<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended January 2, 1999 - Commission file Number 0-17038
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Concord Camera Corp.
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(Exact names of registrant as specified in its charter)
New Jersey 13-3152196
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(State or other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
4000 Hollywood Blvd. Suite 650N, Hollywood, Florida 33021
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(Address of principal executive office) (Zip code)
954/331-4200
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, no par value -- 11,238,013 shares as of February 5, 1999
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Page 1 of 14
Exhibit Index on Page 13
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Concord Camera Corp.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
January 2, 1999 June 30, 1998
--------------- -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 24,535,326 $ 7,119,699
Accounts receivable, net 17,681,780 19,961,534
Inventories 18,998,471 21,458,595
Prepaid expenses and other current assets 4,046,117 3,238,129
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Total current assets 65,261,694 51,777,957
Plant and equipment, net 17,900,766 15,930,486
Goodwill, net 517,519 727,633
Other assets 4,666,102 3,645,703
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Total assets $ 88,346,081 $ 72,081,779
------------ ------------
Current liabilities:
Short-term debt $ 7,451,745 $ 10,822,012
Current portion of long-term debt -- 35,676
Current obligations under capital leases 1,564,148 870,173
Accounts payable 12,951,222 14,213,757
Accrued expenses 6,862,864 4,418,604
Income taxes payable 784,994 379,662
Other current liabilities 451,961 224,781
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Total current liabilities 30,066,934 30,964,665
Deferred income taxes 689,169 689,169
Senior Notes 14,850,000 --
Long-term debt -- 2,460,784
Obligations under capital leases 2,801,058 1,409,865
Other long-term liabilities 252,547 452,548
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Total liabilities 48,659,708 35,977,031
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Stockholders' equity:
Common stock, no par value, 40,000,000 authorized; 11,238,013 and
11,214,451 issued as of January 2, 1999, and June 30, 1998, respectively 40,144,793 40,094,559
Paid in capital 1,033,553 850,786
Retained earnings (deficit) 3,163,977 (1,622,215)
Notes receivable arising from common stock purchase agreements (2,837,647) (2,765,463)
------------ ------------
41,504,676 36,557,667
Less: treasury stock, at cost; 366,763 and 63,553 shares, respectively (1,818,303) (452,919)
------------ ------------
Total stockholders' equity
39,686,373 36,104,748
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Total liabilities and stockholders' equity
$ 88,346,081 $ 72,081,779
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Concord Camera Corp.
Consolidated Income Statements
<TABLE>
<CAPTION>
(Unaudited)
For the quarter ended
----------------------------------------
January 2, 1999 December 31, 1997
--------------- -----------------
<S> <C> <C>
Net sales $ 31,083,585 $ 31,329,131
Cost of products sold 23,144,944 23,016,433
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Gross profit 7,938,641 8,312,698
Selling expenses 2,198,854 2,654,637
General and administrative expenses 2,424,885 2,716,581
Financial expenses 950,521 405,264
Other (income), net (218,017) (52,720)
Legal expenses and settlement costs 78,601 55,868
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Income before income taxes 2,503,797 2,533,068
Provision for income taxes 176,000 196,266
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Net Income $ 2,327,797 $ 2,336,802
============ ============
Weighted average common shares outstanding-basic 10,944,819 10,880,473
Incremental shares using treasury stock method 653,500 600,589
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Weighted average common shares outstanding-diluted 11,598,319 11,481,062
============ ============
Basic earnings per share $ 0.21 $ 0.21
============ ============
Diluted earnings per share $ 0.20 $ 0.20
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Concord Camera Corp.
Consolidated Income Statements
<TABLE>
<CAPTION>
(Unaudited)
For the six months ended
----------------------------------------
January 2, 1999 December 31, 1997
--------------- -----------------
<S> <C> <C>
Net sales $ 62,107,412 $ 51,135,413
Cost of products sold 45,725,825 37,529,015
------------ ------------
Gross profit 16,381,587 13,606,398
Selling expenses 4,592,033 4,351,104
General and administrative expenses 4,881,215 5,101,770
Financial expenses 1,755,710 804,185
Other (income), net (131,922) (122,892)
Legal expenses and settlement costs 93,366 97,462
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Income before income taxes 5,191,186 3,374,769
Provision for income taxes 405,000 266,548
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Net Income $ 4,786,186 $ 3,108,221
============ ============
Weighted average common shares outstanding- basic 11,045,548 10,880,473
Incremental shares using treasury stock method 688,669 522,582
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Weighted average common shares outstanding-diluted 11,734,217 11,403,055
============ ============
Basic earnings per share $ 0.43 $ 0.29
============ ============
Diluted earnings per share $ 0.41 $ 0.27
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
Concord Camera Corp.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(Unaudited)
For the six months ended
----------------------------------------
January 2, 1999 December 31, 1997
--------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,786,186 $ 3,108,221
------------ ------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 2,051,698 1,624,807
Interest income on notes receivable arising from common stock agreements (72,184) (72,184)
Non-cash compensation expense 182,767 --
Change in assets and liabilities:
(Increase) decrease in accounts receivable 2,279,754 (8,461,714)
(Increase) decrease in inventories 2,460,124 (5,242,967)
(Increase) in prepaid expenses and other current assets (859,622) (1,348,254)
(Increase) decrease in other assets (1,462,259) 582,860
Increase (decrease) in accounts payable (1,262,535) 10,103,985
Increase in accrued expenses 2,444,260 1,575,095
Increase in income taxes payable 405,332 324,979
Increase (decrease) in other current liabilities 227,180 (143,361)
Increase in deferred income taxes -- 45
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Total adjustments 6,394,515 (1,056,709)
------------ ------------
Net cash provided by operating activities 11,180,701 2,051,512
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (3,518,365) (2,163,501)
Purchase of Treasury Stock (1,365,384) --
------------ ------------
Net cash (used in) investing activities (4,883,749) (2,163,501)
------------ ------------
Cash flows from financing activities:
Net borrowings under short-term debt agreements (3,370,267) (1,023,210)
Net borrowings (repayments) of long-term debt 12,353,540 (16,143)
Principal payments under capital lease obligations 2,085,167 (103,497)
Net proceeds from issuance of common stock 50,234 --
------------ ------------
Net cash provided by (used in) financing activities 11,118,674 (1,142,850)
------------ ------------
Net increase (decrease) in cash 17,415,627 (1,254,839)
Cash at beginning of period 7,119,699 5,297,820
------------ ------------
Cash at end of period $ 24,535,326 $ 4,042,981
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
See Note 3 - Supplemental disclosure of cash flow information.
5
<PAGE>
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 2, 1999
(unaudited)
Note 1 - General
In the opinion of Concord Camera Corp. ("the Company"), the accompanying
unaudited financial statements contain all adjustments, including normal
recurring adjustments, necessary for the fair presentation of the Company's
financial position as of January 2, 1999, and the results of operations and cash
flows for the periods ended January 2, 1999 and December 31, 1997.
The Notes to Consolidated Financial Statements, which are included in the
Company's 1998 Form 10-K Annual Report, should be read with the accompanying
financial statements.
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement No.
128, Earnings per Share ("Statement 128"). Statement 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share are calculated on a basis similar to
fully diluted earnings per share. All applicable earnings per share amounts have
been presented, and where necessary, restated to conform to the Statement 128
requirements.
The Company operates on a worldwide basis and its results may be adversely or
positively affected by fluctuations of various foreign currencies against the
U.S. Dollar, specifically, the Canadian Dollar, German Mark, British Pound
Sterling, French Franc and Japanese Yen. Each of the Company's foreign
subsidiaries purchases its inventories in U.S. Dollars and sells them in local
currency, thereby creating an exposure to fluctuations in foreign currency
exchange rates. Certain components needed to manufacture cameras are purchased
in Japanese Yen. The impact of foreign exchange transactions is reflected in the
profit and loss statement. The Company continues to analyze the benefits and
costs associated with hedging against foreign currency fluctuations.
Note 2 - Inventories
Inventories are comprised of the following:
<TABLE>
<CAPTION>
January 2, 1999 June 30, 1998
--------------- -------------
<S> <C> <C>
Raw materials and components $11,559,629 $ 13,033,653
Finished goods 7,438,842 8,424,942
----------- ------------
$18,998,471 $ 21,458,595
=========== ============
</TABLE>
Note 3 - Supplemental Disclosures of Cash Flow Information:
<TABLE>
<CAPTION>
For the Six Months ended
---------------------------------------
January 2, 1998 December 31,1997
--------------- ----------------
<S> <C> <C>
Cash paid for interest $ 1,526,435 $ 640,176
=========== =========
Cash paid for taxes $ -- $ 40,000
=========== =========
</TABLE>
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
The quarter ended January 2, 1999 compared to the quarter ended December 31,
1997.
Total revenues for the quarters ended January 2, 1999 and December 31,
1997 were approximately $31,084,000 and $31,329,000, respectively, a decrease of
approximately $245,000 or 0.8%. The decrease in revenues for the second quarter
of the company's fiscal year ended June 30, 1999 ("Fiscal 1999") over the second
quarter of the company's fiscal year ended June 30, 1998 ("Fiscal 1998')
resulted principally from decreases in sales to original equipment manufacturer
("OEM") customers, net of increases in sales to retail customers. OEM revenues
for the quarter ended December 31, 1997 included approximately $7,900,000 of
non-recurring sales. For comparison purposes, excluding the approximate
$7,900,000 of non-recurring sales in the second fiscal quarter of Fiscal 1998,
net sales for the second quarter of Fiscal 1999 were $31,084,000 versus
$23,429,000 for the second quarter of last year, an increase of approximately
$7,655,000 or 32.7%.
Sales by Concord Camera HK Limited ("Concord HK") for the quarters
ended January 2, 1999 and December 31, 1997 were approximately $24,996,000 and
$24,666,000, respectively, an increase of approximately $330,000 or 1.3%. The
increase is due primarily to the increases in sales to retail customers net of
decreases in sales to OEM customers. Retail sales for the quarters ended January
2, 1999 and December 31, 1997 were approximately $4,997,000 and $3,674,000,
respectively, an increase of approximately $1,340,000 or 36.5%. OEM sales for
the quarters ended January 2, 1999 and December 31, 1997 were approximately
$20,000,000 and $20,992,000, respectively, a decrease of approximately $992,000
or 4.7%. The increases in retail sales were due to increases in traditional and
single-use camera revenues by the Company's retail customers.
Consolidated sales of the Company's operations in the United States,
Latin America and Canada ("Concord Americas") for the quarters ended January 2,
1999 and December 31, 1997 were approximately $3,839,000 and $4,142,000,
respectively, a decrease of approximately $303,000 or 7.3%. In addition certain
Americas customers decreased merchandise purchases on a F.O.B. Hong Kong basis
from Concord HK. During the quarters ended January 2, 1999 and December 31,
1997, Concord Americas customers purchased approximately $2,628,000 and
$2,780,000, respectively, from Concord HK, a decrease of approximately $152,000
or 5.5%. If this decrease were added to the quarter ended January 2, 1999
American sales, sales of traditional cameras to Concord Americas customers,
would have decreased by 6.6%.
Consolidated sales of Concord Camera Europe, Concord Camera GmbH, and
Concord Camera France ("Concord Camera Europe") for the quarters ended January
2, 1999 and December 31, 1997, were approximately $2,249,000 and $2,521,000,
respectively, a decrease of approximately $272,000 or 10.8%. The decrease in
sales was offset by an increase in sales to certain European customers on a
F.O.B. Hong Kong basis from Concord HK. During the quarters ended January 2,
1999 and December 31, 1997, European customers purchased approximately
$2,356,000 and $657,000, respectively, from Concord HK, an increase of
approximately $1,699,000 or 258.6%. If this increase were added to the sales for
the quarter ended January 2, 1999, European sales to European customers would
have increased by 44.9%.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 25.5%
for the quarter ended January 2, 1999 from 26.5% for the quarter ended December
31, 1997. This decrease was primarily the result of increased product
development costs associated with new products. Product development costs were
$1,192,000 for the quarter ended January 2, 1999 as compared to $950,000 for the
quarter ended December 31, 1997, an increase of approximately $242,000 or 25.5%.
Expenses
As a percentage of sales, operating expenses, consisting of selling,
general and administrative and financial expenses, decreased to 17.9% in the
quarter ended January 2, 1999 from 18.4% in the quarter ended December 31, 1997.
Operating expenses decreased to $5,574,000 in the quarter ended January 2, 1999
from $5,776,000 in the quarter ended December 31, 1997, a decrease of $202,000
or 3.5%.
7
<PAGE>
Selling expenses decreased to $2,199,000 or 7.1% of net sales in the
quarter ended January 2, 1999 from $2,655,000 or 8.5% of net sales in the
quarter ended December 31, 1997. The decrease was primarily attributable to
decreases in royalty expenses and promotional allowances and the benefits from
the consolidation of warehouse facilities undertaken by the Company in Fiscal
1996.
General and Administrative expenses decreased to $2,425,000 or 7.8% of
net sales in the quarter ended January 2, 1999 from $2,717,000 or 8.7% of net
sales in the quarter ended December 31, 1997.
Financial expenses increased to $951,000 or 3.1% of net sales for the
quarter ended January 2, 1999 from $405,000 or 1.3% of net sales in the quarter
ended December 31, 1997. Such increase was primarily a result of an increase in
average debt outstanding during the quarter ended January 2, 1999.
Litigation and settlement costs in the quarters ended January 2, 1999
and December 31, 1997 were approximately $79,000 and $56,000, respectively, an
increase of approximately $23,000. The costs were incurred in connection with
non-operating matters, primarily the arbitration against Jack C. Benun, the
Company's former Chairman and CEO.
Other (income), Net
Other (income), net was approximately $218,000 and $53,000 in the
quarters ended January 2, 1999 and December 31, 1997, respectively. Other
(income), net includes directors' fees, certain public relations costs, foreign
exchange gains and losses and interest income.
Income Taxes
The Company's provision for income taxes for the quarter ended January
2, 1999 is primarily related to the earnings of the Company's Far East and
domestic operations, net of benefits relating to operating loss carryforwards
and overpayments/refunds on the Company's other subsidiaries.
Net Income
As a result of the matters described above, the Company had net income
of approximately $2,328,000 or $0.20 per diluted share in the quarter ended
January 2, 1999, as compared to net income of $2,337,000 or $.20 per diluted
share in the quarter ended December 31, 1997. The Company achieved its profit
plan for the second quarter and is in line to achieve its previously announced
projected profit of $7 to $8 million or $0.58 to $0.66 per diluted share for the
current fiscal year.
8
<PAGE>
Six months ended January 2, 1999 compared to the six months ended December 31,
1997.
Total revenues for the six months ended January 2, 1999 and December
31, 1997 were approximately $62,107,000 and $51,135,000, respectively, an
increase of approximately $10,972,000 or 21.5%. The increase in revenues for the
six months of Fiscal 1999 over the six months of Fiscal 1998 resulted
principally from increases in sales to OEM and retail customers. OEM Revenues
for the six months ended December 31, 1997 included approximately $9,200,000 of
non-recurring sales. For comparison purposes, excluding the approximate
$9,200,000 of non-recurring sales in the six months of Fiscal 1998, net sales
for the six months of Fiscal 1999 were $62,107,000 versus $41,935,000 for the
six months of last year, an increase of approximately $20,172,000 or 48.1%.
Sales by Concord Camera HK Limited ("Concord HK") for the six months
ended January 2, 1999 and December 31, 1997 were approximately $52,155,000 and
$40,378,000, respectively, an increase of approximately $11,777,000 or 29.2%.
The increase is due primarily to the increases in sales to OEM and retail
customers. OEM sales for the six months ended January 2, 1999 and December 31,
1997 were approximately $40,905,000 and $31,930,000, respectively, an increase
of approximately $8,975,000 or 28.1%. Retail sales for the six months ended
January 2, 1999 and December 31, 1997 were approximately $11,251,000 and
$8,447,000, respectively, an increase of approximately $2,804,000 or 33.2%.
These increases were due to increases in traditional and single-use camera
revenues by the Company's OEM and retail customers.
Consolidated sales of Concord Americas for the six months ended January
2, 1999 and December 31, 1997 were approximately $5,807,000 and $6,643,000,
respectively, a decrease of approximately $836,000 or 12.6%. This decrease in
sales was offset by an increase in sales to certain Americas customers on a
F.O.B. Hong Kong basis from Concord HK. During the six months ended January 2,
1999 and December 31, 1997 Concord Americas customers purchased approximately
$6,431,000 and $5,411,000, respectively, from Concord HK, an increase of
approximately $1,020,000 or 18.9%. If this increase were added to the six months
ended January 2, 1999, Concord Americas sales, sales of traditional cameras to
Concord Americas customers would have increased by 1.5%.
Consolidated sales of Concord Camera Europe for the six months ended
January 2, 1999 and December 31, 1997, were approximately $4,145,000 and
$3,991,000, respectively, an increase of approximately $154,000 or 3.8%. In
addition certain European customers increased merchandise purchases on a F.O.B.
Hong Kong basis from Concord HK. During the six months ended January 2, 1999 and
December 31, 1997, European customers purchased approximately $4,796,000 and
$2,537,000, respectively, from Concord HK, an increase of approximately
$2,259,000 or 89.0%. If this increase were added to the sales for the six months
ended January 2, 1999, Concord Camera Europe sales to European customers would
have increased by 37.0%.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 26.3%
for the six months ended January 2, 1999 from 26.6% for the six months ended
December 31, 1997. This decrease was primarily the result of increased product
development costs associated with new products. Product development costs were
$2,436,000 for the six months ended January 2, 1999 as compared to $1,713,000
for the six months ended December 31, 1997, an increase of approximately
$723,000 or 42.2%.
Expenses
As a percentage of sales, operating expenses, consisting of selling,
general and administrative and financial expenses, decreased to 18.1% in the six
months ended January 2, 1999 from 20.0% in the six months ended December 31,
1997. Operating expenses increased to $11,229,000 in the six months ended
January 2, 1999 from $10,257,000 in the six months ended December 31, 1997, an
increase of $972,000 or 9.5%.
Selling expenses increased to $4,592,000 or 7.4% of net sales in the
six months ended January 2, 1999 from $4,351,000 or 8.5% of net sales in the six
months ended December 31, 1997. The increase was primarily attributable to the
Company's increased volume and increases in royalty expenses and promotional
allowances partially offset by the benefits from the consolidation of warehouse
facilities undertaken by the Company in Fiscal 1996.
General and Administrative expenses decreased to $4,881,000 or 7.9% of
net sales in the six months ended January 2, 1999 from $5,102,000 or 10.0% of
net sales in the six months ended December 31, 1997.
9
<PAGE>
Financial expenses increased to $1,756,000 or 2.8% of net sales for the
six months ended January 2, 1999 from $804,000 or 1.6% of net sales in the six
months ended December 31, 1997. Such increase was primarily a result of an
increase in average debt outstanding during the six months ended January 2,
1999.
Litigation and settlement costs in the six months ended January 2, 1999
and December 31, 1997 were approximately $93,000 and $97,000, respectively. The
costs were incurred in connection with non-operating matters, primarily the
arbitration against Jack C. Benun, the Company's former Chairman and CEO.
Other (income), Net
Other (income), net was approximately $132,000 and $123,000 in the six
months ended January 2, 1999 and December 31, 1997, respectively. Other
(income), net includes directors' fees, certain public relations costs, foreign
exchange gains and losses and interest income.
Income Taxes
The Company's provision for income taxes for the six months ended
January 2, 1999 is primarily related to the earnings of the Company's Far East
and domestic operations, net of benefits relating to operating loss
carryforwards and overpayments/refunds on the Company's other subsidiaries.
Net Income
As a result of the matters described above, the Company had net income
of approximately $4,786,000 or $0.41 per diluted share in the six months ended
January 2, 1999, as compared to net income of $3,108,000 or $.27 per diluted
share in the six months ended December 31, 1997. The Company achieved its profit
plan for the six months and is in line to achieve its previously announced
projected profit of $7 to $8 million or $0.58 to $0.66 per diluted share for the
current fiscal year.
Liquidity and Capital Resources
At January 2, 1999, the Company had working capital of $35,195,000 as
compared to $20,813,000 at June 30, 1998. Cash flow provided by operating
activities was approximately $11,181,000 and $2,052,000 for the six months ended
January 2, 1999 and December 31, 1997, respectively. Capital expenditures for
the six months ended January 2, 1999 and December 31, 1997 were approximately
$3,518,000 and $2,164,000, respectively. The Company's principal funding
requirement has been, and is expected to continue to be, the financing of
accounts receivable and inventory. Additionally, the combined United States
operation is dependent upon funding received from the foreign operations.
Senior Notes Payable. On July 30, 1998, the Company consummated a private
placement of $15 million of senior notes. The notes bear interest at 11%, and
the maturity date is July 15, 2005. Interest payments are due quarterly. The
agreement contains certain restrictive covenants relating to, among other
things, incurrence of additional indebtedness and dividend and other payment
restrictions affecting subsidiaries.
Mortgage Payable. On April 9, 1998, the Company entered into a 15 month
$2,100,000 mortgage loan agreement that is secured by the Company-owned
manufacturing facilities located in Baoan County, Shenzhen Municipal, Peoples
Republic of China and bears interest at 12.986%. The mortgage loan agreement
requires monthly payments of interest only and a balloon payment of $2,100,000
on July 9, 1999.
Non-Notification Factoring with Recourse Facility. During the last quarter of
Fiscal 1998, Concord HK consummated a $10,000,000 Non-Notification Factoring
with Recourse Facility, (the "Factoring Facility"), that is guaranteed by the
Company, is secured by certain accounts receivables of the Company's Hong Kong
operations and bears interest at 1.5% above the prime lending rate. Availability
is subject to advance formulas based on eligible accounts receivable with no
minimum borrowings. The Company utilized the Factoring Facility during the
fourth quarter of Fiscal 1998 to replace a one-year $1,500,000 revolving credit
facility with an U.S. bank. At January 2, 1999, approximately $3,365,000 was
outstanding and classified as short-term debt.
10
<PAGE>
U.S. Credit Facility. The Company has a $4,500,000 credit facility, (the "U.S.
Credit Facility"), which expires on May 31, 1999, that is secured by accounts
receivable, inventory and other related assets of the Company's United States
operations and bears interest at 1.5% above the prime lending rate, which was
8.5% at January 2, 1999. Availability is subject to advance formulas based on
eligible inventory and accounts receivable with interest calculated on borrowing
of $1,500,000. At January 2, 1999, approximately $1,551,000 was outstanding and
classified as short-term debt under the U.S. Credit Facility.
Hong Kong Credit Facility. Concord HK has credit facilities, (the "HK
Facilities"), that provides Concord HK with up to $2,700,000 of financing as
follows: letters of credit and standby letters of credit of up to $1,800,000 and
packing loans of up to $900,000. As of January 2, 1999, approximately $435,000
was utilized under the HK Facilities. The HK Facilities, which is payable on
demand, bears interest at 2% above the prime lending rate which was 10%on
January 2, 1999. Concord guarantees all amounts outstanding under the HK
Facilities.
Canadian Working Capital Facility. On November 25, 1996, the Company obtained a
$990,000 working capital facility, (the "Canadian Facility"), with a Canadian
bank, which is secured by accounts receivable, inventory and other related
assets of the Company's Canadian operations and bears interest at 1% above the
prime lending rate, which was 7.75% at January 2, 1999. Availability under the
Canadian Facility is subject to advance formulas based on eligible accounts
receivable and seasonable inventory eligibility with no minimum borrowings and
is subject to monthly covenant requirements. No funds were utilized on January
2, 1999.
Other Arrangements and Future Cash Commitments. Management believes that
anticipated cash flow from operations together with financing from the Senior
Notes Payable, the Factoring Facility, the U.S. Credit Facility, the HK
Facilities, and the Canadian Facility, or replacement facilities, will be
sufficient to fund its operating cash needs for the foreseeable future.
Impact of Year 2000
The Year 2000 issue is the result of computer-controlled systems using two
digits rather than four to define the applicable year. For example, computer
programs that have time-sensitive software may recognize a date ending in "00"
as the year 1900 rather than the year 2000. This could result in system failure
or miscalculations causing disruptions of operations including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
Based on an assessment, the Company determined that it will be required to
modify or replace portions of its software and hardware so that its systems will
function properly with respect to dates in the year 2000 and thereafter. The
Company presently believes that with modifications to existing software and
conversions to new software and hardware, the Year 2000 issue will not pose
significant operational problems for its systems. However, if such modifications
and conversions are not made, or are not completed in timely fashion, the Year
2000 problems could have a material impact on the operations of the Company.
The Company is continuing to contact all of its significant suppliers and large
customers to determine the extent to which the Company's interface systems are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. The Company's total Year 2000 project cost and estimates to complete
include the estimated costs and time associated with the impact of third party
Year 2000 issues based on presently available information is approximately
$100,000. However, there can be no guarantee that the systems of other companies
on which the Company's systems rely will be converted on a timely basis and will
not have a material adverse effect on the Company's systems.
The Company is actively engaged in utilizing both internal and external
resources to reprogram, or replace, and test its software and hardware for Year
2000 compliance. The Company's objective is to complete the Year 2000 project
not later than July 1, 1999, which is prior to any anticipated impact on its
operating systems. The Fiscal 1999 cost of the Year 2000 project is not expected
to have a material effect on the results of operations.
11
<PAGE>
The costs of the project and the date which the Company has established to
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third party modification plans
and other factors. However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.
Forward-Looking Statements
The statements contained in this report that are not historical facts
are "forward-looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995), which can be identified by the use of
forward-looking terminology such as: "estimates," "projects," "anticipates,"
"expects," "intends," "believes," or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in such forward-looking statements. Management wishes to
caution the reader that these forward-looking statements, such as statements
regarding development of the Company's business, the Company's anticipated
capital expenditures and other statements contained in this report regarding
matters that are not historical facts, are only estimates or predictions. No
assurance can be given that future results will be achieved; actual events for
results may differ materially as a result of risks facing the Company or actual
results differing from the assumptions underlying such statements. In
particular, expected revenues could be adversely affected by production
difficulties or economic conditions negatively affecting the market for the
Company's products. To obtain the results expected from the introduction of the
Company's new products will require timely completion of development, successful
ramp-up of full-scale production on a timely basis and customer and consumer
acceptance of those products. In addition, the OEM agreements require an ability
to meet high quality and performance standards, successful implementation of
production at greatly increased volumes and an ability to sustain production at
greatly increased volumes, as to all of which there can be no assurance. There
also can be no assurance that products under development will be successfully
developed or that once developed such products will be commercially successful.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company, as a result of its global operating and financial
activities, is exposed to changes in interest rates and foreign currency
exchange rates which may adversely affect its results of operations and
financial position. In seeking to minimize the risks and/or costs associated
with such activities, the Company manages exposures to changes in interest rates
and foreign currency rates through its regular operating and financing
activities. Each of the Company's foreign subsidiaries purchases its inventories
in U.S. Dollars and sells them in local currency, thereby creating an exposure
to fluctuations in foreign currency exchange rates. Certain components needed to
manufacture cameras are purchased in Japanese Yen. The impact of foreign
exchange transactions is reflected in the profit and loss statement. The
Company's hedging activities were immaterial and as of January 2, 1999 there
were no forward exchange contracts outstanding. The Company continues to analyze
the benefits and costs associated with hedging against foreign currency
fluctuations. The Company's exposure to changes in interest rates results from
its borrowing activities used to meet its liquidity needs. Long-term debt is
generally used to finance long-term investments, while short-term debt is used
to meet working capital requirements. Derivative instruments are not presently
used to adjust the Company's interest rate risk profile. The Company does not
utilize financial instruments for trading or speculative purposes, nor does it
utilize leveraged financial instruments.
12
<PAGE>
PART 2. OTHER INFORMATION
a. Item 6. Reports on Form 8-K
None
b. Exhibits
Exhibit No. Exhibit
----------- -------
27 Financial Data Schedule
10.1 Lease Agreement between Prologis Trust,
a Maryland real estate investment trust,
and the Company.
10.2 Lease Agreement, dated as of August 12, 1998,
between CarrAmerica Realty Corp., a Maryland
corporation, and the Company.
10.3 Amendment No. 2, dated as of January 1, 1999,
to amended and restated Employment Agreement
dated as of May 1, 1997, between Ira B.
Lampert and the Company.
10.4 Supplemental Executive Retirement Plan and
Agreement for Ira B. Lampert.
10.4(a) Amendment to the Supplemental Executive
Retirement Plan and Agreement for Ira B.
Lampert.
10.5 Deferral Agreement, dated as of May 1, 1997,
between Concord Camera Corp. and Ira B.
Lampert.
13
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONCORD CAMERA CORP.
-----------------------------
(Registrant)
BY: /s/ Harlan I. Press
---------------------------
(Signature)
Harlan I. Press
Corporate Controller and Assistant Secretary
DULY AUTHORIZED AND PRINCIPAL ACCOUNTING
OFFICER
DATE: February 10, 1999
14
<PAGE>
EXHIBIT 10.1
LEASE AGREEMENT
THIS LEASE AGREEMENT is made this day of , 1998, between
ProLogis Trust, a Maryland real estate investment trust ("Landlord"), and the
Tenant named below.
Tenant: Concord Keystone Sales Corp.
Tenant's representative, 35 Mileed Way
address, and phone no.: Avenel, New Jersey 07001-2403
(732) 499-8280
Premises: That portion of the Building, containing
approximately 13,700 rentable square feet, as
determined by Landlord, as shown on Exhibit A.
Project: Port 95 Industrial Park
Building: Port 95 Distribution Center #500, 4009 SW 30th
Avenue, Fort Lauderdale, Florida 33312
Tenant's Proportionate Share
of Project: 10.74%
Tenant's Proportionate Share
of Building: 10.74%
Lease Term: Beginning on the Commencement Date and ending
on the last day of the 120th full calendar
month thereafter.
Commencement Date: See Addendum B
Initial Monthly Base Rent: $6,850.00
Initial Estimated Monthly 1. Utilities: $ 0.00
Operating Expense Payments:
(estimate only and subject to
adjustment to actual costs and 2. Common Area Charges: $ 514.00
expenses according to the
provisions of this Lease) 3. Taxes: $1,028.00
4. Insurance: $ 57.00
5. Others: $ 0.00
Initial Estimated Monthly
Operating Expense Payments: $1,599.00
Initial Monthly Sales Tax: $ 506.94
Initial Monthly Base Rent,
Operating Expenses, and
Sales Tax Payments: $8,955.94
Security Deposit: $8,955.94
Broker: Cushman & Wakefield and The Holliday Group
Addendas: A (Miscellaneous). B (Construction).
C (Right of First Offer). D (Two Renewal
Options at Market) E (Vacation of Premises).
F (Reasonable Efforts to Relet).
1. Granting Clause. In consideration of the obligation of Tenant to pay
rent as herein provided and in consideration of the other terms, covenants, and
conditions hereof, Landlord leases to Tenant, and Tenant takes from Landlord,
the Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.
2. Acceptance of Premises. Tenant shall accept the Premises in its
condition as of the Commencement Date, subject to all applicable laws,
ordinances, regulations, covenants and restrictions. Landlord has made no
representation or warranty as to the suitability of the Premises for the conduct
of Tenant's business, and Tenant waives any implied warranty that the Premises
are suitable for Tenant's intended purposes. Except as provided in Paragraph 10,
in no event shall Landlord have any obligation for any defects in the Premises
or any limitation on its use. The taking of possession of the Premises shall be
conclusive evidence that Tenant accepts the Premises and that the Premises were
in good condition at the time possession was taken except for items that are
Landlord's responsibility under Paragraph 10 and any punchlist items agreed to
in writing by Landlord and Tenant.
<PAGE>
3. Use. The Premises shall be used only for the purpose of receiving,
storing, shipping and selling (but limited to wholesale sales) products,
materials and merchandise made and/or distributed by Tenant and for such other
lawful purposes as may be incidental thereto; provided, however, with Landlord's
prior written consent, Tenant may also use the Premises for light manufacturing.
Tenant shall not conduct or give notice of any auction, liquidation, or going
out of business sale on the Premises. Tenant will use the Premises in a careful,
safe and proper manner and will not commit waste, overload the floor or
structure of the Premises or subject the Premises to use that would damage the
Premises. Tenant shall not permit any objectionable or unpleasant odors, smoke,
dust, gas, noise, or vibrations to emanate from the Premises, or take any other
action that would constitute a nuisance or would disturb, unreasonably interfere
with, or endanger Landlord or any tenants of the Project. Outside storage,
including without limitation, storage of trucks and other vehicles, is
prohibited without Landlord's prior written consent. Tenant, at its sole
expense, shall use and occupy the Premises in compliance with all laws,
including, without limitation, the Americans With Disabilities Act, orders,
judgments, ordinances, regulations, codes, directives, permits, licenses,
covenants and restrictions now or hereafter applicable to the Premises
(collectively, "Legal Requirements"). The Premises shall not be used as a place
of public accommodation under the Americans With Disabilities Act or similar
state statutes or local ordinances or any regulations promulgated thereunder,
all as may be amended from time to time. Tenant shall, at its expense, make any
alterations or modifications, within or without the Premises, that are required
by Legal Requirements related to Tenant's use or occupation of the premises.
Tenant will not use or permit the Premises to be used for any purpose or in any
manner that would void Tenant's or Landlords's insurance, increase the insurance
risk, or cause the disallowance of any sprinkler credits. If any increase in the
cost of any insurance on the Premises or the Project is caused by Tenant's use
or occupation of the Premises, or because Tenant vacates the Premises, then
Tenant shall pay the amount of such increase to Landlord. Any occupation of the
Premises by Tenant prior to the Commencement Date shall be subject to all
obligations of Tenant under this Lease.
4. Base Rent. Tenant shall pay Base Rent in the amount set forth above.
The first month's Base Rent, the Security Deposit, and the first monthly
installment of estimated Operating Expenses (as hereafter defined) shall be due
and payable on the date hereof, and Tenant promises to pay to Landlord in
advance, without demand, deduction or set-off, monthly installments of Base Rent
on or before the first day of each calendar month succeeding the Commencement
Date. Payments of Base Rent for any fractional calendar month shall be prorated.
All payments required to be made by Tenant to Landlord hereunder shall be
payable at such address as Landlord may specify from time to time by written
notice delivered in accordance herewith. The obligation of Tenant to pay Base
Rent and other sums to Landlord and the obligations of Landlord under this Lease
are independent obligations. Tenant shall have no right at any time to abate,
reduce, or set-off any rent due hereunder except as may be expressly provided in
this Lease. If Tenant is delinquent in any monthly installment of Base Rent or
of estimated Operating Expenses for more than 5 days, Tenant shall pay to
Landlord on demand a late charge equal to 5 percent of such delinquent sum. The
provision for such late charge shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as a
penalty.
5. Security Deposit. The Security Deposit shall be held by Landlord as
security for the performance of Tenant's obligations under this Lease. The
Security Deposit is not an advance rental deposit or a measure of Landlord's
damages in case of Tenant's default. Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the Security Deposit to
pay delinquent payments due under this Lease, and the cost of any damage,
injury, expense or liability caused by such Event of Default, without prejudice
to any other remedy provided herein or provided by law. Tenant shall pay
Landlord on demand the amount that will restore the Security Deposit to its
original amount. Landlord's obligation respecting the Security Deposit is that
of a debtor, not a trustee; no interest shall accrue thereon. The Security
Deposit shall be the property of Landlord, but shall be paid to Tenant when
Tenant's obligations under this Lease have been completely fulfilled. Landlord
shall be released from any obligation with respect to the Security Deposit upon
transfer of this Lease and the Premises to a person or entity assuming
Landlord's obligations under this Paragraph 5.
<PAGE>
6. Operating Expense Payments. During each month of the Lease Term, on
the same date that Base Rent is due, Tenant shall pay Landlord an amount equal
to 1/12 of the annual cost, as estimated by Landlord from time to time, of
Tenant's Proportionate Share (hereinafter defined) of Operating Expenses for the
Project. Payments thereof for any fractional calendar month shall be prorated.
The term "Operating Expenses" means all costs and expenses incurred by Landlord
with respect to the ownership, maintenance, and operation of the Project
including, but not limited to, costs of: Taxes (hereinafter defined) and fees
payable to tax consultants and attorneys for consultation and contesting taxes;
insurance; utilities; maintenance, repair and replacement of all portions of the
Project, including without limitation, paving and parking areas, roads, roofs,
alleys, and driveways, mowing, landscaping, exterior painting, utility lines,
heating, ventilation and air conditioning systems, lighting, electrical systems
and other mechanical and building systems; To the extent a warranty is in effect
from a third party for an HVAC system, Landlord will use reasonable efforts to
enforce those rights on behalf of Tenant; however in no event shall Landlord
incur any expenses in enforcing such rights; amounts paid to contractors and
subcontractors for work or services performed in connection with any of the
foregoing; charges or assessments of any association to which the Project is
subject; property management fees payable to a property manager, including any
affiliate of Landlord security services, if any; trash collection, sweeping and
removal; and additions or alterations made by Landlord to the Project or the
Building in order to comply with Legal Requirements (other than those expressly
required herein to be made by Tenant) or that are appropriate to the continued
operation of the Project or the Building as a bulk warehouse facility in the
market area, provided that the cost of additions or alterations that are
required to be capitalized for federal income tax purposes shall be amortized on
a straight line basis over a period equal to the lesser of the useful life
thereof for federal income tax purposes or 10 years. Operating Expenses do not
include costs, or expenses, depreciation or amortization for capital repairs and
capital replacements required to be made by Landlord under Paragraph 10 of this
Lease, debt service under morgages or ground rent under ground leases, costs of
restoration to the extent of net insurance proceeds received by Landlord with
respect thereto, leasing commissions, or the costs of renovating space for
tenants.
-2-
<PAGE>
If Tenant's total payments of Operating Expenses for any year are
less than Tenant's Proportionate Share of actual Operating Expenses for such
year, then Tenant shall pay the difference to Landlord within 30 days after
demand, and if more, then Landlord shall retain such excess and credit it
against Tenant's next payments. For purposes of calculating Tenant's
Proportionate Share of Operating Expenses, a year shall mean a calendar year
except the first year, which shall begin on the Commencement Date, and the last
year, which shall end on the expiration of this Lease. With respect to Operating
Expenses which Landlord allocates to the entire Project, Tenant's "Proportionate
Share" shall be the percentage set forth on the first page of this Lease as
Tenant's Proportionate Share of the Project as reasonably adjusted by Landlord
in the future for changes in the physical size of the Premises or the Project;
and, with respect to Operating Expenses which Landlord allocates only to the
Building, Tenant's "Proportionate Share" shall be the percentage set forth on
the first page of this Lease as Tenant's Proportionate Share of the Building as
reasonably adjusted by Landlord in the future for changes in the physical size
of the Premises or the Building. Landlord may equitably increase Tenant's
Proportionate Share for any item of expense or cost reimbursable by Tenant that
relates to a repair, replacement, or service that benefits only the Premises or
only a portion of the Project or Building that includes the Premises or that
varies with occupancy or use. The estimated Operating Expenses for the Premises
set forth on the first page of this Lease are only estimates, and Landlord makes
no guaranty or warranty that such estimates will be accurate. Addendum A
(Operating Expenses)
7. Utilities. Tenant shall pay for all water, gas, electricity, heat,
light, power, telephone, sewer, sprinkler services, refuse and trash collection,
and other utilities and services used on the Premises, all maintenance charges
for utilities, and any storm sewer charges or other similar charges for
utilities imposed by any governmental entity or utility provider, together with
any taxes, penalties, surcharges or the like pertaining to Tenant's use of the
Premises. Landlord may cause at Tenant's expense any utilities to be separately
metered or charged directly to Tenant by the provider. Tenant shall pay its
share of all charges for jointly metered utilities based upon consumption, as
reasonably determined by Landlord. No interruption or failure of utilities
shall result in the termination of this Lease or the abatement of rent. Tenant
agrees to limit use of water and sewer for normal restroom use.
8. Taxes. Landlord shall pay all taxes, assessments and governmental
charges (collectively referred to as "Taxes") that accrue against the Project
during the Lease Term, which shall be included as part of the Operating Expenses
charged to Tenant. Landlord may contest by appropriate legal proceedings the
amount, validity, or application of any Taxes or liens thereof. All capital
levies or other taxes assessed or imposed on Landlord upon the rents payable to
Landlord under this Lease and any franchise tax, any excise, transaction, sales
or privilege tax, assessment, levy or charge measured by or based, in whole or
in part, upon such rents from the Premises and/or the Project or any portion
thereof shall be paid by Tenant to Landlord monthly in estimated installments or
upon demand, at the option of Landlord, as additional rent; provided, however,
in no event shall Tenant be liable for any net income taxes imposed on Landlord
unless such net income taxes are in substitution for any Taxes payable
hereunder. If any such tax or excise is levied or assessed directly against
Tenant, then Tenant shall be responsible for and shall pay the same at such
times and in such manner as the taxing authority shall require. Tenant shall be
liable for all taxes levied or assessed against any personal property or
fixtures placed in the Premises, whether levied or assessed against Landlord or
Tenant.
9. Insurance. Landlord shall maintain all risk property insurance
covering the full replacement cost of the Building. Landlord may, but is not
obligated to, maintain such other insurance and additional coverages as it may
deem necessary, including, but not limited to, commercial liability insurance
and rent loss insurance. All such insurance shall be included as part of the
Operating Expenses charged to Tenant. The Project or Building may be included in
a blanket policy (in which case the cost of such insurance allocable to the
Project or Building will be determined by Landlord based upon the insurer's cost
calculations). Tenant shall also reimburse Landlord for any increased premiums
or additional insurance which Landlord reasonably deems necessary as a result of
Tenant's use of the Premises.
Tenant, at its expense, shall maintain during the Lease Term: all
risk property insurance covering the full replacement cost of all property and
improvements installed or placed in the Premises by Tenant at Tenant's expense;
worker's compensation insurance with no less than the minimum limits required by
law; employer's liability insurance with such limits as required by law; and
commercial liability insurance, with a minimum limit of $1,000,000 per
occurrence and a minimum umbrella limit of $1,000,000, for a total minimum
combined general liability and umbrella limit of $2,000,000 (together with such
additional umbrella coverage as Landlord may reasonably require) for property
damage, personal injuries, or deaths of persons occurring in or about the
Premises. Landlord may from time to time require reasonable increases in any
such limits. The commercial liability policies shall name Landlord as an
additional insured, insure on an occurrence and not a claim-made basis, be
issued by insurance companies which are reasonably acceptable to Landlord, not
be cancelable unless 30 days' prior written notice shall have been given to
Landlord, contain a hostile fire endorsement and a contractual liability
endorsement and provide primary coverage to Landlord (any policy issued to
Landlord providing duplicate or similar coverage shall be deemed excess over
Tenant's policies). Such policies or certificates thereof shall be delivered to
Landlord by Tenant upon commencement of the Lease Term and upon each renewal of
said insurance.
-3-
<PAGE>
The all risk property insurance obtained by Landlord and Tenant
shall include a waiver of subrogation by the insurers and all rights based upon
an assignment from its insured, against Landlord or Tenant, their officers,
directors, employees, managers, agents, invitees and contractors, in connection
with any loss or damage thereby insured against. Neither party nor its officers,
directors, employees, managers, agents, invitees or contractors shall be liable
to the other for loss or damage caused by any risk coverable by all risk
property insurance, and each party waives any claims against the other party,
and its officers, directors, employees, managers, agents, invitees and
contractors for such loss or damage. The failure of a party to insure its
property shall not void this waiver. Landlord and its agents, employees and
contractors shall not be liable for, and Tenant hereby waives all claims against
such parties for, business interruption and losses occasioned thereby sustained
by Tenant or any person claiming through Tenant resulting from any accident or
occurence in or upon the Premises or the Project from any cause whatsoever,
including without limitation, damage caused in whole or in part, directly or
indirectly, by the negligence of Landlord or its agents, employees or
contractors.
10. Landlord's Repairs. Landlord shall maintain, at its expense, the
structural soundness of the roof, foundation, and exterior walls of the Building
in good repair, reasonable wear and tear and uninsured losses and damages caused
by Tenant, its agents and contractors excluded. The term "walls" as used in this
Paragraph 10 shall not include windows, glass or plate glass, doors or overhead
doors, special store fronts, dock bumpers, dock plates or levelers, or office
entries. Tenant shall promptly give Landlord written notice of any repair
required by Landlord pursuant to this Paragraph 10, after which Landlord shall
have a reasonable opportunity to repair.
11. Tenant's Repair. Landlord, at Tenant's expense as provided in
Paragraph 6, shall maintain in good repair and condition the parking areas and
other common areas of the Building, including, but not limited to driveways,
alleys, landscape and grounds surrounding the Premises. Subject to Landlord's
obligation in Paragraph 10 and subject to Paragraphs 9 and 15, Tenant, at its
expense, subject to reasonable wear and tear, shall repair, replace and maintain
in good condition all portions of the Premises and all areas, improvements and
systems exclusively serving the Premises including, without limitation, dock and
loading areas, truck doors, plumbing, water, and sewer lines up to points of
common connection, fire sprinklers and fire protection systems, entries, doors,
ceilings and roof membrane, windows, interior walls, and the interior side of
demising walls, and heating, ventilation and air conditioning systems. Such
repair and replacements include capital expenditures and repairs whose benefit
may extend beyond the Term. Heating, ventilation and air conditioning systems
and other mechanical and building systems serving the Premises shall be
maintained at Tenant's expense pursuant to maintenance service contracts entered
into by Tenant or, at Landlord's election, by Landlord. The scope of services
and contractors under such maintenance contracts shall be reasonably approved by
Landlord. If Tenant fails to perform any repair or replacement for which it is
responsible, Landlord may perform such work and be reimbursed by Tenant within
10 days after demand therefor. Subject to Paragraphs 9 and 15, Tenant shall bear
the full cost of any repair or replacement to any part of the Building or
Project that results from damage caused by Tenant, its agents, contractors, or
invitees and any repair that benefits only the Premises.
12. Tenant-Made Alterations and Trade Fixtures. Any alterations,
additions, or improvements made by or on behalf of Tenant to the Premises
("Tenant-Made Alterations") shall be subject to Landlord's prior written
consent. Tenant shall cause, at its expense, all Tenant-Made Alterations to
comply with insurance requirements and with Legal Requirements and shall
construct at its expense any alteration or modification required by Legal
Requirements as a result of any Tenant-Made Alterations. All Tenant-Made
Alterations shall be constructed in a good and workmanlike manner by contractors
reasonably acceptable to Landlord and only good grades of materials shall be
used. All plans and specifications for any Tenant-Made Alterations shall be
submitted to Landlord for its approval. Landlord may monitor construction of the
Tenant-Made Alterations. Tenant shall reimburse Landlord for its reasonable
costs in reviewing plans and specifications and in monitoring construction.
Landlord's right to review plans and specifications and to monitor construction
shall be solely for its own benefit, and Landlord shall have no duty to see that
such plans and specifications or construction comply with applicable laws,
codes, rules and regulations. Tenant shall provide Landlord with the identities
and mailing addresses of all persons performing work or supplying materials,
prior to beginning such construction, and Landlord may post on and about the
Premises notices of non-responsibility pursuant to applicable law. Tenant shall
furnish security or make other arrangements satisfactory to Landlord to assure
payment for the completion of all work free and clear of liens and shall provide
certificates of insurance for worker's compensation and other coverage in
amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction. Upon completion of any Tenant-Made Alterations, Tenant shall
deliver to Landlord sworn statements setting forth the names of all contractors
and subcontractors who did work on the Tenant-Made Alterations and final lien
waivers from all such contractors and subcontractors. Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements constructed
by Landlord or Tenant shall remain on the Premises at Landlord's property,
except to the extent Landlord's requires removal at Tenant's expense of any such
items or Landlord and Tenant have otherwise agreed in writing in connection with
Landlord's consent to any Tenant-Made Alterations. Tenant shall repair any
damage caused by such removal. Addendum B
-4-
<PAGE>
Tenant, at its own cost and expense and without Landlord's prior
approval, may erect such shelves, bins, machinery and trade fixtures
(collectively "Trade Fixtures") in the ordinary course of its business provided
that such items do not alter the basic character of the Premises, do not
overload or damage the Premises, and may be removed without injury to the
Premises, and the construction, erection, and installation thereof complies with
all Legal Requirements and with Landlord's requirements set forth above. Tenant
shall remove its Trade Fixtures and shall repair any damage caused by such
removal.
13. Signs. Tenant shall not make any changes to the exterior of the
Premises, install any exterior lights, decorations, balloons, flags, pennants,
banners, or painting, or erect or install any signs, windows or door lettering,
placards, decoration, or advertising media of any type which can be viewed from
the exterior of the Premises, without Landlord's prior written consent. Upon
surrender or vacation of the Premises, Tenant shall have removed all signs and
repair, paint and/or replace the building facia surface to which its signs are
attached. Tenant shall obtain all applicable governmental permits and approvals
for sign and exterior treatments. All signs, decorations, advertising media,
blinds, draperies and other window treatment or bars or other security
installations visible from outside the Premises shall be subject to Landlord's
approval and conform in all respects to Landlord's requirements.
14. Parking. Tenant shall be entitled to park in common with other
tenants of the Project in those areas designated for nonreserved parking.
Landlord may allocate parking spaces among Tenant and other tenants in the
Project if Landlord determines that such parking facilities are becoming
crowded. Landlord shall not be responsible for enforcing Tenant's parking rights
against any third parties.
15. Restoration. If at any time during the Lease Term the Premises are
damaged by a fire or other casualty. Landlord shall notify Tenant within 45 days
after such damage as to the amount of time Landlord reasonably estimates it will
take to restore the Premises. If the restoration time is estimated to exceed 4.5
months, either Landlord or Tenant may elect to terminate this Lease upon notice
to the other party given no later than 30 days after Landlord's notice. If
neither party elects to terminate this lease or if Landlord estimates that
restoration will take 4.5 months or less, then, subject to receipt of sufficient
insurance proceeds, Landlord shall promptly restore the Premises excluding the
improvements installed by Tenant or by Landlord and paid by Tenant, subject to
delays arising from the collection of insurance proceeds or from Force Majeure
events. Tenant at Tenant's expense shall promptly perform, subject to delays
arising from the collection of insurance proceeds, or from Force Majeure events,
all repairs or restoration not required to be done by Landlord and shall
promptly re-enter the Premises and commence doing business in accordance with
this Lease. Notwithstanding the foregoing, either party may terminate this Lease
if the Premises are damaged during the last year of the Lease Term and Landlord
reasonably estimates that it will take more than one month to repair such
damage. Tenant shall pay to Landlord with respect to any damage to the Premises
the amount of the commercially reasonably deductible under Landlord's insurance
policy (currently $10,000) within 10 days after presentment of Landlord's
invoice. If the damage involves the premises of other tenants, Tenant shall pay
the portion of the deductible that the cost of the restoration of the Premises
bears to the total cost of restoration, as determined by Landlord. Base Rent and
Operating Expenses shall be abated for the period of repair and restoration in
the proportion which the area of the Premises, if any, which is not usable by
Tenant bears to the total area of the Premises. Such abatement shall be the sole
remedy of Tenant, and except as provided herein, Tenant waives any right to
terminate the Lease by reason of damage or casualty loss.
16. Condemnation. If any part of the Premises or the Project should be
taken for any public or quasi-public use under governmental law, ordinance, or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof (a "Taking" or "Taken"), and the Taking would prevent or materially
interfere with Tenant's use of the Premises or in Landlord's judgment would
materially interfere with or impair its ownership or operation of the Project,
then upon written notice by Landlord this Lease shall terminate and Base Rent
shall be apportioned as of said date. If part of the Premises shall be Taken,
and this Lease is not terminated as provided above, the Base Rent payable
hereunder during the unexpired Lease Term shall be reduced to such extent as may
be fair and reasonable under the circumstances. In the event of any such Taking,
Landlord shall be entitled to receive the entire price or award from any such
Taking without any payment to Tenant, and Tenant hereby assigns to Landlord
Tenant's interest, if any, in such award. Tenant shall have the right, to the
extent that same shall not diminish Landlord's award, to make a separate claim
against the condemning authority (but not Landlord) for such compensation as may
be separately awarded or recoverable by Tenant for moving expenses and damage to
Tenant's Trade Fixtures, if a separate award for such items is made to Tenant.
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<PAGE>
17. Assignment and Subletting. Without Landlord's prior written consent,
Tenant shall not assign this Lease or sublease the Premises or any part thereof
or mortgage, pledge, or hypothecate its leasehold interest or grant any
concession or license within the Premises and any attempt to do any of the
foregoing shall be void and of no effect. For purposes of this paragraph, a
transfer of the ownership interests controlling Tenant shall be deemed an
assignment of this Lease unless such ownership interests are publicly traded.
Nothwithstanding the above, Tenant may assign or sublet the Premises, or any
part thereof, to any entity controlling Tenant, controlled by Tenant or under
common control with Tenant (a "Tenant Affiliate"), without the prior written
consent of Landlord. Tenant shall reimburse Landlord for all of Landlord's
reasonable out-of-pocket expenses in connection with any assignment or sublease.
Upon Landlord's receipt of Tenant's written notice of a desire to assign or
sublet the Premises, or any part thereof (other than to a Tenant Affiliate),
Landlord may, by giving written notice to Tenant within 30 days after receipt of
Tenant's notice, terminate this Lease with respect to the space described in
Tenant's notice, as of the date specified in Tenant's notice for the
commencement of the proposed assignment or sublease.
Nothwithstanding any assignment or subletting, Tenant and any
guarantor or surety or Tenant's obligations under this Lease shall at all times
remain fully responsible and liable for the payment of the rent and for
compliance with all of Tenant's other obligations under this Lease (regardless
of whether Landlord's approval has been obtained for any such assignments or
sublettings). In the event that the rent due and payable by a sublessee or
assignee (or a combination of the rental payable under such sublease or
assignment plus any bonus or other consideration therefor or incident thereto)
exceeds the rental payable under this Lease, then Tenant shall be bound and
obligated to pay Landlord as additional rent hereunder half of such excess
rental and other excess consideration within 10 days following receipt thereof
by Tenant.
If this Lease be assigned or if the Premises be subleased (whether
in whole or in part) or in the event of the mortgage, pledge, or hypothecation
of Tenant's leasehold interest or grant of any concession or license within the
Premises or if the Premises be occupied in whole on in part by anyone other than
Tenant, then upon a default by Tenant hereunder Landlord may collect rent from
the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold
interest was hypothecated, concessionee or licensee or other occupant and,
except to the extent set forth in the preceding paragraph, apply the amount
collected to the next rent payable hereunder; and all such rentals collected
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by Tenant shall be held in trust for Landlord and immediately forwarded to
Landlord. No such transaction or collection of rent or application thereof by
Landlord, however, shall be deemed a waiver of these provisions or a release of
Tenant from the further performance by Tenant of its covenants, duties, or
obligations hereunder.
18. Indemnification. Except for the negligence of Landlord, its agents,
employees or contractors, and to the extent permitted by law, Tenant agrees to
indemnify, defend and hold harmless Landlord, and Landlord's agents, employees
and contractors, from and against any and all losses, liabilities, damages,
costs and expenses (including attorneys' fees) resulting from claims by third
parties for injuries to any person and damage to or theft or misappropriation or
loss of property occurring in or about the Project and arising from the use and
occupancy of the Premises or from any activity, work, or thing done, permitted
or suffered by Tenant in or about the Premises or due to any other act or
omission of Tenant, its subtenants, assignees, invitees, employees, contractors
and agents. The furnishing of insurance required hereunder shall not be deemed
to limit Tenant's obligations under this Paragraph 18.
19. Inspection and Access. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. Landlord and Landlord's
representatives may enter the Premises during business hours for the purpose of
showing the Premises to prospective purchasers and, during the last year of the
Lease Term, to prospective tenants. Landlord may erect a suitable sign on the
Premises stating the Premises are available to let or that the Project is
available for sale. Landlord may grant easements, make public dedications,
designate common areas and create restrictions on or about the Premises,
provided that no such easement, dedication, designation or restriction
materially interferes with Tenant's use or occupancy of the Premises. At
Landlord's request, Tenant shall execute such instruments as may be necessary
for such easements,
dedications or restrictions.
20. Quiet Enjoyment. If Tenant shall perform all of the convenants and
agreements herein required to be performed by Tenant, Tenant shall, subject to
the terms of this Lease, at all times during the Lease Term, have peaceful and
quiet enjoyment of the Premises against any person claiming by, through or under
Landlord.
21. Surrender. Upon termination of the Lease Term or earlier termination of
Tenant's right of possession, Tenant shall surrender the Premises to Landlord in
the same condition as received, broom clean, ordinary wear and tear and casualty
loss and condemnation covered by Paragraphs 15 and 16 excepted. Any Trade
Fixtures, Tenant-Made Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored,
removed, and disposed of by Landlord at Tenant's expense, and Tenant waives all
claims against Landlord for any damages resulting from Landlord's retention and
disposition of such property. All obligations of Tenant hereunder not fully
performed as of the termination of the Lease Term shall survive the termination
of the Lease Term, including without limitation, indemnity obligations, payment
obligations with respect to Operating Expenses and obligations concerning the
condition and repair of the Premises.
22. Holding Over. If Tenant retains possession of the Premises after the
termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Base Rent for the holdover period, an amount equal to double the
Base Rent in effect on the termination date, computed on a monthly basis for
each month or part thereof during such holding over. All other payments shall
continue under the terms of this Lease. In addition, Tenant shall be liable for
all damages incurred by Landlord as a result of such holding over. No holding
over by Tenant, whether with or without consent of Landlord, shall operate to
extend this Lease except is otherwise expressly provided, and this Paragraph 22
shall not be construed as consent for Tenant to retain possession of the
Premises.
<PAGE>
23. Events of Default. Each of the following events shall be an event of
default ("Event of Default") by Tenant under this Lease:
(i) Tenant shall fail to pay any installment of Base Rent or any other
payment required herein when due, and such failure shall continue for a
period of 5 days from the date such payment was due.
(ii) Tenant or any guarantor or surety of Tenant's obligations
hereunder shall (A) make a general assignment for the benefit of creditors
(B) commence any case, proceeding or other action seeking to have an order
for relief entered on its behalf as a debtor or to adjudicate it a bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or of any substantial part of its property (collectively a
"proceeding for relief"); (C) become the subject of any proceeding for
relief which is not dismissed within 60 days of its filing or entry; or (D)
die or suffer a legal disability (if Tenant, guarantor, or surety is an
individual) or be dissolved or otherwise fail to maintain its legal
existence (if Tenant, guarantor or surety is a corporation, partnership or
other entity).
(iii) Any insurance required to be maintained by Tenant pursuant to
this Lease shall be cancelled or terminated or shall expire or shall be
reduced or materially changed, except, in each case, as permitted in this
Lease.
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<PAGE>
(iv) Tenant shall not occupy or shall vacate the Premises or shall fail
to continuously operate its business at the Premises for the permitted use
set forth herein, whether or not Tenant is in monetary or other default
under this Lease. -- Addendum E
(v) Tenant shall attempt or there shall occur any assignment,
subleasing or other transfer of Tenant's interest in or with respect to
this Lease except as otherwise permitted in this Lease.
(vi) Tenant shall fail to discharge any lien placed upon the Premises
in violation of this Lease within 30 days after any such lien or
encumbrance is filed against the Premises.
(vii) Tenant shall fail to comply with any provision of this Lease
other than those specifically referred to in this Paragraph 23, and except
as otherwise expressly provided herein, such default shall continue for
more than 30 days after Landlord shall have given Tenant written notice of
such default.
24. Landlord's Remedies. Upon each occurrence of an Event of Default and so
long as such Event of Default shall be continuing, Landlord may at any time
thereafter at its election: terminate this Lease or Tenant's right of possession
(but Tenant shall remain liable as hereinafter provided), and/or pursue any
other remedies at law or in equity. Upon the termination of this Lease or
termination of Tenant's right of possession, it shall be lawful for Landlord,
without formal demand or notice of any kind, to re-enter the Premises by summary
dispossession proceedings or any other action or proceeding authorized by law
and to remove Tenant and all persons and property therefrom. If Landlord
re-enters the Premises, Landlord shall have the right to keep in place and use,
or remove and store, all of the furniture, fixtures and equipment at the
Premises.
If Landlord terminates this Lease, Landlord may recover from Tenant the
sum of: all Base Rent and all other amounts accrued hereunder to the date of
such termination; the cost of reletting the whole or any part of the Premises,
including without limitation brokerage fees and/or leasing commissions incurred
by Landlord, and costs of removing and storing Tenant's or any other occupant's
property, repairing, altering, remodeling, or otherwise putting the Premises
into condition acceptable to a new tenant or tenants, and all reasonable
expenses incurred by Landlord in pursuing its remedies, including reasonable
attorneys' fees and court costs; and the excess of the then present value of the
Base Rent and other amounts payable by Tenant under this Lease as would
otherwise have been required to be paid by Tenant to Landlord during the period
following the termination of this Lease measured from the date of such
termination to the expiration date stated in this Lease, over the present value
of any net amounts which Tenant establishes Landlord can reasonably expect to
recover by reletting the Premises for such period, taking into consideration the
availability of acceptable tenants and other market conditions affecting
leasing. Such present values shall be calculated at a discount rate equal to
the 90-day U.S. Treasury bill rate at the date of such termination.
If Landlord terminates Tenant's right of possession (but not this Lease),
Landlord may, but shall be under no obligation to, relet the Premises for the
account of Tenant for such rent and upon such terms as shall be satisfactory to
Landlord without thereby releasing Tenant from any liability hereunder and
without demand or notice of any kind to Tenant. For the purpose of such
reletting Landlord is authorized to make any repairs, changes, alterations, or
additions in or to the Premises as Landlord deems reasonably necessary or
desirable. If the Premises are not relet, then tenant shall pay to Landlord as
damages a sum equal to the amount of the rental reserved in this Lease for such
period or periods, plus the cost of recovering possession of the Premises
(including attorneys' fees and costs of suit), the unpaid Base Rent and other
amounts accrued hereunder at the time of repossession, and the costs incurred in
any attempt by Landlord to relet the Premises. If the Premises are relet and a
sufficient sum shall not be realized from such reletting (after first deducting
therefrom, for retention by Landlord, the unpaid Base Rent and other amounts
accrued hereunder at the time of reletting, the cost of recovering possession
(including attorneys' fees and costs of suit), all of the costs and expense of
repairs, changes, alterations, and additions, the expense of such reletting
(including without limitation brokerage fees and leasing commissions) and the
cost of collection of the rent accruing therefrom) to satisfy the rent provided
for in this Lease to be paid, then Tenant shall immediately satisfy and pay any
such deficiency. Any such payments due Landlord shall be made upon demand
therefor from time to time and Tenant agrees that Landlord may file suit to
recover any sums falling due from time to time. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect in
writing to terminate this Lease for such previous breach. -- Addendum F
<PAGE>
Exercise by Landlord of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises and/or a termination of this Lease by Landlord, whether by agreement or
by operation of law, it being understood that such surrender and/or termination
can be effected only by the written agreement of Landlord and Tenant. Any law,
usage, or custom to the contrary notwithstanding, Landlord shall have the right
at all times to enforce the provisions of this Lease in strict accordance with
the terms hereof; and the failure of Landlord at any time to enforce its rights
under this Lease strictly in accordance with same shall not be construed as
having created a custom in any way or manner contrary to the specific terms,
provisions, and covenants of this Lease or as having modified the same. Tenant
and Landlord further agree that forbearance or waiver by Landlord to enforce its
rights pursuant to this Lease or at law or in equity, shall not be a waiver of
Landlord's right to enforce one or more of its rights in connection with any
subsequent default. A receipt by Landlord of rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord. To
the greatest extent permitted by law, Tenant waives the service of notice of
Landlord's intention to re-enter as provided for in any statute, or to institute
legal proceedings to that end, and also waives all right of redemption in case
Tenant shall be dispossessed by a judgment or by warrant of any court of judge.
The terms "enter," "re-enter", "entry" or "re-entry," as used in this Lease, are
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<PAGE>
not restricted to their technical legal meanings. Any reletting of the Premises
shall be on such terms and conditions as Landlord in its sole discretion may
determine (including without limitation a term different than the remaining
Lease Term, rental concessions, alterations and repair of the Premises, lease of
less than the entire Premises to any tenant and leasing any or all other
portions of the Project before reletting the Premises). Landlord shall not be
liable, nor shall Tenant's obligations hereunder be diminished because of,
Landlord's failure to relet the Premises or collect rent due in respect of such
reletting.
25. Tenant's Remedies/Limitation of Liability. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying such
failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary). All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for breach
of Landlord's obligations hereunder. All obligations of Landlord under this
Lease will be binding upon Landlord only during the period of its ownership of
the Premises and not thereafter. The term "Landlord" in this Lease shall mean
only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all obligations of Landlord thereafter
accruing, but such obligations shall be binding during the Lease Term upon each
new owner for the duration of such owner's ownership. Any liability of Landlord
under this Lease shall be limited solely to its interest in the Project, and in
no event shall any personal liability be asserted against Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets of
Landlord.
26. Waiver of Jury Trial. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY
JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
27. Subordination. This Lease and Tenant's interest and rights hereunder
are and shall be subject and subordinate at all times to the lien of any first
mortgage, now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant. Tenant agrees,
at the election of the holder of any such mortgage, to attorn to any such
holder. Tenant agrees upon demand to execute, acknowledge and deliver such
instruments confirming such subordination and such instruments of attornment as
shall be requested by any such holder. Tenant hereby appoints Landlord attorney
in fact for Tenant irrevocably (such power of attorney being coupled with an
interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of the Tenant and to cause any such instrument
to be recorded. Notwithstanding the foregoing, any such holder may at any time
subordinate its mortgage to this Lease, without Tenant's consent, by notice in
writing to Tenant, and thereupon this Lease shall be deemed prior to such
mortgage without regard to their respective dates of execution, delivery or
recording and in that event such holder shall have the same rights with respect
to this Lease as though this Lease had been executed prior to the execution,
delivery and recording of such mortgage and had been assigned to such holder.
The term "mortgage" whenever used in this Lease shall be deemed to include deeds
of trust, security assignments and any other encumbrances, and any reference to
the "holder" of a mortgage shall be deemed to include the beneficiary under a
deed of trust.
28. Mechanic's Liens. Tenant has no express or implied authority to create
or place any lien or encumbrance of any kind upon, or in any manner to bind the
interest of Landlord or Tenant in, the Premises or to charge the rentals payable
hereunder for any claim in favor of any person dealing with Tenant, including
those who may furnish materials or perform labor for any construction or
repairs. Tenant covenants and agrees that it will pay or cause to be paid all
sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the Premises and
that it will save and hold Landlord harmless from all loss, cost or expense
based on or arising out of asserted claims or liens against the leasehold estate
or against the interest of Landlord in the Premises or under this Lease. Tenant
shall give Landlord immediate written notice of the placing of any lien or
encumbrance against the Premises and cause such lien or encumbrance to be
discharged within 30 days of the filing or recording thereof; provided, however,
Tenant may contest such liens or encumbrances as long as such contest prevents
foreclosure of the lien or encumbrance and Tenant causes such lien or
encumbrance to be bonded or insured over in a manner satisfactory to Landlord
within such 30 day period.
<PAGE>
29. Estoppel Certificates. Tenant agrees, from time to time, within 10
business days after request of Landlord, to execute and deliver to Landlord, or
Landlord's designee, any estoppel certificate requested by Landlord, stating
that this Lease is in full force and effect, the date to which rent has been
paid, that Landlord is not in default hereunder (or specifying in detail the
nature of Landlord's default), the termination date of this Lease and such other
matters pertaining to this Lease as may be requested by Landlord. Tenant's
obligation to furnish each estoppel certificate in a timely fashion is a
material inducement of Landlord's execution of this Lease. No cure or grace
period provided in this Lease shall apply to Tenant's obligations to timely
deliver an estoppel certificate. Tenant hereby irrevocably appoints Landlord as
its attorney in fact to execute on its behalf and in its name any such estoppel
certificate if Tenant fails to execute and deliver the estoppel certificate
within 10 days after Landlord's written request thereof.
30. Environmental Requirements. Except for Hazardous Material contained in
products used by Tenant in de minimis quantities for ordinary cleaning and
office purposes, Tenant shall not permit or cause any party to bring any
Hazardous Material upon the Premises or transport, store, use, generate,
manufacture or release any
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<PAGE>
Hazardous Material in or about the Premises without Landlord's prior written
consent. Tenant, at its sole cost and expense, shall operate its business in the
Premises in strict compliance with all Environmental Requirements and shall
remediate in a manner satisfactory to Landlord any Hazardous Materials released
on or from the Project by Tenant, its agents, employees, contractors, subtenants
or invitees. Tenant shall complete and certify to disclosure statements as
requested by Landlord from time to time relating to Tenant's transportation,
storage, use, generation, manufacture, or release of Hazardous Materials on the
Premises. The term "Environmental Requirements" means all applicable present and
future statutes, regulations, ordinances, rules, codes, judgments, orders or
other similar enactments of any governmental authority or agency regulating or
relating to health, safety, or environmental conditions on, under, or about the
Premises or the environment, including without limitation, the following: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Resource Conservation and Recovery Act; and all state and local counterparts
thereto, and any regulations or policies promulgated or issued thereunder. The
term "Hazardous Materials" means and includes any substance, material, waste,
pollutant, or contaminant listed or defined as hazardous or toxic, under any
Environmental Requirements, asbestos and petroleum, including crude oil or any
fraction thereof, natural gas, or synthetic gas usable for fuel (or mixtures of
natural gas and such synthetic gas). As defined in Environmental Requirements,
Tenant is and shall be deemed to be the "operator" of Tenant's "facility" and
the "owner" of all Hazardous Materials brought on the Premises by Tenant, its
agents, employees, contractors or invitees, and the wastes, by-products, or
residues generated, resulting, or produced therefrom.
Tenant shall indemnify, defend, and hold Landlord harmless from and
against any and all losses (including, without limitation, diminution in value
of the Premises or the Project and loss of rental income from the Project),
claims, demands, actions, suits, damages (including, without limitation,
punitive damages), expenses (including, without limitation, remediation,
removal, repair, corrective action, or cleanup expenses), and costs (including,
without limitation, actual attorneys' fees, consultant fees or expert fees and
including, without limitation, removal or management of any asbestos brought
into the Premises or disturbed in breach of the requirements of this Paragraph
30, regardless of whether such removal or management is required by law) which
are brought or recoverable against, or suffered or incurred by Landlord as a
result of any release of Hazardous Materials for which Tenant is obligated to
remediate as provided above or any other breach of the requirements under this
Paragraph 30 by Tenant, its agents, employees, contractors, subtenants,
assignees or invitees, regardless of whether Tenant had knowledge of such
noncompliance. The obligations of Tenant under this Paragraph 30 shall survive
any termination of this Lease.
Landlord shall have access to, and a right to perform inspections and
tests of, the Premises to determine Tenant's compliance with Environmental
Requirements, its obligations under this Paragraph 30, or the environmental
condition of the Premises. Access shall be granted to Landlord upon Landlord's
prior notice to Tenant and at such times so as to minimize, so far as may be
reasonable under the circumstances, any disturbance to Tenant's operations. Such
inspections and tests shall be conducted at Landlord's expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement, in which case Tenant shall reimburse Landlord for the reasonable
cost of such inspection and tests. Landlord's receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant.
31. Rules and Regulations. Tenant shall, at all times during the Lease
Term and any extension thereof, comply with all reasonable rules and regulations
at any time or from time to time established by Landlord covering use of the
premises and the Project. The current rules and regulations are attached hereto.
In the event of any conflict between said rules and regulations and other
provisions of this Lease, the other terms and provisions of this Lease shall
control. Landlord shall not have any liability or obligation for the breach of
any rules or regulations by other tenants in the Project.
32. Security Service. Tenant acknowledges and agrees that, while
Landlord may patrol the Project, Landlord is not providing any security services
with respect to the Premises and that Landlord shall not be liable to Tenant
for, and Tenant waives any claim against Landlord with respect to, any loss by
theft or any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or any other breach of security with
respect to the Premises.
<PAGE>
33. Force Majeure. Landlord shall not be held responsible for delays in
the performance of its obligations hereunder when caused by strikes, lockouts,
labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, delay in issuance of permits, enemy or
hostile governmental action, civil commotion, fire or other casualty, and other
causes beyond the reasonable control of Landlord ("Force Majeure").
34. Entire Agreement. This Lease constitutes the complete agreement of
Landlord and Tenant with respect to the subject matter hereof. No
representations, inducements, promises or agreements, oral or written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this lease. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.
35. Severability. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal invalid or unenforceable clause or provision
as may be possible and be legal, valid and enforceable.
36. Brokers. Tenant and Landlord represent and warrant to the other
that it has dealt with no broker, agent or other person in connection with this
transaction and that no broker, agent or other person brought about this
transaction other than the broker, if any, set forth on the first page of this
Lease, and Tenant and Landlord agree to indemnify each other harmless from and
against any claims by any other broker, agent or other person claiming a
commission or other form of compensation by virtue of having dealt with Tenant
and Landlord with regard to this leasing transaction.
37. Miscellaneous. (a) Any payments or charges due from Tenant to
Landlord hereunder shall be considered rent for all purposes of this Lease.
(b) If and when included within the term "Tenant", as used in this
instrument, there is more than one person, firm or corporation, each shall be
jointly and severally liable for the obligations of Tenant.
(c) All notices required or permitted to be given under this Lease
shall be in writing and shall be sent by registered or certified mail, return
receipt requested, or by a reputable national overnight courier service, postage
prepaid, or by hand delivery addressed to the parties at their address below,
and with a copy sent to Landlord at 14100 East 35th Place, Aurora, Colorado
80011. Either party may by notice given aforesaid change its address for all
subsequent notices. Except where otherwise expressly provided to the contrary,
notice shall be deemed given upon delivery.
(d) Except as otherwise expressly provided in this Lease or as
otherwise required by law, Landlord retains the absolute right to withhold any
consent or approval.
(e) At Landlord's request from time to time Tenant shall furnish
Landlord with true and complete copies of its most recent annual and quarterly
financial statements prepared by Tenant or Tenant's accountants and any other
financial information or summaries that Tenant typically provides to its lenders
or shareholders.
<PAGE>
(f) Neither this Lease nor a memorandum of lease shall be filed by or
on behalf of Tenant in any public record. Landlord may prepare and file, and
upon request by Landlord Tenant will execute, a memorandum of lease.
(g) The normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Lease or any exhibits or amendments hereto.
(h) The submission by Landlord to Tenant of this Lease shall have no
binding force or effect, shall not constitute an option for the leasing of the
Premises nor confer any right or impose any obligations upon either party until
execution of this Lease by both parties.
(i) Words of any gender used in this Lease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions inserted
in this Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.
(j) Any amount not paid by Tenant within 5 days after its due date in
accordance with the terms of this Lease shall bear interest from such due date
until paid in full at the lesser of the highest rate permitted by applicable law
or 15 percent per year. It is expressly the intent of Landlord and Tenant at all
times to comply with applicable law governing the maximum rate or amount of any
interest payable on or in connection with this Lease. If applicable law is ever
judicially interpreted so as to render usurious any interest called for under
this Lease, or contracted for, charged, taken, reserved, or received with
respect to this Lease, then it is Landlord's and Tenant's express intent that
all excess amounts theretofore collected by Landlord be credited on the
applicable obligation (or, if the obligation has been or would thereby be paid
in full, refunded to Tenant), and the provisions of this Lease immediately shall
be\ deemed reformed and the amounts thereafter collectible hereunder reduced,
without the necessity of the execution of any new documents, so as to comply
with the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for hereunder.
(k) Construction and interpretation of this Lease shall be governed by
the laws of the state in which the Project is located, excluding any principles
of conflicts of laws.
(l) Time is of the essence as to the performance of Tenant's and
Landlord's obligations under this Lease.
(m) All exhibits and addenda attached hereto are hereby incorporated
into this Lease and made a part hereof. In the event of any conflict between
such exhibits or addenda and the terms of this Lease, such exhibits or addenda
shall control.
38. Landlord's Lien/Security Interest. Tenant hereby grants Landlord a
security interest, and this Lease consitutes a security agreement, within the
meaning of and pursuant to the Uniform Commercial Code of the state in which the
Premises are situated as to all of Tenant's property situate in, or upon or used
in connection with the Premises (except merchandise sold in the ordinary course
of business) as security for all of Tenant's obligations hereunder, including,
without limitation, the obligation to pay rent. Such personalty thus encumbered
includes specifically all trade and other fixtures for the purpose of this
Paragraph and inventory, equipment, contract rights, accounts receivable and the
proceeds thereof. In order to perfect such security interest, Tenant shall
execute such financing statements and file the same at Tenant's expense at the
state and county Uniform Commercial Code filing offices as often as Landlord in
its discretion shall require: and Tenant hereby irrevocably appoints Landlord
its agent
<PAGE>
for the purpose of executing and filing such financing statements on Tenant's
behalf as Landlord shall deem necessary. Nothing contained in this Lease shall
be construed as a consent on the part of Lessor to subject the estate of Lessor
to liability under the Florida Construction Lien Law, it being expressly
understood that the Lessor's estate shall not be subject to such liability.
39. Radon Gas. Radon is a naturally occurring radioactive gas, that
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
40. Limitation of Liability of Trustees, Shareholders, and Officers of
ProLogis Trust. Any obligation or liability whatsoever of ProLogis Trust, a
Maryland real estate investment trust, which may arise at any time under this
Lease or any obligation or liability which may be incurred by it pursuant to any
other instrument, transaction, or undertaking contemplated hereby shall not be
personally binding upon, nor shall resort for the enforcement thereof be had to
the property of, its trustees, directors, shareholders, officers, employees or
agents, regardless of whether such obligation or liability is in the nature of
contract, tort, or otherwise.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the day and year first above written.
TENANT: LANDLORD:
Concord Keystone Sales Corp. PROLOGIS TRUST, A MARYLAND REAL ESTATE
INVESTMENT TRUST
By: /s/ Harlan I. Press By:
----------------------------- -----------------------------------
Name: Harlan I. Press Name: John W. Seiple, Jr.
--------------------------- --------------------------------
Title: Corp. Comptroller Title: Vice President
-------------------------- -------------------------------
Address: Address:
35 Milweed Way 4105 34th Street, Suite A
- -------------------------------- --------------------------------------
- -------------------------------- --------------------------------------
Avenel, NJ 07001-2403 Orlando, Florida 32811
- -------------------------------- --------------------------------------
WITNESSES AS TO TENANT: WITNESS AS TO LANDLORD:
/s/
- -------------------------------- --------------------------------------
/s/
- -------------------------------- --------------------------------------
<PAGE>
Rules and Regulations
---------------------
1. The sidewalk, entries, and driveways of the Project shall not be obstructed
by Tenant, or its agents, or used by them for any purpose other than
ingress and egress to and from the Premises.
2. Tenant shall not place any objects, including antennas, outdoor furniture,
etc., in the parking areas, landscaped areas or other areas outside of its
Premises, or on the roof of the Project.
3. Except for seeing-eye dogs, no animals shall be allowed in the offices,
halls, or corridors in the Project.
4. Tenant shall not disturb the occupants of the Project or adjoining
buildings by the use of any radio or musical instruments or by the making
of loud or improper noises.
5. If Tenant desires telegraphic, telephonic or other electric connections in
the Premises, Landlord or its agent will direct the electrician as to where
and how the wires may be introduced; and, without such direction, no boring
or cutting of wires will be permitted. Any such installation or connection
shall be made at Tenant's expense.
6. Tenant shall not install or operate any steam or gas engine or boiler, or
other mechanical apparatus in the Premises, except as specifically approved
in the Lease. The use of oil, gas or inflammable liquids for heating,
lighting or any other purpose is expressly prohibited. Explosives or other
articles deemed extra hazardous shall not be brought into the Project.
7. Parking any type of recreational vehicles is specifically prohibited on or
about the Project. Except for the overnight parking of operative vehicles,
no vehicle of any type shall be stored in the parking areas at any time. In
the event that a vehicle is disabled, it shall be removed within 48 hours.
There shall be no "For Sale" or other advertising signs on or about any
parked vehicle. All vehicles shall be parked in the designated parking
areas in conformity with all signs and other markings. All parking will be
open parking, and no reserved parking, numbering or lettering of individual
spaces will be permitted except as specified by Landlord.
8. Tenant shall maintain the Premises free from rodents, insects and other
pests.
9. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs or who shall in any manner do any act in violation of the
Rules and Regulations of the Project.
10. Tenant shall not cause any unnecessary labor by reason of Tenant's
carelessness or indifference in the preservation of good order and
cleanliness. Landlord shall not be responsible to Tenant for any loss of
property on the Premises, however occurring, or for any damage done to the
effects of Tenant by the janitors or any other employee or person.
<PAGE>
11. Tenant shall give Landlord prompt notice of any defects in the water, lawn
sprinkler, sewage, gas pipes, electrical lights and fixtures, heating
apparatus, or any other service equipment affecting the Premises.
12. Tenant shall not permit storage outside the Premises, including without
limitation, outside storage of trucks and other vehicles, or dumping of
waste or refuse or permit any harmful materials to be placed in any
drainage system or sanitary system in or about the Premises.
13. All moveable trash receptacles provided by the trash disposal firm for the
Premises must be kept in the trash enclosure areas, if any, provided for
that purpose.
14. No auction, public or private, will be permitted on the Premises or the
Project.
15. No awnings shall be placed over the windows in the Premises except with the
prior written consent of Landlord.
16. The Premises shall not be used for lodging, sleeping or cooking or for any
immoral or illegal purposes or for any purpose other than that specified in
the Lease. No gaming devices shall be operated in the Premises.
17. Tenant shall ascertain from Landlord the maximum amount of electrical
current which can safely be used in the Premises, taking into account the
capacity of the electrical wiring in the Project and the Premises and the
needs of other tenants, and shall not use more than such safe capacity.
Landlord's consent to the installation of electric equipment shall not
relieve Tenant from the obligation not to use more electricity than such
safe capacity.
18. Tenant assumes full responsibility for protecting the Premises from theft,
robbery and pilferage.
19. Tenant shall not install or operate on the Premises any machinery or
mechanical devices of a nature not directly related to Tenant's ordinary
use of the Premises and shall keep all such machinery free of vibration,
noise and air waves which may be transmitted beyond the Premises.
<PAGE>
EXHIBIT 10-2
......................
Lease
PRESIDENTIAL CIRCLE
......................
Between
CONCORD CAMERA CORPORATION
(Tenant)
and
CARRAMERICA REALTY CORP.
(Landlord)
<PAGE>
Page
----
1. LEASE AGREEMENT 3
2. RENT 3
A. Types of Rent 3
(1) Base Rent 3
(2) Operating Cost Share Rent 3
(3) Tax Share Rent 3
(4) Additional Rent 3
(5) Rent 3
B. Payment of Operating Cost Share Rent and Tax Share Rent 3
(1) Payment of Estimated Operating Cost Share Rent
and Tax Share Rent 3
(2) Correction of Operating Cost Share Rent 3
(3) Correction of Tax Share Rent 3
C. Definitions 3
(1) Included Operating Costs 3
(2) Excluded Operating Costs 3
(3) Taxes 4
(4) Lease Year 4
(5) Fiscal Year 4
D. Computation of Base Rent and Rent Adjustments 4
(1) Prorations 4
(2) Default Interest 4
(3) Rent Adjustments 4
(4) Books and Records 4
(5) Miscellaneous 4
3. PREPARATION AND CONDITION OF PREMISES;
POSSESSION AND SURRENDER OF PREMISES 4
A. Condition of Premises 5
B. Tenant's Possession 5
C. Maintenance 5
4. PROJECT SERVICES 5
A. Heating and Air Conditioning 5
B. Elevators 5
C. Electricity 5
D. Water 5
E. Janitorial Service 5
F. Interruption of Services 5
5. ALTERATIONS AND REPAIRS 5
A. Landlord's Consent and Conditions 5
B. Damage to Systems 6
C. No Liens 6
D. Ownership of Improvements 6
E. Removal at Termination 6
6. USE OF PREMISES 6
7. GOVERNMENTAL REQUIREMENTS AND BUILDING RULES 6
8. WAIVER OF CLAIMS; INDEMNIFICATION, INSURANCE 6
A. Waiver of Claims 6
B. Indemnification 6
C. Tenant's Insurance 7
D. Insurance Certificates 7
E. Landlord's Insurance 7
9. FIRE AND OTHER CASUALTY 7
A. Termination 7
B. Restoration 7
10. EMINENT DOMAIN 7
11. RIGHTS RESERVED TO LANDLORD 7
A. Name 8
B. Signs 8
C. Window Treatments 8
D. Keys 8
E. Access 8
<PAGE>
F. Preparation for reoccupancy 8
G. Heavy Articles 8
H. Show Premises 8
I. Relocation of Tenant 8
J. Use of Lockbox 8
K. Repairs and Alterations 8
L. Landlord's Agents 8
M. Building Services 8
N. Other Actions 8
12. TENANT DEFAULT 8
A. Rent Default 8
B. Assignment/Sublease or Hazardous Substances Default 8
C. Other Performance Default 8
D. Credit Default 8
E. Vacation or Abandonment Default 8
13. LANDLORD REMEDIES 8
A. Accelerate Rent 8
B. Termination of Lease or Possession 8
C. Lease Termination Damages 8
D. Possession Termination Damages 9
E. Landlord's Remedies Cumulative 9
F. WAIVER OF TRIAL BY JURY 9
G. Litigation Costs 9
14. SURRENDER 9
15. HOLDOVER 9
16. SUBORDINATION TO GROUND LEASES AND MORTGAGES 9
A. Subordination 9
B. Termination of Ground Lease or Foreclosure of Mortgage 9
C. Security Deposit 9
D. Notice and Right to Cure 9
E. Definitions 10
17. ASSIGNMENT AND SUBLEASE 10
A. In General 10
B. Landlord's Consent 10
C. Procedure 10
D. Change of Management or Ownership 10
E. Excess Payments 10
F. Recapture 10
18. CONVEYANCE BY LANDLORD 10
19. ESTOPPEL CERTIFICATE 10
20. SECURITY DEPOSIT 10
21. FORCE MAJEURE 11
22. TENANT'S PERSONAL PROPERTY AND FIXTURES 11
23. NOTICES 11
A. Landlord 11
B. Tenant 11
24. QUIET POSSESSION 11
25. REAL ESTATE BROKER 11
26. MISCELLANEOUS 11
A. Successors and Assigns 11
B. Date Payments Are Due 11
C. Meaning of "Landlord", "Re-Entry" "including" and "Affiliate" 11
D. Time of the Essence 11
E. No Option 11
F. Severability 11
G. Governing Law 11
H. Lease Modification 11
I. No Oral Modification 11
<PAGE>
J. Landlord's Right to Cure 11
K. Captions 11
L. Authority 11
M. Landlord's Enforcement of Remedies 12
N. Entire Agreement 12
O. Landlord's Title 12
P. Light and Air Rights 12
Q. Singular and Plural 12
R. No Recording by Tenants 12
S. Exclusivity 12
T. No Construction Against Drafting Party 12
U. Survival 12
V. Rent Not Based on Income 12
W. Building Manager and Service Providers 12
X. Late Charge and Interest on Late Payments 12
27. UNRELATED BUSINESS INCOME 12
28. HAZARDOUS SUBSTANCES 12
29. EXCULPATION 12
30. RADON GAS 12
31. TENANT PARKING 12
A. General 12
B. Rates 12
C. Reservations 12
D. Conditions 13
32. EXTENSION OPTION 13
33. TERMINATION OPTION 14
Appendix A - PLAN OF THE PREMISES
Appendix B - RULES AND REGULATIONS
Appendix C - TENANT IMPROVEMENT AGREEMENT
Appendix D - MORTGAGES CURRENTLY AFFECTING THE PROJECT
Appendix E - COMMENCEMENT DATE CONFIRMATION
Appendix F - JANITORIAL SPECIFICATIONS
<PAGE>
LEASE
THIS LEASE (the "Lease") is made as of August 12, 1998 between CarrAmerica
Realty Corp., a Maryland Corporation (the "Landlord") and the Tenant as named in
the Schedule below. The term "Project" means the building (the "Building") known
as "Presidential Circle" and the land (the "Land") located at 4000 Hollywood
Boulevard, Hollywood, Florida 33021. "Premises" means that part of the Project
leased to Tenant described in the Schedule and outlined on Appendix A.
The following schedule (the "Schedule") is an integral part of this Lease.
Terms defined in this Schedule shall have the same meaning throughout the Lease.
SCHEDULE
1. Tenant: Concord Camera Corporation, a New Jersey Corporation
2. Premises: Suite 650-N
3. Rentable Square Feet of the Premises: 10,145
4. Tenant's Proportionate Share: 3,632 (based upon dividing the Rentable
Square Feet of the Premises by a total of 279,320 rentable square feet
in the Building)
5. Security Deposit: $46,272.38
6. Tenant's Real Estate Broker for this Lease: Haliday Group
7. Landlord's Real Estate Broker for this Lease: N/A
8. Tenant Improvements, if any: See the Tenant Improvement Agreement
attached hereto as Appendix C.
9. Commencement Date: September 1, 1998, but if the Premises are subject
to new construction pursuant to Appendix C, then the Completion Date,
as defined therein, if it is later; Landlord and Tenant shall execute a
Commencement Date Confirmation substantially in the form of Appendix E
promptly following the Commencement Date.
10. Termination Date/Term: August 31, 2008, one hundred twenty (120) months
after the Commencement Date, or if the Commencement Date is not the
first day of a month, then one hundred twenty (120) months after the
first day of the following month.
11. Guarantor: N/A
12. Base Rent:
Annual Monthly
Period Base Rent Base Rent
------ --------- ---------
Year 1 $159,276.48 $13,273.04
Year 2 $165,647.52 $13,803.96
Year 3 $172,273.44 $14,356.12
Year 4 $179,164.44 $14,930.37
Year 5 $186,331.08 $15,527.59
Year 6 $193,784.28 $16,148.69
Year 7 $201,535.68 $16,794.64
Year 8 $209,597.16 $17,466.43
Year 9 $217,981.08 $18,165.09
Year 10 $226,700.28 $18,891.69
13. Operating Cost Share Rent: During the calendar year 1998, Tenant
acknowledges that the estimated amount of Operating Costs as referred
to in Paragraph 2.B and 2.C of the Lease are $10.25 per rentable square
foot plus applicable tax.
14. Rent: During the initial calendar year of the Lease, the monthly Rent
(as defined in Paragraph 2 of the Lease) is as follows:
Base Rent $13,273.04
Operating Cost Share Rent (non-taxable) $ 1,978.28
Operating Cost Share Rent (taxable) $ 6,687.25
Sales Tax $ 1,197.62
----------
TOTAL $23,136.19
Such amount is subject to change based upon the terms of the Lease.
15. Parking: Subject to the terms described in Section 31 of the Lease.
Total Parking Spaces forty (40)
Garage Parking Spaces* ten (10)
Surface Parking Spaces thirty (30)
*Initial monthly rate of $40.00 per parking space.
2
<PAGE>
1. LEASE AGREEMENT. On the terms stated in this Lease, Landlord leases the
Premises to Tenant, and Tenant leases the Premises from Landlord, for the Term
beginning on the Commencement Date and ending on the Termination Date unless
extended or sooner terminated pursuant to this Lease.
2. RENT.
A. Types of Rent. Tenant shall pay the following Rent in United States
funds, in the form of a check to Landlord at the following address:
CarrAmerica Realty Corp.
t/a Presidential Circle
P.O. Box 198363
Atlanta, GA 30384-8363
or by wire transfer as follows:
NationsBank of Georgia
ABA Number 061-000-052
Account Number 3255808182
or in such other manner as Landlord may notify Tenant:
(1) Base Rent in monthly installments in advance, the first monthly
installment payable concurrently with the execution of this Lease and
thereafter on or before the first day of each month of the Term in the
amount set forth on the Schedule.
(2) Operating Cost Share Rent in an amount equal to the Tenant's
Proportionate Share of the Operating Costs for the applicable fiscal year of
the Lease, paid monthly in advance in an estimated amount. Definitions of
Operating Costs and Tenant's Proportionate Share, and the method for billing
and payment of Operating Cost Share Rent are set forth in Sections 2B, 2C
and 2D.
(3) Additional Rent in the amount of all costs, expenses, liabilities,
and amounts which Tenant is required to pay under this Lease, excluding Base
Rent and Operating Cost Share Rent, but including any interest for late
payment of any item of Rent.
(4) Rent as used in this Lease means Base Rent, Operating Cost Share
Rent, Additional Rent, and those amounts which may be due as per section
2.A.5 below. Tenant's agreement to pay Rent is an independent covenant, with
no right of setoff, deduction or counterclaim of any kind. Landlord shall
use reasonable efforts to determine Tenant's liability for Rent, within one
(1) year from the termination of this Lease. Landlord shall notify Tenant
within such one (1) year period of any matters which Landlord has not been
able to resolve despite its reasonable efforts, and all other matters shall
be deemed final.
(5) Tenant shall pay in addition to rent, all sales, use and occupancy
taxes levied by the State of Florida, or any other governmental jurisdiction
having authority for the privilege of leasing or occupying the premises.
B. Payment of Operating Cost Share Rent.
(1) Payment of Estimated Operating Cost Share Rent. Landlord shall
estimate the Operating Costs of the Project by April 1 of each fiscal year,
or as soon as reasonably possible thereafter. Landlord may revise these
estimates whenever it obtains more accurate information, such as the final
real estate tax assessment or tax rate for the Project.
Within ten (10) days after receiving the original or revised estimate
from Landlord, Tenant shall pay Landlord one-twelfth (1/12th) of the
Tenant's Proportionate Share of this estimate, multiplied by the number of
months that have elapsed in the applicable fiscal year to the date of such
payment including the current month, minus payments previously made by
Tenant for the months elapsed. On the first day of each month thereafter,
Tenant shall pay Landlord one-twelfth (1/12th) of Tenant's Proportionate
Share of this estimate, until a new estimate becomes applicable.
(2) Correction of Operating Cost Share Rent. Landlord shall deliver to
Tenant a report for the previous fiscal year (the "Operating Cost Report")
by April 1 of each year, or as soon as reasonably possible thereafter,
setting forth (a) the actual Operating Costs incurred, (b) the amount of
Operating Cost Share Rent due from Tenant, and (c) the amount of Operating
Cost Share Rent paid by Tenant. Within twenty (20) days after such delivery,
Tenant shall pay to Landlord the amount due minus the amount paid. If the
amount paid exceeds the amount due, Landlord shall apply the excess to
Tenant's payments of Operating Cost Share Rent next coming due.
<PAGE>
C. Definitions.
(1) Included Operating Costs "Operating Costs" means any expenses, costs
and disbursements of any kind including Taxes, paid or incurred by Landlord
in connection with the management, maintenance, operation, insurance, repair
and other related activities in connection with any part of the Project and
of the personal property, fixtures, machinery, equipment, systems and
apparatus used in connection therewith, including the cost of providing
those services required to be furnished by Landlord under this Lease.
Operating Costs shall also include the costs of any capital improvements
which are intended to reduce Operating Costs or improve safety, and those
made to keep the Project in compliance with governmental requirements
applicable from time to time (collectively, "Included Capital Items");
provided, that the costs of any Included Capital Item shall be amortized by
Landlord, together with an amount equal to interest at ten percent (10%) per
annum, over the estimated useful life of such item and such amortized costs
are only included in Operating Costs for that portion of the useful life of
the Included Capital Item which falls within the Term.
If the Project is not fully occupied during any portion of any fiscal
year, Landlord may adjust (an "Equitable Adjustment") Operating Costs to
equal what would have been incurred by Landlord had the Project been fully
occupied. This Equitable Adjustment shall apply only to Operating Costs
which are variable and therefore increase as occupancy of the Project
increases. Landlord may incorporate the Equitable Adjustment in its
estimates of Operating Costs.
If Landlord does not furnish any particular service whose cost would
have constituted an Operating Cost to a tenant other than Tenant who has
undertaken to perform such service itself, Operating Costs shall be
increased by the amount which Landlord would have incurred if it had
furnished the service to such tenant.
(2) Excluded Operating Costs. Operating Costs shall not include:
(a) costs of alterations of tenant premises;
(b) costs of capital improvements other than Included Capital Items;
(c) interest and principal payments on mortgages or any other debt
costs, or rental payments on any ground lease of the Project;
3
<PAGE>
(d) real estate brokers' leasing commissions;
(e) Legal fees, space planner fees and advertising expenses incurred
with regard to leasing the Building or portions thereof;
(f) any cost or expenditure for which Landlord is reimbursed, by
insurance proceeds or otherwise, except by Operating Cost Share
Rent;
(g) the cost of any service furnished to any office tenant of the
Project which Landlord does not make available to Tenant;
(h) depreciation (except on any included Capital Items);
(i) franchise or income taxes imposed upon Landlord, except to the
extent imposed in lieu of all or any part of taxes;
(j) costs of correcting defects in construction of the Building (as
opposed to the cost of normal repair, maintenance and replacement
expected with the construction materials and equipment installed in
the Building in light of their specifications);
(k) legal and auditing fees which are for the benefit of Landlord such
as collecting delinquent rents, preparing tax returns and other
financial statements, and audits other than those incurred in
connection with the preparation of reports required pursuant to
Section 2B above;
(l) the wages of any employee for services not related directly to the
management, maintenance, operation and repair of the Building;
(m) fines, penalties and interest; and
(n) any Operating Cost Share Rent not recovered from other tenants.
(3) Taxes. "Taxes" means any and all taxes, assessments and charges of
any kind, general or special, ordinary or extraordinary, levied against the
Project, which Landlord shall pay or become obligated to pay in connection
with the ownership, leasing, renting, management, use, occupancy, control or
operation of the Project or of the personal property, fixtures, machinery,
equipment, systems and apparatus used in connection therewith. Taxes shall
include real estate taxes, personal property taxes, sewer rents, water
rents, special or general assessments, transit taxes, ad valorem taxes, and
any tax levied on the rents hereunder or the interest of Landlord under this
Lease (the "Rent Tax"). Taxes shall also include all actual fees and other
costs and expenses paid by Landlord in reviewing any tax and in seeking a
refund or reduction of any Taxes, whether or not the Landlord is ultimately
successful.
For any year, the amount to be included in Taxes (a) from taxes or
assessments payable in installments, shall be the amount of the installments
(with any interest) due and payable during such year, and (b) from all other
Taxes, shall at Landlord's election be the amount accrued, assessed, or
otherwise imposed for such year or the amount due and payable in such year.
Any refund or other adjustment to any Taxes by the taxing authority, shall
apply during the year in which the adjustment is made.
Taxes shall not include any net income (except Rent Tax), capital,
stock, succession, transfer, franchise, gift, estate or inheritance tax,
except to the extent that such tax shall be imposed in lieu of any portion
of Taxes.
(4) Lease Year. "Lease Year" means each consecutive twelve-month period
beginning with the Commencement Date, except that if the Commencement Date
is not the first day of a calendar month, then the first Lease Year shall be
the period from the Commencement Date through the final day of the twelve
months after the first day of the following month, and each subsequent Lease
Year shall be the twelve months following the prior Lease Year.
(5) Fiscal Year. "Fiscal Year" means the calendar year, except that the
first fiscal year and the last fiscal year of the Term may be a partial
calendar year.
D. Computation of Base Rent and Rent Adjustments.
(1) Prorations. If this Lease begins on a day other than the first day
of a month, the Base Rent, Operating Cost Share Rent and Tax Share Rent
shall be prorated for such partial month based on the actual number of days
in such month. If this Lease begins on a day other than the first day, or
ends on a day other than the last day, of the fiscal year, Operating Cost
Share Rent and Tax Share Rent shall be prorated for the applicable fiscal
year.
<PAGE>
(2) Default Interest. Any sum due from Tenant to Landlord not paid when
due shall bear interest from the date due until paid at eighteen percent
(18%) per annum.
(3) Rent Adjustments. The square footage of the Premises and the
Building set forth in the Schedule are conclusively deemed to be the actual
square footage thereof, without regard to any subsequent remeasurement of
the Premises or the Building. If any Operating Cost paid in one fiscal year
relates to more than one fiscal year, Landlord may proportionately allocate
such Operating Cost among the related fiscal years.
(4) Books and Records. Landlord shall maintain books and records
reflecting the Operating Costs in accordance with sound accounting and
management practices. Tenant and its certified public accountant shall have
the right to inspect Landlord's records at Landlord's office upon at least
seventy-two (72) hours' prior notice during normal business hours during the
ninety (90) days following the respective delivery of the Operating Cost
Report or the Tax Report. The results of any such inspection shall be kept
strictly confidential by Tenant and its agents, and Tenant and its certified
public accountant must agree, in their contract for such services, to such
confidentiality restrictions and shall specifically agree that the results
shall not be made available to any other tenant of the Building. Unless
Tenant sends to Landlord any written exception to either such report within
said ninety (90) day period, such report shall be deemed final and accepted
by Tenant. Tenant shall pay the amount shown on both reports in the manner
prescribed in this Lease, whether or not Tenant takes any such written
exception, without any prejudice to such exception. If Tenant makes a timely
exception, Landlord shall cause its independent certified public accountant
or shall select and cause another firm with at least five (5) years of
experience in auditing the books and records of commercial office projects
to issue an accounting or certification of expenses, a copy of which shall
be provided to Tenant. If Landlord and Tenant are unable to come to an
agreement, then the dispute shall be submitted to arbitration under the
auspices of the America Arbitration Association, so long as the scope is
limited to the inquiry and determination of whether the Operating Costs as
billed to Tenant are in accordance with the definitions and computations as
provided in the Lease. Tenant shall pay the cost of such certification
unless Landlord's original determination of annual Operating Costs
overstated the amounts thereof by more than five percent (5%).
(5) Miscellaneous. So long as Tenant is in default of any obligation
under this Lease, Tenant shall not be entitled to any refund of any amount
from Landlord. If this Lease is terminated for any reason prior to the
annual determination of
4
<PAGE>
Operating Cost Shares Rent, either party shall pay the full amount due
to the other within fifteen (15) days after Landlord's notice to Tenant
of the amount when it is determined. Landlord may comingle any
payments made with respect to Operating Cost Share Rent or Tax Share
Rent, without payment of interest.
3. PREPARATION AND CONDITION OF PREMISES; POSSESSION AND SURRENDER OF
PREMISES.
A. Condition of Premises. Except to the extent of the Tenant
Improvements item on the Schedule, Landlord is leasing the Premises to Tenant
"as is", without any obligation to alter, remodel, improve, repair or decorate
any part of the Premises. Landlord shall cause the Premises to be completed in
accordance with the Tenant Improvement Agreement attached as Appendix C. To the
best of Landlord's knowledge, the Building equipment is in good working order as
of the date of the Lease.
B. Tenant's Possession. Tenant's taking possession of any portion of
the Premises shall be conclusive evidence that the Premises was in good order,
repair and condition. If Landlord authorizes Tenant to take possession of any
part of the Premises prior to the Commencement Date for purposes of doing
business, all terms of this Lease shall apply to such pre-Term possession,
including Base Rent at the rate set forth for the First Lease Year in the
Schedule prorated for any partial month.
C. Maintenance. Throughout the Term, Tenant shall maintain the Premises
in their condition as of the Completion Date, loss or damage caused by the
elements, ordinary wear, and fire and other casualty excepted, and at the
termination of this Lease, or Tenant's right to possession, Tenant shall return
the Premises to Landlord in broom-clean condition. To the extent Tenant fails to
perform either obligation, Landlord may, but need not, restore the Premises to
such condition and Tenant shall pay the cost thereof within ten (10) days of
demand therefore.
4. PROJECT SERVICES. Landlord shall furnish services as follows:
A. Air Conditioning. During the normal business hours of 8:00 a.m. to
6:00 p.m., Monday through Friday (except for holidays), and 9:00 a.m. to 1:00
p.m. on Saturday, Landlord shall furnish (i) air conditioning such that the
average temperature condition of the Premises is 74 degrees F (+2 degrees F dry
bulb with 50% + 5% relative humidity) when the outdoor conditions are not above
95 degrees F dry bulb. Landlords obligations hereunder shall be diminished to
the extent that Tenant adversely affects the temperature maintained by the air
conditioning system by operating its equipment. If Tenant installs such
equipment, Landlord may install supplementary air conditioning units in the
Premises, and Tenant shall pay to Landlord upon demand as Additional Rent the
cost of installation, operation and maintenance thereof. The temperature
condition herein described above is further conditioned based on blinds being
fully lowered with slats at a forty-five degree azimuth, coincident with peak
sun load, or the equivalent solar barrier; electrical load of five (5) watts
(connected load) per rentable square foot and a people load of one person per
one hundred seventy-five square feet. The term holidays, as referred to above
shall be New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, Christmas Day and any other holiday taken by tenants occupying at least
one-half (1/2) of the net rentable area of office space in the Building, as
announced from time to time by Landlord.
Landlord shall furnish air conditioning after business hours if Tenant
provides Landlord reasonable prior notice, and pays Landlord all then current
charges for such additional air conditioning. Such current charges are twenty
(20) dollars per hour, however, this amount is subject to increase.
B. Elevators. Landlord shall provide passenger elevator service during
normal business hours to Tenant in common with Landlord and all other tenants.
Landlord shall provide limited passenger service at other times, except in case
of an emergency. Landlord shall provide freight elevator service at reasonable
hours at Tenant's request, subject to scheduling by the Landlord and payment for
the service by Tenant.
C. Electricity. Landlord shall provide sufficient electricity to
operate normal office lighting and equipment. Tenant shall not install or
operate in the Premises any electrically operated equipment or other machinery,
other than business machines and equipment normally employed for general office
use which do not require high electricity consumption for operation, without
obtaining the prior written consent of Landlord. If any or all of Tenant's
equipment requires electricity consumption in excess of that which is necessary
to operate normal office equipment, such consumption (including consumption for
computer or telephone rooms and special HVAC equipment) shall be submetered by
Landlord at Tenant's expense, and Tenant shall reimburse Landlord as Additional
Rent for the cost of its submetered consumption based upon Landlord's average
cost of electricity. Such Additional Rent shall be in addition to Tenant's
obligations pursuant to Section 2A(2) to pay its Proportionate Share of
Operating Costs.
<PAGE>
D. Water. Landlord shall furnish hot and cold tap water for drinking
and toilet purposes. Tenant shall pay Landlord for water furnished for any other
purpose as Additional Rent at rates fixed by Landlord. Tenant shall not permit
water to be wasted.
E. Janitorial Service. Landlord shall furnish janitorial service as
generally provided to other tenants in the Building. A copy of the current
janitorial specifications are attached as Appendix F.
F. Interruption of Services. If any of the Building equipment or
machinery ceases to function properly for any cause Landlord shall use
reasonable diligence to repair the same promptly. Landlord's inability to
furnish, to any extent, the Project services set forth in this Section 4, or any
cessation thereof resulting from any causes, including any entry for repairs
pursuant to this Lease, and any renovation, redecoration or rehabilitation of
any area of the Building shall not render Landlord liable for damages to either
person or property or for interruption or loss to Tenant's business, nor be
construed as an eviction of Tenant, nor work an abatement of any portion of
Rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof.
However, in the event that an interruption of the Project services set forth in
this Section 4 causes the Premises to be untenantable for a period of at least
ten (10) consecutive business days, monthly Rent shall be thereafter abated
proportionately.
Notwithstanding anything to the contrary in this section, if (i)
Landlord ceases to furnish electric, heating, cooling, elevator, water, or
janitorial services to the Premises, and Tenant notifies Landlord of such
cessation in writing (the "Interruption Notice"), (ii) such cessation does not
arise as a result of an act or omission of Tenant, (iii) such cessation is not
caused by fire or other casualty (in which case Section 9 shall control), (iv)
the repair or restoration of such services is reasonably within the control of
Landlord, and (v) as a result of such cessation, the Premises or a material
portion thereof is rendered untenantable (meaning that Tenant is unable to use
the Premises in the normal course of its business) and Tenant in fact ceases to
use the Premises or a material portion thereof, sixty (60) consecutive days,
Tenant may cancel this Lease by giving not less than sixty (60) days, prior
written notice of its intention so to terminate to Landlord, which notice must
be sent within ten (10) days after the expiration of said sixty-day period, and
this Lease shall terminate as of the date specified in such notice with the same
effect as if such date were the scheduled expiration date of this Lease.
Notwithstanding the foregoing, if Tenant sends such a notice of cancellation and
Landlord, prior to thirty (30) days after the date of such notice, substantially
restores the interrupted services, then Tenant's notice shall be without force
or effect and this Lease shall continue in full force and effect. In addition,
notwithstanding this sixty (60) day time frame, provided that Landlord has
promptly commenced all appropriate actions to reinstate delivery of the services
which will have been interrupted and such actions are thereafter diligently and
continuously pursued by Landlord in good faith, the sixty (60) day period be
extended so that it exceeds a total of ninety (90) days.
G. Lighting. Landlord or its designer shall furnish, install, and
replace, as required, all lighting tubes, lamps, bulbs, starters, transformers
and ballasts and like items in Building-standard lighting fixtures in the
premises.
H. Security Service. Landlord shall provide security service for the
Building consistent with that of comparable office buildings in the vicinity,
with no warranty or liability respecting the effectiveness of the service.
5. ALTERATIONS AND REPAIRS.
A. Landlord's Consent and Conditions. Tenant shall not make any
improvements or alterations to the Premises (the "Work") without in each
instance submitting plans and specifications for the Work to Landlord and
obtaining Landlord's prior written consent. Tenant shall pay Landlord's standard
charge for review of the plans and all other items submitted by Tenant. Landlord
will be deemed to be acting reasonably in withholding its consent for any Work
which (a) impacts the base structural components or systems of the Building, (b)
impacts any other tenant's premises, or (c) is visible from outside the
Premises.
Tenant shall reimburse Landlord for actual costs incurred for review of
the plans and all other items submitted by Tenant. Tenant shall pay for the cost
of all Work. All Work shall become the property of Landlord upon its
installation, except for Tenant's trade fixtures and for items which Landlord
requires Tenant to remove at Tenant's cost at the termination of the Lease
pursuant to Section 5E.
The following requirements shall apply to all Work:
(1) Prior to commencement, Tenant shall furnish to Landlord building
permits, certificates of insurance satisfactory to Landlord, and, at Landlord's
request, security for payment of all costs.
<PAGE>
(2) Tenant shall perform all Work so as to maintain peace and
harmony among other contractors serving the Project and shall avoid interference
with other work to be performed or services to be rendered in the Project.
(3) The Work shall be performed in a good and workmanlike manner,
meeting the standard for construction and quality of materials in the Building,
and shall comply with all insurance requirements and all applicable governmental
laws, ordinances and regulations ("Governmental Requirements").
(4) Tenant shall perform all Work so as to minimize or prevent
disruption to other tenants, and Tenant shall comply with all reasonable
requests of Landlord in response to complaints from other tenants.
(5) Tenant shall perform all Work in compliance with Landlord's
"Policies, Rules and Procedures for Construction Projects" in effect at the time
the Work is performed.
(6) Tenant shall permit Landlord to supervise all Work. Landlord may
charge a supervisory fee not to exceed fifteen percent (15%) of labor, material,
and all other costs of the Work, if Landlord's employees or contractors perform
the Work.
(7) Upon completion, Tenant shall furnish Landlord with contractor's
affidavits and full and final statutory waivers of liens, as-built plans and
specifications, and receipted bills covering all labor and materials, and all
other close-out documentation required in Landlord's "Policies, Rules and
Procedures for Construction Projects".
B. Damage to Systems. If any part of the mechanical, electrical or
other systems in the Premises shall be damaged, Tenant shall promptly notify
Landlord, and Landlord shall repair such damage. Landlord may also at any
reasonable time make any repairs or alterations which Landlord deems necessary
for the safety or protection of the Project, or which Landlord is required to
make by any court or pursuant to any Governmental Requirement. Tenant shall at
its expense make all other repairs necessary to keep the Premises, and Tenant's
fixtures and personal property, in good order, condition and repair; to the
extend Tenant fails to do so, Landlord may make such repairs itself. The cost of
any repairs made by Landlord on account of Tenant's default, or on account of
the misuse or neglect by Tenant or its invitees, contractors or agents anywhere
in the Project, shall become Additional Rent payable by Tenant on demand.
C. No Liens. Tenant has no authority to cause or permit any lien or
encumbrance of any kind to affect Landlord's interest in the Project; any such
lien or encumbrance shall attach to Tenant's interest only. If any mechanic's
lien shall be filed or claim of lien made for work or materials furnished to
Tenant, then Tenant shall at its expense within ten (10) days thereafter either
discharge or contest the lien or claim. If Tenant contests the lien or claim,
then Tenant shall (i) within such ten (10) day period, provide Landlord adequate
security for the lien or claim, (ii) contest the lien or claim in good faith by
appropriate proceedings that operate to stay its enforcement, and (iii) pay
promptly any final adverse judgment entered in any such proceeding. If Tenant
does not comply with these requirements, Landlord may discharge the lien or
claim, and the amount paid, as well as attorney's fees and other expenses
incurred by Landlord, shall become Additional Rent payable by Tenant on demand.
D. Ownership of Improvements. All Work as defined in this Section 5,
partitions, hardware, equipment, machinery and all other improvements and all
fixtures except trade fixtures, constructed in the Premises by either Landlord
or Tenant, (i) shall become Landlord's property upon installation without
compensation to Tenant, unless Landlord consents otherwise in writing, and (ii)
shall at Landlord's option either (a) be surrendered to Landlord with the
Premises at the termination of the Lease or of Tenant's right to possession, or
(b) be removed in accordance with Subsection 5E below (unless Landlord at the
time it gives its consent to the performance of such construction expressly
waives in writing the right to require such removal).
E. Removal at Termination. Except for those improvements constructed by
Landlord prior to the Commencement Date according to the terms of Appendix C,
upon the termination of this Lease or Tenant's right of possession Tenant shall
remove from the Project its trade fixtures, furniture, moveable equipment and
other personal property, any improvements which Landlord elects shall be removed
by Tenant pursuant to Section 5D, and any improvements to any portion of the
Project other than the Premises. Tenant shall repair all damage caused by the
installation or removal of any of the foregoing items. If Tenant does not timely
remove such property, then Tenant shall be conclusively presumed to have, at
Landlord's election (i) conveyed such property to Landlord without compensation
or (ii) abandoned such property, and Landlord may dispose of or store any part
thereof in any manner at Tenant's sole cost, without waiving Landlord's right to
claim from Tenant all expenses arising out of Tenant's failure to remove the
property, and without liability to Tenant or any other person. Landlord shall
have no duty to be a bailee of any such personal property. If Landlord elects
abandonment, Tenant shall pay to Landlord, upon demand, any expenses incurred
for disposition.
<PAGE>
6. USE OF PREMISES. Tenant shall use the Premises only for general
office purposes. Provided Tenant is not in default of the Lease, Tenant shall
have access to the Premises 24 hours a day, 7 days a week, 365 days each year
according to the terms and conditions of the Lease. Tenant shall not allow any
use of the Premises which will negatively affect the cost of coverage of Land-
lord's insurance on the Project. Tenant shall not allow any inflammable or
explosive liquids or materials to be kept on the Premises. Tenant shall not
allow any use of the Premises which would cause the value or utility of any part
of the Premises to diminish or would interfere with any other tenant or with the
operation of the Project by Landlord. Tenant shall not permit any nuisance or
waste upon the Premises, or allow any offensive noise or odor in or around the
Premises.
If any governmental authority shall deem the Premises to be a "place of
public accommodation" under the Americans with Disabilities Act or any other
comparable law as a result of Tenant's use. Tenant shall either modify its use
to cause such authority to rescind its designation or be responsible for any
alterations, structural or otherwise, required to be made to the Building or the
Premises under such laws.
7. GOVERNMENTAL REQUIREMENTS AND BUILDING RULES. Tenant shall comply
with all Governmental Requirements applying to its use of the Premises. Tenant
shall also comply with all reasonable rules established for the Project from
time to time by Landlord. The present rules and regulations include, but are not
limited to those that are contained in Appendix B. Failure by another tenant to
comply with the rules or failure by Landlord to enforce them shall not relieve
Tenant of its obligation to comply with the rules or make Landlord responsible
to Tenant in any way. Landlord shall use reasonable efforts to apply the rules
and regulations uniformly with respect to Tenant and tenants in the Building
under leases containing rules and regulations similar to this Lease. In the
event of alterations and repairs performed by Tenant, Tenant shall comply with
the provisions of Section 5 of this Lease and also Landlord's "Policies,
Rules and Regulations for Construction Projects".
8. WAIVER OF CLAIMS: INDEMNIFICATION: INSURANCE.
A. Waiver of Claims. To the extent permitted by law, Tenant waives any
claims it may have against Landlord or its officers, directors, employees or
agents for business interruption or damage to property sustained by Tenant as
the result of any act or omission of Landlord.
To the extent permitted by law, Landlord waives any claims it may have
against Tenant or its officers, directors, employees or agents for loss of rents
(other than Rent) or damage to property sustained by Landlord as the result of
any act or omission of Tenant.
B. Indemnification. Tenant shall indemnify, defend and hold harmless
Landlord and its officers, directors, employees and agents against any claim by
any third party for injury to any person or damage to or loss of any property
occurring in the Project and arising from the use of the Premises or from any
other act or omission or negligence of Tenant or any of Tenant's employees,
agents, guests or invitees. Tenant's obligations under this section shall
survive the termination of this Lease.
Landlord shall indemnify, defend and hold harmless Tenant and its
officers, directors, employees and agents against any claim by any third party
for damage to person or Premises or from any other act or omission or gross
negligence of Landlord or any of Landlord's employees or agents. Landlord's
obligations under this section shall survive the termination of this Lease.
C. Tenant's Insurance. Tenant shall maintain insurance as follows, with
such other terms, coverage and insurers, as Landlord shall reasonably require
from time to time:
(1) Commercial General Liability Insurance, with (a) Contractual
Liability including the indemnification provisions contained in this Lease,
(b) a severability of interest endorsement, (c) limits of not less than Two
Million Dollars ($2,000,000) combined single limit per occurrence and not less
than Two Million Dollars ($2,000,000) in the aggregate for bodily injury,
sickness or death, and property damage, and umbrella coverage of not less than
Five Million Dollars ($5,000,000).
<PAGE>
(2) Property Insurance against "All Risks" of physical loss covering
the replacement cost of all improvements, fixtures and personal property. Tenant
waives all rights of subrogation, and Tenant's property insurance shall include
a waiver of subrogation in favor of Landlord.
(3) Workers compensation or similar insurance in form and amounts
required by law, and Employer's Liability with not less than the following
limits:
Each Accident $500,000
Disease-Policy Limit $500,000
Disease-Each Employee $500,000
Such insurance shall contain a waiver of subrogation provision in
favor of Landlord and its agents.
Tenant's Insurance shall be primary and not contributory (contributory
may also be referred to as excess or umbrella insurance) to that carried by
Landlord, its agents, or mortgagee. Landlord, and if any, Landlord's building
manager or agent and ground lessor shall be named as additional insureds as
respects to insurance required of the Tenant in Section 8C(1). The company or
companies writing any insurance which Tenant is required to maintain under this
Lease, as well as the form of such insurance, shall at all times be subject to
Landlord's approval, and any such company shall be licensed to do business in
the state in which the Building is located. Such insurance companies shall have
a A.M. Best rating of A VI or better.
Tenant shall cause any contractor of Tenant performing work on the
Premises to maintain insurance as follows, with such other terms, coverages
and insurers, as Landlord shall reasonably require from time to time:
(1) Commercial General Liability Insurance, including contractor's
liability coverage, contractual liability coverage, completed operations
coverage, broad form property damage endorsement, and contractor's protective
liability coverage, to afford protection with limits, for each occurrence, of
not less than One Million Dollars ($1,000,000) with respect to personal injury,
death or property damage.
(2) Workers' compensation or similar insurance in form and amounts
required by law, and Employer's Liability with not less than the following
limits:
Each Accident $500,000
Disease-Policy Limit $500,000
Disease-Each Employee $500,000
Such insurance shall contain a waiver of subrogation provision in favor
of Landlord and its agents.
Tenant's contractor's insurance shall be primary and not contributory
to that carried by Tenant, Landlord, their agents or mortgagees. Tenant and
Landlord, and if any, Landlord's building manager or agent, mortgagee or ground
lessor shall be named as additional insured on Tenant's contractor's insurance
policies.
D. Insurance Certificates. Tenant shall deliver to Landlord
certificates evidencing all required insurance no later than five (5) days prior
to the Commencement Date and each renewal date, or at any other time required by
Landlord. Each certificate will provide for thirty (30) days prior written
notice of termination or cancellation to Landlord and Tenant.
E. Landlord's Insurance. Landlord shall maintain "All-Risk" property
insurance at replacement cost, including loss of rents, on the Building, and
Commercial General Liability insurance policies covering the common areas of the
Building, each with such terms, coverages and conditions as are normally carried
by reasonably prudent owners of properties similar to the Project. With respect
to property
<PAGE>
insurance, Landlord and Tenant mutually waive all rights of subrogation, and the
respective "All-Risk" coverage property insurance policies carried by Landlord
and Tenant shall contain enforceable waiver of subrogation endorsements.
9. FIRE AND OTHER CASUALTY
A. Termination. If a fire or other casualty causes substantial damage to
the Building or the Premises, Landlord shall engage a registered architect to
certify within one (1) month of the casualty to both Landlord and Tenant the
amount of time needed to restore the Building and the Premises to tenantability,
using standard working methods. If the time needed exceeds nine (9) months from
the beginning of the restoration, or two (2) months therefrom if the restoration
would begin during the last twelve (12) months of the Lease, then in the case of
the Premises, either Landlord or Tenant may terminate this Lease, and in the
case of the Building, Landlord may terminate this Lease, by notice to the other
party within ten (10) days after the notifying party's receipt of the
architect's certificate. The termination shall be effective thirty (30) days
from the date of the notice and Rent shall be paid by Tenant to that date, with
an abatement for any portion of the Premises which has been untenantable after
the casualty.
B. Restoration. If a casualty causes damage to the Building or the Premises
but this Lease is not terminated for any reason, then subject to the rights of
any mortgagees or ground lessors, Landlord shall obtain the applicable insurance
proceeds and diligently restore the Building and the Premises subject to current
Governmental Requirements. Tenant shall replace its damaged improvements,
personal property and fixtures. Rent shall be abated on a per diem basis during
the restoration for any portion of the Premises which is untenantable and such
shall continue until a new certificate of occupancy, if required, is obtained
except to the extent that Tenant's negligence caused the casualty.
10. EMINENT DOMAIN. If a part of the Project is taken by eminent domain or
deed in lieu thereof which is so substantial that the Premises cannot reasonably
be used by Tenant for the operation of its business, then either party may
terminate this Lease effective as of the date of the taking. If any substantial
portion of the Project is taken without affecting the Premises, then Landlord
may terminate this Lease as of the date of such taking. Rent shall abate from
the date of the taking in proportion to any part of the Premises taken. The
entire award for the taking of any kind shall be paid to Landlord. Tenant may
pursue a separate award for its trade fixtures and moving expenses in connection
with the taking, but only if such recovery does not reduce the awards payable to
Landlord. All obligations accrued to the date of the taking shall be performed
by the party liable to perform said obligations, as set forth herein.
11. RIGHTS RESERVED TO LANDLORD.
Landlord may exercise at any time any of the following rights respecting the
operation of the Project without liability to the Tenant of any kind:
A. Name. To change the name or street address of the Building or the suite
number(s) of the Premises.
B. Signs. To install and maintain any signs on the exterior and in the
interior of the Building, and to approve at its sole discretion, prior to
installation, any of Tenant's signs in the Premises visible from the common
areas or the exterior of the Building. No sign shall be installed or maintained
on the exterior or interior of the building without Landlord's prior approval.
C. Window Treatments. To approve, at its discretion, prior to installation,
any shades, blinds, ventilators or window treatments of any kind, as well as any
lighting within the Premises that may be visible from the exterior of the
Building or any interior common area.
D. Keys. To retain and use at any time passkeys to enter the Premises or
any door within the Premises. Tenant shall not alter or add any lock or bolt.
E. Access. To have access to inspect the Premises, and to perform its
obligations, or make repairs, alterations, additions or improvements, as
permitted by this Lease, provided Landlord gives twenty-four (24) hour notice in
non-emergency situations.
F. Preparation for Reoccupancy. To decorate, remodel, repair, alter or
otherwise prepare the Premises for reoccupancy at any time after Tenant abandons
the Premises, without relieving Tenant of any obligation to pay Rent.
G. Heavy Articles. To approve the weight, size, placement and time and
manner of movement within the Building of any safe, central filing system or
other heavy article of Tenant's property. Tenant shall move its property
entirely at its own risk.
H. Show Premises. To show the Premises to prospective purchasers, tenants,
brokers, lenders, investors, rating agencies or others at any reasonable time,
provided that Landlord gives prior notice to Tenant and does not materially
interfere with Tenant's use of the Premises.
<PAGE>
J. Use of Lockbox. To designate a lockbox collection agent for collections
of amounts due Landlord. In that case, the date of payment of Rent or other sums
shall be the date of the agent's receipt of such payment or the date of actual
collection if payment is made in the form of a negotiable instrument thereafter
dishonored upon presentment. However, Landlord may reject any payment for all
purposes as of the date of receipt or actual collection by mailing to Tenant
within 21 days after such receipt or collection a check equal to the amount sent
by Tenant.
K. Repairs and Alterations. To make repairs or alterations to the Project
and in doing so transport any required material through the Premises, to close
entrances, doors, corridors, elevators and other facilities in the Project, to
open any ceiling in the Premises, or to temporarily suspend services or use of
common areas in the Building. Landlord may perform any such repairs or
alterations during ordinary business hours, except that Tenant may require any
Work in the Premises to be done after business hours if Tenant pays Landlord for
overtime and any other expenses incurred. Landlord may do or permit any work on
any nearby building, land, street, alley or way.
L. Landlord's Agents. If Tenant is in default under this Lease, possession
of Tenant's funds or negotiation of Tenant's negotiable instrument by any of
Landlord's agents shall not waive any breach by Tenant or any remedies of
Landlord under this Lease.
M. Building Services. To install, use and maintain through the Premises,
pipes, conduits, wires and ducts serving the Building, provided that such
installation, use and maintenance does not unreasonably interfere with Tenant's
use of the Premises.
N. Other Actions. To take any other action which Landlord deems reasonable
in connection with the operation, maintenance or preservation of the Building.
12. TENANT'S DEFAULT.
Any of the following shall constitute a default by Tenant:
A. Rent Default. Tenant fails to pay any Rent when due and fails to cure
such default within five (5) days after notice thereof.
B. Assignment/Sublease or Hazardous Substances Default. Tenant defaults in
its obligations under Section 17 Assignment and Sublease or Section 28 Hazardous
Substances;
C. Other Performance Default. Tenant fails to perform any other obligation
to Landlord under this Lease, and, in the case of only the first two (2) such
failures during the Term of this Lease, this failure continues for ten (10) days
after written notice from Landlord, except that if Tenant begins to cure its
failure within the ten (10) day period but cannot reasonably complete its cure
within such period, then, so long as Tenant continues to diligently attempt to
cure its failure, the ten (10) day period shall be extended to sixty (60) days,
or such lesser period as is reasonably necessary to complete the cure;
D. Credit Default. One of the following credit defaults occurs:
(1) Tenant commences any proceeding under any law relating to bankruptcy,
insolvency, reorganization or relief of debts, or seeks appointment of a
receiver, trustee, custodian or other similar official for the Tenant or for
any substantial part of its property, or any such proceeding is commenced
against Tenant and either remains undismissed for a period of thirty days or
results in the entry of an order for relief against Tenant which is not
fully stayed within seven days after entry;
(2) Tenant become insolvent or bankrupt, does not generally pay its debts
as they become due, or admits in writing its inability to pay its debts, or
makes a general assignment for the benefit of creditors;
(3) Any third party obtains a levy or attachment under process of law
against Tenant's leasehold interest.
E. Vacation or Abandonment Default. Tenant vacates or abandons the Premises.
13. LANDLORD REMEDIES.
A. Accelerate Rent. Landlord may accelerate rent due hereunder and may also
at its option proceed with any and all of its remedies provided by this lease.
B. Termination of Lease or Possession. If Tenant defaults, Landlord may
elect by notice to Tenant either to terminate this Lease or to terminate
Tenant's possession of the Premises without terminating this Lease. In either
case, Tenant shall immediately vacate the Premises and deliver possession to
Landlord, and Landlord may repossess the Premises and may, at Tenant's sole
cost, remove any of Tenant's signs and any of its other property, without
relinquishing its right to receive Rent or any other right against Tenant.
<PAGE>
C. Lease Termination Damages. If Landlord terminates the Lease, Tenant shall
pay to Landlord a sum equal to all rent accrued up to and including the date of
termination, plus Landlord's reasonable estimate of the aggregate Rent that
would have been payable from the date of termination through the Termination
Date, reduced by the rental value of the Premises calculated as of the date of
termination for the same period, taking into account anticipated vacancy prior
to reletting, reletting expenses and market concessions, both discounted to
present value at the rate of five percent (5%) per annum. All such amounts shall
be then immediately due and payable upon the termination. If Landlord shall
relet any part of the Premises for any part of such period before such present
value amount shall have been paid by Tenant or finally determined by a court,
then the amount of Rent payable pursuant to such reletting (taking into account
vacancy prior to reletting and any reletting expenses or any concessions) shall
be deemed to be the reasonable rental value for that portion of the Premises
relet during the period of the reletting.
D. Possession Termination Damages. If Landlord terminates Tenant's right to
possession without terminating the Lease and Landlord takes possession of the
Premises itself, Landlord may relet any part of the Premises for such Rent, for
such time, and upon such terms as Landlord in its sole discretion shall
determine, without any obligation to do so prior to renting other vacant areas
in the Building. Any proceeds from reletting the Premises shall first be applied
to the expenses of reletting, including redecoration, repair, alteration,
advertising, brokerage, legal, and other reasonably necessary expenses. If the
reletting proceeds after payment of expenses are insufficient to pay the full
amount of Rent under this Lease, Tenant shall pay such deficiency to Landlord
monthly upon demand as it becomes due. Any excess proceeds shall be retained by
Landlord.
E. Landlord's Remedies Cumulative. All of Landlord's remedies under this
Lease shall be in addition to all other remedies Landlord may have at law or in
equity. Waiver by Landlord of any breach of any obligation by Tenant shall be
effective only if it is in writing, and shall not be deemed a waiver of any
other breach, or any subsequent breach of the same obligation. Landlord's
acceptance of payment by Tenant shall not constitute a waiver of any breach by
Tenant, and if the acceptance occurs after Landlord's notice to Tenant, or
termination of the Lease or of Tenant's right to possession, the acceptance
shall not affect such notice or termination. Acceptance of payment by Landlord
after commencement of a legal proceeding or final judgement shall not affect
such proceeding or judgement. Landlord may advance such monies and take such
other actions for Tenant's account as reasonably may be required to cure or
mitigate any default by Tenant. Tenant shall immediately reimburse Landlord for
any such advance, and such sums shall bear interest at the default interest rate
until paid.
F. Waiver of Trial By Jury. Each party waives trial by jury in the event of
any legal proceeding brought by the other in connection with this lease. Each
party shall bring any action against the other in connection with this lease in
a Federal, State or County court located in Broward, Florida, consents to the
jurisdiction of such courts, and waives any right to have any proceeding
transferred from such courts on the ground of improper venue or inconvenient
forum.
G. Litigation Costs. In the event either party places the enforcement of
this Lease, or any part thereof, or the collection of any Rent due, or to become
due hereunder, or recovery of the possession of the Premises in the hands of an
attorney, or files suit upon the same, the non-prevailing (or defaulting) party
shall pay the prevailing party's reasonable attorney's fees and court costs,
including, without limitation, the costs of any special master.
14. SURRENDER. Upon termination of this Lease or Tenant's right to
possession, Tenant shall return the Premises to Landlord in good order and
condition, ordinary wear and casualty damage excepted. Except for those
improvements constructed by Landlord prior to the Commencement Date according to
the terms of Appendix "C". Landlord requires Tenant to remove any alterations,
then Tenant shall remove the alterations in a good and workmanlike manner and
restore the Premises to its condition prior to their installation.
15. HOLDOVER. Tenant shall have no right to holdover possession of the
Premises after the expiration or termination of this Lease without Landlord's
prior written consent, which consent may be withheld in Landlord's sole and
absolute discretion. If Tenant retains possession of any part of the Premises
after the Term, Tenant shall become a month-to-month tenant for the entire
Premises upon all of the terms of this Lease as might be applicable to such
month-to-month tenancy, except that Tenant shall pay all of Base Rent, Operating
Cost Share Rent and Tax Share Rent at double the rate in effect immediately
prior to such holdover, computed on a monthly basis for each full or partial
month Tenant remains in possession. Tenant shall also pay Landlord all of
Landlord's direct and consequential damages resulting from Tenant's holdover.
No acceptance of Rent or other payments by Landlord under these holdover
provisions shall operate as a waiver of Landlord's right to regain possession or
any other of Landlord's remedies.
<PAGE>
16. SUBORDINATION TO GROUND LEASES AND MORTGAGES.
A. Subordination. This Lease shall be subordinate to any present or future
ground lease or mortgage respecting the Project, and any amendments to such
ground lease or mortgage, at the election of the ground lessor or mortgagee as
the case may be, effected by notice to Tenant in the manner provided in this
Lease. The subordination shall be effective upon such notice, but at the request
of Landlord or ground lessor or mortgagee, Tenant shall within ten (10) days of
the request, execute and deliver to the requesting party any reasonable
documents provided to evidence the subordination. Any mortgagee has the right,
at its option, to subordinate its mortgage to the terms of this Lease, without
notice to, nor the consent of, Tenant.
B. Termination of Ground Lease or Foreclosure of Mortgage. If any ground
lease is terminated or mortgage foreclosed or deed in lieu of foreclosure given
and the ground lessor, mortgagee or purchaser at a foreclosure sale shall
thereby become the owner of the Project, Tenant shall attorn to such ground
lessor or mortgagee or purchaser without any deduction or setoff by Tenant, and
this Lease shall continue in effect as a direct lease between Tenant and such
ground lessor, mortgagee or purchaser. The ground lessor or mortgagee or
purchaser shall be liable as Landlord only during the time such ground lessor or
mortgagee or purchaser is the owner of the Project. At the request of Landlord,
ground lessor or mortgagee, Tenant shall execute and deliver within ten (10)
days of the request any document furnished by the requesting party to evidence
Tenant's agreement to attorn.
C. Security Deposit. Any ground lessor or mortgagee shall be responsible
for the return of any security deposit by Tenant only to the extent the security
deposit is received by such ground lessor or mortgagee.
D. Notice and Right to Cure. The Project is subject to any ground lease and
mortgage identified with name and address of ground lessor or mortgagee in
Appendix D to this Lease (as the same may be amended from time to time by
written notice to Tenant). Tenant agrees to send by registered or certified mail
to any ground lessor or mortgagee identified either in such Appendix or in any
later notice from Landlord to Tenant a copy of any notice of default sent by
Tenant to Landlord. If Landlord fails to cure such default within the required
time period under this Lease, but ground lessor or mortgagee begins to cure
within ten (10) days after such period and proceeds diligently to complete such
cure, then ground lessor or mortgagee shall have such additional time as is
necessary to complete such cure, including any time necessary to obtain
possession if possession is necessary to cure, and Tenant shall not begin to
enforce its remedies so long as the cure is being diligently pursued.
E. Definitions. As used in this Section 16, "mortgage" shall include "deed
of trust" and/or "trust deed" and "mortgagee" shall include "beneficiary" and/or
"trustee", "mortgagee" shall include the mortgagee of any ground lessee, and
"ground lessor", "mortgagee", and "purchaser" at a foreclosure sale shall
include, in each case, all of its successors and assigns, however remote.
17. ASSIGNMENT AND SUBLEASE.
A. In General. Tenant shall not, without the prior consent of Landlord in
each case, (i) make or allow any assignment or transfer, by operation of law or
otherwise, of any part of Tenant's interest in this Lease, (ii) grant or allow
any lien or encumbrance, by operation of law or otherwise, upon any part of
Tenant's interest in this Lease, (iii) sublet any part of the Premises, or (iv)
permit anyone other than Tenant and its employees to occupy any part of the
Premises. Tenant shall remain primarily liable for all of its obligations under
this Lease, notwithstanding any assignment or transfer. No consent granted by
Landlord shall be deemed to be a consent to any subsequent assignment or
transfer, lien or encumbrance, sublease or occupancy. Tenant shall pay all of
Landlord's attorneys' fees and other expenses incurred in connection with any
consent requested by Tenant or in reviewing any proposed assignment or
subletting. Any assignment or transfer, grant of lien or encumbrance, or
sublease or occupancy without Landlord's prior written consent shall be void. If
Tenant shall assign this Lease or sublet the Premises in its entirety any rights
of Tenant to renew this Lease, extend the Term or to lease additional space in
the Project shall be extinguished thereby and will not be transferred to the
assignee or subtenant, all such rights being personal to the Tenant named
herein.
<PAGE>
B. Landlord's Consent. Landlord will not unreasonably withhold its consent
to any proposed assignment or subletting. It shall be reasonable for Landlord to
withhold its consent to any assignment or sublease if (i) Tenant is in default
under this Lease, (ii) the proposed assignee or sublessee is a tenant in the
Project or an affiliate of such a tenant or a party that Landlord has identified
as a prospective tenant in the Project, (iii) the financial responsibility,
nature of business, and character of the proposed assignee or subtenant are not
all reasonably satisfactory to Landlord, (iv) in the reasonable judgment of
Landlord the purpose for which the assignee or subtenant intends to use the
Premises (or a portion thereof) is not in keeping with Landlord's standards for
the Building or are in violation of the terms of this Lease or any other leases
in the Project, (v) the proposed assignee or subtenant is a government entity,
or (vi) the proposed assignment is for less than the entire Premises or for less
than the remaining Term of the Lease. The foregoing shall not exclude any other
reasonable basis for Landlord to withhold its consent.
C. Procedure. Tenant shall notify Landlord of any proposed assignment or
sublease at least thirty (30) days prior to its proposed effective date. The
notice shall include the name and address of the proposed assignee or subtenant,
its corporate affiliates in the case of a corporation and its partners in a case
of partnership, an execution copy of the proposed assignment or sublease, and
sufficient information to permit Landlord to determine the financial
responsibility and character of the proposed assignee or subtenant. As a
condition to any effective assignment of this Lease, the assignee shall execute
and deliver in form satisfactory to Landlord at least fifteen (15) days prior to
the effective date of the assignment, an assumption of all of the obligations of
Tenant under this Lease. As a condition to any effective sublease, subtenant
shall execute and deliver in form satisfactory to Landlord at least fifteen (15)
days prior to the effective date of the sublease, an agreement to comply with
all of Tenant's obligations under this Lease, and at Landlord's option, an
agreement (except for the economic obligations which subtenant will undertake
directly to Tenant) to attorn to Landlord under the terms of the sublease in the
event this Lease terminates before the sublease expires.
D. Change of Management or Ownership. Any transfer of the direct or
indirect power to affect the management or policies of Tenant or direct or
indirect change in 51% or more of the ownership interest in Tenant shall
constitute an assignment of this Lease.
E. Excess Payments. If Tenant shall assign this Lease or sublet any part of
the Premises for consideration in excess of the pro-rata portion of Rent
applicable to the space subject to the assignment or sublet, then Tenant shall
pay to Landlord as Additional Rent 50% of any such excess immediately upon
receipt.
F. Recapture. Landlord may, by giving written notice to Tenant within
thirty (30) days after receipt of Tenant's notice of assignment or subletting,
terminate this Lease with respect to the space described in Tenant's notice, as
of the effective date of the proposed assignment or sublease and all obligations
under this Lease as to such space shall expire except as to any obligations that
expressly survive any termination of this Lease.
18. CONVEYANCE BY LANDLORD. If Landlord shall at any time transfer its
interest in the Project or this Lease, Landlord shall be released of any
obligations occurring after such transfer, except the obligation to return to
Tenant any security deposit not delivered to its transferee, and Tenant shall
look solely to Landlord's successors for performance of such obligations. This
Lease shall not be affected by any such transfer.
19. ESTOPPEL CERTIFICATE. Each party shall, within ten (10) days of
receiving a request from the other party, execute, acknowledge in recordable
form, and deliver to the other party or its designee a certificate stating,
subject to a specific statement of
<PAGE>
any applicable exceptions, that the Lease as amended to date is in full force
and effect, that the Tenant is paying Rent and other charges on a current basis,
and that to the best of the knowledge of the certifying party, the other party
has committed no uncured defaults and has no offsets or claims. The certifying
party may also be required to state the date of commencement of payment of Rent,
the Commencement Date, the Termination Date, the Base Rent, the current
Operating Cost Share Rent and Tax Share Rent estimates, the status of any
improvements required to be completed by Landlord, the amount of any security
deposit, and such other matters as may be reasonably requested. Failure to
deliver such statement within the time required shall be conclusive evidence
against the non-certifying party that this Lease, with any amendments identified
by the requesting party, is in full force and effect, that there are no uncured
defaults by the requesting party, that not more than one month's Rent has been
paid in advance, that the non-certifying party has not paid any security
deposit, and that the non-certifying party has no claims or offsets against the
requesting party.
20. SECURITY DEPOSIT. Tenant shall deposit with Landlord on the date of
this Lease, security for the performance of all of its obligations in the amount
set forth on the Schedule. If Tenant defaults under this Lease, Landlord may use
any part of the Security Deposit to make any defaulted payment, to pay for
Landlord's cure of any defaulted obligation, or to compensate Landlord for any
loss or damage resulting from any default. To the extent any portion of the
deposit is used. Tenant shall within five (5) days after demand from Landlord
restore the deposit to its full amount. Landlord may keep the Security Deposit
in its general funds and shall not be required to pay interest to Tenant on the
deposit amount. If Tenant shall perform all of its obligations under this Lease
and return the Premises to Landlord at the end of the Term, Landlord shall
return all of the remaining Security Deposit to Tenant within thirty (30) days
after the end of the Term. The Security Deposit shall not serve as an advance
payment of Rent or a measure of Landlord's damages for any default under this
Lease.
If the Landlord transfers its interest in the Project or this Lease,
Landlord may transfer the Security Deposit to its transferee. Upon such
transfer, Landlord shall have no further obligation to return the Security
Deposit to Tenant, and Tenant's right to the return of the Security Deposit
shall apply solely against Landlord's transferee.
21. FORCE MAJEURE. Landlord or Tenant shall not be in default under this
Lease to the extent Landlord or Tenant is unable to perform any of its
obligations on account of any strike or labor problem, energy shortage,
governmental pre-emption or prescription, national emergency, or any other cause
of any kind beyond the reasonable control of Landlord or Tenant ("Force
Majeure").
22. TENANT'S PERSONAL PROPERTY AND FIXTURES. Landlord shall maintain any
rights pursuant to statutory lien law.
23. NOTICES
. All notices, consents approvals and similar communications to
be given by one party to the other under this Lease, shall be given in writing,
mailed or personally delivered as follows:
A. Landlord. To Landlord as follows:
CarrAmerica Realty Corp.
2424 North Federal Highway, Suite 160
Boca Raton, Florida 33431
Attn: Market Officer
with a copy to:
CarrAmerica Realty Corporation
1850 K. Street, N.W.
Suite 500
Washington, D.C. 20006
Attn: Lease Administration
or to such other person at such other address as Landlord may designate by
notice to Tenant.
<PAGE>
B. Tenant. To Tenant as follows:
Concord Camera Corporation
4000 Hollywood Boulevard, Suite 650-N
Hollywood, FL 33021
or to such other person at such other address as Tenant may designate by notice
to Landlord.
Mailed notices shall be sent by United States certified or registered mail,
return receipt requested or by a reputable national overnight courier service,
postage prepaid. Mailed notices shall be deemed to have been given on the
earlier of actual delivery or three (3) business days after posting in the
United States mail in the case of registered or certified mail, and one business
day in the case of overnight courier.
24. QUIET POSSESSION. So long as Tenant shall perform all of its
obligations under this Lease, Tenant shall enjoy peaceful and quiet possession
of the Premises against any party claiming through the Landlord.
25. REAL ESTATE BROKER. Landlord and Tenant represents to each other that
they have not dealt with any real estate broker with respect to this Lease
except for any broker(s) listed in the Schedule, and no other broker is in any
way entitled to any broker's fee or other payment in connection with this Lease.
Landlord and Tenant shall indemnify and defend each other against any claims by
any other broker or third party for any payment of any kind in connection with
this Lease.
26. MISCELLANEOUS.
A. Successors and Assigns. Subject to the limits on Tenant's assignment
contained in Section 17, the provisions of this Lease shall be binding upon and
inure to the benefit of all successors and assigns of Landlord and Tenant.
B. Date Payments Are Due. Except for payments to be made by Tenant under
this Lease which are due upon demand, or are due in advance (such as Base Rent),
Tenant shall pay to Landlord any amount for which Landlord renders a statement
of account within ten days of Tenant's receipt of Landlord's statement.
C. Meaning of "Landlord", "Re-Entry", "including" and "Affiliate". The term
"Landlord" means only the owner of the Project and the lessor's interest in this
Lease from time to time. The words "re-entry" and "re-enter" are not restricted
to their technical legal meaning. The words "including" and similar words shall
mean "without limitation." The word "affiliate" shall mean a person or entity
controlling, controlled by or under common control with the applicable entity.
"Control" shall mean the power directly or indirectly, by contract or otherwise,
to direct the management and policies of the applicable entity.
D. Time of the Essence. Time is of the essence of each provision of this
Lease.
E. No Option. This document shall not be effective for any purpose until it
has been executed and delivered by both parties; execution and delivery by one
party shall not create any option or other right in the other party.
F. Severability. The unenforceability of any provision of this Lease shall
not affect any other provision.
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<PAGE>
G. Governing Law. This Lease shall be governed in all respects by the laws
of the county in which the Project is located, without regard to the principles
of conflicts of laws.
H. Lease Modification. Tenant agrees to modify this Lease in any way
requested by a mortgagee which does not cause increased expense to Tenant or
otherwise materially adversely affect Tenant's interests under this Lease.
I. No Oral Modification. No modification of this Lease shall be effective
unless it is a written modification signed by both parties.
J. Landlord's Right to Cure. If Landlord breaches any of its obligations
under this Lease, Tenant shall notify Landlord in writing and shall take no
action respecting such breach so long as Landlord promptly begins to cure the
breach and diligently pursues such cure to its completion. Landlord may cure any
default by Tenant, any expenses uncured shall become Additional Rent due from
Tenant on demand by Landlord.
K. Captions. The captions used in this Lease shall have no effect on the
construction of this Lease.
L. Authority. Landlord and Tenant each represents to the other that it has
full power and authority to execute and perform this Lease.
M. Landlord's Enforcement of Remedies. Landlord may enforce any of its
remedies under this Lease either in its own name or through an agent.
N. Entire Agreement. This Lease, together with all Appendices, constitutes
the entire agreement between the parties. No representations or agreements of
any kind have been made by either party which are not contained in this Lease.
O. Landlord's Title. Landlord's title shall always be paramount to the
interest of the Tenant, and nothing in this Lease shall empower Tenant to do
anything which might in any way impair Landlord's title.
P. Light and Air Rights. Landlord does not grant in this Lease any rights
to light and air in connection with Project. Landlord reserves to itself, the
Land, the Building below the improved floor of each floor of the Premises, the
Building above the ceiling of each floor of the Premises, the exterior of the
Premises and the areas on the same floor outside the Premises, along with the
areas within the Premises required for the installation and repair of utility
lines and other items required to serve other tenants of the Building.
Q. Singular and Plural. Wherever appropriate in this Lease, a singular term
shall be construed to mean the plural where necessary, and a plural term the
singular. For example, if at any time two parties shall constitute Landlord or
Tenant, then the relevant term shall refer to both parties together.
R. No Recording by Tenant. Tenant shall not record in any public records
any memorandum or any portion of this Lease.
S. Exclusivity. Landlord does not grant to Tenant in this Lease any
exclusive right except the right to occupy its Premises.
T. No Construction Against Drafting Party. The rule of construction that
ambiguities are resolved against the drafting party shall not apply to this
Lease.
U. Survival. All obligations of Landlord and Tenant under this Lease shall
survive the termination of this Lease.
V. Rent Not Based on Income. No rent or other payment in respect of the
Premises shall be based in any way upon net income or profits from the Premises.
Tenant may not enter into or permit any sublease or license or other agreement
in connection with the Premises which provides for a rental or other payment
based on net income or profit.
W. Building Manager and Service Providers. Landlord may perform any of its
obligations under this Lease through its employees or third parties hired by the
Landlord.
<PAGE>
X. Late Charge and Interest on Late Payments. Without limiting the
provisions of Section 12A, if Tenant fails to pay any installment of Rent or
other charge to be paid by Tenant pursuant to this Lease within five (5)
business days after the same becomes due and payable, then Tenant shall pay a
late charge equal to the greater of five percent (5%) of the amount of such
payment or $250. In addition, interest shall be paid by Tenant to Landlord on
any late payments of Rent from the date due until paid at the rate provided in
Section 2D(2). Such late charge and interest shall constitute Additional Rent
due and payable by Tenant to Landlord upon the date of payment of the delinquent
payment referenced above.
Y. Tenant's Financial Statements. Within ten (10) days after Landlord's
written request therefor, Tenant shall deliver to Landlord the current audited
annual and quarterly financial statements of Tenant, and annual audited
financial statements of the two (2) years prior to the current year's financial
statements, each with an opinion of a certified public accountant and including
a balance sheet and profit and loss statement, all prepared in accordance with
generally accepted accounting principles consistently applied in a form as
currently required at the time of lease execution by the Securities and Exchange
Commission.
27. UNRELATED BUSINESS INCOME. If Landlord is advised by its counsel at any
time that any part of the payments by Tenant to Landlord under this Lease may be
characterized as unrelated business income under the United States Internal
Revenue Code and its regulations, then Tenant shall enter into any amendment
proposed by Landlord to avoid such income, so long as the amendment does not
require Tenant to make more payments or accept fewer services from Landlord,
than this Lease provides.
28. HAZARDOUS SUBSTANCES. Tenant shall not cause or permit any Hazardous
Substances to be brought upon, produced, stored, used, discharged or disposed of
in or near the Project unless Landlord has consented to such storage or use in
its sole discretion. "Hazardous Substances" include those hazardous substances
described in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq., any
other applicable federal, state or local law, and the regulations adopted under
these laws. If any lender or governmental agency shall require testing for
Hazardous Substances in the Premises, Tenant shall pay for such testing.
29. EXCULPATION. Landlord shall have no personal liability under this
Lease; its liability shall be limited to its interest in the Project, and shall
not extend to any other property or assets of the Landlord. In no event shall
any officer, director, employee, agent, shareholder, partner, member or
beneficiary of Landlord be personally liable for any of Landlord's obligations
hereunder.
30. RADON GAS. Radon is naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from your county
public health unit. This section of the lease has been inserted to comply with
Section 404.056 97 Florida statutes.
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<PAGE>
31. TENANT PARKING.
A. General. As long as Tenant is not in default under this Lease, Landlord
will provide Tenant during the Lease Term with unassigned, nonexclusive parking
spaces in the (i) Building parking garage and (ii) surface parking area, for the
number of automobiles set forth in the Schedule. Such parking spaces may be used
only by principals and employees of Tenant. Tenant will pay parking rent (plus
tax) each month, per parking space, in the amount set forth in the Schedule with
respect to the Building garage, which payment shall constitute Additional Rent
hereunder. Tenant and Tenant's principals, employees, guests and visitors shall
have the right, on a nonexclusive basis, to use the ground level non-garage
parking areas surrounding the Building.
B. Rates. Commencing on the first day of the second Lease Year and on the
first day of each Lease Year thereafter during the Lease Term, the monthly
parking rent payable by Tenant with respect to the Building garage, as set forth
in the Schedule shall be increased by four percent (4%). If Tenant fails to pay
parking charges when due, in addition to all other remedies available to
Landlord, Landlord may, by written notice to Tenant, elect to proceed as
provided under the default provisions of this Lease and/or cease to provide all
or any of the foregoing parking spaces.
C. Reservations. Landlord has and reserves the right to alter the methods
used to control parking and the right to establish such controls and rules and
regulations (such as parking stickers to be affixed to vehicles) regarding
parking that Landlord may deem desirable. Without liability, Landlord will have
the right to tow or otherwise remove vehicles improperly parked, blocking
ingress or egress lanes, or violating parking rules, at the expense of the
offending Tenant and/or owner of the vehicle. In the event Tenant fails to
utilize, regularly and consistently, all of the garage parking spaces for which
Tenant pays parking rent under the Schedule, Landlord shall have the right to
terminate Tenant's right to use such unused parking. Upon such termination of
the use of garage parking spaces by Landlord, Tenant shall receive a reduction
in parking rent in an amount equal to the number of parking spaces taken
hereunder, times the per space rent paid by Tenant. Tenant agrees (i) to comply
with the notice of termination; (ii) that such termination shall become
unconditionally effective, without further documentation on the noticed date of
termination; and (iii) that such termination shall not constitute an eviction,
constructive or otherwise, a default or breach by Landlord or any kind, or the
basis for any form of Rent abatement, set-off, claim or like action by Tenant.
Landlord and Tenant further agree that any garage parking spaces, the use of
which are terminated under the aforementioned procedure, shall be made available
by Landlord to Tenant or other tenants, as Landlord elects in its reasonable
discretion.
D. Conditions. Tenant's right to use, and its right to permit its
principals and guests to use, the parking facilities pursuant to this Lease are
subject to the following conditions: (i) Landlord has made no representations
or warranties with respect to the parking area, the number of spaces located
therein or access thereto; (ii) Landlord reserves the right to reduce the number
of parking spaces in the parking area (garage and non-garage) by not more than
ten percent (10%) of the then number of parking area spaces in the parking area
and/or change access thereto provided that the number of garage spaces specified
in the Schedule continue to be available for Tenant's use; and none of the
foregoing should entitle Tenant to any claim against Landlord or to any
abatement of Rent (or any part thereof); (iii) Landlord has no obligation to
provide a parking lot attendant and Landlord shall have no liability on account
of any loss or damage to any vehicle or the contents thereof, Tenant hereby
agreeing to bear the risk of loss for same; (iv) Tenant, its agent, employees
and invitees, shall park their automobiles and other vehicles only where and as
designated from time to time by Landlord within the parking area; (v) if and
when so requested by Landlord, Tenant shall furnish Landlord with the license
numbers of any vehicles of Tenant, its agents and employees; and (vi) Landlord
(or the operator of the parking area) may charge Tenant (and/or its employees,
invitees and visitors) directly for the parking fee established by Landlord (or
such operator) from time to time for the use of such parking area.
Landlord and Tenant have carefully read and reviewed this Lease and each
term and provision contained herein (inclusive of any Rider, Guaranty, and
exhibits attached hereto), and by execution of this Lease, show their informed
and voluntary consent thereto. The parties hereby agree that at the time this
Lease is executed, the terms of this Lease are commercially reasonable and
effectuate the intent and purpose of Landlord and Tenant with respect to the
Premises.
<PAGE>
32. EXTENSION OPTION.
Subject to Subsections B and C below, Tenant may at its option extend the Term
of this Lease for the entire Premises for two (2) periods of five (5) years (the
"Renewal Term") upon the same terms contained in the Lease, excluding the
provisions of Appendix C of the Lease and except for the amount of Base Rent
payable during the Renewal Term. Tenant shall have no additional extension
option.
A. The Base Rent during the Renewal Term shall be the greater of (i) the
Base Rent applicable to the last day of the final Lease Year prior to the
applicable Renewal Term, or (ii) the then prevailing market rate for a
comparable term commencing on the first day of the Renewal Term for tenants of
comparable size and creditworthiness for comparable space in the Building and
other first class office buildings in the vicinity of the Building as reasonably
determined by Landlord.
B. To exercise its option, Tenant must deliver an initial non-binding
notice to Landlord not less than nine (9) months prior to the proposed
commencement of the applicable Renewal Term. Landlord shall calculate and inform
Tenant of the Base Rent for the Premises. Such calculation shall be final and
shall not be recalculated at the actual commencement of the Renewal Term if any.
Tenant shall give Landlord final binding notice of intent to exercise its option
to extend within fifteen (15) days after receiving Landlord's calculation of
Base Rent. If Tenant fails to give either its initial non-binding notice or its
final binding notice timely, Tenant will be deemed to have waived its option to
extend.
C. Tenant's option to extend this Lease is subject to the conditions that:
(i) Tenant has not been in default under this Lease, and (ii) Tenant shall not
have assigned this Lease, or sublet any portion of the Premises under a sublease
which is in effect at any time during the final 12 months prior to the
applicable Renewal Term.
13
<PAGE>
33. TERMINATION OPTION.
Tenant may at its option terminate this Lease in its entirety (the "Termination
Option") effective as of the first day of the sixth (6th) Lease Year (the "Early
Termination Date") by delivering notice of its intent to terminate this Lease
(the "Termination Notice") to Landlord on or before the date twelve (12) months
prior to the Early Termination Date. If Tenant fails to deliver its Termination
Notice timely, Tenant will be deemed to have waived such Termination Option. If
there are any uncured defaults by Tenant under this Lease as of the date Tenant
delivers the Termination Notice or as of the Early Termination Date, the
Termination Option shall be void, and the Lease shall remain in effect. If
Tenant properly exercises its Termination Option, this Lease shall terminate as
of the Early Termination Date.
The "Termination Fee" shall be Four Hundred Thirty Three Thousand Five
Hundred Thirty Five Dollars and One Cent ($433,535.01) tenant shall pay the
Termination Fee in the last full calendar month prior to the Early Termination
Date.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
LANDLORD: CARRAMERICA REALTY CORP., a Maryland corporation
By: /s/ Robert E. Peterson
- ------------------------------- ----------------------------------
Witness Robert E. Peterson
Managing Director
Date: August 12, 1998
- ------------------------------- --------------------------------
Witness
TENANT: CONCORD CAMERA CORPORATION,
a New Jersey corporation
/s/ By: /s/ Brian King
- ------------------------------- -------------------------
Witness Title: Vice President
/s/ Date: July 24, 1998
- -------------------------------
Witness
14
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 2 dated as of January 1, 1999 to Amended and
Restated Employment Agreement dated as of May 1, 1997 (the "Agreement"), between
Concord Camera Corp., a New Jersey corporation (the "Company"), and Ira B.
Lampert (the "Executive").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which is hereby acknowledged, the Agreement is hereby amended as
follows:
1. The following sentence is added at the end of Section 4 of
the Agreement:
Effective January 1, 1999, the Base Salary of Executive
referred to in the first sentence of this section shall be
increased to $650,000.
2. Section 7(b) of the Agreement is hereby amended by adding
the parenthetical expression set forth below immediately after the number
$14,167 in the fifth line of said section:
(increased to $18,333 effective January 1, 1999).
Except as amended hereby, the Agreement shall continue in full
force and effect.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment No. 2 as of the date first above written.
CONCORD CAMERA CORP.
By: /s/ Harlan I. Press
--------------------------------
Harlan I. Press, Asst. Secretary
/s/ Ira B. Lampert
----------------------------------
Ira B. Lampert
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AND AGREEMENT
FOR
IRA B. LAMPERT
This Plan and Agreement made as of the 1st day of May, 1997 by
and between CONCORD CAMERA CORP., a New Jersey corporation (the "Employer") and
IRA B. LAMPERT (the "Executive").
Article I. Introduction
In consideration of the services performed by the Executive
for the Employer in the past and to be performed in the future, the Employer
hereby agrees to pay, in addition to other consideration to be provided by the
Employer, deferred compensation to him under the terms and conditions
hereinafter set forth. This Agreement creates an unfunded, nonqualified plan
maintained for the purposes of providing deferred compensation for the
Executive, a member of senior management and a highly compensated Executive, and
shall be construed and administered accordingly.
Article II. Definitions
When used herein with initial capital letters, the following
words have the following meanings:
Accounts - the special accounts established by the Employer
for the benefit of the Executive reflecting the Monthly Credits and adjustments
for income, gain or loss and any payments from the accounts.
<PAGE>
Monthly Credit - the $14,167 to be credited each month to an
Account pursuant to paragraph 1 of Article III.
Term of Employment - the period or periods of such term under
the Amended and Restated Employment Agreement, dated May 1, 1997, by and between
the Employer and the Executive, as such agreement may be amended from time to
time.
Plan and Agreement - this Supplemental Executive
Retirement Plan and Agreement for Ira B. Lampert.
Article III. Deferred Compensation
1. During the Term of the Employment, the Employer agrees to
credit $14,167 each month to an Account, and such deferred compensation shall be
paid to the Executive as hereinafter provided.
2. The Employer shall keep separate Accounts for the Monthly
Credits in respect of particular years to the extent necessary to account for
differing elections and designations hereunder regarding benefit distributions
and beneficiaries for such years.
3. During any calendar year of the Term of Employment, the
Employer, in its sole discretion, may accelerate the crediting to the Account of
the Monthly Credits with respect to such year.
4. The balance in each Account shall be deemed for purposes of
this Plan and Agreement to be invested and reinvested in such securities,
investments, instruments or insurance policies as the Executive, in his sole
discretion, shall direct
2
<PAGE>
from time to time, by one day advance written notice given to the Employer or
its designee. With the consent of the Employer, the Executive may, by giving
written notice to the Employer or its designee, authorize an investment manager
to make the directions specified in the preceding sentence. Any investment
direction or change of investment direction shall be deemed made on the first
business day following the Employer's or its designee's, as the case may be,
receipt of the Executive's or the investment manager's, as the case may be,
written notice of investment direction. Any such investment direction shall
remain in effect until affirmatively changed by a subsequent investment
direction given in the same manner, provided that the proceeds of any investment
which matures shall be deemed to be reinvested in such money market account as
the Employer may determine and thereafter until a new investment direction is
made with respect to such proceeds. Notwithstanding the foregoing, no such
deemed investment shall, in the Employer's reasonable judgment, impose upon the
Employer administrative burdens or financial costs which are inappropriate in
view of all of the circumstances. If no applicable investment direction is given
on or before the date on which a Monthly Credit is credited to an Account, such
amount shall be initially invested in a such money market account as the
Employer may reasonably determine. The Employer, in its discretion and on such
terms as it decides, may waive, or reduce the period of, any notice required
under this paragraph.
3
<PAGE>
5. Title to and beneficial ownership of any direct or indirect
investments the Employer may make in connection with the Plan and Agreement
(including the transfer of funds to a selected investment manager for
discretionary investment and reinvestment in such investments by such investment
manager or the transfer of funds to a so-called rabbi trust), shall at all times
remain with the Employer, and the Executive and his designated beneficiary or
beneficiaries shall not have any property interest whatsoever in such
investments.
6. At the end of every month, each Account shall be increased
or decreased by (a) in the case of each investment actually made directly or
indirectly by the Employer with respect to such Account, the net amount of all
income, gain or loss earned or sustained, whether realized or unrealized, with
respect to such investment, and (b) in the case of each deemed investment with
respect to such Account, the net amount of all income, gain or loss which would
have been earned or sustained, whether realized or unrealized, had the balance
in the Account in fact been invested and reinvested in such investment. Each
Account shall also be charged with all payments or other distributions with
respect to such Account and with all fees and expenses (including brokerage
fees) with respect to such Account, in the case of investments actually made, at
the rates actually paid and, in the case of investments deemed to have been
made, at the rates which would have been paid had the investments actually been
made.
4
<PAGE>
Article IV. Benefit Distributions
1. The balance in each Account shall be paid to the Executive
in one of the two following methods at the election of the Executive: (a) a
lump-sum payment to be paid at such time as is designated by the Executive or
(b) annual installment payments over such period of years as may be designated
by the Executive; provided, however, no payment shall be payable pursuant to
this Article IV prior to the Executive's termination of employment with the
Employer. The Executive's election and designation referred to in the previous
sentence with respect to an Account shall be made by a written notice to the
Employer prior to the first day of the year to which the Account relates. The
Executive may make different elections and designations with respect to the
Monthly Credits of each year, with any such different elections and designations
accounted for through the creation of separate Accounts as contemplated by
paragraph 2 of Article III. In the event that the Executive fails to make an
election pursuant to this paragraph 1 with respect to an Account, the balance in
such Account shall be paid in ten annual installments commencing on the first
day of the month following the termination of the Executive's employment with
the Employer.
2. All payments to be made pursuant to paragraph 1 of this
Article IV with respect to each Account shall be made in cash, and in
furtherance thereof, all investments actually made with respect to such Account
shall be sold by the Employer at
5
<PAGE>
such time or times as the Employer may determine to effect such payment;
provided, that (a) in the case of an installment payment, unless the Executive
provides the Employer with written notice to the contrary at least five days
prior to the date any such payment is due, the Employer may select the
investments to be sold or deemed sold to provide the cash necessary for such
payment, and (b) to the extent investments have actually been made by the
Employer with respect to such Account, the Executive may elect, subject to the
Employer's approval, to receive payment in kind in lieu of cash by providing
written notice of such election to the Employer at least five days prior to the
date of such payment.
3. For purposes of determining the amount of a payment
referred to in paragraph 1 of this Article IV with respect to an Account, (a)
the balance in such Account shall be adjusted by the Employer in the manner
provided in paragraph 6 of Article III not more than five trading days preceding
such payment, (b) the amount of such payment shall be reduced by the amount of
any expenses actually incurred or deemed to have been incurred in connection
with the sale or deemed sale of investments required to make such payment
("selling expenses"), and (c) if the installment method is elected with respect
to any year, the amount of each installment shall be equal to the balance in the
appropriate Account as of the date of payment (as adjusted pursuant to clause
(a) of this sentence), divided by the number of annual installments remaining,
including the installment then being paid, and then reduced by the amount of any
applicable selling expenses.
6
<PAGE>
4. Except as provided in this paragraph 4, the Executive shall
have no right to modify in any way his election and designation made pursuant to
paragraph 1 of this Article IV with respect to an Account or, in the event of
his failure to make such an election or designation, the default provisions of
paragraph 1. Provided that a modification election is made at least 12 months
prior to the commencement of the benefit distributions with respect to an
Account, the Executive, may:
(a) delay the date on which a lump-sum payment from such
Account shall be made;
(b) change the form of benefit payment from such Account
from a lump-sum payment to annual installment payments
over such period of years as designated by the
Executive;
(c) change the form of benefit payment from such Account
from annual installments to a lump-sum payment which
shall be paid at the time designated by the Executive
but no sooner than the day on which the installment
payments were to commence;
(d) delay the commencement of annual installment payments
from such Account; or
(e) increase the period of years during which annual
installments shall be made out of such Account.
7
<PAGE>
5. Notwithstanding anything in this Plan and Agreement to the
contrary, in the event of the termination of the Executive's employment with the
Employer for any reason prior to the Executive's attainment of age 65, the
balance in each Account shall be paid to the Executive in one lump-sum payment
within 30 days of such termination.
6. Employer is authorized to withhold from any payments made
hereunder such amounts for income tax, social security, unemployment
compensation and other taxes as shall be necessary or appropriate to comply with
applicable laws and regulations.
Article V. Hardship
The Employer may, in its sole discretion, distribute all or a
portion of the balances in the Accounts to the Executive upon a demonstration by
the Executive of an immediate and heavy financial need. The amount of any
distribution made pursuant to this Article V shall be limited to the amount
necessary to satisfy such financial need.
Article VI. Death
In the event of the Executive's death prior to the payment of
all of the balances in the Accounts, unless the Executive otherwise elects with
the consent of the Employer, the Employer shall pay all remaining balances in
8
<PAGE>
the Accounts at such time, not later than 60 days following the Executive's
death, in one lump-sum to such beneficiary or beneficiaries designated by the
Executive in a writing filed by the Executive with the Employer, or in the
absence of such a beneficiary designation, to the Executive's estate.
Article VII. Claims Procedures
1. At any time the Employer makes a determination adverse to
the Executive or his beneficiary with respect to a claim for payment, the
Employer shall notify the claimant in writing of such determination, setting
forth:
(a) the specific reason for such determination;
(b) a reference to the specific provision or provisions of
this Plan on which such determination is based;
(c) a description of any additional material or information
necessary to perfect the claim, and an explanation of
the reason that such material is required, and
(d) an explanation of the rights and procedures set forth
in this Article VII.
2. A person who receives notice of an adverse determination by
the Employer with respect to a claim may request, within 60 days of receipt of
such notice, that the Employer review its determination. This request may be
made on behalf of a claimant by a duly authorized representative. The claimant
9
<PAGE>
or representative may review pertinent documents and submit issues and comments
with respect to the controversy to the Employer. The Employer shall render a
decision within 60 days of a request for review (or within 120 days under
special circumstances), which decision shall be in writing and shall set forth
the specific reasons for the decision reached and the specific provisions of
this Plan and Agreement on which the decision is based. A copy of the ruling
shall be forwarded to the claimant.
Article VIII. Miscellaneous
1. Benefits provided in this Plan and Agreement will not be
subject to garnishment, attachment, or assignment, or any other legal process by
creditors of the Executive or any person or persons designated as beneficiaries
of this Plan and Agreement or any other payee of the benefits provided herein,
except as specifically provided herein.
2. The Executive and his beneficiaries shall have the status
of unsecured creditors of the Employer and this Plan and Agreement constitutes a
mere promise by the Employer to make benefit payments as required by Articles
IV, V and VI.
3. This Plan and Agreement creates no rights in the Executive
to continue in the employment of the Employer for any length of time, nor does
it create any rights in the Executive or his beneficiaries nor any obligations
on the part of the Employer, other than those specifically provided herein.
10
<PAGE>
4. This Plan and Agreement shall be binding upon and inure to
the benefit of the Employer, its successors and assigns, and the Executive, his
heirs, executors, administrators and legal representatives.
5. The waiver by any party of any term of this Plan and
Agreement on any occasion shall not be deemed to be a further or continuing
waiver of any such term.
6. Written notices which the Executive must provide to the
Employer under this Plan and Agreement (including, but not limited to,
investment directions, benefit distribution elections and beneficiary
designations) shall be addressed to the Employer at: 35 Mileed Way, Avenel, New
Jersey 07001.
7. This Plan and Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New Jersey without giving
effect to principles governing choice of law.
8. This Plan and Agreement may be terminated or amended only
by a writing signed by both of the parties hereto.
11
<PAGE>
IN WITNESS WHEREOF, this Plan and Agreement has been duly
executed by the Employer and by the Executive as of the day and year first above
written.
Witness: CONCORD CAMERA CORP
/s/ Elizabeth M. Marsiano By: /s/ Harlan I. Press
- ------------------------- ------------------------
Harlan I. Press
Witness:
/s/ XXXXXXXXXXXXX /s/ Ira B. Lampert
- ------------------------- ------------------------
Ira B. Lampert
12
<PAGE>
AMENDMENT TO THE
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AND AGREEMENT
FOR
IRA B. LAMPERT
Amendment (this "Amendment") to the Supplemental Executive Retirement
Plan and Agreement for Ira B. Lampert, dated as of January 1, 1999, by and
between CONCORD CAMERA CORP., a New Jersey corporation (the "Employer") and IRA
B. LAMPERT (the "Executive").
Reference is made to the Supplemental Executive Retirement Plan and
Agreement for Ira B. Lampert (the "Plan"), dated as of the first day of May,
1997, by and between the Employer and the Executive.
It is agreed by the parties hereto that the Plan shall be amended as
follows:
1. The definition of "Monthly" found in Article II of the Plan shall be
deleted and the following shall be substituted therefor:
Monthly Credit - the $14,167 (increased to $18,333 as of January
1, 1999) to be credited each month to an Account pursuant to
paragraph 1 of Article III.
2. Paragraph 1 of Article III of the Plan shall be deleted and the
following shall be substituted therefor:
1. During the Term of the Employment, the Employer agrees to
credit $14,167 (increased to $18,333 as of January 1, 1999) each
month to a Account, and such deferred compensation shall be paid
to the Executive as hereinafter provided.
3. The foregoing amendments to the Plan shall be effective as of January 1,
1999.
Except as amended hereby, the Plan shall continue in full force
and effect.
IN WITNESS WHEREOF, this Amendment has been duly executed by the Employer and by
the Executive as of the date and year first above written.
Witness: CONCORD CAMERA CORP.
By:
- ----------------------------------- --------------------------------
Witness:
By:
- ----------------------------------- --------------------------------
Ira B. lampert
<PAGE>
DEFERRAL AGREEMENT
Deferral Agreement (this "Deferral Agreement") made as of the
1st day of May, 1997 by and between Concord Camera Corp., a New Jersey
corporation (the "Employer"), and Ira B. Lampert (the "Executive").
The Executive is presently Chairman and Chief Executive
Officer of the Employer. The Executive and the Employer desire to make
provisions to permit the Executive to defer the payment of certain compensation
in connection with that employment on the terms hereinafter provided.
In consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto hereby agree as follows:
Article I. Deferred Compensation
1. The Employer agrees to defer the payment of certain
compensation earned by the Executive during each calendar year, and such
deferred compensation shall be paid to the Executive as hereinafter provided.
The amount of compensation to be deferred in respect of any year shall be that
portion or all of the Executive's annual salary and/or cash bonus earned for
such year as the Executive elects to defer by written notice given to the
Employer at least 15 days prior to the first day of such year; provided,
however, that in the case of a cash bonus to be paid in a year following the
year to which such cash bonus relates, such election may be made prior to the
last day of the year to which
<PAGE>
such cash bonus relates; provided, further, that in the case of compensation to
be paid in 1997 after the execution of this Deferral Agreement, such election
may be made within 30 days of the execution of this Deferral Agreement.
2. The Employer shall establish and credit to a special
account on its books (hereinafter referred to as an "Account") the amount of
deferred compensation specified in paragraph 1 of this Article I. The Employer
shall keep separate Accounts for deferred compensation in respect of particular
years to the extent necessary to account for differing elections and
designations hereunder regarding investments, benefit distributions and
beneficiaries for such years. If a portion or all of the Executive's annual
salary for a year is deferred under paragraph 1, one-twelfth (or in the case of
1997, a fraction, the denominator of which is 1 and the numerator of which is
the number of full month remaining in 1997 at the time of the election) of such
deferred amount shall be credited to the appropriate Account on the last day of
each month during such year (or such period). If a portion or all of the
Executive's bonus for a year is deferred under paragraph 1, such deferred amount
shall be credited to the appropriate Account on the last day of the month in
which the Executive would have received the bonus in cash had he not elected the
deferral under paragraph 1.
3. The balance in each Account shall be deemed for purposes of
this Deferral Agreement to be invested and reinvested in such securities,
investments, instruments and insurance
2
<PAGE>
policies as the Executive, in his sole discretion, shall direct from time to
time, by one day advance written notice given to the Employer or its designee.
With the consent of the Employer, the Executive may, by giving written notice to
the Employer or its designee, authorize an investment manager to make the
directions specified in the preceding sentence. Any investment direction or
change of investment direction shall be deemed made on the first business day
after the day of the Employer's or its designee's, as the case maybe, receipt of
the Executive's or the investment manager's, as the case may be, written notice
of investment direction. Any such investment direction shall remain in effect
until affirmatively changed by a subsequent investment direction given in the
same manner, provided that the proceeds of any investment which matures shall be
deemed to be reinvested in such money market account as the Employer may
determine and thereafter until a new investment direction is made with respect
to such proceeds. Notwithstanding the foregoing, no such deemed investment
shall, in the Employer's reasonable judgment, impose upon the Employer
administrative burdens or financial costs which are inappropriate in view of all
of the circumstances. If no applicable investment direction is given on or
before the date on which an amount is credited to an Account, such amount shall
be initially invested in such money market account as the Employer may
reasonably determine. The Employer, in its discretion and on such terms as it
decides, may waive, or reduce the period of, any notice required under this
paragraph.
3
<PAGE>
4. Title to and beneficial ownership of any direct or indirect
investment the Employer may make in connection with the Plan or Agreement
(including the transfer of funds to a selected investment manager for
discretionary investment and reinvestment in such investments by such investment
manager or the transfer of funds to a so-called rabbi trust), shall at all times
remain with the Employer, and the Executive and his designated beneficiary or
beneficiaries shall not have any property interest whatsoever in such
investments.
5. At the end of every month, each Account shall be increased
or decreased by (a) in the case of each investment actually made directly or
indirectly by the Employer with respect to such Account, the net amount of all
income, gain or loss earned or sustained, whether realized or unrealized, with
respect to such investment, and (b) in the case of each deemed investment with
respect to such Account, the net amount of all income, gain or loss which would
have been earned or sustained, whether realized or unrealized, had the balance
in the Account in fact been invested and reinvested in such investment. Each
Account shall also be charged with all payments or other distributions with
respect to such Account and with all fees and expenses (including brokerage
fees) with respect to such Account, in the case of investments actually made, at
the rates actually paid and, in the case of investments deemed to have been
made, at the rates which would have been paid had the investments actually been
made.
4
<PAGE>
Article II. Benefit Distributions
1. The balance in each Account shall be paid to the Executive
in one of the two following methods at the election of the Executive: (a) a
lump-sum payment to be paid at such time as is designated by the Executive or
(b) annual installment payments over such period of years as may be designated
by the Executive. The Executive's election and designation referred to in the
previous sentence with respect to an Account shall be made by a written notice
to the Employer at the time of his deferral election for the year or years to
which the Account relates. The Executive may make different elections and
designations with respect to the deferred compensation of each year, with any
such different elections and designations accounted for through the creation of
separate Accounts as contemplated by paragraph 2 of Article I. In the event that
the Executive fails to make an election pursuant to this paragraph 1 with
respect to an Account, the balance in such Account shall be paid in ten annual
installments commencing on the first day of the month following the termination
of the Executive's employment with the Employer.
2. All payments to be made pursuant to paragraph 1 of this
Article II with respect to each Account shall be made in cash, and in
furtherance thereof, all investments actually made with respect to such Account
shall be sold by the Employer at such time or times as the Employer may
determine to effect such payment; provided, that (a) in the case of an
installment payment, unless the Executive provides the Employer with written
5
<PAGE>
notice to the contrary at least five days prior to the date any such payment is
due, the Employer may select the investments to be sold or deemed sold to
provide the cash necessary for such payment, and (b) to the extent investments
have actually been made by the Employer with respect to such Account, the
Executive may elect, subject to the Employer's approval, to receive payment in
kind in lieu of cash by providing written notice of such election to the
Employer at least five days prior to the date of such payment.
3. For purposes of determining the amount of a payment
referred to in paragraph 1 of this Article II with respect to an Account, (a)
the balance in such Account shall be adjusted by the Employer in the manner
provided in paragraph 5 of Article I not more than five trading days preceding
such payment, (b) the amount of such payment shall be reduced by the amount of
any expenses actually incurred or deemed to have been incurred in connection
with the sale or deemed sale of investments required to make such payment
("selling expenses"), and (c) if the installment method is elected with respect
to any year, the amount of each installment shall be equal to the balance in the
appropriate Account as of the date of payment (as adjusted pursuant to clause
(a) of this sentence), divided by the number of annual installments remaining,
including the installment then being paid, and then reduced by the amount of any
applicable selling expenses.
6
<PAGE>
4. Except as provided in this paragraph 4, the Executive shall
have no right to modify in any way his election and designation made pursuant to
paragraph 1 of this Article II with respect to an Account or, in the event of
his failure to make such an election or designation, the default provisions of
paragraph 1. Provided that a modification election is made at least 12 months
prior to the commencement of the benefit distributions with respect to an
Account, the Executive, may:
(a) delay the date on which a lump-sum payment from such
Account shall be made;
(b) change the form of benefit payment from such Account
from a lump-sum payment to annual installment payments
over such period of years as designated by the
Executive;
(c) change the form of benefit payment from such Account
from annual installments to a lump-sum payment which
shall be paid at the time designated by the Executive
but no sooner than the day on which the installment
payments were to commence;
(d) delay the commencement of annual installment payments
from such Account; or
(e) increase the period of years during which annual
installments shall be made out of such Account.
7
<PAGE>
5. Notwithstanding anything in this Deferral Agreement to the
contrary, in the event of the termination of the Executive's employment with the
Employer for any reason prior to the Executive's attainment of age 65, the
balance in each Account shall be paid to the Executive in one lump-sum payment
within 30 days of such termination.
6. Employer is authorized to withhold from any payments
hereunder such amounts for income tax, social security, unemployment
compensation and other taxes as shall be necessary or appropriate to comply with
applicable laws and regulations.
Article III. Hardship
The Employer may, in its sole discretion, distribute all or a
portion of the balances in the Accounts to the Executive upon a demonstration by
the Executive of an immediate and heavy financial need. The amount of any
distribution made pursuant to this Article III shall be limited to the amount
necessary to satisfy such financial need.
Article IV. Death
In the event of the Executive's death prior to the payment of
all of the balances in the Accounts, unless the Executive otherwise elects with
the consent of the Employer, the Employer shall pay all remaining balances in
the Accounts at such time, not later than 60 days following the Executive's
death, in one lump-sum to such beneficiary or beneficiaries designated by the
Executive in a writing filed by the Executive with the Employer, or in the
absence of such a beneficiary designation, to the Executive's estate.
8
<PAGE>
Article V. Claims Procedures
1. At any time the Employer makes a determination adverse to
the Executive or his beneficiary with respect to a claim for payment, the
Employer shall notify the claimant in writing of such determination, setting
forth:
(a) the specific reason for such determination;
(b) a reference to the specific provision or provisions of
this Plan on which such determination is based;
(c) a description of any additional material or information
necessary to perfect the claim, and an explanation of
the reason that such material is required; and
(d) an explanation of the rights and procedures set forth
in this Article V.
2. A person who receives notice of an adverse determination by
the Employer with respect to a claim may request, within 60 days of receipt of
such notice, that the Employer review its determination. This request may be
made on behalf of a claimant by a duly authorized representative. The claimant
or representative may review pertinent documents and submit issues and comments
with respect to the controversy to the Employer. The Employer shall render a
decision within 60 days of
9
<PAGE>
a request for review (or within 120 days under special circumstances), which
decision shall be in writing and shall set forth the specific reasons for the
decision reached and the specific provisions of this Plan on which the decision
is based. A copy of the ruling shall be forwarded to the claimant.
Article VI. Miscellaneous
1. Benefits provided in this Deferral Agreement will not be
subject to garnishment, attachment, or assignment, or any other legal process by
creditors of the Executive or any person or persons designated as beneficiaries
of this Deferral Agreement or any other payee of the benefits provided herein,
except as specifically provided herein.
2. The Executive and his beneficiaries shall have the status
of unsecured creditors of the Employer and this Deferral Agreement constitutes a
mere promise by the Employer to make benefit payments as required by Article II,
III and IV.
3. This Deferral Agreement creates no rights in the Executive
to continue in the employment of the Employer for any length of time, nor does
it create any rights in the Executive or his beneficiaries nor any obligations
on the part of the Employer, other than those specifically provided herein.
4. This Deferral Agreement shall be binding upon and inure to
the benefit of the Employer, its successors and assigns, and the Executive, his
heirs, executors, administrators and legal representatives.
10
<PAGE>
5. The waiver by any party of any term of this Deferral
Agreement on any occasion shall not be deemed to be a further or continuing
waiver of any such term.
6. Written notices which the Executive must provide to the
Employer under this Deferral Agreement (including, but not limited to, deferral
elections, investment directions, benefit distribution elections and beneficiary
designations) shall be addressed to the Employer at: 35 Mileed Way, Avenel, New
Jersey 07001.
7. This Deferral Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New Jersey without giving
effect to principles governing choice of law.
8. This Deferral Agreement may be terminated or amended only
by a writing signed by both of the parties hereto.
IN WITNESS WHEREOF, this Deferral Agreement has been duly
executed by the Employer and by the Executive as of the day and year first above
written.
Witness: CONCORD CAMERA CORP.
/s/ Elizabeth M. Marsiano By: /s/ Harlan I. Press
- ------------------------- ------------------------
Harlan I. Press
Witness:
/s/ XXXXXXXXXXXXXXX /s/ Ira B. Lampert
- ------------------------- ------------------------
Ira B. Lampert
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Concord
Camera Corp.'s Consolidated financial statements as of January 2, 1999 and the
results of operations for the six months ended January 2, 1999 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> JAN-02-1999
<CASH> 24,535,326
<SECURITIES> 0
<RECEIVABLES> 18,712,251
<ALLOWANCES> 1,030,471
<INVENTORY> 18,998,471
<CURRENT-ASSETS> 65,261,694
<PP&E> 34,760,761
<DEPRECIATION> (16,859,995)
<TOTAL-ASSETS> 88,346,081
<CURRENT-LIABILITIES> 30,066,934
<BONDS> 14,850,000
0
0
<COMMON> 40,144,793
<OTHER-SE> (458,420)
<TOTAL-LIABILITY-AND-EQUITY> 88,346,081
<SALES> 62,107,412
<TOTAL-REVENUES> 62,107,412
<CGS> 45,725,825
<TOTAL-COSTS> 11,322,324
<OTHER-EXPENSES> (131,922)
<LOSS-PROVISION> 36,074
<INTEREST-EXPENSE> 1,531,717
<INCOME-PRETAX> 5,191,186
<INCOME-TAX> 405,000
<INCOME-CONTINUING> 4,786,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,786,186
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.41
</TABLE>
