SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 1997
ENHANCED SERVICES COMPANY, INC.
(Exact name of registrant as specified in charter)
Colorado 0-24256 76-0462973
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
16000 Barkers Point Lane, Houston, Texas 77079
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code 281-566-5051
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 6, 1997, the Company sold its office building in Houston, TX, to
Barker's Point, Ltd. for $1,750,000 and entered into a 36 month lease with the
purchaser for the 14,478 square feet it presently occupies in the building at an
initial monthly rental of $12,668. On closing of the sale, $614,000 of the
purchase price was applied to discharge the note secured by a mortgage on the
building, $152,000 was deposited for a portion of the Company's lease obligation
through August, 2000, $120,000 was applied to pay expenses related to the sale,
and the net balance, $864,000, was received by the Company. The consideration
paid for the building was determined in arms' length negotiations with its
purchaser, with whom neither the Company nor any of its affiliates, directors,
officers, or associate of any such director or officer had any material
relationship.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION.
If the Company had closed the sale of its building in Houston and leased a
portion of the building on the terms set forth in Exhibit 10(i)(C) hereto and
summarized in Item 2 hereof at the beginning of its current fiscal year,
December 1, 1996, on a PRO FORMA basis:
(a) its income statement for its first two fiscal quarters ended May 31,
1997 would, after PRO FORMA adjustments giving effect to the gain on the
sale, interest income on the net balance received on the sale and the rent
deposit, lease expenses for rental of space in the building previously
owned, and the elimination of depreciation and other ownership expenses of
the building, have shown non-recurring net income of approximately
$826,925 from such adjustments, resulting in PRO FORMA net income of
approximately $375,548 for the two fiscal quarters, from an actual loss of
$337,998 for such six month period, and
(b) its balance sheet as of the end of said two fiscal quarters, May 31,
1997, would, after giving effect to such PRO FORMA adjustments, have shown
(i) an increase of cash and equivalents of $849,600, from $307,858 to
$1,157,458, (ii) a pre-paid lease deposit asset of $152,000, (iii) a
decrease in fixed assets of $734,057, from $1,262,878 to $528,821, (iv) a
decrease in current liabilities representing the current portion of its
mortgage debt of $9,700, (v) a decrease in the long-term mortgage debt of
$598,114, and (vi) an increase in net worth of approximately $826,925,
from an actual net worth of $2,070,360 to a PRO FORMA net worth of
approximately $2,897,285.
(c) EXHIBITS.
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Exhibit 10(i)(c). Agreement between the Company and Trinity Hope,
Inc. or its assignee and, dated May 20, 1997,
for the sale of the Company's office building
in Houston, TX. The contract was subsequently
assigned to Barkers Point, LTD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENHANCED SERVICES COMPANY, INC.
(Registered)
Date: August 21, 1997 By /s/ ROBERT SMITH
Robert Smith, Treasurer (CFO)
EXHIBIT 10(i)(c)
16000 Barker's Landing Office Building
Houston, Texas
THE STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
THIS LEASE AGREEMENT is made and entered into to be effective as of the 30TH day
of JULY, 1997 (the "Effective Date"), by and between the Lessee hereinafter
named and TRINITY HOPE, INC. (OR ITS ASSIGNEES), a Texas corporation,
hereinafter called "Lessor", whose offices are located at 6100 Hillcroft, Suite
600, Houston, Texas 77081. Lessor and Lessee agree as follows:
1. Definitions. The following definitions and basic provisions shall be
construed in conjunction with and limited by the references thereto in other
provisions of this Lease:
(a) Lessee: LAPTOP SOLUTIONS, INC.
(b) Demised Premises: Space designated as Suite 100 , comprising approximately
14,478 square feet ("Rentable Space"), as shown on Exhibit "A" attached hereto
and made a part hereof, out of the office building and related common area and
parking lot areas (the "Building") located at 16000 Barker's Landing, Houston,
Texas.
(c) Lease Term: A THREE YEAR term, commencing on the Effective Date and ending
on JULY 29 , 2000 (the "Initial Lease Term"). Notwithstanding the fact that the
Rent Commencement Date (which is set forth in Section 6 hereof) is after the
Effective Date of this Lease, the parties intend that each party is vested with
rights immediately upon execution of this Lease and that this Lease is binding
upon and enforceable against each party and is in full force and effect upon
execution.
(d) Base Rent: The sums set forth in Section 6 hereof.
(e) Security Deposit: $152,019.00 (SEE SECT. 31 FOR DETAILS)
(f) Permitted Use: General office use.
2. Parking. Lessee and Lessee's visitors, clients, agents and employees are
permitted to park automobiles on a non-exclusive basis, together with all others
so entitled, in the areas designated by Lessor for parking. Lessee shall abide
by any and all parking regulations and rules established from time to time by
Lessor.
3. Quiet Enjoyment. In consideration of the obligation of Lessee to pay rent as
herein provided and in consideration of the other terms, covenants and
conditions hereof, Lessor hereby demises and leases to Lessee, and Lessee hereby
leases and takes from Lessor, the Demised Premises, to have and to hold the same
for the Term specified herein, all upon the terms and conditions set forth in
this Lease.
4. Condition and Acceptance of the Leased Premises
(a) Lessee agrees to accept the space in "as is" condition.
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5. Services. Lessor agrees to furnish Lessee while occupying the Demised
Premises the following services:
(a) Hot and cold water at those points of supply provided for general use of
tenants.
(b) Electric services in the manner, and to the extent deemed by Lessor to be
standard and not in excess of the amount supplied by Lessor to tenants occupying
proportionately the same amount of space. Lessee shall purchase any additional
electric current from Lessor and shall pay all charges in connection with such
arrangements, including an additional amount equal to 5% of all charges for the
handling of such arrangements. Lessee shall pay for the costs of the excess
electric current at an average rate payable by Lessor to the public authority.
(c) Central heat and air conditioning in season, at such temperatures and in
such amounts as are considered by Lessor to be standard, but such service at
times during Normal Building Operating Hours; routine maintenance and electric
lighting service for all public areas and special service areas of the Building
in the manner and to the extent deemed by Lessor to be standard, but such
service at times during week days other than normal business hours for the
Building, on Saturday afternoons, Sundays and holidays to be furnished only upon
request of Lessee, who shall bear the entire cost thereof as determined by
Lessor. "Normal Building Operating Hours" shall be from 7:00 a.m. to 7:00 p.m.,
Monday through Friday, and 7:00 a.m. through 1:00 p.m. Saturday, exclusive of
holidays.
(d) Janitorial cleaning services as may in the judgment of Lessor be reasonably
required.
(e) Failure to any extent to furnish, or any stoppage of, these defined services
resulting from causes beyond control of Lessor shall not render Lessor liable in
any respect for damages to either person or property, nor be construed as an
eviction of Lessee or result in abatement of any rent, nor relieve Lessee from
fulfillment of any covenant or agreement hereof. Should any equipment or
machinery break down, or for any cause cease to function properly, Lessor shall
use reasonable diligence to repair same promptly, but Lessee shall have no claim
for rebate of rent or damages on account of any interruptions in service
occasioned thereby or resulting therefrom.
6. Rent. As Base Rent for the Demised Premises, Lessee agrees to pay to the
Landlord all of the amounts (without abatement, deduction or offset) set forth
on Schedule I annexed hereto, commencing as of JULY 30, 1997 (the "Rent
Commencement Date"). The obligation of Lessee to pay rent is an independent
covenant, and no act or circumstance whatsoever, whether such act or
circumstance constitutes a breach of covenant by Lessor or not, shall release
Lessee of the obligation to pay rent. As between Lessor and Lessee, all payments
due Lessor under provisions of this Lease are considered as rent.
7. Adjustment of Rental. For each calendar year during the Lease Term, beginning
with the first full calendar year after the Effective Date, Lessee shall pay to
Lessor, as an additional charge and in the manner provided below, Lessee's pro
rata share of the excess, if any, of the Operating Expenses for any such
calendar year, over an amount equal to $5.00 PER NET RENTABLE SQUARE FOOT. (THE
"OPERATING EXPENSE BASE"). In this regard, it is specially agreed and
understood that Lessor makes no representation, warranty or covenants, express
or implied, that the amount of Operating Expenses will not exceed any amount
during the Lease Term. If at any time the Building is not fully occupied or
Lessor is not supplying all services to all portions of the Building during an
entire calendar year, then Operating Expenses shall be adjusted as though the
Building had been fully occupied and Lessor were supplying all services to all
portions of the Building during the entire calendar year.
For purposes of this Lease, the following terms shall have the meanings
indicated:
(a) "Operating Expenses" shall mean and include all costs and expenses of every
kind and nature paid or incurred by Lessor (including appropriate reserves) in
operating, managing, equipping, protecting, insuring, heating, cooling,
lighting, ventilating, repairing, replacing and maintaining the Building. Such
costs and expenses include but not be limited to: maintaining the Building;
cleaning; removal of rubbish and other refuse; costs of water, electricity,
sewer, gas and other utilities; costs of elevator maintenance service, insect
and pest extermination service and window cleaning service; fire protection;
exterior illumination of the Building and the common areas and illumination and
maintenance of signs; snow and ice clearance, fees, costs and expenses paid
under a building management contract, if any; costs and expenses of planting,
maintaining, replanting and replacing flowers and
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other landscaping; water and sewage charges; premiums for liability, property
damage, fire extended coverage, malicious mischief, vandalism, workers'
compensation, employees' liability and other insurance; wages; unemployment
taxes; social security taxes; fuel and other operating costs of the systems for
heating and cooling the Building; special assessments; real property taxes and
personal property taxes; fees for audits; required licenses and permits; costs
and expenses of supplies and materials; and reasonable depreciation of, and
rents paid or, the leasing of equipment used in the operation of the Building;
reasonable administration costs incurred to manage and operate the Building;
reasonable amortization charges on account of any capital expenditure incurred
to effect a reduction in Operating Expenses or which relate to a capital item
installed pursuant to any governmental law, rule or order, provided that costs
of equipment properly chargeable to capital accounts and depreciation of the
original cost of constructing the Building or any additions thereto shall be
excluded except as expressly provided above.
(b) "Floor Area" whenever used herein shall mean the area consisting of the
Rentable Space set forth in Section I(b) of this Lease. Changes in the Floor
Area of the Demised Premises by reason of any expansion or contraction permitted
by Lessor in such area occurring during any calendar month shall be effective,
for purposes of this section, on the first day of the next succeeding calendar
month and such Floor Area in effect for the whole of any calendar year or
partial year shall be the average of such Floor Area in effect on the first day
of each calendar month in such year or partial year.
(c) "Total Rentable Floor Area" is approximately 40,829 rentable Floor Area of
the completed Building available for leasing. In the event the Total Rentable
Floor Area varies by reason of partial casualty or condemnation, or expansion of
or addition to the Building, resulting changes on the Total Rentable Floor Area
occurring during any calendar month shall be effective on the first day of the
next succeeding calendar month and the Total Rentable Floor Area in effect for
the whole of any calendar year or partial calendar year shall be the average of
the Total Rentable Floor Area in effect on the first day of each calendar month
in such year or partial year.
Lessee's pro rata share of any excess Operating Expenses shall be that portion
of the whole of such excess which the Floor Area of the Demised Premises bears
to the Total Rentable Floor Area.
The annual charges for any excess in Operating Expenses are payable in monthly
installments on the first day of each calendar month, in advance, in an amount
estimated by Lessor, which estimate (and resulting monthly charge) may be
changed from time to time by Lessor. (Lessor will make such estimate of
Operating Expense in advance for any calendar year and give Lessee written
notice of such estimate. Lessee shall make regular monthly payments based on
such estimate.) Lessee's share shall be prorated in the event Lessee is required
to make such payment for a partial calendar year. Within ONE HUNDRED EIGHTY
(180) DAYS , OR AS SOON AS REASONABLY POSSIBLE THEREAFTER, after the end of each
calendar year, Lessor shall furnish Lessee a statement in reasonable detail of
the actual Operating Expenses paid or incurred by Lessor during such period, and
thereupon there shall be an adjustment between Lessor and Lessee with payment to
or repayment by Lessor, as the case may require, to the end that Lessor shall
receive the entire amount of Lessee's pro rata share of such excess in Operating
Expenses for such period and no more.
Lessee, at its expense, shall have the right at all reasonable times (but not
more than once in any calendar year) to audit Lessor's books and records
relating to this Lease for any year or years for which additional rental
payments become due; or at Lessor's sole discretion Lessor will provide such
audit prepared by a certified public accountant.
8. Late Charge. Lessor may charge Lessee a late charge of 5% of each rental
payment which is not received by the Lessor within fifteen (15) days of the due
date.
9. Use. It is understood that the Demised Premises may be used for purposes
permitted in Section I(h) hereof and for no other purpose without prior written
consent of Lessor. Lessee shall not use the Demised Premises for any unlawful
purpose or so as to constitute a nuisance. The Lessee, at the expiration of the
term, shall deliver up the Demised Premises in good repair and condition,
damages beyond the control of the Lessee, reasonable use, ordinary decay, wear
and tear excepted. Lessee may maintain in the Demised Premises computer
equipment and any other facility or equipment useful in the normal conduct of
Lessee's business and not inconsistent with the use of the Demised Premises as a
business office; provided, however, that Lessee covenants and agrees that any
use of the
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Demised Premises which will affect the appearance of the Building or be visible
from the outside of the Building or from the public areas of the Building, or
which exceeds structural loads of floors or walls, or which adversely affects
the mechanical, plumbing or electrical systems of the Building, or which affects
ventilation and other areas of the Building or interferes with or unreasonably
annoys other Lessees of the Building must have Lessor's prior written approval,
and any use of the Premises shall be such that the same would not adversely
affect the value of the Building and is in conformity and harmony with the
architecture of the Building. Any use of the Premises note specifically allowed
as described above is a prohibited use thereof by Lessee (and its assignees and
sublessees).
10. Quiet Enjoyment. The Lessor covenants and agrees that Lessee, on paying said
monthly rent and performing the covenants herein, shall and may peaceably and
quietly hold and enjoy the Demised Premises and common areas, including, but not
limited to, parking areas, sidewalks, entrances, exits, lobbies, restrooms and
lounges for the term aforesaid.
11. Lessee's Obligations. Lessee shall at all times keep the Demised Premises
(including, but not limited to, the interior of the Demised Premises, interior
entrances to the Demised Premises, all interior glass and interior windows of
any type) and all partitions, doors, fixtures, equipment and appurtenances
thereof in good order, condition and repair, as may be necessary. All repairs
and restorations shall be of quality and class equal to the present
installations and shall be done in a good and workmanlike manner.
12. Ordinances and Regulations. The Lessee hereby covenants and agrees to comply
with all the rules and regulations of the Board of Fire Underwriters, Officers
or Boards of the City, County or State having jurisdiction over the Demised
Premises, and with all ordinances and regulations of governmental authorities
wherein the Demised Premises are located, at Lessee's sole cost and expense, but
only insofar as any of such rules, ordinances and regulations pertain to the
manner in which the Lessee shall use the Demised Premises; the obligation to
comply in every other case, and also all cases where such rules, regulations and
ordinances require repairs, alterations, changes or additions to the Building
(including the Demised Premises) or building equipment, or any part of either,
being hereby expressly assumed by Lessor, and Lessor covenants and agrees
promptly and duly to comply with all such rules, regulations and ordinances with
which Lessee has not herein expressly agreed to comply.
13. Signs. The Lessee shall not place any signs or other advertising matter or
material on the exterior or on the interior of the Demised Premises or of the
Building, without the prior written consent of the Lessor which consent may be
withheld in its sole discretion. Any lettering or signs placed on the interior
of the Building shall be for directional purposes only, and such signs and
lettering shall be of a type, kind, character and description to be approved by
Lessor.
14. Alterations.
(a) Lessee, by occupancy hereunder, accepts the Demised Premises as being in
good repair and condition. Lessee shall maintain the Demised Premises and every
part thereof in good repair and condition, damages by causes beyond the control
of the Lessee, reasonable use, ordinary decay and wear and tear excepted. Lessee
shall not make or suffer to be made any alterations, additions or improvements
to or of the Demised Premises or any part thereof without prior written consent
of Lessor. If Lessor consents to the proposed alterations, additions, or
improvements, the same shall be at Lessee's sole cost and expense, and all
construction work done by Lessee within the Demised Premises shall be performed
in a good and workmanlike manner, in compliance with all governmental
requirements. Any such alterations shall be made at such times and in such
manner as not to unreasonably interfere with the occupation, use and enjoyment
of the remainder of the Building by the other tenants thereof. If required by
Lessor, such alterations shall be removed by Lessee upon the termination or
sooner expiration of the term of this Lease and Lessee shall repair damage to
the premises caused by such removal, all at Lessee's cost and expense. Lessee
agrees to indemnify Lessor and hold it harmless against any loss, liability or
damage resulting from such work, and Lessee, shall, if requested by Lessor,
furnish bond or other security satisfactory to Lessor against any such loss,
liability or damage.
(b) Lessee shall not permit any mechanic's, materialmen's or other liens to be
fixed or placed against the premises or the building or the land and agrees
immediately to discharge (whether by payment or by filing of the
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necessary bond, or otherwise) any mechanic's, materialmen's or other lien which
is allegedly fixed or placed against any of the foregoing as the result of an
act or omission of Lessee.
15. Lessor's Right to Inspect and Display; Roof. The Lessor shall have the
right, at reasonable times during the term of this Lease, to enter the Demised
Premises for the purposes of examining or inspecting same and of making such
repairs or alterations as the Lessor shall deem necessary. The Lessor shall also
have the right to enter the Demised Premises at all reasonable hours for the
purpose of displaying said premises to prospective tenants. The use of the roof
of the Building is expressly reserved to Lessor which shall have the sole right
to determine the use thereof.
16. Destruction of Premises.
(a) If the Demised Premises are totally destroyed by fire or other casualties,
both the Lessor and Lessee shall have the option of terminating this Lease or
any renewal thereof, upon giving written notice at any time within thirty days
from the date of such destruction, and if the Lease be so terminated, all rent
shall cease as of the date of such destruction and any prepaid rent shall be
refunded.
(b) If the Demised Premises are partially damaged by fire or other casualty, or
totally destroyed thereby and neither party elects to terminate this Lease
within the provisions of paragraph (a) above or (c) below, then the Lessor
agrees, at Lessor's sole cost and expense, to restore the Demised Premises to a
kind and quality substantially similar to that immediately prior to such
destruction or damage. Said restoration shall be commenced within a reasonable
time and completed without delay on the part of the Lessor and in any event
shall be accomplished within one hundred fifty days from the date of the fire or
other casualty. In such case, all rents paid in advance shall be proportioned as
of the date of damage or destruction and all rent thereafter accruing shall be
equitably and proportionately suspended and adjusted according to the nature and
extent of the destruction or damage, pending completion of rebuilding,
restoration, or repair, except that in the event the destruction or damage is so
extensive as to make it unfeasible for the Lessee to conduct Lessee's business
on the Demised Premises, the rent shall be completely abated until the Demised
Premises are restored by the Lessor or until the Lessee resumes use and
occupancy of the Demised Premises, whichever shall first occur. The Lessor shall
not be liable for any inconvenience or interruption of business of the Lessee
occasioned by fire or other casualty.
(c) If the Lessor undertakes to restore, rebuild or repair the premises, and
such restoration, rebuilding or repair is not accomplished within one hundred
fifty days, and such failure does not result from causes beyond the control of
Lessor, the Lessee shall have the right to terminate this Lease by written
notice to the Lessor within thirty days after expiration of said one hundred
fifty day period.
(d) Lessor shall not be liable to carry fire, casualty or extended damage
insurance on the person or property of the Lessee or any person or property
which may now or hereafter be placed in the Demised Premises.
17. Condemnation. If during the term of this Lease or any renewal thereof, the
whole of the Demised Premises, or such portion thereof as will make the Demised
Premises unusable for the purpose leased, be condemned by public authority for
public use, then, in either event, the term hereby granted shall cease and come
to an end as of the date of the vesting of title in such public authority, or
when possession is given to such public authority, whichever event last occurs.
Upon such occurrence the rent shall be proportioned as of such date and any
prepaid rent shall be returned to the Lessee. The Lessor shall be entitled to
the entire award for such taking except for any statutory claim of the Lessee
for injury, damage or destruction of Lessee's business accomplished by such
taking. If a portion of the Demised Premises is taken or condemned by public
authority for public use so as not to make the remaining portion of the Demised
Premises unusable for the purposes leased, this Lease will not be terminated but
shall continue. In such case, the rent shall be equitable and fairly reduced or
abated for the remainder of the term in proportion to the amount of the Demised
Premises taken. In no event shall the Lessor be liable to the Lessee for any
business interruption, diminution in use or for the value of any unexpired term
of this Lease.
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18. Holdover. It is further covenanted and agreed that if the Lessee, any
assignee or sublessee shall continue to occupy the Demised Premises after the
termination of this Lease (including a termination by notice hereunder), without
prior written consent of the Lessor, such tenancy shall be a tenancy at
sufferance and the amount of monthly rental shall be equal to the rent paid for
the last month of the lease term, plus fifty percent (50%) of such amount.
Acceptance by the Lessor of rent after such termination shall not constitute a
renewal of this Lease or a consent to such occupancy nor shall it waive Lessor's
right of reentry or any other right contained herein.
19. Subordination. Lessee's rights under this Lease are and shall always be
subordinate to the operation and effect of any mortgage, deed of trust, ground
lease, assignment of leases or other security instrument or operating agreement
now or hereafter placed or governing the Building or related improvements and
land on which the Demised Premises are located, or any part thereof by Lessor.
This clause shall be self-operative, and no further instrument of subordination
shall be required. In confirmation thereof, Lessee shall execute such further
assurances as may be required by Lessor or any mortgagee, trustee, beneficiary,
ground lessor or assignee under any such mortgage, deed of trust, ground lease,
assignment of leases or other security instrument. The foregoing
notwithstanding, any mortgagee, trustee, beneficiary, lessee or assignee may
elect that this Lease shall have priority over its mortgage, deed of trust,
ground lease or other security instrument and upon notification of such election
by any such mortgagee, beneficiary or ground lessor to lessee, this lease shall
be deemed to have priority over said mortgage, deed of trust, ground lease,
assignment of leases or other security instrument. Lessee agrees to execute all
instruments requested by any such mortgagee, trustee, beneficiary, ground lessor
or assignee to confirm such priority or subordination, as the case may be.
Lessee hereby attorns to any successors to Lessor's interest in this lease, and
shall recognize such successor as Lessor hereunder. Lessee agrees to execute all
instruments requested by such successor to confirm such attornment. The Lessee
by virtue of its attornment upon payment of the rent reserved and the
compliance, performance and discharge of the terms, conditions, covenants and
obligations on the part of the Lessee to be performed hereunder, Lessee shall
have the right to the peaceable possession of the Demised Premises for the term
of this lease and any extension or renewal thereof and shall not be disturbed in
the event of the termination or foreclosure of any mortgage, deed of trust,
ground lease, assignment of leases, or security instrument now or hereafter
placed or governing the Demised Premises or the consentual transfer or
assignment of Lessor's interest in the Demised Premises; such successor in title
to the Lessor hereunder shall acknowledge and confirm to the Lessee that the
Lessee's right to continue to occupy said premises pursuant to the term of this
lease shall in no wise be affected by such termination.
Lessor hereby agrees not to disturb the peaceable possession of the Lessee under
this Lease in accordance with the hereinabove provided provision so long as the
Lessee performs its obligations in accordance with such hereinabove provided
provision.
20. Indemnification. Lessor shall not be liable to the Lessee, or any of its
agents, employees, servants or invitees, for any damage to persons or property
due to the construction, condition or design or any defect in the Project or its
mechanical systems which may exist or subsequently occur, and Lessee, with
respect to itself and its agents, employees, servants and invitees, hereby
expressly assumes all risks of damage and liability to persons and property,
either proximate or remote by reason of the present or future condition of the
Premises. Additionally, Lessee agrees to indemnify and hold Lessor harmless of,
from and against all claims, actions, damages, liabilities and expenses asserted
against the Lessor on account of injuries to person or damage to property
(including any diminution in value thereof) when and to the extent that any such
damages or injury may be caused, either proximate or remote, wholly or in part
by any act or omission, whether negligent or not, of Lessee or any of its
agents, servants, employees, contractors, patrons or invitees (while such
invitees are on the Premises) or of any other person entering upon the Premises
under or with the express or implied invitation of Lessee, or if any such injury
or damage may in any other way arise from or out of the occupancy or use of
Lessee, its agents, employees and invitees of the Premises, or for the disposal
on, or use of, the Premises of any hazardous or toxic waste materials, including
without limitation gasoline and oil spillage or leakage, in violation of any
federal, state or municipal environmental or other laws, rules or regulations,
including the removal of such materials. This paragraph is for the benefit of
the Lessor only, and no right of action shall accrue hereunder to any third
party by way of subrogation or otherwise.
21. Insurance.
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(a) Public Liability Insurance. Lessee shall take out and keep in force and
effect during the term hereof, at Lessee's expense, commercial general liability
and property damage insurance with limits of liability not less than One Million
and 00/100 Dollars ($1,000,000.00) per accident/occurrence and $1,000,000 in the
aggregate, insuring against any and all liability of the insured with respect to
personal injury or death arising out of the use or occupancy of the leased
premises, and property damage liability insurance with a limit of not less than
One Million and 00/100 Dollars ($1,000,000.00) per accident/occurrence. Such
insurance shall be issued by companies and with policies in form reasonably
satisfactory to Lessor. Said policies shall name both Lessee and Lessor as
insureds.
(b) Fire or Other Casualty Insurance.
(i) Lessor agrees that it will at all times during the term of this Lease insure
and keep in effect on the Demised Premises (excluding Lessee's fixtures,
furniture, stock in trade, equipment and personal property), fire and extended
coverage insurance.
(ii) Lessee shall maintain in full force and effect during the term of this
Lease, in responsible companies approved by Lessor fire and extended coverage
insurance (including an endorsement for vandalism and malicious mischief)
covering all Lessee's property in, on or about the Premises, with full waiver of
subrogation rights against Lessor and in an amount equal to at least 80% of the
full replacement cost of such property. Certificates of such insurance shall be
delivered to Lessor within thirty (30) days of the execution date of this Lease,
and thereafter within ten (10) days of Lessor's request therefor. All such
insurance policies shall contain a landlord's protective liability endorsement
in favor of Lessor and indicate that at least ten days' prior written notice
shall be delivered to Lessor by the insurer prior to termination or cancellation
of such insurance.
(c) Personal Property. Lessee shall be solely responsible for insuring and
paying the cost of insurance covering its fixtures, furniture, stock in trade,
equipment and Lessee's personal property.
(d) Insurance Proceeds. All proceeds of the fire and extended coverage
insurance, if and when received by Lessor, shall be used first to restore
improvements to the condition which they were in prior to the occurrence of the
damage, unless the Lease is terminated as hereinafter provided.
(e) Policies. All policies of insurance shall be written by an insurance company
or companies authorized to do business in the State of Texas. Lessee shall
furnish Lessor upon request an insurance certificate evidencing adequate
insurance as required hereunder. Lessee will procure endorsements on the
policies required to be maintained by it requiring that at least thirty (30)
days' prior written notice be given to Lessor before any cancellation or
reduction of insurance under any such policy. If Lessee fails to comply with the
requirements of this Lease, Lessor may obtain such insurance and keep the same
in effect, and Lessee shall pay Lessor the premium costs thereof, and until
Lessor is paid by Lessee, interest thereon at the maximum rate permitted by law.
22. Waiver of Subrogation. Notwithstanding anything contained in this Lease to
the contrary, Lessor and Lessee each hereby waives any and all rights of
recovery, claim, action, or cause of action, against the other, its agents,
officers, or employees, for any loss or damage that may occur to the Premises,
or any improvements thereto, or the building of which the Premises are a part,
or any improvements thereto, or any personal property of such party therein, by
reason of fire, the elements, or any other cause(s) for which insurance is
carried by the injured party at the time of such damage, regardless of the cause
of such loss or damage, including negligence of the other party hereto, its
agents, servants or employees; provided, however, that this provision shall be
inapplicable if it shall have the effect of invalidating the insurance coverage
of a party hereto. Both Lessor and Lessee agree to obtain an endorsement
acknowledging the waiver of subrogation as provided herein and to furnish to the
other party proof that such endorsement has been obtained.
23. Personal Property Taxes. Lessee agrees to pay, before the due date, all
taxes, assessments and governmental charges of any kind and nature whatsoever
levied or assessed against Lessee's personal property, equipment and fixtures,
stock in trade or other personal property owned by Lessee and placed by Lessee
in or about the Demised Premises.
<PAGE>
24. Default. The following events are deemed to be events of default by Lessee
under this Lease:
(1) Lessee shall fail to pay any installment of rent hereunder and such failure
shall continue for a period of five (5) days.
(2) Lessee shall fail to comply with any term, provision or covenant of this
Lease, other than the payment of rent, and shall not cure such failure within
thirty (30) days after written notice thereof to Lessee.
(3) Lessee or any guarantor of Lessee's obligations under this Lease become
insolvent, or shall make a transfer in fraud of creditors, or shall make an
assignment for the benefit of creditors.
(4) Lessee or any guarantor of Lessee's obligations under this Lease file a
petition under any section or chapter of the Bankruptcy Reform Act of 1978, as
amended, or under any similar law or statute of the United States or any State
thereof; or Lessee or any guarantor of Lessee's obligations under this Lease
shall be adjudged bankrupt or insolvent in proceedings filed against Lessee or
any guarantor of Lessee's obligations under this Lease thereunder.
(5) A receiver or trustee is appointed for the Demised Premises or for all or
substantially all of the assets of Lessee or any guarantor of Lessee's
obligations under this Lease.
(6) Lessee deserts or vacates all or any substantial portion of the Demised
Premises, or does not conduct the business permitted herein for a period of ten
(10) days during any thirty day period.
(7) Lessee shall do or permit to be done anything which creates a lien upon the
premises.
Upon the occurrence of any such event of default, Lessor shall have the option
to pursue any one or more of the following remedies:
(A) Terminate this Lease, in which event Lessee shall immediately surrender the
Demised Premises to Lessor, and if Lessee fails to do so, Lessor may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the Demised Premises and expel or remove
Lessee and any other person who may be occupying said premises or any part
thereof, by force if necessary, without being liable for prosecution or any
claim of damages therefor; and Lessee agrees to pay to Lessor on demand the
amount of all losses and damage which Lessor may suffer by reason of such
termination, whether through inability to relet the premises on satisfactory
terms or otherwise.
(B) Enter upon and take possession of the Demised Premises and expel or remove
Lessee and any other person who may be occupying said premises or any part
thereof, and if Lessor so elects, relet the premises on such terms as Lessor may
deem advisable and receive the rent therefor; and Lessee agrees to pay to Lessor
on demand any deficiency that may arise by reason of such reletting.
(C) Enter upon the Demised Premises without being liable for prosecution or any
claim for damages therefor, and do whatever Lessee is obligated to do under the
terms of this Lease; and Lessee agrees to reimburse Lessor on demand for any
expenses which Lessor may incur in thus effecting compliance with Lessee's
obligations under this Lease, and Lessee further agrees that Lessor shall not be
liable for any damages resulting to the Lessee from such action.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any other
remedies herein provided or provided by law, nor shall pursuit of any other such
remedy constitute a forfeiture or waiver of any rent due to Lessor hereunder or
of any damages accruing to Lessor by reason of the violation of any of the
terms, provisions and covenants herein contained. Forbearance by Lessor to
enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default. In
determining the amount of loss or damage which Lessor may suffer by reason of
termination of this Lease or the deficiency arising by reason of any reletting
by Lessor as above provided, allowance shall be made for the expense of
repossession and any repairs or remodeling undertaken by Lessor following
repossession. In the event the Lessee shall default in the payment of rent or
any other sums payable by the Lessee herein, or if the Lessee shall default in
the performance of
<PAGE>
any other covenants or agreements of this Lease, or if the Lessee should become
bankrupt or insolvent or any debtor proceedings be taken by or against the
Lessee, then and in addition to any and all legal remedies and rights, the
Lessor may declare the entire balance of the rent for the remainder of the term
to be due and payable and may collect the same by distress or otherwise and
Lessor shall have a lien on the personal property of the Lessee which is located
in the Demised Premises and in order to protect its security interest in the
said property Lessor may without first obtaining a distress warrant, lock up the
Demised Premises in order to protect said interest in the secured property, or
the Lessor may terminate this Lease and retake possession of the Demised
Premises, or enter the Demised Premises and relet the same without termination,
in which later event the Lessee covenants and agrees to pay any deficiency after
Lessee is credited with the rent thereby obtained less all repairs and expenses
(including the expenses of obtaining possession), or the Lessor may resort to
any two or more of such remedies or rights, and adoption of one or more such
remedies or rights shall not necessarily prevent the enforcement of others
concurrently or thereafter.
The Lessee also covenants and agrees to pay reasonable attorneys' fees and costs
and expenses of the Lessor, including court costs, if the Lessor employs an
attorney to collect rent or enforce other rights of the Lessor herein in event
of any breach as aforesaid and the same shall be payable regardless of whether
collection or enforcement is effected by suit or otherwise.
25. Common Area. The "Common Area", if any, is the part of the Building
designated by Lessor from time to time for the common use of all tenants,
including among other facilities, parking area, sidewalks, landscaping, curbs,
loading areas, private streets and alleys, if any, lighting facilities, foyers,
hallways, restrooms, and other areas and improvements provided by Lessor for the
common use of all lessees of the Building, their invitees, guests, agents,
servants or employees, customers, subtenants, licensees, invitees, all of which
common areas shall be subject to Lessor's sole management and control and shall
be operated and maintained in such manner as Lessor, in its discretion, shall
determine. Lessor reserves the right to change from time to time the dimensions
and location of the Common Area, as well as the location, dimensions, identity
and type of any Building in the Common Area, and to construct additional
buildings or additional stories on existing buildings or other improvements in
the Building, and to eliminate such buildings or improvements. Lessee and its
employees, customers, subtenants, licensees, and invitees shall have the
nonexclusive right and license to use the Common Area as constituted from time
to time, such use to be in common with Lessor, other lessees of the Building and
other persons permitted by Lessor to use the same, and subject to such
reasonable rules and regulations governing the use as Lessor may from time to
time prescribe, including the designation of specific areas within the Building
or in reasonable proximity thereto in which automobiles owned by Lessee, its
employees, subtenants, licensees and invitees shall be parked. Lessor may
temporarily close any part of the Common Area for such periods of time as may be
necessary to prevent the public from obtaining prescriptive rights or to make
repairs or alterations.
26. Agents, Commissions. Lessee warrants that it has had no dealing with any
broker or agent in connection with the negotiation or execution of this Lease
other than Lessor's broker, if any. In the event any agent or broker other than
Lessor's broker shall make a claim for a commission, or fee, Lessee shall be
responsible for payment thereof and hereby indemnifies and holds Lessor harmless
from such claim for commission or fees.
27. Sale. In the event of the transfer and assignment by Lessor of its interest
in this Lease and in the Building containing the Demised Premises to a person
expressly assuming Lessor's obligations under this Lease, Lessor shall thereby
be released from any further obligations hereunder, and Lessee agrees to look
solely to such successor in interest of the Lessor for performance of such
obligations. Any security given by Lessee to secure performance of Lessee's
obligations hereunder may be assigned and transferred by Lessor to such
successor in interest, and Lessor shall thereby be discharged of any further
obligation relating thereto.
28. Non-Liability. Lessee specifically agrees to look solely to Lessor's
interest in the Project for the recovery of any judgment from Lessor, it being
agreed that Lessor shall never be personally liable for any such judgment. The
provision contained in the foregoing sentence is not intended to, and shall not,
limit any right that Lessee might otherwise have to obtain injunctive relief
against Lessor or Lessor's successors in interest, or any other action not
involving the personal liability of Lessor to respond in monetary damages from
assets other than Lessor's interest in the Project or any suit or action in
connection with enforcement or collection of amounts which may become owing or
payable under or on account of insurance maintained by Lessor.
<PAGE>
29. Rules and Regulations. The Rules and Regulations appended as Exhibit "C" to
this Lease are hereby made a part of this Lease, and Lessee agrees to comply
with and observe the same. Lessee's failure to keep and observe said Rules and
Regulations shall constitute a breach of the terms of this Lease in the manner
as if the same were contained herein as covenants. Lessor reserves the right
from time to time to amend these Rules and Regulations and to adopt additional
Rules and Regulations. Written notice of such amended or additional Rules and
Regulations, if any, shall be given to Lessee, and Lessee agrees thereupon to
comply with and observe all such amended and additional rules and regulations,
provided the same shall apply uniformly to all tenants of the Project.
30. Estoppel Certificate. Lessee agrees to execute, acknowledge and deliver to
Lessor at the Commencement Date an instrument ratifying this Lease and
certifying: (i) that Lessee has entered into occupancy of the Leased Premises
and the date of such entry; (ii) that this Lease is in full force and effect,
and has not been assigned, modified, supplemented or amended in any way (or if
there has been any assignment, modification, supplement or amendment identifying
the same); (iii) that this Lease represents the entire agreement between Lessor
and Lessee as to the subject matters hereof (or if there has been any
assignment, modification, supplement or amendment identifying the same); (iv)
the date of commencement and expiration of the term; (v) that all conditions
under the Lease to be performed by Lessor have been satisfied; (vi) that no
default exists in the performance or observance of any covenant or condition in
this Lease and there are no defenses or offsets against the enforcement of this
Lease by Lessor (or specifying such default, defense or offset); (vii) that,
except for a security deposit, no rental has been paid in advance and no
security has been deposited with Lessor; and (viii) the date to which rental has
been paid under this Lease.
31. Security Deposit. The security deposit mentioned in Section I(g) shall be
paid to Lessor on the date of Lessee's execution of this Lease. Upon receipt
from Lessee of the security deposit above, such sum shall be held by Lessor
without interest as security for the faithful performance by Lessee of Lessee's
covenants and obligations under this Lease, it being expressly understood that
such deposit is not an advance payment of rental, except as noted below, or a
measure of Lessor's damages in case of default by Lessee. If at any time during
the initial term or any extension thereof the rental required to be paid
hereunder, or any portion of it, shall be overdue and unpaid, or any other sum
payable by Lessee to Lessor hereunder shall be overdue and unpaid, then Lessor
may, at its option, appropriate and apply any portion of the said deposit to the
payment of such overdue rental or other sum. Should Lessee comply with all of
the terms, covenants and conditions of this Lease and promptly pay all sums due
hereunder the balance of the security deposit as described below shall be
returned to Lessee upon termination of this Lease. Notwithstanding the above,
Lessor and Lessee have agreed that up to 75% of the Security Deposit may be
applied as payment of rental during the initial eighteen (18) months of the
Lease Term as noted in the Base Rent schedule on Exhibit B. The balance (25% of
the Security Deposit) shall be retained by Lessor over the term of the Lease
pursuant to this Section 31.
32. Keys and Locks. Lessor shall furnish Lessee with keys and locks for the
corridor doors entering the Demised Premises. All such keys shall remain the
property of the Lessor. No additional locks shall be allowed on any door of the
Demised Premises without Lessor's permission, and Lessee shall not make, or
permit to be made any duplicate keys, except those furnished by Lessor. Upon
termination of this Lease, Lessee shall surrender to Lessor all keys of the
Demised Premises, and give to Lessor the explanation of the combination of all
locks for safes, safe cabinets or vaults and doors, if any, in the Demised
Premises, provided, however, Lessee shall place no safe, safe cabinet, or vault
within the Demised Premises, without the written consent of Lessor.
33. Rights Reserved. Lessor reserves the right (a) to change the Building's name
or street address; (b) to install, affix and maintain any and all signs on the
exterior and interior of the Building; (c) to retain and to use in appropriate
instances, keys to all doors within and into the Premises, it being agreed that
no locks or bolts shall be altered, changed or added without the prior written
consent of Lessor; (d) to decorate or to make repairs, alterations, additions or
improvements, whether structural or otherwise, in and about the Building, or any
part thereof, and for such purposes to enter upon the Premises; and (e) to grant
to anyone the exclusive right to conduct any business or render any services in
the Building.
34. Miscellaneous.
<PAGE>
(a) Wherever any notice is required or permitted hereunder such notice shall be
in writing. Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered, whether actually received or not,
when deposited in the United States Mail, postage prepaid, registered mail,
return receipt requested, addressed to the parties hereto at the respective
addresses set out in Section 1.01 above, or at such other addresses as they have
theretofore specified by written notice.
(b) Nothing herein contained shall be deemed or construed by the parties hereto,
nor by any third party, as creating the relationship of principal and agent or
of partnership or joint venture between the parties hereto, it being understood
and agreed that neither the method of computation of rent, nor any other
provision contained herein, nor any acts of the parties hereto, shall be deemed
to create any relationship between the parties hereto other than the
relationship of landlord and tenant. Whenever herein the singular number is
used, the same shall include the plural, and words of any gender shall include
each other gender.
(c) The captions used herein are for convenience only and do not limit or
amplify the provisions hereof.
(d) One or more waivers of any covenant, term or condition of this Lease by
either party shall not be construed as a waiver of subsequent breach of the same
covenant, term or condition. The consent or approval by either party to or of
any act by the other party requiring such consent or approval shall not be
deemed to waive, or render unnecessary, consent to or approval of any subsequent
similar act.
(e) This Lease contains the entire agreement between the parties, and no
agreement shall be effective to change, modify or terminate this Lease in whole
or in part unless such agreement is in writing and duly signed by the party
against whom enforcement of such change, modification or termination is sought.
(f) The terms, provisions and covenants contained in this Lease shall apply to,
inure to the benefit of, and be binding upon the parties hereto and their
respective heirs, successors in interest and legal representatives except as
otherwise herein expressly provided.
(g) The laws of the State of Texas shall govern the interpretation, validity,
performance and enforcement of this Lease. If any provision of this Lease shall
be held to be invalid or unenforceable, the validity and enforceability of the
remaining provisions of this Lease shall not be affected thereby. Exclusive
venue for any litigation arising out of the interpretation, validity,
performance or enforcement of this Lease lies in Harris County, Texas.
IN WITNESS WHEREOF, Lessee and Lessor have caused this instrument to be executed
as of the date first above written, by their respective officers or parties
thereunto duly authorized.
LESSOR: TRINITY HOPE, INC.
----------------------
By: Gregory S. Nelson
LESSEE: LAPTOP SOLUTIONS, INC., a Texas corporation
-----------------------
By: ROBERT SMITH
<PAGE>
LIST OF EXHIBITS
EXHIBIT "A" - Diagram of Leased Premises (omitted)
EXHIBIT "B" - Schedule of Rent
EXHIBIT "C" - Rules and Regulations
EXHIBIT "D" - SPECIAL PROVISIONS
<PAGE>
EXHIBIT "B"
TERM MONTHLY RENT
36 MONTHS $12,668.25 avg
RENT SCHEDULE
MONTHS MONTHLY RENT
- ------ ------------
1 - 18 $ 6,334.12 *
19-36 $12,668.25
* The Lessee and Lessor have agreed pursuant to Section 31 of the Lease that
Lessee may apply 75% of the Security Deposit for payment of rental on a prorata
basis for the first eighteen (18) months of the lease term. This results in a
reduced monthly rental of $6,334.12 for the initial eighteen (18) months of the
lease term. Lessor shall retain the balance of the Security Deposit (25%) over
the remainder of the lease term.
Notwithstanding the above, Lessor shall have the option to increase the Base
Rental by exercising its Market Adjustment to Base Rental Provision as defined
below.
Lessor shall have the option to increase the Base Market Rental to a fair market
rental as reasonably determined by Lessor in its sole discretion (Market
Adjustment to Base Rental) at any time during this Lease Term by providing
Lessee with written notice ("Notice") to Lessee provided Lessor complies with
the following provisions. Provided Lessor pays to Lessee the amount set forth in
the next sentence, the Base Rental shall increase to the fair market rental rate
determined by Lessor in such notice at the next installment of Base Rental
becoming due. Notwithstanding anything contained herein to the contrary, in no
event shall the Base Rental increase during the term hereof pursuant to this
paragraph by more than $3.00 per net rentable square foot. If Lessor exercises
this adjustment to Base Rental, Lessor shall compensate Lessee for such
adjustment by paying to Lessee simultaneously with the Notice, an amount equal
to the amount of the difference between (a) the increased Base Rental over the
remainder of the term, and (b) the negotiated rental rate contained in this
Lease, which payment shall be made simultaneously with the delivery of the
Notice. If Lessor fails to pay Lessee such sum, the Base Rental shall not be
adjusted upward, notwithstanding anything contained herein to the contrary. For
example, if Lessor exercises its option on 7/29/2002 at the time Lessee is
paying $10.50 per net rentable square foot of space per year and Lessor
exercises the option to increase the Base Rental upward by a $1.00 per net
rentable square foot per year to $11.50, then Lessor would pay to Lessee,
simultaneously with such notice, $1.00 per net rentable square foot per year
remaining for the Lease Term, or $14,478, simultaneously with Lessor's Notice to
increase the Base Rental.
<PAGE>
EXHIBIT "C"
RULES AND REGULATIONS
1. The sidewalks, entries, passages and stairways shall not be obstructed by the
Lessee, or its agents, or used by them for any purpose other than ingress and
egress to and from the Premises.
2. a. Furniture, equipment or supplies shall be moved in or out of the Building
only during such hours and in such manner as may be prescribed by the Lessor.
b. No safe or article, the weight of which may constitute a hazard or danger to
the Building or its equipment, shall be moved into the Premises.
c. Safes and other equipment, the weight of which is not excessive, shall be
moved into, from or about the Building only during the hours and in such manner
as shall be prescribed by the Lessor, and the Lessor shall have the right to
designate the location of such articles in the Premises hereby demised.
3. Restrooms and other water fixtures shall not be used for any purpose other
than that for which the same are intended, and any damage resulting to the same
from misuse on the part of the Lessee, its agents or employees, shall be paid
for by the Lessee. No person shall waste water by tying back or wedging the
faucets, or in any other manner.
4. No animal shall be allowed in the offices, halls, or corridors in the
Buildings.
5. Bicycles or other vehicles shall not be permitted in the offices, halls or
corridors.
6. No person shall disturb the occupants of this or adjoining buildings by the
use of any television, radio or musical instrument or by the making of loud or
disruptive noises.
7. No additional lock or locks shall be placed by the Lessee on any door in the
Building unless the written consent of the Lessor shall first be obtained. A
reasonable number of keys to the Premises and to the restrooms (if locked) will
be furnished by the Lessor, and neither the Lessee, its agents or employees,
shall have any duplicate keys made. At the termination of this tenancy, the
Lessee shall promptly return to the Lessor all keys to offices, restrooms or
vaults.
8. The use of oil, gas or inflammable liquids for heating, lighting or any other
purposes is expressly prohibited. Explosives or other articles deemed hazardous
shall not be brought into the Building.
9. The Lessee shall not mark upon, paint sighs upon, cut, drill into, drive
nails or screws into, or in any way deface the walls, ceiling, partitions or
floors of the Premises or of the Building, and any defacement, damage or injury
caused by the Lessee, its agents or employees, shall be paid for by the Lessee.
10. Lessee agrees to use chair pads to be furnished by Lessee, under all rolling
and ordinary desk chairs in the carpeted areas throughout the term of the Lease
and that all draperies or window coverings, if any, shall not be lined, and be
of an open weave.
11. Electric floor space heaters shall not be used.
<PAGE>
12. Canvassing, soliciting and peddling in or about the Building are prohibited.
13. The Lessor reserves the right to make such other and further reasonable
rules and regulations as in its judgment may from time to time be needful and
desirable for the safety, security, care and cleanliness of the Premises and
preservation of good order therein.
14. Lessor reserves the right to exclude or expel from the Building any person
who, in the judgment of Lessor, is intoxicated or under the influence of liquor
or drugs, or who shall in any manner do any act in violation of any of the rules
and regulations of the Building.
15. No vending machine or machines of any description shall be installed,
maintained or operated in the Premises without the written consent of Lessor.
16. Lessor shall have the right, exercisable without notice and without
liability to Lessee, to change the name and street address of the Building of
which the Premises are a part.
17. Lessor shall have the right to control and operate the public portions of
the Building, and the public facilities, and heating and air conditioning, as
well as facilities furnished for the common use of the tenants including parking
areas, in such manner as it deems best for the benefit of the tenants generally.
18. Upon written notice to Lessee, Lessor shall have the right to impose a "NO
SMOKING" regulation on both Lessee, common and other public areas.
<PAGE>
EXHIBIT "D"
SPECIAL PROVISIONS
1. AMERICAN WITH DISABILITIES ACT. Lessor shall be responsible for the cost of
compliance with the Americans with Disabilities Act of 1990 in all common areas
of the Building and such compliance shall be at the sole discretion and
interpretation of Lessor. Lessee shall be responsible for compliance with the
provisions of said act in the leased premises. Lessor and Lessee agree to
defend, indemnify and hold each other harmless from and against any loss,
claims, demands, costs (including attorney's fees and disbursements), damages,
fines, causes of action or penalties resulting from any violations of said act
in the area or areas for which each party is responsible.
Lessor will comply, except that the costs of any changes to the
Building required by modification to any laws and/or regulations subsequent to
the lease commencement, shall be amortized at 10% interest over the useful life
of said change or changes and passed on as an operating expense of the Building.
2. ENVIRONMENTAL POLLUTION & HAZARDOUS SUBSTANCES:
The following shall be added to this Lease:
LESSEE'S RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES
1. Hazardous Substances. The term "Hazardous Substances", as
used in this Lease, shall include, without limitation,
flammables, explosives radioactive materials, asbestos,
polychlorinated biphenyls (PCBs), chemicals known to cause
cancer or reproductive toxicity, pollutants, contaminants,
hazardous wastes, toxic substances or related materials,
petroleum and petroleum products, and substances declared to
be hazardous toxic under any law or regulation now or
hereafter enacted or promulgated by any governmental authority.
2. Lessee's Restrictions. Lessee shall not cause:
(a) Any violation of any federal, state, or local law, ordinance,
or regulation now or hereafter enacted, related to
environmental conditions on, under , or about the Premises, or
arising from Lessee's use or occupancy of the premises,
including, but not limited to, soil and ground water
conditions; or
(b) The use, generation, release, manufacture, refining,
production, processing, storage, or disposal of any Hazardous
Substance on, under or about the Premises in violation of any
law, or the transportation to or from the Premises of any
Hazardous Substance in violation of any law, except as
specifically disclosed on Schedule A to this Lease.
3. Environmental Clean-Up
(a) Lessee shall, at Lessee's own expense, comply with all laws
regulating the use, generation, storage, transportation, or
disposal of Hazardous Substances ("Laws").
<PAGE>
(b) Lessee shall, at Lessee's own expense, make all submissions
to, provide all information required by, and comply with all
requirements of all governmental authorities (the
"Authorities") under the Laws.
(c) Should any Authority or any third party demand that a
clean-up plan be prepared and that a clean-up be
undertaken because of any deposit, spill, discharge, or
other release of Hazardous Substances is caused by
Lessee at or from the Premises, or which arises at any
time from Lessee's use or occupancy of the Premises,
then Lessee shall, at Lessee's own expense, carry out
all such clean-up plans.
(d) Lessee shall promptly provide all information regarding
the use, generation, storage, transportation, or
disposal of Hazardous Substances that is requested by
Lessor. If Lessee fails to fulfill any duty imposed
under this Paragraph (3) after ten (10) days written
notice from Lessor or such longer period of time as may
be required to do so by the exercise of reasonable
diligence by Lessee Lessor may do so; and in such case,
Lessee shall cooperate with Lessor in order to prepare
all documents Lessor reasonably deems necessary or
appropriate to determine the applicability of the Laws
to the Premises and Lessee's use thereof, and for
compliance therewith, the Lessee shall execute all
documents reasonably requested by Lessor promptly upon
Lessor's request. No such action by Lessor and no
attempt made by Lessor to mitigate damages under any Law
shall constitute a waiver of any of Lessee's obligations
under this Paragraph (3).
(e) Lessee's obligations and liabilities under this Paragraph (3)
shall survive the expiration of this Lease.
4. Lessee's Indemnity.
(a) Lessee shall indemnify, defend, and hold harmless Owner,
the manager of the Property, and their respective
officers, directors, beneficiaries, shareholders,
partners, agents, and employees from all fines, suits,
procedures, claims, and actions of every kind, and all
costs associated therewith (including attorney's and
consultants' fees) arising out of or in any way
connected with any deposit, spill, discharge, or other
release of Hazardous Substances that occurs or which
arises at any time from Lessee's use or occupancy of the
Premises, or from Lessee's failure to provide all
information, make all submissions, and take all steps
required by all Authorities under the Laws and all other
environmental laws.
(b) Lessee's obligations and liabilities under this Paragraph (4)
shall survive the expiration of this Lease.
3. ASSIGNMENT AND SUBLEASE.
Lessee shall not assign or in any manner transfer this Lease or any estate or
interest herein, or sublet the premises or any part thereof, or grant any
license, concession or other right of occupancy of any portion of the premises
without the prior written consent of Lessor, which shall not be unreasonably
withheld or delayed. Lessor shall have the option, upon receipt from Lessee of a
written request for Lessor's consent to a subletting or assignment, to refuse
its consent to the proposed assignment or sublease, which option shall be deemed
to be elected unless Lessor gives Lessee written notice providing otherwise.
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If Lessee desires at any time to enter into an assignment of this Lease or a
sublease of all or part of the Premises, Lessee shall give written notice to
Lessor of its desire to do so, which notice shall contain (a) the name of the
proposed assignee or subtenant, (b) the nature of the proposed assignee's or
subtenant's business to be carried on in the Premises, (c) the terms and
provisions of the proposed assignment or sublease, and (d) resumes, business
plans, references, financial information, and other information as Lessor may
reasonably request concerning the proposed assignee or subtenant.
Lessee shall have the right to make an "Approved Sublease" of the Demised
Premises or any portion thereof in accordance with this Section 3 only to an
"Approved Sublessee" as defined herein. For purposes hereof, an "Approved
Sublease" is a sublease of a portion of the Demised Premises to an "Approved
Sublessee" as defined below provided, (1) Lessee shall have given Lessor at
least thirty (30) days prior written notice of such proposed Approved Sublease,
together with such information as Lessor may request in order to verify that all
requirements for an Approved Sublease, have been met, and an original of the
instrument evidencing such Approved Sublease to be executed by Lessee and the
proposed Approved Sublessee, wherein such proposed Approved Sublessee
specifically agrees that its possession is subject to all of the obligations of
Lessee hereunder and agrees to abide by the terms hereof, which relate to the
term and the portion of the Demised Premises covered by such sublease (and
Lessee promptly furnishes Lessor with a duplicate original of such instrument,
fully executed, following such Approved Sublease), (2) the Demised Premises will
thereafter be used only for the purposes described in herein, and or no other
purpose, (3) Lessee is not in default under the terms of this Lease as set forth
herein, at the time Lessee (a) proposes to make and (b) makes, an Approved
Sublease, and (4) the proposed Approved Sublessee will not use any part of the
Demised Premises for any purpose not authorized by this Lease. Notwithstanding
any Approved Sublease, Lessee, and any guarantor of Lessee's obligations
hereunder, shall at all times remain primarily obligated and liable for the
payment of the Base Rental, Additional Rent, and any other sums becoming due to
Lessor under the terms of this Lease, and for compliance with all of Lessee's
other obligations under this Lease. If the difference between (a) the Base Rent
plus Additional Rent and other sums due and payable by any Approved Sublessee
under any such Approved Sublease, minus (b) Lessee's Leasing Costs (limited to
those amounts that would occur in a Fair Market Value transaction) exceeds the
Base Rental and Additional Rent payable under this Lease with respect to such
space for such term, Lessee shall pay to Lessor all such excess within ten (10)
days following receipt thereof by Lessee (it being understood that lessee shall
pay Lessor such excess on a monthly basis after Lessee has recovered Lessee's
Leasing Costs). For purposes of this section 10(B) the term "Approved Sublessee"
means any of the following: (i) a subsidiary of Lessee in which Lessee own
directly at least fifty-one percent (51%) of the voting securities and voting
interest (ii) a corporation, partnership, personal estate, trust, or any
combination of the foregoing, which own at least fifty-one percent (51%)
directly or indirectly of the voting securities and voting interests in Lessee
("Lessee's Parent Company"), and (iii) a subsidiary of Lessee's Parent Company,
if any, in which Lessee's Parent Company owns at least fifty-one percent (51%)
directly or indirectly of the voting securities and voting interests thereof,
and (a) whose use and occupancy of the portion the Demised Premises covered by
its sublease will not affect (i) the security and well being of the Building,
(ii) Lessor's obligations to other tenants of the Building, (iii) Lessor's use
of the Demised Premises or use of the Building by other tenants of the Building,
and (iv) the characteristics or quality of the Building, and (b) who is not a
governmental or quasi-governmental authority, a religious organization or a
public or private school.
Lessee shall, despite any permitted assignment or sublease, remain directly and
primarily liable for the performance of all of the covenants, duties, and
obligations of Lessee hereunder, unless Lessor agrees in writing to release
Lessee of such responsibility, and Lessor shall be permitted to enforce the
provisions of this Lease against Lessee or any assignee or sublessee without
demand upon or proceeding in any way against any other person. Moreover, in the
event that the rental due and payable by a sublessee exceeds rent payable under
this Lease, then Lessee shall be bound and obligated to pay Lessor all such
excess consideration within ten (10) days following receipt thereof by Lessee
from such sublessee, assignee, licensee or other transferee, as the case may be.
4. RENEWAL OPTION
Subject to the preferential right of any current, or pending, owner
of the building to lease said space for its own use, and provided Lessee is not
in monetary or material default under this Lease, Lessee is hereby granted one
(1) Renewal Option (the "Renewal Option") for a two (2) year term (the "Renewal
Term") to be
<PAGE>
effective July 29, 2000 for all, but not a part of, the entire premises upon the
same terms and conditions of this Lease with the following exceptions:
(a) The Renewal Option will contain no further renewal options
unless granted by Lessor in writing;
(b) The rental rate shall be at one hundred percent (100%) of the
Fair Market Rental Rate then in effect for comparable buildings in the area and
as more clearly defined herein.
(c) Lessee must give Lessor written notice of its intent to exercise
the Renewal Option no earlier than nine months and no later than six (6) months
prior to the expiration of the initial Term.
(d) Lessor shall provide Lessee with its interpretation of Fair
Market Rental Rate within fifteen (15) days of above notice of Lessee's intent
to exercise this Renewal Option. Lessee may accept the rate as quoted, or elect
to enter into negotiations with Lessor for a period of not to exceed forty-five
(45) days, during which time both parties will be required to negotiate on a
diligent, good faith basis to arrive at an agreement concerning the fair market
value rental rate. Should an agreement not be reached by both parties during
said forty-five (45) day period, either party may, at its option, terminate the
negotiations at which time Lessee's option to renew shall expire and be of no
further force and effect.
If agreement is reached during the negotiation period, then Landlord shall draft
an amendment to the Lease evidencing the agreement within thirty (30) days of
agreement being reached. Within thirty (30) days of Lessor's submission of this
document to Lessee, Lessee shall execute and return said document to Lessor.
Notwithstanding the above, if Lessee has been in monetary or material default
three (3) or more times during the initial term without having cured such
default(s) using its best efforts to do so with continuity and diligence, then
Lessor shall have the option to rescind Lessee's right to the renewal option
outlined above. Lessor shall be obligated to inform Lessee by written notice
whenever Lessor determines that an uncured monetary or material default which
would affect this renewal option occurs.
For the purposes of definition in this Lease document, Fair Market Value shall
have the following meaning:
With respect to the Renewal option contained herein, the applicable "fair market
rental rate" shall be that rate charged for space of comparable size and
condition in comparable office buildings in the area in which the Building is
located, taking into consideration the location, quality and age of the
building, floor level, extent of leasehold improvements (existing or to be
provided), rental abatement, lease takeovers/assumptions, moving expenses and
other concessions, term of lease, extent of services to be provided, distinction
between "Gross" and "Net" lease, base year or other amount allowed by Lessor for
payment of building operating expenses (expense stop), the time the particular
rental under consideration became or is to become effective, or any other
relevant term or condition.
