks after the date hereof four copies
of a plan or plans and a specification of the Tenant's Works containing
such details as the Landlord may require in order to form a true and fair
view thereof and the Tenant shall apply for and use its best endeavours to
obtain all Requisite Approvals for the carrying out of the Tenant's Works
4(2) On or after the plan or plans and specification of the Tenant's Works have
been approved by the Landlord the Tenant (subject to having obtained all
Requisite Approvals) shall with all due expedition and diligence proceed to
carry out and complete the Tenant's Works in a good and workmanlike manner
and to the reasonable satisfaction of the Landlord's Surveyor
4(3) in relation to and in carrying out the Tenant's Works and every part
thereof the Tenant shall comply in all respects with the conditions set out
in the said draft of the Licence
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4(4) The Tenant shall carry out and complete to a standard satisfactory to the
Landlord or its surveyor the Tenant's Works within six weeks after the date
hereof
4(5) The Landlord and the Landlord's Surveyors shall be entitled at all
reasonable times upon reasonable prior notification to the Tenant to enter
upon the Premises to inspect the progress of the Tenant's Works but any
observations thereupon shall be made only to the Tenant and not those
concluding the Tenant's Works
4(6) The Tenant shall not occupy (save for the purpose of concluding the
Tenant's Works) or trade from the Premises or any part of it until the
completion of the grant of the Lease
4(7) The Tenant shall not commence the Tenant's Works until the detailed plans
and specifications thereof shall have been approved by the Landlord and the
Superior Landlord (if necessary)
4(8) Completion of thee Licence shall take place 7 days after the later of (i)
the grant of the Lease or (ii) the date upon which all approvals required
pursuant to Clause 4(7) have been obtained
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5. The Tenant shall not part with assign licence mortgage or charge or execute
a declaration of trust in respect of or in any other way deal with or
dispose of its interest in the Premises under this Agreement or any part
thereof
6. Neither this Agreement nor entry upon the Premises or payment of any sum by
the Tenant pursuant to any of the foregoing provisions shall constitute a
demise of the Premises
7.(1) If the Tenant shall enter into liquidation either compulsory or voluntary
(except for the purpose of reconstruction or amalgamation on terms
reasonably approved by the Landlord) or suffer the appointment of a
receiver or administrative receiver or administrator or if the Tenant shall
otherwise become insolvent or cease to exist or if the Tenant shall commit
any breach of any of the obligations hereunder which is not rectified
within 14 days of notice thereof being given by the Landlord to the Tenant
the Landlord may
(a) by 14 days notice in writing require the Tenant to vacate the Premises
and (at the Landlord's option) by such time to remove the Tenant's
Works or such of them as the Landlord may specify and to reinstate the
Premises whereupon the Tenant shall immediately comply with the
requirements of such notice;
or
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carry out and complete such reinstatement within 14 days of the termination
of this Agreement the Landlord may carry out and complete such
reinstatement and all reasonable and proper costs and expenses so incurred
by the Landlord (including all proper and reasonable professional fees and
expenses and Value Added Tax) shall be payable by the Tenant to the
Landlord from time to time on demand and until so paid bear interest at 4
per cent per annum above National Westminster Bank plc base lending rate
from time to time as well after as before any judgment calculated and
accruing on a daily basis from the date of such demand up to and including
the date of actual payment
8. The Landlord shall not be required to deduce its title to grant the Lease
and the Tenant shall be deemed to have accepted that the Landlord does have
good title and shall not be entitled to raise any objections or
requisitions in respect thereof whatsoever
9. The Tenant hereby acknowledges that this Agreement is not entered into in
reliance upon any representations made but not embodied in this Agreement
save such representations (if any) as have been made in writing prior to
the date hereof by the Landlord's solicitors to the Tenant's solicitors
10. Notwithstanding the grant of the Lease the provisions of this Agreement
shall not merge and shall remain in full force and effect so far as any of
them remain to be performed
11
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11. The parties hereto hereby agree that the provisions set out in Clause 8 of
the Lease shall apply mutatis mutandis to this Agreement as if the same
were herein set out in full
12. The provisions of Section 196 of the Law of Property Act 1925 shall apply
to all notices required to be served hereunder
IN WITNESS whereof this Agreement was duly executed as a Deed on the date
stated above
12
<PAGE>
THE SCHEDULE
(Details of Tenant's Works)
Installation and repositioning of demountable partitioning as shown on the Plan
annexed to the Licence.
13
<PAGE>
EXECUTED as a DEED by )
CITY & CORPORATE COUNSEL )
LIMITED in the presence of:- )
J.G. Walker
-----------
J.G. Walker
15 WETHERBY GARDENS
LONDON SW5 05W
Director
/s/ Michael Pledge /s/ Alan Watson
MICHAEL PLEDGE ALAN WATSON
Director
EXECUTED as a DEED by )
VIDEO BROADCASTING )
CORPORATION INC )
in the presence of:-
Director
Secretary
14
<PAGE>
DATED 9th February 1995
- --------------------------------------------------------------------------------
CITY & CORPORATE COUNSEL LIMITED
- and -
VIDEO BROADCASTING CORPORATION INC.
- --------------------------------------------------------------------------------
UNDERLEASE
of
First Floor 14 Soho Square London W1
- --------------------------------------------------------------------------------
MAXWELL BATLEY
SOLICITORS
27 CHANCERY LANE LONDON WC2A 1PA
<PAGE>
THIS UNDERLEASE
DATED the Ninth day of February 1995
BETWEEN: CITY & CORPORATE COUNSEL whose registered office is at
61 Charterhouse Street London EC1M 6HS ("the Landlord") and VIDEO BROADCASTING
CORPORATION INC. a company incorporated in Delaware whose registered office is
at 708 Third Avenue New York NY 10017 United States of America ("the Tenant")
1. DEFINITIONS
In this sub-Lease the following expressions shall have the following
meanings:
(a) "Building" means all that property situated 14 Soho
Square London W1 together with the buildings
erected thereon or on some part thereof
comprising a lower ground, ground and first
second third and fourth floors and including
terraces and other external area ALL of
which is now known as 14 Soho Square London
W1 together with the appurtenances thereto
belonging and the fixtures and fittings in
the nature of
1
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landlord's fixtures and fittings and
including all carpets blinds curtains and
all fitted cupboards presently at the
Building
(b) "the Common Parts" means the entrance hall lift and staircase
leading from the ground to the third floor
(c) "the Conducting Media" means drains sewers conduits flues gutters
gullies channels ducts shafts watercourses
pipes cables wires and mains or any of
them in or passing through the Building or
some part thereof except insofar as the
same exclusively serve the Demised
Premises
(d) "the Demised Premises" shall mean the first floor at the Building
including:
(i) the interior faces of all structural walls
and columns bounding or within the Demised
Premises
(ii) the whole of any non-structural wall which
falls within the Demised Premises and one
2
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half in width or any non-structural wall
which bounds the Demised Premises
(iii) the floor screwed down to the joists or
other structural parts supporting the
flooring of the Demised Premises and plaster
to the walls and floor and wall finishes
(iv) the interior face of the structure of the
ceiling to the Demised Premises and the
whole of any false and/or suspended ceilings
and the voids between the ceilings and false
ceilings therein
(v) all window and doors including the frames
and fittings thereof
(vi) all sprinkler apparatus (if any) water and
sanitary fittings stopcocks cisterns
radiators apparatus and equipment for air
extraction and all air water electricity gas
and other service wires ducts pipes
conduits fixings and conducting media
which solely serve the Demised Premises
3
<PAGE>
(vii) all additional alterations and improvements
which may be carried out during the Term
together with the Landlord's fixtures and
fittings as listed on the Inventory
(e) "the Inventory" means the attached list of all Landlord's
fixtures and fittings
(f) "the Lease" means the Lease dated 21st May 1990
between Astonford Investments Limited (1)
and the Landlord (2) whereby the Superior
Landlord granted the Tenant a Lease of the
Building
(g) "the Superior Landlord" means Astonford Investments Limited and its
successors in title and the reversioner for
the time being immediately expectant on the
term hereby granted
All other defined words and phrases shall have the meanings attributed to
them in the Lease
2. In consideration of the rents and the Tenant's covenants hereinafter
reserved and contained the Landlord demises unto the Tenant the Demised
Premises
4
<PAGE>
INVENTORY OF LANDLORD'S FIXTURES AND FITTINGS
FIRST FLOOR
Suspended ceiling with 14 inset fluorescent Light fittings and diffusers.
Secondary glazing to front elevation windows.
2 ranges of fitted Cupboards.
7 "versamtemp" wall mounted Air Conditioning units with fresh air and extract
ducting in ceiling.
Green patterned Carpet as laid.
Perimeter compartment electrical trunking system.
1 water Fire extinguisher.
<PAGE>
TOGETHER WITH the rights specified in the First Schedule hereto excepting
and reserving unto the Landlord the rights specified in the First Schedule
to the Lease to hold the Demised Premises unto the Tenant from the 14th day
of November 1994 to the 23rd day of June 1999 subject (i) to the matters
referred to in the Second Schedule to the Lease so far as the same are
still subsisting and capable of taking effect and (ii) to the proviso for
re-entry herein contained YIELDING AND PAYING therefor during the term:-
FIRSTLY
(i) in respect of the period from the 14th day of November 1994 to the
20th day of April 1995 the rent of a peppercorn (if demanded) and
(ii) in respect of the period the 21st day of April 1995 to the 23rd day of
June 1995 the annual rent of (pound)33,000 such rent to be inclusive
of uniform business rate and water rates electricity charges normal
office cleaning to the same standard as supplied to the Building and
use of the reception services at the Building during normal office
hours and
(iii)in respect of the period from the 24th day of June 1995 to the 23rd
day of June 1997 the annual rent of (pound)26,040 exclusive of rates
and all other outgoings and
<PAGE>
(iv) thereafter with effect from the 24th June 1997 the annual rent of
(pound)29,760 exclusive of rates and all other outgoings.
SECONDLY with effect from the 24th June 1995 by way of additional rent the
Tenant's Proportion of the Service Expenses as defined in and in accordance
with the provisions of the Second Schedule hereto
THIRDLY by way of additional rent a sum or sums of money equal to
(a) 21.41 per cent of all amounts expended or incurred from time to time
by the Landlord (i) in paying the insurance rent secondly reserved by
the Lease in respect of insurance of the Building from and against the
Insured Risks (as defined in the Lease) and (ii) in complying with the
Landlord's obligations (as lessee under the Lease) pursuant to Clauses
4(19)(a) and (b) of the Lease and
(b) the whole of all amounts expended from time to time by the Landlord in
insuring against the loss of four years rent from the Demised Premises
such rents thirdly reserved to be payable on demand
FOURTHLY by way of additional rent any Value Added Tax which is or may
become payable on the rents firstly secondly and thirdly hereby reserved
and to be paid in accordance with the provisions of Clause 3(1)(b) hereof
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The rent first reserved to be paid by equal quarterly payments in advance
on 25th March 24th June 29th September and 25th December in each year clear
of all deductions the first payment to be in respect of the period from the
21st day of April 1995 to the 23rd day of June 1995 and to be made on the
21st day of April 1995 All such rents hereinbefore reserved to be paid
without any deductions whatsoever (other than such as may for the time
being be required by law to be made)
3. The Tenant hereby covenants with the Landlord to the intent that the
obligations may continue throughout the Term as follows:
(1)(a) to pay the said rents first secondly thirdly and fourthly
reserved at times and in the manner provided above without any
deduction except as aforesaid and whether or not demanded by the
Landlord
(b) All rents (except the rent fourthly hereby reserved) or other
sums payable by the Tenant to the Landlord under the terms of
this Deed are exclusive of Value Added Tax and the Tenant shall
on the relevant date upon which payments of the rents or other
sums in question are due hereunder pay in addition:
(i) in the case of rents (except as aforesaid) all Value Added
Tax lawfully payable in respect thereof
7
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(ii) in the cases of other sums all Value Added Tax payable in
respect thereof save to the extent that the Landlord is able
to recover the same as an input
(c) If the Tenant shall fail to pay to the Landlord any money payable
by the Tenant to the Landlord pursuant to any of the Tenant's
covenants contained in this deed (including the covenant to pay
the rents hereby reserved) within 14 days after the dates when
the same become due or if the Landlord shall refuse to accept the
tender of such rents or any part of them because of a significant
breach of covenant by the Tenant to pay interest on such money at
a rate of four per centum per annum above the base rate from time
to time of National Westminster Bank plc as well after as before
any judgement calculated and accruing on a daily basis from the
date such money becomes due up to and including the date of
actual payment thereof
(2)(a) With effect from the 24th June 1995 to pay all existing and
future rates assessments charges and outgoings of every kind
(whether or not recurring and whether of an existing or novel
nature) payable by law in respect of the Demised Premises or any
part of it by the owner lessor lessee or occupier of it
8
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(b) With effect from the 24th June 1995 and in the event that the
Demised Premises shall not be separately assessed to pay a fair
proportion (to be conclusively determined by the surveyor for the
time being of the Landlord) of all existing and future rates
assessments charges and outgoings of the same kind as those
mentioned in paragraph (a) above payable by law in respect of the
Building
(3) To Pay to the relevant suppliers all charges for gas electricity and
water (including meter rents and standing charges) consumed in the
Demised Premises
(4) In relation to the Demised Premises and where appropriate the Common
Parts to abide by and to observe and perform the provisions of
sub-clauses 4(2)(b) and (c) (6) (7) (8) (9) (10) (11) (12) (13) (15)
(16) (17) (18) (20) (21) (22) (23) (24) (29) (30) (31) (32) (33) (34)
(35) (36) (37) (38) (but excluding from 4(38) the references to the
"said lift lift gears lift housing plant room") (39) (41) and (42) of
the Lease in the same manner as if such sub-clauses were set out in
extenso in this Underlease
(5) From time to time and at all times well and substantially to repair
and clean the Demised Premises and to keep the Demised Premises
together with all improvements and additions to the Demised Premises
9
<PAGE>
and all Landlord's fixtures fittings and appurtenances of whatever
nature affixed or fastened to the Demised Premises in good and
substantial repair and condition (damage by Insured Risks excepted
unless and to the extent that the Policies of Insurance in respect of
Insured Risks effected by the Superior Landlord are vitiated or the
policy monies are withheld by reason of any act or omission of the
Tenant or its employees or agents)
(6) In the year 1994 and in the last year of the term (howsoever
determined) to paint in a proper and workmanlike manner all the inside
parts of the Demised premises heretofore painted with at least two
good coats of paint of good quality and also with every such internal
painting to wash down stop whiten grain varnish or paper and otherwise
decorate in a proper and workmanlike manner all such internal parts of
the Demised Premises that have been or ought properly to be so treated
(7) Not at any time during the Term to assign the whole of the Demised
Premises without the Landlord's written Licence first had and obtained
which shall not be unreasonably withheld PROVIDED THAT every such
Licence shall be by Deed to be prepared by the Landlord but at the
expense of the Tenant to which the intended assignee shall be a party
in order to covenant (and if a firm then jointly and severally by all
its partners) directly with the Landlord to pay the rents hereby
10
<PAGE>
reserved in advance to pay interest on the said rents being in arrears
in accordance with the terms of this Lease and to perform and observe
the covenants and conditions on the part of the Tenant herein
contained (including this present covenant) in the same manner as if
such covenants and conditions were therein repeated in extenso and if
such intended assignee shall be a body corporate then upon the
Landlord's demand in that behalf to provide such reasonable security
in the form of either a rental deposit or a parent company or other
corporate guarantee or such other form of guarantee as the Landlord
may reasonably require and on the basis that such surety covenants
with the Landlord in the form mutatis mutandis set out in the Third
Schedule to the Lease
(8) Not at any time during the Term to sublet or share or licence the
occupation of the whole or any part of the Demised Premises and not to
assign or otherwise part with possession of part only of the Demised
Premises PROVIDED that nothing contained in this Clause shall prevent
the Tenant from sharing occupation of the whole or any part or parts
of the Demised Premises with a company which is for the time being a
member of the same group of companies as the Tenant within the meaning
of Section 42 of the Landlord and Tenant Act 1954 in the form of that
section as it exists at the date of this lease and for the purposee of
interpreting that section "subsidiary" shall have the meaning assigned
to it under Section 736 of the
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Companies Act 1985 as originally enacted PROVIDED FURTHER that no
tenancy shall be created by any such sharing of occupation
4. The Landlord hereby covenants with the Tenant (subject to the payment by
the Tenant of the rents hereby reserved) and PROVIDED THAT the Tenant has
complied with all the covenants and obligations on the part of the Tenant
to be performed and observed (as follows):-
(i) to pay the rents reserved by the Lease and to perform so far as the
Tenant is not liable for such performance under the terms of this
Underlease the covenants and conditions on the part of the Lessee
contained in the Lease and to indemnify and to keep indemnified the
Tenant so far as aforesaid against all actions claims proceedings
costs expenses and demands in any way relatingt to the Lease
(ii) on the request and at the expense of the Tenant to take all reasonable
steps to enforce the covenants on the part of the Superior Landlord
contained in the Lease
(iii)to ensure that the Demised Premises are cleaned daily to a reasonable
standard
(iv) that the Tenant paying the rents hereby reserved and observing and
performing the several covenants and stipulations herein on the part
12
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of the Tenant contained shall peaceably hold and enjoy the Demised
Premises throughout the Term and without any interruption by the
Landlord or any person rightfully claiming under or in trust for the
Landlord
(v) to provide the services of a receptionist during normal business hours
whose duties shall include: answering telephone calls between 8:00
a.m. and 8:00 p.m. on working days; showing visitors to the Tenant's
premises
5. PROVIDED ALWAYS and it is hereby agreed that if and whenever the rents or
any of them or any part of any of them reserved or made payable by the
Tenant in this Deed shall be in arrear and unpaid for Fourteen (14) days
after they shall have become due (whether legally demanded or not) or if
the Tenant shall at any time fail or neglect to perform or observe any of
the covenants conditions or agreements in this Deed and on the part of the
Tenant to be performed or observed or if (the Tenant being a company) any
application to the Court is made pursuant to Section 9 of the Insolvency
Act 1986 or the Tenant shall enter into liquidation (other than a voluntary
liquidation for the purpose of reconstruction or amalgamation of a solvent
company where the reconstructed or amalgamated company assumes the
obligations of the liquidated company hereunder) or shall have a
provisional liquidator or a receiver or administrative receiver appointed
or be the subject of a petition for an administrative order or otherwise
cease to exist or if (the
13
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Tenant being an individual) any application to the Court is made pursuant
to either or both of Sections 253 or 267 of the said Insolvency Act or
there shall be presented to the Court a petition for bankruptcy order
against the Tenant or the Tenant shall have a receiving order made against
him or if (whether or not the Tenant is a company) there shall be called a
meeting with or the Tenant shall enter into any arrangement or composition
with his creditors or suffer any distress to be levied on the goods of the
Tenant or the Tenant shall otherwise be or become insolvent (and if the
expression "the Tenant" shall include more than one company or individual
the right of forfeiture herein shall arise if any such event as aforesaid
shall occur in relation to any one such company or individual) then and in
any such case it shall be lawful for the Landlord or any person or persons
duly authorised by the Landlord to re-enter the Demised Premises or any
part of them in the name of the whole and thereupon the term shall
absolutely determine but without prejudice to any right of action or remedy
of the Landlord in respect of any antecedent breach of any of the covenants
by the Tenant contained in this Deed
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6. The provisions of Clause 7 of the Lease shall apply to this Underlease
(with the exception of sub-clauses 7(1) and 7(9) in the same manner as if
such Clause 7 were set out in extenso in this Underlease
7. Having been authorised so to do by an order of the Mayor's and City of
London Court made on the 22nd day of September 1994 under the provisions of
Sections 38(4) of the Landlord and Tenant Act 1954 as amended by Section 5
of the Law of Property Act 1969 the Landlord and Tenant agree that the
provisions of Sections 24 and 28 of the Landlord and Tenant Act 1954 shall
be excluded in relation to the tenancy hereby created
8. (1) Each of the parties to this Deed irrevocably agrees for the benefit of
each of the other parties that the place of performance of the
obligations under or pursuant to this Deed shall be England and that
the Courts of England shall have jurisdiction to hear and determine
any suit action or proceedings and to settle any disputes which may
arise out of or in connection with this Deed and for such purposes
irrevocably submits to the jurisdiction of such Courts
(2) The submission to the jurisdiction of the Courts referred to in
sub-clause (1) hereof shall not (and shall not be construed so as to)
limit the rights of the Landlord to take proceedings against the
Tenant in any other court of competent jurisdiction nor shall the
taking of
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proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction whether concurrently or not
(3) The Tenant irrevocably agrees that
(a) any process issued out of the High Court may for the purposes of
the Rules of the Supreme Court of England and any notices to be
served on it under this Deed may for the purposes of this Deed be
served on it in each case by leaving a copy of such process or
notice (as the case may be) or posting such a copy by ordinary
post addressed to it at the address for service in England and
Wales specified in Clause 7(6) hereof or at such other address in
England and Wales of which the Landlord shall have received a
notice which itself complies in all respects with paragraph (b)
below
(b) any notice of change of address for service to be given by the
Tenant shall
(i) be given in writing by the Tenant to the Landlord
(ii) specify the date of this Deed and the parties to it
(iii) contain the full address of the Property
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(iv) specify the last applicable address for service under this
Deed either as specified in Clause 7(6) hereof or (as the
case may be) as last notified pursuant to paragraph (a)
above and the date of such notification and
(v) specify the new address in England and Wales for such
service and the date (being not earlier than 14 days after
delivery of such notice to the Landlord) from which it shall
apply
and any purported notice which fails in any respect to comply
with the provisions of this paragraph (b) shall not constitute
due notice of change of address for service for the purpose of
this paragraph (b)
(c) Any such service of process or notice pursuant to paragraph (a)
above shall be deemed to have been completed two days after
posting of such process or notice or upon personal delivery
(4) The Tenant irrevocably consents generally in respect of any legal
action or proceeding arising out of or in connection with this Deed to
the giving of any relief or the issue of any process in connection
with such action or proceeding including (without limitation) the
making enforcement or execution against any property whatsoever and
17
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wheresoever (irrespective of its use or intended use) of any order or
judgment which may be made or given in such suit action or proceeding
(5) To the extent that the Tenant may in any jurisdiction be entitled to
claim for itself or its assets immunity from suit execution attachment
(whether in aid of execution before judgment or otherwise) or other
legal process and to the extent that in any such jurisdiction there
may be attributed to it or its assets such immunity (whether or not
claimed) the Tenant irrevocably agrees not to claim and irrevocably
waives such immunity to the full extent permitted by the laws of such
jurisdiction
(6) The Tenant hereby appoints Wright Son & Pepper of 9 Grays Inn Square
London WC1R 5JF or the successor in title to such practice as its
Agent for the acceptance of service of process in England and Wales
and agrees that service of process on the same shall be valid and
effectual unless prior to such service the Tenant shall have notified
the Landlord in writing of the name and address of another Agent for
the acceptance of service of process in England and Wales and to which
the provisions of this sub-clause (6) will apply
18
<PAGE>
IN WITNESS whereof the Landlord and Tenant have caused this lease to
be executed the day and year first above written
THE FIRST SCHEDULE
Rights granted to the Tenant
1. The free and uninterrupted passage of water soil gas electricity and
telephonic communications from and to any part of the Demised Premises
through the Conducting Media commonly used for those purposes
2. In common with the Landlord and occupiers of the Building and all others
thereto entitled at all times and for all purposes in connection with the
business of the Tenant conducted at or from the Demised Premises a right of
access to and egress from the Demised Premises by way of the staircase and
lift
3. The right of support shelter and protection for the Demised Premises from
the other parts of the Building
4. The right to use the male and female lavatories and the right to use the
kitchen on the Fourth Floor
5. The right to use the Boardroom situate within the Building for not more
than two hours a week
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6. The right to use the fire escapes in case of emergency in the Building in
common with the Landlord
THE SECOND SCHEDULE
Service Charge
PART 1
1. In this Schedule the following expressions shall have the following
meanings:-
(a) "the Tenant's Proportion" shall mean 21.41 per cent;
PROVIDED that should the Building be altered by way of extension addition
or other similar works or incorporation with other premises or in any other
substantial manner the Tenant's Proportion may be recalculated by the
Landlord's surveyor and in the event of such recalculation shall be such
amended proportion as shall be notified in writing to the Tenant by the
Landlord's surveyor And such amended proportion shall have effect from the
date specified in such notification
(b) "the Service expenses" shall mean the aggregate of such of the costs
expenses fees outgoings and other money specified in Part 2 of this
Schedule as are incurred or paid by the Landlord and shall at the
Landlord's discretion include a sum or sums of money by way of reasonable
provision
20
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for anticipated expenditure in respect of the Service Expenses which the
Landlord may in its discretion allocate to a Service Year and consider fair
and reasonable in the circumstances.
(c) "the Service Year" shall mean the period of Twelve (12) calendar months
ending on the 23rd day of June in each year or on such other date as the
Landlord may from time to time notify in writing to the Tenant.
2. The Tenant will pay to the Landlord at the times and in the manner set out
below the Tenant's Proportion of the Service Expenses:-
(a) The Landlord will as soon as practicable after the commencement of the
term and thereafter on or about the end of each Service Year make and
notify in writing to the Tenant an estimate of the Service Expenses to be
incurred or paid during the next Service Year.
(b) The Tenant shall pay the Tenant's Proportion of the estimated service
expenses under sub-paragraph (a) by equal instalments in advance on the
usual quarter days in each year or proportionately for any period less than
a quarter the first payment whereof shall be made in respect of the period
from the 24th day of June 1995 to the next succeeding quarter day PROVIDED
that (i) such first payment shall be payable within fourteen days of the
notification to the Tenant of the amount thereof together with the
instalments in respect of any quarterly period which shall have commenced
21
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before such notification and (ii) if the estimate of the Service Expenses
in respect of any Service Year shall not have been notified to the Tenant
as aforesaid before the quarter day immediately preceding the commencement
of such Service Year the Tenant shall continue to pay such quarterly
instalments at the rate last payable by it until such notification Provided
that the Tenant will within 7 days after it has been notified of the
estimate of the Service Expenses in respect of that Service Year pay to the
Landlord a sum equal to the difference between the aggregate of the
quarterly payments already made (at the rate last payable) in respect of
that Service Year and the aggregate of the quarterly payments which would
have been made in respect of that Service Year had the estimate of the
Service expenses in respect of that Service Year been notified to the
Tenant before the quarter day immediately preceding that Service Year and
(iii) if such notification shall have been given before the quarter day
immediately preceding the commencement of any Service Year in respect of
such Service Year the instalment payable on the said quarter day shall be
at the new rate so notified to the Tenant.
(c) Unless prevented by causes beyond the Landlord's control as soon as
possible following the end of each Service Year the Landlord will prepare
and deliver to the Tenant a statement of the Service Expenses for that
Service Year and the sum payable by the Tenant and will provide the Tenant
upon reasonable prior written notice and during normal working hours with
facilities to inspect and copy at the Tenant's expense any vouchers
22
<PAGE>
supporting such statement and the Tenant will within fourteen days of the
delivery of such statement pay to the Landlord any such balance shown by
such statement to be due from the Tenant as being in excess of the
aggregate amount of the quarterly installments paid by the Tenant in
respect of that Service Year (payments made in respect of the quarter
commencing on the quarter day immediately preceding any Service Year being
apportioned on a daily basis in respect of the periods respectively
terminating on and commencing immediately after the end of each Service
Year) and if such statement shall show that there is a balance due to the
Tenant from the Landlord then the Landlord will credit the Tenant with such
balance against future liabilities to pay the Service Expenses PROVIDED
that the provisions of this sub-paragraph shall continue to apply
notwithstanding the determination of the term but only in respect of the
period down to such determination the Tenant's Proportion of the Service
Expenses for the Service Year during which such determination occurs being
apportioned for the said period on a daily basis and it at the end of the
Term there shall have been any overpayment of the Tenant's Proportion of
the Service Expenses (apportioned as necessary on a daily basis) then that
overpayment shall be repaid to the Tenant as soon as the amount shall have
been ascertained.
(d) The certified statement of the Landlord's surveyors as to the amount of
the estimated or actual Service Expenses shall be final and binding upon
the parties hereto save as to questions of law or in the case of manifest
error.
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<PAGE>
3. Any omission by the Landlord to include in any statement or estimate of
Service Expenses for any Service Year a sum expended or a liability incurred in
that year shall not preclude it from including such sum or the amount of such
liability in any subsequent Service Year.
4. The Tenant shall not be entitled to object to any item comprised in the
Service Expenses by reason that the materials work or service in question might
have been provided or performed at a lower cost or by reason that such item may
or does benefit one or more other tenants in the Building more than it benefits
the Tenant.
5. The maximum amount payable by the Tenant towards the Service Expenses shall
not exceed in respect of any one Service Year the sum of (pound)6,820 plus Value
Added Tax thereon
PART 2
The Service Expenses comprise all costs charges commissions premiums fees
interest and expenses incurred paid or provided for:-
1. In connection with or relating to inspecting cleaning draining emptying
operating lighting decorating repairing maintaining and when requisite
modifying or renewing and rebuilding the structure (including foundations
roofs structural and load bearing walls structural columns beams slabs
andfloors) and the exterior (including all windows in the common parts) of
the
24
<PAGE>
Building and all walls flues gutters drains pipes sewers channels conduits
ducts wires cables watercourses fences walls roadways pavements forecourts
parking areas floors balconies entrances ways passages areas and any other
services easements things or conveniences (not limited in kind to those
enumerated above) which or any parts of the Building which shall at any
time during the term serve or be capable of being used or enjoyed by the
Demised Premises.
2. In connection with the daily cleaning of all parts of the Building
including the Demised Premises.
3. Without prejudice to the generality off paragraph 1 above:
(a) In painting washing and cleansing the exterior (including all
windows in the Building) of the Building when necessary.
(b) In providing operating maintaining testing repairing and when
requisite modifying or renewing a fire alarm system sprinkler system
and in addition fire fighting equipment in those parts of the Building
not demised or intended to be demised to a tenant.
(c) In providing maintaining repairing renewing and replacing
furnishings decorations appointments fittings bins receptacles tools
appliances apparatus and other equipment and materials which the
25
<PAGE>
Landlord may reasonably consider desirable or necessary for the
Building.
(d) In discharging all payments of the kinds mentioned in Clauses
3(2)(a) and 3(2)(b) of this deed relating to any part of the Building
or its appurtenances not demised or intended to be demised to a
tenant.
(e) In discharging the amount which the Landlord shall be required to
pay as a contribution towards the expense of making repairing
maintaining rebuilding and cleansing all ways roads passageways
pavements sewers gutters drains channels pipes wire watercourses
sanitary apparatus party walls party structures party fences stairways
entrance ways or other conveniences (not limited in kind to those
enumerated above) which may belong to or be used for the Building in
common with other premises near to or adjoining it.
(f) In employing or obtaining the services of such persons as the
Landlord reasonably considers necessary or desirable for
caretaking reception porterage security management and providing and
maintaining the services in the Building and all other expenditure
incidental thereto including (but without limiting the generality of
such provision) the payment of statutory and such other health pension
welfare and other payments contributions and premiums as the Landlord
may in its absolute discretion deem desirable or necessary
26
<PAGE>
and the provision of uniforms working or protective clothing burglar
alarms surveillance telecommunications or monitoring apparatus
entrance and exit barriers and other materials or equipment for the
efficient performance of their duties.
(g) In providing accommodation (on such terms as the Landlord may
determine) for any person referred to in sub-paragraph (f) above.
(h) In operating cleaning decorating maintaining repairing and when
requisite modifying renewing and replacing:
(i) the lifts hoists and cradles (including all motors and
machinery and lift shafts and ancillary equipment and apparatus)
toilet accommodation entrances staircases landings windows ways
passages and areas inside and outside the Building the use of
which is not exclusive to any tenant of the Landlord.
(ii) any parts of the Building occupied or used by or on behalf
of the Landlord its servants agents or contractors where
reasonably necessary or desirable in connection with the
management or administration of the Building or the provision of
services to it.
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<PAGE>
(iii) the plant boilers radiators and other installations for the
provision of hot water heating ventilation air-conditioning and
compressed air to the Building (including those parts referred to
in sub-paragraph (h) (ii) above).
(i) In providing maintaining and renewing and replacing notice boards
notices signs and directions at the entrances to and exits from the
Building and in such other places as the Landlord may consider
expedient.
(j) In the collection of the rents and other payments due from tenants
in the Building and the administration and management of the Building
and the performance of the Landlord's obligations in this deed or
payable to any solicitors accountants surveyors valuers or architects
or other professional advisers whom the Landlord may from time to time
employ or commission in connection with such matters including the
cost off preparing or causing to be prepared statements or
certificates of and auditing the Service Expenses (or where no such
persons are employed a reasonable charge by the Landlord for
performing such functions in respect of the Building shall be
substituted).
(k) In complying with the provisions of any enactment insofar as such
provisions apply to the Building and save where the Tenant or
28
<PAGE>
any other tenant of the Landlord is responsible therefor whether or
not pursuant to the terms of this deed.
(i) Of or incidental to taking all steps deemed desirable or expedient
by the Landlord in complying with making representations against or
otherwise contesting or dealing with every notice regulation or order
of any competent local or other authority in relation to the Building
or its appurtenances (except insofar as the Tenant or any other tenant
of the Landlord is responsible therefor whether or not pursuant to the
terms of this deed).
4. In the carrying out of all other work or doing of any other act or thing
or providing services (in all cases) of any kind whatsoever which the
Landlord may from time to time reasonably consider necessary or desirable
for the purpose of maintaining the Building or its amenities or for the
benefit of the Building or the tenants or occupiers for the time being of
it.
EXECUTED as a DEED by )
CITY & CORPORATE COUNSEL LIMITED )
in the presence of:- )
/s/ Michael Pledge
Director
/s/ Alan Watson
Director/Secretary
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<PAGE>
ABC Radio Networks 125 West End Avenue New York NY 10023 (212) 456-5606
[ABC Logo]
Mary T. Fogarty
Director
Satellite Services/Studio Marketing
THE INFORMATION CONTAINED IN THIS CONTRACT IS PROPRIETARY TO ABC AND THE PARTY
TO WHICH IT IS ADDRESSED AND NOT TO BE REVEALED TO ANY OTHER PARTY
March 6, 1996
Mr. Lidj Lewis
MediaLink
708 Third Ave.
New York, NY 10017
Dear Lidj:
This letter, when signed by MediaLink, Inc. ("Licensee") and ABC Radio Network,
Inc. ("ABC"), will constitute a fully binding agreement (the "Agreement") on the
following terms and conditions:
1. Grant of Rights
(a) ABC Radio Network, Inc. ("ABC") hereby grants Licensee a license to use
satellite transmission time on Satcom C-5 Transponder 23 in connection with the
production and transmission of "MediaLink" (the "Program" or "Programs"). ABC
will provide satellite facilities March 18, 1996 through March 17, 1997, Monday
through Friday from 4:45am to 5:00am ET to SEDAT channel 15. ABC reserves the
right to change your satellite channel assignment in the event ABC deems it
necessary to do so. In the event that ABC needs to change the channel
assignment, ABC will provide Licensee with 30 days advance written notice.
(b) Licensee will bear all the responsibility and cost of the delivery to
ABC of the Programs which are the subject of this Agreement.
<PAGE>
2. Compensation
(a) In consideration of the rights granted herein, during this Agreement,
Licensee will pay ABC the following fees:
(i) $100.00 per 15 minute feed for satellite channel service.
(b) This Agreement is conditioned upon the completion by Licensee of ABC's
credit application and the approval thereof by ABC.
(c) Licensee will be billed the going rate for any additional expenses
incurred during the length of contract that are not expressly defined above.
This includes and is not limited to appropriate fees for additional satellite
time, backhaul, tape playback, labor, materials, and installation of equipment.
(d) Licensee will pay in advance for the services rendered to it by ABC.
All bills will be payable by Licensee within ten (10) days of receipt of
invoice. Checks are to be made payable to ABC Radio Network, Inc., 125 West End
Avenue, New York, New York 10023, or to such other address as ABC shall
designate.
3. Term
(a) The term of this Agreement will be for the period commencing March 18,
1996 through and including March 17, 1997.
(b) ABC agrees to negotiate in good faith with MediaLink, commencing no
later than 90 days prior to the end of the Term, for an extension of this
Agreement under mutually agreeable terms. Should the Licensee deem it necessary
to terminate this contract before contracted end date, Licensee must notify ABC
Satellite Services of their intention to terminate programming in a written
letter 90 days in advance of final broadcast date. ABC maintains the right to
pro-rate the Licensee on any remaining balances owed due to termination of this
agreement without the sufficient written 90 day notice of cancellation.
(c) This agreement may be terminated by either party without penalty, on
notice to the other party, if the other party breaches, refuses or for any
reason fails to perform any of its material obligations herein, or fails to
comply with any of the material covenants, warranties, representations,
indemnities or other obligations herein.
(d) In the event of termination for any reason of ABC's agreement described
in subparagraph 7(f) hereinbelow, this Agreement shall be deemed terminated on
the effective date of termination of the ABC Agreement.
<PAGE>
4. Warranties and Representations
Licensee represents and warrants that it has the legal right and power to
make and enter into this Agreement and that there are no contracts or
agreements, expressed or implied, between Licensee, its parent company,
subsidiaries, or any other parties which will prevent Licensee from fulfilling
all of its obligations hereunder. Licensee warrants that all of its activities
hereunder will conform to applicable FCC regulations and that the feeds and land
line connections will meet ABC's technical requirements. Licensee further
warrants that it has acquired all necessary underlying rights for the
transmission of the Programs and that its Programs, and the satellite
transmission thereof by ABC, will not violate any third party's rights.
5. Sublicense
Licensee may not sublicense the satellite transmission time to any other
party at any time for any purpose whatsoever.
6. Indemnity
Licensee agrees to protect, defend and indemnify ABC, its officers,
directors, agents and employees against any and all liability, loss and expense,
including reasonable attorneys' fees arising from any claim or litigation
involving any breach by Licensee of this Agreement or any of Licensee's
representations or warranties set forth herein, or arising from any claim
violation or infringement of rights resulting from the transmission hereunder of
any programs or materials furnished by Licensee.
7. General
(a) Neither Licensee nor ABC may assign this Agreement without the prior
written consent of the other, except that ABC may assign this Agreement and all
of its rights and obligations hereunder to any party acquiring a portion of its
radio business or to any entity controlling ABC, controlled by ABC or under
common control with ABC.
(b) Licensee agrees that ABC shall not incur any liability hereunder
because of the unavailability of the satellite transmission time due to an act
of God, a failure of technical or mechanical facilities, inability to transmit
signal on the uplink, failure or delay of transmission of Programs, labor
disputes, government action, strikes, lockouts or any industrial action, flood,
fire explosion, accident, riot or any other cause beyond ABC's control. Further,
Licensee agrees that ABC shall not incur any liability for the production,
distribution or reception of Programs broadcast from the satellite for
affiliates or customers of Licensee.
<PAGE>
(c) Licensee agrees that if, for any reason, it ceases operation or any
application is made to the Federal Communications Commission pertaining to any
assignment or transfer or control of its license or interest therein, Licensee
will immediately notify ABC, in writing, and ABC, at its discretion, shall have
the right to terminate this Agreement.
(d) All notices to be given hereunder shall be given personally or prepaid
and mailed to Licensee at the address designated herein on the first page of
this Agreement or any other address designated by either party hereto, in
writing, in accordance herewith. Any notice given by mail shall be deemed to be
given on the day it is mailed.
(e) Nothing contained herein shall be deemed to constitute a partnership,
agency or joint venture between the parties. Licensee's relationship to ABC
shall be that of an independent contractor. In accordance herewith, Licensee
agrees that any and all contracts of employment of personnel furnished, with
respect to the satellite transmission time hereunder, shall be made by Licensee,
as principal, and that there will be no liability whatsoever on ABC's part, with
respect to such contracts or personnel.
(f) Licensee shall comply with all applicable tariffs. Licensee is subject
to all applicable terms and conditions of ABC's agreement with the satellite
carrier covering the Satcom C-5 Transponder 23.
(g) Licensee shall not use the terms "ABC", "ABC Radio", "ABC Radio
Network", or "ABC Talkradio-Weekend", or any other ABC trademark or
identification with ABC, in any marketing, advertisement, press release, trade
article, video or audio interview, or sound bite, without the expressed written
consent of ABC.
(h) This Agreement is subject to all federal, state and municipal laws and
regulations now or hereafter in force, and shall be governed and construed in
accordance with the laws of the State of New York, and shall not be exchanged,
modified or discharged in whole or in part, except by an instrument duly signed
by Licensee and ABC. No waiver by either of the parties or the breach of any
term or provision of this Agreement will be construed as a waiver or any
preceding or subsequent breach of the same or any other provision.
(i) This Agreement is subject to, and Licensee's rights hereunder shall be
subordinate to, ABC's rights with respect to the satellite.
(j) This Agreement comprises our entire agreement, with respect to this
subject matter and shall supersede all other prior written or oral agreements.
<PAGE>
(k) This long-term service agreement has been negotiated individually by
the parties in order to be tailored in such a way so as to meet the specialized
needs and requirements of each party. Capital Cities/ABC, Inc. does not intend
to act in the capacity of a common carrier in offering the services which are
subject to this negotiated agreement and does not purport to hold out the
offering of such services on an indiscriminate basis.
If the foregoing is in accordance with Licensee's full understanding, please
indicate Licensee's consent to these terms and conditions by signing in the
space provided below.
Very truly yours,
ABC RADIO NETWORK, INC.
By: /s/ Mary T. Fogarty
--------------------------
Mary T. Fogarty
Director of Satellite Services
Accepted and Agreed
J. GRAEME MCWHIRTER
By: /s/ J. GRAEME MCWHIRTER
-----------------------
Date: (3/13/96)
----------------------
<PAGE>
AGREEMENT, dated February 9, 1993, by and between VIDEO BROADCASTING
CORPORATION d/b/a MEDIALINK, a Delaware corporation with offices at 708 Third
Avenue, New York, New York 10017 ("VBC") and NEWSWORTHY ("NW"), a joint venture
of Parrot Communications Int'l, Inc., having offices at 2917 N. Ontario Street,
Burbank, California 91504 ("PCI") and Primo Newservice, Inc., having offices at
182 Soundbeach Avenue, Old Greenwich, Connecticut 06870 ("PNI").
W I T N E S S E T H:
WHEREAS, VBC is engaged in the business of transmitting various
information, including but not limited to, video news releases, press releases
and public service announcements;
WHEREAS, NW produces and distributes a news format program entitled
"Newsworthy" (the "Newsworthy Program") to various television stations and cable
television stations; and
WHEREAS, VBC is desirous of transmitting various video news releases and
public service announcements on the Newsworthy Program and NW is desirous of
selling to VBC the air time which is necessary to provide VBC with the
opportunity to do so;
NOW, THEREFORE, it is hereby mutually agreed as follows:
Section 1. Representations of NW. NW hereby represents and warrants to VBC
as set forth below:
1.1 Production of the Newsworthy Program. NW will produce the
Newsworthy Program on a weekly basis, fifty-two (52) weeks a year. NW shall be
solely responsible for the quality of all production aspects, inclusive of
editing, of the Newsworthy Program.
1.2 Delivery and Notification. NW will deliver the Newsworthy Program
via satellite, on a timely basis in order to ensure that the Newsworthy Program
is aired as contemplated by Section 1.1 of this Agreement, to television
stations and cable television stations.
1.3 Airing of the Newsworthy Program. NW is responsible for ensuring
that each Newsworthy Program delivered to television stations and cable
television stations is aired on the applicable station. The list attached hereto
as Exhibit 1.3 identifies the television stations and cable television stations
which presently broadcast the Newsworthy Program on a weekly
<PAGE>
basis. NW will use its best efforts to ensure that such stations continue to
broadcast the Newsworthy Program on a weekly basis and that additional
television stations and cable television stations broadcast the Newsworthy
Program on a weekly basis.
1.4 Quality of the Newsworthy Program. NW shall maintain the present
quality, as determined by television broadcasting standards, of all aspects of
the Newsworthy Program. Such aspects include, but are not limited to, the
quality and reputation of the newscaster, production, editing, transmission and
delivery.
1.5 Video News Releases. During each Newsworthy Program, NW shall
provide air time for and transmit a minimum of eight (8) video news releases
provided by VBC. Each video news release provided by VBC shall receive a minimum
air time of one (1) minute. NW acknowledges that, in accordance with Section 3
of this Agreement, VBC will be marketing and attempting to sell air time for two
(2) additional video news releases during each Newsworthy Program for video news
release distributors other than VBC. During each Newsworthy Program, NW shall
provide air time for and transmit in their entirety such two (2) additional
video news releases.
Section 2. Fees. VBC shall, provided that NW is in full compliance with the
representations and warranties contained in Section 1 of this Agreement during
each week of the Term, as defined herein, pay to NW the fees set forth below:
(a) In the event it is determined by Nielsen Media Research's SIGMA
Service that an aggregate of between one (1) and seven (7) television stations
and cable stations with a minimum aggregate household account, as defined by
Arbitron, of 500,000, aired the Newsworthy Program during a particular week, VBC
shall pay NW Three Thousand Five Hundred ($3,500) Dollars for such week.
(b) In the event it is determined by Nielsen Media Research's SIGMA
Service that an aggregate of between eight (8) and twelve (12) television
stations and cable stations with a minimum aggregate household account, as
defined by Arbitron, of 4,000,000 aired the Newsworthy Program during a
particular week, VBC shall pay NW Four Thousand Five Hundred ($4,500) Dollars
for such week.
(c) In the event it is determined by Nielsen Media Research's SIGMA
Service that an aggregate of between thirteen (13) and twenty-four (24)
television stations and cable stations with a minimum aggregate household
account, as defined by Arbitron, of 6,500,000 aired the Newsworthy Program
during a particular week, VBC shall pay NW Five Thousand Five Hundred ($5,500)
Dollars for such week.
2
<PAGE>
(d) In the event it is determined by Nielsen Media Research's SIGMA
Service that an aggregate of twenty-five (25) or more television stations and
cable stations with a minimum aggregate household account, as defined by
Arbitron, of 12,500,000 aired the Newsworthy Program during a particular week,
VBC shall pay NW Six Thousand Five Hundred ($6,500) Dollars for such week.
Section 3. Marketing of Video News Releases. VBC agrees to use reasonable
efforts to market, at a price of Two Thousand Two Hundred and Fifty ($2,250)
Dollars per video news release, the air time for the two additional video news
releases described in Section 1.5 of this Agreement. VBC further agrees, in the
event it does not provide the eight (8) video news releases contemplated by
Section 1.5 of this Agreement, to market the resulting available air time in
accordance with the terms and conditions of this Section. VBC shall, in
connection with the marketing and sale of air time for each video news release
in accordance with this Section 3, retain Seven Hundred Fifty ($750) Dollars of
each Two Thousand Two Hundred and Fifty ($2,250) it receives for the marketing
and sale of such air time and remit the remaining One Thousand Five Hundred
($1,500) Dollars to NW.
Section 4. Public Service Announcements. VBC shall use reasonable efforts
to market for the use by various entities that produce public service
announcements fifteen (15) second and thirty (30) second spots to be used for
public service announcements during the advertising time of each Newsworthy
Program. NW shall make available to VBC a minimum of ninety (90) seconds for
public service announcements during each Newsworthy Program, NW shall retain the
rights to any advertising time which it sells during each Newsworthy Program.
VBC shall pay NW the sum of Three Hundred ($300) Dollars for each fifteen (15)
second public service announcement broadcast on the Newsworthy Program as a
result of its marketing efforts and shall pay NW the sum of Five Hundred ($500)
Dollars for each thirty (30) second public service announcement broadcast on the
Newsworthy Program as a result of its marketing efforts.
Section 5. Commencement Date. The Term of this Agreement shall commence on
February 1, 1993, unless VBC, in its sole discretion, elects to commence the
Term on March 1, 1993.
Section 6. Term. This Agreement shall have a term (the "Term") of one (1)
year and VBC shall have the option to renew the Agreement for an additional one
(1) year term upon not less than thirty (30) days prior written notice.
Section 7. VBC Right to Terminate. Notwithstanding anything to the contrary
contained in this Agreement, in the event, during any week of the term, it is
determined by Nielsen Media Research's SIGMA Service that less than an aggregate
of eight (8) television stations and cable stations with a minimum
3
<PAGE>
aggregate household account, as defined by Arbitron, of 4,000,000, aired the
Newsworthy Program during a particular week, VBC shall have the right to
terminate this Agreement.
Section 8. Payment Terms. All payments due hereunder from VBC to NW shall
be made by VBC seven (7) days after the airing of the applicable Newsworthy
Program.
Section (9). Covenant Not to Compete. NW, PCI, PNI, Al Primo ("AP") and
Robert Mertz ("RM") hereby acknowledge that VBC entered into this Agreement due
to the fact that AP and RM manage the Newsworthy Program. NW, AP and RM hereby
agree that they will not, nor will their affiliates directly or indirectly, in
the United States, at any time during the Term or any renewal term, have an
interest as an owner, partner, participant, associate or in any other capacity
of any news format program which includes for a fee news material in full or in
part and which is distributed to either television stations and/or cable
television stations.
Section 10. Injunctive Relief. NW, AP and RM hereby agree that any breach
or threatened breach by them of Section 9 of this Agreement shall entitle VBC,
in addition to all other legal remedies available to it, to apply to any court
of competent jurisdiction, without the posting of a bond or showing of special
damages, to enjoin such breach or threatened breach. The parties understand and
intend that each restriction agreed to by NW, AP and RM hereinabove shall be
construed as separable and divisible from every other restriction, that the
unenforceability of any restriction shall not limit the enforceability, in whole
or in part, of any other restriction, and that one or more or all of such
restrictions may be enforced in whole or in part as the circumstances warrant.
In the event that any restrictions in this Agreement is more restrictive than
permitted by law in the jurisdiction in which VBC seeks enforcement thereof,
such restriction shall be limited to the extent permitted by law.
Section 11. Miscellaneous.
11.1 Entire Agreement. This Agreement constitutes and embodies the
full and complete understanding and agreement of the parties with respect to the
matters covered hereby, supersedes all prior understandings and agreements, if
any, whether oral or written between NW and VBC and shall not be amended,
modified or changed except by an instrument in writing executed by the party to
be charged. The invalidity or partial invalidity of one or more provisions of
this Agreement shall not invalidate any other provision of this Agreement. No
waiver by either party of any provision or condition to be performed shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
any prior or subsequent time.
11.2 Binding Effect. This Agreement shall inure to the benefit of, be
binding upon and enforceable against, the parties hereto and their respective
successors.
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11.3 Captions. The captions contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.4 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, postage prepaid, or special overnight delivery, to the party at the
address set forth above or to such other address as either party may thereafter
give notice of in accordance with the provisions hereof.
11.5 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of New York applicable to contracts made
and to be performed therein without giving effect to the principles of conflict
of laws thereof.
11.6 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
VIDEO BROADCASTING CORPORATION
By:/s/ Laurence Moskowitz
-------------------------
President
As to Sections 9 and 10: NEWSWORTHY
/s/ Al Primo By: Parrot Communications Int'l, Inc.
- --------------------------------
Al Primo, individually By:/s/ R. W. Mertz C.E.O.
-------------------------
/s/ R. W. Mertz Name and Title
- --------------------------------
Robert Mertz, individually
Parrot Communications Int'l Inc. By: Primo Newservice, Inc.
By:/s/ R. W. Mertz PRES./C.E.O. By:/s/ Al Primo, Pres.
----------------------------- -------------------------
Name and Title Name and Title
Primo Newservice, Inc.
By:/s/ Al Primo, Pres.
-----------------------------
Name and Title
5
<PAGE>
EXHIBIT 1.3
6
<PAGE>
NEWSWORTHY(R)
- --------------------------------------------------------------------------------
2917 N. ONTARIO STREET BURBANK, CA 91504
182 SOUND BEACH AVENUE OLD GREENWICH, CT 06870
February 21, 1995
Laurence Moskowitz
VIDEO BROADCASTING CORPORATION
708 Third Avenue
New York, NY 10017
Dear Larry:
As per our telephone conversation, this is to confirm renewal of the agreement
dated February 9, 1993 by and between NEWSWORTHY(R) and VIDEO BROADCASTING
CORPORATION d/b/a MEDIALINK (VBC) which expires at the end of this month (the
original agreement) as per the following revised terms and conditions:
1. Renewal shall be for an additional 2 year term commencing March 1, 1995 and
running through February 28, 1997;
2. Effective March 1, 1995 the commission paid by NEWSWORTHY(R) to VBC as
outlined in Section 3 of the original agreement shall be reduced to $375;
3. Commencing March 1, 1996 all payments made by VBC to NEWSWORTHY(R) as
outlined in Section 2 of the original agreement shall be increased by $300;
4. All other terms and conditions set forth in the original agreement shall
remain in force for the 2 year renewal term outlined above.
If the above accurately represents the revised terms under which VBC agrees to
abide for the outlined 2 year renewal time, please acknowledge same by
counter-signing below.
AGREED AND ACCEPTED by:
/s/ R. W. Mertz
Robert W. Mertz
Chief Executive Officer, NEWSWORTHY(R)
President/C.E.O., PARROT COMMUNICATIONS INT'L, INC.
INDIVIDUALLY
UNDERSTOOD AND AGREED TO FOR VIDEO BROADCASTING CORPORATION d/b/a MEDIALINK by:
/s/ Laurence Moskowitz 3/13/95
- ----------------------------- -------
Laurence Moskowitz, President Date
UNDERSTOOD AND AGREED TO FOR PRIMO NEWSERVICE, INC. and INDIVIDUALLY for
Al Primo by:
/s/ Al T. Primo 2/28/95
- ----------------------------- -------
Albert T. Primo, President Date
<PAGE>
AMENDED AND RESTATED
AP EXPRESS AGREEMENT
BETWEEN
PRESS ASSOCIATION, INC.
AND
VIDEO BROADCASTING CORPORATION.
----------------------------
Dated as of November 1, 1992
<PAGE>
TABLE OF CONTENTS
Page
----
1. TERMINATION OF 1990 AMENDED AND RESTATED AGREEMENT 2
2. SERVICES............................................. 2
2.1 Use of Network................................. 2
2.2 Addition/Deletion of VBC Subscribers........... 4
2.3 Restricted Access and Security................. 4
3. EQUIPMENT MAINTENANCE................................ 4
3.1 Maintenance.................................... 4
3.2 Out-of-Scope Maintenance....................... 5
4. REGULAR CHARGES; ADJUSTMENTS; PAYMENT POLICIES....... 5
THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION
5. NEWS ORGANIZATIONS, TRADE ASSOCIATIONS,
NON-NEWS ORGANIZATIONS............................... 7
6. TERM AND TERMINATION OF AGREEMENT.................... 7
6.1 Commencement................................... 7
6.2 Basic Term..................................... 7
6.3 Material Breach by VBC......................... 8
6.4 Material Breach by Press Association........... 8
7. INDEPENDENT SUBSCRIBER AGREEMENTS.................... 9
8. INDEMNIFICATION...................................... 9
8.1 Indemnification of VBC......................... 9
8.2 Indemnification of Press Association........... 9
9. REPRESENTATIONS AND WARRANTIES OF PRESS ASSOCIATION. 9
10. REPRESENTATIONS AND WARRANTIES OF VBC................ 10
11. LIMITS ON LIABILITY.................................. 11
12. PERFORMANCE SUBJECT TO LAWS.......................... 11
13. RELATION OF PARTIES.................................. 11
14. RIGHT OF FIRST REFUSAL............................... 12
15. ASSIGNMENTS.......................................... 12
16. NON-SOLICITATION..................................... 12
<PAGE>
17. ADVERTISING AND PUBLICITY............................ 12
18. MISCELLANEOUS........................................ 12
18.1 No Waiver...................................... 12
18.2 Governing Law.................................. 13
18.3 Notices........................................ 13
18.4 Confidentiality................................ 14
18.5 Entire Agreement............................... 14
18.6 Descriptive Headings........................... 14
18.7 Submission to Jurisdiction..................... 14
18.8 Shipment of Printers; Installations............ 14
18.9 Counterparts................................... 15
EXHIBITS
Exhibit A Description of Network
Exhibit B Form of Logo
Exhibit C Request Form
Exhibit D Out-of-Scope Service Rates
<PAGE>
THIS AMENDED AND RESTATED AGREEMENT, made as of this 1st day of November,
1992, between PRESS ASSOCIATION, INC. ("Press Association"), a New York
corporation with offices at 50 Rockefeller Plaza, New York, New York 10020 and
VIDEO BROADCASTING CORPORATION, doing business as MEDIALINK and PROGRAMLINK
("VBC"), a Delaware corporation with offices at 708 Third Avenue, New York, New
York 10017.
WITNESSETH:
WHEREAS, Press Association is a wholly-owned subsidiary of The Associated
Press, and is engaged in the business of collecting and disseminating general
news of local, national, and international importance; and
WHEREAS, Press Association, in connection with the performance of such news
collection and dissemination functions, operates the AP Express network for use
by certain newsrooms as described in Exhibit A (the "Network") and presently
transmits to broadcast licensees certain news and news-related items ("PA
News-Related Data") provided to Press Association by news organizations ("News
Organizations") and broadcast industry trade associations ("Trade
Associations"); and
WHEREAS, Press Association has surplus capacity within the Network and
shares the use of such capacity and the cost of such use with News Organizations
and Trade Associations; and
WHEREAS, VBC is engaged in the business of providing organizations
("non-News Organizations") which produce publicity and public relations
materials ("VBC Information") for distribution to television stations with the
opportunity to transmit VBC Information and, accordingly, desires to share the
surplus capacity within the Network; and
WHEREAS, Press Association desires to share the surplus capacity within the
Network with VBC, and in consideration for the commitments that VBC had made to
the Network as set forth herein, Press Association desires to enter into this
amended and restated Agreement; and
WHEREAS, the parties agree that in order to provide News Organizations,
Trade Associations and non-News Organizations with the highest quality service
possible, Press Association shall have the exclusive right to distribute PA News
Related Data for News Organizations and Trade Associations, while VBC shall have
the exclusive right to distribute VBC Information for non-News Organizations;
<PAGE>
WHEREAS, the parties entered into an Agreement dated as of November 1, 1987
("November 1987 Agreement") and an Amended and Restated Agreement dated as of
April 30, 1990 (the "1990 Amended and Restated Agreement"), and are interested
in further amending and restating the November 1987 Agreement, subject to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. TERMINATION OF 1990 AMENDED AND RESTATED AGREEMENT
The parties acknowledge and agree that the 1990 Amended and Restated
Agreement will terminate upon execution of this Agreement. This Agreement will
supersede the 1990 Amended and Restated Agreement for all purposes.
2. SERVICES
2.1 Use of Network.
(a) Press Association shall establish the Network, in accordance with
Exhibit A, which shall consist of, among other things, the placement of
Receivers (as defined in Exhibit A) in a minimum of 600 television stations
("Receive Points"). Subject to the terms of this Agreement, VBC is hereby
granted the right to use the Network to transmit VBC Information.
(b) If a television station requests that Press Association terminate
delivery of VBC Information to such station, Press Association will promptly
provide VBC with notice of such request, and VBC shall have 30 business days
from the date of such notice to acquire the written permission from such station
to continue to receive VBC Information. VBC will deliver a copy of such written
approval to Press Association. If no such written approval is furnished to Press
Association at the end of such 30 day period, Press Association will no longer
provide VBC Information to such television station.
(c) Press Association hereby agrees to share up to 50% of the transmission
capacity of the Network with VBC in order to enable VBC to transmit VBC
Information solely to television newsrooms (the "Receive Points").
(d) Press Association shall transmit VBC Information in accordance with the
specifications set forth on Exhibit A annexed hereto and made a part hereof.
Transmission of satellite publicity advisories ("Satellite Publicity
Advisories"), and video publicity advisories ("Video Publicity Advisories") (the
"Advisories") shall conform to the statements or guidelines adopted by Press
Association for its newswire transmissions.
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<PAGE>
(e) VBC shall have the exclusive right to market VBC Information for
distribution over the Network. VBC expressly acknowledges and agrees that
customers of AP Express Newspaper Network may elect to send the same information
as it is being sent over the AP Express Newspaper Network via the Network to
Receive Points with the permission of such Receive Points. For purposes of this
Paragraph of this Agreement, the "AP Express Newspaper Network" is a shared data
network for broadcast, cable and direct broadcast satellite television networks
primarily for delivery of material to non-broadcast interests such as
newspapers, trade publications and related parties.
(f) Both Press Association and VBC hereby agree that they and their
affiliates will transmit no more than 10,000 words per day of textual material
other than Advisories ("non-Advisory Material") to any Receive Point which has
only one Receiver. If VBC desires to transmit more than 10,000 words per day of
non-Advisory Material, it must request an Additional Receiver ("Additional
Receiver") for such transmissions chargeable to VBC in accordance with Section
4.1 hereof. If Press Association desires to transmit more than 10,000 words per
day of non-Advisory Material, it must install an Additional Receiver for such
transmissions at no cost to VBC, unless the parties agree that VBC shall also
transmit non-Advisory Material to such additional receiver, in which case such
receiver shall be deemed to be an Additional Receiver chargeable to VBC in
accordance with Section 4.1 hereof. VBC shall not be charged for any Receiver
unless the installation thereof is expressly agreed to by VBC. Notwithstanding
the foregoing, the parties may at any time mutually agree to add Additional
Receivers to the Network.
(g) The form of logo and label to be used by VBC on the Receivers (printers
only) shall be substantially in the form of Exhibit B annexed hereto. Press
Association agrees that upon installation each Receiver shall have affixed to it
such form of logo and label.
(h) Press Association shall retain title to all Equipment provided by Press
Association under this Agreement.
(i) VBC hereby agrees to provide all non-News Organizations with access to
the Network at a rate determined by VBC in its sole discretion.
(j) The parties may mutually agree in writing from time to time that
certain Receive Points on the Network for which AP has installed a Receiver will
not be deemed to be included in the 600 Receive Points that are used for
purposes of calculating the guaranteed minimum monthly payments made pursuant to
Section 4.1(a) hereof.
3
<PAGE>
2.2 Addition/Deletion of VBC Subscribers.
(a) A Receive Point may be designated for inclusion within the Network by
VBC at the rates established herein. The minimum interval required for such
inclusions will be (i) five business days from receipt of written notice to
include an additional Receive Point at a location where there is an existing
Receive Point and (ii) 30 business days to add a Receive Point to the Network at
a location that does not have an existing Receive Point. If such added Receive
Point location requires third party services, such as telephone company
circuits, in order to be connected to the Network, the actual interval will be
depended on delivery of such third party services.
(b) VBC may delete Receive Points from the Network with 30 business days'
prior written notice. Any penalty charges paid by Press Association as a result
of discontinuing third party services shall be reimbursed by VBC to Press
Association.
(c) Upon a need for additional codes for classification of VBC Information
for delivery to Receive Points, VBC will notify Press Association of the
proposed code. Press Association shall have five business days to add the
additional classification codes to the Network. Upon verification by Press
Association that the classification code is not used elsewhere in the Network,
the code may be used by VBC. VBC may make changes in the classification code to
existing Receive Points electronically or may request coding changes for
existing Receive Points by telefax or electronic mail.
(d) Any requests for inclusions or deletions of Receive Points shall be
made on a form substantially in the form of Exhibit C attached hereto.
2.3 Restricted Access and Security.
(a) Press Association agrees to take all reasonable steps to ensure that no
third party has access to or use of VBC Video Publicity Advisories provided to
the Network, to the extent it has access to or control thereof.
(b) VBC agrees to take all reasonable steps to protect the security of the
Network, to the extent that it has access to or control thereof.
3. EQUIPMENT MAINTENANCE
3.1 Maintenance.
(a) Press Association shall use its best efforts to maintain the Network,
on a 24-hour basis seven days per week. During the term of this Agreement, upon
request from authorized VBC
4
<PAGE>
personnel, Press Association will inspect, adjust and correct any
malfunction of the Network.
(b) Upon awareness of a failure within the Network, VBC shall contact the
Operations Manager at 50 Rockefeller Plaza, 4th Floor Operations, New York, New
York 10020 (212) 621-1530.
3.2 Out-of-Scope Maintenance.
At the request of VBC, Press Association may perform other work not defined
in this Agreement provided that such other work is, in Press Association's
opinion, within Press Association's capability and will not present labor
jurisdiction problems, is not hazardous and does not entail violation of any
federal, state or local laws, ordinances or regulations. Such work will consist
of, but not be limited to, responding to service requested due to
operator-related or caused failures, aborted installations due to lack of
available power source, interconnecting cabling and VBC-requested equipment
relocations and reinstallations. Such out-of-scope maintenance shall be provided
at the rates set forth in Exhibit D attached hereto.
4. REGULAR CHARGES; ADJUSTMENTS; PAYMENT POLICIES
THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
5. NEWS ORGANIZATIONS, TRADE ASSOCIATIONS, NON-NEWS ORGANIZATIONS
The parties hereby agree that Press Association will reserve to itself the
right to distribute PA News-Related Data for News Organizations and Trade
Associations; provided, however, that VBC may serve News Organizations and Trade
Associations with the prior express written consent of Press Association. News
Organizations shall include, without limitation, CBS, ABC, NBC, Reuters, Conus,
CNN, ESPN, Westinghouse. Trade Associations shall include, without limitation,
NAB, RTNDA and RAB. Press Association shall determine, in its sole discretion,
whether a particular organization is a News Organization or Trade Association.
6. TERM AND TERMINATION OF AGREEMENT
6.1 Commencement.
Press Association shall use its best efforts to enable VBC to use the
Network, in accordance with Section 2, on the date hereof. No regular monthly or
periodic fees or charges to be incurred by VBC under this Agreement shall be
payable prior to actual commencement of services.
6.2 Basic Term.
The basic term of this Agreement shall be from the date hereof until
November 1, 1997. This Agreement shall automatically renew for consecutive
two-year periods unless either party gives written notice to the other party of
its desire to terminate the
7
<PAGE>
Agreement and such notice is received at least six months prior to the
expiration of each period.
6.3 Material Breach by VBC
Should VBC breach any of its material obligations hereunder, Press
Association shall provide written notice thereof to VBC. VBC shall have the
right to cure its default during a 30-day period following receipt of the
notice. If no cure is made during such cure period, then Press Association may
cancel this Agreement without penalty on five days' additional written notice.
Upon a termination pursuant to this Section 6.3, VBC shall pay to Press
Association, as liquidated damages and not as a penalty, an amount equal to 100%
of the Guaranteed Minimum Payment for the remaining term of this Agreement.
6.4 Material Breach by Press Association.
(a) Should Press Association breach any of its material obligations
hereunder, VBC shall provide written notice thereof to Press Association. Press
Association shall have the right to cure its default during a 30-day period
following receipt of the notice. If no cure is made during such cure period,
then VBC shall have the right to cancel this Agreement on five days' additional
written notice. Upon a termination pursuant to this Section, VBC shall have no
further obligations hereunder to Press Association except for the payment of
amounts previously due and owing.
(b) In addition to the right to terminate set forth in Section 6.4 (a)
above, VBC or any affiliate of VBC under this Agreement shall have the right to
indemnification from Press Association for the difference, if any, between the
cost of the Network as provided by Press Association, and the cost of a
substitute network arrangement of the same or substantially similar capability,
procured in good faith and without unreasonable delay at reasonable cost, for
the remaining term of this Agreement provided, however, that in lieu of
indemnifying VBC under this Section 6.4(b), Press Association shall have the
option to provide VBC with an alternative network arrangement with at least
equal capability to the substituted network described above at the same cost to
VBC.
(c) Such right to terminate and receive indemnification from Press
Association pursuant to Sections 6.4(a) and (b) and Section 7.1 hereof shall be
the sole and exclusive remedy available to VBC relating to Press Association's
breach of this Agreement.
(d) Notwithstanding any rights granted to VBC pursuant to this Section,
Press Association shall not in any way be liable to VBC or any affiliate of VBC
for any indirect, consequential, special, exemplary or incidental damages in
contract, tort or otherwise to VBC or any affiliate of VBC arising from or
relating to this Agreement.
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<PAGE>
7. INDEPENDENT SUBSCRIBER AGREEMENTS
VBC and PA acknowledge and agree that (i) they shall each have the right to
independently contract with their respective subscribers regarding the service
or services it provides, without notice to, or interference by, the other party
and (ii) the terms and conditions of such agreements are not subject to the
approval of the other party.
8. INDEMNIFICATION
8.1 Indemnification of VBC.
If Press Association's work under this Agreement involves operations by
Press Association on the premises of any Receive Point, Press Association shall
take all necessary precautions to prevent the occurrence of any injury to person
or property (including the goods and services provided hereunder) during the
progress of such work. To the extent that any such injury or damages are due
directly to Press Association's willful or grossly negligent acts, Press
Association shall defend, indemnify and save VBC and its officers, directors,
employees, agents, affiliates, affiliated companies and assigns harmless from,
and shall defend such parties against any liability claim, loss, damage, or
expense by reason of injuries to persons (including reasonable attorneys' fees)
for physical injury to persons, death or damage to property directly arising out
of the use of said premises by Press Association or the activities of Press
Association, its agents, representatives, contractors or employees.
8.2 Indemnification of Press Association.
(a) VBC hereby agrees to indemnify and hold Press Association and its
officers, directors, employees, agents, affiliates, affiliated companies and
assigns harmless from, and shall defend such parties against, any and all
liability, loss, claim, damage or expense (including reasonable attorneys' fees)
for injury to person, death or damage to property arising out of or resulting
from the willful or grossly negligent acts of VBC.
(b) VBC hereby further agrees to indemnify and hold Press Association and
its officers, directors, employees, agents affiliates, affiliated companies and
assigns harmless from, and shall defend such parties against, any and all
liability, loss, claim or damage (including reasonable attorneys' fees) due to
the placement of the VBC logo on any Receiver.
9. REPRESENTATIONS AND WARRANTIES OF PRESS ASSOCIATION
Press Association represents and warrants as follows:
9.l Press Association is a corporation duly incorporated, validly existing
and in good standing under the laws
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<PAGE>
of the jurisdiction of its incorporation and is qualified to do business in all
other jurisdictions where the failure so to qualify might materially affect its
business or assets.
9.2 The execution, delivery and performance by Press Association of this
Agreement are within Press Association's corporate powers, have been duly
authorized by all necessary corporate action, require no governmental approval,
and do not contravene law or any contractual restriction binding on Press
Association.
9.3 This Agreement will be, when delivered, the legal, valid and binding
obligation of Press Association enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium, or similar laws of general applicability relating to or affecting
creditor's rights.
9.4 There are no pending or, to the best knowledge of Press Association,
threatened actions or proceedings affecting Press Association before any court
or governmental agency, which may materially adversely affect the financial
condition or operations of Press Association.
10. REPRESENTATIONS AND WARRANTIES OF VBC
VBC represents and warrants to Press Association as follows:
10.1 VBC is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is
qualified to do business in all other jurisdictions where the failure so to
qualify might materially affect its business or assets.
10.2 The execution, delivery and performance by VBC of this Agreement are
within VBC's corporate powers, have been duly authorized by all necessary
corporate action, require no governmental approval, and do not contravene law or
any contractual restriction binding on VBC.
10.3 This Agreement will be, when delivered, the legal, valid and binding
obligation of VBC enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability relating to or affecting creditor's rights.
10.4 There are no pending or, to the best knowledge of VBC, threatened
actions or proceedings affecting VBC before any court or governmental agency,
which may materially adversely affect the financial condition or operations of
VBC.
10
<PAGE>
11. LIMITS ON LIABILITY
11.1 Press Association shall not be liable to VBC for loss, damage or
claims resulting from (1) inadvertent publication of VBC Information entering
the Network, (2) interruption of transmission of VBC Information by the Network
caused by mechanical or electrical breakdown, (3) interruption in common carrier
service, or (4) other causes beyond the reasonable control of Press Association.
Unless such interruptions affect more than 50% of the Receive Points
simultaneously and are continuous for more than seven consecutive days, the
monthly fees payable by VBC shall not be reduced by such interruptions.
11.2 Without limitation, neither party shall be liable for delays in
delivery or performance hereunder if such delays are caused by fire, flood,
commercial power failure or reduction of commercial power supplied, earthquake,
tornado, acts of God or of public enemies, failure of telecommunication links
(not being attributable to the willful act or negligence of the concerned party
or any person or entity affiliate with it), strike, lockout, industrial dispute
or job action, or by reason or any other cause beyond their control and fault.
Should such an event be imminent or occur, the affected party will notify the
other immediately, by telephone (and then in writing) and identify any event
which caused or will cause, the event resulting in a failure or delay on its
part. Such notice shall also state, to the extent possible, the anticipated
effect of the event on that party's ability to perform.
12. PERFORMANCE SUBJECT TO LAWS
This Agreement shall be subject to local, state, and federal laws and
regulations, including regulations of the Federal Communications Commission, as
they shall be supplemented and amended from time to time. Neither party shall be
liable for failure to perform its obligations under this Agreement to the extent
such performance shall be prevented by such laws and regulations.
13. RELATION OF PARTIES
Subject to Section 1.1(d) above, neither party is under any obligation to
deal exclusively with the other regarding use of communication facilities.
Neither party will involve itself in any way in the sale or promotion of the
services provided by the other party, except as agreed upon between the parties
in writing. The parties to this Agreement are not partners or joint venturers.
Press Association is not acting as a common carrier but is sharing the use of
the Network with VBC.
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<PAGE>
14. RIGHT OF FIRST REFUSAL
If Press Association at any time decides to cease transmitting Satellite
Publicity Advisories, Video Publicity Advisories or Program Advisories, it shall
enter into good faith negotiations with VBC to permit VBC to assume the
operation of the Network with regard to such Satellite Publicity Advisories,
Video Publicity Advisories and Program Advisories. Such assumption shall be
entirely dependent upon VBC and Press Association entering into an agreement in
form and substance satisfactory to both parties.
15. ASSIGNMENTS
Neither party shall assign its rights or obligations under this Agreement
without the prior express written consent of the other, which consent will not
be unreasonably withheld; any attempted assignment without such written consent
shall be void, except that either party may assign its rights or obligations
under this Agreement to an affiliate with prior written notification to the
other party. For purposes of this Agreement, "affiliate" shall mean any entity
that controls, is controlled by, or is under common control with either party.
For purposes of this definition, "control" shall mean direct or indirect
beneficial ownership of at least 50% of equity.
16. NON-SOLICITATION
Neither Press Association nor VBC shall offer or make any form of
solicitation of employment to any person in the employ of the other party, or
any affiliate or parent of the other party either (i) during the term of this
agreement and (ii) for a period of two years after the termination of this
Agreement, without the prior express written consent of the other party.
17. ADVERTISING AND PUBLICITY
All advertising and publicity by Press Association and VBC, where the other
party in this Agreement is mentioned by name, must be submitted and approved by
the other party prior to release for publication and the other party shall not
unreasonably withhold such approval. VBC may not use any Associated Press logo
in any manner without the prior written permission of Press Association and/or
The Associated Press.
18. MISCELLANEOUS
18.1 No Waiver.
12
<PAGE>
The failure of either party at any time to require performance by the other
party of any provision of this Agreement shall in no way affect the right of
either party thereafter to enforce the same provision, nor shall the waiver of
either party of any breach of any provision herein be held or taken to be a
waiver of any succeeding breach or as a waiver of the provision itself.
18.2 Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to its choice of law rules.
18.3 Notices.
All notices, statements and payments required or permitted under this
Agreement shall be deemed properly make upon receipt at the following addresses
or at such other place as the parties may from time to time direct in writing:
If to Press Association:
Press Association, Inc.
50 Rockefeller Plaza - 5th Floor
New York, New York 10020
Attn: James Williams
Vice-President and Director of
Broadcast Services
With a copy of all notices and
material communications to:
John K. Keitt, Jr., Esq.
Rogers and Wells
200 Park Avenue
New York, New York 10166
If to VBC:
VBC
c/o Video Broadcasting Corporation
708 Third Avenue
New York, New York 10017
Attn: Laurence Moskowitz
President
With a copy of all notices and
material communication to:
Theodore Wm. Tashlik, Esq.
Tashlik, Kreutzer and Goldwyn, P.C.
833 Northern Blvd.
Great Neck, New York 11021
13
<PAGE>
18.4 Confidentiality.
The parties hereto agree that all documents and confidential information
furnished to a party hereunder (including the terms of this Agreement) shall be
held in strict confidence and shall not, without the prior written consent of
the other party, be made available or disclosed to any third party or be used by
the other party hereto other than as contemplated hereunder. Moreover, each
party hereto agrees to restrict dissemination of such documents and confidential
information to only those persons in their respective organizations who are
directly involved in the performance of the obligations under this Agreement.
Notwithstanding the above restriction, neither party shall have any obligation
for any disclosure of information which is, or becomes generally known to the
public without breach of the terms of this Agreement, or for any disclosure of
information which is required by court order or by order of any governmental or
administrative tribunal having jurisdiction over the parties hereto.
18.5 Entire Agreement.
This Agreement constitutes the entire agreement of the parties hereto and
no amendment or modification shall be binding unless reduced to writing and
signed by the parties.
18.6 Descriptive Headings.
The descriptive headings of the several sections and subsections of this
Agreement are used for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
18.7 Submission to Jurisdiction.
The parties hereto agree that the state courts and federal courts in the
State of New York shall be proper forums for any legal controversy arising in
connection with this Agreement, and the parties hereto hereby irrevocably and
unconditionally consent to the non-exclusive jurisdiction of such courts for
such purposes. The parties hereto further irrevocably consent to the service of
process in connection with any such controversy by the mailing thereof by
registered or certified mail, postage prepaid, to the parties hereto, at the
respective addresses set forth in, or designated pursuant to, this Agreement.
18.8 Shipment of Printers; Installations.
All printers packed and shipped by AP hereunder will include an appropriate
"AP Express/Medialink" badge. Press Association will use its best efforts to
complete installations of such printers within 30 business days of the date of
VBC's written request for such installations.
14
<PAGE>
18.9 Counterparts.
This Agreement may be executed in several counterparts and by the different
parties hereto on separate counterparts, each of which shall be deemed to be an
original and all of which, when taken together, shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date set forth above.
VIDEO BROADCASTING CORPORATION PRESS ASSOCIATION, INC.
By: /s/ Laurence Moskowitz By: /s/ James Williams III
-------------------------- ---------------------------
Name: Laurence Moskowitz Name: James Williams
Title: President Title: Vice President and
Director of Broadcast
Services
15
<PAGE>
EXHIBIT A
DESCRIPTION OF NETWORK
1. Press Association shall provide Customer with access to at least a
1200-baud national data delivery network that employs addressable end-user
equipment ("Receivers") to a minimum of the 48 contiguous states, Alaska,
Hawaii and Puerto Rico.
2. For Customer Subscribers which are not FCC-licensed television stations or
cable television systems and for Customer Subscribers located outside the
geographic area described above, the Network can be made available to the
Customer for delivery to Customer Subscribers via facsimile or equivalent,
at Press Association's discretion. Customer Information relayed via
facsimile shall be deemed to have been transmitted on a "routine" priority,
and the cost shall be at the Regular Rate, as adjusted from time to time,
plus toll charges. The delivery time set for transmission priority of
Customer Information shall not apply to Customer Information relayed to
Customer Subscriber(s) via facsimile.
<PAGE>
EXHIBIT B
FORM OF LOGO
A copy of the form of logo to be used by VBC on the Receivers is annexed
hereto.
<PAGE>
[FORM OF LOGO]
AP EXPRESS PROGRAMLINK
AP EXPRESS PROGRAMLINK
AP EXPRESS MEDIALINK
AP EXPRESS MEDIALINK
<PAGE>
EXHIBIT C
REQUEST FORM
[Date]
CUSTOMER/NETWORK NAME:__________________________________________________________
DATE:__________________________ REQUESTED BY:__________________________________
________________________________________________________________________________
ACTION TO BE TAKEN
________Add user to network ________Outside move of circuit
________Disconnect ________Make equipment change
________Inside move of circuit ________Amend previous order
________Change coding ________Change information in
________Cancel previous order records
METHOD OF DELIVERY: Printer_________ Computer________
DESIRED EFFECTIVE DATE: ______________________________________
________________________________________________________________________________
LOCATION INFORMATION
Receive Point: _______________________________________________________________
Street Address: _______________________________________________________________
Building Name: _______________________________________________________________
Room/Floor: _______________________________________________________________
City/State/Zip: _______________________________________________________________
Contact & Title: _______________________________________________________________
Telephone: _______________________________________________________________
REMARKS/SPECIAL INSTRUCTIONS
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
EXHIBIT D
OUT-OF-SCOPE SERVICE RATES
1. Prevailing Out-of-Scope Service:
Regular hours: 9:00 am to 5:00 pm
$72.00/hour per man
Monday thru Friday
excluding holidays
MINIMUM CHARGE IS 2 HOURS
Overtime hours: 5:00 pm to 9:00 am
$108.00/hour per man
Monday thru Friday
and all day Saturdays and
Sundays, excluding holidays
MINIMUM CHARGE IS 2 HOURS
Holiday hours: All holidays recognized
$144.00/hour per man
by Company
MINIMUM CHARGE IS 5 HOURS
2. Prices shall be calculated to the nearest tenth of one hour.
3. Vehicle mileage will be charged to $0.50 per mile. Other travel expenses
such as parking, tolls, lodging, meals, etc., will be charged to actual
cost (overnight lodging and meals not applicable to less than four working
hours).
4. Prices are subject to change with 90-day prior notification. All rates will
be identical to those charged to other Press Association customers under
similar types of contracts.
5. Press Association recognized holidays are as follows:
1. New Year's Day
2. Washington's Birthday
3. Memorial Day
4. Independence Day
5. Labor Day
6. Thanksgiving Day
7. Christmas Day
<PAGE>
ADDENDUM
This Addendum dated as of February 21, 1996 supplements the AP Express
Agreement between Press Association, Inc. ("PA") and Video Broadcasting
Corporation ("VBC") dated November 1, 1992 (the "Agreement").
All capitalized terms used herein but not otherwise defined herein shall
have the same meaning assigned to such terms in the Agreement. If there is any
inconsistency between the terms and conditions of this Addendum and the
Agreement, this Addendum shall control.
Notwithstanding the terms and conditions of the Agreement, PA and VBC agree
to expand their relationship for the distribution of public relations and
corporate news information in audio ("Audio News Release", or "ANR") and text
("Text News Release", or "TNR") or also in text as an advisory to an ANR ("Text
News Advisory" or "TNA"), (collectively, "VBC Information") to radio stations
which currently receive and AP or PA service.
1. PA agrees to transmit ANR's, which may also include a related actuality
and natural sound, over the AP Network News Main Channel. Each ANR, may also
include a TNA to notify radio stations of the availability of an ANR, a
description of the material provided on the ANR and a script for the ANR. Each
ANR will run for a length of no longer than three (3) continuous minutes and
each accompanying TNA will not exceed 500 words in length.
2. PA agrees to provide two, five-minute periods each weekday at 4:06 a.m.
to 4:11 a.m. Eastern and 3:06 p.m. to 3:11 p.m. Eastern for transmission of
ANR's on the AP Network News Main Channel. PA may, in its sole discretion,
adjust such transmission times as may be necessary to accommodate its regular
and breaking news programming upon reasonable notice to VBC. In addition, PA
may, in its sole discretion, adjust such transmission times as may be necessary
to accommodate increased transmission volume of ANR's.
3. PA also agrees to transmit to radio stations TNR's unrelated to the
transmission of an ANR distributed over the AP Network News Main Channel. Each
such TNR may not exceed a total of 300 words in length.
<PAGE>
4. Each TNR and TNA shall be transmitted to each radio station capable of
receiving such transmission, as determined by PA, and in which VBC has received
and provided to PA a signed authorization by the station to receive such
material. Notwithstanding the above, PA agrees to seek authorization from those
radio stations currently receiving the AP Express text service.
5. THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
6. During the term of this Addendum, VBC shall have the exclusive right to
market TNR's over the AP Express text-delivery network to radio stations.
7. The parties understand that TNR's cannot be marketed viably until the AP
Express text-delivery network reaches at least 300 radio stations. During the
term of this Addendum, PA intends to expand the current number of AP Express
text delivery locations.
8. THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
9. THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
10. THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
<PAGE>
IN WITNESS WHEREOF, the authorized representatives of the parties hereto
have executed this Addendum as of the date written above.
VIDEO BROADCASTING CORPORATION PRESS ASSOCIATION, INC.
By: /s/ J. Graeme McWhirter By: Signature
--------------------------- -----------------------------
Executive Vice President Vice President
at Washington, D.C.
<PAGE>
[Global Access Letterhead]
Satellite Services Agreement
This is an agreement between Global Access Telecommunications Services, Inc.
("Global") and Medialink ("Medialink"), dated as of January 1, 1996, in
connection with satellite services provided to Medialink. The terms of this
Agreement are as follows:
1. TRANSPONDER USE. Global shall provide to Medialink, subject to availability
and on the terms set out in this Agreement and in the attached Global
Access Standard Terms and Conditions which are incorporated in this
Agreement by this reference, the use of Global-owned or -controlled C- and
Ku-band transponders (the "Transponder(s)") and Global-controlled fiber
optic circuits (the "Fiber"). This Agreement constitutes an agreement for
"Occasional Service" as that term is used in the Standard Terms and
Conditions.
2. TERM. This Agreement shall commence January 1, 1996, and shall continue
through December 31, 1996.
3. MINIMUM USAGE. Medialink shall use a minimum of 1,000 hours during the term
of this Agreement.
4. SERVICE RATES. The service rates for Global-controlled US domestic C-band
transponders shall be $485 per hour. The service rates for
Global-controlled US domestic Ku-band transponders shall be $720 per hour.
The service rates for Fiber shall be the then-current rate card rates as
published by Global, less 5%. The service rates for the Global-controlled
Eutelsat II/F4 22 transponder shall be $845 per hour. The service rates for
all other transponders are listed on the attached Addendum 4. In the event
Global's occasional use rates from the satellite carriers are increased,
Global reserves the right to apply a corresponding percentage increase to
Medialink's service rates.
The services rates for Global-controlled US domestic C-band transponders
shall be adjusted once Medialink's utilization reaches 1200 hours during
the term of this Agreement. For those hours scheduled after Medialink's
utilization reaches 1200 hours, (that is, for 1201 hours and above) the
services rates for Global-controlled US domestic C-band transponders shall
be $475 per hour.
5. PAYMENT. Payment of the service rates called for by Section 4 shall be due
within 30 days of the receipt invoice.
<PAGE>
a. If Medialink fails to make any of these payments by the due date
specified above, Global shall give Medialink written notice of such failure
and Medialink shall have 10 business days from receipt of such notice to
complete payment. If Medialink fails to make the required payment within
those 10 business days, Medialink will be deemed in breach of this
Agreement and Global shall have the rights provided for in the Standard
Terms and Conditions.
b. To the extent the foregoing provisions conflict with the provisions of
Section 4 of the Standard Terms and Conditions, the items set forth above
shall control.
6. CANCELLATION/UNDER UTILIZATION. On the last day of the term of this
Agreement, Global shall calculate the total number of hours used by
Medialink. In the event that Medialink has used fewer than 1000 hours,
Medialink shall have the option to (a) pay Global and amount equal to $485
multiplied by the difference between the Commitment and the actual hours
used or (b) enter into a new agreement with Global for at least 1000 hours
plus the number of hours not used under this Agreement at the then-current
rate card rates. If, during the term of this Agreement, Global cannot
satisfy reasonable requests by Medialink for the Transponders, those hours
that cannot be provided will be counted towards Medialink's usage
requirement. Hours scheduled and subsequently canceled will be billed
according to the attached Standard Terms and Conditions, and will not count
towards the contracted number of hours.
7. THIRD PARTY AGREEMENTS. This Agreement is subject to Global's contracts
with third parties through which it has obtained any portion of the rights
made available to Medialink under this Agreement. Medialink shall have no
greater rights or remedies against or with respect to Global under this
Agreement than Global has against the Carrier under those contracts.
8. STANDARD TERMS AND CONDITIONS. Global's Standard Terms and Conditions are
attached and considered an integral part of this Agreement. In the event of
conflict or difference between the terms of Global's Standard Terms and
Conditions, and/or the terms of this Agreement, the provision that is most
favorable to Global shall prevail.
9. NOTICE. Pursuant to Section 19(c) of the Standard Terms and Conditions, the
address for notices of the parties to this Agreement shall be as follows:
GLOBAL ACCESS TELECOMMUNICATIONS SERVICES, INC.
77 North Washington Street
Boston, MA 02114
FAX: 617-720-0803
Attention: Vice President, Sales
MEDIALINK
708 Third Avenue
New York, NY 10017
FAX: 212-682-2370
Attention: Associate Vice President
<PAGE>
AGREED: AGREED:
MEDIALINK GLOBAL ACCESS TELECOMMUNICATIONS
SERVICES, INC.
By: /s/ J. Graeme McWhirter By: /s/ Signature
-------------------------- ----------------------------
Title: EVP Title: PRES & CEO
Date: 2/20/96 Date: 2/22/96
<PAGE>
[Global Access Letterhead]
Addendum 4
SERVICE RATES
Prepared for Medialink
Effective January 1, 1996
- --------------------------------------------------------------------------------
GLOBAL ACCESS INVENTORY
- --------------------------------------------------------------------------------
C-BAND Hourly Rate
- --------------------------------------------------------------------------------
Telstar 402R $485
Galaxy C4 $485
Galaxy 3R $485
Galaxy 6 $485
- --------------------------------------------------------------------------------
KU-BAND Hourly Rate
- --------------------------------------------------------------------------------
SBS6 $720
- --------------------------------------------------------------------------------
FIBER CIRCUITS Hourly Rate
- --------------------------------------------------------------------------------
Accunet $400
- --------------------------------------------------------------------------------
Vyvx $415
- --------------------------------------------------------------------------------
INTERNATIONAL Hourly Rate
- --------------------------------------------------------------------------------
Intelsat IOR 57 SCPC (9MHz) $795
- --------------------------------------------------------------------------------
Intelsat POR 180 SCPC (9MHz) $795
- --------------------------------------------------------------------------------
PanAmSat 1, 2, 4 Analog (27 MHz) $1,375
- --------------------------------------------------------------------------------
MCPC $925
- --------------------------------------------------------------------------------
SCPC (9 MHz) $795
- --------------------------------------------------------------------------------
Orion-1 $975
- --------------------------------------------------------------------------------
Eutelsat II/F4 (30 MHz) $845
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AT&T INVENTORY
- --------------------------------------------------------------------------------
C-BAND Hourly Rate
- --------------------------------------------------------------------------------
Telstar 302/303 $420
- --------------------------------------------------------------------------------
Telstar 401/402R $600
- --------------------------------------------------------------------------------
KU-BAND Hourly Rate
- --------------------------------------------------------------------------------
Telstar 401/402R (27 MHz) $720
- --------------------------------------------------------------------------------
Telstar 401/402R (54 MHz) $900
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HUGHES INVENTORY
- --------------------------------------------------------------------------------
KU-BAND Hourly Rate
- --------------------------------------------------------------------------------
SBS5, SBS6, Galaxy K4, Galaxy K7 $900
- --------------------------------------------------------------------------------
NOTES:
o All prices apply to Global Access-owned inventory and bulk buy purchases
from carriers and are subject to change. Individually owned space will be
quoted on a per case basis.
o All services are provided per Global Access' Standard Terms and Conditions.
<PAGE>
GLOBAL ACCESS TELECOMMUNICATIONS SERVICES, INC.
Standard Terms and Conditions
1. Application of Terms and Conditions; Exclusion of Other or Additional
Terms. These Standard Terms and Conditions are applicable to all Communications
Services provided by Global Access Telecommunications Services ("GATS") to the
customer ("Customer") pursuant to this Service Agreement ("Agreement").
COMMUNICATIONS SERVICES WILL BE PROVIDED ONLY ON THE FOLLOWING TERMS AND
CONDITIONS AND ANY CONFLICTING, DIFFERENT OR ADDITIONAL TERMS AND CONDITIONS
CONTAINED IN CUSTOMER'S ACKNOWLEDGMENT OR PURCHASE ORDER OR ELSEWHERE ARE HEREBY
OBJECTED TO BY GATS AND SHALL NOT CONSTITUTE PART OF THIS AGREEMENT. This
Agreement contains the full understanding of the parties with respect to the
subject matter hereof and supersedes any previous agreements between the parties
regarding such subject matter. This Agreement may not be amended, nor any of its
provisions waived, except by a writing executed by the party against which such
amendment or waiver is sought to be enforced.
2. Definitions. For purposes of this Agreement, the following terms shall
have the definitions set forth in this Section 2, as follows:
"Applicable Carrier" shall mean the person, corporation, partnership, firm or
other entity in control of the satellite, satellite transponder, microwave link,
uplink, downlink, analog copper and/or fiber optic facilities being used to
provide the Communications Services.
"Applicable Carrier's Tariff" shall mean the Applicable Carrier's Tariff for
Allowances for Interruptions, setting forth the policies of the Applicable
Carrier with regard to credits, allowances, refunds or payments in the event of
an interruption of Communications Services caused by the Applicable Carrier or
the Applicable Carrier's equipment, as well as the policies of the Applicable
Carrier with regard to payments, penalties and charges for cancellation of
Communications Services by the Customer.
"Communications Services" shall include (without limitation) satellite
transponder, transponder uplink/downlink, fiber optic, telephone line and/or
microwave capacity, as applicable to the services requested by Customer.
"Customer" shall mean any person, corporation, partnership, firm or other entity
purchasing Communications Services under this Agreement, or any employees,
agents, parents, subsidiaries, affiliates, authorized users or assigns of such
person, corporation, partnership, firm or other entity.
"Customer Agent" shall mean any person, corporation, partnership, firm or other
entity transmitting signals to, from or via a satellite transponder or using
other Communications Services with the permission of or on behalf of a Customer.
"Exchange Rates" shall mean the rates at which US dollars are exchanged for the
relevant foreign currency as published in The Wall Street Journal, U.S. Edition.
"Fixed-Term Service" shall mean service contracted for by a Customer pursuant to
a Communications Circuit Lease Agreement with GATS.
"Occasional Service" shall mean service contracted for by a Customer pursuant to
the telephone and facsimile inquiry and confirmation process employed by GATS,
including, without limitation, those Customers who have not placed a long-term,
full time order for Communications Services with GATS.
"Uplink/Downlink Agent" shall mean the person, corporation, partnership, firm or
other entity engaged by Customer to transmit or receive Customer's signal to the
satellite transponder being used to provide the Communications Services.
3. Provision of Communications Services. GATS shall provide Customer, and
Customer shall accept from GATS, Communications Services as specified by
Customer.
4. Payment of Charges. Customer shall pay all charges for Communications
Services furnished to or at the request of Customer on the first day of the
calendar period for which those charges are applicable or upon receipt of
invoice. If any payment for Communications Services is not received by GATS
within 30 days after the date of invoice, then such overdue amount shall be
subject to late payment charges at the lower of 18% per annum or the highest
legally permissible rate of interest until the date payment is actually
received.
<PAGE>
5. International Service. Rates for international Communications Services
are priced to Customer based on the Exchange Rate at the time service is
contracted for, subject to monthly adjustments to reflect changes in the
applicable published Exchange Rate on the first day of each month. Should the
carrier of non-U.S. Communications Services modify its tariff or the technical
parameters for Communications Services during the term of this Agreement, GATS
shall have the right correspondingly to modify the tariff or rate of technical
parameters of its Communications Services to Customer.
6. Limitation of GATS' Liability. (a) EXCEPTING ONLY LIABILITY FOR GATS'
RECKLESS OR WILLFUL MISCONDUCT, GATS' LIABILITY ARISING OUT OF ITS PROVISION OF
COMMUNICATIONS SERVICES HEREUNDER, INCLUDING BUT NOT LIMITED TO LIABILITIES
ARISING OUT OF GATS' NEGLIGENCE, MISTAKES AND OMISSIONS, INTERRUPTIONS, DELAYS,
ERRORS, OR OTHER DEFECTS IN THE COMMUNICATIONS SERVICES OR BREACH OF CONTRACT OR
ARISING OUT OF THE FAILURE TO FURNISH COMMUNICATIONS SERVICES, WHETHER CAUSED BY
ACTS OF COMMISSION OR OMISSION, SHALL BE LIMITED TO THE EXTENSION OF ALLOWANCES
FOR INTERRUPTIONS AS SET FORTH IN SECTION 10 BELOW. SUCH ALLOWANCES FOR
INTERRUPTION SHALL BE THE SOLE REMEDY OF CUSTOMER, AUTHORIZED USED OR JOINT USER
AND THE SOLE LIABILITY OF GATS HEREUNDER. GATS' LIABILITY FOR DAMAGES OR LOSSES
OF ANY KIND ARISING OUT OF ITS FURNISHING COMMUNICATIONS SERVICES SHALL IN NO
EVENT EXCEED AN AMOUNT EQUAL TO ITS FIXED MONTHLY OR OTHER CHARGE ALLOCABLE TO
THE FAULTY OR DEFECTIVE SERVICE.
(b) NOTWITHSTANDING THE PROVISIONS OF THE PRECEDING SUBPARAGRAPH, GATS
SHALL NOT BE LIABLE TO CUSTOMER OR TO ANY AUTHORIZED OR JOINT USER FOR ANY LOSS
OF, DEFECTS IN OR ANY INABILITY TO FURNISH SERVICE DUE TO ACTS OF GOD, ACTS OF
GOVERNMENT, WAR, RIOTS, STRIKES, FAILURE OF A TRANSPONDER, FAILURE OF A
SATELLITE, FAILURE OF ANY OTHER TRANSMISSION EQUIPMENT OR OTHER CAUSES BEYOND
GATS' CONTROL.
(c) ANY AND ALL EXPRESS AND IMPLIED WARRANTIES RELATING TO THE SATELLITE
TRANSPONDERS, UPLINKS/DOWNLINKS, FIBER OPTIC SERVICE OR OTHER COMMUNICATIONS
SERVICES, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A SPECIFIC PURPOSE OR USE, ARE EXPRESSLY DISCLAIMED. IN NO EVENT
SHALL GATS BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT
NOT LIMITED TO, LOST PROFITS), REGARDLESS OF THE FORESEEABILITY THEREOF,
OCCASIONED BY THE TERMINATION OF CUSTOMER'S RIGHTS TO USE, OR THE PREEMPTION OF
OR THE FAILURE OF, OR LOSS OF TECHNICAL QUALITY OF, THE SATELLITE TRANSPONDERS,
UPLINKS/DOWNLINKS, FIBER OPTIC SERVICE, OR OTHER COMMUNICATIONS SERVICES OR BY
ANY DELAY IN COMMENCEMENT OF THIS AGREEMENT OR BY ANY OTHER CAUSE OR MATTER
WHATSOEVER. CUSTOMER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS GATS FROM ANY
CLAIMS MADE UNDER A WARRANTY OR REPRESENTATION MADE BY CUSTOMER TO ANY THIRD
PARTY WITH RESPECT TO THE COMMUNICATIONS SERVICES.
7. Claims. GATS shall be indemnified, defend and save harmless by Customer
from and against all loss, liability, damage and expense, including reasonable
attorneys' fees, due to claims arising out of the content of any programming
transmitted over GATS' facilities pursuant to this Agreement including without
limitation, any claim for libel, slander, or infringement of copyright and any
other claim resulting from any act or omission of Customer arising from the use
of GATS' facilities or Communications Services.
8. Obligations of the Customer. Customer shall make all arrangements with
other common carriers, stations, networks, sponsors, music licensing
organizations, performers, representatives or other parties for the
authorizations necessary to avail itself of the Communications Services. GATS
shall be indemnified, defended and saved harmless by Customer from any liability
arising out of failure to make such arrangements. Customer shall not use
Communications Services for any unlawful purpose, including (without limitation)
any use which constitutes a violation of any state or federal obscenity laws.
GATS shall have the right to terminate this Agreement and the Communications
Services provided hereunder without liability to Customer in the event that
GATS, its officers, employees or agents, or the Applicable Carrier, its
officers, employees or agents, becomes the subject of any investigation, or is
threatened with or made a party to any administrative proceeding or litigation,
related to the alleged illegal use of the Communications Services by the
Customer.
9. Non-Interference for Satellite Transmissions and Use of Other
Communications Services. (a) All transmissions to and from the satellite
transponder or other use of Communications Services made by Customer and/or a
Customer Agent in connection with use of Communications Services pursuant to
this Agreement shall comply with all of the rules and regulations of the Federal
Communications Commission ("FCC"), other governmental agencies, carriers or
other authorities applicable to Customer and/or each Customer Agent with respect
to the Satellite Transponder or the Communications Services. Customer and each
Customer Agent will follow the established practices and procedures of the
Applicable Carrier for frequency coordination and will not utilize the
Communications Services in a manner which, under standard engineering practice,
would or might interfere with the use of or cause physical harm to any satellite
transponder, the satellite or any other communications facility. If, in GATS',
the Applicable Carrier's or other carrier's judgment, Customer's or any Customer
Agent's transmissions to or from or utilization of the satellite transponder or
other Communications Services (whether directly or through a Customer Agent),
interferes with or causes physical harm to any satellite transponder, the
satellite or any other communications facility, Customer agrees to cease or
cause to be ceased immediately all transmissions to and utilization of the
satellite transponder or other Communications Services upon notice thereof by
GATS or the carrier until such time as such transmission or utilization shall
not, in GATS' or the carrier's judgment, interfere with and shall not cause
physical harm to any satellite transponder, the satellite or any other
communications facility. In such event and in addition to GATS' other rights and
remedies hereunder, Customer agrees that
<PAGE>
its rights to use a portion of the satellite transponder or other Communications
Services in accordance with this Agreement shall be subject to GATS' right to
terminate this Agreement and all of Customer's rights hereunder without
liability to Customer and to take such action as may be necessary, appropriate
or desirable to terminate any such interference or physical harm by Customer and
each Customer Agent.
(b) To ensure that Customer and each Uplink/Downlink Agent's transmissions
to and from the satellite transponder and Customer's utilization of the
Communications Services (whether directly or through an Uplink/Downlink Agent)
does not so interfere with or cause physical harm to any transponder or
satellite, Customer and each Uplink/Downlink Agent, prior to any transmission to
the satellite transponder, must satisfy the uplink access requirements set forth
by the Applicable Carrier. Further, without limiting the generality of the
foregoing, if Customer's use involves video broadcasting, Customer agrees to
comply in all respects with Section 25.308 of the FCC rules regarding the
Automatic Transmitter Identification System.
10. Pre-emptible Nature of Communications Services. The satellite
transponder and other Communications Services provided herein are not normally
protected and may be preempted and Customer acknowledges and agrees that it
sometimes may be necessary or advisable for the Applicable Carrier or other
carrier deliberately to preempt or interrupt Customer's use of the
Communications Services in order to protect the overall performance of each
satellite, fiber optic network or other communications facility, to comply with
its contractual obligations to third parties or for business or other technical
reasons. Such decisions shall be made by the owners or operators of the
satellite, fiber optic network or other communications facility at their sole
discretion and GATS shall have no liability to Customer as a result of such
decisions.
11. Allowances for Interruption. (a) Allowances for interruption of
Occasional Service usage will be in accordance with the Applicable Carrier's
Tariff. In the absence of an Applicable Carrier's Tariff, GATS policy for
allowances for interruption of Occasional Service shall apply as follows: (i)
When an interruption of an Occasional Service occurs for a period of 60 seconds
or more, credit is allowed in the basis of 5 minutes for each 5 consecutive
minutes or fraction thereof of interruption; (ii) Two or more interruptions
occurring during any period of 5 consecutive minutes shall be considered as one
interruption; (iii) Allowances will be based on the rate applicable to the
service being provided which was interrupted. The amount of the allowance is
proportionate to the total number of minutes in the applicable order which
includes the portion of service affected by the interruption; (iv) An
interruption of either the audio or video portion of the Communications Service
shall be considered an interruption of both; and (v) Other than the allowances
herein, GATS shall not be held liable for interruptions of service.
(b) Allowances for interruption of Fixed Term Service usage will be in
accordance with the Applicable Carrier's Tariff. In the absence of an Applicable
Carrier's Tariff, GATS' policy shall apply as follows: (i) When an interruption
of a Communications Service occurs for a period of 60 seconds or more, credit is
allowed in the basis of 5 minutes for each 5 consecutive minutes or fraction
thereof of interruption; (ii) Two or more interruptions occurring during any
period of 5 consecutive minutes shall be considered as one interruption; and
(iii) An interruption of either the audio or visual portion of the television
channel shall be considered an interruption of both.
(c) An allowance will not be made where Customer fails to transmit or
receive a television, data or voice channel as a result of, or attributable in
whole or in part to: (i) Customer's negligence or willful acts, or the
negligence or willful acts of its officers, directors, agents, employees,
subsidiaries, parents, affiliates, customers, authorized users and viewing
subscribers, or any of them; (ii) the failure of local channels, transmission
lines or equipment provided by Customer, its subsidiaries, parents, affiliates,
authorized users, viewing subscribers, Customer Agents or any of them; (iii) Sun
outages, heavy precipitation or heavy cloud cover; or (iv) Customer's failure to
use the channel ordered.
(d) In no event shall GATS be liable for allowances for interruption unless
the claim for such allowance is made within fifteen (15) days after the date
Customer became aware or should have become aware of the interruption.
12. Denial of Service. In the event of nonpayment of any sum due, or of any
violation of the Communications Act of 1934, as amended, or any Rules,
Regulations or Orders of the FCC or of the terms of this Agreement by Customer,
or the imposition by the FCC or any governmental authority having jurisdiction
of conditions on the provision of Communications Services which are unacceptable
to GATS or the Applicable Carrier, GATS may either temporarily deny service or
terminate the service without incurring liability to Customer.
13. Cancellation by Customer. (a) Occasional Service may be cancelled only
by advance notice by Customer to GATS and upon payment of any applicable
cancellation charges. The specific charges to Customer, if any, will be those of
the Applicable Carrier's Tariff in effect at that time. In the absence of an
Applicable Carrier's Tariff, GATS' policy in effect at that time shall apply.
(b) Except as specifically provided herein, Fixed-Term Service may only be
cancelled upon the occurrence of all the following: written notice to GATS;
payment of total hourly, monthly or annual charges due for service previously
provided and for scheduled service that has not been provided as of the date of
cancellation; and payment of all other sums otherwise due through the term of
the Fixed-Term Service to be provided pursuant to this Agreement.
14. Taxes. If any sales taxes are similar charges or impositions are
asserted against GATS after, or as a result of Customer's use of the
Communications Services, by any local, state, national, or international, public
or quasi-public governmental entity, Customer shall be solely responsible for
such taxes, charges or impositions.
<PAGE>
15. Title to Communications Facilities. This Agreement shall not, and shall
not be deemed to, convey to Customer title of any kind to any of the satellite
transponders, transponder uplinks/downlinks, fiber optic links, telephone lines,
microwave facilities or other facilities utilized in connection with the
Communications Services.
16. No Transfer. Customer shall not, and shall not have the right to,
grant, sell, assign, encumber, permit the utilization of, license, lease,
sublease or otherwise convey, directly or indirectly, in whole or in part,
voluntarily or by operation of law, any of its rights under this Agreement
without the express written permission of GATS and/or the Applicable Carrier.
17. No Third-Party Beneficiary. The provisions of this Agreement are for
the benefit only of the parties hereto, and no third party may seek to enforce,
or benefit from these provisions, except that GATS and Customer acknowledge and
agree that the provisions of Section 9(a) hereof are intended for the benefit of
GATS, the Applicable Carrier and other carriers, and all other transponder,
fiber optic network and communications facility owners, users or transferees.
Both parties hereto agree that any other such transponder, fiber optic network
or communications facility owner, user or transferee shall have the right to
enforce, as a third-party beneficiary, the provisions of Section 8(a) hereof,
against Customer, directly in an action brought solely by such other
transponder, fiber optic network or communications facility owner, user or
transferee, or may join with GATS or any other transponder, fiber optic network
or communications facility owner, user or transferee in bringing an action
against Customer for violation of such Section.
18. Legal Expenses. If any proceeding is brought for the enforcement of
this Agreement, or because of an alleged or actual dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs and expenses incurred in such action or proceeding in addition to
any other relief to which such party may be entitled.
19. Miscellaneous. (a) This Agreement shall be governed and interpreted by
the laws of the Commonwealth of Massachusetts applicable to agreements made and
fully performed therein, except to the extent that the parties' respective
rights and obligations are subject to local, State and Federal laws or
regulations. Customer hereby consents to the jurisdiction of the federal and
state courts having a situs in Suffolk County, Massachusetts over any proceeding
initiated with respect to the enforcement or interpretation of this Agreement.
Nothing in this Agreement shall be deemed to create any joint venture or
principal-agent relationship between GATS and Customer.
(b) Except as provided in Section 16, this Agreement shall insure to the
benefit of and be binding on the respective successors, permitted licensees and
permitted assigns of the parties hereto.
(c) All notices, consent, waivers or other communications given under this
Agreement shall be in writing, and be given by personal delivery, mail, telegram
or private wire, at the respective addresses of Customer and GATS set forth here
or at the most current address as may be supplied by such party to the other for
notice. Notice given by mail shall be considered to have been given three (3)
days after the date of mailing, postage prepaid certified or registered mail.
Notice given by telegram shall be considered to have been given on delivery of
such telegram to a telegraph office with charges therefore prepaid or to be
billed to the sender. Notice given by private wire shall be considered to have
been given when transmitted prepaid. Notice given by fax shall be considered to
have been given when actually received by the party to whom the fax is delivered
and receipt is telephonically confirmed.
<PAGE>
[Nielsen letterhead]
NIELSEN SIGMA SERVICE AGREEMENT ("AGREEMENT")
BETWEEN VIDEO BROADCASTING CORP., d/b/a MEDIALINK ("CLIENT") AND
A.C. NIELSEN COMPANY ("NIELSEN")
Client hereby requests a non-exclusive license to receive and to use SIGMA
Service analyses on the following terms and conditions:
1. Scope of Service
A. Sigma Service hereunder will consist of (a) weekly (i.e. Monday -
Sunday) reports indicating telecasts, if any, of the "Video News
Releases," "Public Service Announcements," "Satellite Media Tours"
and/or other similar video releases intended for use by television
stations for promotional/informational purposes (collectively,
"Releases") produced by or distributed by or for Client for which
Client from time to time requests, and Nielsen agrees to provide,
SIGMA Service tracking and reporting hereunder ("Client Releases");
(b) at the additional charges set forth in Appendix 1 hereto, daily
(i.e., encompassing the period from 3 A.M. EST of the reported day to
3 A.M. EST of the next day) reports indicating telecasts, if any, of
Client Releases; and (c) such Client service as Nielsen shall offer
from time to time in connection with the analysis of such reports and
the preparation of special reports or analyses (at separate charges
determined by Nielsen). In addition, during the term of this
Agreement, Nielsen will provide Client with a weekly "Unidentified
Video Release" report identifying Releases, if any, for which Nielsen
has captured AMOL Code identified to Client but for which Nielsen has
not, by the applicable processing date(s), received a "Tracking
Request Form(s)" as defined below. All requests for tracking and
reporting of Client Releases shall be made in writing using "Tracking
Request Forms", in the form of Exhibit A hereto, in the case of weekly
reports, and "Daily Request Forms", in the form of Exhibit B hereto,
in the case of daily reports (collectively, "Forms").
B. Subject to Client's fulfillment of its obligations under Section 4
below, each weekly report and, if ordered by Client, daily report,
will indicate station, Designated Marked Area ("DMA"), title and
telecast date and time of each Client Release, if any, detected and
identified by Nielsen as having been telecast during the subject week
or day, as the case may be.
<PAGE>
C. The data for SIGMA Service reports shall be gathered through the use,
in each of Nielsen's DMAs, of Nielsen's proprietary system (known as
the "AMOL System") for the automated monitoring of commercial
television broadcasts for the presence of a unique,
Nielsen-proprietary code ("AMOL Code") included in each Client Release
in accordance with Section 4 below. Nielsen will monitor the telecasts
of Nielsen-selected commercial broadcast networks and commercial
independent broadcast stations and Nielsen-selected cable network
satellite feeds in each of Nielsen's DMAs.
D. Each weekly report shall be delivered in hardcopy form (one copy each)
within approximately five (5) business days after the end of each week
covered by the subject report. Additional hardcopies are available at
extra charges quoted by Nielsen. Daily reports ordered by Client will
be delivered by such method as the parties shall mutually agree upon
(one copy of each) at approximately 3 P.M. on the business day
following the day covered by the report, provided that Client has
submitted a timely Daily Request Form with respect to such Client
Release as provided in paragraph 4 (iv) below. Tracking and reporting
of each Client Release will begin as provided in the subject Form(s)
and (in the case of weekly reports) will continue for 13 weeks subject
to extension by mutual written agreement and the payment of Nielsen's
charges therefor; provided, however, that unless so extended, weekly
reports will not be provided for weeks beginning after the expiration
of the Minimum Duration.
E. The initial format of SIGMA Service reports shall be as set forth in
Exhibits C and D hereto.
2. Prices and Terms
A. Client agrees to pay, promptly upon presentation of invoices, charges
determined in accordance with the provisions of Appendix 1 attached
hereto and made part hereof, based on the rate class selected by
Client. Client hereby elects rate class (circle one and initial):
A JGM
________
B________
C________
D________
E________
All invoices not paid within 30 days after presentation shall bear
interest at the rate of 18% per annum or the highest rate allowed by
applicable law (if lower) from the date due until paid, payable upon
demand.
B. All charges hereunder shall be increased to the extent of any sales,
use or other tax of any governmental authority now or hereafter levied
or required to be collected by Nielsen on all or any portion of SIGMA
Service provided hereunder.
<PAGE>
C. If Client fails to pay any invoice as and when due, then pending
payment thereof, including applicable interest thereon, Nielsen, upon
notice to Client, may suspend SIGMA Service until payment is made and
will not thereby be deemed in default, nor will Client be deemed
relieved of its obligations, hereunder. If Nielsen retains a
collection agent and/or counsel for the purpose of enforcing its
rights under this Agreement, Client agrees to pay, on demand,
Nielsen's costs and expenses (including court costs, collection agent
and attorney fees) incurred in connection therewith.
3. Term and Termination
A. This Agreement, and SIGMA Service hereunder, shall commence with the
first week of SIGMA Service tracking as provided in the first Tracking
Request Form hereunder and, subject to the provisions of paragraphs
3.C. and 7, shall continue for a minimum period of 104 weeks ("Minimum
Duration") and thereafter until terminated as provided in paragraph
3.B., 3.C., or 7, below.
B. This Agreement, and SIGMA Service hereunder, may be terminated by
Client, with or without cause, by serving written notice on Nielsen at
any time, which notice shall be effective on expiration of the eighth
month next following the month during which such notice shall have
been served or upon such later date as Client may specify in such
notice; provided, however, that such termination shall not in any
event be effective prior to the expiration of the period of Minimum
Duration.
C. This Agreement, and SIGMA Service hereunder, may be terminated by
Nielsen, with or without cause, by serving written notice on the
Client at any time, which notice shall not become effective prior to
the expiration of the period of Minimum Duration; except, however,
that termination may be effective on any date specified by Nielsen in
such notice in the event of (i) any breach hereof by Client; (ii) if
Nielsen is unable or will become unable for any cause beyond its
control substantially to perform its obligations hereunder; or (iii)
if Nielsen is then terminating SIGMA Service to all clients.
D. Upon Nielsen's request after termination (which request shall not be
made until at least 30 days after the effective date of termination),
Client shall either return to Nielsen or destroy, and provide Nielsen
with a certificate of destruction signed by an authorized
representative of Client, all copies, in whatever form or format
recorded or maintained, of all reports and information provided
hereunder.
4. Identification of Client Releases
Client agrees that it shall undertake the following, at its own cost
and expense:
(i) acquire, install, operate and maintain the equipment and facilities
specified by Nielsen ("AMOL Encoders") in order to place AMOL Code on
Client Releases;
<PAGE>
(ii) encode, or cause to be encoded, all Client Releases with AMOL Code, in
accordance with Nielsen's specifications and instructions, in order
that Nielsen's AMOL System may be used to detect and identify the
encoded signal upon telecast;
(iii) complete Tracking Request Forms for each Client Release by such time
following the first day with respect to which Client seeks to have the
telecast thereof tracked and reported in accordance with this
Agreement as Nielsen, by written notice from time to time, may
require;
(iv) complete Daily Request Forms for each Client Release with respect to
which Client seeks to have the daily report run, by noon of the day
being requested; and
(v) acquire and deliver to Nielsen, promptly upon Nielsen's request, a
standard VHS videotape copy of each Client Release showing the AMOL
Code placed thereon; provided that Nielsen has made such request
within thirty (30) days after Nielsen's receipt of a Tracking Request
Form with respect to such Client Release.
Client further agrees that it will not place, or permit or allow the
placement of, any other codes or signals the same as or similar to AMOL
Code on any Client Releases.
5. Uses of Service
A. Nielsen's obligations hereunder shall be limited to use of all
reasonable efforts to furnish the information required to be delivered
hereunder. Client recognizes that all reports and information
furnished hereunder are supplied merely to convey the information
therein contained and remain the property of Nielsen, loaned to Client
for confidential internal use in connection with the conduct of its
business of sponsoring, producing and/or distributing Client Releases
and in accordance with this Agreement. Client represents that it has a
continuing legitimate business interest in all information to be
furnished hereunder and agrees that such information will not be
disclosed to any person unless such person:
(i) has a legitimate business interest in such information; and
(ii) agrees to use such information only as permitted to Client
hereunder and to not further disclose any thereof; and in any
event may be disclosed only to those within its own organization
having a need to know, consistent with the uses permitted to
Client; to public relations firms, advertising agencies,
sponsors, producers and/or distributors for whom Client is
performing production/distribution services or who are performing
production/distribution services for Client or with whom Client
is negotiating with respect thereto, in all cases only as is
consistent with the uses permitted to Client hereunder.
<PAGE>
B. Client further agrees not to:
(i) loan, give, sell, lease, trade, exchange, or transfer possession
of any report or information furnished hereunder, or any copy
thereof, either alone or in combination with any other data;
(ii) publish, reproduce, copy or extract, or permit or allow others to
publish, reproduce, copy or extract, any report or information
furnished hereunder, unless specifically authorized to do so in
writing by Nielsen (including without limitation the requirement
of Nielsen's written approval for quotation of data in
advertising promotional material or press releases), or unless
such action is in conformity with written advice of Nielsen
permitting publication of data contained in SIGMA Service reports
where such publication, reproduction, etc., correctly states the
facts in a manner not likely to mislead the reader (Client may,
however, without Nielsen's consent, reproduce such information
reasonably required for use in sales presentations made to
individual organizations or small groups if divulgence of such
information is permitted by this Agreement); and
(iii) use, or attempt to use, or permit or allow the use of, any
reports or information furnished hereunder in any legal
proceedings (including, but not limited to, any use in litigation
and/or use with any governmental investigatory, regulatory or
other body or authority).
C. The provisions of this Section 5 shall apply as well to all data and
information supplied to Client by electronic means, including without
limitation, dial-up telephone access to a computer system, diskettes,
compact discs and/or magnetic tapes. Client's obligations under this
Section 5 shall survive termination of this Agreement and are not
changed in any way by the publication of any SIGMA Service reports or
information in any manner whatsoever by Nielsen or by others.
<PAGE>
6. Limitation of Liability; Indemnity
A. NIELSEN MAKES NO WARRANTIES, EXPRESS OR IMPLIED INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO ANY ASPECTS OF SIGMA SERVICE
PROVIDED HEREUNDER AND ALL OF SUCH WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED BY NIELSEN AND WAIVED BY CLIENT. Without limiting the scope
of the disclaimers and limitations herein, Client acknowledges that
(i) SIGMA Service only reports the results of the monitoring of
broadcasts for the presence of AMOL Code; (ii) Nielsen does not
represent that it will detect and/or identify all Client Releases
which are broadcast; and (iii) Nielsen's ability to collect and report
information depends upon matters outside of Nielsen's control
including, but not limited to, (1) duration of the Client Release; (2)
equipment failure or breakdown; (3) broadcast signal strength; (4)
station broadcasts which are not AMOL monitored; (5) Client's
compliance with the provisions of Section 4; (6) transmission,
receipt, station editing and broadcasting procedures which do not
delete, replace or impair AMOL Code; (7) adequate access to cable
network satellite feeds; and (8) cooperation from third parties in
installing, operating and maintaining the equipment and facilities
necessary to capture AMOL Code.
B. Nielsen shall not be responsible or liable, in contract, tort or
otherwise, and Client waives all claims against Nielsen, for any loss,
cost, damage, expense or injury of any kind, whether direct, special,
incidental, consequential or otherwise, directly or indirectly
resulting from (i) any errors or inaccuracies in any SIGMA Service
reports or information; (ii) any failure to provide or delay in
providing any thereof; (iii) any other action or inaction, whether or
not negligent, of Nielsen, its agents or employees, in compiling,
delivering or communicating SIGMA Service reports or information or
the use thereof by Client or by others; (iv) any misrepresentation of
AMOL Code or of telecasts of Client Releases; or (v) any interference
with video signals caused, directly or indirectly, by the presence of
AMOL Code, or the encoding, transmission, receipt, editing or
broadcasting thereof; provided, however that, except when due to any
of the causes described in (iii) (1) through (8) of paragraph 6.a.,
above or the failure of AMOL or other equipment or facilities
(including, but not limited to, AMOL Encoders and telephone equipment)
or to any other causes beyond Nielsen's control, Nielsen will, if
feasible, correct any material errors in any SIGMA Service reports or
information brought to its attention and will provide Client with a
credit of $100 for each SIGMA Service weekly report which is not
delivered and a credit in the amount paid for each SIGMA Service daily
report ordered by Client which is not delivered. Client agrees that
the remedies set forth herein shall be Client's sole and exclusive
remedies, at law and in equity, in the event of the occurrence of any
of the foregoing.
<PAGE>
C. Client agrees to indemnify Nielsen and hold Nielsen harmless against
and from all liabilities, claims, actions and causes of action
(whether or not meritorious, and including without limitation claims
based on the alleged negligence of Nielsen or any officer, agent or
employee of Nielsen) imposed upon or asserted against Nielsen by any
third party, and all losses, costs, damages and expenses, including
attorney fees, arising out of (i) the acquisition, installation,
maintenance, operation or failure of AMOL Encoders; or (ii) the
divulgence by Client or any officer, agent or employee of Client of
any report or information furnished pursuant hereto contrary to the
terms hereof.
D. The provisions of this Section 6 shall survive termination of this
Agreement with regard to all services performed and information
furnished by Nielsen during the term hereof.
7. Service Changes. To facilitate improvements in SIGMA Service, and to meet
changing conditions and unforeseen circumstances, Nielsen shall have the
right to modify its service including the right to make, without notice,
any changes in report formats, scheduling, specifications, techniques
(including, but not limited to changes in, or alternatives to, the
technology utilized to track telecasts of Client Releases), Forms or
reported information, which changes shall be effective as determined by
Nielsen. In the event, however, that any such change(s) are accompanied by
an increase in price hereunder, such price increase shall take effect only
after Nielsen has given Client at least ninety (90) days notice thereof,
but Client, in lieu of accepting such price increase, may elect to cancel
Agreement, as of the effective date of the increase, by giving notice to
Nielsen within thirty (30) days of Nielsen's notice of such increase.
8. General Provisions
A. This Agreement, together with each properly completed Form,
constitutes the entire understanding between the parties with respect
to SIGMA Service and supersedes all prior agreements and
understandings between Nielsen and Client with respect thereto, all of
which prior agreements and understandings are hereby terminated by
mutual agreement as of the effective date hereof.
B. Upon discovery of any error in billing of or payment for SIGMA Service
hereunder (exclusive of taxes, which are not subject to the following
limitations) either party hereto may, within twelve (12) months
following the making of said error (but not more than six (6) months
following delivery of the last report due hereunder) serve written
notice on the other party, requesting adjustment; and any such claim
found to be justified shall be settled promptly. In all other cases,
any and all claims of Client under or with respect to this Agreement
shall be deemed waived if not brought within the earlier of one (1)
year after the transaction or occurrence which gave rise to the cause
of action and one (1) year after effective date of termination hereof.
<PAGE>
C. Nielsen reserves the right to assign, transfer, set over or sell its
rights in and to this Agreement to a corporation controlling,
controlled by or under common control with Nielsen, a business
successor of Nielsen or a successor to the SIGMA Service business of
Nielsen, and reserves the right to have all SIGMA Service rendered by
such corporation or successor, after notice to Client. Client reserves
the right to assign, transfer, set over or sell its rights in and to
this Agreement to a controlled subsidiary or business successor of
Client, and reserves the right to have all SIGMA Service rendered to
such subsidiary or successor, after notice to Nielsen; provided, in
the event of such assignment by Client, the assignee shall assume all
the obligations of the assignor hereunder and the assignor shall
continue to be liable under this Agreement.
D. Except as otherwise specifically provided herein, all notices
hereunder shall be in writing and shall be given by personal delivery,
registered or certified mail, or delivered via telecopier or FAX
machine at the respective addresses of the parties set forth below or
such other address(es) as may be designated by notice similarly given.
Notices shall be deemed given when personally delivered, delivered by
telecopier or by FAX machine or three business days after deposit in
the U.S. mail, registered or certified mail, postage paid, except that
notice of change of address shall be effective only from the date of
its receipt.
E. All AMOL Code, information provided by Client pursuant to Section 4,
and all work product of the foregoing, shall be the sole property of
Nielsen which Nielsen may use in its business either in providing
SIGMA Service to Client, to others or otherwise.
F. Client agrees that it will encode, or permit or allow encoding of,
Releases with AMOL Code only during the term of this Agreement and
will do so only as contemplated by Section 4(ii) hereof. Client
further agrees that it will not place or permit or allow placement of
any other codes or signals the same as or similar to AMOL Code on any
Releases in such a manner as to interfere with Nielsen's use of AMOL
Code in connection with SIGMA Service to Client or to others, which
obligation shall survive termination or expiration of this Agreement.
G. Client acknowledges that any breach of any of the provisions of
paragraph 3.D., the last paragraph of Section 4, Section 5 and/or 8.F,
will cause irreparable harm to Nielsen, for which damages will not be
an adequate remedy and, therefore, agrees that in the event of any
such breach, Nielsen shall be entitled, in addition to any other
rights or remedies it may have, at law or in equity, to temporary
and/or permanent injunctive relief, without need of posting bond
therefor, against Client and all persons or entities acting through,
for or with Client.
<PAGE>
H. This Agreement is subject to acceptance by Nielsen in Northbrook,
Illinois and until so accepted, shall not be binding upon Nielsen.
This Agreement and each Form shall be construed under, and the
parties' respective rights and obligations hereunder and thereunder
shall be governed by and in accordance with, the internal laws of the
State of Illinois. In the event of any conflict between the provisions
of this Agreement and those contained in any Form(s), the provisions
of this Agreement shall control.
I. Only the President, Senior Vice President Market Development, or
Coordinating Vice President of Nielsen Media Research shall have the
power of acceptance or modification of this Agreement, and any
modification hereof shall be in writing. No waiver by either party of
any breach by the other shall be deemed to be a waiver of any
preceding or subsequent breach.
ACCEPTED AT NORTHBROOK, ILLINOIS
A.C. NIELSEN COMPANY CLIENT: VIDEO BROADCASTING CORP.
d/b/a MEDIALINK
By: /s/ Ronald F. Eggert By: /s/ J. Graeme McWhirter
---------------------------- -----------------------------
Its: Coordinating Vice President Its: Executive Vice President
Date: 10/28/94 Date: 9/14/94
Address for notices: Address for notices:
Nielsen Plaza 708 Third Avenue
Northbrook, IL 60062 New York, NY 10017
with a copy to:
375 Patricia Avenue
Dunedin, FL 34698
<PAGE>
Agreement Date: 9/14/94 Rate Class: A
Client: Video Broadcasting Corp.
NIELSEN SIGMA TWO YEAR SERVICE AGREEMENT
APPENDIX 1
For SIGMA Service, Client shall pay the charges indicated below based on the
rate class elected by Client in paragraph 2.A. of the Agreement. The rate class
determines the volume of new Releases per year covered by the base fee and the
number of SID codes included in the base fee. Additionally, the rate class
defines the cost per Release in excess of the number of new Releases per year
covered by the base fee, the cost per Release for daily reports and a credit
bank which can be used for special reports and services (i.e., daily reports).
The Client shall pay the annual base fee commencing with the month in which
SIGMA Service commences. This annual base fee will be billed and payable in 12
equal monthly installments as described below. The annual base fee covers set-up
charges and up to 52 weekly reports tracking the number of new Client Releases
described below in the rate class table for up to 13 weeks each.
The above base fee contemplates the provision to Client of a maximum number of
Nielsen SID code(s) described below for use by Client in fulfilling its
obligations under Section 4(ii) of the Agreement. Should Client request, and
Nielsen agree to provide, one or more additional Nielsen SID codes, an
additional charge of $8,850 per contract year (or partial year) for each such
additional Nielsen SID code shall apply and will be billed and payable in equal
monthly installments over the balance of the term of the Agreement.
For each additional Client Release over the number specified under "Number of
New Releases Per Year" below, Client agrees to pay the additional one-time
charges indicated below, which charges will be added to the first Nielsen
monthly invoice, as aforesaid, issued after Nielsen begins tracking such Client
Release.
<PAGE>
Appendix 1 (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Number Of New Number Cost Per Credit
Releases Per Year of SID Annual Monthly Cost Per Release Bank For
Rate (Covered by Base Codes Base Base Add'l For Daily Special
Class Fee) Included Fee Fee Release Reports Reports
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 650 10 $120,000 $10,000 $130 $ 50 $30,000
B 300 3 $ 69,600 $ 5,800 $145 $ 50 $12,000
C 200 1 $ 56,400 $ 4,700 $155 $ 75 $ 5,000
D 100 1 $ 32,400 $ 2,700 $160 $ 75 $ 3,600
E 24 1 $ 17,400 $ 1,450 $175 $100
</TABLE>
Tracking and reporting for extended (i.e., in excess of 13 weeks) periods is
available at additional one-time charges of $50 per Client Release for each
additional 13 week period (or portion thereof, as the case may be) during the
balance of the term of the Agreement, which charge will be added to the first
Nielsen monthly invoice, as aforesaid, issued after Nielsen begins the first
additional week of such tracking in each instance.
Credit bank balance may be used only in the contract year for which credited and
not in any prior or subsequent year.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ATTN: DEPT 43 EXHIBIT A - NIELSEN SIGMA(Trademark) SERVICE AGREEMENT
TRACKING REQUEST FORM Week ending Sunday____________
ID______ NAME OF CLIENT __________________________________ CONTRACT TERM _________________ |_| CORRECTION
(Must call to
confirm receipt)
Client hereby requests SIGMA service tracking and reporting for the following Client Releases, in accordance with the
above-referenced Agreement and the following additional terms and conditions.
CLIENT ADMINISTRATION NIELSEN ADMINISTRATION
Form Completed By:___________________ Date Received:________________________ Follow-up Required: Yes |_| _________
No |_| _________
Date Sent:___________________________ Logged By:____________________________
Encoding Encoding Reporting Client
Version Encoding Start End Start Release Delivery
Client Release Name Number Date Time Time Date Type Type
------------------- ------ ---- ---- ---- ---- ---- ----
MM / DD / YY HH / MM / SS HH / MM / SS MM / DD / YY
- ------------------------------------------------------------------------------------------------------------------------------------
|_| AM
|_| PM
- ------------------------------------------------------------------------------------------------------------------------------------
_________ _________ _________ _________
Classification
#1_________ #2_________ #3_________ #4_________
- ------------------------------------------------------------------------------------------------------------------------------------
|_| AM
|_| PM
- ------------------------------------------------------------------------------------------------------------------------------------
_________ _________ _________ _________
Classification
#1_________ #2_________ #3_________ #4_________
- ------------------------------------------------------------------------------------------------------------------------------------
|_| AM
|_| PM
- ------------------------------------------------------------------------------------------------------------------------------------
_________ _________ _________ _________
Classification
#1_________ #2_________ #3_________ #4_________
ORDER TO INITIATE SIGMA SERVICE TRACKING AND REPORTING, THIS FORM MUST BE FILLED OUT WITH ALL REQUESTED INFORMATION, SIGNED BY DULY
AUTHORIZED REPRESENTATIVE OF CLIENT, AND SENT, BY FAX TO "SIGMA ENCODING" AT 813-738-3309.
Authorized By:___________________________________________ Title:______________________________________ Date:______________________
</TABLE>
<PAGE>
EXHIBIT B
NIELSEN SIGMA DAILY REQUEST FORM
* * * * * * *Daily Runs Requested* * * * * * *
Release Name Date Date Date Date Date
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
/ / / / / / / / / /
- --------------------------------------------------------------------------------
IN ORDER TO INITIATE SIGMA DAILY RUNS AND REPORTING, THIS FORM MUST BE FILLED
OUT WITH ALL REQUESTED INFORMATION, SIGNED BY A DULY AUTHORIZED REPRESENTATIVE
OF CLIENT, AND SENT, BY FAX TO "SIGMA ENCODING AT 813/738-3309.
AUTHORIZED BY:____________________________ DATE:__/__/__
<PAGE>
EXHIBIT C - EXAMPLE SIGMA (tm) REPORT FORMAT
NIELSEN SIGMA (tm) SERVICE
VIDEO RELEASE USAGE - EXACT SECOND DETAIL
SEPTEMBER 21, 1991 - SEPTEMBER 27, 1991
VIDEO RELEASE: V313 HEALTH TIPS DISTRIBUTOR: VIDEO NEWS SERVICE
<TABLE>
<CAPTION>
DAY HALF START END LENGTH TIME
MKT STA- DATE OF DAY- HOUR TIME TIME AIRED DATE ENCODED
RANK DESIGNATED MARKET AREA TION AFFIL AIRED WK PART AIRED HH:MM:SS HH:MM:SS MM:SS ENCODED HH:MM:SS
- ---- ---------------------- ---- ----- ----- -- ---- ----- -------- -------- ----- ------- --------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 NEW YORK WWOR IND 24Sep91 TH EM 7:00A 7:00:03 7:00:15 0:13 9-Sep-91 9:23:15
LE 11:00P 7:00:16 7:00:17 0:02 9-Sep-91 9:23:07
4 PHILADELPHIA WHSP IND 27Sep91 MO EF 6:30P 18:34:46 18:34:46 0:13 9-Sep-91 9:23:05
WPVI ABC 27Sep91 MO EF 7:00P 19:05:22 19:05:55 0:34 9-Sep-91 9:23:07
WE EF 7:00P 19:15:02 19:15:22 0:21 9-Sep-91 9:23:02
1 10 HOUSTON 3 KHTV IN 4 21Sep91 TH5 EF6 6:30P7 18:35:22 8 18:35:379 0:15 10 9-Sep-91 11 9:23:07
55 TULSA KOKI FOX 22Sep91 FR EF 7:00P 19:06:28 19:06:38 0:10 9-Sep-91 9:23:51
7:30P 19:35:39 19:36:01 0:23 9-Sep-91 9:25:44
</TABLE>
HOW TO READ THIS REPORT:
1 The video release was aired in the market ranked 10th, based on universe
estimates of households with TVs.
2 The market is designated as Houston.
3 KHTV, an independent station, which carried the video release.
4 KHTV aired this video release on Thursday, September 21st, 1991.
5 The airing occurred during the Early Fringe daypart (see footnotes).
6 The video release aired sometime between 6:30P-6:59P (in local time).
7 The exact start time that the video release aired was 18:35:22 or 6:35:22
P.M.
8 The exact time that the video release ended airing was 18:35:27 or 6:35:27
P.M.
9 The exact duration (minutes:seconds) that the video aired was 16 seconds.
10 The video release, V313 Health Tips, was encoded on September 9th, 1991.
11 The sixteen seconds of the video release began with the segment encoded at
9:23:07 A.M.
EM = 5AM - 9AM DT = 9AM - 4PM EF = 4PM - 8PM
PT = 8PM - 10PM LE = 10PM - 1AM LN = 1AM - 5AM
COPYRIGHT 1992 NIELSEN MEDIA RESEARCH - PRINTED IN U.S.A.
<PAGE>
EXHIBIT D - EXAMPLE SIGMA (tm) REPORT FORMAT
NIELSEN SIGMA (tm) SERVICE
VIDEO RELEASE USAGE - HALF-HOUR SUMMARY
SEPTEMBER 7, 1991 - SEPTEMBER 27, 1991
VIDEO RELEASE: V313 HEALTH TIPS DISTRIBUTOR: VIDEO NEWS SERVICE
MKT STA- DATE DAY- LOCAL
RANK DESIGNATED MARKET AREA TION AFFIL AIRED DAY PART 1/2 HR
- ---- ---------------------- ---- ----- ----- --- ---- ------
1 NEW YORK WWOR IND 24Sep91 TH EM 7:00A
LE 11:00P
4 PHILADELPHIA WHSP IND 14Sep91 MO EF 6:30P
WPVI ABC 14Sep91 MO EF 7:00P
WE EF 7:00P
1 10 2 HOUSTON 3 KHTV IND 4 24Sep91 TH 5 EF 6 6:30P
55 TULSA KOKI IND 11Sep91 FR EF 7:00P
7:30P
LE 11:30P
104 GREENVILLE-
N.BERN-WASHINGTON WITN NBC 11Sep91 FR EF 7:00P
170 ALEXANDRIA, LA KALB NBC 26Sep91 SA EF 6:30P
201 LAREDO KGNS NBC 18Sep91 FR LE 11:00P
7 MARKETS TO-DATE 8 STATIONS TO-DATE 12 1/2 HRS TO-DATE
HOW TO READ THIS REPORT:
1 The video release was aired in the market ranked 10th, based on universe
estimates of households with TVs.
2 The market is designated as Houston.
3 KHTV, an independent station, which carried the video release.
4 KHTV aired this video release on Thursday, September 24th, 1991.
5 The airing occurred during the Early Fringe daypart (see footnotes).
6 The video release aired sometime between 6:30P-6:59P (in local time).
EM = 5AM - 9AM DT = 9AM - 4PM EF = 4PM - 8PM
PT = 8PM - 10PM LE = 10PM - 1AM LN = 1AM - 5AM
COPYRIGHT 1992 NIELSEN MEDIA RESEARCH - PRINTED IN U.S.A.
<PAGE>
Date of Agreement: 9/14/94 Daily Electronic
Client: Video Broadcasting Corp.
AMENDMENT TO NIELSEN SIGMA tm SERVICE AGREEMENT
BETWEEN CLIENT AND A.C. NIELSEN COMPANY ("Nielsen")
For good and valuable consideration, the receipt and sufficiency of which
hereby is acknowledged, Nielsen and Client hereby amend the above Agreement as
follows:
In lieu of weekly reports and daily reports as described in Section 1.D.,
Section 1.A. (a) and (b) of the Agreement, Nielsen will deliver reports
("cumulative daily reports") indicating telecasts, if any, of Client Releases
during the seven days ending at 6 A.M. EST on the day preceding the report date
plus the period from 6 A.M. EST on the day preceding the report date to 3 A.M.
EST on the report date. Cumulative daily reports will be delivered
electronically, utilizing Client's computer logon identification in order to
give Client access to Nielsen's mainframe computer for purposes of electronic
file transferring to Client's personal computer, in Nielsen-standard format,
subject to the following:
1. Client is responsible for the selection, acquisition, installation, use
and maintenance of all computer and communications equipment, and all software,
meeting Nielsen's specifications (as provided to Client from time to time in
written notice(s) by Nielsen) to permit such electronic delivery and Client's
access to the information so transmitted and for all charges (including, but not
limited to, communications charges and software license fees) relating thereto.
NIELSEN MAKES NO WARRANTIES, EXPRESS OR IMPLIED INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO ANY EQUIPMENT OR SOFTWARE CONTEMPLATED HEREUNDER, ALL OF WHICH
WARRANTIES BEING EXPRESSLY DISCLAIMED BY NIELSEN AND WAIVED BY CLIENT.
2. Nielsen shall make cumulative daily report data available to Client by 3
P.M. EST on the day following the report date and shall use reasonable efforts
to make such data available to Client by 1 P.M. EST such following day. Nielsen
reserves the right to delivery cumulative daily reports on diskettes, in
Nielsen-standard format, in lieu of electronic delivery where Nielsen is unable,
for any reason, to deliver such reports electronically.
<PAGE>
3. Appendix 1 attached hereto and incorporated herein shall replace, in its
entirety, Appendix 1 to the Agreement.
4. Nielsen shall not be responsible or liable, in contract, tort or
otherwise, and Client waives all claims against Nielsen, for any loss, cost
damage, expense or injury of any kind, whether direct, special, incidental,
consequential or otherwise, directly or indirectly resulting from the selection,
acquisition, use of maintenance of all or any of the equipment and/or software
referred to in Paragraph 1 of the Amendment of for any defects or errors
therein, whether or not Nielsen knew, or should have known, of any thereof.
Notwithstanding the provisions of Section 6.B. of the Agreement, Nielsen shall
not be required to correct any errors in any such equipment or software or in
any SIGMA Service reports or information attributable thereto. In addition, the
$100 credit provided for in Section 6.B. of the Agreement shall not apply to
failures to deliver cumulative daily reports electronically if Nielsen delivers
such cumulative daily reports on diskette within thirty (30) business days after
the date by which such cumulative daily reports should have been delivered
electronically.
Except as expressly amended hereby, the Agreement shall remain in full
force and effect in accordance with the terms thereof.
5. This amendment shall be effective as of _________.
ACCEPTED AT NORTHBROOK, ILLINOIS
A.C. NIELSEN COMPANY CLIENT
By: /s/ Ronald F. Eggert By: /s/ J. Graeme McWhirter
----------------------------- -----------------------------
Its: Coordinating Vice President Its: Executive Vice President
Date: 10/28/94 Date: 9/16/94
Address for notices: Address for notices:
375 Patricia Avenue 708 Third Avenue
Dunedin, FL 34698 New York, NY 10017
Attachments: 1. Electronic Tracking Request Form
2. SIGMA tm Electronic Data Format
<PAGE>
AGREEMENT DATE:______________________________ RATE CLASS:______________
CLIENT:__________________________________
NIELSEN SIGMA DAILY ELECTRONIC AGREEMENT
Appendix 1
Number Of Number
Releases Per of SID Annual Monthly Cost Per
Rate Year(Covered) Codes Base Base Add'l
Class by Base Fee) Incl. Fee Fee Release
A 650 10 $122,400 $10,200 $180
B 300 3 $ 80,100 $ 6,675 $220
C 200 1 $ 68,700 $ 5,725 from release 201-249 $255
from release 250 -up $250
D 100 1 $ 43,800 $ 3,650 $285
E 24 1 $ 21,000 $ 1,750 $325
NOTE: CREDIT BANK IS NOT AVAILABLE UNDER THE DAILY ELECTRONIC
AGREEMENT. IT HAS BEEN APPLIED TO THE ANNUAL BASE FEES.
<PAGE>
AMENDMENT TO NIELSEN SIGMA SERVICE AGREEMENT
BETWEEN VIDEO BROADCASTING CORP., d/b/a MEDIALINK ("CLIENT") AND
A.C. NIELSEN COMPANY ("NIELSEN")
DATE OF ACCEPTANCE 9/14/96 ("AGREEMENT")
Client and Nielsen, for good and valuable consideration, the receipt and
sufficiency of which of which is acknowledged, hereby agree to amend the
Agreement as follows:
1. In paragraph 2.A., "18%" is replaced with "12%".
2. In paragraph 2.C., the phrase "and substantially prevails on the merits" is
added immediately after the phrase "enforcing its rights under this
Agreement" and "reasonable" is inserted immediately before the phrase
"attorney fees".
3. In paragraph 3.B., "eight" is replaced with "sixth".
4. In paragraph 4. (v), "(but no more frequently than twelve (12) times per
contract year) is inserted immediately after "upon Nielsen's request".
5. In paragraph 5.A., "all reasonable" is replaced with "its best."
6. The following is added to the end of paragraph 5.B. (iii):
except if and to the extent compelled by service of legal process or in
response to an official governmental demand and then only if Client (a)
gives Nielsen prompt advance notice thereof; and (b) first obtains
appropriate Agreements of Confidentiality, Protective Orders and (where
appropriate) Evidentiary Stipulations in form and substance acceptable to
Nielsen.
7. In paragraph 7, "report formats" is deleted from the third line and the
following is added at the end of the first sentence thereof:
and the right to make changes in report formats effective upon at least 30
days' prior notice to Client (the effective date to be specified by
Nielsen in such notice).
8. The following sentence is added at the end of paragraph 8.E.:
Nothing in this paragraph 8.E. is intended to limit Client's right to use
the reports and information furnished hereunder to the extent expressly
permitted in Section 5 hereof. In addition, notwithstanding the provision
of this paragraph 8.E., Nielsen agrees that it will not provide to any
other producer or distributor of Releases any custom reports which are
limited to reporting on Releases as to which Client has request SIGMA
Service tracking
<PAGE>
and reporting hereunder; provided, however, that the foregoing is not
intended to prohibit Nielsen from disclosing such information, or any
other information relating to Releases, Client Releases or otherwise,
whether to producers and/or distributors of Releases or to others, on a
syndicated basis (i.e., where such information as to any one or more
Client Releases is provided in conjunction with similar information as
to Releases of one or more other producers and/or distributors of
Releases).
9. Except as expressly amended hereby, the Agreement shall remain in full
force and effect in accordance with the terms thereof.
10. This Amendment shall be effective as of the date of acceptance hereof by
Nielsen.
ACCEPTED AT NORTHBROOK, ILLINOIS
A.C. NIELSEN COMPANY VIDEO BROADCASTING CORP.
d/b/a MEDIALINK
By: /s/ Ronald F. Eggert By: /s/ J. Graeme McWhirter
----------------------------- ---------------------------
Title: Coordinating Vice President Title: Executive Vice President
Date: October 28, 1994 Date: 9/14/94
<PAGE>
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of February 28, 1996,
by and between Video Broadcasting Corporation (the "Borrower") whose address is
708 Third Avenue, New York, NY 10017 and Silicon Valley Bank, a
California-chartered bank ("Lender"), with its principal place of business at
3003 Tasman Drive, Santa Clara, CA 95054 and with a loan production office
located at Wellesley Office Park, 40 William Street, Suite 350, Wellesley, MA
02181, doing business under the name "Silicon Valley East".
1. DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness which may be
owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Promissory Note, dated March 6, 1995, in the original
principal amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00) (the
"Note"). The Note, together with other promissory notes from Borrower to Lender,
is governed by the terms of a Letter Agreement, dated March 6, 1995, between
Borrower and Lender, as such agreement may be amended from time to time (the
"Loan Agreement").
Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by a Commercial Security Agreement, dated March 6, 1995. Additionally,
and in connection with the repayment of the Indebtedness, Borrower has agreed
with Lender not to further encumber any of its intellectual property, pursuant
to a Negative Pledge Agreement dated March 6, 1995.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing payment of the Indebtedness shall be referred
to as the "Security Documents". Hereinafter, the Security Documents, together
with all other documents evidencing or securing the Indebtedness shall be
referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Note.
1. Payable in one payment of all outstanding principal plus all
accrued unpaid interest on February 27, 1997. In addition,
Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date beginning March 27, 1996 and
all subsequent interest payments will be due on the same day of
each month thereafter.
B. Modification(s) to Loan Agreement.
1. Numbered paragraph 1, entitled "Profitability" is hereby amended
to read, in its entirety as follows:
For the quarter ending March 31, 1996, Borrower shall not incur a
quarterly loss in excess of $100,000.00; for the quarter ending
June 30, 1996, Borrower shall achieve minimum profits of
$75,000.00; for the quarter ending September 30, 1996, Borrower
shall not incur a loss in excess of $150,000.00; and for the
quarter ending
<PAGE>
December 31, 1996, Borrower shall achieve minimum profits of
$150,000.00. Notwithstanding the foregoing, Borrower may not
incur two consecutive quarterly losses.
2. Numbered paragraph 2, entitled "Minimum Equity" is hereby amended
to read, in its entirety:
Borrower shall maintain, on a monthly basis, a minimum tangible
net worth of $875,000.00.
3. Numbered paragraph 3, entitled "Leverage" is hereby amended to
read, in its entirety:
Borrower shall maintain, on a monthly basis, a maximum total debt
to tangible net worth ratio of 1.50 to 1.00.
4. Numbered paragraph 4, entitled "Liquidity" is hereby amended to
read, in its entirety:
Borrower shall maintain, on a monthly basis, a minimum quick
ratio of 1.25 to 1.00.
5. Lender shall conduct an audit of Borrower's books and records,
including, without limitation, Borrower's accounts receivable, at
least once per year. Borrower's deposit account will be debited
for the audit expense and a notification will be mailed to
Borrower.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay Lender a fee in the amount of Three
Thousand and 00/100 ($3,000.00) (The "Loan Fee").
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of this date, it has no defenses against the obligations
to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness,
Lender is relying upon Borrower's representations, warranties, and agreements,
as set forth in the Existing Loan Documents. Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Lender's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Lender to make any future modifications to
the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Lender and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Lender in writing. No maker, endorser,
or guarantor will be released by virtue of this Loan Modification Agreement. The
terms of this Paragraph apply not only to this Loan Modification Agreement, but
also to all subsequent loan modification agreements.
<PAGE>
8. JURISDICTION/VENUE. Borrower accepts for itself and in connection with its
properties, unconditionally, the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement; provided, however, that if for any
reason Lender cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall be in Santa Clara County, California.
8. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Lender (provided, however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Lender in California).
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Loan Fee.
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: LENDER:
VIDEO BROADCASTING CORPORATION SILICON VALLEY BANK, doing
business as SILICON VALLEY EAST
By: /s/ J. Graeme McWhirter By:_______________________________________
--------------------------- Name:_____________________________________
Name: J. Graeme McWhirter Title:____________________________________
Title: Executive Vice Pres.
SILICON VALLEY BANK
By:_______________________________________
Name:_____________________________________
Title:____________________________________
(Signed at Santa Clara County, California)
<PAGE>
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: Video Broadcasting Corporation
LOAN OFFICER: Tim O'Loughlin
DATE: April 9, 1996
Loan Fee $3,000.00
FEES DUE $3,000.00
-------- =========
Please indicate the method of payment:
(x) A check for the total amount is attached.
( ) Debit DDA #__________________ for the total amount.
( ) Loan proceeds
/s/ J. Graeme McWhirter 5/10/96
- --------------------------------
Authorized Signer (date)
- --------------------------------
Silicon Valley Bank (date)
Account Officer's Signature
[Copy of Video Broadcasting Corp. check]
<PAGE>
[Silicon Letterhead]
March 6, 1995
Mr. Graeme McWhirter
Chief Financial Officer
Video Broadcasting Corporation
708 Third Avenue
New York, NY 10017
Dear Mr. McWhirter:
We are pleased to inform you that Silicon Valley Bank, a California-chartered
bank ("Bank") with its principal place of business at 3000 Lakeside Drive, Santa
Clara, CA 95054 and with a loan production office located at Wellesley Office
Park, 45 William Street, Wellesley, Massachusetts 02181 doing business under the
name "Silicon Valley East", has approved a working capital line of credit of
$500,000 for the use of Video Broadcasting Corporation (the "Company") subject
to the following terms and to the Bank's periodic review. Unless renewed, this
line will expire on February 28, 1996. This commitment shall not become
effective unless and until an executed copy of this letter together with all
necessary accompanying documentation as well as the facility fee described below
has been returned to the Bank, which must take place within 21 days from the
date of this letter.
Borrowings under the working capital line shall be secured by a first security
interest in the Company's accounts receivable, inventory, and machinery,
equipment and all other assets and all monies and all other property in our
possession which the Bank may use to pay the Company's obligations.
Borrowings under this line shall bear interest at a rate per annum equal to the
Prime Rate plus 1%. The "Prime Rate" means the rate from time to time announced
and made effective by the Bank as its Prime Rate. The Company's borrowing rate
shall change as the Prime Rate changes. A facility fee of $3,000 as well as any
out-of-pocket expenses incurred by the Bank in connection with establishment of
this credit facility must be paid at the time the documents are returned to the
Bank. All interest will be charged monthly in arrears and will be calculated on
the basis of a 360-day year. The Bank shall be authorized to debit the Company's
principal account or any other account maintained by the Company with the bank
for any principal, interest or fees associated with the Company's credit
facility without prior notice.
The maximum available borrowings under this line will be the lesser of $500,000
or 75% of all of the Company's eligible domestic trade accounts receivable
within 90 days from invoice date, including government receivables to a maximum
of $50,000. A definition of eligible A/R accompanies this letter.
In order to monitor availability, the Bank asks that the Company submit within
15 days of each month-end duplicate Borrowing Base Certificates (BBC), an
accounts receivable aging, duplicate income statements and balance sheets, and
duplicate Certificates of Compliance. The BBC indicates the Company's borrowing
availability and the Certificate of Compliance asks you to confirm that the
Company is in compliance with the financial covenants and asks you to further
represent that you have no knowledge of any impending circumstances which would
take the Company out of compliance. Any advances hereunder or renewal hereof
will be made only if there exists no default
<PAGE>
Page Two
under any loan documentation executed by the Company with the Bank. A default is
defined in the (accompanying) Promissory Note dated March 6, 1995.
The Bank reserves the right to have performed from time to time an examination
of the Company's books and records by an agent of the Bank. In no event shall
the Bank perform more than two examinations per annum unless the Company is in
default. The Company agrees to pay for the cost of this examination.
So long as this commitment remains outstanding, the Company agrees to maintain
the following covenants as well as any other covenants listed in the
(accompanying) Promissory Note dated March 6, 1995:
1. Profitability - (Tested Quarterly)
To report no two consecutive loss quarters
Maximum loss/Minimum earnings in Q1 '95 of ($100M).
Minimum earnings in Q2 '95 of $75M.
Maximum loss in Q3 '95 of ($150M).
Minimum earnings in Q4 '95, of $150M.
2. Minimum Equity - (Tested Monthly)
Maintain a minimum Tangible Net Worth (TNW) of $850M through 4/30/95; and $875
thereafter. TNW is defined as Stockholders' Equity plus Subordinated Debt (debt
which is formally subordinated to the Bank) less intangibles (including but not
limited to Goodwill, Capitalized Software and Excess Purchase Costs).
3. Leverage - (Tested Monthly) Maintain a ratio of Total Liabilities less
Subordinated Debt divided by TNW not to exceed 1.6:1 through 4/30/95; and 1.5:1
thereafter.
4. Liquidity - (Tested Monthly) Maintain a minimum Quick Ratio of 1.0:1 through
4/31/95; and 1.25:1 thereafter. Quick Ratio is defined as cash and receivables
divided by current liabilities including any borrowings under this facility.
5. Not directly or indirectly pledge, grant, create or permit to exist any
security interest, lien or other encumbrance upon any of the Company's assets,
including without limitation, the Borrower's Intellectual Property, except in
favor of the Bank.
6. To provide the Bank with duplicate unaudited monthly financial statements
prepared in accordance with generally accepted accounting principles and
duplicate audited annual (consolidated and consolidating) financial statements
certified by public accountants with an unqualified opinion, to be received 25
and 90 days respectively after the close of the period.
7. To provide the Bank with copies of all legal process served upon the Company,
and, at the request of the Bank, to provide the Bank with a copy of the Annual
management letter provided by the Company's auditors.
8. Maintain adequate fire and liability insurance satisfactory to the Bank, a
copy of which shall be forwarded to the Bank.
<PAGE>
Page Three
9. Not to participate in any merger or consolidation or to pay any dividends
without the Bank's consent, which consent shall not be unreasonably withheld or
delayed.
10. Not to dispose of any material assets other than in the ordinary course of
business without the Bank's consent, which shall not be unreasonably withheld or
delayed.
11. To file all tax returns and to pay all taxes due.
12. Not to invest in any securities other than money market instruments
acceptable to the Bank.
13. Not to incur indebtedness for borrowed money, except for either a)
indebtedness to Silicon Valley Bank and Barclay's Bank or b) indebtedness
incurred for the purchase or lease of equipment, the aggregate of such
indebtedness for the purchase or lease of such equipment in an aggregate amount
not exceeding $250,000 at any given point in time.
14. Not to be in default of any other loan agreement with any other Bank.
15. To remain a duly organized corporation under the laws of Delaware, and not
to file for protection under the Bankruptcy Code.
16. All reasonable legal fees incurred will be for the account of the Company.
17. To reimburse the Bank for any reasonable expenses incurred by the Bank to
enforce the terms of this obligation.
18. Prior to closing you agree to provide the Bank with Articles of
Incorporation and a Certificate of Good Standing from the appropriate state
authorities.
If the Bank waives any rights under this Agreement, it will not affect any
future action the Bank may wish to take. This Agreement shall be binding upon
any of the Company's successors in interest. The laws of the Commonwealth of
Massachusetts shall apply to this Agreement. THE COMPANY ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND,
AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS LETTER AGREEMENT; PROVIDED,
HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA COUNTY,
CALIFORNIA. (INITIAL HERE /s/) BANK AND COMPANY HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER BANK OR
COMPANY AGAINST THE OTHER.
It is our understanding that the Company will maintain a reasonable portion of
its excess funds in its Silicon Valley Bank account.
<PAGE>
Page Four
This Agreement shall become effective only when it shall have been executed by
the Company and the Bank (provided, however, in no event shall this Agreement
become effective until signed by an officer of the Bank in California).
We are delighted to expand our relationship with Video Broadcasting Corporation
and look forward to many successful years of working together.
Sincerely,
SILICON VALLEY BANK
By: /s/ Florence G. Knisley
---------------------------
Name: Florence G. Knisley
Title: AVP/Operations Officer
SILICON VALLEY BANK, doing
business as SILICON VALLEY EAST
By: /s/ Kathleen Borie
- -------------------------------
Name: Kathleen Borie
Title: Vice President
Agreed and Accepted this 24 day of April, 1995.
By: /s/ Laurence Moskowitz By: /s/ J. Graeme McWhirter
---------------------------- ----------------------------
Name: Laurence Moskowitz Name: J. Graeme McWhirter
Title: President Title: Executive Vice President
(initials)
enclosures:
1. Borrowing Base Certificate and Certificate of Compliance
2. Promissory Note
3. Security Documents
4. Account Opening Forms
5. Other ancillary forms and documents
<PAGE>
ELIGIBLE DOMESTIC ACCOUNTS RECEIVABLE
"Eligible Domestic Accounts Receivable" means an account receivable owing
to the Company which met the following specifications at the time it came into
existence and continues to meet the same until it is collected in full:
(a) The account is not more than 90 days from the date of the invoice
thereof.
(b) The account arose from the performance of services or an outright sale
of goods by Company, such goods have been shipped to the account debtor, and
Company has possession of, or has delivered to Bank, shipping and delivery
receipts evidencing such shipment.
(c) The account is not subject to any prior assignment, claim, lien, or
security interest, and the Company will not make any further assignment thereof
or create any further security interest therein, nor permit the Company's right
therein to be reached by attachment, levy, garnishment or other judicial
process.
(d) The account is not subject to set-off, credit, allowance or adjustment
by the account debtor, except discount allowed for prompt payment, and the
account debtor has not contested his liability thereon and has not returned any
of the goods from the sale from which the account arose.
(e) The account arose in the ordinary course of Company's business and did
not arise from the performance of services or a sale of goods to a supplier or
employee of the Company.
(f) No notice of bankruptcy or insolvency of the account debtor has been
received by or is known to the Company.
(g) The Bank has not notified the Company that the account or account
debtor is unsatisfactory on the basis of the account debtor's financial
condition, operating performance, or credit history.
(h) Not more than 50% of the aggregate receivables of the account debtor
are over ninety (90) days from invoice.
(i) The aggregate accounts receivables from the account debtor do no exceed
25% of the total Eligible Receivables of the Company; that portion of the
account over the 25% level will be disqualified.
(j) The account debtor is not a Subsidiary of the Company or an officer or
employee of the Company or a Subsidiary.
(k) The account debtor is a person or entity located in the United States
or Canada and the account arose out of services rendered or goods delivered in
the United States or Canada.
<PAGE>
VIDEO BROADCASTING CORP.
401(K) TAX DEFERRED SAVINGS PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS 17
2.2 DETERMINATION OF TOP HEAVY STATUS 17
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER 21
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY 22
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 22
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 22
2.7 RECORDS AND REPORTS 24
2.8 APPOINTMENT OF ADVISERS 24
2.9 INFORMATION FROM EMPLOYER 24
2.10 PAYMENT OF EXPENSES 24
2.11 MAJORITY ACTIONS 25
2.12 CLAIMS PROCEDURE 25
2.13 CLAIMS REVIEW PROCEDURE 25
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY 26
3.2 APPLICATION FOR PARTICIPATION 26
3.3 EFFECTIVE DATE OF PARTICIPATION 26
3.4 DETERMINATION OF ELIGIBILITY 27
<PAGE>
3.5 TERMINATION OF ELIGIBILITY 27
3.6 OMISSION OF ELIGIBLE EMPLOYEE 27
3.7 INCLUSION OF INELIGIBLE EMPLOYEE 28
3.8 ELECTION NOT TO PARTICIPATE 28
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION 28
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION 29
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 33
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS 34
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS 38
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS 41
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS 43
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS 46
4.9 MAXIMUM ANNUAL ADDITIONS 48
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS 54
4.11 TRANSFERS FROM QUALIFIED PLANS 55
4.12 DIRECTED INVESTMENT ACCOUNT 57
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND 58
5.2 METHOD OF VALUATION 58
<PAGE>
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 59
6.2 DETERMINATION OF BENEFITS UPON DEATH 59
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY 60
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 61
6.5 DISTRIBUTION OF BENEFITS 65
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 67
6.7 TIME OF SEGREGATION OR DISTRIBUTION 68
6.8 DISTRIBUTION FOR MINOR BENEFICIARY 68
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN 69
6.10 ADVANCE DISTRIBUTION FOR HARDSHIP 69
6.11 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS 71
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE 71
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE 72
7.3 OTHER POWERS OF THE TRUSTEE 72
7.4 LOANS TO PARTICIPANTS 75
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS 77
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES 77
7.7 ANNUAL REPORT OF THE TRUSTEE 78
7.8 AUDIT 78
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE 79
7.10 TRANSFER OF INTEREST
<PAGE>
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT 81
8.2 TERMINATION 82
8.3 MERGER OR CONSOLIDATION 82
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS 83
9.2 ALIENATION 83
9.3 CONSTRUCTION OF PLAN 84
9.4 GENDER AND NUMBER 84
9.5 LEGAL ACTION 84
9.6 PROHIBITION AGAINST DIVERSIFICATION OF FUNDS 85
9.7 BONDING 85
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE 86
9.9 INSURER'S PROTECTIVE CLAUSE 86
9.10 RECEIPT AND RELEASE FOR PAYMENTS 86
9.11 ACTION BY THE EMPLOYER 86
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY 87
9.13 HEADINGS 87
9.14 APPROVAL BY INTERNAL REVENUE SERVICE 88
9.15 UNIFORMITY 88
<PAGE>
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS 88
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS 89
10.3 DESIGNATION OF AGENT 90
10.4 EMPLOYEE TRANSFERS 90
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION 90
10.6 AMENDMENT 91
10.7 DISCONTINUANCE OF PARTICIPATION 91
10.8 ADMINISTRATOR'S AUTHORITY 91
<PAGE>
VIDEO BROADCASTING CORP.
401(K) TAX DEFERRED SAVINGS PLAN
THIS AGREEMENT, hereby made and entered into this 18th day of May, 1992, by
and between Video Broadcasting Corp. (herein referred to as the "Employer") and
Laurence Moscowitz and J. Graeme McWhirter (herein referred to as the
"Trustee").
W I T N E S S E T H:
WHEREAS, the Employer desires to recognize the contribution made to its
successful operation by its employees and to reward such contribution by means
of a 401(k) Profit Sharing Plan for those employees who shall qualify as
Participants hereunder;
NOW, THEREFORE, effective January 1, 1992, (hereinafter called the
"Effective Date"), the Employer hereby establishes a 401(k) Profit Sharing Plan
and creates this trust (which plan and trust are hereinafter called the "Plan")
for the exclusive benefit of the Participants and their Beneficiaries, and the
Trustee hereby accepts the Plan on the following terms:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.2 "Administrator" means the person designated by the Employer pursuant to
Section 2.4 to administer the Plan on behalf of the Employer.
1.3 "Affiliated Employer" means the Employer and any corporation which is a
member of a controlled group of corporations (as defined in Code Section 414(b))
which includes the Employer; any trade or business (whether or not incorporated)
which is under common control (as defined in Code Section 414(c)) with the
Employer; any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1
<PAGE>
1.4 "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 2.2.
1.5 "Anniversary Date" means December 31st.
1.6 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of Sections
6.2 and 6.6.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.8 "Compensation" with respect to any Participant means total compensation
paid by the Employer for a Plan Year. Amounts contributed by the Employer under
the within Plan, except for an Employee's Compensation that is deferred pursuant
to Section 4.2, and any non-taxable fringe benefits provided by the Employer
shall not be considered as Compensation.
For a Participant's initial year of participation, Compensation shall
be recognized for the entire Plan Year.
Compensation in excess of $200,000 shall be disregarded. Such amount
shall be adjusted at the same time and in such manner as permitted under Code
Section 415(d). In applying this limitation, the family group of a Highly
Compensated Participant who is subject to the Family Member aggregation rules of
Code Section 414(q)(6) because such Participant is either a "five percent owner"
of the Employer or one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated as a single
Participant, except that for this purpose Family Members shall include only the
affected Participant's spouse and any lineal descendants who have not attained
age nineteen (19) before the close of the year. If, as a result of the
application of such rules the adjusted $200,000 limitation is exceeded, then the
limitation shall be prorated among the affected Family Members in proportion to
each such Family Member's Compensation prior to the application of this
limitation.
1.9 "Contract" or "Policy" means a life insurance policy or annuity
contract (group or individual) issued by the insurer as elected.
2
<PAGE>
1.10 "Deferred Compensation" with respect to any Participant means that
portion of the Participant's total Compensation which has been contributed to
the Plan in accordance with the Participant's deferral election pursuant to
Section 4.2.
1.11 "Early Retirement Date" means the first day of the month (prior to the
Normal Retirement Date) coinciding with or following the date on which a
Participant or Former Participant attains age 55 and has completed at least 1
Year of Service with the Employer (Early Retirement Age). A Participant shall
become fully Vested upon satisfying this requirement if still employed at his
Early Retirement Age.
A Former Participant who terminates employment after satisfying the
service requirement for Early Retirement and who thereafter reaches the age
requirement contained herein shall be entitled to receive his benefits under
this Plan.
1.12 "Elective Contribution" means the Employer's contributions to the Plan
that are made pursuant to the Participant's deferral election provided in
Section 4.2. In addition, any Employer Qualified Non-Elective Contribution made
pursuant to Section 4.6 shall be considered an Elective Contribution for
purposes of the Plan. Any such contributions deemed to be Elective Contributions
shall be subject to the requirements of Sections 4.2(b) and 4.2(c) and shall
further be required to satisfy the discrimination requirements of Regulation
1.401(k)-1(b)(3), the provisions of which are specifically incorporated herein
by reference.
1.13 "Eligible Employee" means any Employee.
Employees who perform 30 Hours of Service or less per week shall not
be eligible to participate in this Plan.
Employees of Affiliated Employers shall not be eligible to participate
in this Plan unless such Affiliated Employers have specifically adopted this
Plan in writing.
1.14 "Employee" means any person who is employed by the Employer or
Affiliated Employer, but excludes any person who is an independent contractor.
Employee shall include Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such Leased Employees do not constitute
more than 20% of the recipient's non-highly compensated work force.
3
<PAGE>
1.15 "Employer" means Video Broadcasting Corp. and any Participating
Employer (as defined in Section 10.1) which shall adopt this Plan; any successor
which shall maintain this Plan; and any predecessor which has maintained this
Plan. The Employer is a Delaware corporation with principal offices in the State
of New York.
1.16 "Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of the aggregate amount of the Employer matching contributions
made pursuant to Section 4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section 4.7(c) on behalf of
Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions permitted under the limitations of Section 4.7(a).
1.17 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions made on behalf of Highly Compensated Participants for
the Plan Year over the maximum amount of such contributions permitted under
Section 4.5(a). Excess Contributions shall be treated as an "annual addition"
pursuant to Section 4.9(b).
1.18 "Excess Deferred Compensation" means, with respect to any taxable year
of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.9(b).
1.19 "Family Member" means, with respect to an affected Participant, such
Participant's spouse, such Participant's lineal descendants and ascendants and
their spouses, all as described in Code Section 414(q)(6)(B).
1.20 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.
4
<PAGE>
1.21 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1st of each year and ending the following December 31st.
1.22 "Forfeiture" means that portion of a Participant's Account that is not
Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a Participant's
Account, or
(b) the last day of the Plan Year in which the Participant incurs five
(5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a
Terminated Participant whose vested benefit is zero, such Terminated Participant
shall be deemed to have received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall occur pursuant to
Section 6.4. In addition, the term Forfeiture shall also include amounts deemed
to be Forfeitures pursuant to any other provision of this Plan.
1.23 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.24 "415 Compensation" means compensation as defined in Section 4.9(d).
1.25 "414(s) Compensation" with respect to any Employee means his Deferred
Compensation plus "415 Compensation" paid during a Plan Year. The amount of
"414(s) Compensation" with respect to any Employee shall include "414(s)
Compensation" during the entire twelve (12) month period ending on the last day
of such Plan Year.
"414(s) Compensation" in excess of $200,000 shall be disregarded. Such
amount shall be adjusted at the same time and in such manner as permitted under
Code Section 415(d).
1.26 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder, and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" as defined in Section 1.32(c).
5
<PAGE>
(b) Employees who received "415 Compensation" during the "look-back
year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during the "look-back
year" from the Employer in excess of $50,000 and were in the Top Paid Group
of Employees for the Plan Year.
(d) Employees who during the "look-back year" were officers of the
Employer (as that term is defined within the meaning of the Regulations
under Code Section 416) and received "415 Compensation" during the
"look-back year" from the Employer greater than 50 percent of the limit in
effect under Code Section 415(b)(1)(A) for any such Plan Year. The number
of officers shall be limited to the lesser of (i) 50 employees; or (ii) the
greater of 3 employees or 10 percent of all employees. For the purpose of
determining the number of officers, Employees described in section 1.54(a),
(b), (c) and (d) shall be excluded, but such Employees shall still be
considered for the purpose of identifying the particular Employees who are
officers. If the Employer does not have at least one officer whose annual
"415 Compensation" is in excess of 50 percent of the Code Section
415(b)(1)(A) limit, then the highest paid officer of the Employer will be
treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the 100 Employees
paid the greatest "415 Compensation" during the "determination year" and
also are described in (b), (c) or (d) above when these paragraphs are
modified to substitute "determination year" for "look-back year".
The "look-back year" shall be the calendar year ending with or within
the Plan Year for which testing is being performed, and the "determination year"
(if applicable) shall be the period of time, if any, which extends beyond the
"look-back year" and ends on the last day of the Plan Year for which testing is
being performed (the "lag period")/ If the "lag period" is less than twelve
months long, the dollar threshold amounts specified in (b), (c) and (d) above
shall be prorated based upon the number of months in the "lag period".
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts that would otherwise be excluded form a
Participant's gross income by reason
6
<PAGE>
of the application of Code Sections 125, 402(a)(8), 402(h)(1)(B) and, in the
case of Employer contributions made pursuant to a salary reduction agreement, by
including amounts that would otherwise be excluded from a Participant's gross
income by reason of the application of Code Section 403(b). Additionally, the
dollar threshold amounts specified in (b) and (c) above shall be adjusted at
such time and in such manner as is provided in Regulations. In the case of such
an adjustment, the dollar limits which shall be applied are those for the
calendar year in which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received not earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered by any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year".
1.27 "Highly Compensated Former Employee" means a former Employee who had a
separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as a Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner". For purposes
of this Section, "determination year", "415 Compensation" and "five percent
owner" shall be determined in accordance with Section 1.26. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
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<PAGE>
1.28 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the Plan.
1.29 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (2) each
hour for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated ) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period; (3) each hour for
which back pay is awarded or agreed to by the Employer without regard to
mitigation of damages. These hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
The same Hours of Service shall not be credited both under (1) or (2), as the
case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by
or due from the Employer regardless of whether such payment is made by or due
from the Employer directly, or indirectly through, among others, a trust fund,
or insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
An Hour of Service must be counted for the purpose of determining a
Year of Service, a year of participation for purposes of accrued benefits, a
1-Year Break in Service, and employment commencement date (or reemployment
commencement date).
8
<PAGE>
In addition, Hours of Service will be credited for employment with other
Affiliated Employers. The provisions of Department of Labor regulations
2530.200b-2(b) and (c) are incorporated herein by reference.
1.30 "Income" means the income allocable to "excess amounts" which shall
equal the sum of the allocable gain or loss for the "applicable computation
period" and the allocable gain or loss for the period between the end of the
"applicable computation period" and the date of distribution ("gap period"). The
income allocable to "excess amounts" for the "applicable computation period" and
the "gap period" is calculated separately and is determined by multiplying the
income for the "applicable computation period" or the "gap period" by a
fraction. The numerator of the fraction is the "excess amount" for the
"applicable computation period". The denominator of the fraction is the total
"account balance" attributable to "Employer contributions" as of the end of the
"applicable computation period" or the "gap period", reduced by the gain
allocable to such total amount for the "applicable computation period" or the
"gap period" and increased by the loss allocable to such total amount for the
"applicable computation period" or the "gap period". The provisions of this
Section shall be applied:
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess amounts";
(2) "taxable year of the Participant" for "applicable computation
period";
(3) "Deferred Compensation" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance".
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amount";
(2) "Plan Year" for "applicable computation period";
(3) "Elective Contributions" for "Employer contributions"; and
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<PAGE>
(4) "Participant's Elective Account" for "account balance".
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Employer matching contributions made pursuant to Section 4.1(b)
and any qualified non-elective contributions or elective deferrals
taken into account pursuant to Section 4.7(c) for "Employer
contributions"; and
(4) "Participant's Account" for "account balance".
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable income for the "gap period".
Under such "safe harbor method", allocable income for the "gap period" shall be
deemed to equal ten percent (10%) of the Income allocable to "excess amounts"
for the "applicable computation period" multiplied by the number of calendar
months in the "gap period". For purposes of determining the number of calendar
months in the "gap period", a distribution occurring on or before the fifteenth
day of the month shall be treated as having been made on the last day of the
preceding month and a distribution occurring after such fifteenth day shall be
treated as having been made on the first day of the next subsequent month.
Income allocable to any distribution of Excess Deferred Compensation
on or before the last day of the taxable year of the Participant shall be
calculated from the first day of the taxable year of the Participant to the date
on which the distribution is made pursuant to either the "fractional method" or
the "safe harbor method".
1.31 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledge fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
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1.32 "Key Employee" means an Employee as defined in Code Section 416(i) and
the Regulations thereunder. Generally, any Employee or former Employee (as well
as each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) having annual "415
Compensation" greater than 50 percent of the amount in effect under Code
Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation" from the
Employer for a Plan Year greater than the dollar limitation in effect under
Code Section 415(c)(1)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning of Code Section
318) both more than one-half percent interest and the largest interests in
the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner" means
any person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of the total
combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than five percent (5%) of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be treated as separate
employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent owner"
means any person who owns (or is considered as owning within the meaning of
Code Section 318) more than one percent (1%) of the outstanding stock of
the Employer or stock possessing more than one percent (1%) of the total
combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than one percent (1%) of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be
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aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated as
separate employers. However, in determining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation" from each employer
required to be aggregated under Code Sections 414(b), (c), (m) and (o)
shall be taken into account.
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Sections 125,
402(a)(8), 402(h)(1)(B) and, in the case of Employer contributions made pursuant
to a salary reduction agreement, by including amounts that would otherwise be
excluded from a Participant's gross income by reason of the application of Code
Section 403(b).
1.33 "Late Retirement Date" means the first day of the month coinciding
with or next following a Participant's actual Retirement Date after having
reached his Normal Retirement Date.
1.34 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one year,
and such services are of a type historically performed by employees in the
business field of the recipient employer. Contributions or benefits provided a
Leased Employee by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided by the
recipient employer. A Leased Employee shall not be considered an Employee of the
recipient if:
(a) Such employee is covered by a money purchase pension plan
providing:
(1) a non-integrated employer contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3), but including
amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under Code Sections 125,
402(a)(9), 402(h) or 403(b);
(2) immediate participation; and
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(3) full and immediate vesting.
(b) Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.35 "Non-Elective Contribution" means the Employer's contributions to the
Plan excluding, however, contributions made pursuant to the Participant's
deferral election provided for in Section 4.2 and any Qualified Non-Elective
Contributions.
1.36 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.37 "Non-Key Employees" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.38 "Normal Retirement Date" means the first day of the month coinciding
with or next following the Participant's Normal Retirement Age (65th birthday,
or the 1st anniversary of joining the Plan, if later). A Participant shall
become fully Vested in his Account upon attaining his Normal Retirement Age.
1.39 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
"A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by reason
of the Employee's pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or
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paternity leave of absence" shall be those which would normally have been
credited but for such absence, or, in any case in which the Administrator is
unable to determine such hours normally credited, eight (8) Hours of Service per
day. The total Hours of Service required to be credited for a "maternity or
paternity leave of absence" shall not exceed 501.
1.40 "Participant" means any Eligible Employee who participates in the Plan
as provided in Sections 3.2 and 3.3, and has not for any reason become
ineligible to participate further in the Plan.
1.41 "Participant's Account" means the account established and maintained
by the Administrator for each Participant with respect to his total interest in
the Plan and Trust resulting from the Employer's Non-Elective Contributions.
1.42 "Participant's Combined Account" means the total aggregate amount of
each Participant's Elective Account and Participant's Account.
1.43 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer's Elective
Contributions. A separate accounting shall be maintained with respect to that
portion of the Participant's Elective Account attributable to Elective
Contributions pursuant to Section 4.2 and any Employer Qualified Non-Elective
Contributions.
1.44 "Plan" means this instrument, including all amendments thereto.
1.45 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1st of each year and ending the following December 31st.
1.46 "Qualified Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to Section 4.6. Such
contributions shall be considered an Elective Contribution for the purposes of
the Plan and used to satisfy the "Actual Deferral Percentage" tests.
In addition, the Employer's contributions to the Plan that are made
pursuant to Section 4.8(g) which are used to satisfy the "Actual Contribution
Percentage" tests shall be considered Qualified Non-Elective Contributions and
be subject to the provisions of Sections 4.2(b) and 4.2(c).
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1.47 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.48 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.49 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date
(see Section 6.1).
1.50 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.51 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.52 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.53 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
1.54 "Top Paid Group" means the top 20 percent of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of "415 Compensation" (determined for this purpose in accordance with
Section 1.26) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer. Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the Employer
constituting United States source income within the meaning of Code Section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the following additional
Employees shall also be excluded; however, such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(a) Employees with less than six (6) months of service;
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(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months during the
year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer
are covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on
a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.55 "Total and Permanent Disability" means a physical or mental condition
of a Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of continuing any gainful occupation and which condition
constitutes total disability under the federal Social Security Acts.
1.56 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
1.57 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.58 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.59 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
For vesting purposes, the computation period shall be the Plan Year.
For all other purposes, the computation period shall be the Plan Year.
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Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
TOP HEAVY ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan and the
special minimum allocation requirements of Code Section 416(c) pursuant to
Section 4.4 of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in which, as
of the Determination Date, (1) the Present Value of Accrued Benefits of Key
Employees and (2) the sum of the Aggregate Accounts of Key Employees under
this Plan and all plans of an Aggregation Group, exceeds sixty percent
(60%) of the Present Value of Accrued Benefits and the Aggregate Accounts
of all Key and Non-Key Employees under this Plan and all plans of an
Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but
such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate Account
balance shall not be taken into account for purposes of determining whether
this Plan is a Top Heavy or Super Top Heavy Plan (or whether any
Aggregation Group which includes this Plan is a Top Heavy Group). In
addition, if a Participant or Former Participant has not performed any
services for any Employer maintaining the Plan at any time during the five
year period ending on the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into account for the
purposes of determining whether this Plan is a Top Heavy or Super Top Heavy
Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate Accounts of Key
Employees under this Plan and all plans of an Aggregation Group, exceeds
ninety percent (90%) of the Present Value of Accrued Benefits and Aggregate
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Accounts of all Key and Non-Key Employees under this Plan and all plans of
an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) his Participant's Combined Account balance as of the most recent
valuation occurring within a twelve (12) month period ending on the
Determination Date;
(2) an adjustment for any contributions due as of the Determination
Date. Such adjustment shall be the amount of any contributions
actually made after the valuation date but due on or before the
Determination Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any contributions made
after the Determination Date that are allocated as of a date in that
first Plan Year;
(3) any Plan distributions made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years.
However, in the case of distributions made after the valuation date
and prior to the Determination Date, such distributions are not
included as distributions for top heavy purposes to the extent that
such distributions are already included in the Participant's Aggregate
Account balance as of the valuation date. Notwithstanding anything
herein to the contrary, all distributions, including distributions
made prior to January 1, 1984, and distributions under a terminated
plan which if it had not been terminated would have been required to
be included in an Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value of life
insurance policies) of a Participant's account balance because of
death shall be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified voluntary
employee contributions shall not be considered to be a part of the
Participant's Aggregate Account balance.
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(5) with respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another employer),
if this Plan provides the rollovers or plan-to-plan transfers, it
shall always consider such rollovers or plan-to-plan transfers as a
distribution for the purposes of this Section.
(6) with respect to related rollovers and plan-to-plan transfers (ones
either not initiated by the Employee or made from a plan maintained by
the same employer), if this Plan provides the rollover or plan-to-plan
transfer, it shall not be counted as a distribution for the purposes
of this Section. If this Plan is the Plan accepting such rollover or
plan-to-plan transfer, it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate Account balance,
irrespective of the date on which such rollover or plan-to-plan
transfer is accepted.
(7) For the purposes of determining whether two employers are to be
treated as the same employer in (5) and (6) above, all employers
aggregated under Code Section 414(b), (c), (m) and (o) are treated as
the same employer.
(d) "Aggregation Group" means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregate Group: In determining a Required Aggregation
Group hereunder, each plan of the Employer in which a Key Employee is
a participant in the Plan Year containing the Determination Date or
any of the four preceding Plan Years, and each other plan of the
Employer which enables any plan in which a Key Employee participates
to meet the requirements of Code Sections 401(a)(4) or 410, will be
required to be aggregated. Such group shall be known as the Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation Group
is a Top Heavy Group. No plan in the Required Aggregation
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Group will be considered a Top Heavy Plan if the Required Aggregation
Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include any
other plan not required to be included in the Required Aggregation
Group, provided the resulting group, taken as a whole, would continue
to satisfy the provisions of Code Sections 401(a)(4) or 410. Such
group shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top Heavy
Plan if the Permissive Aggregation Group is a Top Heavy Group. No plan
in the Permissive Aggregation Group will be considered a Top Heavy
Plan if the Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination Dates
fall within the same calendar year shall be aggregated in order to
determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years ending on
the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding Plan
Year, or (b) in the case of the first Plan Year, the last day of such Plan
Year.
(f) Present Value of Accrued Benefit: In the case of a defined benefit
plan, the Present Value of Accrued Benefit for a Participant other than a
Key Employee, shall be used as determined using the single accrual method
used for all plans of the Employer and Affiliated Employers, or if no such
single method exists, using a method which results in benefits accruing not
more rapidly than the slowest accrual rate permitted under Code Section
411(b)(1)(C). The determination of the Present Value of Accrued Benefit
shall be determined as of the most recent valuation date that falls within
or ends with the 12-month period ending on the Determination Date except as
provided in Code Section 416 and the Regulations thereunder for the first
and second plan years of a defined benefit plan.
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(g) "Top Heavy Group" means an Aggregation Group in which, as of the
Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under all
defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Participants.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the Trustee
and the Administrator from time to time as it deems necessary for the
proper administration of the Plan to assure that the Plan is being operated
for the exclusive benefit of the Participants and their Beneficiaries in
accordance with the terms of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy and method", i.e.,
it shall determine whether the Plan has a short run need for liquidity
(e.g., to pay benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current need, or shall
appoint a qualified person to do so. The Employer or its delegate shall
communicate such needs and goals to the Trustee, who shall coordinate such
Plan needs with its investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a directive to such
Trustee as to investment of the Trust Funds. Such "funding policy and
method" shall be consistent with the objectives of this Plan and with the
requirements of Title I of the Act.
(c) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or allocated
by it under the provisions of this Plan or pursuant to procedures
established hereunder. This requirement may be satisfied by formal periodic
review by the Employer or by a qualified person specifically designated by
the
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Employer, through day-to-day conduct and evaluation, or through other
appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any person,
including, but not limited to, the Employees of the Employer, shall be eligible
to serve as an Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. An Administrator may
resign by delivering his written resignation to the Employer or be removed by
the Employer by delivery of written notice of removal, to take effect at a date
specified therein, or upon delivery to the Administrator if no date is
specified.
The Employer, upon the resignation or removal of an Administrator, shall
promptly designate in writing a successor to this position. If the Employer does
not appoint an Administrator, the Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the responsibilities
of each Administrator may be specified by the Employer and accepted in writing
by each Administrator. In the event that no such delegation is made by the
Employer, the Administrators may allocate the responsibilities among themselves,
in which event the Administrators shall notify the Employer and the Trustee in
writing of such action and specify the responsibilities of each Administrator.
The Trustee thereafter shall accept and rely upon any documents executed by the
appropriate Administrator until such time as the Employer or the Administrators
file with the Trustee a written revocation of such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the Plan
for the exclusive benefit of the Participants and their Beneficiaries, subject
to the specific terms of the Plan. The Administrator shall administer the Plan
in accordance with its terms and shall have the power and discretion to construe
the terms of the Plan and to determine all questions arising in connection with
the administration, interpretation, and application of the Plan. Any such
determination by the Administrator shall be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any defect, supply
any information, or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or
22
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advisable to carry out the purpose of the Plan; provided, however, that any
procedure, discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently applied and
shall be consistent with the intent that the Plan shall continue to be deemed a
qualified plan under the terms of Code Section 401(a), and shall comply with the
terms of the Act and all regulations issued pursuant thereto. The Administrator
shall have all powers issued pursuant thereto. The Administrator shall have all
powers necessary or appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant hereunder
and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to the
amount and the kind of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration of the
Plan;
(e) to interpret the provisions of the Plan and to make and publish
such rules for regulation of the Plan as are consistent with the terms
hereof;
(f) to determine the size and type of any Contract to be purchased
from any insurer, and to designate the insurer from which such Contract
shall be purchased;
(g) to compute and certify to the Employer and to the Trustee from
time to time the sums of money necessary or desirable to be contributed to
the Plan;
(h) to consult with the Employer and the Trustee regarding the short
and long-term liquidity needs of the Plan in order that the Trustee can
exercise any investment discretion in a manner designed to accomplish
specific objectives;
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(i) to prepare and implement a procedure to notify Eligible Employees
that they may elect to have a portion of their Compensation deferred to
paid to them in cash;
(j) to assist any Participant regarding his rights, benefits, or
elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall keep
all other books of account, records, and other data that may be necessary for
proper administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the Administrator,
may appoint counsel, specialists, advisers, and other persons as the
Administrator or the Trustee deems necessary or desirable in connection with the
administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer shall
supply full and timely information to the Administrator on all matters relating
to the Compensation of all Participants, their Hours of Service, their Years of
Service, their retirement, death, disability, or termination of employment, and
such other pertinent facts as the Administrator may require; and the
Administrator shall advise the Trustee of such of the foregoing facts as may be
pertinent to the Trustee's duties under the Plan. The Administrator may rely
upon such information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless
paid by the Employer. Such expenses shall include any expenses incident to the
functioning of the Administrator, including, but not limited to, fees of
accountants, counsel, and other specialists and their agents, and other costs of
administering the Plan. Until paid, the expenses shall constitute a liability of
the Trust Fund. However, the Employer may reimburse the Trust Fund for any
administration
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<PAGE>
expense incurred. Any administration expense paid to the Trust Fund as a
reimbursement shall not be considered an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of administrative
authority pursuant to Section 2.5, if there shall be more than one
Administrator, they shall act by a majority of their number, but may authorize
one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed with the Administrator on
forms supplied by the Employer. Written notice of the disposition of a claim
shall be furnished to the claimant within 90 days after the application is
filed. In the event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be understood by
the claimant, pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the claim will be
provided. In addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.12
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which may be obtained from
the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60 days after
receipt of the writing notification provided for in Section 2.12. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the
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proceedings. In such event, a complete written transcript of the proceedings
shall be furnished to both parties by the court reporter. The full expense of
any such court reporter and such transcripts shall be borne by the party causing
the court reporter to attend the hearing. A final decision as to the allowance
of the claim shall be made by the Administrator within 60 days of the receipt of
the appeal (unless there has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances occasioning it
are communicated to the claimant within the 60 day period). Such communication
shall be in writing in a manner calculated to be understood by the claimant and
shall include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who was employed on June 1, 1992 shall be eligible to
participate and shall enter the Plan as of the first day of such Plan Year. Any
other Eligible Employee shall be eligible to participate following their date of
hire. The Employer shall give each prospective Eligible Employee written notice
of his eligibility to participate in the Plan prior to the close of the Plan
Year in which he first becomes an Eligible Employee.
3.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each Eligible Employee shall
make application to the Employer for participation in the Plan and agree to the
terms hereof. Upon the acceptance of any benefits under this Plan, such Employee
shall automatically be deemed to have made application and shall be bound by the
terms and conditions of the Plan and all amendments hereto.
3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the first
day of any calendar quarter coinciding with or next following the date on which
such Employee met the eligibility requirements of Section 3.1, provided said
Employee was still employed as of such date (or if not employed on such date, as
of the date of rehire if a 1-Year Break in Service has not occurred).
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3.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
determination shall be conclusive and binding upon all persons as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.13.
3.5 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification of an
Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in his interest in the Plan for each Year of Service
completed while a noneligible Employee, until such time as his
Participant's Account shall be forfeited or distributed pursuant to the
terms of the Plan. Additionally, his interest in the Plan shall continue to
share in the earnings of the Trust Fund.
(b) In the event a Participant is no longer a member of an eligible
class of Employees and becomes ineligible to participate but has not
incurred a 1-Year Break in Service, such Employee will participate
immediately upon returning to an eligible class of Employees. If such
Participant incurs a 1-Year Break in Service, eligibility will be
determined under the break in service rules of the Plan.
(c) In the event an Employee who is not a member of an eligible class
of Employees becomes a member of an eligible class, such Employee will
participate immediately if such Employee has satisfied the minimum age and
service requirements and would have otherwise previously become a
Participant.
3.6 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a Participant
in the Plan is erroneously omitted and discovery of such omission is not made
until after a contribution by his Employer for the year has been made, the
Employer shall make a subsequent contribution with respect to the omitted
Employee in the amount which the said Employer would have contributed with
respect to him had he not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in part in any taxable
year under applicable provisions of the Code.
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3.7 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Employee shall not be entitled to recover the contribution made with respect to
the ineligible person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount contributed with respect
to the ineligible shall constitute a Forfeiture (except for Deferred
Compensation which shall be distributed to the ineligible person) for the Plan
Year in which the discovery is made.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect voluntarily
not to participate in the Plan. The election not to participate must be
communicated to the Employer, in writing, at least thirty (30) days before the
beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be deemed
an Employer's Elective Contribution.
(b) On behalf of each Participant who is eligible to share in matching
contributions for the Plan Year, a discretionary matching contribution
equal to a percentage of each such Participant's Deferred Compensation, the
exact percentage to be determined each year by the Employer, which amount
shall be deemed an Employer's Non-Elective Contribution.
(c) Notwithstanding the foregoing, however, the Employer's
contributions for any Plan Year shall not exceed the maximum amount
allowable as a deduction to the Employer under the provisions of Code
Section 404. All contributions by the Employer shall be made in cash or in
such property as is acceptable to the Trustee.
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(d) Except, however, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even if it
exceeds the amount which is deductible under Code Section 404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer from 1% to 15% of his
Compensation which would have been received in the Plan Year, but for the
deferral election. A deferral election (or modification of an earlier
election) may not be made with respect to Compensation which is currently
available on or before the date the Participant executed such election or,
if later, the latest of the date the Employer adopts this cash or deferred
arrangement, or the date such arrangement first became effective.
The amount by which Compensation is reduced shall be that
Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective Account.
(b) The balance in each Participant's Elective Account shall be fully
Vested at all times and shall not be subject to Forfeiture for any reason.
(c) Amounts held in the Participant's Elective Account may not be
distributable earlier than:
(1) a Participant's termination of employment, Total and Permanent
Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the existence at the time of
Plan termination of another defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975(e)(7))
or the establishment of a successor defined contribution plan (other
than an employee stock ownership plan as defined in Code Section
4975(e)(7)) by the Employer or an Affiliated Employer within the
period ending twelve months after distribution of all assets from the
Plan maintained by the Employer;
(4) the date of disposition by the Employer to an entity that is not
an Affiliated Employer or
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substantially all of the assets (within the meaning of Code Section
409(d)(2)) used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the disposition with
respect to a Participant who continues employment with the corporation
acquiring such assets;
(5) the date of disposition by the Employer or an Affiliated Employer
who maintains the Plan of its interest in a subsidiary (within the
meaning of Code Section 409(d)(3)) to an entity which is not an
Affiliated Employer but only with respect to a Participant who
continues employment with such subsidiary; or
(6) the proven financial hardship of a Participant, subject to the
limitations of Section 6.10.
(d) In any Plan Year, a Participant's Deferred Compensation made under
this Plan and all other plans, contracts or arrangements of the Employer
maintaining this Plan shall not exceed, during any taxable year, the
limitation imposed by Code Section 402(g), as in effect at the beginning
of such taxable year. This dollar limitation shall be adjusted annually
pursuant to the method provided in Code Section 415(d) in accordance with
Regulations.
(e) In the event a Participant has received a hardship distribution
from his Participant's Elective Account pursuant to Section 6.10 or
pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any other plan
maintained by the Employer, then such Participant shall not be permitted to
elect to have Deferred Compensation contributed to the Plan on his behalf
for a period of twelve (12) months following the receipt of the
distribution. Furthermore, the dollar limitation under Code Section 402(g)
shall be reduced, with respect to the Participant's taxable year following
the taxable year in which the hardship distribution was made, by the amount
of such Participant's Deferred Compensation, if any, pursuant to this Plan
(and any other plan maintained by the Employer) for the taxable year of the
hardship distribution.
(f) If a Participant's Deferred Compensation under this Plan together
with any elective deferrals
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(as defined in Regulation 1.402(g)-1(b)) under another qualified cash or
deferred arrangement (as defined in Code Section 401(k)), a simplified
employee pension (as defined in Code Section 408(k)), a salary reduction
arrangement (within the meaning of Code Section 3121(a)(5)(D)), a deferred
compensation plan under Code Section 457, or a trust described in Code
Section 501(c)(18) cumulatively exceed the limitation imposed by Code
Section 402(g) (as adjusted annually in accordance with the method provided
in Code Section 415(d) pursuant to Regulations) for such Participant's
taxable year, the Participant may, not later than March 1 following the
close of his taxable year, notify the Administrator in writing of such
excess and request that his Deferred Compensation under this Plan be
reduced by an amount specified by the Participant. In such event, the
Administrator may direct the Trustee to distribute such excess amount (and
any Income allocable to such excess amount) to the Participant not later
than the first April 15th following the close of the Participant's taxable
year. Any distribution of less than the entire amount of Excess Deferred
Compensation and Income shall be treated as a pro rata distribution of
Excess Deferred Compensation and Income. The amount distributed shall not
exceed the Participant's Deferred Compensation under the Plan for the
taxable year. Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following conditions:
(1) the Participant shall designate the distribution as Excess
Deferred Compensation;
(2) the distribution must be made after the date on which the Plan
received the Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferred Compensation.
(g) Notwithstanding Section 4.2(f) above, a Participant's Excess
Deferred Compensation shall be reduced, but not below zero, by any
distribution of Excess Contributions pursuant to Section 4.6(a) for the
Plan Year beginning with or within the taxable year of the Participant.
(h) At Normal Retirement Date, or such other date when the Participant
shall be entitled to receive
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benefits, the fair market value of the Participant's Elective Account shall
be used to provide additional benefits to the Participant or his
Beneficiary.
(i) All amounts allocated to a Participant's Elective Account may be
treated as a Directed Investment Account pursuant to Section 4.12.
(j) Employer Elective Contributions made pursuant to this Section may
be segregated into a separate account for each Participant in a federally
insured savings account, certificate of deposit in a bank or savings and
loan association, money market certificate, of other short-term debt
security acceptable to the Trustee until such time as the allocation
pursuant to Section 4.4 have been made.
(k) The Employer and the Administrator shall implement the salary
reduction elections provided for herein in accordance with the following:
(1) A Participant may commence making elective deferrals to the Plan
only after first satisfying the eligibility and participation
requirements specified in Article III. However, the Participant must
make his initial salary deferral election within a reasonable time,
not to exceed thirty (30) days, after entering the Plan pursuant to
Section 3.3. If the Participant fails to make an initial salary
deferral election within such time, then such Participant may
thereafter make an election in accordance with the rules governing
modifications. The Participant shall make such an election by entering
into a written salary reduction agreement with the Employer and filing
such agreement with the Administrator. Such election shall initially
be effective beginning with the pay period following the acceptance of
the salary reduction agreement by the Administrator, shall not have
retroactive effect and shall remain in force until revoked.
(2) A Participant may modify a prior election during the Plan Year and
concurrently make a new election by filing a written notice with the
Administrator within a reasonable time before the pay period for which
such modification is to be effective. However, modifications to a
salary
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deferral election shall only be permitted quarterly, during election
periods established by the Administrator prior to the first day of
each Plan Year Quarter. Any modification shall not have retroactive
effect and shall remain in force until revoked.
(3) A Participant may elect to prospectively revoke his salary
reduction agreement in its entirety at any time during the Plan Year
by providing the Administrator with thirty (30) days written notice of
such revocation (or upon such shorter notice as may be acceptable to
the Administrator). Such revocation shall become effective as of the
beginning of the first pay period coincident with or next following
the expiration of the notice period. Furthermore, the termination of
the Participant's employment, or the cessation of participation for
any reason, shall be deemed to revoke any salary reduction agreement
then in effect, effective immediately following the close of the pay
period within which such termination or cessation occurs.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its contributions to the
Plan for each Plan Year within the time prescribed by law, including extensions
or time, for the filing of the Employer's federal income tax return for the
Fiscal Year.
However, Employer Elective Contributions accumulated through payroll
deductions shall be paid to the Trustee as of the earliest date on which such
contributions can reasonably be segregated from the Employer's general assets,
but in any event within ninety (90) days from the date on which such amounts
would otherwise have been payable to the Participant in cash. The provisions of
Department of Labor regulations 2510.3-102 are incorporated herein by reference.
Furthermore, any additional Employer contributions which are allocable to the
Participant's Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve-month period immediately following the close of such Plan
Year.
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4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS
(a) The Administrator shall establish and maintain an account in the
name of the each Participant to which the Administrator shall credit as of
each Anniversary Date all amounts allocated to each such Participant as set
forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of the Employer's
Contributions for each Plan Year. Within a reasonable period of time after
the date of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
(1) With respect to the Employer's Elective Contribution made pursuant
to Section 4.1(a), to each Participant's Elective Account in an amount
equal to each such Participant's Deferred Compensation for the year.
(2) With respect to the Employer's Non-Elective Contribution made
pursuant to Section 4.1(b), to each Participant's Account in
accordance with Section 4.1(b).
Only Participants who have completed a Year of Service during the Plan
Year and are actively employed on the last day of the Plan Year shall
be eligible to share in the matching contribution for the year.
(c) As of each Anniversary Date any amounts which became Forfeitures
since the last Anniversary Date shall first be made available to reinstate
previously forfeited account balances of Former Participants, if any, in
accordance with Section 6.4(e). The remaining Forfeitures, if any, shall be
used to reduce the contribution of the Employer hereunder for the Plan Year
in which such Forfeitures occur.
(d) For any Top Heavy Plan Year, Non-Key Employees not otherwise
eligible to share in the allocation of contributions as provided above,
shall receive the minimum allocation provided for in Section 4.4(g) if
eligible pursuant to the provisions of Section 4.4(i).
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(e) Participants who are not actively employed on the last day of the
Plan Year due to Retirement (Early, Normal or Late), Total and Permanent
Disability or death shall share in the allocation of contributions for that
Plan Year only if otherwise eligible in accordance with this Section.
(f) As of each Anniversary Date or other valuation date, before
allocation of Employer contributions, any earnings or losses (net
appreciation or net depreciation) of the Trust Fund shall be allocated in
the same proportion that each Participant's and Former Participant's
nonsegregated accounts bear to the total of all Participants' and Former
Participants' nonsegregated accounts as of such date.
Participants' transfers from other qualified plans deposited in
the general Trust Fund after a valuation date shall not share in any
earnings and losses (net appreciation or net depreciation) of the Trust
Fund for such period. Each segregated account maintained on behalf of a
Participant shall be credited or charged with its separate earnings and
losses.
(g) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the
Employer's contributions allocated to the Participant's Combined Account of
each Non-Key Employee shall be equal to at least three percent (3%) of such
Non-Key Employee's "415 Compensation" (reduced by contributions and
forfeitures, if any, allocated to each Non-Key Employee in any defined
contribution plan included with this plan in a Required Aggregation Group).
However, if (i) the sum of the Employer's contributions allocated to the
Participant's Combined Account of each Key Employee for such Top Heavy Plan
Year is less than three percent (3%) of each Key Employee's "415
Compensation" and (ii) this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to meet the requirements
of Code Section 401(a)(4) or 410, the sum of the Employer's contributions
allocated to the Participant's Combined Account of each Non-Key Employee
shall be equal to the largest percentage allocated to the Participant's
Combined Account of any Key Employee. However, in determining whether a
Non-Key Employee has received the required minimum allocation, such Non-Key
Employee's Deferred Compensation and matching contributions needed
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to satisfy the "Actual Contribution Percentage" tests pursuant to Section
4.7(a) shall not be taken into account.
However, no such minimum allocation shall be required in this
Plan for any Non-Key Employee who participates in another defined
contribution plan subject to Code Section 412 providing such benefits
included with this Plan in a Required Aggregation Group.
(h) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer's
contributions allocated on behalf of such Key Employee divided by the "415
Compensation" for such Key Employee.
(i) For any Top Heavy Plan Year, the minimum allocations set forth
above shall be allocated to the Participant's Combined Account of all
Non-Key Employees who are Participants and who are employed by the Employer
on the last day of the Plan Year, including Non-Key Employees who have (1)
failed to complete a Year of Service; and (2) declined to make mandatory
contributions (if required) or, in the case of a cash or deferred
arrangement, elective contributions to the Plan.
(j) For the purposes of this Section, "415 Compensation" shall be
limited to $200,000 (unless adjusted in such manner as permitted under Code
Section 415(d)).
(k) Notwithstanding anything herein to the contrary, Participants who
terminated employment for any reason during the Plan Year shall share in
the salary reduction contributions made by the Employer for the year of
termination without regard to the Hours of Service credited.
(l) If a Former Participant is reemployed after five (5) consecutive
1-Year Breaks in Service, then separate accounts shall be maintained as
follows:
(1) one account for nonforfeitable benefits attributable to pre-break
service; and
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(2) one account representing his status in the Plan attributable to
post-break service.
(m) Notwithstanding anything to the contrary, for Plan Years beginning
after December 31, 1989, if this is a Plan that would otherwise fail to
meet the requirements of Code Sections 401(a)(26), 410(b)(1) or
410(b)(2)(A)(i) and the Regulations thereunder because Employer
contributions have not been allocated to a sufficient number or percentage
of Participants for a Plan Year, then the following rules shall apply:
(1) The group of Participants eligible to share in the Employer's
contributions for the Plan Year shall be expanded to include the
minimum number of Participants who would not otherwise be eligible as
are necessary to satisfy the applicable test specified above. The
specific Participants who shall become eligible under the terms of
this paragraph shall be those who are actively employed on the last
day of the Plan Year and, when compared to similarly situated
Participants, have completed the greatest number of Hours of Service
in the Plan Year.
(2) If after application of paragraph (1) above, the applicable test
is still not satisfied, then the group of Participants eligible to
share in the Employer's contribution for the Plan Year shall be
further expanded to include the minimum number of Participants who are
not actively employed on the last day of the Plan Year as are
necessary to satisfy the applicable test. The specific Participants
who shall become eligible to share shall be those Participants, when
compared to similarly situated Participants, who have completed the
greatest number of Hours of Service in the Plan Year before
terminating employment.
(3) Nothing in this Section shall permit the reduction of a
Participant's accrued benefit. Therefore any amounts that have
previously been allocated to Participants may not be reallocated to
satisfy these requirements. In such event, the Employer shall make an
additional contribution equal to the amount such affected Participants
would have received had they been included in the allocations, even if
it exceeds the amount which
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would be deductible under Code Section 404. Any adjustments to the
allocations pursuant to this paragraph shall be considered a
retroactive amendment adopted by the last day of the Plan Year.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Employer Elective Contributions to a Participant's
Elective Account shall satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group multiplied
by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the Highly
Compensated Participant group over the "Actual Deferral Percentage"
for the Non-Highly Compensated Participant group shall not be more
than two percentage points. Additionally, the "Actual Deferral
Percentage" for the Highly Compensated Participant group shall not
exceed the "Actual Deferral Percentage" for the Non-Highly Compensated
Participant group multiplied by 2. The provisions of Code Section
401(k)(3) and Regulation 1.401(k)-1(b) are incorporated herein by
reference.
However, in order to prevent the multiple use of the alternative
method described in (2) above and in Code Section 401(m)(9)(A), any
Highly Compensated Participant eligible to make elective deferrals
pursuant to Section 4.2 and to make Employee contributions or to
receive matching contributions under this Plan or under any other plan
maintained by the Employer or an Affiliated Employer shall have his
actual contribution ratio reduced pursuant to Regulation 1.401(m)-2,
the provisions of which are incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral Percentage"
means, with respect to the Highly Compensated Participant group and
Non-Highly
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Compensated Participant group for a Plan Year, the average of the ratios,
calculated separately for each Participant in such group, of the amount of
Employer Elective Contributions allocated to each Participant's Elective
Account for such Plan Year, to such Participant's "414(s) Compensation" for
such Plan Year. The actual deferral ratio for each Participant and the
"Actual Deferral Percentage" for each group shall be calculated to the
nearest one-hundredth of one percent. Employer Elective Contributions
allocated to each Non-Highly Compensated Participant's Elective Account
shall be reduced by Excess Deferred Compensation to the extent such excess
amounts are made under this Plan or any other plan maintained by the
Employer.
(c) For the purpose of determining the actual deferral ratio of a
Highly Compensated Employee who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) because such Participant is either a "five
percent owner" of the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year, the
following shall apply:
(1) The combined actual deferral ratio for the family group (which
shall be treated as one Highly Compensated Participant) shall be
determined by aggregating Employer Elective Contributions and "414(s)
Compensation" of all eligible Family Members (including Highly
Compensated Participants). However, in applying the $200,000 limit to
"414(s) Compensation", Family Members shall include only the affected
Employee's spouse and any lineal descendants who have not attained age
19 before the close of the Plan Year. Notwithstanding the foregoing,
with respect to Plan Years beginning prior to January 1, 1990,
compliance with the Regulations then in effect shall be deemed to be
compliance with this paragraph.
(2) The Employer Elective Contributions and "414(s) Compensation" of
all Family Members shall be disregarded for purposes of determining
the "Actual Deferral Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into account in paragraph
(1) above.
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(3) If a Participant is required to be aggregated as a member of more
than one family group in a plan, all Participants who are members of
those family groups that include the Participant are aggregated as one
family group in accordance with paragraphs (1) and (2) above.
(d) For the purposes of Sections 4.5(a) and 4.6, a Highly Compensated
Participant and a Non-Highly Compensated Participant shall include any
Employee eligible to make a deferral election pursuant to Section 4.2,
whether or not such deferral election was made or suspended pursuant to
Section 4.2.
(e) For the purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k), if two or more plans which include cash or deferred
arrangements are considered one plan for the purposes of Code Section
401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)), the cash or
deferred arrangements included in such plans shall be treated as one
arrangement. In addition, two or more cash or deferred arrangements may be
considered as a single arrangement for purposes of determining whether or
not such arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k).
In such a case, the cash or deferred arrangements included in such plans
and the plans including such arrangements shall be treated as one
arrangement and as one plan for purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(k). For Plan Years beginning after
December 31, 1989, plans may be aggregated under this paragraph (e) only
if they have the same plan year.
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) may not be combined with this Plan for
purposes of determining whether the employee stock ownership plan or this
Plan satisfies this Section and Code Sections 401(a)(4), 410(b) and 401(k).
(f) For purposes of this Section, if a Highly Compensated Participant
is a Participant under two or more cash or deferred arrangements (other
than a cash or deferred arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e)(7)) of the Employer or an
Affiliated Employer, all such cash or deferred arrangements shall be
treated as one cash or deferred arrangement for the
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purpose of determining the actual deferral ratio with respect to such
Highly Compensated Participant. However, if the cash or deferred
arrangements have different Plan Years, this paragraph shall be applied by
treating all the cash or deferred arrangements ending with or within the
same calendar year as a single arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's Elective
Contributions made pursuant to Section 4.4 do not satisfy one of the tests set
forth in Section 4.5(a), the Administrator shall adjust Excess Contributions
pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following the
end of each Plan Year, the Highly Compensated Participant having the
highest actual deferral ratio shall have his portion of Excess
Contributions distributed to him until one of the tests set forth in
Section 4.5(a) is satisfied, or until his actual deferral ratio equals the
actual deferral ratio of the Highly Compensated Participant having the
second highest actual deferral ratio. This process shall continue until one
of the tests set forth in Section 4.5(a) is satisfied. For each Highly
Compensated Participant, the amount of Excess Contributions is equal to the
Elective Contributions on behalf of such Highly Compensated Participant
(determined prior to the application of this paragraph) minus the amount
determined by multiplying the Highly Compensated Participant's actual
deferral ratio (determined after application of this paragraph) by his
"414(s) Compensation". However, in determining the amount of Excess
Contributions to be distributed with respect to an affected Highly
Compensated Participant as determined herein, such amount shall be reduced
by any Excess Deferred Compensation previously distributed to such affected
Highly Compensated Participant for his taxable year ending with or within
such Plan Year.
(1) With respect to the distribution of Excess Contributions pursuant
to (a) above, such distribution:
(i) may be postponed but not later than the close of the Plan
Year following the Plan Year to which they are allocable;
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(ii) shall be made simultaneously from Deferred Compensation and
matching contributions which relate to such Deferred Compensation
provided, however, that any such matching contributions which are
not Vested shall be forfeited in lieu of distribution;
(iii) shall be adjusted for Income; and
(iv) shall be designated by the Employer as a distribution of
Excess Contributions (and Income).
(2) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of Excess
Contributions and Income.
(3) If the determination and correction of Excess Contributions of a
Highly Compensated Participant whose actual deferral ratio is
determined under the family aggregation rules, then the actual
deferral ratio shall be reduced as required herein, and the Excess
Contributions for the family unit shall be allocated among the Family
Members in proportion to the Elective Contributions of each Family
Member that were combined to determine the group actual deferral
ratio. Notwithstanding the foregoing, with respect to Plan Years
beginning prior to January 1, 1990, compliance with the Regulations
then in effect shall be deemed to be compliance with this paragraph.
(b) Within twelve (12) months after the end of the Plan Year, the
Employer may make a special Qualified Non-Elective Contribution on behalf
of Non-Highly Compensated Participants in an amount sufficient to satisfy
one of the tests set forth in Section 4.5(a). Such contribution shall be
allocated to the Participant's Elective Account of each Non-Highly
Compensated Participant in the same proportion that each Non-Highly
Compensated Participant's Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants.
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4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for the Highly Compensated
Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group; or
(2) the lesser of 200 percent of such percentage for the Non-Highly
Compensated Participant group, or such percentage for the Non-Highly
Compensated Participant group plus 2 percentage points. However, to
prevent the multiple use of the alternative method described in this
paragraph and Code Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make elective deferrals pursuant to Section
4.2 or any other cash or deferred arrangement maintained by the
Employer or an Affiliated Employer and to make Employee contributions
or to receive matching contributions under this Plan or under any
other plan maintained by the Employer or an Affiliated Employer shall
have his actual contribution ratio reduced pursuant to Regulation
1.401(m)-2. The provisions of Code Section 401(m) and Regulations
1.401(m)-1(b) and 1.401(m)-2 are incorporated herein by reference.
(b) For the purposes of this Section and Section 4.8, "Actual
Contribution Percentage" for a Plan Year means, with respect to the Highly
Compensated Participant group and Non-Highly Compensated Participant group,
the average of the ratios (calculated separately for each Participant in
each group) of:
(1) the sum of Employer matching contributions made pursuant to
Section 4.1(b) on behalf of each such Participant for such Plan Year;
to
(2) the Participant's "414(s) Compensation" for such Plan Year.
(c) For purposes of determining the "Actual Contribution Percentage"
and the amount of Excess Aggregate Contributions pursuant to Section
4.8(d), only Employer matching contributions contributed to the Plan prior
to the end of the succeeding Plan Year shall
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be considered. In addition, the Administrator may elect to take into
account, with respect to Employees eligible to have Employer matching
contributions pursuant to Section 4.1(b) allocated to their accounts,
elective deferrals (as defined in Regulation 1.402(g)-1(b)) and qualified
non-elective contributions (as defined in Code Section 401(m)(4)(C))
contributed to any plan maintained by the Employer. Such elective deferrals
and qualified non-elective contributions shall be treated as Employer
matching contributions subject to Regulation 1.401(m)-1(b)(2) which is
incorporated herein by reference. However, the Plan Year must be the same
as the plan year of the plan to which the elective deferrals and the
qualified non-elective contributions are made.
(d) For the purpose of determining the actual contribution ratio of a
Highly Compensated Employee who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) because such Employee is either a "five
percent owner" of the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year, the
following the following shall apply:
(1) The combined actual contribution ratio for the family group (which
shall be treated as one Highly Compensated Participant) shall be
determined by aggregating Employer matching contributions made
pursuant to Section 4.1(b) and "414(s) Compensation" of all eligible
Family Members (including Highly Compensated Participants). However,
in applying the $200,000 limit to "414(s) Compensation", Family
Members shall include only the affected Employee's spouse and any
lineal descendants who have not attained age 19 before the close of
the Plan Year. Notwithstanding the foregoing, with respect to Plan
Years beginning prior to January 1, 1990, compliance with the
Regulations then in effect shall be deemed to be compliance with this
paragraph.
(2) The Employer matching contributions made pursuant to Section
4.1(b) and "414(s) Compensation" of all Family Members shall be
disregarded for purposes of determining the "Actual Contribution
Percentage" of the Non-Highly Compensated Participant group except
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to the extent taken into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of more
than one family group in a plan, all Participants who are members of
those family groups that include the Participant are aggregated as one
family group in accordance with paragraphs (1) and (2) above.
(e) For purposes of this Section and Code Sections 401(a)(4), 410(b)
and 401(m), if two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made are treated as one
plan for purposes of Code Sections 401(a)(4) or 410(b) (other than the
average benefits test under Code Section 410(b)(2)(A)(ii)), such plans
shall be treated as one plan. In addition, two or more plans of the
Employer to which matching contributions, Employee contributions, or both,
are made may be considered as a single plan for purposes of determining
whether or not such plans satisfy Code Sections 401(a)(4), 410(b) and
401(m), as though such aggregated plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated under this
paragraph (e) only if they have the same plan year.
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) may not be aggregated with this Plan
for purposes of determining whether the employee stock ownership plan or
this Plan satisfies this Section and Code Sections 401(a)(4), 410(b) and
401(m).
(f) If a Highly Compensated Participant is a Participant under two or
more plans (other than an employee stock ownership plan as defined in Code
Section 4975(e)(7)) which are maintained by the Employer or an Affiliated
Employer to which matching contributions, Employee contributions, or both,
are made, all such contributions on behalf of such Highly Compensated
Participant shall be aggregated for the purposes of determining such Highly
Compensated Participant's actual contribution ratio. However, if the plans
have different plan years, this paragraph shall be applied by treating all
plans ending with or within the same calendar year as a single plan.
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(g) For purposes of Sections 4.7(a) and 4.8, a Highly Compensated
Participant and Non-Highly Compensated Participant shall include any
Employee eligible to have Employer matching contributions pursuant to
Section 4.1(b) (whether or not a deferral election was made or suspended
pursuant to Section 4.2(e)) allocated to his account for the Plan Year.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that the "Actual Contribution Percentage" for the
Highly Compensated Participant group exceeds the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group pursuant to
Section 4.7(a), the Administrator (on or before the fifteenth day of the
third month following the end of the Plan Year, but in no event later than
the close of the following Plan Year) shall direct the Trustee to
distribute to the Highly Compensated Participant having the highest actual
contribution ratio, his Vested portion of Excess Aggregate Contributions
(and Income allocable to such contributions) or, if forfeitable, forfeit
such non-Vested Excess Aggregate Contributions (and Income allocable to
such Forfeitures) until either one of the tests set forth in Section 4.7(a)
is satisfied, or until his actual contribution ratio equals the actual
contribution ratio of the Highly Compensated Participant having the second
highest actual contribution ratio. This process shall continue until one of
the tests set forth in Section 4.7(a) is satisfied. The distribution and/or
Forfeiture of Excess Aggregate Contributions shall be made in the following
order:
(1) Employer matching contributions distributed and/or forfeited
pursuant to Section 4.6(a)(1);
(2) Remaining Employer matching contributions.
(b) Any distribution and/or Forfeiture of less than the entire amount
of Excess Aggregate Contributions (and Income) shall be treated as a pro
rata distribution and/or Forfeiture of Excess Aggregate Contributions and
Income. Distribution of Excess Aggregate Contributions shall be designated
by the Employer as a distribution of Excess Aggregate Contributions (and
Income). Forfeitures of Excess Aggregate Contributions shall be treated in
accordance with Section 4.4.
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(c) Excess Aggregate Contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes of
Code Sections 404 and 415 even if distributed from the Plan.
(d) For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the total Employer matching
contributions made pursuant to Section 4.1(b) and any qualified
non-elective contributions or elective deferrals taken into account
pursuant to Section 4.7(c) on behalf of the Highly Compensated Participant
(determined prior to the application of this paragraph) minus the amount
determined by multiplying the Highly Compensated Participant's actual
contribution ratio (determined after application of this paragraph) by his
"414(s) Compensation". The actual contribution ratio must be rounded to the
nearest one-hundredth of one percent. In no case shall the amount of Excess
Aggregate Contribution with respect to any Highly Compensated Participant
exceed the amount of Employer matching contributions made pursuant to
Section 4.1(b) and any qualified non-elective contributions or elective
deferrals taken into account pursuant to Section 4.7(c) on behalf of such
Highly Compensated Participant for such Plan Year.
(e) The determination of the amount of Excess Aggregate Contributions
with respect to any Plan Year shall be made after first determining the
Excess Contributions, if any, to be treated as voluntary Employee
contributions due to recharacterizing for the plan year of any other
qualified cash or deferred arrangement (as defined in Code Section 401(k))
maintained by the Employer that ends with or within the Plan Year.
(f) If the determination and correction of Excess Aggregate
Contributions of a Highly Compensated Participant whose actual contribution
ratio is determined under the family aggregation rules, then the actual
contribution ratio shall be reduced and the Excess Aggregate Contributions
for the family unit shall be allocated among the Family Members in
proportion to the sum of Employer matching contributions made pursuant to
Section 4.1(b) and any qualified non-elective contributions or elective
deferrals taken into account pursuant to Section 4.7(c) of each Family
Member that were combined to determine the group actual contribution ratio.
Notwithstanding
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the foregoing, with respect to Plan Years beginning prior to January 1,
1990, compliance with Regulations then in effect shall be deemed to be
compliance with this paragraph.
(g) Notwithstanding the above, within twelve (12) months after the end
of the Plan Year, the Employer may make a special Qualified Non-Elective
Contribution on behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy one of the tests set forth in Section 4.7(a). Such
contribution shall be allocated to the Participant's Elective Account of
each Non-Highly Compensated Participant in the same proportion that each
Non-Highly Compensated Participant's Compensation for the year bears to the
total Compensation of all Non-Highly Compensated Participants. A separate
accounting shall be maintained for the purpose of excluding such
contributions from the "Actual Deferral Percentage" tests pursuant to
Section 4.5(a).
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual additions"
credited to a Participant's accounts for any "limitation year" shall equal
the lesser of: (1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code Section 415(b)(a)(A)) or (2) twenty-five
percent (25%) of the Participant's "415 Compensation" for such "limitation
year".
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts for
any "limitation year" of (1) Employer contributions, (2) Employee
contributions, (3) forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code Section
415(l)(2) which is part of a pension or annuity plan maintained by the
Employer and (5) amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section 419A(d)(3)) under a
welfare benefit plan (as defined in Code Section 419(e)) maintained by the
Employer. Except, however, the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not apply to: (1) any
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contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as an
"annual addition", or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code Section 415, the
transfer of funds from one qualified plan to another is not an "annual
addition". In addition, the following are not Employee contributions for
the purposes of Section 4.9(b)(2): (1) rollover contributions (as defined
in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section 411(a)(7)(B)
(cash-outs); (4) repayments of distributions received by an Employee
pursuant to Code Section 411(a)(3)(D) (mandatory contributions; and (5)
Employee contributions to a simplified employee pension excludable from
gross income under Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code Section 415, "415
Compensation" shall include the Participant's wages, salaries, fees for
professional service and other amounts received (without regard to whether
or not an amount is paid in cash) for personal services actually rendered
in the course of employment with an Employer maintaining the Plan to the
extent that the amounts are includable in gross income (including, but not
limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, reimbursements, and expense allowances, and in
the case of a Participant who is an Employee within the meaning of Code
Section 401(c)(1) and the regulations thereunder, the Participant's earned
income (as described in Code Section 401(c)(2) and the regulations
thereunder)) paid during the "limitation year".
"415 Compensation" shall exclude (1)(A) contributions made by the
Employer to a plan of deferred compensation to the extent that, before the
application of the Code Section 415 limitations to the Plan, the
contributions are not includable in the gross income of the Employee for
the taxable year in which contributed, (b) contributions made by the
Employer to
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a plan of deferred compensation to the extent that all or a portion of such
contributions are recharacterized as a voluntary Employee contribution, (C)
Employer contributions made on behalf of an Employee to a simplified
employee pension plan described in Code Section 408(k) to the extent such
contributions are distributions from a plan of deferred compensation
regardless of whether such amounts are includable in the gross income of
the Employee when distributed except any amounts received by an Employee
pursuant to an unfunded non-qualified plan to the extent such amounts are
includable in the gross income of the Employee; (2) amounts realized from
the exercise of a non-qualified stock option or when restricted stock (or
property) held by an Employee either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture; (3) amounts realized
from the sale, exchange or other disposition of stock acquired under a
qualified stock option; and (4) other amounts which receive special tax
benefits, such as premiums for group term life insurance (but only to the
extent that the premiums are not includable in the gross income of the
Employee), or contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of any annuity contract
described in Code Section 403(b) (whether or not the contributions are
excludable from the gross income of the Employee). For the purposes of this
Section, the determination of "415 Compensation" shall be made by not
including amounts that would otherwise be excluded from a Participant's
gross income by reason of the application of Code Sections 125, 402(a)(8),
402(h)(1)(B) and, in the case of Employer contributions made pursuant to a
salary reduction agreement, Code Section 403(b).
(e) For purposes of applying the limitations of Code Section 415, the
"limitation year" shall be the Plan Year.
(f) The dollar limitation under Code Section 415(b)(1)(A) stated in
paragraph (a)(1) above shall be adjusted annually as provided in Code
Section 415(d) pursuant to the Regulations. The adjusted limitation is
effective as of January 1st of each calendar year and is applicable to
"limitation years" ending with or within that calendar year.
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(g) For the purpose of this Section, all qualified defined benefits
plans (whether terminated or not) ever maintained by the Employer shall be
treated as one defined benefit plan, and all qualified defined contribution
plans (whether terminated or not) ever maintained by the Employer shall be
treated as one defined contribution plan.
(h) For the purpose of this Section, if the Employer is a member of a
controlled group of corporations, trades or business under common control
(as defined by Code Section 1563(a) or Code Section 414(b) and (c) as
modified by Code Section 415(h)), is a member of an affiliated service
group (as defined by Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to Regulations under Code
Section 414(o), all Employees of such Employers shall be considered to be
employed by a single Employer.
(i) For the purpose of this Section, if this Plan is a Code Section
413(c) plan, all Employers of a Participant who maintain this Plan will be
considered to be a single Employer.
(j)(1) If a Participant participates in more than one defined
contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan shall
equal the maximum "annual additions" for the "limitation year" minus any
"annual additions" previously credited to such Participant's accounts
during the "limitation year".
(2) If a Participant participates in both a defined contribution plan
subject to Code Section 412 and a defined contribution plan not
subject to Code Section 412 maintained by the Employer which have the
same Anniversary Date, "annual additions" will be credited to the
Participant's accounts under the defined contribution plan subject to
Code Section 412 prior to crediting "annual additions" to the
Participant's accounts under the defined contribution plan not subject
to Code Section 412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained by the
Employer which have
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the same Anniversary Date, the maximum "annual additions" under this
Plan shall equal the product of (A) the maximum "annual additions" for
the "limitation year" minus any "annual additions" previously credited
under subparagraphs (1) or (2) above, multiplied by (B) a fraction (i)
the numerator of which is the "annual additions" which would be
credited to such Participant's accounts under this Plan without regard
to the limitations of Code Section 415 and (ii) the denominator of
which is such "annual additions" for all plans described in this
subparagraph.
(k) If an Employee is (or has been) a Participant in one or more
defined benefit plans and one or more defined contribution plans maintained
by the Employer, the sum of the defined benefit plan fraction and the
defined contribution plan fraction for any "limitation year" may not exceed
1.0.
(l) The defined benefit plan fraction for any "limitation year" is a
fraction, the numerator of which is the sum of the Participant's projected
annual benefits under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of which is the
lesser of 125 percent of the dollar limitation determined for the
"limitation year" under Code Sections 415(b) and (d) or 140 percent of the
highest average compensation, including any adjustments under Code Section
415(b).
Notwithstanding the above, if the Participant was a Participant
as of the first day of the first "limitation year" beginning after December
31, 1986, in one or more defined benefit plans maintained by the Employer
which were in existence on May 6, 1986, the denominator of this fraction
will not be less than 125 percent of the sum of the annual benefits under
such plans which the Participant had accrued as of the close of the last
"limitation year" beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans individually
and in the aggregate satisfied the requirements of Code Section 415 for all
"limitation years" beginning before January 1, 1987.
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(m) The defined contribution plan fraction for any "limitation year"
is a fraction, the numerator of which is the sum of the annual additions to
the Participant's Account under all the defined contribution plans (whether
or not terminated) maintained by the Employer for the current and all prior
"limitation years" (including the annual additions attributable to the
Participant's nondeductible Employee contributions to all defined benefit
plans, whether or not terminated, maintained by the Employer and the annual
additions attributable to all welfare benefit funds, as defined in Code
Section 419(e), and individual medical accounts, as defined in Code Section
415(l)(2), maintained by the Employer), and the denominator of which is the
sum of the maximum aggregate amounts for the current and all prior
"limitation years' of service with the Employer (regardless of whether a
defined contribution plan was maintained by the Employer). The maximum
aggregate amount in any "limitation year" is the lesser of 125 percent of
the dollar limitation determined under Code Sections 415(b) and (d) in
effect under Code Section 415(c)(1)(A) or 35 percent of the Participant's
Compensation for such year.
If the Employee was a Participant as of the end of the first day
of the first "limitation year" beginning after December 31, 1986, in one or
more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted
if the sum of this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an
amount equal to the product of (1) the excess of the sum of the fractions
over 1.0 times (2) the denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end of
the last "limitation year" beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan made after
May 6, 1986, but using the Code Section 415 limitation applicable to the
first "limitation year" beginning on or after January 1, 1987. The annual
addition for any "limitation year" beginning before January 1, 1987 shall
not be recomputed to treat all Employee contributions as annual additions.
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(n) Notwithstanding the foregoing, for any "limitation year" in which
the Plan is a Top Heavy Plan, 100% shall be substituted for 125% in
sections 4.9(l) and 4.9(m) unless the extra minimum allocation is being
provided pursuant to Section 4.4. However, for any "limitation year" in
which the Plan is a Super Top Heavy Plan, 100% shall be substituted for
125% in any event.
(o) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements prescribed in
this Section shall at all times comply with the provisions of Code Section
415 and the Regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in estimating a
Participant's Compensation or other facts and circumstances to which
Regulation 1.415-6(b)(6) shall be applicable, the "annual additions" under
this Plan would cause the maximum "annual additions" to be exceeded for any
Participant, the Administrator shall (1) return any voluntary Employee
contributions credited for the "limitation year" to the extent that the
return would reduce the "excess amount" in the Participant's accounts (2)
hold any "excess amount" remaining after the return of any voluntary
Employee contributions in a "Section 415 suspense account" (3) use the
"Section 415 suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to reduce Employer
contributions for that Participant if that Participant is covered by the
Plan as of the end of the "limitation year", or if the Participant is not
so covered, allocate and reallocate the "Section 415 suspense account" in
the next "limitation year" (and succeeding "limitation years" if necessary)
to all Participants in the Plan before any Employer or Employee
contributions which would constitute "annual additions" are made to the
Plan for such "limitation year" (4) reduce Employer contributions to the
Plan for such "limitation year" by the amount of the Section 415 suspense
account" allocated and reallocated during such "limitation year".
(b) For purposes of this Article, "excess amount" for any Participant
for a "limitation year" shall mean the excess, if any, of (1) the "annual
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additions" which would be credited to his account under the terms of the
Plan without regard to the limitations of Code Section 415 over (2) the
maximum "annual additions" determined pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415 suspense account" shall
mean an unallocated account equal to the sum of "excess amounts" for all
Participants in the Plan during the "limitation year". The "Section 415
suspense account" shall not share in any earnings or losses of the Trust
Fund.
(d) The Plan may not distribute "excess amounts", other than voluntary
Employee contributions, to Participants or Former Participants.
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be transferred
from other qualified plans by Participants, provided that the trust from
which such funds are transferred permits the transfer to be made and the
transfer will not jeopardize the tax exempt status of the Plan or Trust or
create adverse tax consequences for the Employer. The amounts transferred
shall be set up in a separate account herein referred to as a
"Participant's Rollover Account". Such account shall be fully Vested at all
times and shall not be subject to Forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held by the
Trustee pursuant to the provisions of this Plan and may not be withdrawn
by, or distributed to the Participant, in whole or in part, except as
provided in Paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations (including Regulation
1.411(d)-4), amounts attributable to elective contributions (as defined in
Regulation 1.401(k)-1(g)(4)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-1(d).
(d) At Normal Retirement Date, or such other date when the Participant
or his Beneficiary shall be
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entitled to receive benefits, the fair market value of the Participant's
Rollover Account shall be used to provide additional benefits to the
Participant or his Beneficiary. Any distributions of amounts held in a
Participant's Rollover Account shall be made in a manner which is
consistent with and satisfies the provisions of Section 6.5, including,
but not limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder. Furthermore, such amounts
shall be considered as part of a Participant's benefit in determining
whether an involuntary cash-out of benefits without Participant's consent
may be made.
(e) The Administrator may direct that employee transfers made after a
valuation date be segregated into a separate account for each Participant
in a federally incurred savings account, certificate of deposit in a bank
or savings and loan association, money market certificate, or other short
term debt security acceptable to the Trustee until such time as the
allocations pursuant this Plan have been made, at which time they may
remain segregated or be invested as part of the general Trust Fund, to be
determined by the Administrator.
(f) All amounts allocated to a Participant's Rollover Account may be
treated as a Directed Investment Account pursuant to Section 4.12.
(g) For purposes of this Section, the term "qualified plan" shall mean
any tax qualified plan under Code Section 401(a). The term "amounts
transferred from other qualified plans" shall mean: (i) amounts
transferred to this Plan directly from another qualified plan; (ii)
lump-sum distributions received by an Employee from another qualified plan
which are eligible for tax free rollover to a qualified plan and which are
transferred by the Employee to this Plan within sixty (60) days following
his receipt thereof; (iii) amounts transferred to this Plan from a conduit
individual retirement account provided that the conduit individual
retirement account has no assets other than assets which (A) were
previously distributed to the Employee by another qualified plan as a
lump-sum distribution (B) were eligible for tax-free rollover to a
qualified plan and (C) were deposited in such conduit individual retirement
account within sixty (60) days of receipt thereof and other than earnings
on said assets;
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and (iv) amounts distributed to the Employee from a conduit individual
retirement account meeting the requirements of clause (iii) above, and
transferred by the Employee to this Plan within sixty (60) days of his
receipt thereof from such conduit individual retirement account.
(h) Prior to accepting any transfers to which this Section applies,
the Administrator may require the Employee to establish that the amounts to
be transferred to this Plan meet the requirements of this Section and may
also require the Employee to provide an opinion of counsel satisfactory to
the Employer that the amounts to be transferred meet the requirements of
this Section.
(i) This Plan shall not accept any direct or indirect transfers (as
that term is defined and interpreted under Code Section 401(a)(11) and the
Regulations thereunder) from a defined benefit plan, money purchase plan
(including a target benefit plan), stock bonus or profit sharing plan which
would otherwise have provided for a life annuity form of payment to the
Participant.
(j) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction having
the effect of such a transfer) shall only be permitted if it will not
result in the elimination or reduction of any "Section 411(d)(6) protected
benefit" as described in Section 8.1.
4.12 DIRECTED INVESTMENT ACCOUNT
(a) The Administrator, in his sole discretion, may determine that all
Participants be permitted to direct the Trustee as to the investment of all
or a portion of the interest in any one or more of their individual account
balances. If such authorization is given by the Administrator, Participants
may, subject to a procedure established and applied in a uniform
nondiscriminatory manner, direct the Trustee in writing to invest any
portion of their account in specific assets or other investments permitted
under the Plan. That portion of the account of any Participant so directing
will thereupon be considered a Directed Investment Account, which shall not
share in Trust Fund earnings.
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(b) A separate Directed Investment Account shall be established for
each Participant who has directed an investment. Transfers between the
Participant's regular account and his Directed Investment Account shall be
charged and credited as the case may be to each account. The Directed
Investment Account shall not share in Trust Fund earnings, but it shall be
charged or credited as appropriate with the net earnings, gains, losses and
expenses as well as any appreciation or depreciation in market value during
each Plan Year attributable to such account.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Anniversary Date,
and at such other date or dates deemed necessary by the Administrator, herein
called "valuation date", to determine the net worth of the assets comprising the
Trust Fund as it exists on the "valuation date" prior to taking into
consideration any contribution to be allocated for that Plan Year. In
determining such net worth, the Trustee shall value the assets comprising the
Trust Fund at their fair market value as of the "valuation date" and shall
deduct all expenses for which the Trustee has not yet obtained reimbursement
from the Employer or the Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust Fund
which are listed on a registered stock exchange, the Administrator shall direct
the Trustee to value the same at the prices they were last traded on such
exchange preceding the close of business on the "valuation date". If such
securities were not traded on the "valuation date", or if the exchange on which
they are traded was not open for business on the "valuation date", then the
securities shall be valued at the prices at which they were last traded prior to
the "valuation date". Any unlisted security held in the Trust Fund shall be
valued at its bid price next preceding the close of business on the "valuation
date", which bid price shall be obtained from a registered broker or an
investment banker. In determining the fair market value of assets other than
securities for which trading or bid prices can be obtained, the Trustee may
appraise such assets itself, or in its discretion, employ one or more appraisers
for that purpose and rely on the values established by such appraiser or
appraisers.
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ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and retire
for the purposes hereof on his Normal Retirement Date or Early Retirement Date.
Upon such Normal Retirement Date or Early Retirement Date, all amounts credited
to such Participant's Combined Account shall become distributable. However, a
Participant may postpone the termination of his employment with the Employer to
a later date, in which event the participation of such Participant in the Plan,
including the right to receive allocations pursuant to Section 4.4, shall
continue until his Late Retirement Date. Upon a Participant's Retirement Date,
or as soon thereafter as is practicable, the Trustee shall distribute all
amounts credited to such Participant's Combined Account in accordance with
Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date or
other termination of his employment, all amounts credited to such
Participant's Combined Account shall become fully Vested. The Administrator
shall direct the Trustee, in accordance with the provisions of Sections 6.6
and 6.7, to distribute the value of the deceased Participant's accounts to
the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall
direct the Trustee, in accordance with the provisions of Sections 6.6 and
6.7, to distribute any remaining amounts credited to the accounts of a
deceased Former Participant to such Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an outstanding
loan to the Participant or Former Participant shall be taken into account
in determining the amount of the death benefit.
(d) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of the
account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
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(e) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse. Except, however, the Participant
nay designate a Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been abandoned (within
the meaning of local law) and the Participant has a court order to
such effect (and there is no "qualified domestic relations order" as
defined in Code Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on
a form satisfactory to the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by filing
written notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in writing to any
change in Beneficiary unless the original consent acknowledged that the
spouse had the right to limit consent only to a specific Beneficiary and
that the spouse voluntarily elected to relinquish such right. In the event
no valid designation of Beneficiary exists at the time of the Participant's
death, the death benefit shall be payable to his estate.
(f) Any consent by the Participant's spouse to waive any rights to the
death benefit must be in writing, must acknowledge the effect of such
waiver, and be witnessed by a Plan representative or a notary public.
Further, the spouse's consent must be irrevocable and must acknowledge the
specific nonspouse Beneficiary.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to his
Retirement Date or other termination of his employment, all amounts credited to
such Participant's Combined Account shall become fully Vested. In the event of a
Participant's Total and Permanent Disability, the Trustee, in
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accordance with the provisions of Sections 6.5 and 6.7, shall distribute to such
Participant all amounts credited to such Participant's Combined Account as
though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date coinciding with or subsequent to
the termination of a Participant's employment for any reason other than
death, Total and Permanent Disability or retirement, the Administrator may
direct the Trustee to segregate the amount of the Vested portion of such
Terminated Participant's Combined Account and invest the aggregate amount
thereof in a separate, federally insured savings account, certificate of
deposit, common or collective trust fund of a bank or a deferred annuity.
In the event the Vested portion of a Participant's Combined Account is not
segregated, the amount shall remain in a separate account for the
Terminated Participant and share in allocations pursuant to Section 4.4
until such time as a distribution is made to the Terminated Participant.
Distribution of the funds due to a Terminated Participant shall
be made on the occurrence of an event which would result in the
distribution had the Terminated Participant remained in the employ of the
Employer (upon the Participant's death, Total and Permanent Disability,
Early or Normal Retirement). However, at the election of the Participant,
the Administrator shall direct the Trustee to cause the entire Vested
portion of the Terminated Participant's Combined Account to be payable to
such Terminated Participant upon completion of the quarterly valuation next
following termination of employment. The value of this distribution shall
be based upon such quarterly valuation, without an adjustment for interest
from the date of that valuation to the date of actual distribution. Any
distribution under this paragraph shall be made in a manner which is
consistent with and satisfies the provisions of Section 6.5, including, but
not limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested benefit derived
from Employer and Employee contributions does not exceed $3,500 and has
never exceeded $3,500 at the time of any prior distribution, the
Administrator shall direct the Trustee to cause the
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entire Vested benefit to be paid to such Participant in a single lump sum.
For purposes of this Section 6.4, if the value of a Terminated
Participant's Vested benefit is zero, the Terminated Participant shall be
deemed to have received a distribution of such Vested benefit.
(b) Any Participant employed on June 1, 1992 shall become fully Vested
in his Participant's Account immediately upon entry into the Plan. The
Vested portion of any other Participant's Account shall be a percentage of
the total amount credited to his Participant's Account determined on the
basis of the Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
1 100%
(c) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer's contributions to the Plan or upon any full
or partial termination of the Plan, all amounts credited to the account of
any affected Participant shall become 100% Vested and shall not thereafter
be subject to Forfeiture.
(d) The computation of a Participant's nonforfeitable percentage of
his interest in the Plan shall not be reduced as the result of any direct
or indirect amendment to this Plan. For this purpose, the Plan shall be
treated as having been amended if the Plan provides for an automatic change
in vesting due to a change in top heavy status. In the event that the Plan
is amended to change or modify any vesting schedule, a Participant with at
least three (3) Years of Service as of the expiration date of the election
period may elect to have his nonforfeitable percentage computed under the
Plan without regard to such amendment. If a Participant fails to make such
election, then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence on the adoption
date of the amendment and shall end 60 days after the latest of:
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(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the amendment
from the Employer or Administrator.
(e)(1) If any Former Participant shall be reemployed by the Employer
before a 1-Year Break in Service occurs, he shall continue to participate
in the Plan in the same manner as if such termination had not occurred.
(2) If any Former Participant shall be reemployed by the Employer
before five (5) consecutive 1-Year Breaks in Service, and such Former
Participant had received, or was deemed to have received, a
distribution of his entire Vested interest prior to his reemployment,
his forfeited account shall be reinstated only if he repays the full
amount distributed to him before the earlier of five (5) years after
the first date on which the Participant is subsequently reemployed by
the Employer or the close of the first period of five (5) consecutive
1-Year Breaks in Service commencing after the distribution, or in the
event of a deemed distribution, upon the reemployment of such Former
Participant. If a distribution occurs for any reason other than a
separation from service, the time for repayment may not end earlier
than five (5) years after the date of distribution. In the event the
Former Participant does repay the full amount distributed to him, or
in the event of a deemed distribution, the undistributed portion of
the Participant's Account must be restored in full, unadjusted by any
gains or losses occurring subsequent to the Anniversary Date or other
valuation date coinciding with or preceding his termination. The
source for such reinstatement shall first be any Forfeitures occurring
during the year. If such source is insufficient, then the Employer
shall contribute an amount which is sufficient to restore any such
forfeited Accounts.
(3) If a Former Participant is reemployed after a 1-Year Break in
Service has occurred,
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Years of Service shall include Years of Service prior to his 1-Year
Break in Service subject to the following rules:
(i) If a Former Participant has a 1-Year Break in Service, his
pre-break and post-break service shall be used for computing
Years of Service for eligibility and for vesting purposes only
after he has been employed for one (1) Year of Service following
the date of his reemployment with the Employer;
(ii) Any Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting from
Employer contributions shall lose credits otherwise allowable
under (i) above if his consecutive 1-Year Breaks in Service equal
or exceed the greater of (A) five (5) or (b) the aggregate number
of his pre-break Years of Service;
(iii) After five (5) consecutive 1-Year Breaks in Service, a
Former Participant's Vested Account balance attributable to
pre-break service shall not be increased as a result of
post-break service;
(iv) If a Former Participant who has not had his Years of Service
before a 1-Year Break in Service disregarded pursuant to (ii)
above completes one (1) Year of Service for eligibility purposes
following his reemployment with the Employer, he shall
participate in the Plan retroactively from his date of
reemployment;
(v) If a Former Participant who has not had his Years of Service
before a 1-Year Break in Service disregarded pursuant to (ii)
above completes a Year of Service (a 1-Year Break in Service
previously occurred, but employment had not terminated), he shall
participate in the Plan retroactively from the first day of the
Plan Year during which he completes one (1) Year of Service.
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(f) In determining Years of Service for purposes of vesting under the
Plan, Years of Service prior to the Effective Date of the Plan shall be
excluded.
6.8 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the Participant,
shall direct the Trustee to distribute to a Participant or his Beneficiary
any amount to which he is entitled under the Plan in one lump-sum payment
in cash or in property.
(b) Any distribution to a Participant who has a benefit which exceeds,
or has ever exceeded, $3,500 at the time of any prior distribution shall
require such Participant's consent if such distribution occurs prior to the
later of his Normal Retirement Age or age 62. With regard to this required
consent:
(1) The Participant must be informed of his right to defer receipt of
the distribution. If a Participant fails to consent, it shall be
deemed an election to defer the distribution of any benefit. However,
any election to defer the receipt of benefits shall not apply with
respect to distributions which are required under Section 6.5(c).
(2) Notice of the rights specified under this paragraph shall be
provided not less than 30 days and no more than 90 days before the
first day on which all events have occurred which entitle the
Participant to such benefit.
(3) Written consent of the Participant to the distribution must not be
made before the Participant receives the notice and must not be made
more than 90 days before the first day on which all events have
occurred which entitle the Participant to such benefit.
(4) No consent shall be valid if a significant detriment is imposed
under the Plan on any Participant who does not consent to the
distribution.
(c) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits shall be made in accordance with
the following
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requirements and shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder (including Regulation 1.401(a)(9)-2), the provisions
of which are incorporated herein by reference:
(1) A Participant's benefits shall be distributed to him not later
than April 1st of the calendar year following the later of (i) the
calendar year in which the Participant attains the age 70 1/2 or, (ii)
the calendar year in which the Participant retires, provided, however,
that this clause (ii) shall not apply in the case of a Participant who
is a "five (5) percent owner" at any time during the five (5) Plan
Year period ending in the calendar year in which he attains age 70 1/2
or, in the case of a Participant who becomes a "five (5) percent
owner" during any subsequent Plan Year, clause (ii) shall no longer
apply and the required beginning date shall be the April 1st of the
calendar year following the calendar year in which such subsequent
Plan Year ends. Notwithstanding the foregoing, clause (ii) above shall
not apply to any Participant unless the Participant had attained age
70 1/2 before January 1, 1988 and was not a "five (5) percent owner"
at any time during the Plan Year ending with or within the calendar
year in which the Participant attained age 66 1/2 or any subsequent
Plan Year.
(2) Distributions to a Participant and his Beneficiaries shall only be
made in accordance with the incidental death benefit requirements of
Code Section 401(a)(9)(G) and the Regulations thereunder.
(d) All annuity Contracts under this Plan shall be non-transferable
when distributed. Furthermore, the terms of any annuity Contract purchased
and distributed to a Participant or spouse shall comply with all of the
requirements of the Plan.
(e) If a distribution is made at a time when a Participant is not
fully Vested in his Participant's Account and the Participant may increase
the Vested percentage in such account:
(1) a separate account shall be established for the Participant's
interest in the Plan as of the time of the distribution; and
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(2) at any relevant time, the Participant's Vested portion of the
separate account shall be equal to an amount ("X") determined by the
formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the Vested percentage at
the relevant time, AB is the account balance at the relevant time, D
is the amount of distribution, and R is the ratio of the account
balance at the relevant time to the account balance after
distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) The death benefit payable pursuant to Section 6.2 shall be paid to
the Participant's Beneficiary in one lump-sum payment in cash or in
property subject to the rules of Section 6.6(b).
(b) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in accordance
with the following requirements and shall otherwise comply with Code
Section 401(a)(9) and the Regulations thereunder. If it is determined
pursuant to Regulations that the distribution of a Participant's interest
has begun and the Participant dies before his entire interest has been
distributed to him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of distribution
selected pursuant to Section 6.5 as of his date of death. If a Participant
dies before he has begun to receive any distributions of his interest under
the Plan or before distributions are deemed to have begun pursuant to
Regulations, then his death benefit shall be distributed to his
Beneficiaries by December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
However, the 5-year distribution requirement of the preceding
paragraph shall not apply to any portion of the deceased Participant's
interest which is payable to or for the benefit of a designated
Beneficiary. In such event, such portion may, at the election of the
Participant (or the Participant's designated Beneficiary), be distributed
over a period not extending beyond the life expectancy of such designated
Beneficiary provided such distribution
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begins not later than December 31st of the calendar year immediately
following the calendar year in which the Participant died. However, in the
event the Participant's spouse (determined as of the date of the
Participant's death) is his Beneficiary, the requirement that distributions
commence within one year of a Participant's death shall not apply. In lieu
thereof, distributions must commence on or before the later of: (1)
December 31st of the calendar year immediately following the calendar year
in which the Participant died; or (2) December 31st of the calendar year in
which the Participant would have attained age 70 1/2. If the surviving
spouse dies before distributions to such spouse begin, then the 5-year
distribution requirement of this Section shall apply as if the spouse was
the Participant.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the Trustee is to make
a distribution on or as of an Anniversary Date, the distribution may be made on
such date or as soon thereafter as is practicable, but in no event later than
180 days after the Anniversary Date. However, unless a Former Participant elects
in writing to defer the receipt of benefits (such election may not result in a
death benefit that is more than incidental), the payment of benefits shall occur
not later than the 60th day after the close of the Plan Year in which the latest
of the following events occurs: (a) the date on which the Participant attains
the earlier of age 65 or the Normal Retirement Age specified herein; (b) the
10th anniversary of the year in which the Participant commenced participation in
the Plan; or (c) the date the Participant terminates his service with the
Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
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6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall be restored.
6.10 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan Year up
to the lesser of 100% of his Participant's Elective Account valued as of
the last Anniversary Date or other valuation date or the amount necessary
to satisfy the immediate and heavy financial need of the Participant. Any
distribution made pursuant to this Section shall be deemed to be made as of
the first day of the Plan Year or, if later, the valuation date immediately
preceding the date of distribution, and the Participant's Elective Account
shall be reduced accordingly. Withdrawal under this Section shall be
authorized only if the distribution is on account of:
(1) Medical expenses described in Code Section 213(d) incurred by the
Participant, his spouse, or any of his dependents (as defined in Code
Section 152);
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment of tuition for the next semester or quarter of
post-secondary education for the Participant, his spouse, children, or
dependents; or
(4) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
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(b) No distribution shall be made pursuant to this Section unless the
Administrator, based upon the Participant's representation and such other
facts as are known to the Administrator, determines that all of the
following conditions are satisfied:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant;
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available
under all plans maintained by the Employer;
(3) The Plan, and all other plans maintained by the Employer, provide
that the Participant's elective deferrals and voluntary Employee
contributions will be suspended for at least twelve (12) months after
receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer, provide
that the Participant may not make elective deferrals for the
Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount of such
Participant's elective deferrals for the taxable year of the hardship
distribution.
(c) Notwithstanding the above, distributions from the Participant's
Elective Account pursuant to this Section shall be limited solely to the
Participant's Deferred Compensation.
(d) Any distribution made pursuant to this Section shall be made in a
manner which is consistent with and satisfies the provisions of Section
6.5, including, but not limited to, all notice and consent requirements of
Code Section 411(a)(11) and the Regulations thereunder.
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6.11 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a Participant in
this Plan shall be subject to the rights afforded to any "alternate payee" under
a "qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected Participant has not
reached the "earliest retirement age" under the Plan. For the purposes of this
Section, "alternate payee," "qualified domestic relations order" and "earliest
retirement age" shall have the meaning set for under Code Section 414(p).
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of responsibilities:
(a) Consistent with the "funding policy and method" determined by the
Employer, to invest, manage, and control the Plan assets subject, however,
to the directions of an Investment Manager if the Trustee should appoint
such manager as to all or a portion of the assets of the Plan;
(b) At the direction of the Administrator, to pay benefits required
under the Plan to be paid to Participants, or, in the event of their death,
to their Beneficiaries;
(c) To maintain records of receipts and disbursements and furnish to
the Employer and/or Administrator for each Plan Year a written annual
report per Section 7.7; and
(d) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to sign
papers on their behalf.
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7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep the
Trust Fund invested without distinction between principal and income and in
such securities or property, real or persona, wherever situated, as the
Trustee shall deem advisable, including, but not limited to, stocks, common
or preferred, bonds and other evidences of indebtedness or ownership, and
real estate or any interest therein. The Trustee shall at all times in
making investments of the Trust Fund consider, among other factors, the
short and long-term financial needs of the Plan on the basis of information
furnished by the Employer. In making such investments, the Trustee shall
not be restricted to securities or other property of the character
expressly authorized by the applicable law for trust investments; however,
the Trustee shall give due regard to any limitations imposed by the Code or
the Act so that at all times the Plan may qualify as a qualified Profit
Sharing Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to the
terms of its usual and customary bank agency agreement, under which the
duties of such bank or trust company shall be of a custodial, clerical and
record-keeping nature.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law,
statutory authority, including the Act, and other provisions of the Plan, shall
have the following powers and authorities, to be exercised in the Trustee's sole
discretion:
(a) To purchase or subscribe for, any securities or other property and
to retain the same;
(b) To sell, exchange, convey, transfer, grant options to purchase, or
otherwise dispose of any securities or other property held by the Trustee,
by private contract or at public auction. No person dealing with the
Trustee shall be bound to see to the application of the purchase money or
to inquire into the validity, expediency, or propriety of any such sale or
other disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or
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powers of attorney with or without power of substitution; to exercise any
conversion privileges, subscription rights or other options, and to make
any payments incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes affecting
corporate securities, and to delegate discretionary powers, and to pay any
assessments or charges in connection therewith; and generally to exercise
any of the powers of an owner with respect to stocks, bonds, securities, or
other property;
(d) To cause any securities or other property to be registered in the
Trustee's own name or in the name of one or more of the Trustee's nominees,
and to hold any investments in bearer form, but the books and records of
the Trustee shall at all times show that all such investments are part of
the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any part,
of the Trust Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to inquire into the
validity, expediency, or propriety of any borrowing;
(f) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as Trustee
hereunder, whether or not such securities or other property would normally
be purchased as investments hereunder;
(g) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(h) To settle, compromise, or submit to arbitration any claims, debts,
or damages due or owing to or from the Plan, to commence or defend suits
or legal or administrative proceedings, and to represent the Plan in all
suits and legal and administrative proceedings;
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(i) To employ suitable agents and counsel and to pay their reasonable
expenses and compensation, and such agent or counsel may or may not be
agent or counsel for the Employer;
(j) To apply for and procure from responsible insurance companies, to
be selected by the Administrator, as an investment of the Trust Fund such
annuity, or other Contracts (on the life of any Participant) as the
Administrator shall deem proper; to exercise, at any time or from time to
time, whatever rights and privileges may be granted under such annuity, or
other Contracts; to collect, receive, and settle for the proceeds of all
such annuity or other Contracts as and when entitled to do so under the
provisions thereof;
(k) To invest funds of the Trust in time deposits or savings accounts
bearing a reasonable rate of interest in the Trustee's bank;
(l) To invest in Treasury Bills and other forms of United States
government obligations;
(m) To sell, purchase and acquire put or call options if the options
are traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or, if
the options are not traded on a national securities exchange, are
guaranteed by a member firm of the New York Stock Exchange;
(n) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(o) To pool all or any of the Trust Fund, from time to time, with
assets belonging to any other qualified employee pension benefit trust
created by the Employer or an affiliated company of the Employer, and to
commingle such assets as make joint or common investments and carry joint
accounts on behalf of this Plan and such other trust or trusts, allocating
undivided shares or interests in such investments or accounts or any pooled
assets of the two or more trusts in accordance with their respective
interests;
(p) To do all such acts and exercise all such rights and privileges,
although not specifically
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mentioned herein, as the Trustee may deem necessary to carry out the
purposes of the Plan.
(q) Directed Investment Account. The powers granted to the Trustee
shall be exercised in the sole fiduciary discretion of the Trustee.
However, if Participants are so empowered by the Administrator, each
Participant may direct the Trustee to separate and keep separate all or a
portion of his share of his account; and further each Participant is
authorized and empowered, in his sole and absolute discretion, to give
directions to the Trustee in such form as the Trustee may require
concerning the investment of the Participant's Directed Investment Account,
which directions must be followed by the Trustee subject, however, to
restrictions on payment of life insurance premiums. Neither the Trustee nor
any other persons including the Administrator or otherwise shall be under
any duty to question any such direction of the Participant or to review any
securities or other property, real or personal, or to make any suggestions
to the Participant in connection therewith, and the Trustee shall comply as
promptly as practicable with directions given by the Participant hereunder.
Any such direction may be of a continuing nature or otherwise and may be
revoked by the Participant at any time in such form as the Trustee may
require. The Trustee may refuse to comply with any direction from the
Participant in the event the Trustee, in its sole and absolute discretion,
deems such directions improper by virtue of applicable law. The Trustee
shall not be responsible or liable for any loss or expense which may result
from the Trustee's refusal or failure to comply with any directions from
the Participant. Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's Directed
Investment Account.
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make loans to
Participants and Beneficiaries under the following circumstances: (1) loans
shall be made available to all Participants and Beneficiaries on a
reasonably equivalent basis; (2) loans shall not be made available to
Highly Compensated Employees in an amount greater than the amount made
available to other Participants and Beneficiaries; (3) loans shall bear a
reasonable rate
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of interest; (4) loans shall be adequately secured; and (5) shall provide
for repayment over a reasonable period of time.
(b) Loans shall not be granted to any Participant or his Beneficiary
that provide for a repayment period extending beyond such Participant's
Normal Retirement Date.
(c) Loans made pursuant to this Section (when added to the outstanding
balance of all other loans made by the Plan to the Participant) shall be
limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan to the Participant during the one year
period ending on the day before the date on which such loan is made,
over the outstanding balance of loans from the Plan to the Participant
on the date on which such loan was made, or
(2) one-half (1/2) of the present value of the non-forfeitable accrued
benefit of the Participant under the Plan.
(d) Loans shall provide for level amortization with payments to be
made not less frequently than quarterly over a period not to exceed five
(5) years. However, loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made) as
a principal residence of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed five (5) years.
(e) Any loans granted or renewed on or after the last day of the first
Plan Year beginning after December 31, 1988 shall be made pursuant to a
Participant loan program. Such loan program shall be established in writing
and must include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to administer
the Participant loan program;
(2) a procedure for applying for loans;
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(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans offered;
(5) the procedure under the program for determining a reasonable rate
of interest;
(6) the types of collateral which may secure a Participant loan; and
(7) the events constituting default and the steps that will be taken
to preserve Plan assets.
Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby incorporated by
reference and made a part of the Plan. Furthermore, such Participant loan
program may be modified or amended in writing from time to time without the
necessity of amending this Section.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from time
to time be agreed upon in writing by the Employer and the Trustee. An individual
serving as Trustee who already receives full-time pay from the Employer shall
not receive compensation from the Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from the
Trust Fund unless paid or advanced by the Employer. All taxes of any kind and
all kinds whatsoever that may be levied or assessed under existing or future
laws upon, or in respect of, the Trust Fund or the income thereof, shall be paid
from the Trust Fund.
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7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary Date
or receipt of the Employer's contribution for each Plan Year, the Trustee shall
furnish to the Employer and Administrator a written statement of account with
respect to the Plan Year for which such contribution was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales or
other disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator deems
appropriate. The Employer, forthwith upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within ninety (90) days after its receipt thereof shall be deemed
an approval thereof. The approval by the Employer of any statement of
account shall be binding as to all matters embraced therein as between the
Employer and the Trustee to the same extent as if the account of the
Trustee had been settled by judgment or decree in an action for a judicial
settlement of its account in a court of competent jurisdiction in which the
Trustee, the Employer and all persons having or claiming an interest in the
Plan were parties; provided, however, that nothing herein contained shall
deprive the Trustee of its right to have its accounts judicially settled if
the Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be required by the Act and
the regulations thereunder for any Plan Year, the Administrator shall
direct the Trustee to engage on behalf of all Participants an independent
qualified public accountant for that purpose. Such accountant shall, after
an audit of the books and records of the Plan in accordance with
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generally accepted auditing standards, within a reasonable period after the
close of the Plan Year, furnish to the Administrator and the Trustee a
report of his audit setting forth his opinion as to whether any statements,
schedules or lists that are required by Act Section 103 or the Secretary of
Labor to be filed with the Plan's annual report, are presented fairly in
conformity with generally accepted accounting principles applied
consistently. All auditing and accounting fees shall be an expense of and
may, at the election of the Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised and
subject to periodic examination by a state or federal agency, it shall
transmit and certify the accuracy of that information to the Administrator
as provided in Act Section 103(b) within one hundred twenty (120) days
after the end of the Plan year or by such other date as may be prescribed
under regulations of the Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the Employer,
at least thirty (30) days before its effective date, a written notice of
his resignation.
(b) The Employer may remove the Trustee by mailing by registered or
certified mail, addressed to such Trustee at his last known address, at
least thirty (30) days before its effective date, a written notice of his
removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such successor,
upon accepting such appointment in writing and delivering same to the
Employer, shall, without further act, become vested with all the estate,
rights, powers, discretions, and duties of his predecessor with like
respect as if he were originally named as a Trustee herein. Until such a
successor is appointed, the remaining Trustee or Trustees shall have full
authority to act under the terms of the Plan.
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(d) The Employer may designate one or more successors prior to the
death, resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such designation,
the successor shall, without further act, become vested with all the
estate, rights, powers, discretions, and duties of his predecessor with the
like effect as if he were originally named as Trustee herein immediately
upon the death, resignation, incapacity, or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he shall
furnish to the Employer and Administrator a written statement of account
with respect to the portion of the Plan Year during which he served as
Trustee. This statement shall be either (i) included as part of the annual
statement of account for the Plan Year required under Section 7.7 or (ii)
set forth in a special statement. Any such special statement of account
should be rendered to the Employer no later than the due date of the annual
statement of account for the Plan Year. The procedures set forth in Section
7.7 for the approval by the Employer of annual statements of account shall
apply to any special statement of account rendered hereunder and approval
by the Employer of any such special statement in the manner provided in
Section 7.7 shall have the same effect upon the statement as the Employer's
approval of an annual statement of account. No successor to the Trustee
shall have any duty or responsibility to investigate the acts or
transactions of any predecessor who has rendered all statements of account
required by Section 7.7 and this subparagraph.
7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee at
the direction of the Administrator shall transfer the Vested interest, if any,
of such Participant in his account to another trust forming part of a pension,
profit sharing or stock bonus plan maintained by such Participant's new employer
and represented by said employer in writing as meeting the requirements of Code
Section 401(a), provided that the trust to which such transfers are made permits
the transfer to be made.
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ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the Plan,
subject to the limitations of this Section. However, any amendment which
affects the rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and Administrator's
written consent. Any such amendment shall become effective as provided
therein upon its execution. The Trustee shall not be required to execute
any such amendment unless the Trust provisions contained herein are a part
of the Plan and the amendment affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it authorizes or
permits any part of the Trust Fund (other than such part as is required to
pay taxes and administration expenses) to be used for or diverted to any
purpose other than for the exclusive benefit of the Participants or their
Beneficiaries or estates; or causes any reduction in the amount credited to
the account of any Participant; or causes or permits any portion of the
Trust Fund to revert to or become property of the Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger, plan
transfer or similar transaction) shall be effective if it eliminates or
reduces any "Section 411(d)(6) protected benefit" or adds or modifies
conditions relating to "Section 411(d)(6) protected benefits" the result of
which is a further restriction on such benefit unless such protected
benefits are preserved with respect to benefits accrued as of the later of
the adoption date or effective date of the amendment. "Section 411(d)(6)
protected benefits" are benefits described in Code Section 411(d)(6)(A),
early retirement benefits and retirement-type subsidies, and optional forms
of benefit.
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8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate the
Plan by delivering to the Trustee and Administrator written notice of such
termination. Upon any full or partial termination, all amounts credited to
the affected Participants' Combined Accounts shall become 100% Vested as
provided in Section 6.4 and shall not thereafter be subject to forfeiture,
and all unallocated amounts shall be allocated to the accounts of all
Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall direct
the distribution of the assets of the Trust Fund to Participants in a
manner which is consistent with and satisfies the provisions of Section
6.5. Distributions to a Participant shall be made in cash or in property or
through the purchase of irrevocable nontransferable deferred commitments
from an insurer. Except as permitted by Regulations, termination of the
Plan shall not result in the reduction of "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan and trust only if the
benefits which would be received by a Participant of this Plan, in the event of
a termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
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ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the Employer
and any Participant or to be a consideration or an inducement for the employment
of any Participant or Employee. Nothing contained in this Plan shall be deemed
to give any Participant or Employee the right to be retained in the service of
the Employer or to interfere with the right of the Employer to discharge any
Participant or Employee at any time regardless of the effect which such
discharge shall have upon him as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which shall
be payable out of the Trust Fund to any person (including a Participant or
his Beneficiary) shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and
any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be void; and no such benefit shall in
any manner be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject to
attachment or legal process for or against such person, and the same shall
not be recognized by the Trustee, except to such extent as may be required
by law.
(b) This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, as a result of a loan from the Plan.
At the time a distribution is to be made to or for a Participant's or
Beneficiary's benefit, such proportion of the amount distributed as shall
equal such loan indebtedness shall be paid by the Trustee to the Trustee or
the Administrator, at the direction of the Administrator, to apply against
or discharge such loan indebtedness. Prior to making a payment, however,
the Participant or Beneficiary must be given written notice by the
Administrator that such loan indebtedness is to be so paid in whole or part
from his Participant's Combined Account. If the Participant or Beneficiary
does not agree that the loan indebtedness is a valid claim against his
Vested Participant's Combined Account, he shall be entitled to a review of
the validity of the
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claim in accordance with procedures provided in Sections 2.12 and 2.13.
(c) This provision shall not apply to a "qualified domestic relations
order" defined in Code Section 414(p), and those other domestic relations
orders permitted to be so treated by the Administrator under the provisions
of the Retirement Equity Act of 1984. The Administrator shall establish a
written procedure to determine the qualified status of domestic relations
orders and to administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic relations
order", a former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Act
and the laws of the State of New York, other than its laws respecting choice of
law, to the extent not preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender
in all cases where they would so apply, and whenever any words are used herein
in the singular or plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the Trust
and/or Plan established hereunder to which the Trustee or the Administrator may
be a party, and such claim, suit, or proceeding is resolved in favor of the
Trustee or Administrator, they shall be entitled to be reimbursed from the Trust
Fund for any and all costs, attorney's fees, and other expenses pertaining
thereto incurred by them for which they shall have become liable.
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9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by
law, it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, or collateral arrangement or by any other
means, for any part of the corpus or income of any trust fund maintained
pursuant to the Plan or any funds contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of Participants,
Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive contribution
under a mistake of fact pursuant to Act Section 403(c)(2)(A), the
Employer may demand repayment of such excessive contribution at any time
within one (1) year following the time of payment and the Trustees shall
return such amount to the Employer within the one (1) year period. Earnings
of the Plan attributable to the excess contributions may not be returned to
the Employer but any losses attributable thereto must reduce the amount so
returned.
9.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted by
the Act and regulations thereunder, shall be bonded in an amount not less than
10% of the amount of the funds such Fiduciary handles; provided, however, that
the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount of
funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is not
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Action Section 412(a)(2)), and the bond shall be in a form
approved by the Secretary of Labor. Notwithstanding anything in the Plan to the
contrary, the cost of such bonds shall be an expense of and may, at the election
of the Administrator, be paid from the Trust Fund or by the Employer.
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9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors, shall be
responsible for the validity of any Contract issued hereunder or for the failure
on the part of the insurer to make payments provided by any such Contract, or
for the action of any person which may delay payment or render a Contract null
and void or unenforceable in whole or in part.
9.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary, or
to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative, Beneficiary,
guardian or committee, as a condition precedent to such payment, to execute a
receipt and release thereof in such form as shall be determined by the Trustee
or Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required
to do or perform any act or matter or thing, it shall be done and performed by a
person duly authorized by its legally constituted authority.
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9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are specifically
given them under the Plan. In general, the Employer shall have the sole
responsibility for making the contributions provided for under Section 4.1; and
shall have the sole authority to appoint and remove the Trustee and the
Administrator; to formulate the Plans "funding policy and method"; and to amend
or terminate, in whole or in part, the Plan. The Administrator shall have the
sole responsibility for the administration of the Plan, which responsibility is
specifically described in the Plan. The Trustee shall have the sole
responsibility of management of the assets held under the Trust, except those
assets, the management of which has been assigned to an Investment Manager, who
shall be solely responsible for the management of the assets assigned to it, all
as specifically provided in the Plan. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named Fiduciary may rely
upon such direction, information or action of another named Fiduciary as being
proper under the Plan, and is not required under the Plan to inquire into the
propriety of any such direction, information or action. It is intended under the
Plan that each named Fiduciary shall be responsible for the obligations under
the Plan. No named Fiduciary shall guarantee the Trust Fund in any manner
against investment loss or depreciation in asset value. Any person or group may
serve in more than one Fiduciary capacity. In the furtherance of their
responsibilities hereunder, the "named Fiduciaries" shall be empowered to
interpret the Plan and Trust and to resolve ambiguities, inconsistencies and
omissions, which findings shall be binding, final and conclusive.
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
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9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, contributions to
this Plan are conditioned upon the initial qualification of the Plan under
Code Section 401. If the Plan receives an adverse determination with
respect to its initial qualification, then the Plan may return such
contributions to the Employer within one year after such determination,
provided the application for the determination is made by the time
prescribed by law for filing the Employer's return for the taxable year in
which the Plan was adopted, or such later date as the Secretary of the
Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary, except Sections
3.6, 3.7 and 4.1(d), any contribution by the Employer to the Trust Fund is
conditioned upon the deductibility of the contribution by the Employer
under the Code and, to the extent any such deduction is disallowed, the
Employer may, within one (1) year following the disallowance of the
deduction, demand repayment of such disallowed contribution and the Trustee
shall return such contribution within one (1) year following the
disallowance. Earnings of the Plan attributable to the excess contribution
may not be returned to the Employer, but any losses attributable thereto
must reduce the amount so returned.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. In the event of any conflict between the terms of this
Plan and any Contract purchased hereunder, the Plan provisions shall control.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of the
Employer and Trustee, any other corporation or entity, whether an affiliate or
subsidiary or not, may adopt this Plan and all of the provisions hereof, and
participate herein and be known as a Participating Employer, by a properly
executed document evidencing said intent and will of such Participating
Employer.
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10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required to use the same
Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to, commingle, hold and
invest as one Trust Fund all contributions made by Participating Employers,
as well as all increments thereof. However, the assets of the Plan shall,
on an ongoing basis, be available to pay benefits to all Participants and
Beneficiaries under the Plan without regard to the Employer or
Participating Employer who contributed such assets.
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights under
the Plan, and all amounts credited to such Participant's Combined Account
as well as his predecessor, and his length of participation in the Plan,
shall continue to his credit.
(d) All rights and values forfeited by termination of employment shall
inure only to the benefit of the Participants of the Employer or
Participating Employer by which the forfeiting Participant was employed,
except if the Forfeiture is for an Employee whose Employer is an Affiliated
Employer, then said Forfeiture shall inure to the benefit of the
Participants of those Employers who are Affiliated Employers. Should an
Employee of one ("First") Employer be transferred to an associated
("Second") Employer which is an Affiliated Employer, such transfer shall
not cause his account balance (generated while an Employee of "First"
Employer) in any manner, or by any amount to be forfeited. Such Employee's
Participant Combined Account balance for all purposes of the Plan,
including length of service, shall be considered as though he had always
been employed by the "Second" Employer and as such had received
contributions, forfeitures, earnings or losses , and appreciation or
depreciation in value of assets totaling amount so transferred.
(e) Any expenses of the Trust which are to be paid by the Employer or
borne by the Trust Fund shall
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be paid by each Participating Employer in the same proportion that the
total amount standing to the credit of all Participants employed by such
Employer bears to the total standing to the credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purposes of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates the contrary, the word "Employer"
shall be deemed to include each Participating Employer as related to its
adoption of the Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between Participating
Employers, and in the event of any such transfer, the Employee involved shall
carry with him his accumulated service and eligibility. No such transfer shall
effect a termination of employment hereunder, and the Participating Employer to
which the Employee is transferred shall thereupon become obligated hereunder
with respect to such Employee in the same manner as was the Participating
Employer from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution subject to allocation during each Plan Year shall be
allocated only among those Participants of the Employer or Participating
Employer making the contribution, except if the contribution is made by an
Affiliated Employer, in which event such contribution shall be allocated among
all Participants of all Participating Employers who are Affiliated Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but
in the event of an Employee transfer from one Participating Employer to
another, the employing Employer shall immediately notify the Trustee thereof.
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10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall only be by the written action of each
and every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke its
participation in the Plan. At the time of any such discontinuance or revocation,
satisfactory evidence thereof and of any applicable conditions imposed shall be
delivered to the Trustee. The Trustee shall thereafter transfer, deliver and
assign Contracts and other Trust Fund assets allocable to the Participants of
such Participating Employer to such new Trustee as shall have been designated by
such Participating Employer, in the event that it has established a separate
pension plan for its Employees provided, however, that no such transfer shall be
made if the result is the elimination or reduction of any "Section 411(d)(6)
protected benefits" in accordance with Section 8.1(c). If no successor is
designated, the Trustee shall retain such assets for the Employees of said
Participating Employer pursuant to the provisions of Article VII hereof. In no
such event shall any part of the corpus or income of the Trust as it relates to
such Participating Employer be used for or diverted for purposes other than for
the exclusive benefit of the Employees of such Participating Employer.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary rules
or regulations, binding upon all Participating Employers and all Participants,
to effectuate the purpose of this Article.
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IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
Video Broadcasting Corp.
By /s/ J. Graeme McWhirter
-------------------------------
EMPLOYER
/s/ Laurence Moskowitz
-------------------------------
TRUSTEE
/s/ J. Graeme McWhirter
--------------------------------
TRUSTEE
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VIDEO BROADCASTING CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
(As adopted effective as of January 31, 1996)
1. Purpose of the Plan
This is the controlling and definitive statement of the Video Broadcasting
Corporation Stock Option Plan (hereinafter called the PLAN(1)). The purpose of
the PLAN is to advance the interests of the COMPANY by providing ELIGIBLE
PARTICIPANTS with financial incentives to promote the success of its long term
business objectives, and to increase their proprietary interest in the success
of the COMPANY. It is the intent of the COMPANY to reward those ELIGIBLE
PARTICIPANTS who have a significant impact on improved long term corporate
achievements. Inasmuch as the PLAN is designed to encourage financial
performance and to improve the value of shareholders' investments in MEDIALINK,
the costs of the PLAN will be funded from corporate earnings.
2. Plan Administration
The PLAN shall be administered by the COMMITTEE, which shall be constituted
in such a manner as to comply with the rules governing a plan intended to
qualify as a discretionary plan under RULE 16b-3.
Subject to the provisions of the PLAN, the COMMITTEE shall have full and
final authority, in its sole discretion:
(a) to determine the ELIGIBLE PARTICIPANTS to whom OPTIONS shall be
granted and the number of shares of COMMON STOCK to be awarded under each
OPTION, based on the recommendation of the CHIEF EXECUTIVE OFFICER (except
that awards to the CHIEF EXECUTIVE OFFICER shall be based on the
recommendation of the BOARD OF DIRECTORS);
(b) to determine the time or times at which OPTIONS shall be granted;
(c) to designate the OPTIONS being granted as ISOs or NON-QUALIFIED
STOCK OPTIONS;
(d) to establish a form of agreement which shall evidence the OPTIONS.
The option agreement shall state that it is subject to all of the terms and
conditions of the PLAN, it shall clearly identify the status
- ----------
(1) Capitalized words are defined in Section 18 hereof.
<PAGE>
of the OPTIONS granted as ISOs or NON-QUALIFIED STOCK OPTIONS and shall
contain such other terms and conditions not in conflict with this PLAN as
the COMMITTEE may deem appropriate. Each option agreement may contain
provisions which: 1) restrict the transfer of COMMON STOCK acquired
pursuant to an OPTION, 2) regulate rights of redemption, repurchase or
first refusal exercisable by the COMPANY, 3) impose any exercise or vesting
restrictions relating to OPTIONS or COMMON STOCK received upon the exercise
of any OPTION, 4) provide for the holding of COMMON STOCK in escrow for
such periods as the COMMITTEE determines, or 5) provide for the accelerated
exercise of OPTIONS upon the occurrence of such events as the COMMITTEE may
determine or such other conditions pertaining to OPTIONS or COMMON STOCK as
the COMMITTEE determines the vesting schedule;
(e) to determine the terms and conditions, not inconsistent with the
terms of the PLAN, of any OPTION granted hereunder (including, but not
limited to, the consideration and method of payment for shares purchased
upon the exercise of an OPTION, and any vesting acceleration or
exercisability provisions in the event of a CHANGE IN CONTROL or
TERMINATION), based in each case on such factors as the COMMITTEE shall
deem appropriate;
(f) to approve forms of agreement for use under the PLAN;
(g) to construe and interpret the PLAN and any related OPTION
agreement and to define the terms employed herein and therein;
(h) except as provided in Section 16 hereof, to modify or amend any
OPTION or to waive any restrictions or conditions applicable to any OPTION
or the exercise thereof;
(i) except as provided in Section 16 hereof, to prescribe, amend and
rescind rules, regulations and policies relating to the administration of
the PLAN;
(j) except as provided in Section 16 hereof, to suspend, terminate,
modify or amend the PLAN;
(k) to delegate to one or more agents such administrative duties as
the COMMITTEE may deem advisable, to the extent permitted by applicable
law; and
(l) to make all other determinations and take such other action with
respect to the PLAN and any OPTION granted hereunder as the COMMITTEE may
deem advisable, to the extent permitted by law.
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3. Shares of Stock Subject to the Plan
There shall be reserved for use under the PLAN and for the grant of any
other incentive awards pursuant to the PLAN (subject to the provisions of
Section 12 hereof) a total of 559,007 shares of COMMON STOCK, which shares may
be authorized but unissued shares of COMMON STOCK or issued shares of COMMON
STOCK which shall have been reacquired by MEDIALINK.
If any OPTION expires or terminates for any reason without having been
exercised in full, then any unexercised shares which were subject to such OPTION
(except shares as to which a related TANDEM SAR has been exercised) shall again
be available for the future grant of OPTIONS under the PLAN (unless the PLAN has
terminated). In addition, shares may be reused or added back to the PLAN to the
extent permitted by applicable law.
4. Eligibility
OPTIONS will be granted only to ELIGIBLE PARTICIPANTS. ISOs will be granted
only to EMPLOYEES. The COMMITTEE, in its sole discretion, may grant OPTIONS to
an ELIGIBLE PARTICIPANT who is a resident or citizen of a foreign country, with
such modifications as the COMMITTEE may deem advisable to reflect the laws, tax
policy or customs of such foreign country.
The PLAN shall not confer upon any OPTIONEE any right to continuation of
employment, service as a DIRECTOR or consulting relationship with the COMPANY;
nor shall it interfere in any way with the right of the OPTIONEE or the COMPANY
to terminate such employment, service as a DIRECTOR or consulting relationship
at any time, with or without cause.
5. Designation of Options
At the time of the grant of each OPTION under this PLAN, the COMMITTEE
shall determine whether such OPTION is to be designated as an ISO or a
NON-QUALIFIED STOCK OPTION; provided, however, that ISOs may be granted only to
EMPLOYEES.
Notwithstanding such designation, to the extent that the aggregate FAIR
MARKET VALUE (determined for each share as of the date of grant of the OPTION
covering each share) of the shares with respect to which OPTIONS ISOs become
exercisable for the first time by any OPTIONEE during any calendar year exceeds
$100,000, such OPTIONS shall be treated as NON-QUALIFIED STOCK OPTIONS.
OPTIONS shall be awarded at no cost to the OPTIONEE.
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6. Option Price
The OPTION PRICE of the COMMON STOCK under each OPTION issued shall be the
FAIR MARKET VALUE of the COMMON STOCK on the date of grant with respect to ISOs.
The OPTION PRICE of the COMMON STOCK under each OPTION issued shall be equal to,
more than, or less than the FAIR MARKET VALUE of the COMMON STOCK on the date of
grant with respect to NON- QUALIFIED STOCK OPTIONS.
No ISO shall be granted to an EMPLOYEE who, at the time the ISO is granted,
owns (actually or constructively under the provisions of Section 424(d) of the
CODE) stock possessing more than ten (10%) percent of the total combined voting
power of all classes of stock of the COMPANY, unless the OPTION PRICE is at
least 110% of the FAIR MARKET VALUE (determined as of the time the ISO is
granted) of the shares of COMMON STOCK subject to the ISO and the ISO by its
terms is not exercisable more than five (5) years from the date it is granted.
7. Stock Appreciation Rights
At the discretion of the COMMITTEE, an OPTION may be granted with or
without a TANDEM SAR which permits the OPTIONEE to surrender unexercised an
OPTION or portion thereof and to receive in exchange a payment having a value
equal to the difference between (x) the FAIR MARKET VALUE of the COMMON STOCK
covered by the surrendered portion of the OPTION on the date the SAR is
exercised and (y) the OPTION PRICE for such COMMON STOCK. The SAR is subject to
the same terms and conditions as the related OPTION, except that (i) the SAR may
be exercised only when there is a positive spread (i.e., when the FAIR MARKET
VALUE of the COMMON STOCK subject to the OPTION exceeds the OPTION PRICE), and
(ii) if the OPTIONEE is a SECTION 16 OFFICER, DIRECTOR or other person whose
transactions in the COMMON STOCK are subject to Section 16(b) of the EXCHANGE
ACT, the SAR may be exercised only during the period beginning on the third
(3rd) business day following the date of release of the COMPANY's quarterly or
annual statement of earnings and ending on the twelfth (12th) business day
following such date.
Upon the exercise of a SAR, the number of shares subject to exercise under
the related OPTION shall be automatically reduced by the number of shares
represented by the OPTION or portion thereof surrendered. No payment will be
required from the OPTIONEE upon the exercise of a SAR, except that any amount
necessary to satisfy applicable federal, state or local tax requirements shall
be withheld.
8. Terms of Options
The term of each ISO shall be for ten (10) years from the date of grant,
subject to earlier termination as provided in Section 10 hereof and subject to
the provisions of Section 6 hereof. The term of each NON-QUALIFIED STOCK OPTION
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<PAGE>
shall be fifteen (15) years from the date of grant, subject to earlier
termination as provided in Section 10 hereof. All OPTIONS granted heretofore
under the NON- QUALIFIED STOCK OPTION PLAN shall have a term of fifteen (15)
years from the date of grant. Any provision of the PLAN to the contrary
notwithstanding, no OPTION shall be exercised after the time limitations stated
in this Section 8.
9. Withholding for Taxes
In the event the COMPANY is required to withhold any federal, state or
local taxes in respect of (i) any compensation income realized by any OPTIONEE
as a result of any disqualifying disposition of any shares of COMMON STOCK
acquired upon exercise of an ISO granted hereunder, (ii) any shares of COMMON
STOCK acquired upon exercise of a NON-QUALIFIED STOCK OPTION, or (iii) any
payment made upon exercise of a SAR, the COMPANY shall deduct from any payments
of any kind otherwise due to such OPTIONEE the aggregate amount of federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such federal, state or local taxes, or if no such
payments are due or to become due to such OPTIONEE, then such OPTIONEE will be
required to pay the COMPANY, or make other arrangements satisfactory to the
COMPANY regarding payment to the COMPANY of, the aggregate amount of such taxes.
All matters with respect to the total amount of taxes to be withheld in respect
of any such compensation income shall be determined by the COMMITTEE in its sole
discretion.
10. Termination of Employment or Relationship with the Company
(a) In the event of a TERMINATION by reason of a discharge or
TERMINATION FOR CAUSE, any unexercised OPTIONS theretofore granted to an
OPTIONEE under the PLAN shall forthwith terminate.
(b) Unless otherwise provided in a duly executed stock option
agreement, in the event of a TERMINATION by reason of RETIREMENT, the
OPTIONEE may fully exercise his OPTIONS to the extent that such OPTIONS are
vested and have not previously expired or been exercised, at any time
within their respective terms or within twelve (12) months after such
RETIREMENT, whichever is shorter. This twelve (12) month period shall be
extended if an OPTIONEE remains on the BOARD OF DIRECTORS after RETIREMENT.
In such case, the OPTIONS may be exercised as long as the OPTIONEE remains
a DIRECTOR and for a period of six (6) months thereafter, or within twelve
(12) months after RETIREMENT, whichever is longer; provided, however, that
no OPTION may be exercised after the expiration of its term.
Notwithstanding the foregoing, any ISOs held by the OPTIONEE may be
exercised only within their respective terms or within three (3) months
after RETIREMENT, whichever is shorter.
(c) In the event of a TERMINATION by reason of DISABILITY or death,
the OPTIONEE (or the OPTIONEE's estate or a person who
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<PAGE>
acquired the right to exercise such OPTIONS by bequest or inheritance) may
fully exercise his OPTIONS to the extent that such OPTIONS are vested and
have not previously expired or been exercised, at any time within their
respective terms or within twelve (12) months after the date of such
TERMINATION, whichever is shorter. Notwithstanding the foregoing, in the
event of a termination by reason of death, any ISOs held by the OPTIONEE's
estate or a person who acquired the right to exercise such OPTIONS by
bequest or inheritance may be exercised only within their respective terms
or within three (3) months after the OPTIONEE's death, whichever is
shorter.
(d) In the event of a TERMINATION for any reason other than those
specified in subparagraphs (a) through (c) above, any unexercised OPTION or
OPTIONS granted under the PLAN shall be deemed cancelled and terminated
forthwith, except that the OPTIONEE may fully exercise his OPTIONS to the
extent that such OPTIONS are vested and have not previously expired or been
exercised, during the balance of their respective terms or within three (3)
months of such TERMINATION, whichever is shorter.
(e) Notwithstanding the provisions of subparagraphs (a) through (d)
above, the COMMITTEE may, in its sole discretion, establish different terms
and conditions pertaining to the effect of TERMINATION, to the extent
permitted by applicable federal and state law.
11. Payment for Shares Upon Exercise of Options
The exercise of any OPTION shall be contingent upon receipt by the COMPANY
of (i) cash, (ii) check, (iii) shares of COMMON STOCK, (iv) an executed exercise
notice together with irrevocable instructions to a broker to either sell the
shares subject to the OPTION or hold such shares as collateral for a margin loan
and to promptly deliver to the COMPANY the amount of sale or loan proceeds
required to pay the OPTION PRICE, (v) any combination of the foregoing in an
amount equal to the full OPTION PRICE of the shares being purchased, (vi)
OPTIONS then exercisable by him or her valued at the excess of the aggregate
FAIR MARKET VALUE of the COMMON STOCK subject to such OPTIONS on the date of
exercise over the aggregate option exercise price of such OPTIONS, or (vii) such
other consideration and method of payment, other than a note from the OPTIONEE,
as the COMMITTEE, in its sole discretion, may allow (which, in the case of an
ISO shall be determined at the time of grant), to the extent permitted by
applicable law. For purposes of this paragraph, shares of COMMON STOCK that are
delivered in payment of the OPTION PRICE must have been previously owned by the
OPTIONEE for a minimum of one year, and shall be valued at their FAIR MARKET
VALUE as of the date of the exercise of the OPTION.
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<PAGE>
12. Adjustments Upon Changes in Number or Value of Shares of Common Stock
If there are any changes in the number or value of shares of COMMON STOCK
by reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, mergers, consolidations or other events that materially
increase or decrease the number or value of issued and outstanding shares of
COMMON STOCK, the COMMITTEE may make such adjustments as it shall deem
appropriate, to prevent dilution or enlargement of rights, in (i) the number of
shares of COMMON STOCK available for future grants of OPTIONS under the PLAN,
(ii) the number of shares of COMMON STOCK covered by OPTIONS then outstanding,
and (iii) the price per share of COMMON STOCK covered by each such outstanding
OPTION.
13. Non-Transferability of Options
An OPTION shall not be transferable by the OPTIONEE otherwise than by will
or the laws of descent and distribution, or pursuant to a qualified domestic
relations order as defined by the CODE, Title I of ERISA or the rules
thereunder. During the lifetime of the OPTIONEE, an OPTION may be exercised only
by the OPTIONEE or by an alternate payee under a qualified domestic relations
order. Notwithstanding the foregoing, the COMMITTEE may, in its discretion,
establish different terms of transferability, to the extent permitted by
applicable law.
14. Change in Control
Upon the occurrence of a CHANGE IN CONTROL (as defined below):
(a) Any time periods relating to the exercise of any OPTION granted
hereunder shall be accelerated so that such OPTION may be immediately
exercised in full; and
(b) The COMMITTEE may offer any OPTIONEE the option of having the
COMPANY purchase his or her OPTION for an amount of cash which could have
been attained upon the exercise of such OPTION had it been fully
exercisable; unless the COMMITTEE in its sole discretion determines that
such CHANGE IN CONTROL will not adversely impact the OPTIONEES of OPTIONS
hereunder and is in the best interests of the shareholders of MEDIALINK.
The COMMITTEE may make such further provisions with respect to a CHANGE IN
CONTROL as it shall deem equitable and in the best interests of the
shareholders of MEDIALINK. Such provision may be made in any agreement
relating to any OPTION granted hereunder, by amendment to any such
agreement or by resolution of the COMMITTEE.
The phrase "CHANGE IN CONTROL" shall have such meaning as ascribed thereto
from time to time by the COMMITTEE or as set forth in any agreement relating to
any OPTION granted hereunder or by resolution of the COMMITTEE; provided,
however, that, notwithstanding the foregoing, a "CHANGE IN
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<PAGE>
CONTROL" shall be deemed to have occurred if MEDIALINK's COMMON STOCK has not
been registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, and the shareholders of MEDIALINK shall have
approved (i) any consolidation or merger of MEDIALINK in which MEDIALINK is not
the continuing or surviving corporation or pursuant to which shares of COMMON
STOCK or PREFERRED STOCK are converted into cash, securities or other property,
other than a merger of MEDIALINK in which the holders of the COMMON STOCK and
PREFERRED STOCK immediately prior to the merger have the same proportionate
ownership of common stock and preferred stock of the surviving corporation
immediately after the merger, (ii) any sale, lease, exchange, or other transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the COMPANY, or (iii) any plan or proposal for the
liquidation or dissolution of MEDIALINK.
15. Listing and Registration of Shares
Each OPTION shall be subject to the requirement that if at any time the
COMMITTEE shall determine in its discretion, that the listing, registration or
qualification of the shares covered thereby under any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such OPTION or the issue or purchase of shares thereunder,
such OPTION may not be exercised in whole or in part unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the COMMITTEE.
16. Amendment and Termination of the Plan and Options
The BOARD OF DIRECTORS or the COMMITTEE may at any time suspend, terminate,
modify or amend the PLAN in any respect; provided, however, that, to the extent
necessary and desirable to comply with RULE 16b-3 or with Section 422 of the
CODE (or any other applicable law or regulation, including the requirements of
any stock exchange on which the COMMON STOCK is listed or quoted), shareholder
approval of any PLAN amendment shall be obtained in such a manner and to such a
degree as is required by the applicable law or regulation.
No suspension, termination, modification or amendment of the PLAN may,
without the consent of the OPTIONEE, adversely affect his or her rights under
OPTIONS theretofore granted to such OPTIONEE. In the event of amendments to the
CODE or applicable rules or regulations relating to ISOs subsequent to the date
hereof, the COMPANY may amend the PLAN, and the COMPANY and OPTIONEES holding
OPTION agreements shall agree to amend outstanding OPTION agreements, to conform
to such amendments, provided such amendments to such outstanding OPTION
agreements do not adversely affect his or her rights under such outstanding
OPTION agreements.
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<PAGE>
The COMMITTEE may make such amendments or modifications in the terms and
conditions of any OPTION as it may deem advisable, or cancel or annul any grant
of an OPTION; provided, however, that no such amendment, modification,
cancellation or annulment may, without the consent of the OPTIONEE, adversely
affect his or her rights under such OPTION; and provided, further, the COMMITTEE
may not reduce the OPTION PRICE or purchase price of any OPTION below the
original OPTION PRICE or purchase price.
Notwithstanding the foregoing, the COMMITTEE reserves the right, in its
sole discretion, to (i) convert any outstanding ISOs to NON-QUALIFIED STOCK
OPTIONS, (ii) to require an OPTIONEE to forfeit any unexercised or unpurchased
OPTIONS, any shares received or purchased pursuant to an OPTION, or any gains
realized by virtue of the receipt of an OPTION in the event that such OPTIONEE
competes against the COMPANY, and (iii) to cancel or annul any grant of an
OPTION in the event of a OPTIONEE's TERMINATION FOR CAUSE.
17. Effective Date of Program and Duration
This PLAN shall become effective as of January 31, 1996; provided the PLAN
is approved by the vote of the holders of a majority of the outstanding shares
of the COMMON STOCK and PREFERRED STOCK. Upon this PLAN becoming effective, the
COMPANY's existing NON QUALIFIED STOCK OPTION PLAN will be amended and restated,
so that the stock option provisions contained in this PLAN will apply to all
stock options granted under the existing NON-QUALIFIED STOCK OPTION PLAN. Unless
terminated sooner pursuant to Section 16 hereof, the PLAN shall terminate on
January 30, 2011.
18. Definitions
a. BOARD OF DIRECTORS means the Board of Directors of MEDIALINK.
b. CHANGE IN CONTROL has the meaning set forth in Section 14 hereof.
c. CHIEF EXECUTIVE OFFICER means the Chief Executive Officer of
MEDIALINK.
d. CODE means the Internal Revenue Code of 1986, as amended from time
to time.
e. COMMITTEE means the committee appointed by the BOARD OF DIRECTORS
from time to time to administer the PLAN and to serve at the pleasure of
the BOARD OF DIRECTORS, or any successor to such committee.
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f. COMMON STOCK means common shares of MEDIALINK with a par value of
$.01 per share.
g. COMPANY means MEDIALINK, and any parent corporation (as defined in
Section 424(e) of the CODE) or subsidiary corporation (as defined in
Section 424(f) of the CODE).
h. CONSULTANT means any person, including an advisor, who is engaged
by the COMPANY to render services.
i. DIRECTOR means any person who is a member of the BOARD OF
DIRECTORS, including an advisory, emeritus or honorary director.
j. DISABILITY shall have the meaning set forth in Section 22(e)(3) of
the CODE or any similar provision hereinafter enacted unless otherwise
agreed upon the COMPANY and OPTIONEE.
k. ELIGIBLE PARTICIPANT means any EMPLOYEE, DIRECTORS, CONSULTANTS,
employees or consultants of any affiliates of MEDIALINK, and other persons
whose participation in the PLAN is deemed by the COMMITTEE to be in the
best interests of the COMPANY.
l. EMPLOYEE means any person who is employed by the COMPANY. The
payment of a director's fee or consulting fee by the COMPANY shall not be
sufficient to constitute "employment" by the COMPANY.
m. ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
n. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
o. FAIR MARKET VALUE of each share of COMMON STOCK means (i) if the
COMMON STOCK is listed on a national securities exchange, the closing sale
price per share on the principal exchange on which the COMMON STOCK is
listed as reported by such exchange, (ii) if the COMMON STOCK is quoted in
the National Market System, the closing price per share as reported by
NASDAQ, (iii) if the COMMON STOCK is traded in the over-the-counter market
but not quoted in the National Market Systems, the average of the closing
bid and asked quotations per share as reported by NASDAQ, or any other
nationally accepted reporting medium if NASDAQ quotations shall be
unavailable, or (iv) if none of the foregoing applies, market value of the
COMMON STOCK will be the fair value of the COMMON STOCK as reasonably
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determined in the good faith judgment of the COMPANY's BOARD OF DIRECTORS.
p. ISO means an OPTION intended to qualify as an incentive stock
option under Section 422 of the CODE.
q. MEDIALINK means Video Broadcasting Corporation, a Delaware
corporation.
r. NON-EMPLOYEE DIRECTOR means a DIRECTOR who is not an EMPLOYEE.
s. NON-QUALIFIED STOCK OPTION means any OPTION which is not an ISO.
t. NON-QUALIFIED STOCK OPTION PLAN means the COMPANY's 1987 Stock
Option Plan.
u. OPTION means an option to purchase shares of COMMON STOCK granted
under the PLAN.
v. OPTIONEE means the ELIGIBLE PARTICIPANT receiving the OPTION, or
his or her legal representative, legatees, distributees or alternate
payees, as the case may be.
w. OPTION PRICE means the purchase price for the COMMON STOCK upon
exercise of an OPTION.
x. PLAN means this Stock Option Plan or any successor plan which the
COMMITTEE may adopt from time to time with respect to the grant of OPTIONS
under the PLAN.
y. PREFERRED STOCK means (i) Series A 10% Cumulative Convertible
Preferred Stock, par value $1.50; (ii) Series B 10% Cumulative Convertible
Preferred Stock, par value $1.35; (iii) Series C 10% Cumulative Convertible
Preferred Stock, par value $2.75 and (iv) any other preferred stock
authorized by MEDIALINK.
z. RETIREMENT means the actual retirement date of an Employee, which
shall be determined by the COMMITTEE.
aa. RULE 16b-3 means Rule 16b-3 under the EXCHANGE ACT or any
successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.
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bb. SAR means a stock appreciation right whose value is based on the
increase in the FAIR MARKET VALUE of the COMMON STOCK covered by such
right.
cc. SECTION 16 OFFICER means any person who is designated by the BOARD
OF DIRECTORS as an executive officer of MEDIALINK and any other person who
is designated as an officer of MEDIALINK for purposes of Section 16 of the
EXCHANGE ACT.
dd. TANDEM refers to a SAR granted in conjunction with an OPTION.
ee. TERMINATION occurs when an EMPLOYEE ceases to be employed by the
COMPANY as a common law employee, when a DIRECTOR ceases to be a member of
the BOARD OF DIRECTORS or when the relationship between the COMPANY and a
CONSULTANT or other ELIGIBLE PARTICIPANT terminates, as the case may be.
ff. TERMINATION FOR CAUSE means termination for cause which results
from the commission of a felony, fraud, willful misconduct or gross
negligence which has resulted or may result in material damage to the
COMPANY, in the sole discretion of the COMMITTEE.
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No. of shares subject to option: ______ Option No. ____
VIDEO BROADCASTING CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of the ____ day of
____________, 199__, between Video Broadcasting Corporation, a
Delaware corporation (the "Company") and ____________________,
residing at __________________________________ (the "Optionee") .
W I T N E S S E T H:
1. Grant of Option and Option Price. Pursuant to the
provisions of the Video Broadcasting Corporation Amended and Restated
Stock Option Plan (the "Plan"), a copy of which is attached hereto,
the Company hereby grants to the Optionee, subject to the terms and
conditions of the Plan and subject further to the terms and conditions
herein set forth, the option to purchase from the Company all or any
part of an aggregate of ________ shares of Common Stock ($.01 par
value) of the Company ("Common Stock") at the purchase price of
$______ per share.
2. Terms and Conditions. It is understood and agreed that the
option evidenced hereby is subject to the following terms and conditions:
a. The option granted hereunder is (check one or appropriate
combination):
( ) a non-qualified stock option;
( ) an incentive stock option ("ISO");
( ) with a tandem stock appreciation right ("SAR").
b. Expiration Date. The option shall expire on ____________
(the "Expiration Date").
c. Exercise of Option. Except as provided below, options will
be vested and exercisable in accordance with the following schedule:
<PAGE>
Portion of
Number of Options Option That May Be
Date That May Be Exercised Exercised
20%
40%
60%
80%
100%
This option may be exercised in whole or from time
to time in part when and to the extent exercisable by its terms and
without regard to whether there is outstanding any other option
granted to the Optionee to purchase shares of Common Stock of the
Company. Any exercise shall be accompanied by a written notice to the
Company, in substantially the form attached hereto, specifying the
number of shares as to which the option is being exercised. Notation
of any partial exercise shall be made by the Company on Schedule 1
annexed hereto. In its sole discretion, the Committee may vary the
time at which all or part of any option may be exercised.
d. Payment for Shares upon Exercise of Options. The
purchase price of the shares as to which this option shall be
exercised shall be paid to the Company at the time of exercise either
(i) in cash, (ii) by check, (iii) by delivering shares of Common Stock
of the Company already owned by the Optionee for a minimum of one year
and being valued at their fair market value as of the date of the
exercise of the Option, (iv) by delivering an executed exercise notice
together with irrevocable instructions to a broker to either sell the
shares subject to the option or hold such shares as collateral for a
margin loan and to deliver promptly to the Company the amount of sale
or loan proceeds required to pay the Option Price, (v) by delivering
Options then exercisable by Optionee valued at the excess of the Fair
Market Value of the Common Stock subject to such Options on the date
of exercise over the aggregate Option Price of such Options, (vi) by
delivering any combination of the foregoing in an amount equal to the
full Option Price of the shares being purchased, or (vii) such other
consideration and method of payment as the Committee, in its sole
discretion, may allow to the extent permitted by applicable laws.
e. Income Tax Withholding. Upon the exercise of this option,
in whole or in part, any compensation income realized by the Optionee
as a result of any disqualifying disposition of any shares of Common
Stock acquired upon exercise of an ISO, any shares of Common Stock
acquired upon exercise of a non-qualified stock option, or any payment
made upon exercise of a SAR, as the case may be, will be treated as
compensation income subject to withholding for income tax purposes.
The Company shall make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of all Federal,
state, local and other taxes required by law to be withheld with
respect to this option, including, but not limited to, deducting the
aggregate amount of any such withholding taxes from the amount to be
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paid hereunder, whether in Common Stock or in cash, or from any other
amount thereafter payable to the Optionee, or requiring the Optionee,
his beneficiary or legal representative, as the case may be, to pay to
the Company the aggregate amount required to be withheld or to execute
such documents as the Committee deems necessary or desirable to enable
it to satisfy the withholding obligation.
f. Transferability of Options. This option shall be transferable
by the Optionee to his spouse or issue; a trust for the benefit of one
or more of either the Optionee or the Optionee's spouse or issue; or a
partnership comprised solely of one or more of such Optionee, or such
Optionee's spouse or issue or trusts for the benefit of such
Optionee's spouse or issue.
g. Investment Representation. The Optionee hereby
acknowledges and represents that the shares to be acquired, if not
registered pursuant to a Registration Statement on Form S-8 or
successor form, pursuant to this option (i) will be acquired for
investment and not for resale or with a view to the distribution
thereof and (ii) that such Optionee is able to bear the economic risk
of an investment for the Common Stock or has knowledge and experience
in financial and business matters so as to be capable of evaluating
the merits and risks of the investment. In such event, no shares shall
be issued or transferred to the Optionee unless and until the Company
is satisfied with the correctness of such representation. The Optionee
further agrees to furnish to the Company, prior to the issuance of any
shares upon the exercise of all or any part of this option, an
agreement (in such form as the Committee may specify) in which the
Optionee represents (i) and (ii) above with respect to the shares
acquired by him upon exercise of the option.
h. Adjustments Upon Changes in Number or Value of Shares
of Common Stock. In the event of any changes in the number or value of
shares of Common Stock of the Company by reason of stock dividends,
stock splits, reverse stock splits, recapitalizations, mergers,
consolidations, or other similar events that materially increase or
decrease the number or value of issued and outstanding shares of
Common Stock, the number and kind of shares subject to this option and
the purchase price per share shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the rights
granted to the Optionee hereunder. Any adjustment so made shall be
final and binding upon the Optionee.
i. Optionee Has No Rights as a Shareholder. The Optionee
shall have no rights as a shareholder with respect to any shares of
Common Stock subject to this option prior to the date on which he is
recorded as a holder of such shares on the records of the Company.
j. Option Confers No Rights with Respect to Continuance of
Employment. This option shall not confer upon the Optionee any
right with respect to continuance of employment, service as a
Director or consulting relationship with the Company or any
Subsidiary; nor shall it interfere in any way with the right of the
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Optionee or the Company or any Subsidiary to terminate such
employment, service as a Director or consulting relationship, at any
time, with or without cause.
k. Compliance with Law and Regulations. This option and the
obligation of the Company to sell and deliver shares hereunder shall
be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory
agency as may be required.
3. Optionee Bound By Plan. The Optionee hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by all the terms and
provisions thereof.
4. Notices. Any notice hereunder to the Company
shall be addressed to it at its office, 708 Third Avenue, New York,
New York 10017, Attention: J. Graeme McWhirter, and any notice
hereunder to the Optionee shall be addressed to him at the Optionee's
address set forth below subject to the right of either party to
designate at any time hereafter, in writing, a different address.
5. Definitions. All terms used in this Agreement shall have the same
meaning as set forth in the Plan.
6. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Video Broadcasting Corporation
has caused this Agreement to be duly executed and the Optionee has
executed this Agreement, both as of the day and year first set forth
above.
VIDEO BROADCASTING CORPORATION
By:___________________________
Agreed to and accepted:
________________________________
_______________________
Optionee
________________________________
Social Security Number
Address:
________________________________
________________________________
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SCHEDULE 1
Notations As To Partial Exercise
Number of Balance of
Date of Purchased Shares On Authorized
Exercise Shares Option Signature Notation Date
________ _________ __________ __________ _____________
<PAGE>
EXERCISE NOTICE
Name of Optionee: _____________________
Address of Optionee:
_______________________________________
_______________________________________
Date: ________________________________
Re: Video Broadcasting Corporation
Amended and Restated Stock Option Plan ("Plan")
Dear Mr. McWhirter:
Pursuant to the terms of the Plan and my Stock
Option, Option Number _________ ("Agreement"), I was granted Stock
Options to purchase _____ (number) shares of the Common Stock of Video
Broadcasting Corporation, $.01 par value ("Shares"). Previously, I
have exercised Stock Options granted under the Agreement with regard
to _______________ (number) Shares.
I hereby exercise Stock Options under the Agreement
to purchase ___________ (number) Shares, at an option price of
$__________ per Share, for a total purchase price of $_____________.
I herewith tender the total purchase price, as
stated above, by enclosing herein (check and complete one, or
appropriate combination, of the following):
(A) ( ) cash in the amount of $___________
(B) ( ) a certified check in the amount of $___________ payable
to Video Broadcasting Corporation
(C) ( ) __________ (number) shares of Common Stock of Video
Broadcasting Corporation, valued at $___________ per share,
for a total value at $__________.
(D) ( ) ___________ (number) options of Video Broadcasting
Corporation, valued at $_____, such value being equal to
the excess of the aggregate market value of the Common
<PAGE>
Mr. J. Graeme McWhirter
_______________, 199__
Page 2
Stock subject to such options on the date hereof
over the aggregate option exercise price of such options.
I acknowledge that if I check either (C) or (D)
above, the valuation of the tendered stock or options, as the case may
be, is subject to final determination by the Stock Option Committee.
I hereby reaffirm all of the terms and conditions of
the Agreement, including but not limited to, the provisions of
Paragraph 2(f) relating to my obligation to make funds available for
applicable tax withholding, and Paragraph 2(h) relating to the
investment representation. I further agree to take such action and to
execute such documents as the Stock Option Committee may require in
connection with the exercise of this option, pursuant to the terms of
the Plan and Agreement.
Very truly yours,
-------------------------------------
Signature of Optionee
-------------------------------------
Social Security Number
<PAGE>
VIDEO BROADCASTING CORPORATION
1996 DIRECTORS STOCK OPTION PLAN
1. Purpose. The purpose of this 1996 Directors Stock Option Plan (the
"Plan") is to provide a means by which directors of Video Broadcasting
Corporation (the "Company") who are not employees of the Company or any of its
Affiliates ("Nonemployee Directors"), may be given an opportunity to purchase
shares of Common Stock of the Company, par value $.01 per share ("Common
Stock"). The Plan is intended to advance the interests of the Company by
encouraging stock ownership on the part of the Company's Nonemployee Directors
by enabling the Company (and its Affiliates) to secure and retain the services
of highly qualified persons, and by providing the Company's Nonemployee
Directors with an additional incentive to advance the success of the Company
(and its Affiliates). For purposes of this Plan, "Affiliate" shall mean any
parent or subsidiary corporation of the Company as defined in Section 425(e) and
(f), respectively, of the Internal Revenue Code of 1986 (the "Code").
"Affiliation" shall refer to a group of Affiliates.
2. Stock Subject to Option. Subject to adjustment as provided in Sections
4(h) and (i) hereof, options may be granted by the Company from time to time to
purchase up to an aggregate of 150,000 shares of the Company's authorized but
unissued Common Stock. Shares that by reason of the expiration of an option or
otherwise are no longer subject to purchase pursuant to an option granted under
the Plan may be reoptioned under the Plan.
3. Participants. All directors of the Company who are not employees of the
Company or any of its Affiliates may be granted options under the Plan.
4. Terms and Conditions of Options. Options granted from time to time
pursuant to the Plan shall be evidenced by written agreements and shall not be
inconsistent with this Plan. Shares of Common Stock that may be purchased under
an option granted pursuant to this Plan shall sometimes hereinafter be referred
to as "Director Options".
(a) Grants of Director Options. Each individual who is a Nonemployee
Director of the Board of Directors of the Company as of the effective date
of the Plan shall be granted and receive, as of the effective date of the
Plan and without the exercise of the discretion of any person or persons,
an option to purchase 2,000 Director Options per year for each year that
such individual was a member of the Board of Directors of the Company prior
to 1996; provided, however, that in no event shall the amount of Director
Options granted to any member of the Board of Directors for service prior
to 1996 exceed 12,000 (subject to adjustment in the same manner as provided
in Section 4(h) hereof with respect to Director Options subject to options
then outstanding).
<PAGE>
Commencing January 1, 1997, as of January 31st of each year, each
Nonemployee Director who is in office as of the effective date of the Plan
("Old Directors") shall be granted and receive on each January 31st after
the date of adoption of this Plan that he or she is a Nonemployee Director,
without the exercise of the discretion of any person or persons, an option
to purchase 2,500 Director Options (subject to adjustment in the same
manner as provided in Section 4(h) hereof with respect to Director Options
subject to options then outstanding). Each Nonemployee Director who was not
a Director as of the effective date of the Plan and who is elected or
appointed as a Director subsequent to the effective date of the Plan ("New
Directors") shall be granted and receive, as of the date of his or her
election or appointment and without the exercise of the discretion of any
person or persons, an option to purchase 2,500 Director Options (subject to
adjustment in the same manner as provided in Section 4(h) hereof with
respect to Director Options subject to options then outstanding) and shall
be granted and receive as of each anniversary date of such election or
appointment (provided such New Director is a Nonemployee Director on such
anniversary date), without the exercise of the discretion of any person or
persons, an option to purchase 2,500 Director Options (subject to
adjustment in the same manner as provided in Section 4(h) hereof with
respect to Director Options subject to options then outstanding). If, as of
any date that the Plan is in effect, there are not sufficient Director
Options available under the Plan to allow for the grant to each Nonemployee
Director of an option for the number of shares provided herein, the Plan
shall terminate as provided in Section 6 hereof. All options granted under
the Plan shall be at the option price set forth in Section 4(b) hereof and
shall be subject to adjustment as provided in Section 4(h) hereof.
(b) Option Price. The option price for each Director Option shall be
the market value of the Common Stock on the date the option is granted (the
"Date of Grant"). For purposes of this Plan, the "market value" of each
share of Common Stock means (i) if the Common Stock is listed on a national
securities exchange, the closing sale price per share on the principal
exchange on which the Common Stock is listed as reported by such exchange,
(ii) if the Common Stock is quoted in the National Market System, the
closing price per share as reported by NASDAQ, (iii) if the Common Stock is
traded in the over-the-counter market but not quoted in the National Market
Systems, the average of the closing bid and asked quotations per share as
reported by NASDAQ, or any other nationally accepted reporting medium if
NASDAQ quotations shall be unavailable, or (iv) if none of the foregoing
applies, market value of the Common Stock will be the fair value of the
Common Stock as reasonably determined in the good faith judgment of the
Company's Board of Directors.
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(c) Term of Option. Notwithstanding any other provision of this Plan,
each option granted under this Plan shall expire not more than fifteen (15)
years from the date the option is granted, except that under the
circumstances described in Section 4(g), 4(i), and 4(j), options may expire
and terminate at an earlier date.
(d) Exercise of Option. Except as otherwise provided in the applicable
option agreement, each option granted to Old Directors for prior services
shall be fully exercisable and vested as of the effective date of the Plan.
Except as otherwise provided in the applicable option agreement, each
option granted to New Directors and Old Directors for each year commencing
in 1997 that such Old Directors and New Directors are a member of the Board
of Directors of the Company shall become exercisable and vested only to the
following extent: (i) up to thirty-three and one-third (331/3%) percent of
the options granted may be exercised on or after the first anniversary of
the Date of Grant; (ii) up to sixty-six and two-thirds (662/3%) percent of
the options granted may be exercised on or after the second anniversary of
the Date of Grant; and (iii) up to one hundred (100%) percent of the
options granted may be exercised on or after the third anniversary of the
Date of Grant. The date of grant shall be the date set forth in any option
agreement as the "Date of Grant." Other than as contemplated in Section
4(g)(1) and 4(g)(2) hereof, if an optionee ceases to be a director of the
Company for any reason, no option shall give an optionee (or his successor)
a right to acquire any greater number of shares than he had rights to
acquire on the date of his termination. The Committee may accelerate the
time at which an option may be exercised.
(e) Manner of Exercise. Shares purchased upon exercise of Director
Options shall at the time of purchase be paid for in full. The Company
shall satisfy its employment tax and other tax withholding obligations by
requiring the optionee to pay the amount of employment tax and withholding
tax, if any, that must be paid under federal, state and local law due to
the exercise of the option, subject to such restrictions or procedures as
the Company deems necessary to satisfy Rule 16b-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). To the extent that
the right to purchase shares has accrued hereunder, options may be
exercised from time to time by written notice to the Company stating the
full number of shares with respect to which the option is being exercised
and the time of delivery thereof, which shall be at least fifteen days
after the giving of such notice unless an earlier date shall have been
mutually agreed upon by the optionee (or other person entitled to exercise
the option) and the Company, accompanied by payment to the Company of the
purchase price in full and the amount of employment tax and withholding tax
due, if any, upon the exercise of the options. Such payment shall be
effected (i) by certified or official bank
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check, (ii) by the delivery of a number of shares of Common Stock (plus
cash if necessary) having a fair market value equal to the amount of such
purchase price and employment and withholding tax, (iii) by the delivery of
Director Options then exercisable valued at the excess of the aggregate
market value, as defined in Section 4(b) hereof, of the Common Stock
subject to such Director Options on the date of exercise over the aggregate
option exercise price of such Director Options or (iv) by delivery of the
equivalent thereof acceptable to the Company. The Company will, as soon as
reasonably possible, notify the optionee of the amount of employment tax
and other withholding tax that must be paid under federal, state and local
law due to the exercise of the option. At the time of delivery, the Company
shall, without transfer or issue tax to the optionee (or other person
entitled to exercise the option), deliver to the optionee (or to such other
person) at the principal office of the Company, or such other place as
shall be mutually agreed upon, a certificate or certificates for the Shares
of Common Stock; provided, however, that the time of delivery may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with any requirements of law.
(f) Non-Transferability of Option Rights. No option shall be
assignable or transferable otherwise than by will or by the laws of descent
and distribution. During the lifetime of an optionee, the option is
exercisable only by the optionee.
(g) Termination of Relationship.
(1) In the event that an optionee shall die before he ceases to
be a director of the Company, or if an optionee ceases to be a
director of the Company because optionee has become disabled within
the meaning of Section 22(e)(3) of the Code, all options held by the
optionee to the extent that such options have not previously expired
or been exercised, shall become fully exercisable and vested, and
optionee, his estate or beneficiary, shall have the right to exercise
his options at any time for a period of twelve months from the date of
death of optionee or the date he ceases to be a director of the
Company due to disability (if otherwise within the term of the
option). Notwithstanding the foregoing, the provisions of this Section
4(g)(1) shall be subject to Sections 4(c), 4(i) and 4(j), which may
earlier terminate the option.
(2) In the event that the optionee retires from service as a
director of the Company in accordance with the Company's retirement
policies in effect from time to time, such option shall continue to
vest during the lifetime of the optionee in accordance with the Plan
and the stock option agreement in effect and may be
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exercised at any time during the remaining term of the option. If an
optionee that has retired dies subsequent to their retirement during
the term of an option, such option shall continue to vest in
accordance with the Plan and the stock option agreement in effect and
may be exercised within twelve months of such optionee's death (if
otherwise within the option period), but not thereafter.
Notwithstanding the foregoing, the provisions of this Section 4(g)(2)
shall be subject to Sections 4(c), 4(i) and 4(j), which may earlier
terminate the option.
(3) In the event that optionee ceases to be a director of the
Company, and the provisions of Section 4(g)(1), 4(g)(2) and 4(j) do
not apply, the option may be exercised, to the extent the option could
be exercised immediately prior to such cessation, at any time within
nine months after the date of such cessation (if otherwise within the
option period).
(h) Adjustment of Director Options on Recapitalization. The aggregate
number of shares of Common Stock for which options may be granted to
persons participating under the Plan, the number of shares covered by each
outstanding Director Option, and the exercise price per share for each such
option shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock of the Company resulting from
the subdivision or consolidation of shares after the Date of Grant, the
payment of a stock dividend in shares of Common Stock after the Date of
Grant, or other decrease or increase in the shares of outstanding Common
Stock effected after the Date of Grant without receipt of consideration by
the Company; provided, however, that any options to purchase fractional
shares resulting from any such adjustment shall be eliminated.
(i) Acceleration of Options Upon Reorganization. If the Company shall
at any time participate in a reorganization to which Section 368 of the
Code applies and (A) the Company is not the surviving entity or (B) the
Company is the surviving entity and the shareholders of Common Stock are
required to exchange their shares for property and/or securities, the
Company shall give each optionee written notice of such fact on or before
fifteen (15) days before such reorganization, and each option shall be
exercisable in full after receipt of such notice and prior to such
reorganization; however, options not exercised prior to such reorganization
shall expire on the occurrence of such reorganization. A sale of all or
substantially all the assets of the Company for a consideration (apart from
the assumption of obligations) consisting primarily of securities shall be
deemed a reorganization for the foregoing purposes.
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(j) Dissolution of Company. In the event of the proposed dissolution
or liquidation of the Company, the options granted hereunder shall
terminate as of the date to be fixed by the Committee (as defined in
Section 5 hereof), provided that not less than thirty (30) days' prior
written notice of the date so fixed shall be given to the optionee, and the
optionee shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his options.
(k) Rights as a Shareholder. The optionee shall have no rights as a
shareholder with respect to any shares of Common Stock of the Company held
under option until the date of issuance of the stock certificates to him or
her for such shares. Except as provided in Section 4(h), no adjustment
shall be made for dividends or other rights for which the record date is
prior to the date of such issuance.
(l) Time of Granting Director Options. The grant of a Director Option
shall occur only when a written option agreement shall have been duly
executed and delivered by or on behalf of the Company and the person to
whom such Option shall be granted; provided, that the Date of Grant of an
option shall be the date upon which the Committee approved such grant and
such date shall be set forth as the Date of Grant in the written stock
option agreement.
(m) Stock Legend. Certificates evidencing shares of the Company's
Common Stock purchased upon the exercise of options issued under the Plan
shall be endorsed with a legend in substantially the following form, unless
a registration statement relating to such shares has been declared
effective under the Securities Act of 1933 by the Securities and Exchange
Commission:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND NEITHER THESE
SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT, APPLICABLE STATE SECURITIES LAWS
AND THE RULES AND REGULATIONS THEREUNDER.
5. Administration.
(a) The Plan shall be administered by the Board of Directors or a
committee consisting of not less than three (3) directors (the
"Committee"). The members of the Committee shall be appointed by the
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Board of Directors. The Board of Directors may, from time to time, remove
members from or add members to the Committee. Vacancies in the Committee,
however caused, shall be filled by the Board of Directors. The Committee
shall select one of its members chairman and shall hold meetings at such
times and places as it may determine. The Committee may appoint a secretary
and, subject to the provisions of the Plan and to policies determined by
the Board of Directors of the Company, may make such rules and regulations
for the conduct of its business as it shall deem advisable. A majority of
the Committee shall constitute a quorum. All actions of the Committee shall
be taken by a majority of its members. Any action may be taken by a written
instrument signed by a majority of the members, and action so taken shall
be fully as effective as if it had been taken by a vote of the majority of
the members at a meeting duly called and held.
(b) Subject to the express terms and conditions of the Plan, the
Committee shall have full power to grant Director Options under the Plan,
to construe or interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it and to make all other determinations
necessary or advisable for its administration.
(c) Subject to the provisions of Sections 3 and 4 hereof, the
Committee may from time to time confirm the persons that shall be granted
Director Options under the Plan, the number of option shares and the
exercise price, and the time or times at which options shall be granted and
may be exercised.
(d) The Committee shall report to the Board of Directors of the
Company the names of persons granted Director Options, the number of
options subject to, and the terms and conditions of each option.
(e) No member of the Board of Directors of the Company or of the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan or to any Director Option.
6. Effective Date and Termination.
(a) The effective date of the Plan is the date on which the Plan is
approved by the shareholders of the Company.
(b) The Plan shall terminate on the earlier to occur of (i) the tenth
anniversary of the effective date of the Plan, or (ii) the date as of which
there are not sufficient Director Options available under the Plan to allow
for the grant to each Nonemployee Director of an option for the number of
shares provided hereunder; but the Board of Directors of the Company may
terminate the Plan at any time prior thereto. Termination
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of the Plan shall not alter or impair, without the consent of the optionee,
any of the rights or obligations of any optionee or their successors under
any Options outstanding and not exercised in full on the date of
termination.
7. Amendments. The Board of Directors of the Company may, from time to
time, alter, amend, suspend, or discontinue the Plan, or alter or amend any and
all option agreements granted thereunder; provided, however, that Sections 4(a)
and 4(b) hereof shall not be amended more than once every six months, other than
to the comport with changes in the Code, the Employee Retirement Income Security
Act, or the rules thereunder; provided, further, that no such action of the
Board of Directors, without the approval of the shareholders of Company, may
alter the provisions of the Plan so as to:
(a) materially increase the benefits accruing to any of the Plan's
participants;
(b) materially increase the number of shares of Common Stock subject
to the Plan;
(c) modify the requirements as to the eligibility for participation in
the Plan;
(d) extend the term of the Plan or the maximum term of the options
granted;
(e) alter any outstanding option agreement to the detriment of the
optionee without his consent; or
(f) decrease, directly or indirectly (by cancellation and substitution
of options or otherwise), the option price applicable to any option granted
under this Plan.
8. Status of Options. Options granted pursuant to this Plan are intended to
qualify as Non-Qualified Stock Options as such term is described in Treasury
Regulation Section 1.83-7 and are not intended to qualify as Incentive Stock
Options within the meaning of Section 422 of the Code, and the terms of this
Plan and options granted hereunder shall be so construed. Nothing in this Plan
shall be interpreted as a representation, guarantee or other undertaking on the
part of the Company that the options granted pursuant to this Plan are, or will
be, determined to be Incentive Stock Options, within that section of the Code.
9. Use of Proceeds. The proceeds from the sale of Common Stock pursuant to
the exercise of options will be used for the Company's general corporate
purposes.
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10. Securities Laws.
(a) The Company shall not be obligated to issue any Director Options
pursuant to any option granted under the Plan at any time when the offering
of the shares covered by such option have not been registered under the
Securities Act of 1933, as amended, and such other state and federal laws,
rules or regulations as the Company deems applicable and, in the opinion of
legal counsel for the Company, there is no exemption from the registration
requirements of such laws, rules or regulations available for the offering
and sale of such shares.
(b) It is intended that the Plan and any grant of an option made to a
person subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3, as currently in effect or as hereinafter
modified or amended ("Rule 16b-3"), promulgated under the Exchange Act. If
any provision of the Plan or any such option would disqualify the Plan or
such option under, or would otherwise not comply with Rule 16b-3, such
provision or option shall be construed or deemed amended to conform to Rule
16b-3.
9
<PAGE>
1996 DIRECTORS STOCK OPTION PLAN
DIRECTORS STOCK OPTION AGREEMENT
Video Broadcasting Corporation (the "Company"), in consideration of the
value of the continuing services of ______________ (hereinafter called
"Optionee"), which continuing services the grant of this option is designed to
secure, and in consideration of the undertaking made herein by Optionee, and
pursuant to its 1996 Directors Stock Option Plan (the "Plan"), hereby grants to
Optionee an option, evidenced by this option agreement, exercisable for the
period and upon the terms hereinafter set forth, to purchase ________________
(_______) shares of Common Stock ("Common Stock") of the Company at a price of
$______ per share.
1. Term of Option.
(a) This option is granted as of the date the Committee makes the
Grant (sometimes hereinafter called the "Date of Grant") and will terminate and
expire, to the extent not previously exercised, ten (10) years after the Date of
Grant, or at such earlier time as may be specified in Section 4 and 6 hereof.
(b) Of the _______ options granted hereunder, _____ were granted to
Optionee for his service as a member of the Board of Directors of the Company
prior to 1996. Such ____ options are presently 100% vested and Optionee may
presently exercise rights to acquire 100% of the option shares ("Option Shares")
related to such _____ options.
(c) Except as otherwise provided in this Option Agreement, Optionee
shall have the right to acquire Option Shares under this Option Agreement as
follows:
(i) As of the first anniversary of the Date of Grant and
thereafter, Optionee may exercise rights to acquire 33-1/3% of the
Option Shares;
(ii) As of the second anniversary of the Date of Grant, Optionee
may exercise rights to acquire up to 66-2/3% of the Option Shares; and
(iii) As of the third anniversary of the Date of Grant, Optionee
may exercise rights to acquire up to 100% of the Option Shares.
<PAGE>
2. Non-Transferability. This option is not assignable or transferable
otherwise than by will or by the laws of descent and distribution. During the
lifetime of the Optionee, this option shall be exercisable only by him.
3. Manner of Exercise. The Optionee (or other person entitled to exercise
this option) shall purchase shares of stock of the Company subject hereto by the
payment to the Company of the purchase price in full and the amount of
employment tax and withholding tax due, if any, upon the exercise of the option
(i) by certified or official bank check, (ii) by the delivery of a number of
shares of Common Stock (plus cash if necessary) having a fair market value equal
to the amount of such purchase price and employment and withholding tax, or
(iii) by delivery of the equivalent thereof acceptable to the Company. This
option may be exercised from time to time by written notice to the Company, in
substantially the form attached hereto, stating the full number of shares with
respect to which this option is being exercised and the time of delivery
thereof, which shall be at least fifteen days after the giving of notice unless
an earlier date shall have been mutually agreed upon by the Optionee (or other
person entitled to exercise this option) and the Company, accompanied by full
payment for the shares as described in the first sentence of this Section 3. The
Company will, as soon as is reasonably possible, notify the Optionee of the
amount of employment tax and other withholding tax, if any, that must be paid
under federal, state and local law due to the exercise of the option. The
Company shall have no obligation to deliver certificates for the shares
purchased until the Optionee pays to the Company the purchase price in full and
the amount of employment tax and withholding tax specified in the Company's
notice, which payment shall be effected as described in this Section 3 by
payment terms set forth in the first sentence of this Section 3. At the time of
delivery, the Company shall, without transfer or issue tax to the Optionee (or
other person entitled to exercise this option) deliver at the principal office
of the Company, or at such other place as shall be mutually agreed upon, a
certificate or certificates for such shares; provided, however, that the time of
delivery may be postponed by the Company for such period as may be required for
it to comply with reasonable diligence with any requirements of law.
4. Termination of Relationship.
(a) In the event that Optionee shall die before he ceases to be a
director of the Company, or if Optionee ceases to be a director of the Company
because Optionee has become disabled within the meaning of Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended, this option to the extent it has
not previously expired or been exercised, shall become fully exercisable and
vested and Optionee, his estate or beneficiary shall have the right to exercise
this option at any time for a period of twelve months from the date of death of
Optionee or the date he ceases to be a director of the Company due to disability
(if otherwise within the term of the option). Notwithstanding the foregoing, the
provisions of this Section 4(a) shall be subject to Sections 1(a) and 6 hereof
and Section 4(g) of the Plan, which may earlier terminate the option.
2
<PAGE>
(b) In the event that the Optionee retires from service as a director
of the Company in accordance with the Company's retirement policies in effect
from time to time, this option shall continue to vest during the lifetime of the
Optionee in accordance with the terms of the Plan and this Option Agreement and
may be exercised at any time during the remaining term of the option. If
Optionee dies subsequent to his retirement during the term of this option, this
option shall continue to vest in accordance with the Plan and this option
agreement and may be exercised within twelve months of Optionee's death (if
otherwise within the option period), but not thereafter. Notwithstanding the
foregoing, the provisions of this Section 4(b) shall be subject to Sections
1(a), 6 and Section 4(g) of the Plan which may earlier terminate the option.
(c) In the event that Optionee ceases to be a director of the Company,
and the provisions of Sections 4(a) and 4(b) hereof and Section 4(j) of the Plan
do not apply, this option may be exercised, to the extent the option could be
exercised immediately prior to cessation, at any time within nine months after
the date of such cessation (if otherwise within the option period).
5. Adjustments on Recapitalization. The aggregate number of shares of
Common Stock subject hereto and the exercise price per share shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of the Common Stock resulting from the subdivision or consolidation of
shares after the Date of Grant, the payment of a stock dividend in shares of
Common Stock after the Date of Grant, or other decrease or increase in the
shares of Common Stock outstanding effected after the Date of Grant without
receipt of consideration by the Company; provided, however, that any option to
purchase fractional shares resulting from such adjustments shall be eliminated.
6. Acceleration of Options on Reorganization. If the Company shall at any
time participate in a reorganization to which Section 368 of the Code applies
and (A) the Company is not the surviving entity or (B) the Company is the
surviving entity and the shareholders of Common Stock are required to exchange
their shares for property and/or securities, the Company shall give Optionee
written notice of such fact on or before fifteen (15) days before such
reorganization; and this option shall be exercisable in full after receipt of
such notice and prior to such reorganization; however, options not exercised
prior to such reorganization shall expire on the occurrence of such
reorganization. A sale of all or substantially all the assets of the Company for
a consideration (apart from the assumption or obligations) consisting primarily
of securities shall be deemed a reorganization for the foregoing purposes.
Notwithstanding the foregoing, the provisions of this Section 6 shall be subject
to Section 1(a).
7. No Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock of the Company held under
option until the date of issuance of the stock certificates to him or her for
such
3
<PAGE>
shares. Except as provided in Section 5, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
8. Stock Legend. Certificates evidencing shares of the Company's Common
Stock purchased upon the exercise of options issued under the Plan shall be
endorsed with a legend in substantially the following form, unless a
registration statement relating to such shares has been declared effective under
the Securities Act of 1933 by the Securities and Exchange Commission:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND NEITHER THESE
SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT, APPLICABLE STATE SECURITIES LAWS
AND THE RULES AND REGULATIONS THEREUNDER.
9. Status of Options. Options granted pursuant to the Plan and this
Agreement are intended to qualify as Non-Qualified Stock Options as such term is
described in Treasury Regulation Section 1.83-7 and are not intended to qualify
as Incentive Stock Options within the meaning of Section 422 of the Code, and
the terms of the Plan and this Agreement and options granted hereunder shall be
so construed. Nothing in the Plan or this Agreement shall be interpreted as a
representation, guarantee or other undertaking on the part of the Company that
the options granted pursuant to the Plan and this Agreement are, or will be,
determined to be Incentive Stock Options, within that section of the Code.
10. Subject to Plan. This option is subject to all the terms and conditions
of the Plan, and specifically to the power of the Committee (as defined in the
Plan) to make interpretations of the Plan and of options granted thereunder, and
of the Board of Directors of the Company to alter, amend, suspend or discontinue
the Plan subject to the limitations expressed in the Plan. By acceptance hereof,
Optionee acknowledges receipt of a copy of the Plan and recognizes and agrees
that all determinations, interpretations or other actions respecting the Plan
may be made by a majority of the Board of Directors of the Company or of the
Committee, and that such determinations, interpretations or other actions are
final, conclusive and binding upon
4
<PAGE>
all parties, including Optionee. Capitalized terms used but not otherwise
defined in this option agreement shall have the meanings ascribed to them by the
Plan.
IN WITNESS WHEREOF, this Option Agreement is executed as of the ___ day of
___________, 199__.
VIDEO BROADCASTING CORPORATION
By:_____________________________
Name:________________________
Title:_________________________
The undersigned Optionee hereby accepts the benefits of the foregoing
Directors Stock Option Agreement.
_________________________________
_______________________, Optionee
5
<PAGE>
EXERCISE NOTICE
Name of Optionee: _____________________
Address of Optionee:____________________
________________________________________
Date: __________________________________
Re: Video Broadcasting Corporation
1996 Directors Stock Option Plan ("Plan")
Dear Mr. McWhirter:
Pursuant to the terms of the Plan and my Stock Option, ("Agreement"), I was
granted Stock Options to purchase _____ (number) shares of the Common Stock of
Video Broadcasting Corporation, $.01 par value ("Shares"). Previously, I have
exercised Stock Options granted under the Agreement with regard to
_______________ (number) Shares.
I hereby exercise Stock Options under the Agreement to purchase ___________
(number) Shares, at an option price of $__________ per Share, for a total
purchase price of $_____________.
I herewith tender the total purchase price, as stated above, by enclosing
herein (check and complete one, or appropriate combination, of the following):
(A) (__) cash in the amount of $___________
(B) (__) a certified check in the amount of $___________ payable to
Video Broadcasting Corporation
(C) (__) __________ (number) shares of Stock of Video Broadcasting
Corporation, valued at $___________ per share, for a total
value at $__________.
<PAGE>
_______________, 199_
Page 2
I acknowledge that if I check (C) above, the valuation of the tendered
stock is subject to final determination by the Board of Directors of Video
Broadcasting Corporation.
I hereby reaffirm all of the terms and conditions of the Agreement. I
further agree to take such action and to execute such documents as the Board of
Directors may require in connection with the exercise of this option, pursuant
to the terms of the Plan and Agreement.
Very truly yours,
-------------------------------------
Signature of Optionee
-------------------------------------
Social Security Number
<PAGE>
FORM OF INDEMNIFICATION AGREEMENT
This Agreement made and entered into as of the ____
day of _______________, 1996, by and between VIDEO BROADCASTING
CORPORATION, a Delaware corporation, hereinafter called the "Company,"
and ______________, an individual residing at
______________________________________ (the "Indemnitee").
W I T N E S S E T H :
WHEREAS, the Company is desirous of providing
Indemnitee with limitation of liability and indemnification to the
fullest extent permitted by law;
WHEREAS, the Company desires to have Indemnitee
serve or continue to serve as a director or officer of the Company or
of any other corporation, subsidiary, partnership, joint venture,
trust or other enterprise (herein called "Affiliate") of which he has
been or is serving at the request, for the convenience, or to
represent the interest of the Company, with the assurance that the
Company will indemnify him against costs and risks of claims for
damages by reason of his being a director or officer of the Company or
of an Affiliate, or by reason of his decisions or actions on their
behalf;
WHEREAS, the Company has agreed to provide
Indemnitee with the benefits contemplated by this Agreement, together
with coverage under any directors' and officers' liability insurance
policy presently in force or which may be obtained in
<PAGE>
the future, although there is no assurance that the Company will apply
for or obtain any such insurance; and
WHEREAS, Indemnitee desires to serve or to continue
to serve as such director or officer provided that he is furnished
with the indemnity provided for hereinafter, in one or more of such
capacities.
NOW, THEREFORE, for and in consideration of the
premises and the covenants contained herein, the Company and
Indemnitee do hereby covenant and agree as follows:
1. AGREEMENT TO SERVE. Indemnitee will serve and/or
continue to serve the Company or an Affiliate of the Company, at the
will of the Company, as a director and/or officer so long as he is
duly elected and qualified in accordance with the provisions of the
Company's Certificate of Incorporation and the By-Laws thereof, or
until such time as he tenders his resignation in writing.
2. INDEMNIFICATION.
A. The Company hereby agrees to
indemnify and hold harmless Indemnitee to the fullest extent permitted
by the Company's Certificate of Incorporation, its By-Laws, the
Delaware General Corporation Law (the "DGCL") or any other applicable
law, as any or all may be amended from time to time, against any and
all amounts which he is or becomes obligated to pay because of any
charge, claim or claims, whether civil or criminal, made against him
because of any act or omission or neglect or breach of duty, including
any actual or alleged error or misstatement or misleading statement or
other act done or wrongfully attempted, which he commits or suffers
while acting in his capacity as an officer or director of the
2
<PAGE>
Company or an Affiliate thereof and because of his being such an
officer or director or serving in any other capacity requested by the
Company; provided, however, that if the DGCL is repealed or modified
the result of which limits Indemnitee's indemnification rights and/or
protection under the DGCL, then with respect to any event occurring
prior to such repeal or modification, Indemnitee shall be entitled to
the indemnification rights and protection provided under the DGCL as
if such repeal or modification had not occurred, provided such
indemnification would not result in the Company violating any
provision of the DGCL or other applicable law. The payments which the
Company will be obligated to make hereunder shall include but shall
not be limited to all expenses (including reasonable attorneys' fees),
damages, judgments, fines, settlements and costs, costs of
investigation and costs of defense of any actual or threatened legal
actions or claims, or of any actual or threatened judicial,
administrative or other proceedings, and appeals therefrom and costs
of attachment or similar bonds, and shall be payable within 30 days
after the Indemnitee has given the Company a written claim for such
funds, as set forth in Section 2(B) hereof; provided, however, that
the Company shall not be obligated to pay fines or other obligations
or fees imposed by law or otherwise which it is prohibited by
applicable law from paying as indemnity. To the full extent so
permitted, the foregoing shall apply to actions by or in the right of
the Company and shall require the Company to pay expenses, including
bail bonds, if any, in advance of final disposition as set forth
above.
B. If a claim under this Agreement is
not paid by the Company, or on its behalf, within 30 days after a
written claim has been given to the Company, the Indemnitee may at any
time thereafter bring suit against the Company
3
<PAGE>
to recover the unpaid amount of the claim and if successful, the
Indemnitee shall also be entitled to be paid all costs and expenses of
prosecuting such claim, including reasonable attorneys' fees and
interest. As a condition precedent to his right to be indemnified
hereunder, Indemnitee shall give the Company notice in writing as soon
as reasonably practicable of any claim made against him for which
indemnity will or could be sought under this Agreement. Notice to the
Company shall be directed to Video Broadcasting Corporation, 708 Third
Avenue, New York, NY 10017, Attention: Chairman of the Board, and
shall be deemed received if sent by registered or certified mail,
return receipt requested.
C. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the right of recovery of the Indemnitee.
3. INSURANCE. The Company, to the extent it
is available at a reasonable commercial price, shall maintain a
directors' and officers' liability insurance policy providing
coverage in the amount of $2,000,000 pursuant to which Indemnitee
shall receive insurance coverage.
4. LIMITATIONS. The Company shall not be
liable under this Agreement to make any payment in connection with any
claim:
A. for which payment is actually made
to the Indemnitee under a valid and collectable Company insurance
policy, premiums for which are paid by the Company or any of its
Affiliates, except in respect of any deductible and excess beyond the
amount of payment under such insurance;
4
<PAGE>
B. for which the Indemnitee is
indemnified by the Company otherwise than pursuant to this Agreement,
provided such amount has previously been paid to the Indemnitee;
C. based upon or attributable to the
Indemnitee gaining in fact any personal profit or advantage to which
he was not legally entitled;
D. brought about or contributed to by
the dishonesty of the Indemnitee seeking payment hereunder; and
E. by an Indemnitee who acts as a
plaintiff suing the Company, its Affiliates or other directors or
officers of the Company or its Affiliates; provided, however,
notwithstanding the foregoing, the Indemnitee shall be protected under
this Agreement as to any claim upon which suit may be brought against
him by reason of any alleged dishonesty on his part, unless a judgment
or other final and non-appealable adjudication thereof adverse to the
Indemnitee shall establish that he committed acts of active and
deliberate dishonesty with actual dishonest purpose and intent, which
acts were material and an essential element to the cause of action so
adjudicated.
5. DETERMINATION OF RIGHTS. The determination
of the rights of Indemnitee to indemnification and payment of expenses
under this Agreement or under the provisions of the Amended and
Restated Certificate of Incorporation or the Amended and Restated
Bylaws of the Company and standard of conduct shall be made by (i) the
Board of Directors or a committee of non-officer directors of the
Board of Directors, a majority of which shall be disinterested, (ii)
special, independent counsel selected and appointed by the Board of
Directors or a committee of non-
5
<PAGE>
officer directors, or (iii) such other body of persons as may be
permitted by the DGCL. Notwithstanding the foregoing, if there has
been a Change of Control (as hereinafter defined) after the date of
this Agreement, then such determination and evaluation shall be made
by a special independent counsel who is selected by the Indemnitee and
approved by the Company, which approval shall not be unreasonably
withheld. The fees of such special independent counsel shall be paid
by the Company. A "Change of Control" shall be deemed to have occurred
if, without the prior approval or support of the Board of Directors,
any of the following shall occur; (i) any person (as such term is used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the beneficial owner of 25% or more of the
voting power of the Company, (ii) at the end of any one year period a
majority of the Board of Directors shall consist of persons who were
not directors at the beginning of such period, or (iii) a merger or
consolidation of the Company, other than one resulting in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent 80% of the voting power of the Company or such
surviving entity immediately thereafter.
6. CUMULATIVE RIGHTS AND SEVERABILITY. Nothing
herein shall be deemed to diminish or otherwise restrict the
Indemnitee's right to indemnification under the Company's directors'
and officers' liability insurance, any provision of the Company's
Certificate of Incorporation, its By-Laws, vote of stockholders or
disinterested directors, or under the DGCL or any other applicable
law. On the contrary, the rights granted to Indemnitee hereunder are
intended to protect Indemnitee to the fullest extent permitted by law
and shall be cumulative and in
6
<PAGE>
addition to any rights that Indemnitee may have from any other source.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever (a) the
validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby,
and (b) to the fullest extent possible the provisions of this
Agreement shall be construed so as to give effect to the intent
manifested by the provisions held invalid, illegal or unenforceable.
7. SURVIVAL. The obligations of the Company
hereunder will survive (a) any actual or purported termination of this
Agreement by the Company or its successors or assigns, whether by
operation of law or otherwise, (b) any change in the Company's
Certificate of Incorporation or By-Laws, and (c) termination of the
Indemnitee's services to the Company or an Affiliate thereof (whether
such services were terminated by the Company, such Affiliate or the
Indemnitee), whether or not a claim is made or an action or proceeding
is threatened or commenced before or after the actual or purported
termination of this Agreement, change in the Company's Certificate of
Incorporation or By-Laws, or termination of the Indemnitee's services.
8. GOVERNING LAW. The parties hereto agree
that this Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware.
9. SUCCESSOR AND ASSIGNS. The Company shall
cause this Agreement to be binding upon all successors and assigns of
the Company (including any transferee of all or substantially all of
its assets and any successor by merger or otherwise by operation of
law). This Agreement shall be binding upon and inure to the
7
<PAGE>
benefit of the heirs, executors, administrators, personal representatives
and estate of the Indemnitee.
10. BOARD APPROVAL. This Agreement has been
approved by the Board of Directors of the Company.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and signed as of the day and year
first above written.
VIDEO BROADCASTING CORPORATION
By: _______________________________
Title:
_______________________________
8
<PAGE>
Davis Partnership
67 Albion Gate
Hyde Park Place
London W2 England
March 1, 1994
Video Broadcasting Corporation
708 Third Avenue
New York, NY 10017
Gentlemen:
This letter shall serve to confirm the terms and
conditions of our agreement regarding consulting services to be
performed by the Davis Partnership (the "Partnership") for Video
Broadcasting Corporation (the "Company").
Reference is made to that certain consulting agreement, dated
as of September 14, 1992, between the Company and David H. Davis ("Davis").
The Partnership, Davis and the Company hereby agree
that such consultancy agreement is hereby terminated and further agree
that Davis will perform all of the consulting services on behalf of
the Partnership as contemplated by this Agreement.
Davis, on behalf of the Partnership, shall provide
services relating to the Company's London operation, including
planning, marketing, staffing and operation, and development of
strategic partnerships in the United Kingdom, Europe, and elsewhere,
the establishment of affiliates worldwide, preparing for and attending
sales meetings, presentations to existing and potential clients,
undertaking speaking engagements within Europe and elsewhere, and
undertake such other duties as may be assigned to it from time to time
by the Board of Directors of the Company. Davis shall serve as a
member of the Board of Directors of the Company during the Term of
this Agreement as the nominee of and at the pleasure of the President
of the Company and shall have the honorary title of Vice Chairman,
MediaLink-Europe without additional compensation. Davis shall
personally attend two (2) official board meetings at the Company's
expense and shall attend all other meetings of the Board
<PAGE>
March 1, 1994
Page 2
of Directors via telephone. Davis shall attend at least one (1)
official management meeting in London, England and periodic meetings
with the Company's London staff. Davis shall devote such time and
effort to the performance of his duties hereunder on a basis of four
(4) days per week or as otherwise mutually agreed upon by the
Partnership and the Company.
The term of this Consulting Agreement shall commence
as of the date hereof and shall continue until December 31, 1995 or
until terminated pursuant to the terms and conditions hereof (the
"Initial Term"). On January 1, 1996 and on each anniversary thereof,
the term of this Agreement shall be automatically renewed for an
additional twelve (12) month period (each, a "Renewal Term") unless
either party shall have given ninety (90) days prior written notice of
its intent not to renew. The term "Term" as used herein shall mean the
Initial Term and any Renewal Terms hereunder.
The Company shall pay to the Partnership hereunder
a base annual consulting fee ("Base Consulting Fee") equal to
Fifty-four Thousand (54,000 Pounds) Pounds Sterling per annum. The Base
Consulting Fee shall be payable monthly. The Company shall not make,
and shall not be responsible for, any withholding deductions.
In addition to its annual Base Consulting Fee, the
Partnership shall be entitled to receive a bonus (the "Bonus") in
accordance with the provisions of this paragraph. As soon as
practicable after the execution of this document and at the beginning
of the 1995 calendar year, the Partnership and the company shall
mutually agree as to the goals and objectives for the 1994 or 1995
calendar year, as the case may be, based on turnover and income/loss
of the Company's European operation. The amount of the bonus shall be
equal to the sum of (i) five (5%) percent of the excess over the
agreed revenue target and (ii) five (5%) percent of the improvement of
the agreed net Income/loss target; provided, however, once the
Company's European operation has achieved profitability, the total
Bonus for each year shall not exceed five (5%) percent of the Pre-Tax
Net Profits, as defined herein.
Subject to the provisions of the following
paragraph, the Bonus shall be paid (i) fifty (50%) percent in cash
("Cash Portion") upon completion of the Company's independent audit by
the Company's regularly employed independent certified public
accountants ("Accountants") for such calendar year; and (ii) fifty
(50%) percent in Common Stock, $.01 par value, of the Company (the
"Stock Portion") valued at a multiple of one and one-half (1.5) times
revenue of the Company, the Stock Portion to be payable in three (3)
equal annual installments, with the first installment payable on the
date of the payment of the Cash Portion.
<PAGE>
March 1, 1994
Page 3
Notwithstanding the provisions of the preceding two
paragraphs the Partnership shall not be entitled to receive the Cash
Portion or any installment of the Stock Portion which has not been
paid or delivered in the event either (i) of the termination this
agreement For Cause (as hereinafter defined), or (ii) the Partnership
wrongfully fails to provide the services contemplated hereby, in
either case at any time prior to the payment of the Cash Portion or
the delivery of the Stock Portion, as the case may be. Notwithstanding
the provisions of the preceding two paragraphs, the Partnership shall
not be entitled to receive any installment of the Stock Portion which
has not been delivered in the event that either (i) this agreement
expires without an automatic renewal of the term, or (ii) the
Partnership elects to terminate this Agreement on ninety (90) days
prior written notice as set forth herein, in either case at any time
prior to the delivery of any installment of the Stock Portion. The
Partnership shall be entitled to receive the Cash Portion and the
Stock Portion in accordance with the terms and provisions of this
Agreement in the event of either (i) the death or Disability (as
hereinafter defined) of Davis, or (ii) the Company's termination of
the this Agreement which is not a termination For Cause.
The term "Pre-Tax Net Profits" as used in this
Agreement shall mean the net profits of the Company relating only to
its European operation for a fiscal year prior to (i) the payment or
provision for any Federal, state or local income or other taxes; and
(ii) the amount of the Bonus of the Partnership for such fiscal year,
as computed by the Company's Accountants.
The Company shall pay or reimburse the Partnership
or Davis, as the case may be, for all reasonable and necessary
business, travel or other expenses, upon proper documentation thereof,
which may be incurred by them in connection with the rendition of the
services contemplated hereunder.
The Partnership shall not be entitled to participate
in any profit sharing, group insurance, option plans, hospitalization,
and group health benefit plans or other benefits and plans of the
Company.
The Partnership and Davis shall have no authority to
bind or commit the Company to agreements of any kind (except as
expressly agreed in writing), nor shall the Partnership or Davis have
any authority or power to incur any debt, obligation or liability or
to enter into any contract or commitment on the Company's behalf. The
Partnership and Davis shall be considered an independent contractor
and not a servant, employee or agent of the Company.
It is expressly understood that any person or entity
engaged by the Partnership or Davis to assist them in providing
services hereunder is at their own
<PAGE>
March 1, 1994
Page 4
risk, expense and supervision and has no claim against the Company for
salaries, commissions or other items of cost, and the Partnership and
Davis warrant that any such person or entity shall be subordinate to
them and by and under them.
This Agreement may be terminated by either party at
any time upon 90 days prior written notice. This Agreement shall
terminate upon the death or Disability, as hereinafter defined, of
Davis, or upon the termination For Cause, as hereinafter defined, or
because the Partnership wrongfully fails to provide the services
contemplated hereby. The Company shall pay to the Partnership or any
person designated by the Partnership in writing, the aggregate amount
of the accrued Consulting Fee as of such termination but not yet paid.
As used herein, "Disability" shall mean that Davis
is mentally or physically incapable or unable to perform his regular
and customary consulting duties for a period of ninety (90)
consecutive days or for period of ninety (90) days in any three
hundred and sixty (360) day period.
As used herein, the term "For Cause" shall mean (i)
Davis' conviction in a court of law of any crime or offense, or (ii)
willful misconduct, or (iii) the material breach by the Partnership of
any provision of this Agreement, or (iv) reckless disregard of its
responsibilities under this Agreement.
The Partnership and Davis recognize that they will
have access to secret and confidential information regarding the
Company and its products, know-how, customers and plans. The
Partnership and Davis acknowledge that such information is of great
value to the Company, is the sole property of the Company, and has
been and will be acquired by them in confidence. In consideration of
the obligations undertaken by the Company, the Partnership and Davis
will not, at any time, during or after the terms hereof, reveal,
divulge or make known to any person, any information acquired by them
during the term, which is treated as confidential by the Company and
not otherwise in the public domain. The provisions of this paragraph
shall survive this Agreement.
The Partnership and Davis recognize that the
services to be performed by them hereunder are special, unique and
extraordinary. The parties confirm that it is reasonably necessary for
the protection of the Company that the Partnership and Davis agree,
and, accordingly, the Partnership and Davis do hereby agree, that they
will not, directly or indirectly, in the Territory (as hereinafter
defined) at any time during the Restricted Period (as hereinafter
defined):
<PAGE>
March 1, 1994
Page 5
(a) except as provided herein, engage in any
business competitive with the business conducted by the Company either
on their own behalf or as an officer, director, stockholder, partner,
consultant, associate, employee, owner, agent, creditor, independent
contractor, or co-venturer of any third party; or
(b) employ or engage, or cause or authorize,
directly or indirectly, to be employed or engaged, for or on behalf of
themselves or any third party, any employee or agent of the Company.
If any of the restrictions contained in the
preceding paragraphs shall be deemed to be unenforceable by reason of
the extent, duration, geographical scope thereof, or otherwise, then
the court making such determination shall have the right to reduce
such extent, duration, geographical scope, or other provisions hereof,
and in its reduced form this Agreement shall then be enforceable in
the manner contemplated hereby.
The non-compete covenants set forth herein shall not
be construed to prevent the Partnership or Davis from owning, directly
or indirectly, in the aggregate, an amount not exceeding five (5%)
percent of the issued and outstanding voting securities of any class
of any corporation whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market.
The term "Restricted Period" as used herein shall
mean the term of this Agreement plus two (2) years after the date the
Partnership no longer renders consulting services for the Company. The
term "Territory" as used herein shall mean the United Kingdom and
Europe. The provisions of the non-compete shall survive the
termination of this Agreement and until the end of the Restricted
Period.
The Partnership and Davis acknowledge that the
services to be rendered under the provisions of this Agreement are of
a special, unique and extraordinary character and that it would be
difficult or impossible to replace such services. Accordingly, they
agree that any breach or threatened breach by them of the
confidentiality and non-compete provisions of this Agreement shall
entitle the Company, in addition to all other legal remedies available
to it, to apply to any court of competent jurisdiction to enjoin such
breach or threatened breach. The parties understand and intend that
each restriction agreed to by the Partnership and Davis hereinabove
shall be construed as separable and divisible from every other
restriction, that the unenforceability of any restriction shall not
limit the enforceability, in whole or in part, of any other
restriction, and that one or more or all of such restrictions may be
enforced in whole or in part as the circumstances warrant. In the
event that any restriction in this Agreement is more restrictive than
permitted by law in the jurisdiction
<PAGE>
March 1, 1994
Page 6
in which the Company seeks enforcement thereof, such restriction shall
be limited to the extent permitted by law.
The Partnership may not assign or delegate any of
its rights or duties under this Agreement.
This Agreement constitutes and embodies the full and
complete understanding and agreement of the parties with respect to
the Partnership's consulting agreement with the Company, supersedes
all prior understandings and agreements, if any, whether oral or
written, between the Partnership and the Company and shall not be
amended, modified or changed except by an instrument in writing. The
invalidity or partial invalidity of one or more of the provisions of
this Agreement shall not invalidate any other provision of this
Agreement. No waiver by either party of any provision or condition to
be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or any prior or subsequent time.
This Agreement shall inure to the benefit of, be
binding upon and enforceable against, the Parties hereto and their
respective successors and permitted assigns.
All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally
delivered or sent by certified, registered or express mail, postage
prepaid, or overnight delivery to the party set forth above or to such
other address as either party may hereafter give notice of in
accordance with the provisions hereof.
This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State. This
Agreement shall be construed according to and governed by the laws of
the State of New York without giving effect to the principles of
conflict of laws thereof. The parties hereto agree to accept the
jurisdiction of the U.S. Federal Court or New York County Supreme
Court, in the State of New York, for the purpose of any action or
proceeding against them arising out of or relating to this Agreement,
and agree that venue for any judicial action or proceeding brought in
such State shall be in the Southern District of New York or Supreme
Court of New York County, as the case may be. Each of the parties
hereto irrevocably consents to the services of process in any action
or proceeding in such courts by the mailing thereof by United States
registered or certified mail postage paid at its address set forth
herein.
<PAGE>
March 1, 1994
Page 7
This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
If the foregoing accurately reflects the agreement
of our agreement, please so indicate by signing where set forth below.
Very truly yours,
DAVIS PARTNERSHIP
By:/s/ David H. Davis
David H. Davis, Partner
/s/ Beryl Davis
Beryl Davis, Partner
/s/ David H. Davis
David H. Davis, individually
Accepted and Agreed to this
1st day of March 1994
VIDEO BROADCASTING CORPORATION
By: /s/ J. Graeme McWhirter
J. Graeme McWhirter, Executive
Vice President
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF VIDEO BROADCASTING CORPORATION
1. Medialink PR Data Corporation, a Delaware corporation
<PAGE>
Exhibit 23.1
The Board of Directors
Medialink Worldwide Incorporated:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
New York, New York
October 15, 1996
<PAGE>
POWER OF ATTORNEY
Each person whose individual signature appears below
hereby authorizes Laurence Moskowitz, with full power of substitution
and full power to act without the others, his true and lawful
attorney-in-fact and agent in his name, place, and stead, to execute
in the name and on behalf of each such person, individually and in
each capacity stated below, and to file, any and all amendments to
this Registration Statement, including any and all post-effective
amendments.
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------------------- --------------------------------------- ------------------------
<S> <C> <C>
/s/ J. Graeme McWhirter
- -------------------------------------------- Executive Vice President, October 15, 1996
J. Graeme McWhirter Chief Financial Officer and
Assistant Secretary
/s/ David Davis
- ------------------------ ------------------- Senior Vice President/International, October 15, 1996
David Davis Director
/s/ Harold Finelt
- -------------------------------------------- Director October 15, 1996
Harold Finelt
/s/ Donald Kimelman
- -------------------------------------------- Director October 15, 1996
Donald Kimelman
/s/ James J. O'Neil
- -------------------------------------------- Director October 15, 1996
James J. O'Neil
/s/ Gerald P. Rodeen
- -------------------------------------------- Director October 15, 1996
Gerald P. Rodeen
/s/ Theodore Wm. Tashlik
- -------------------------------------------- Director October 15, 1996
Theodore Wm. Tashlik
</TABLE>
