ANNUAL REPORT FOR SMALL BUSINESS ISSUERS
SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1997
Commission File No. 0-17069
EXCAL ENTERPRISES, INC.
(Name of small business issuer as specified in its charter)
Delaware 59-2855398
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 N. Tampa Street, Suite 3575, Tampa, Florida 33602
(Address of principal executive offices, including zip code)
(813) 224-0228
(Issuer's telephone number)
Securities registered under Section 12(g) of the Act:
Title of Each Class
Common Stock, $.001 par value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and, (2) has
been subject to such filing requirements for the past 90 days. Yes _X_ No
___
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment of
this Form 10-KSB. [X]
Revenue for the fiscal year ended June 30, 1997 was $3,344,700.
The aggregate market value of the voting stock held by non-affiliates, based
on the average of the closing bid and asked prices of the Registrant's common
stock in the over the counter market as reported by the National Quotation
Bureau, Inc. on August 29, 1997 of $4.25 was approximately $7,492,000. Shares
of voting stock held by each officer, director and person who owns 5% or more
of the outstanding voting stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily conclusive.
As of August 29, 1996, there were 3,984,594 shares of the Registrant's common
stock, par value $.001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive Proxy Statement for its 1997 annual meeting, (the
"Proxy Statement") is incorporated by reference in Part III of this Form 10-K
to the extent stated herein. Except with respect to information specifically
incorporated by reference in this Form 10-K, the Proxy Statement is not deemed
to be filed as a part hereof.
ITEM 1. DESCRIPTION OF BUSINESS.
General
Excal Enterprises, Inc., a Delaware corporation (the "Company"), was formed
in July 1986. In June 1995, the Company changed its name from Assix
International, Inc. The Company was engaged in two distinct business
operations: (i) its commercial real estate operations and (ii) its automotive
services operations, which has been discontinued. The Company's commercial
real estate operations are operated through Imeson Center, Inc., a wholly-
owned subsidiary. This subsidiary owns, leases, and manages certain real
property located in Jacksonville, Florida consisting of a two story building
containing approximately 1,666,000 square feet of rentable office and
warehouse space. This property was acquired from Sears as part of the
settlement agreement regarding termination of the licensed agent agreement
between the Company and Sears in February 1994. The Company is actively
pursuing a mortgage loan against the Imeson Center property.
During the initial years of its operating history, the Company acquired, by
way of a series of mergers and asset acquisitions, the assets of predecessor
entities which were engaged in business operations substantially similar to
those previously conducted by the Company's automotive services division. On
June 30, 1995, the Company transferred all its automotive assets, contracts,
and related liabilities to Assix Automotive, Inc., a newly formed, wholly-
owned subsidiary. The Company's automotive services division marketed ride-
related automotive services through retail tire dealer service outlets
licensed as agents of the Company. During the fourth quarter of fiscal 1996,
the Company received termination notices from its two largest licensed agents,
who together accounted for two-thirds of the Company's automotive services
revenue. As a result, the Company decided to terminate the agency agreements
with the remaining licensed agents effective June 30, 1997 and is currently
winding up the affairs of the entity. The automotive services division is
reported as discontinued operations.
The Company plans to use the proceeds from the liquidation of its
automotive division and proceeds from leveraging its Imeson Center property
to, among other things, acquire a new core business. The Company has focused
its search for a new core business in the areas of light manufacturing and
industrial distribution. The Company's objective is to identify and acquire a
company that will be used as a spring board to future growth. Management
believes this will be best accomplished by acquiring a company that is a
leader in a niche segment of a large market or in an industry that will lend
itself to a consolidation strategy.
Imeson Center Real Estate Operations
The Company's real estate operations consist of the management of the
property owned by its wholly-owned subsidiary, Imeson Center, Inc. The
officers and directors of Imeson Center, Inc. are also officers and/or
directors of the Company. The building itself is a two-story facility with
eight bays on each floor. Seven of the bays on the first floor and eight bays
on the second floor, each containing 99,446 square feet of rentable space,
were originally designed as warehouse space. The other remaining first floor
bay is divided into two floors of office space containing a total of
approximately 184,000 square feet of rentable space. During the end of fiscal
1997 the second floor bay located above the existing office space was
converted to office space with approximately 90,000 square feet of rentable
space. As of June 30, 1997, all 14 of the warehouse bays and all but 41,000
square feet of the office space were leased (See "Dependence on Major
Customers").
The Property includes approximately 74 acres of real estate. Based on
preliminary investigations, the Company believes that it could develop the
outparcels, subject to the availability of suitable lessees and compliance
with environmental and other applicable laws. Any such development will
require significant capital expenditures by the Company.
Market for the Company's Products and Services
The Company's Imeson Center facility is unique in that it is a two-story
facility containing 1,392,000 rentable square feet of warehouse space (696,000
square feet on the first floor and 696,000 square feet on the second floor)
and approximately 274,000 rentable square feet of office space. The Company
currently has a single tenant utilizing the warehouse space. If the Company
leased the warehouse space to multiple tenants, it would limit the usefulness
of the second story warehouse space and require the Company to incur
significant costs related to demising the property and meeting current fire
and safety code requirements, including the requirements of the Americans with
Disabilities Act. Jacksonville, Florida is a major shipping port and the
Imeson Center is located near the port and interstate highways. There is a
significant number of warehouse facilities that compete with Imeson Center for
tenants. The Company has two primary tenants utilizing 232,000 square feet of
the 274,000 square feet of office space. Most of the office space in the
Jacksonville area is located in the southern and central areas of
Jacksonville. Imeson Center is located in the northern area of Jacksonville.
The Company has marketed the office space for use as a telecommunications or
service oriented business. The facility has over 2,200 parking spaces, most of
which are allocated to the office area. This results in over six parking
spaces per 1,000 square feet of office space, providing the Company with a
competitive advantage over many other office facilities.
Dependence on Major Customers
The Company had leases with four tenants for its Imeson Center facility as
of June 30, 1997. All of the leases require the tenants to reimburse the
Company for their pro-rata share of operating expenses (including common area
maintenance, property taxes, and insurance) and to pay for their own
utilities. The first lease, with Laney & Duke Terminal Warehouse Company, Inc.
(Laney & Duke), is for 1,392,244 square feet of warehouse space and expires on
December 31, 2000. Laney & Duke accounted for $2,365,314 of revenue in fiscal
1997, resulting in an effective annual lease rate of $1.61 per square foot,
including operating expenses. The second lease, with America Online (AOL), is
for 92,340 square feet of office space beginning June 16, 1995 and terminating
on June 15, 2002. AOL expanded into an additional 1,200 square feet of space
during fiscal 1996. This lease accounted for $864,086 of revenue in fiscal
1997 at an effective annual lease rate of $9.24, including operating expenses.
These two leases accounted for substantially all of the Company's revenue in
fiscal 1997 and fiscal 1996. The loss of either of these two lessees would
have a significant impact on the Company. The third lease is with the
Prudential Insurance Company (Prudential) for 138,998 square feet of office
space. This lease began in full on June 16, 1997 and terminates June 15, 1999.
Prudential has the option to extend the lease for either six months or four
years. This lease is expected to increase the net revenue of the real estate
operations by over $1 million while having a negligible effect on operating
expenses. The fourth lease is for 1,000 square feet of office space used for a
food service operation. The Company currently has 41,000 square feet of office
space that is available for lease. Significant renovations will need to be
made to the available space before it can be leased.
Competition
With respect to the Company's real estate subsidiary, the commercial real
estate market is subject to numerous competitive factors, including the
location of the real property, the physical condition of the real property,
the owner or lessor's willingness to make capital improvements, the duration
and terms of any leasing arrangements, the availability of financing for
capital improvements and purchase obligations, and fluctuations in real
property values.
Employees
On September 15, 1997, the Company employed 13 full time employees. Of that
number, 5 were employed in the corporate offices, 2 were employed in the
automotive subsidiary and 6 were employed by the real estate subsidiary. The
Company's employees are not covered by collective bargaining agreements. The
Company believes the relations with its employees to be satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company entered into a lease for approximately 3,500 square feet of
office space for its executive offices at 100 North Tampa Street, Suite 3575,
Tampa, Florida 33602. The lease on this downtown Tampa office space commenced
October 15, 1994 and terminates on October 15, 2000. The Company believes that
its present facility is adequate for expected operations.
On July 8, 1994, the Company purchased a 35,000 square foot facility at 808
N. Rome Avenue in Tampa, Florida which contains management offices and served
as its automotive services manufacturing facility. This property is collateral
for the Companies $480,000 line of credit. The property is currently available
for sale.
The Company's commercial rental property consists of a single two story
structure located on 74 acres at One Imeson Park Boulevard in Jacksonville,
Florida. The property contains approximately 1,392,000 square feet of
warehouse space and 274,000 square feet of office space. The building is
primarily built of concrete and steel with a membrane roof. There are no
liens, encumbrances, or mortgages on the property. However, the Company is
actively seeking financing on the property. The Company does not currently
have any definitive plans or commitments for renovation or expansion of the
property. However, the Company is marketing the available 41,000 square feet
of office space and management expects to incur significant renovation costs
in order to lease the space. In addition, the Company may build additional
facilities on the available outparcels upon request of a lessee. Any of these
improvements would require the Company to obtain financing to fund the cost of
building or renovation. See "Market for the Company's Products and Services"
and "Competition" under "Item 1. Business" for a discussion of the general
competitive conditions to which the property is subject. Information regarding
the leases on the property is contained under "Item 1. Business - Dependence
on Major Customers." Management believes the property is adequately covered by
insurance. The basis of the property for both financial and tax purposes is
$1,600,000 for the land and $5,865,755 for the building as of June 30, 1997.
In addition, various furniture, fixtures and equipment with a basis of
$286,169 as of June 30, 1997 are used in operating the property. For federal
tax purposes, the building is depreciated using the straight-line method over
39 years and the other assets are depreciated using the modified accelerated
cost recovery system over lives of five to seven years. The property taxes on
the land and building for 1996 were $243,017, based on a millage rate of
$21.7028 per $1,000 of assessed value. Sears, as part of the acquisition of
the building, was required to reimburse the Company for all property taxes
through April 15, 1996.
ITEM 3. LEGAL PROCEEDINGS.
Other than the litigation described in Note 13 of the accompanying
financial statements, which is incorporated herein by reference, the Company
is aware of no other material legal proceedings, pending or threatened, to
which any director, officer or affiliate of the Company, or any beneficial
owner of more than 5% of the Company's common stock is a party adverse to the
Company or has a material interest adverse to the Company or to which the
Company is a party or its property subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal market for the Company's common stock is the over-the-counter
market. Quotations are available through the Electronic Bulletin Board
operated by the National Association of Securities Dealers, Inc. under the
symbol EXCL. Prior to November 24, 1995, the Company's symbol was ASIX. The
following table sets forth the range of high and low closing bid prices in
dollars per share of common stock for each full quarterly period within the
two most recent fiscal years. Prices represent inter-dealer quotations,
without adjustment for retail markup, markdown or commissions, and may not
represent actual transactions.
Fiscal Year Ended June 30, 1996 High Low
Quarter ended September 30, 1995 $1.97 $ .94
Quarter ended December 31, 1995 2.09 1.56
Quarter ended March 31, 1996 2.06 1.88
Quarter ended June 30, 1996 2.69 1.50
Fiscal Year Ended June 30, 1997
Quarter ended September 30, 1996 $2.47 $ 1.77
Quarter ended December 31, 1996 2.50 1.78
Quarter ended March 31, 1997 2.88 2.09
Quarter ended June 30, 1997 3.88 2.44
As of August 29, 1997, there were approximately 370 shareholders of record.
In addition, as of the same date, there were 374 beneficial holders based on
non-objecting beneficial owner reports provided by ADP.
No cash dividends or other distributions have been paid by the Company
since its inception with respect to shares of the Company's common stock. It
is the present policy, and the expected future policy, of the Company not to
pay cash dividends and to retain future earnings to support the Company's
growth.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Continuing Operations
Net revenue of the Company consists of commercial real estate rental
revenue from the lease and management of property located in Jacksonville,
Florida (Imeson Center). The property consists of approximately 1,392,000
rentable square feet of warehouse space and 274,000 rentable square feet of
office space (See "Item 2. Description of Properties"). The Company's lease
agreements are structured to include a base minimum rental fee, a contingent
rental fee to reimburse the Company for operating expenses, common area
maintenance costs, insurance and property taxes, and a requirement that the
tenant pay for its own utilities.
As of June 30, 1997, the Company had leases with four tenants at Imeson
Center. The lease of warehouse space to Laney & Duke began December 1, 1995
and included a total of 796,000 square feet. Laney & Duke has gradually
increased the square footage leased and currently occupies all 1,392,000
square feet of warehouse space. This lease terminates December 31, 2000. The
leases with Laney & Duke accounted for 71% and 72% of the revenue in fiscal
1997 and fiscal 1996, respectively. The second tenant is America Online, whose
lease is for 93,000 square feet of office space beginning June 16, 1995 and
terminating on June 15, 2002. This lease with America Online accounted for 26%
and 28% of the revenue in fiscal 1997 and 1996, respectively. The third lease
is with the Prudential for 139,000 square feet of office space. The lease
began for part of the space on May 16, 1997 and for the remaining space on
June 16, 1997. The lease terminates on June 15, 1999. Prudential has the
option to extend the lease for either six months or four years. The fourth
lease is with Service America for 1,000 square feet of office space, used for
a food service operation, beginning September 15, 1995 and terminating on
September 15, 2002.
Revenue increased by 11% to $3,344,700 in fiscal 1997 from $3,021,743 in
fiscal 1996 as a result of the lease of increased warehouse space by Laney &
Duke, the lease of office space to Prudential Insurance Company and an
increase in the base rental rate of the leases. During fiscal 1997 and fiscal
1996, rental revenue included $639,294 and $655,042 of contingent rentals and
$2,705,406 and $2,366,701 of base rent, respectively. The future minimum base
rentals under non-cancelable leases as of June 30, 1997 was $3,692,644 for
fiscal 1998, $3,791,682 for fiscal 1999, $2,874,253 for fiscal 2000,
$1,885,573 for fiscal 2001 and $838,500 thereafter.
Operating costs increased by 37% in fiscal 1997 to $2,293,659 from
$1,675,164 in fiscal 1996. The $618,495 increase in operating expenses is
primarily related to two non-recurring items that reduced the fiscal 1996
operating expenses. Property taxes accounted for $244,495, or 40%, of the
increase. Sears, the former owner of the property, was responsible for paying
the property taxes on Imeson Center through April 15, 1996. In the fourth
quarter of fiscal 1996, the Company received notice of abatement of a $223,000
penalty for underpayment of fiscal 1994 income taxes that was recorded in
prior years. The elimination of the penalty in fiscal 1996 accounted for an
additional 36% of the increase. The remaining portion of the increase was
primarily related to an increase in salary and benefit costs.
Depreciation and amortization primarily related to the commercial real
estate operations and did not significantly change in fiscal 1997, as compared
to fiscal 1996.
Professional fees related to litigation were $781,262 in fiscal 1997
compared to $321,632 in fiscal 1996. The significant increase in professional
fees primarily related to the litigation with KFM Ventures, Inc. and Harvey
Moore, which both went to trial during the fiscal year. Legal counsel had to
prepare for the Harvey Moore trial on three occasions. The trial was postponed
the week before its initial scheduled date and a mistrial was declared during
the rescheduled trial. This resulted in preparing for yet a third trial before
the case was heard and judgment rendered. The Court awarded Harvey Moore
compensation of $294,861 and pre-judgment interest of $85,445. These amounts
were in excess of the $180,000 that the Company had reserved, resulting in a
charge to income of $200,306. In addition, the Company incurred fees related
to currently outstanding litigation. See Note 13 of the accompanying financial
statements for a complete discussion of all outstanding material litigation.
The income tax provision for fiscal 1997 includes a reduction in income tax
expense of $178,000 related to a change in the tax treatment of certain
expenses.
Results of Discontinued Operations
Until fiscal 1995, the Company derived substantially all of its revenue
from the automotive services operations. More particularly, the Company's
revenue was derived from agreements entered into with licensed agents that
marketed and sold the Company's ride-related services. The typical licensed
agent agreement included a flat monthly fee for rental of equipment plus a fee
per usage. The Company's automotive services revenue significantly declined in
fiscal 1995 and fiscal 1996. During the fourth quarter of fiscal 1996, the
Company received termination notices from its largest two licensed agents who
together accounted for two-thirds of the Company's automotive services
revenue. As a result, the Company decided to terminate the agency agreements
with the remaining licensed agents effective June 30, 1997 and the automotive
services division was reported as discontinued operations.
Revenue of the automotive services division declined by 72% to $246,327 in
fiscal 1997 from $885,256 in fiscal 1996 as a result of discontinuing
operations. Automotive services operating costs decreased 56% to $366,065 in
fiscal 1997 from $825,741 in fiscal 1996. Depreciation and amortization costs
decreased from $425,086 in fiscal 1996 to $111,832 in fiscal 1997, primarily
as a result of a decline in the number of Combi-Matchers in operation. At June
30, 1996, management estimated proceeds of $458,607 from the sale of Combi-
Matchers, inventory and other assets resulting in a loss of $1,319,956 and a
loss from operations during the disposal period of $262,687, resulting in a
total loss from disposal of $1,582,643. During fiscal 1997, the Company
recorded $530,559 in revenue from disposal of assets, resulting in a loss of
$985,553 and a loss from operations of $227,694, including depreciation.
Management has reduced its estimate of the required reserve for discontinued
operations by $256,000 ($155,000 after tax) at June 30, 1997. The gain on
disposal for 1997 includes a provision of $46,262 in operating losses during
the phase-out period. The amounts the Company will ultimately realize could
differ materially in the near term from the amounts estimated as the loss on
disposal of the discontinued operations.
Liquidity and Capital Resources
The cash provided by operating activities was $377,986 in fiscal 1997
compared to $560,112 in fiscal 1996. In fiscal 1997 the Company's operations
used $146,213 in working capital compared to $723,486 in working capital
generated in fiscal 1996. The Company expended $436,645 in fiscal 1997 and
$327,854 in fiscal 1996 on operating costs that have been capitalized related
to preparing the Imeson Center facility for rent and broker commissions on the
leases that were obtained for Imeson Center. These costs will be amortized
over the period of the expected benefit. The accounts payable and accrued
expenses increased by $924,849 from the end of fiscal 1996 to the end of
fiscal 1997. The outstanding balance of the Moore settlement accounted for
$282,000 of the increase and outstanding litigation costs accounted for
another $119,000 of the increase. The remaining balance of the increase was
primarily related to renovations of the Imeson Center property and broker
commissions related to the lease of space to Prudential.
Purchases and maturity of held-to-maturity securities represent the
investment in US backed debt securities with a maturity date at the time of
purchase in excess of three months. The proceeds from the sale of assets in
fiscal 1997 represent proceeds from the liquidation of the Companies
automotive services operations. Property and equipment additions in fiscal
1997 primarily consisted of purchases of equipment for operations at Imeson
Center and renovations to the building related to the conversion of warehouse
space to office space.
Cash of $2,290,068 was used by financing activities in fiscal 1997, as
compared to cash used by financing activities of $22,490 in fiscal 1996. The
Company acquired a $480,000 line of credit from the First National Bank of
Tampa in the fourth quarter of fiscal 1997 and paid off all other outstanding
indebtedness. During the fourth quarter of fiscal 1996, the Company paid
$20,110 for the right to repurchase 11,400 shares of its common stock for
$0.196 per share. During the first three months of fiscal 1997, the Company
purchased 641,272 shares of its common stock for an aggregate cash purchase
price of $2,116,198, which shares are currently held as treasury stock. In May
1997, the Company announced plans to repurchase up to $3,000,000 of its common
stock through open market purchases. Through June 30, 1997, the Company
acquired 15,000 shares at a cost of $54,547.
The Company did not have any material commitments for capital expenditures
as of June 30, 1997 other than for ordinary expenses incurred during the usual
course of business. The Company is looking for additional tenants for Imeson
Center for the remaining 41,000 square feet of office space. It is expected
that any new tenant will require the Company to incur significant costs
related to renovation of the property to meet the tenants needs in excess of
the Company's liquidity position. Additionally, the Company is considering
opportunities to develop the outparcels of the Imeson Center. Although the
Company has not identified any specific acquisition opportunities, management
is spending resources to locate potential opportunities to expand the
Company's business operations into other areas. Any new business operation
will likely involve a substantial commitment of Company resources and a
significant degree of risk. The Company also has potential liability related
to litigation (See Note 13 of the accompanying financial statements). Any of
the above mentioned items could require significant capital resources in
excess of the Company's liquidity, requiring it to raise additional capital
through public or private debt or equity financing. The availability of these
capital sources will depend upon prevailing market conditions, interest rates,
and the then existing financial position and results of operations of the
Company. The Company is actively pursuing a mortgage loan against the Imeson
Center property to fund the above mentioned items and accelerate the stock
repurchase program the Company announced in the fourth quarter of fiscal 1997.
However, no assurances can be made by the Company that such additional funding
will be available.
ITEM 7. FINANCIAL STATEMENTS.
The financial Statements of the Company as of June 30, 1997 and the Report
of the Independent Certified Public Accountants thereon are included in
Appendix F to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT.
Information regarding directors and executive officers of the Company is
included under the caption "Classification of Directors" of the registrant's
definitive Proxy Statement for its 1997 annual meeting.
ITEM 10. EXECUTIVE COMPENSATION.
Information regarding executive compensation is included under the caption
"Executive Compensation" of the registrant's definitive Proxy Statement for
its 1997 annual meeting.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding beneficial ownership of the registrant's voting
securities by each director and all officers and directors as group, and by
any person known to beneficially own more than 5% of any class of voting
security of the registrant is included under the caption "Voting Securities"
of the registrant's definitive Proxy Statement for its 1997 annual meeting.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding certain relationships and related transactions is
included under the caption "Indemnification of Company Officers and Directors"
of the registrant's definitive Proxy Statement for its 1997 annual meeting.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits
Exhibit Method
Number Description of
Filing
3.1 Amended and Restated Certificate of Incorporation 7
3.2 Series A Participating Preferred Stock
Certificate of Designations 6
3.3 Second Amended and Restated By-laws 7
4.1 Rights Agreement by and between the Company and Registrar
and Transfer Company dated April 18, 1994 2
10.1 1988 Stock Option Plan 1
10.2 Contract to Purchase - Rome Avenue Property 3
10.3 Form of Indemnity Agreement with Officers and Directors 3
10.4 Lease for 100 North Tampa offices 3
10.5 Webb Employment Agreement 3
10.6 Amendment to Webb Employment Agreement 6
10.7 Newton Employment Agreement 3
10.8 Amendment to Newton Employment Agreement 6
10.9 Barnes Employment Agreement 6
10.10 Warehouse Space Lease Agreements with Laney & Duke
Terminal Warehouse Company, Inc. 4
10.11 Renewal and Modification of Laney & Duke Leases 5
10.12 Amendment to Laney & Duke Leases dated 1/1/97 *
10.13 Amendment to Laney & Duke Leases dated 3/1/97 *
10.14 Office Lease with America Online, Inc. 4
10.15 Office Lease with Prudential Insurance Company of America *
10.16 Form of Stock Purchase Agreement for the repurchase
of 641,272 shares 6
21 List of Subsidiaries of Registrant *
27 Financial Data Schedule *
* Filed herewith.
1 Incorporated by reference to the Company's registration statement on Form
S-18 file #33-21786, filed in Atlanta, Georgia.
2 Incorporated by reference to the Company's Current Report on Form 8-K
dated April 18, 1994.
3 Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1994.
4 Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1995.
5 Incorporated by reference to the Company's Current Report on Form 8-K
dated December 22, 1996.
6 Incorporated by reference to the ComPanies Annual Report on Form 10-KSB
for the year ended June, 30 1996.
7 Incorporated by reference to the ComPanies Quarterly Report or Form 10-QSB
for the quarter ended December 31, 1996.
B. Reports on Form 8-K
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, this 19th day of
September 1997.
EXCAL ENTERPRISES, INC.
/S/ W. CAREY WEBB
W. Carey Webb
President and Chief Executive Officer
In accordance with the Exchange Act of 1934, as amended, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Dated: September 19, 1997 /S/ R. PARK NEWTON, III
R. Park Newton, III
Chairman of the Board and Board Member
Dated: September 19, 1997 /S/ W. CAREY WEBB
W. Carey Webb
President and Chief Executive Officer
Dated: September 19, 1997 /S/ TIMOTHY R. BARNES
Timothy R. Barnes
Vice-President, Chief Financial Officer,
and Principal Accounting Officer
Dated: September 22, 1997 /S/ W. ARIS NEWTON
W. Aris Newton
Vice-President and Board Member
Dated: September 22, 1997 /S/ JOHN L. CASKEY
John L. Caskey
Board Member
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
CONSOLIDATED BALANCE SHEET F-2
CONSOLIDATED STATEMENTS OF OPERATIONS
AND CHANGES IN RETAINED EARNINGS F-3
CONSOLIDATED STATEMENTS OF CASH FLOWS F-4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-5
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Excal Enterprises, Inc. and Subsidiaries
Tampa, Florida
We have audited the accompanying consolidated balance sheet of Excal
Enterprises, Inc. and Subsidiaries as of June 30, 1997 and the related
consolidated statements of operations and changes in retained earnings and
cash flows for the years ended June 30, 1997 and 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Excal Enterprises, Inc. and Subsidiaries as of June 30, 1997, and the
consolidated results of its operations and changes in retained earnings and
its cash flows for the two years then ended, in conformity with generally
accepted accounting principles.
PENDER NEWKIRK & COMPANY
Certified Public Accountants
Tampa, Florida
August 8, 1997
EXCAL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
ASSETS
Current Assets
Cash and cash equivalents $ 1,047,166
Accounts receivable - trade 259,032
Accounts receivable - related parties 6,861
Income tax receivable 185,272
Prepaid expenses and deposits 215,609
Net assets of discontinued operations 160,983
Deferred tax asset 309,000
----------
Total current assets 2,183,923
----------
Property, plant and equipment
Land 1,740,000
Building 6,192,255
Furniture, fixtures, vehicles and equipment 445,829
----------
8,378,084
Less accumulated depreciation and amortization 648,792
----------
Net property, plant and equipment 7,729,292
----------
Capitalized clearing costs, less accumulated
amortization of $119,020 660,533
Commission costs, less accumulated amortization of 329,520
$119,228
Other intangible assets 33,160
----------
Total Assets $ 10,936,428
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 933,840
Accrued liabilities 435,801
Reserve for litigation 586,480
Revolving line of credit 10,952
----------
Total current liabilities 1,967,073
Deferred tax liability 1,858,000
----------
Total Liabilities 3,825,073
----------
Stockholders' equity:
Preferred stock, $.01 par value, 7,500,000 shares
authorized, no shares issued and outstanding --
Common stock, $.001 par value, 20,000,000 shares
authorized,
4,713,866 shares issued, 4,010,594 shares outstanding 4,713
Additional paid-in capital 5,800,423
Retained earnings 3,683,088
Less 703,272 shares of common stock held in
treasury, shares at cost ( 2,376,869)
----------
Total stockholders' equity 7,111,355
----------
Total Liabilities and Stockholders' Equity $ 10,936,428
==========
The accompanying notes are an integral part of the consolidated financial
statements
EXCAL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
CHANGES IN RETAINED EARNINGS
Year Ended June 30
-------------------------
1997 1996
--------- ---------
Net revenue $ 3,344,700 $ 3,021,743
--------- ---------
Operating costs 2,293,659 1,675,164
Depreciation and amortization 367,697 367,281
--------- ---------
Total operating costs 2,661,356 2,042,445
--------- ---------
Net operating profit 683,344 979,298
--------- ---------
Other expense (income)
Professional fees related to litigation 781,262 321,632
Litigation judgment 200,306 --
Interest expense 42,400 14,656
Other expense 13,068 13,870
Dividend and interest income ( 91,288) ( 121,488)
Other income ( 61,225) ( 70,370)
--------- ---------
Net other expense 884,523 158,300
--------- ---------
Income (loss) before income taxes
and discontinued operations ( 201,179) 820,998
Income tax provision (benefit) ( 266,000) 325,000
--------- ---------
Income from continuing operations 64,821 495,998
--------- ---------
Loss (gain) from discontinued operations
Loss from operations of discontinued
division
(less income tax benefit of $154,000) -- 243,772
Loss (gain) on disposal of division
(less income tax expense of $101,000 in
1997
and benefit of $625,000 in 1996) ( 155,000) 957,643
--------- ---------
Loss (gain) from discontinued operations ( 155,000) 1,201,415
--------- ---------
Net income (loss) 219,821 ( 705,417)
Retained earnings - beginning of year 3,463,267 4,168,684
--------- ---------
Retained earnings - end of year $ 3,683,088 $ 3,463,267
========= =========
Earnings (loss) per common and
common equivalent share:
Continuing operations $ .02 $ .10
Operations of discontinued division --- ( .05)
Disposal of division .03 ( .19)
--------- ---------
Primary earnings (loss) per common
and common equivalent share $ .05 $( .14)
========= =========
Weighted average common and common
equivalent shares outstanding 4,636,411 4,995,974
========= =========
The accompanying notes are an integral part of the consolidated financial
statements
EXCAL ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30
-------------------------
1997 1996
--------- ---------
Cash flows from operating activities:
Net income (loss) $ 219,821 $( 705,417)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 479,528 792,368
Provision for uncollectable
accounts receivable ( 12,662) 1,695
Interest income --- 48,584
Reserve for loss (gain) on
disposal of division ( 256,000) 1,582,643
Loss (gain) on disposals of assets ( 212,255) 40,467
Provision for deferred income taxes 72,000 ( 709,000)
Decrease (increase) in operating assets:
Accounts receivable - trade ( 4,796) ( 147,355)
Accounts receivable - related parties 18,899 11,582
Income tax receivable ( 175,556) 621,437
Prepaid expenses and deposits ( 40,460) 18,562
Intangible assets ( 436,645) ( 327,854)
Increase (decrease) in operating
liabilities:
Accounts payable and accrued liabilities 924,849 ( 606,337)
Income taxes payable ( 18,737) 18,737
Reserve for litigation ( 180,000) ( 80,000)
--------- ---------
Net cash provided by operating activities 377,986 560,112
--------- ---------
Cash flows from investing activities:
Purchase of held-to-maturity securities --- ( 590,181)
Maturity of held-to-maturity securities --- 1,827,576
Proceeds from sale of assets 530,559 20,088
Property and equipment additions ( 321,889) ( 118,221)
--------- ---------
Net cash provided by investing activities 208,670 1,139,262
--------- ---------
Cash flows from financing activities:
Net borrowing on line of credit 10,952 ---
Net borrowing of long-term debt --- 122,607
Principal repayments of long-term
debt and capital leases ( 130,275) ( 124,987)
Purchase stock option --- ( 20,110)
Purchase treasury stock (2,170,745) ---
--------- ---------
Net cash used by financing activities (2,290,068) ( 22,490)
--------- ---------
Increase (decrease) in cash (1,703,412) 1,676,884
Cash and cash equivalents,
beginning of year 2,750,578 1,073,694
--------- ---------
Cash and cash equivalents, end of year $ 1,047,166 $ 2,750,578
========= =========
Supplemental disclosure of cash flow information
Interest paid $ 45,007 $ 18,342
Income taxes received $ 42,811 $ 385,174
The accompanying notes are an integral part of the consolidated financial
statements
EXCAL ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BUSINESS
The Company, headquartered in Tampa, Florida, was engaged in two distinct
business operations. The Company's commercial real estate venture is conducted
by and through Imeson Center, Inc., a wholly-owned subsidiary. Imeson Center,
Inc. owns, manages and leases two story warehouse and office facility
containing 1,666,000 square feet of rentable space located on approximately 74
acres in an industrial park in Duval County, Florida. The Company's automotive
services operations were conducted by and through Assix Automotive, Inc., a
wholly-owned subsidiary. In June 1996, the Board of Directors approved a plan
to discontinue the automotive services operations. Assix Automotive, Inc.
ceased operations in June 1997 and is completing its liquidation. The Company
changed its name from Assix International, Inc. to Excal Enterprises, Inc. in
June of 1995.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements are as
follows:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company , Imeson Center, Inc., a wholly-owned subsidiary,
and Assix Automotive, Inc., a wholly-owned subsidiary. The operations of Assix
Automotive are being discontinued, and therefore, the net assets and results
of operations are shown as a single line item on the balance sheet and
statement of operations, respectively.
Estimates and Assumptions. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statement and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents. Cash and cash equivalents include all cash
balances and highly liquid investments with an original maturity of three
months or less.
Property, Plant and Equipment. Property, plant and equipment are recorded
at cost or appraised value at the date of acquisition. Depreciation and
amortization are calculated by using the straight-line method over the
estimated useful lives of the assets, ranging generally from five to ten years
for tangible personal property and 40 years for real property and
improvements. Expenditures for maintenance and repairs are charged to expense
as incurred, and renewals and betterments are capitalized. Gains or losses on
disposals are credited or charged to operations. For income tax purposes, the
Company uses accelerated methods of depreciation for certain assets.
Intangible Assets. The Company capitalized the cost, net of salvage
recovery, of clearing the Imeson Center facility to prepare it for lease. The
net clearing cost incurred in 1997 and 1996 was $227,975 and $254,847,
respectively, and is being amortized over 10 years. Commission costs represent
the broker fees incurred related to the leases obtained for Imeson Center.
These costs are amortized over the life of the leases.
Revenue Recognition. Commercial real estate rental revenue consists of base
rent, reimbursement of operational expenses, and common area maintenance
charges. The Company recognizes revenue when it is earned.
Income taxes. Deferred tax assets and liabilities are recognized for the
estimated future consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective income tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.
Stock based compensation. The Financial Accounting Standards Board issued
Statement 123, Accounting for Stock-Based Compensation, effective for fiscal
years beginning after December 15, 1995. Statement 123 provides that expense
equal to the fair value of all stock-based awards on the date of the grant be
recognized over the vesting period. Alternatively, Statement 123 allows
entities to continue to apply the provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, whereby compensation
expense is recorded on the date the options are granted equal to the excess of
the market price of the underlying stock over the exercise price. The Company
has elected to continue to apply the provisions of APB Opinion No. 25 and
provide pro forma disclosure of the provisions of Statement 123.
Earnings per Share. Earnings per common and equivalent share is based on
the weighted average number of common shares outstanding and the dilutive
effect of common stock equivalents consisting of stock options and warrants.
Fully diluted earnings per share are not presented because they approximate
earnings per common and equivalent share.
Reclassifications. Certain reclassifications have been made to the
financial statements in 1996 in order to conform to the 1997 presentation.
None of the reclassifications affected the financial position or results of
operations.
NOTE 3 - DEPENDENCE ON MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
and accounts receivable. The Company maintains its cash and cash equivalents
at several financial institutions that it believes are of high credit quality
and attempts to limit its exposure in any one particular instrument. There
are times when balances maintained at certain financial institutions are in
excess of insured limits.
Net revenue of the Company consists of commercial real estate revenue from
the lease and management of property located in Jacksonville, Florida. Two
leases accounted for substantially all of the Company's revenue in fiscal 1997
and fiscal 1996 as follows:
Year Ended June 30, 1997 Year Ended June 30, 1996
------------------------ -----------------------
Lessee Amount % to Total Amount % to Total
------------- --------- ---------- --------- ----------
Laney & Duke $2,365,314 71% $2,163,816 72%
America Online 864,086 26% 849,693 28%
The Laney & Duke lease expires on December 31, 2000. The America Online
lease expires on June 15, 2002. The loss of either of these two leases would
have a significant impact on the Company (See Note 8).
NOTE 4 - DISCONTINUED OPERATIONS
During the fourth quarter of fiscal 1996, the Company decided to terminate
the agency agreements with its licensed agents effective June 30, 1997 and
discontinue its automotive services operations. The Company offered the
existing Combi-Matcher machines and related assets for sale to existing
licensed agents and others. The two largest licensed agents purchased the
majority of the Company's automotive services assets. The revenue of the
discontinued operations was $246,327 and $885,256 for the fiscal years ended
June 30, 1997 and 1996, respectively.
At June 30, 1996, management estimated proceeds of $458,607 from the sale
of Combi-Matchers, inventory and other assets resulting in a loss of
$1,319,956 and a loss from operations during the disposal period of $262,687,
resulting in a total loss from disposal of $1,582,643. During fiscal 1997,
the Company recorded $530,559 in revenue from disposal of assets, resulting in
a loss of $985,553 and a loss from operations of $227,694, including
depreciation. Management has reduced its estimate of the required reserve for
discontinued operations by $256,000 ($155,000 after tax) at June 30, 1997. The
gain on disposal for 1997 includes a provision of $46,262 in operating losses
during the phase-out period. The amounts the Company will ultimately realize
could differ materially in the near term from the amounts estimated as the
loss on disposal of the discontinued operations. The net assets of the
discontinued operations, excluding inter-company assets, at June 30, 1997 were
as follows:
Current assets $ 106,852
Property and equipment, net 88,162
-------
Total assets 195,014
Less current liabilities 34,031
-------
Net assets $ 160,983
=======
NOTE 5 - REVOLVING LINE OF CREDIT
The Company obtained a $480,000 revolving line of credit, of which $10,952
was outstanding as of June 30, 1997. The line of credit bears interest at one
point over prime (9.5% at June 30, 1997), and is collateralized by land and a
building with a net carrying cost of $442,425.
NOTE 6 - COMMITMENTS
The Company incurred rent expense of $72,981 and $124,478 for the years
ended June 30, 1997 and 1996, respectively. Future minimum lease payments
under non-cancelable operating leases for the corporate office space and
automobiles as of June 30, 1997 are as follows:
1998 $ 60,023
1999 63,613
2000 73,400
2001 25,690
The Company entered into an employment agreement in March 1994 with its
then President, who is now Chairman of the Board, that obligates the Company
to pay him $180,000 a year for five years, unless his employment is terminated
for due cause. The agreement also provides for a lump sum severance payment of
up to 2.9 times his base salary upon the occurrence of a change in control.
The Company entered into an employment agreement with its current President
and Chief Executive Officer effective August 15, 1994. The agreement obligates
the Company to pay him $180,000 a year for five years, unless his employment
is terminated for due cause. The agreement also provides for a lump sum
severance payment of up to 2.9 times his base salary upon the occurrence of
certain events after a change in control. The agreement provides for a
$100,000 moving allowance, which includes reimbursement for the sale of his
house below its appraised market value.
The Company entered into an employment agreement with its current Vice
President and Chief Financial Officer effective August 7, 1995. The agreement
obligates the Company to pay him $75,000 a year, unless his employment is
terminated for due cause. The agreement also provides for a lump sum severance
payment of up to 2.9 times his base salary upon the occurrence of a change in
control.
NOTE 7 - STOCKHOLDERS' EQUITY
Preferred Stock
On April 18, 1994, the Company's Board of Directors declared a dividend
distribution of one "Right" for each share of common stock, par value $0.001
per share, of the Company (the "Common Stock") outstanding as of April 29,
1994. Distribution of the Rights was not taxable to shareholders and the
Rights expire after ten years. Each Right entitles the registered holder to
purchase from the Company one-hundredth (1/100) of a share of Series A
Participating Preferred Stock at a Purchase Price of $10.00, subject to
certain anti-dilution adjustments (the "Exercise Price"). The terms and
conditions of the Rights are contained in a Rights Agreement, dated April 18,
1994, between the Company and Registrar and Transfer Company, a corporation
acting in the capacity of Rights Agent (and which also serves as the Company's
transfer agent). The plan under which the Company's Board of Directors has
declared a distribution of the Rights, including the definitive terms of the
Rights and the Rights Agreement, are referred to hereinafter as the "Rights
Plan."
The Rights are not presently exercisable and are evidenced only by the
certificates representing shares of Common Stock and are transferable only
with the Common Stock. The Rights become exercisable and separately
transferable on the earlier of (i) the tenth calendar day after the first
public disclosure that a person or group (including any affiliate or associate
of such person or group) has acquired beneficial ownership of 15% or more of
the outstanding Common Stock, or, in the case of a person or group
beneficially owning 15% or more of the outstanding Common Stock on April 18,
1994, the date that such person or group acquires any additional shares of
Common Stock (other than pursuant to a dividend or distribution paid or made
pro rata to all holders of Common Stock or upon exercise of employee stock
options pursuant to any employee benefit plan approved by the Board of
Directors) (such a person or group being called an "Acquiring Person") or (ii)
the tenth calendar day after the commencement of, or first public disclosure
of the intent of any person or group to commence, a tender or exchange offer
for 15% or more of the outstanding Common Stock (the date on which the rights
become exercisable being called the "Distribution Date"). After the
Distribution Date, a holder of a Right (other than the Acquiring Person, whose
Rights become void) will have the right to purchase, upon payment of the
Exercise Price, 1/100th of a share of Series A Preferred Stock, subject to
certain adjustments.
Additionally, after a person becomes an Acquiring Person, each Right will
entitle its holder to purchase, at the Right's Exercise Price, a number of
shares of the Company's Common Stock having a market value at that time of
twice the Right's Exercise Price. Rights held by the Acquiring Person will
become void and will not be exercisable to purchase shares at the bargain
purchase price. If the Company is acquired in a merger or other business
combination transaction after a person becomes an Acquiring Person, each Right
will entitle its holder to purchase, at the Right's then current Exercise
Price, a number of the Acquiring Person's common shares having a market value
at that time of twice the Right's exercise price.
The terms of the Preferred Stock purchasable upon exercise of the Rights
have been designed so that each 1/100th share of Preferred Stock has economic
rights substantially equivalent to those of a share of Common Stock. Thus,
each share of Series A Preferred Stock will be entitled to receive, when and
as declared, a quarterly dividend at an annual rate equal to the greater of
$1.00 per share or one-hundredth times the cash dividend declared on the
Common Stock during the period from January 1 through December 31 of the
immediately preceding year. In addition, the Series A Preferred Stock is
entitled to one hundred times any non-cash dividends (other than dividends
payable in Common Stock) declared on the Common Stock, in like kind. In the
event of the liquidation, dissolution or winding up of the Company, the
holders of Series A Preferred Stock will be entitled to receive a liquidation
payment in an amount equal to the greater of $1.00 per share or one hundred
times the liquidation payment made per share of Common Stock. Each share of
Series A Preferred Stock will have one hundred votes, voting together with the
Common Stock.
Upon exercise of the Rights, the Series A Participating Preferred Stock
will be distributed to holders of the Rights upon exercise thereof and payment
of the Exercise Price (as defined in the Rights Agreement). Absent an
available exemption, registration of the Series A Participating Preferred
Stock will be required under the Securities Act of 1933, as amended, and
applicable state "blue sky" laws prior to such distribution.
Common Stock
During the fourth quarter of fiscal 1996, the Company paid $20,110 for the
rights to acquire 11,400 shares of its common stock for $0.196 per share.
During the first three months of fiscal 1997, the Company purchased 641,272
shares of its common stock for an aggregate cash purchase price of $2,116,198,
which shares are currently held as treasury stock. In May 1997, the Company
announced plans to repurchase up to $3,000,000 of its common stock through
open market purchases. Through June 30, 1997, the Company acquired 15,000
shares at a cost of $54,547.
The Company's shareholders approved increasing the authorized common shares
of the Company from 7,500,000 to 20,000,000 in November 1996.
Options and Warrants
The Company has a stock option plan providing for the issuance of up to
500,000 shares of the Company's common stock to employees and directors,
pursuant to options granted under the Option Plan. The Company has also issued
additional options and warrants to officers, directors, and unaffiliated third
parties outside of the Option Plan. The Company applies APB Opinion 25 and
related Interpretations in accounting for its grants of options and warrants.
The Company has not recorded compensation expense relating to any issuance of
options or warrants since, in all instances, the exercise price was greater
than or equal to the market value of the underlying shares of the Company's
common stock on the dates of grant. Had compensation cost for the options and
warrants granted been determined based on the fair value at the grant dates
under the methods proscribed by FASB Statement 123, the Company's net income
and earnings per share would have been reduced to the proforma amounts
indicated below:
1997 1996
--------- -----------
Net income (loss) As reported $ 219,821 $( 705,417)
Pro forma $ 183,591 $( 723,849)
Primary earnings (loss) per common
and common equivalent share As reported $ .05 ( .14)
Pro forma $ .04 $( .14)
For purposes of the proforma presentation above, the fair value of each
grant is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions for grants in 1997 and
1996, respectively: expected volatility of 30 percent in both years, risk free
interest rates of 6.4% and 6.1%; and expected lives of 3 years for both 1997
and 1996.
A summary of the status of the options issued pursuant to the Plan and the
options and warrants issued outside the Plan is as follows:
Issued Pursuant Issued outside
to Option Plan of Option Plan
-------------------- --------------------
Exercise Exercise
Shares Price(1) Shares(2) price(1)
--------- -------- --------- --------
Outstanding at June 30, 1995 61,000 $1.52 1,541,650 $2.71
Granted in fiscal 1996 75,000 $1.44 -- --
Forfeited in fiscal 1996 6,000 $2.33 211,000 $4.48
Expired in fiscal 1996 -- -- 188,000 $3.86
Outstanding at June 30, 1996 130,000 $1.43 1,142,650 $2.20
Granted in fiscal 1997 -- -- 125,000 $2.34
Outstanding at June 30, 1997 130,000 $1.43 1,267,650 $2.21
(1) Weighted average exercise price.
(2) Does not include options to acquire 300,000 shares at an exercise price
of $1.00 per share that were awarded to Park Newton in 1994 but have not
been issued because of a requirement that the Board of Directors take
certain actions prior to granting such options.
The following table summarizes information about the options and warrants
outstanding at June 30, 1997, stratified by exercise price:
Options Outstanding Options Exercisable
----------------------------------- ----------------------
Weighted Weighted Weighted
Range of Average Average Average
Outstanding Number Contractual Exercise Number Exercise
Exercise Prices Remaining Life Price Exercisable Price
- ----------------- ---------- ---------- -------- ----------- -------
Issued Pursuant to Option plan
- ------------------------------
$1.00 to $1.44 125,000 7.9 years $1.26 100,000 $1.33
$5.74 5,000 1.9 years $5.74 5,000 $5.74
Issued outside of Option Plan(1)
- ------------------------------
$0.53 to $1.13 645,000 6.9 years $1.01 545,000 $1.06
$1.70 to $2.34 427,650 5.5 years $1.97 242,650 $2.17
$5.63 to $7.43 195,000 2.4 years $6.71 195,000 $6.71
(1) Does not include options to acquire 300,000 shares at an exercise price
of $1.00 per share that were awarded to Park Newton in 1994 but have not
been issued because of a requirement that the Board of Directors take
certain actions prior to granting such options.
NOTE 8 - COMMERCIAL REAL ESTATE RENTAL REVENUE
The Company, through its wholly-owned subsidiary Imeson Center, Inc.,
leases improved real property located in Jacksonville, Florida. The leases
include a base rental fee, a contingent rental fee to reimburse the Company
for operating costs and common area maintenance costs, and a requirement that
the tenants pay for their own utilities. The land and building had a carrying
cost of $7,465,755 and accumulated depreciation of $431,765 as of June 30,
1997. Minimum future rentals under non-cancelable leases as of June 30, 1997
are as follows: 1998 - $3,692,644; 1999 - $3,791,682; 2000 - $2,874,253; 2001
- - $1,885,573; 2002 - $836,417; and, 2003 - $2,083. During fiscal 1997 and
1996, rental revenue included $639,294 and $655,042 of contingent rentals,
respectively.
NOTE 9 - LITIGATION SETTLEMENT
In litigation over compensation, the Court awarded Harvey Moore
compensation of $294,861 and pre-judgment interest of $85,445. These amounts
were in excess of the $180,000 the Company had reserved. Harvey Moore and the
Company agreed to pay the award in four monthly payments, including interest
at 10% per annum, beginning June 6, 1997. At June 30, 1997, $282,149 was
outstanding and is included in accounts payable.
The final judgment entered in favor of the Company on November 20, 1995
related to litigation by Nations Bank was upheld upon appeal.
NOTE 10 - INCOME TAXES
The sources of significant temporary differences which gave rise to
deferred tax assets and liabilities as of June 30, 1997 are as follows:
Deferred tax assets:
Accrued salaries and bonuses $ 309,000
Tax basis of intangible assets in excess of book 36,000
Net operating loss carryforward 80,000
Capital loss carryforward 2,000
---------
427,000
Less valuation allowance for loss carryforward 17,000
---------
410,000
---------
Deferred tax liabilities:
Book basis of property, plant and equipment
in excess of tax 22,000
Book basis of investment in subsidiaries
in excess of tax 1,937,000
---------
1,959,000
---------
Net deferred tax liabilities $ 1,549,000
=========
The valuation allowance increased by $15,000 in 1997 and decreased by
$42,000 in 1996. The components giving rise to the net deferred tax
liabilities described above have been included in the accompanying balance
sheet as follows:
Current assets $ 309,000
Non-current liabilities 1,858,000
---------
$ 1,549,000
=========
The components of the provision (benefit) for income taxes for the years
ended June 30, 1997 and 1996 were as follows:
1997 1996
--------- ---------
Current tax expense (benefit) $( 82,000) $ 304,000
Benefit of operating loss carryforward -- ( 21,000)
Deferred tax expense (benefit) ( 184,000) 42,000
--------- ---------
$( 266,000) $ 325,000
========= =========
In 1997, current tax benefit of $155,000 ($28,000 in 1996) and deferred tax
expense of $256,000 (benefit of $751,000 in 1996) were allocated to
discontinued operations. The difference between the provision (benefit) for
income taxes and the amounts obtained by applying the statutory US Federal
Income Tax rate to the income before taxes is as follows:
1997 1996
--------- ---------
Tax expense (benefit) at statutory rate $( 68,000) $ 279,000
Increase (decreases) in taxes resulting
from tax effects of:
State income taxes, net of federal tax benefit ( 56,000) 101,000
Non-deductible expenses 11,000 --
Non-taxable income -- ( 68,000)
Tax planning strategies ( 153,000) --
Change in income tax estimate -- 13,000
--------- ---------
$( 266,000) $ 325,000
========= =========
As of June 30, 1997, the Company had approximately $1,463,000 in net
operating loss carryforwards for state tax purposes and a $5,000 capital loss
carryforward for both state and federal purposes. The net operating loss
carryforward expires in the years 2010 and 2012 and the capital loss
carryforward expires in the year 2000.
NOTE 11 - 401(K) RETIREMENT PLAN
The Company established a 401(k) retirement plan effective March 1, 1997.
The Plan covers substantially all of its employees. Contributions are at the
employees discretion and are matched by the Company up to certain limits. For
the year ended June 30, 1997, the Company contributed $3,910 to the Plan.
NOTE 12 - RELATED PARTIES
The Company has entered into Indemnity Agreements with its officers and
directors under which the Company agrees to indemnify and hold harmless such
individuals against all expense, judgments, fines, penalties, etc. reasonably
incurred by each in connection with their services to the Company. However,
such indemnification only applies following a specific determination that such
individuals acted in good faith and in a manner which each reasonably believed
to be in the best interests of the Company. The Board of Directors previously
authorized the advance of costs and expenses incurred by certain of its
officers, directors, employees and agents in connection with the Securities
and Exchange Commission ("Commission") investigation. Such advances were
conditioned on repayment if it was ultimately determined that the person whose
behalf the advance was made did not meet the statutory standards of conduct
required for indemnification. Under Delaware law, a person may only be
indemnified to the extent that they are determined to have acted in good faith
and in a manner reasonably believed by them to be in the best interest of the
Company. In connection with the Commission's investigation, the Company's
Board of Directors engaged counsel to conduct an internal investigation of the
matters underlying the Commission's investigation. Based upon such report and
on the matters raised by the Commission's investigation, the Board of
Directors discovered no evidence that such officers, directors, employees and
agents acted other than in good faith and in a manner which they reasonably
believed to have been in the best interests of the Company in discharging
their duties. Accordingly, the Board of Directors has determined that such
individuals are entitled to indemnification for costs and expenses incurred in
connection with the Commission investigation referenced above. The Company
reimbursed former officers and directors for $100,000 in judgments and fines
during 1996 and has an additional $350,000 accrued for judgments and fines as
of June 30, 1997.
NOTE 13 - LEGAL PROCEEDINGS
A. Securities and Exchange Commission
On May 28, 1993, the United States Securities and Exchange Commission ("the
Commission") entered an Order Directing Private Investigation and Designating
Officers to Take Testimony in the Matter of Assix International, Inc. ("the
Order"). The Order was based upon reports from Commission staff personnel
prepared as a result of an informal preliminary investigation, apparently
initiated in June 1992, regarding certain of the Company's prior activities.
The reports alleged that the Company may have violated various provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and rules
promulgated thereunder by, among other reasons, failing to report the loss of
its principal customers in a timely and accurate fashion and falsely reporting
a material amount of nonexistent revenue from one of those lost customers. The
reports also alleged that certain individuals, including the Company's
officers and directors, may have participated in such violations or aided and
abetted the suspected Company violations. Additionally, it was alleged that
Mr. R. Park Newton, III traded Company securities before the foregoing
information had been disclosed, thereby violating the insider trading
provisions of the Securities Act of 1933 (the "Securities Act") and the
Exchange Act.
The Company's Board of Directors engaged independent counsel to conduct an
internal investigation into the matters underlying the Commission's reports.
Based upon the results of this investigation and its knowledge of the
Commission's reports, the Board of Directors discovered no evidence that the
officers and directors of the Company acted other than in good faith and in a
manner in which they believed to be in the best interests of the Company in
discharging their duties. The Company and the Commission tentatively reached a
settlement agreement pursuant to which the Company, while neither admitting
nor denying violations of the federal securities laws, would have consented to
the entry of a permanent injunction enjoining the Company from future
violations of the federal securities laws, but no monetary penalty would have
been assessed against the Company. However, in September 1994, the Commission
withdrew the referenced consent decree and commenced to investigate possible
additional violations of the federal securities laws involving the valuation
of real property received by the Company in its contractual settlement with
Sears, Roebuck & Co. ("Sears").
On September 26, 1995, the Commission filed suit in the Federal District
Court for the Middle District of Florida (Civ. No. 95-1583-CIV-T-23-B) against
the Company, R. Park Newton, III (former President and Chief Executive
Officer), Frederic S. Schadt, Charles A. Ross (former member of the Board of
Directors), Douglas S. Gardner (former Secretary and Treasurer), George Crook
(former Chief Operating Officer), Richard I. Brewer (former Controller), and
J. Theodore Biesanz (former Chairman of the Board). The complaint alleges that
the Company and in various instances the above named individuals: (i) during
the fiscal years 1991 through 1993 concealed the loss of the Company's
principal customers as licensed dealers and filed false periodic reports under
the Exchange Act with respect thereto; (ii) falsified the Company's books and
records in order to conceal the loss of its principal customers, including
using allegedly fictitious invoices to deceive the Company's auditors; and,
(iii) understated the value of commercial real estate received by the Company
in a contractual settlement with Sears in order to reduce the Company's income
tax liability, despite the fact that the value was derived from an independent
MAI appraisal.
The Commission alleges that such appraisal is unreasonably low and was not
an objective independent appraisal and that the Company and Mr. Newton failed
to inform the auditors of other allegedly material information bearing on the
value of the real estate. The Company is aware that other parties have
subsequently prepared appraisals and valuations of the real estate in
connection with various litigation. Some of these appraisals and valuations
have placed the value of this property substantially higher than the Company's
original valuation. The Company believes that the original appraisal continues
to be the proper valuation as of the date of acquisition.
The complaint also alleges that Mr. Newton, Mr. Schadt and Mr. Biesanz
violated certain provisions of the Securities Act, the Exchange Act and the
rules thereunder by engaging in illegal insider trading in the Company's
common stock. The Commission contends that (i) Mr. Newton and Mr. Biesanz sold
Company stock while the Company was concealing the loss of its principal
customers; and (ii) Mr. Newton improperly disclosed to Mr. Schadt material non-
public information concerning settlement negotiations between the Company and
Sears, and Mr. Schadt acquired Company common stock in reliance on such non-
public information. The complaint also alleges that Mr. Newton failed to
timely file with the Commission required reports of his trading.
The Commission seeks (i) a permanent injunction against the Company and the
individual defendants enjoining them from violating certain provisions of the
federal securities laws; (ii) an order permanently prohibiting Mr. Newton from
serving as an officer or director of a company whose securities are publicly
held and regulated by the Commission; (iii) disgorgement by Messrs. Newton,
Schadt and Biesanz of profits resulting from the allegedly improper stock
transactions; (iv) an order requiring the Company to obtain a new appraisal
for Imeson Center and to restate its 1994 fiscal year financial statements to
reflect the new appraisal; and (v) an order requiring the Company and Messrs.
Newton, Ross, Crook, Gardner, Brewer, and Schadt to pay civil penalties under
the Securities Enforcement Remedies and Penny Stock Performance Act of 1990.
In November 1995, Charles A. Ross, Douglas S. Gardner, George Crook, and J.
Theodore Biesanz entered into settlement agreements with the Securities and
Exchange Commission (SEC). The Company, in accordance with its indemnity
agreements, reimbursed the former officers and/or directors, excluding J.
Theodore Biesanz, $100,000 in penalties.
The Company filed a motion to dismiss the suit, or in the alternative, to
dismiss legal counsel for the SEC on the grounds of ethical misconduct. The
Company also filed a motion to stay discovery until its motion to dismiss
could be heard. The motion to stay discovery was granted. On September 3,
1997, the judge issued an order denying the ComPanies motion for dismissal,
thereby resuming discovery.
B. ASX Investment Corporation
On February 27, 1996, ASX Investment Corporation and Mr. Steve Rosner (ASX)
filed a Complaint in the United States District Court for the Middle District
of Florida, Civil Action No. 96-348-CIV-T-21E alleging that the Company's 1994
and 1995 Proxy Statements contained numerous misrepresentations, breach of
fiduciary duty, fraud, mismanagement and waste of corporate assets. On March
18, 1996, the Company filed a motion to dismiss the Complaint with prejudice
on the grounds that ASX had voluntarily dismissed two previous Complaints
containing the same allegations. This motion is still pending. No trial date
has been set.
On December 10, 1996, Steve Rosner filed a Complaint in the United States
District Court for the Middle District of Florida, Civil Action No. 96-2428-
CIV-T-25A alleging violations of Sections 10(b) and 20(a) of the Exchange Act
by misrepresenting the value of the property acquired from Sears. The Company
believes that this Complaint has no merit, was filed for the purpose of
coercing the Company to settle the litigation described in the preceding
paragraph, and is barred by statute of limitations. The Company has moved for
dismissal and filed a Rule 11 proceeding against Steve Rosner and his
attorneys demanding that the Company be reimbursed its costs of defending this
suit.
C. Kerry F. Marler
On June 10, 1994, the Company filed a complaint against Kerry F. Marler, in
the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough
County, Florida, Case No. 94-03995. The Company is seeking damages for breach
of fiduciary duty and breach of employment agreement and is seeking a
declaratory judgment that Marler's March 1, 1994 employment agreement and
incentive compensation agreement with the Company superseded any prior
agreements between the parties. Marler, a former employee, director, officer,
and consultant of the Company, is believed to have divulged confidential
corporate information to ASX Investment Corp., in violation of his fiduciary
and contractual obligations. The Company amended the Complaint on August 30,
1994 to join KFM Venture, Inc. and Amazing Systems, Inc., two corporations
wholly-owned by Marler. Marler filed a counterclaim against the Company on
September 11, 1995 alleging causes of action against the Company for breach of
contract, violation of the Whistleblower's Act, conversion, and violation of
Chapter 772, Florida Statutes. The Company believes that the amounts owed to
Marler are subject to offset for the damages caused by Marler to the Company
and that it has committed no action that would support an award of damages to
Marler. The Company has amended its complaint to seek recovery of fraudulent
transfers from Mr. Marler, his wife Peggy Marler, Amazing Systems, Inc. and
KFM Ventures, Inc. Trial is currently scheduled for the week of November 17,
1997.
D. John Sanford, et al.
On October 1, 1996, the Company filed a complaint in the United States
District Court for the Middle District of Florida, Case No. 96-1969-CIV-T-
23A, against John Sanford, Walter Carucci, Paul Koether and Nelson Obus
(collectively referred to as the "Sanford Group") for violation of Section 13D
of the Securities Exchange Act of 1934. On December 10, 1996, the Company
amended its complaint to add Channel partnership II, GP, as a defendant, also
part of the Sanford Group. Defendants Carucci and Sanford have answered the
complaint, denying all material allegations, and have asserted a counterclaim,
alleging that (i) the Company violated Delaware law by voting shares in
connection with the Company's consent solicitation subsequently obtained by
the Company upon its purchase of the Smith Group's common stock; (ii) the
Company violated Delaware law by denying Sanford and Carucci their right to
one vote for each share of Excal common stock they owned; and, (iii) the
Company violated Section 14A of the Securities Exchange Act of 1934 by
distributing a false and misleading proxy statement in connection with the
consent solicitation. As relief, Sanford and Carucci demand certain
declaratory relief by the Court, a directive by the Court for the Company to
rescind any amendments to its Certificate of Incorporation adopted as a result
of the consent solicitation, and costs and expenses related to the bringing of
its counterclaim. The Company believes that the counterclaim submitted by
Carucci and Sanford has no merit and filed a motion for dismissal. In
addition, the Company is seeking to amend its complaint to include violations
of Section 16(b) of the Securities Exchange Act of 1934 and a claim of
tortuous interference with a business relationship.
E. Channel Partnership II, GP
On November 8, 1996, Channel Partnership II, GP, filed a complaint in the
Delaware Court of Chancery in and for New Castle county, C.A. No. 15311-NC,
against the directors of the Company and the Company as a nominal defendant.
The complaint alleges that the directors of the Company breached their
fiduciary duty by authorizing the purchase of 641,272 shares of its common
stock from the Smith Group (the "Smith Group Transaction") and that the proxy
statement issued in connection with the consent solicitation is false and
misleading because it omits material information. The relief sought includes:
(i) a declaration that the proxy the Company received in connection with the
Smith Group Transaction is void and invalid; (ii) a declaration that the Smith
Group Transaction is void and invalid; (iii) an award to the Company of
damages resulting from the Smith Group Transaction and the consent
solicitation; (iv) a declaration voiding and rescinding any amendments to the
Company's Certificate of Incorporation as a result of the consent
solicitation; and, (v) an award to the plaintiff of costs and expenses. The
Company has filed a motion to dismiss the complaint. Channel filed its
response to the Company's motion to dismiss. To date, the Court has not ruled
on the motion to dismiss.
General
During fiscal 1994, the Company recorded various reserves for the above
referenced litigation matters. As of June 30, 1997, $586,480 of those reserves
were still outstanding, including the $350,000 reserve referenced in Note 12.
It is reasonably possible that a change in these estimates, which is not
determinable at this time, will occur in the near term.
Second Floor Space
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (the "Amendment") is made and entered into
effective as of January 1, 1997 (the "Effective Date") by and between IMESON
CENTER, INC., a Florida corporation formerly known as Jacksonville Center,
Inc. ("Landlord"), and LANEY & DUKE TERMINAL WAREHOUSE COMPANY, INC., a
Florida corporation ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into that certain Warehouse Space
Lease Agreement dated December 1, 1994 (the "Lease"), pursuant to which
Landlord leased to Tenant and Tenant leased from Landlord certain Leased
Premises (herein so called) consisting of approximately 198,144 square feet of
space designated as Sections 2.6 and 2.8 and constituting a portion of the
building (the "Building") included in the facility known as One Imeson Center
(the "Property"), located at One Imeson Park Boulevard, Building 100,
Jacksonville, Florida 32210;
WHEREAS, the Lease was subsequently modified to include in the Leased
Premises Section 2.3, 2.4, 2.5 and 2.7 of the Building;
WHEREAS, the Lease was further modified pursuant to the terms of that
certain Lease Renewal and Modification Agreement dated January 1, 1996 (the
"1996 Lease Amendment"), pursuant to which the term of the Lease was extended
and certain other terms and provisions of the Lease were modified;
WHEREAS, the 1996 Lease Amendment provided that during the period
commencing January 1, 1996 and terminating December 31, 1996, Tenant had the
right to lease the entirety of either or both of Sections 2.1 and 2.8 of the
Building (the "Additional Space") under the terms and conditions set forth
therein, and Tenant exercised its right (i) to Section 2.8 on January 15,
1996, and occupied Section 2.8 from that date through December 31, 1996, and
(ii) to Section 2.1 on March 1, 1996, and occupied Section 2.1 from that date
through December 31, 1996;
WHEREAS, on October 1, 1996, Tenant exercised its three (3) year renewal
option for the Leased Premises, as provided in Section 2.2 of the Lease, as
modified by the 1996 Lease Amendment, and as a result of Tenant's exercise of
such option right, the term of the Lease has been extended through December
31, 2000;
WHEREAS, Landlord and Tenant desire to further modify the Lease to
include within the Leased Premises for the balance of the term, as extended
through December 31, 2000, the Additional Space and to increase the Base Rent
and all additional rent and other amounts payable under the Lease
proportionately;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:
1. Recitals. The foregoing recitals are true and correct and are
hereby incorporated into the text of this Agreement.
2. Leased Premises. The Leased Premises shall, as of the Effective
Date, include the Additional Space, and as a result of such inclusion, consist
of approximately 795,568 square feet of space designated as Sections 2.1, 2.2,
2.3, 2.4, 2.5, 2.6, 2.7 and 2.8 in the Building, as depicted on Exhibit A
attached hereto and made a part hereof, and no other space in the Building,
and, as of the Effective Date, Landlord hereby leases and rents unto Tenant
and Tenant hereby hires and takes from Landlord such Leased Premises on the
terms and conditions set forth in the Lease, as previously amended and
modified and as amended and modified in this Amendment (all subsequent
references to the "Lease" shall be deemed to include all such amendments and
modifications). Notwithstanding the foregoing or any other provision of the
Lease, Landlord shall have the right, upon thirty (30) days' written notice to
Tenant, to terminate the Lease as to Section 2.8 in the Building only, and
within thirty (30) days of receipt of such termination notice, Tenant shall
vacate and surrender to Landlord Section 2.8 in accordance with Section 5.6 of
the Lease. In the event of Landlord's exercise of such termination option as
to Section 2.8 and Tenant's timely and proper vacation and surrender of
Section 2.8 and payment of all Base Rent and all additional rent and other
charges under the Lease applicable to Section 2.8 through the date of
termination, Base Rent and all additional rent and other charges payable under
the Lease shall be reduced proportionately based on the 99,446 square foot
area of Section 2.8.
3. Base Rent. The Lease is hereby amended and modified to provide that
Base Rent for the Leased Premises shall be, and Tenant covenants and agrees to
pay Base Rent for the Leased Premises equal to (i) $19,889.20 per month for
each and every month during that portion of the term commencing on January 1,
1997 and terminating on December 31, 1997, (ii) $23,204.07 per month for each
and every month during that portion of the term commencing on January 1, 1998
and terminating on December 31, 1998, (iii) $26,518.93 per month for each and
every month during that portion of the term commencing on January 1, 1999 and
terminating on December 31, 1999, and (iv) $29,833.80 per month for each and
every month during that portion of the term commencing on January 1, 2000 and
terminating on December 31, 2000. Each and every installment of Base Rent
shall be payable in advance on the first day of each calendar month in lawful
United States currency, together with any and all sales or use taxes levied
upon the use or occupancy of the Leased Premises or the rent payable therefor
and any additional rent and/or other charges payable under the Lease.
4. Operating Expenses. Section 3.3 of the Lease is hereby amended to
provide that, as of the Effective Date, Tenant's proportionate share of
Operating Expenses shall be 46.39 percent (795,568 divided by 1,715,000).
5. Definitions. All capitalized terms in the Amendment shall have the
same definitions as provided in the Lease except as may otherwise be provided
herein.
6. No Further Amendment. Except as specifically set forth in the
Amendment, the Lease shall remain unaltered and in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as
of the date set forth above.
Witnesses: LANDLORD:
IMESON CENTER, INC., a Florida corporation
formerly known as Jacksonville Center, Inc.
/S/ DALE GLANTON By:/S/ W. ARIS NEWTON
Name:Dale Glanton Name:W. Aris Newton
Title:President
/S/ W. CAREY WEBB
Name: W. Carey Webb Date of Execution: 12/16/96
TENANT:
LANEY & DUKE TERMINAL WAREHOUSE COMPANY,
INC., a Florida corporation
/S/ CONSTANCE H. OWENS By:/S/ THOMAS A. DUKE
Name:Constance H. Owens Name:Thomas A. Duke
Title:President
/S/ KIMBERLY A ACUFF
Name:Kimberly A. Acuff Date of Execution: 12/14/96
Second Floor Space
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (the "Amendment") is made and entered into
effective as of March 1, 1997 (the "Effective Date") by and between IMESON
CENTER, INC., a Florida corporation formerly known as Jacksonville Center,
Inc. ("Landlord"), and LANEY & DUKE TERMINAL WAREHOUSE COMPANY, INC., a
Florida corporation ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into that certain Warehouse Space
Lease Agreement dated December 1, 1994 (the "Lease"), pursuant to which
Landlord leased to Tenant and Tenant leased from Landlord certain Leased
Premises (herein so called) consisting of approximately 198,144 square feet of
space designated as Sections 2.6 and 2.8 and constituting a portion of the
building (the "Building") included in the facility known as One Imeson Center
(the "Property"), located at One Imeson Park Boulevard, Building 100,
Jacksonville, Florida 32210;
WHEREAS, the Lease was subsequently modified to include in the Leased
Premises Section 2.3, 2.4, 2.5 and 2.7 of the Building;
WHEREAS, the Lease was further modified (i) pursuant to the terms of that
certain Lease Renewal and Modification Agreement dated January 1, 1996 (the
"1996 Lease Amendment"), and (ii) pursuant to the terms of that certain
Amendment to Lease dated January 1, 1997 (the "January, 1997 Lease
Amendment");
WHEREAS, the 1996 Lease Amendment provided that during the period
commencing January 1, 1996 and terminating December 31, 1996, Tenant had the
right to lease the entirety of either or both of Sections 2.1 and 2.8 of the
Building (the "Additional Space") under the terms and conditions set forth
therein, and Tenant exercised its right (i) to Section 2.8 on January 15,
1996, and occupied Section 2.8 from that date through December 31, 1996, and
(ii) to Section 2.1 on March 1, 1996, and occupied Section 2.1 from that date
through December 31, 1996;
WHEREAS, on October 1, 1996, Tenant exercised its three (3) year renewal
option for the Leased Premises, as provided in Section 2.2 of the Lease, as
modified by the 1996 Lease Amendment, and as a result of Tenant's exercise of
such option right, the term of the Lease has been extended through December
31, 2000;
WHEREAS, the January, 1997 Lease Amendment provides that Landlord has the
right to terminate the Lease as to Section 2.8 in the Building only, upon
thirty (30) days' written notice (the "Termination Notice"), and Landlord has
delivered the Termination Notice to Tenant to terminate the Lease as to
Section 2.8 in the Building only, effective as of March 31, 1997;
WHEREAS, Landlord and Tenant desire to further modify the Lease to
reflect such termination;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:
1. Recitals. The foregoing recitals are true and correct and are
hereby incorporated into the text of this Agreement.
2. Leased Premises. The Leased Premises shall, as of April 1, 1997 as
a result of the termination of the Lease as to Section 2.8, consist of
approximately 696,122 square feet of space designated as Sections 2.1, 2.2,
2.3, 2.4, 2.5, 2.6, and 2.7 in the Building, as depicted on Exhibit A attached
hereto and made a part hereof, and no other space in the Building.
3. Base Rent. Effective as of April 1, 1997, the Lease is hereby
amended and modified to provide that Base Rent for the Leased Premises shall
be, and Tenant covenants and agrees to pay Base Rent for the Leased Premises
equal to (i) $17,403.05 per month for each and every month during that portion
of the term commencing on April 1, 1997 and terminating on December 31, 1997,
(ii) $20,303.56 per month for each and every month during that portion of the
term commencing on January 1, 1998 and terminating on December 31, 1998, (iii)
$23,204.06 per month for each and every month during that portion of the term
commencing on January 1, 1999 and terminating on December 31, 1999, and (iv)
$26,104.58 per month for each and every month during that portion of the term
commencing on January 1, 2000 and terminating on December 31, 2000. Each and
every installment of Base Rent shall be payable in advance on the first day of
each calendar month in lawful United States currency, together with any and
all sales or use taxes levied upon the use or occupancy of the Leased Premises
or the rent payable therefor and any additional rent and/or other charges
payable under the Lease.
4. Operating Expenses. Effective as of April 1, 1997 Section 3.3 of
the Lease is hereby amended to provide that, as of the Effective Date,
Tenant's proportionate share of Operating Expenses shall be 40.59 percent
(696,122 divided by 1,715,000).
5. Revocable License. Notwithstanding Landlord's termination of the
Lease as to Section 2.8, Landlord hereby grants to Tenant a license (the
"License") to use such portions of Section 2.8 as from time to time are not
occupied or otherwise committed to other tenants of the Building or required
for Landlord's purposes in Landlord's sole and unrestricted discretion (the
"Available Area"). The Available Area, as of April 1, 1997, shall consist of
approximately 40,000 square feet of space as depicted on Exhibit B attached
hereto and made a part hereof. The License shall be revocable immediately
upon written notice to Tenant, and upon receipt of such revocation notice,
Tenant shall (i) under no circumstances enter into the Available Area during
the normal business hours of any tenant leasing office space adjacent to or
below the Available Area without Landlord's prior approval, and (ii) take all
measures necessary to vacate the Available Area during such hours as Landlord
may prescribe and surrender possession of the Available Area within thirty
(30) days. In connection with Tenant's occupancy of the Available Area,
Tenant shall comply with all provisions of the Sections 3.5, 3.6, 3.7, 4.1,
4.2, 4.4, 4.5, 4.6, 4.8, 5.2, 5.4, 5.5, 5.6, 9.1, 9.2, 9.3, 9.4 and 10.1, all
of which shall apply to the License notwithstanding the termination of the
Lease as to Section 2.8. Tenant further agrees to conduct its operations in
the Available Area in such a manner as to prevent any and all noise and
vibrations from disrupting or otherwise affecting any other tenants in the
Building. Tenant specifically acknowledges that Landlord is, as of the
Effective Date, negotiating to lease approximately 50,000 square feet of space
in Section 2.8 (the "Occupied Space") to an office tenant that will require
that the Occupied Space be completely free from noise and vibration, and
Tenant shall take all measures necessary in the Available Area to ensure
Tenant's compliance with such requirements. In an attempt to comply with such
requirements and after Landlord's and Tenant's joint inspection of the
Occupied Space and the Available Area, Tenant shall immediately take the
following measures in the Available Area, although Landlord makes no
assurances that such measures will be adequate to ensure compliance: (i)
pneumatic or soft tires shall be used on all vehicles operating in the
Available Area; (ii) racks shall be placed over the existing expansion joints
to eliminate vehicle crossing; and (iii) Tenant shall use its best efforts to
avoid entering the Available Area during the normal working hours of any
tenant leasing office space adjacent to or below the Available Area. Tenant
acknowledges that in no event shall the License be construed as creating a
tenancy of any nature whatsoever or any other possessory rights. Tenant
hereby agrees to indemnify Landlord and hold Landlord harmless from and
against any and all loss, cost, claim, liability or damage in connection with
the License, including without limitation all attorneys' fees and costs
through all appellate levels and proceedings.
6. Definitions. All capitalized terms in the Amendment shall have the
same definitions as provided in the Lease except as may otherwise be provided
herein.
7. No Further Amendment. Except as specifically set forth in the
Amendment, the Lease shall remain unaltered and in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as
of the date set forth above.
Witnesses: LANDLORD:
IMESON CENTER, INC., a Florida corporation
formerly known as Jacksonville Center, Inc.
/S/ W. CAREY WEBB By:/S/ W. ARIS NEWTON
Name: W. Carey Webb Name:W. Aris Newton
Title:President
/S/ TIMOTHY R. BARNES
Name: Timothy R. Barnes Date of Execution: 5/23/97
TENANT:
LANEY & DUKE TERMINAL WAREHOUSE COMPANY,
INC., a Florida corporation
/S/ CONSTANCE H. OWENS By:/S/ THOMAS A. DUKE
Name:Constance H. Owens Name:Thomas A. Duke
Title:President
/S/ J. SHEA BULLARD
Name:J. Shea Bullard Date of Execution: 5/5/97
EXHIBIT A
Graphical depiction of Sections of building leased on the second floor
effective with this amendment.
EXHIBIT B
Graphical depiction of the portion of Section 2.8 for which Tenant was
granted a license for use.
OFFICE LEASE
Between
IMESON CENTER, INC.,
Landlord,
and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
Tenant
TABLE OF CONTENTS
1. Lease of Premises 1
2. Definitions 2
3. Base Rent 8
4. Additional Rent 8
5. Use of Premises; Quiet Enjoyment 11
6. Landlord's Work, Delivery of Possession, and Tenant Allowance. 11
7. Services 13
8. Condition and Care of Premises; Landlord's and Tenant's Maintenance
Obligations. 15
9. Surrender of Premises 17
10. Holding Over 18
11. Rules and Regulations 18
12. Rights Reserved to Landlord 18
13. Alterations 19
14. Assignment and Subletting 20
15. Waiver of Certain Claims; Indemnity by Tenant and Landlord 22
16. Damage or Destruction by Casualty 23
17. Eminent Domain 25
18. Default; Rights and Remedies 25
19. Subordination. 29
20. Mortgagee Protection 30
21. Insurance and Subrogation 30
22. Nonwaiver. 32
23. Estoppel Certificate 32
24. Corporate Authority 32
25. Real Estate Brokers 33
26. Notices 33
27. Miscellaneous 33
28. Landlord 34
29. Title and Covenant Against Liens 35
30. Signage 35
31. Exculpatory Provisions 35
32. Hazardous Substances 35
33. Radon Gas 36
34. Access 36
35. Satellite Antennas Receiving Dish 37
Exhibit A Premises
Exhibit A-1 Site Plan Showing Tenant's Parking Area
Exhibit B Rules and Regulations
Exhibit C Annual and Monthly Base Rent
Exhibit C-1 Monthly Base Rent for Space on Each Floor of the Premises
Exhibit D Legal Description of the Land
OFFICE LEASE
THIS OFFICE LEASE (the "Lease"), made effective as of May 15, 1997 (the
"Effective Date"), by and between IMESON CENTER, INC., a Florida corporation
("Landlord"), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation ("Tenant").
WITNESSETH:
1. Lease of Premises; Option to Extend Term.
2.
(a) Premises; Term. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, the premises as outlined on the floor plan attached
hereto as Exhibit A (herein called "Premises") on the mezzanine level and
second floor of the office building located at One Imeson Park Boulevard,
Jacksonville, Florida, and known as One Imeson Center (herein called
"Building"), for a term (herein called "Initial Term") commencing on the
Effective Date (herein also called "Commencement Date") and expiring on the
date (herein called the "Expiration Date") that is one (1) day prior to the
second anniversary of the Entire Premises Rent Commencement Date (as
hereinafter defined), unless sooner terminated as provided herein, paying as
rent therefor the sums hereinafter provided, without any setoff, abatement,
counterclaim or deduction whatsoever except as specifically provided herein.
Landlord and Tenant shall execute a document verifying the Floor Commencement
Date (as hereinafter defined) for the space located on each floor of the
Premises and the Entire Premises Rent Commencement Date. During the Term (as
defined in subparagraph (b) below), Tenant shall also have the exclusive right
to use up to 1,000 standard parking spaces within the area labeled "Tenant's
Parking Area" on the site plan attached hereto as Exhibit A-1; provided,
however, that Landlord reserves the right to restripe and/or reconfigure (but
not relocate) Tenant's Parking Area from time to time so long as Tenant's
Parking Area at all times includes no less than 1,000 standard parking spaces
and that any such restriping or reconfiguration does not unduly inconvenience
Tenant and Tenant's employees, contractors and invitees or materially and
adversely affect Tenant's business. For purposes of this Section, "standard
parking spaces" shall mean parking spaces sufficiently large to meet the
requirements of applicable code, including a sufficient number of handicap
spaces to meet the requirements of applicable code.
(b) Tenant's Option to Extend the Term. Provided that Tenant is not in
default of any term, condition or covenant contained in this Lease beyond any
applicable grace or cure period at the time of exercise of the option to
extend the Term, Tenant shall have the option of renewing the term of this
Lease for one (1) additional period of either four (4) Lease Years or six (6)
months (the "Renewal Term") on the same terms and conditions as provided
herein. The Annual Base Rent and Monthly Base Rent for the Renewal Term shall
be as provided on Exhibit C attached hereto and made a part hereof. (The
Initial Term and the Renewal Term, if Tenant's renewal option is properly and
timely exercised, are together referred to herein as the "Term.") Notice of
the exercise of such option (the "Exercise Notice") shall be given by Tenant
to Landlord in writing not later than two hundred seventy (270) days prior to
the expiration of the Initial Term. The Exercise Notice shall specify whether
Tenant has elected the renewal period of four (4) Lease Years or the renewal
period of six (6) months. Upon exercise of the renewal option, whether it be
for the period of four (4) Lease Years or for the period of six (6) months,
Tenant shall have no further renewal options or term extension rights. In the
event that Tenant shall fail to give timely and proper written notice of its
intent to exercise such option, Tenant shall be deemed irrevocably to have
waived any right to extend the Term. In the event that Tenant shall timely
and properly deliver the Exercise Notice but, at the time of Landlord's
receipt of the Exercise Notice, Tenant is in default of any of the terms,
conditions or covenants in the Lease beyond any applicable grace or cure
period and as a result of such default Landlord has not already terminated
this Lease or Tenant's right to occupy the Premises and Landlord desires to
contest Tenant's right to exercise its option for the Renewal Term, Landlord
shall deliver written notice of such contest ("Landlord's Contest Notice") to
Tenant within ten (10) days of Landlord's receipt of the Exercise Notice
identifying such uncured default(s), and Tenant shall have ten (10) days from
the receipt of Landlord's Contest Notice (the "Additional Cure Period") to
cure such default(s), failing which Tenant's Exercise Notice shall be rendered
null and void and of no force or effect. During the Additional Cure Period,
Landlord shall not terminate this Lease or terminate Tenant's right to occupy
the Premises, but Landlord shall have all other rights and remedies under this
Lease or otherwise available to Landlord at law or in equity. No failure or
election by Landlord to contest Tenant's Exercise Notice shall be deemed to be
a waiver of any rights or remedies that Landlord may have with respect to any
default by Tenant under this Lease.
2. Definitions. As used in this Lease:
(a) "Annual Base Rent" shall mean such amounts as are listed on Exhibit
C attached hereto and made a part hereof.
(b) "Monthly Base Rent" shall mean such amounts as are listed on Exhibit
C attached hereto and made a part hereof.
(c) "Permitted Use" shall mean general office uses, including, but not
limited to, a call center for customer service, billing and claims service and
for such other related uses as are necessary or reasonably desirable to
conduct Tenant's business.
(d) "Brokers" shall mean Phoenix Realty Group, Inc., as Landlord's
agent, and LaSalle Partners Asset Management Limited, Heitman Financial Ltd.
and McCoy Realty Group, as Tenant's agents.
(e) "Initial Monthly Estimate" shall mean Thirteen Thousand Eight
Hundred Ninety-Nine and 80/100 Dollars ($13,899.80), which amount is equal to
the Rentable Area of the Premises multiplied by $.10.
(f) "Rentable Area of the Building" shall mean the sum of the rentable
areas on all floors of the Building computed by measuring to the center line
of the exterior wall on each entire floor, excluding all common and public
areas in the Building and without allowance for any so-called "loss factor".
No deduction shall be made for Building columns or projections. Rentable Area
of the Building shall be deemed to be 1,608,649 square feet; provided,
however, that either party may elect, at its sole cost and expense, to have
the Building measured, in accordance with the foregoing standards and within
sixty (60) days of the Effective Date, by a duly licensed architect reasonably
acceptable to the Landlord and approved in writing by the other party, and the
result of such measurement shall, if different from the foregoing figure, be
deemed to be the Rentable Area of the Building.
(g) "Rentable Area of the Premises" shall mean (A) as to any portion of
the Premises consisting of an entire floor, the area of the entire floor
measured to the center line of the exterior walls; and (B) as to any portion
of the Premises consisting of less than an entire floor, the area measured
from the center line of the exterior wall to the center line of all demising
partitions and to the outside face of corridor partitions. No deduction shall
be made for Building columns or projections, and no allowance shall be made
for any so-called "loss factor". Rentable Area of the Premises shall be
deemed to be 90,026 square feet of space on the mezzanine level and 48,972
square feet on the second floor for a total of 138,998 square feet.
(h) "Rentable Area of the Building Office Space" shall mean the rentable
area of all space in the Building which is or has been leased for office space
measured in accordance with the measurement standards for the Rentable Area of
the Premises. As of the Effective Date, the Rentable Area of the Building
Office Space shall be deemed to be 231,338 square feet and consists of the
Premises and 92,340 square feet of space on the first floor of the Building.
(i) "Tenant's Proportionate Share" shall mean eight and sixty-four
hundredths percent (8.64%), which is the Rentable Area of the Premises divided
by the Rentable Area of the Building; provided, however, that (i) with respect
to such Expenses that apply only to the office space within the Building,
"Tenant's Proportionate Share" shall mean sixty and eight-one hundredths
percent (60.08%), which is the Rentable Area of the Premises divided by the
Rentable Area of the Building Office Space, (ii) with respect to such Expenses
that apply only to the Premises (including, without limitation, air handler
unit maintenance costs, if such air handler unit(s) serve only the Premises,
and, so long as Tenant is the only tenant using the elevators and escalators
serving the office space in the Building, all office area elevator and
escalator maintenance costs), "Tenant's Proportionate Share" shall mean one
hundred percent (100%), provided that if any other tenant of the Building
enjoys the benefit of the elevators and escalators serving the office space in
the Building, Tenant's Proportionate Share of such expenses shall be
determined by dividing the Rentable Area of the Premises by the sum of the
rentable area of the Premises and the rentable area of such other office space
tenant space benefiting from the elevators and the escalators, and (iii) with
respect to Expenses that apply to the parking areas of the Project, "Tenant's
Proportionate Share" shall mean fifty percent (50%), which is the number of
parking spaces to which Tenant is entitled within Tenant's Parking Area (i.e.,
1,000) divided by the approximate total number of parking spaces in the
Project (i.e., 2,000). As of the Effective Date, chiller unit maintenance
costs (including without limitation costs of the maintenance contract for the
chiller units, the contract for the chemicals to treat the water used in the
chiller units and an equitable allocation of the salary and benefits of the on-
site employees who operate and maintain the chiller units) and lobby
maintenance costs are the only budgeted costs that apply only to the office
space in the Building, but Tenant acknowledges and agrees that other costs for
items which are Expenses and which apply to the office space may from time to
time also apply only to such space. Landlord shall be entitled to make
reasonable allocations of Taxes between the office space portion of the
Building and the warehouse space portion of the Building based on information
received from the Duval County Property Appraiser's office (the "Appraiser").
In the event that the Appraiser separately values the Land, the office space
portion of the Building and the warehouse space portion of the Building,
Tenant's Proportionate Share of Taxes shall equal sixty and eight-one
hundredths percent (60.08%) of the Taxes allocable to the office space portion
of the Building plus an equitable portion of the Taxes allocable to the Land
based on the Rentable Area of the Premises and the area of Tenant's Parking
Area. Unless and until the Appraiser makes such separate valuations, Tenant's
Proportionate Share of Taxes shall be eight and sixty-four hundredths percent
(8.64%). Tenant's Proportionate Share shall be recalculated in accordance
with the formulas set forth above in the event that, at any time during the
Term, the Rentable Area of the Premises, the Rentable Area of the Building or
the Rentable Area of the Building Office Space shall change and/or any space
leased for warehouse purposes as of the Effective Date is relet for office
purposes.
(j) "Adjustment Date" shall mean July 1, 1997 and every anniversary
thereof during the Term.
(k) "Adjustment Year" shall mean each annual period or portion thereof
during the Term commencing on July 1 and terminating on June 30 of the next
succeeding calendar year.
(l) "Expenses" shall mean those costs and expenses incurred by Landlord
in accordance with generally accepted accounting principles for operating,
managing, maintaining, insuring, redecorating, and repairing the Building, the
land owned by Landlord upon which the Building stands and serving the Building
(herein called the "Land," as described on Exhibit D attached hereto and made
a part hereof) and the personal property used in conjunction therewith (said
Building, Land and personalty herein collectively called the "Project"),
including without limitation the cost of maintaining and monitoring fire
alarm, smoke detector and related security devices and systems, snow and ice
and trash removal, cleaning and sweeping, planting and replacing decorations,
flowers and landscaping, maintenance, repair and replacement of utility
systems, sprinkler system repair and maintenance, electricity, steam, water,
sewers, refuse collection, fuel, heating, lighting, air conditioning, window
cleaning, janitorial service for the common areas of the Building, insurance
(including but not limited to, fire, extended coverage, all risk, liability,
worker's compensation, rent loss, or any other insurance carried by the
Landlord and applicable to the Project), painting, uniforms, supplies,
sundries, sales or use taxes on supplies or services, cost of wages and sala
ries of all persons engaged in the operation, maintenance and repair of the
Project, and so-called fringe benefits (including social security taxes,
unemployment insurance taxes, cost for providing coverage for disability
benefits, cost of any pensions, hospitalization, welfare or retirement plans,
or any other similar or like expenses incurred under the provisions of any
collective bargaining agreement, or any other cost or expense which Landlord
pays or incurs to provide benefits for employees below the grade of building
manager so engaged in the operation, maintenance and repair of the Project to
be charged proportionately in accordance with the time such employees spend on
the Project), the charges of any independent contractor who, under contract
with the Landlord or its representatives, does any of the work of operating,
managing, maintaining, insuring, redecorating or repairing of the Project,
legal and accounting expenses (including, but not limited to, such reasonable
expenses as relate to seeking or obtaining reductions in and refunds of real
estate taxes) or any other expense or charge, whether or not hereinbefore
mentioned, which, in accordance with generally accepted accounting and
management principles, would be considered as an expense of operating,
maintaining or repairing the Project. Landlord shall use good faith efforts
to obtain materials and services included in Expenses at reasonable and
competitive prices and rates.
The following items shall be excluded from Expenses:
(i) Costs incurred in connection with the original construction of
the Building;
(ii) Costs of Landlord's Work (as defined in Section 6), costs of
alterations or improvements to the premises of other tenants or occupants of
the Building or vacant leasable space in the Building, except as required by a
governmental agency and for the health and welfare of occupants of the
Building or otherwise provided in this Lease. In such a case, the alterations
or improvements will be amortized over their useful life and passed through to
tenants annually;
(iii) Except as provided in paragraph (A) below, capital
expenditures, depreciation and amortization of the Building or the equipment
serving the Building;
(iv) Interest and principal payments, points and other costs in
obtaining or servicing mortgages and other debt costs, if any;
(v) Legal fees, space planners' fees, real estate brokers' leasing
commissions, advertising expenses and any other costs incurred in connection
with the leasing of the Project;
(vi) Costs for which Landlord is reimbursed by its insurance carrier, any
tenant's carrier, any tenant, any warrantor or other third party (Landlord
shall diligently and in good faith pursue all insurance, breach of warranty or
other claims which might result in a reduction in Expenses payable by Tenant);
(vii) Any bad debt loss, rent loss, reserves for bad debts or rent
loss or legal fees incurred in collecting rent from other Building tenants;
(viii) The expense of additional services provided to other tenants in
the Building and other benefits which are not provided to Tenant, but which
are provided to another tenant or occupant of the Building;
(ix) The wages of any employee, except to the extent such wages are
attributable to time spent by such employee in servicing and/or managing the
Project;
(x) Amounts paid as ground rental by Landlord, if any;
(xi) Fees for services rendered to the Project by entities controlled by,
controlling or under common control with Landlord to the extent such fees
exceed the market rate payable for such services if rendered by unrelated
third parties;
(xii) Costs of repairs or replacements caused by the exercise of any
condemnation rights by any public or quasi-public authority to the extent that
Landlord receives compensation for same from the condemning authority;
(xiii) Any charge for Taxes and Landlord's income taxes, excess profit
taxes, franchise taxes or other taxes on Landlord's business or income (other
than sales and use taxes);
(xiv) Any rent paid for Landlord's on-site management or leasing
office, or any other offices or spaces of Landlord or any related entity;
(xv) Costs and expenses of water, sewer, electricity and gas for tenant
space (whether leased or leasable) in the Building;
(xvi) The costs associated with any concession granted to other
tenants in the Building (such as moving expenses, lease assumptions, etc.);
(xvii) Legal fees incurred in disputes with tenants or in connection
with the sale, financing or leasing of the Building or with respect to any
bankruptcy proceedings involving Landlord or any tenant;
(xviii) All payments, debt service, costs and expenses directly related
to the sale or financing of the Building;
(xix) The cost of any work performed preparing a tenant's space for
occupancy, including painting and decorating such space, or services provided
(such as separately metered electricity) for any tenant (including Tenant) at
such tenant's cost or provided by Landlord without charge as an inducement to
lease (such as free rent or improvement allowance);
(xx) The cost of installing, operating and maintaining any specialty
service, such as a retail store, sandwich shop, sundry shop, newsstand, or
concession;
(xxi) The cost of any repairs, alterations, additions, changes,
replacements and the like which under generally accepted accounting principles
are properly classified as capital expenditures, except in the case as
required by a governmental agency and for the health and welfare of occupants
of the Building. In such a case, the alterations or improvements will be
amortized over their useful life and passed through to tenants annually;
(xxii) Legal costs (including settlement or other payments) related to
disputes with contractors hired directly by Landlord, except regarding the
contesting of Taxes;
(xxiii) Costs related to the leasing or purchase of art, except to the
extent such costs are consistent with standards maintained in comparable
office buildings;
(xxiv) Costs, including all general overhead expenses, incurred by
Landlord in the operation of the business of the legal entity that constitutes
the Landlord to the extent that the same is separate and apart from the
operation of the Building;
(xxv) Costs arising from the presence within the Building or the
Project of hazardous materials;
(xxvi) Charitable or political contributions made by Landlord;
(xxvii) Costs and expenses for janitorial service for the Building,
including the Premises and all leasable areas, except for janitorial service
with respect to the common areas;
(xxviii) Interest or penalties resulting from late payments by Landlord;
(xxix) Management fees; and
(xxx) Costs of bringing the Land and the Building into
compliance with the requirements of applicable statutes, laws, ordinances,
codes and governmental rules and regulations to the extent the Land and the
Building are not in compliance on the Effective Date regardless of whether the
parties are aware of such noncompliance on the Effective Date.
Notwithstanding anything contained in the above definition of Expenses to
the contrary:
(A) The cost of any capital improvements to the Building made after the
date of this Lease which reduce Expenses, amortized over such reasonable
period as Landlord shall determine, shall be included in the Expenses,
provided that the amortized amount included in Expenses is less than the
actual reduction in Expenses resulting from the capital improvement.
(B) If any item of Expenses, though paid or incurred in one Lease Year,
relates to more than one calendar year, at the option of Landlord such item
may be proportionately allocated among such related Lease Years.
(m) "Taxes" shall mean real estate taxes, assessments (whether they be
general or special), sewer rents, rates and charges, transit taxes, taxes
based upon leases or the receipt of rent (other than sales and use taxes
payable on rental), and any other federal, state or local governmental charge,
general, special, ordinary or extraordinary (but not including income or
franchise, capital stock, succession, transfer, gift, estate or inheritance
taxes or any other taxes imposed upon or measured by the Landlord's income or
profits, except for sales and use taxes as provided herein), which may now or
hereafter be levied, assessed or imposed against the Land or the Building.
Taxes shall be determined by taking into account the maximum possible discount
for early payment of Taxes other than special assessments, which discount, as
of the Effective Date, is four percent (4%). The Building and the Land are
herein collectively called the "Real Property."
Notwithstanding anything contained in the above definition of Taxes to
the contrary:
(i) If at any time the method of taxation then prevailing shall be
altered so that any new or additional tax, assessment, levy, imposition or
charge or any part thereof shall be imposed upon Landlord in place or partly
in place of any Taxes or contemplated increase therein, or in addition to
Taxes, and shall be measured by or be based in whole or in part upon the Real
Property, the rents or other income therefrom (but not including income or
franchise taxes or any other taxes imposed upon or measured by the Landlord's
income or profits or any leases of any part thereof), then all such new taxes,
assessments, levies, impositions or charges or part thereof, to the extent
that they are so measured or based, shall be included in Taxes levied,
assessed or imposed against the Real Property to the extent that such items
would be payable if the Real Property were the only property of Landlord
subject thereto and the income received by Landlord from the Real Property
were the only income of Landlord.
(ii) Notwithstanding the year for which any such taxes or assessments are
levied, (1) in the case of special taxes or assessments which may be payable
in installments, the amount of each installment, plus any interest payable
thereon, paid during an Adjustment Year shall be included in Taxes for that
year and (2) if any taxes or assessments payable during an Adjustment Year
shall be computed with respect to a period in excess of twelve calendar
months, then taxes or assessments applicable to the excess period shall not be
included in Taxes for that year. Except as provided in the preceding
sentence, all references to Taxes "for" a particular Adjustment Year shall be
deemed to refer to Taxes levied, assessed or otherwise imposed during such
Adjustment Year without regard to when such Taxes are payable.
(iii) Taxes shall also include any personal property taxes (attrib
utable to the Adjustment Year in which paid) imposed upon the furniture,
fixtures, machinery, equipment, apparatus, systems or appurtenances used in
connection with the Real Property or the operation thereof, but excluding any
personal property taxes with respect to personal property owned by any tenant.
(iv) Landlord shall furnish Tenant with a copy of the tax assessment
notice for each Adjustment Year.
(n) "Lease Year" shall mean, subject to the proviso in the last sentence
of this paragraph, each of the two (2) one-year (twelve calendar months)
periods of the Initial Term and, in the event that Tenant exercises a renewal
option in accordance with Section 1(b), the four (4) one-year periods of the
Renewal Term of the Lease (or, in the event that Tenant properly exercises the
six [6] month renewal option, said six [6] month period shall be deemed to be
one-half [1/2] of a Lease Year); provided, however, that the first Lease Year
shall be that period which commences on the Commencement Date and ends on the
date which is one day prior to the one year anniversary of the Entire Premises
Rent Commencement Date (as hereinafter defined).
(o) "Plans" shall mean the plans and specifications in connection with
Tenant's improvement of the Premises prepared by Tenant's architect described
on Exhibit E attached hereto and made a part hereof.
(p) "Floor Commencement Date" with respect to each of the mezzanine
level space of the Premises and the second floor space of the Premises shall
occur on the date that is the first to occur of (a) substantial completion of
Tenant's improvements such that the applicable floor Premises may be used for
the Permitted Use, (b) Tenant's occupancy of the applicable floor or any
portion thereof for the purpose of conducting its business in accordance with
the Permitted Use, or (c) the one hundred twentieth (120th) day following the
Effective Date subject to any force majeure delays. For purposes of the
foregoing, Tenant shall be deemed to have occupied the entire mezzanine level
space of the Premises for the purpose of conducting its business in accordance
with the Permitted Use on the date on which Tenant commences moving personal
property into such space, and Tenant shall be deemed to have occupied the
entire second floor space of the Premises for the purpose of conducting its
business in accordance with the Permitted Use on the date on which Tenant
commences moving personal property into such space.
(q) "Entire Premises Rent Commencement Date" shall mean the earliest
date on which the Floor Commencement Date for the mezzanine level space of the
Premises and the Floor Commencement Date for the second floor space of the
Premises has occurred.
3. Base Rent.
(a) Tenant shall pay, commencing on the Entire Premises Commencement
Date, the Annual Base Rent, as set forth in Exhibit C, to Landlord for the
Premises, payable in equal monthly installments in the amount of the Monthly
Base Rent in advance on the first day of the Term and on the first day of each
calendar month thereafter of the Term. If the Term shall begin on any date
except the first day of a calendar month, or shall end on any day except the
last day of a calendar month, then Monthly Base Rent for any such partial
calendar month within the Term shall be prorated based on a 30-day month.
(b) Base Rent, Additional Rent (as hereinafter defined), Tax and Expense
Estimate (as hereinafter defined) and all other amounts becoming due from
Tenant to Landlord hereunder (herein collectively called the "Rent") shall be
paid in lawful money of the United States to Landlord at the office of
Landlord at 100 North Tampa Street, Suite 3575, Tampa, Florida 33602, or as
otherwise designated from time to time by written notice from Landlord to
Tenant. The payment of Rent hereunder is independent of each and every other
covenant and agreement contained in this Lease, except as specifically
provided herein. Tenant shall pay all applicable sales and use taxes on each
installment or payment of Rent at the time payment is made.
(c) Notwithstanding anything in this Lease to the contrary, from the
first to occur of the Floor Commencement Date for the mezzanine level space of
the Premises or the Floor Commencement Date for the second floor space of the
Premises until the Entire Premises Commencement Date, Tenant shall pay for
either the mezzanine level space of the Premises or the second floor space of
the Premises for which the Floor Commencement Date has occurred, as the case
may be, Base Rent as specified on Exhibit C-1 attached hereto and made a part
hereof and Additional Rent (as hereinafter defined) during such period
prorated based on the proportion of the rentable area of the mezzanine level
space in the Premises (i.e., 90,026 square feet) or the rentable area of the
second floor space in the Premises (i.e., 48,972 square feet), as applicable,
to the rentable area of the Premises (i.e., 138,998 square feet)
4. Additional Rent. In addition to paying the Base Rent specified in
Section 3 hereof, Tenant shall pay to Landlord as additional rent the amounts
(herein collectively called "Additional Rent") determined to be the Tax
Adjustment and Expense Adjustment (both as hereinafter defined) in accordance
with this Section 4:
(a) Computation of Additional Rent. Tenant shall pay as Additional Rent
for each Adjustment Year the following amounts:
(i) Tenant's Proportionate Share of Taxes for such Adjustment Year
(herein called the "Tax Adjustment"); plus
(ii) Tenant's Proportionate Share of Expenses for such Adjustment Year
(herein called the "Expense Adjustment").
(iii) Utilities charges billed to Tenant by Landlord pursuant to
Section 7(b).
(iv) A management fee to Landlord equal to five percent (5%) of all Rent,
inclusive of all amounts included within the immediately preceding subsections
(i), (ii) and (iii) (the "Management Fee").
(v) Notwithstanding anything in this Lease to the contrary, in no event
shall the total of the Expense Adjustment, Tax Adjustment and Management Fee
(including estimated payments) exceed the following amounts on an annual basis
(the "Annual Cap"):
Annual Cap per square
Lease foot of Rentable Area Total Annual
Year of the Premises Cap Amount
1 $ 1.86 $ 258,536.28
2 $ 1.96 $ 272,436.08
3 $ 2.06 $ 286,335.88
4 $ 2.16 $ 300,235.68
5 $ 2.26 $ 314,135.48
6 $ 2.36 $ 328,035.28
Notwithstanding the foregoing, in the event that the First Lease Year is
longer than three hundred sixty-five (365) days, the Annual Cap for the First
Lease Year shall be proportionately increased on a per diem basis. The Annual
Cap shall not apply to any and all amounts billed to Tenant by Landlord
pursuant to Section 7(b).
(b) Payments of Additional Rent; Tax and Expense Estimate; Projections.
Tenant shall pay Additional Rent to Landlord in the manner hereinafter
provided.
(i) Tax Adjustment and Expense Adjustment. The aggregate of payments
required to be made by Tenant on account of Tax Adjustment and Expense
Adjustment for any Adjustment Year until the actual Tax Adjustment and Expense
Adjustment for such Adjustment Year are determined is herein called "Tax and
Expense Estimate".
(ii) Landlord may, at any time and from time to time prior to each
Adjustment Date and from time to time during or after the Adjustment Year in
which such Adjustment Date falls, deliver to Tenant a written notice or
notices ("Projection Notice") setting forth (1) Landlord's reasonable
estimates, forecasts or projections of Taxes or Expenses for such Adjustment
Year (collectively, the "Projections"), which in the case of Taxes shall be
based on the most recent assessment, and (2) Tenant's Tax and Expense Estimate
(setting forth the Expense Adjustment component and the Tax Adjustment
component separately), being Tenant's Proportionate Share of the Projections.
(iii) On or before the first day of the next calendar month following
Landlord's service of a Projection Notice, and on or before the first day of
each month thereafter during the Adjustment Year in question, Tenant shall pay
to Landlord, at the time and in the same manner as payment of Base Rent,
one-twelfth (1/12) of the Tax and Expense Estimate shown in the Projection
Notice. Within thirty (30) days following Landlord's service of a Projection
Notice, to bring Tenant's payments of Tax and Expense Estimate current, Tenant
shall also pay Landlord a lump sum equal to the Tax and Expense Estimate shown
in the Projection Notice less any previous payments on account of Tax and
Expense Estimate made during such Adjustment Year. Until such time as
Landlord furnishes a Projection Notice for an Adjustment Year, Tenant shall
pay to Landlord a monthly installment of Tax and Expense Estimate on the first
day of each month equal to the greater of the latest monthly installment of
Tax and Expense Estimate or one-twelfth (1/12) of Tenant's latest determined
Tax Adjustment and Expense Adjustment; provided, however, that the initial
monthly installment of Tax and Expense Estimate payable by Tenant beginning on
the Entire Premises Commencement Date, subject to change as herein provided,
shall be equal to the Initial Monthly Estimate.
(c) Readjustments. The following readjustments with regard to the Tax
Adjustment and Expense Adjustment shall be made by Landlord and Tenant:
(i) Within ninety (90) days following the end of each Adjustment Year,
Landlord shall submit to Tenant a statement showing the actual Expenses
incurred in the prior Adjustment Year according to major categories of
expense, together with Tenant's Proportionate Share of the actual Expenses,
and a computation of either Tenant's overpayment or underpayment of actual
Expenses for the prior Adjustment Year (the "Landlord's Statement"). If there
has been an underpayment by Tenant for the previous Adjustment Year, then
Tenant shall, within thirty (30) days after the date of Landlord's Statement,
pay to Landlord an amount equal to the underpayment, subject to the Annual Cap
as set forth in Section 4(a)(iv) of this Lease. If Tenant has overpaid its
proportionate share of the Expenses, Landlord shall credit such excess to Rent
payable immediately after the date of Landlord's Statement, or may, at its
option, credit such excess to any Rent theretofore due and owing, until such
excess has been exhausted. If this Lease shall expire or be terminated prior
to full application of such excess, Landlord shall pay to Tenant the balance
thereof not theretofore applied against Rent and not reasonably required for
payment of Rent for the Adjustment Year in which this Lease expires or is
terminated, subject to Tenant's obligations under Section 4(e) hereof,
provided Tenant shall have vacated the Premises and otherwise surrendered the
Premises to Landlord in accordance with this Lease and Tenant is not then in
default under this Lease.
(ii) Within ninety (90) days following the end of each Adjustment Year,
Landlord shall notify Tenant in writing (any such notice herein called
"Landlord's Statement") of such Taxes for such Adjustment Year. Landlord's
Statement shall include a copy of the most recent tax assessment notice(s) for
such Adjustment Year. For purposes of the foregoing, Taxes shall be deemed to
accrue monthly, although Taxes are paid annually. If the Tax Adjustment owed
for such Adjustment Year exceeds the Tax Adjustment component of the Tax and
Expense Estimate paid by Tenant during such Adjustment Year, then Tenant
shall, within thirty (30) days after the date of Landlord's Statement, pay to
Landlord an amount equal to the excess of the Tax Adjustment over the Tax
Adjustment component of the Tax and Expense Estimate paid by Tenant during
such Adjustment Year. If the Tax Adjustment component of the Tax and Expense
Estimate paid by Tenant during such Adjustment Year exceeds the Tax Adjustment
owed for such Adjustment Year, then Landlord shall immediately credit such
excess to Rent payable after the date of Landlord's Statement, or may, at its
option, credit such excess to any Rent theretofore due and owing, until such
excess has been exhausted. If this Lease shall expire or be terminated prior
to full application of such excess, Landlord shall pay to Tenant the balance
thereof not theretofore applied against Rent and not reasonably required for
payment of Rent for the Adjustment Year in which this Lease expires, subject
to Tenant's obligations under Section 4(e) hereof, provided Tenant shall have
vacated the Premises and otherwise surrendered the Premises to Landlord in
accordance with this Lease and Tenant is not then in default under this Lease.
(iii) No interest or penalties shall accrue on any amounts which
Landlord is obligated to credit or pay to Tenant by reason of this Section
4(c) or which Tenant may be obligated to pay Landlord due to an
underestimation and underpayment by Tenant of the Expenses, when such payment
is late, in which event interest shall accrue on any such late payment in
accordance with Section 27(h).
(d) Books and Records. Landlord shall maintain books and records
showing Taxes and Expenses in accordance with sound accounting and management
practices and generally accepted accounting principles. Tenant and its
representatives and consultants shall have the right to examine and copy, at
Tenant's own expense, such books and records showing Taxes and Expenses upon
reasonable prior notice and during normal business hours at any time within
one hundred eighty (180) days following service of Landlord's Statement
provided for in Section 4(c). Unless Tenant or Landlord shall take written
exception to any item of Taxes or Expenses, specifying in detail the reasons
for such exception as to a particular item, within said one hundred eighty
(180) days after service of Landlord's Statement, Landlord's Statement shall
be considered as final and accepted by Tenant and Landlord. Any examination
shall not delay the timely payment of Tenant's Proportionate Share of
Expenses.
(e) Refunds and Reductions. Landlord shall refund to Tenant its
Proportionate Share of any refunds received by Landlord on account of Expenses
or Taxes for any prior Adjustment Year within thirty (30) days of receipt.
(f) Proration and Survival. With respect to any Adjustment Year which
does not fall entirely within the Term, Tenant shall be obligated to pay as
Additional Rent for such year only a pro rata share of Additional Rent as
hereinabove determined, equal to said Additional Rent multiplied by a
fraction, the numerator of which is the number of days in the Term falling
within the Adjustment Year, and whose denominator is 365. Following
expiration or termination of this Lease, Tenant shall pay any Additional Rent
due to Landlord and Landlord shall pay any refund owed Tenant within thirty
(30) days after the date of Landlord's Statement sent to Tenant. Without
limitation on other obligations of Tenant and Landlord which shall survive the
expiration of the Term, the obligations of Tenant and Landlord provided for in
this Section 4 shall survive the expiration or termination of this Lease.
(g) Additional Rent. All amounts payable by Tenant as or on account of
Additional Rent shall be deemed to be additional rent due under this Lease.
5. Use of Premises; Quiet Enjoyment.
(a) Tenant shall use and occupy the Premises for the Permitted Use only
and for no other use or purpose. Except as otherwise provided in this Lease,
Tenant shall, at its own risk and expense, obtain all governmental licenses
and permits necessary for the Permitted Use.
(b) Tenant shall have access to the Building and the Premises 24 hours
per day and 365 days per year.
(c) Tenant shall have the right to install a badge-locking system or
card-reading system for controlling access to the Premises. Tenant shall
provide Landlord with a reasonable number of badges or cards to enable
Landlord to obtain access to the Premises.
(d) Landlord agrees that if Tenant timely pays the rents and other
charges herein provided and performs all of the obligations herein stipulated
to be performed on Tenant's part, Tenant's quiet enjoyment and possession of
the Premises will not be interfered with by Landlord, subject to all terms and
conditions of this Lease.
6. Landlord's Work, Delivery of Possession, and Tenant Allowance.
(a) Landlord's Work. Landlord shall provide the following during the
Term in accordance with all statutes, laws, ordinances and codes, including
without limitation the Americans with Disabilities Act, 11 U.S.C. Section
12181, et seq. (the "ADA").
(i) General Condition of Premises. The Premises shall be in broom clean
condition, subject to any vinyl composition tiled areas. Tenant hereby
acknowledges and agrees that possession of the Premises has been delivered to
Tenant in such condition.
(ii) Electrical Power. Landlord shall provide a minimum of six (6) watts
demand per square foot of Rentable Area of the Premises for Tenant's lights
and outlets (the "Electrical Work"). Tenant hereby acknowledges and agrees
that the Electrical Work is complete. The Premises shall be sub-metered for
electricity consumption at Tenant's expense through one or more meters as
Tenant elects.
(iii) HVAC. Landlord shall provide the following heating,
ventilation and air-conditioning ("HVAC") equipment (such equipment is
hereinafter referred to as the "HVAC Equipment") to serve the Premises:
Mezzanine Level
Total Heat: BTU/Hour 1,174,900 x 2 Units
Tons: Two (2) 97.1 ton units
Coil CFM: 34,000 CFM: 75 hp ea/(2)
Computer Room Area: BTU Heat 84,000, 7 ton unit
8,000 CFM Coil 5 hp motor
Second floor
Total Heat: 1,062,200 BTU per hour x 2 units
Tons: Two (2) 89 ton units
Coil CFM: 30,000 CFM: 40 hp ea/(2)
The HVAC Equipment shall be in good working condition on the Commencement Date
and dedicated solely to the Premises. Tenant has inspected the HVAC Equipment
and accepts the HVAC Equipment in "as is" condition, subject to Landlord's
repair and maintenance responsibilities and the immediately preceding
sentence. Landlord has installed primary HVAC duct work in the Premises.
From such duct work, Tenant may distribute secondary duct work in connection
with Tenant's improvement of the Premises. Tenant accepts the primary duct
work in "as is" condition.
(iv) Telephone Closet. The Premises include a telephone closet in the
space located on the mezzanine level of the Building. Subject to the rights
reserved by Landlord pursuant to Section 12(i), Tenant may use such telephone
closet as a demarkation point from which Tenant may distribute its telephone
lines throughout the Premises.
(v) Elevator and Escalators. From and after the Commencement Date and
thereafter during the Term Landlord shall provide the Building's one (1)
existing passenger elevator and escalators in good working order and condition
so that such elevator and escalator service in the Building shall be of a
quality comparable to such service provided in other quality office buildings
in Jacksonville, Florida. Landlord shall adjust the call buttons in the
passenger elevator promptly to comply with the ADA.
(vi) Building Access Ramp. The access ramp at the front of the Building
shall be refurbished promptly so that the incline of the ramp complies with
the ADA.
(b) Tenant Allowance. On the Effective Date, Landlord shall provide
Tenant with One Hundred Forty-Seven Thousand Five Hundred Dollars
($147,500.00) (the "Allowance") for construction of washrooms in the second
floor space in the Premises, repair and renovation of the washrooms in the
mezzanine level space in the Premises, and installation of a sprinkler system
in the second floor space in the Premises in accordance with NFPA 13 (latest
edition). Tenant shall perform and complete such construction, repair,
renovation and sprinkler installation work in accordance with the terms and
provisions of this Lease. Tenant shall pay any and all costs of such work in
excess of the Allowance and shall be entitled to retain any portion of the
Allowance not expended in connection with such work. In addition, Tenant
shall construct, in accordance with the terms and provisions of this Lease,
the exterior fire stairs from the ground level of the Building to the second
floor of the Building with exits at the mezzanine level and the second floor
of the Building and the interior fire stairs from the first floor of the
Building to the mezzanine level of the Building with an exit at the mezzanine
level, all in accordance with that certain proposal of The Auchter Company
dated April 25, 1997 addressed to Mr. Bob O'Neill of the Prudential Services
Company, a copy of which proposal is attached hereto as Exhibit G. Tenant
shall pay the entire cost of such fire stair construction work; however,
Landlord shall reimburse Tenant for fifty percent (50%) of such cost as
certified by Tenant and The Auchter Company, but in no event more than Fifty-
Four Thousand Four Hundred Dollars ($54,400.00), within thirty (30) days of
the later of completion of such fire stair construction work or the
Commencement Date. If Landlord fails to reimburse Tenant within such thirty
(30) day period, Tenant may offset the amount owed against the installment(s)
or payment(s) of Rent next coming due.
7. Services.
(a) Landlord shall furnish the following services to the Building and
the Premises:
(i) Sanitary sewer service in common with other tenants into the
applicable utility's lines and mains for lavatory and toilet purposes.
(ii) Domestic water in common with other tenants from the applicable
utility's mains for drinking, lavatory and toilet purposes drawn through
fixtures installed by Landlord or by Tenant in the Premises pursuant to
Section 6(b). Tenant shall pay Landlord as Additional Rent for all domestic
water and sanitary sewer service furnished to the Premises on the basis of the
applicable utility's rates from time to time and any reasonable allocation
made by Landlord from time to time. Tenant shall not waste or permit the
waste of water.
(iii) Electricity for the Premises and HVAC Equipment shall be
furnished by Landlord by arranging for electrical service supplied by the
electric utility company serving the Building and the Premises. Tenant shall
pay Landlord as Additional Rent for all electricity furnished to or for the
benefit of the Premises on the basis of the applicable utility's rates (with
no Landlord mark-up except as to the Management Fee) from time to time and
Tenant's usage as determined by one or more sub-meters which shall be
installed at Tenant's sole cost and expense as part of Tenant's improvement of
the Premises. The electricity used for the making of alterations or repairs
in the Premises, or for the operation of the HVAC Equipment or for the
operation of any special or supplementary heating, ventilating or
air-conditioning systems which may be required for computer or data processing
equipment or for other special equipment or machinery installed by or on
behalf of Tenant, shall be paid for by Tenant. In addition, Tenant shall pay
Landlord as Additional Rent for its allocable share of all electricity in
connection with the operation of the chiller units described in Subsection
7(a)(ix) below pursuant to the terms of a separate agreement among Landlord,
Tenant and the other tenants of the Building. Except as otherwise provided in
this Lease, Tenant shall make no material alterations or additions to the
electric equipment or appliances in the Premises or the Building without the
prior written consent of Landlord in each instance. Tenant covenants and
agrees that at all times its use of electric current shall never exceed the
capacity of the feeders to the Building or the risers or wiring installed
thereon.
(iv) HVAC capabilities in accordance with Section 6(a)(iii).
(v) Elevator service to the Premises 24 hours per day provided by the
one (1) existing passenger elevator serving the Building and escalator service
during Tenant's usual business hours.
(vi) Lighting of the common areas of the Building 24 hours per day.
(vii) Janitorial services for the common areas of the Building,
including the cleaning of the glass walls and partitions separating the
Premises from the common areas on the side facing the common areas.
(viii) Landscaping maintenance for the Project.
(ix) Chilled water from the Building's chiller units supplied to the HVAC
Equipment to the limits of the existing chiller units and the existing pipes
associated therewith.
(x) One (1) freight elevator for the non-exclusive use of the office
tenants of the Building.
(xi) One (1) loading dock for the non-exclusive use of the office tenants
of the Building.
(xii) Window washing for the interior of the windows and
glass partitions of the Premises and the exterior of the windows and glass
partitions of the Premises installed by Tenant, as requested by Tenant, the
cost of which (a) shall be paid by Tenant within thirty (30) days of receipt
of Landlord's invoice and (b) shall not be included in Expenses or subject to
the Annual Cap; and window washing for the exterior of the windows and glass
partitions of the Premises installed by Landlord on an as-needed basis, the
cost of which shall be included in the Expenses.
(xiii) A smoking area for Tenant's employees either in the
Building or in a location outside the Building but in reasonably convenient
proximity thereto. Such area may be used by other tenants of the Building.
Landlord shall have no obligation to provide any services to such area or to
furnish, equip or improve the area; however, Landlord shall not unreasonably
withhold its consent to any improvements to such area reasonably proposed by
Tenant. Initially, the smoking area shall be the covered loading dock area on
the east side of the Building adjoining the first floor office space in the
Building. Landlord reserves the right to change the location of the smoking
area from time to time, subject to the requirements of the first sentence of
this subsection 7(a)(xiii).
(b) All charges for the actual cost (with no Landlord mark-up) of water,
sewer, gas and electricity shall be due and payable at the same time as the
installment of Base Rent with which they are billed, or if billed separately,
shall be due and payable within ten (10) days after Tenant receives Landlord's
bill therefor.
(c) The Building and Land shall be managed and maintained in accordance
with standards comparable to those of other properties in the Jacksonville,
Florida area of the kind and quality of the Building and Land.
(d) Tenant agrees that Landlord and its agents shall not be liable in
damages, by abatement of Rent or otherwise, for failure to furnish or for
delay in furnishing any service when such failure or delay is occasioned, in
whole or in part, by repairs, renewals or improvements, by any strike, lockout
or other labor trouble, by inability to secure electricity, gas, water, or
other fuel at the Building after reasonable effort so to do, by any accident
or casualty whatsoever, by the act or default of Tenant or other parties, or
by any cause beyond the reasonable control of Landlord; and such failures or
delays shall never be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
or performing any of its obligations under this Lease. Notwithstanding the
foregoing, in the event of any failure, stoppage or interruption of the
services described in this Section 7, Landlord shall use reasonable diligence
to resume service promptly, and in the event Tenant cannot operate its
business in the Premises or any portion thereof (in excess of 2,500 rentable
square feet) as a result of such interruption and Landlord fails to restore
such service(s) within three (3) business days after receipt of Tenant's
written notice of such interruption as to an interruption within Landlord's
reasonable control, or within sixty (60) days after receipt of Tenant's
written notice of any other interruption, then Tenant, as Tenant's sole and
exclusive remedy, shall be entitled to abate Rent until restoration of the
interrupted service(s) such that Tenant can resume its business operations in
the Premises or applicable portion thereof.
(e) Tenant agrees to cooperate fully with Landlord, at all times, in
abiding by all regulations and requirements which are reasonably necessary for
the proper functioning and protection of all utilities and services and are
reasonably necessary for the operation of the Premises and the Building.
Landlord and its contractors shall have free access, subject to reasonable
prior notice to Tenant except in the event of an emergency, to any and all
mechanical installations, and Tenant agrees that there shall be no
construction or partitions or other obstructions which might interfere with
the moving of the servicing equipment of Landlord to or from the enclosures
containing said installations. Tenant further agrees that neither Tenant nor
its employees, agents, licensees, invitees or contractors shall at any time
tamper with, adjust or otherwise in any manner affect Landlord's mechanical
installations.
8. Condition and Care of Premises; Landlord's and Tenant's Maintenance
Obligations.
(a) Except to the extent set forth in the Lease, Landlord has made no
promises to alter, remodel, improve, repair, decorate or clean the Premises or
any part thereof, and no representation respecting the condition of the
Premises, the Building or the Land has been made to Tenant by or on behalf of
Landlord, except to the extent expressly set forth herein. Except as
specifically set forth in Section 6, Tenant shall be solely responsible for
any and all structural and other alterations, modifications and additions in
or to the Premises in connection with the Permitted Use, whether required by
applicable statutes, laws, codes and governmental rules and regulations or
otherwise, all of which alterations, modifications and additions shall be
subject to the terms and provisions of Section 13. Except as specifically
provided in Section 6, this Section 8, and Section 32(b), Tenant hereby
warrants and represents that it has inspected the Premises and determined that
it is satisfactory in all respects for Tenant's purposes, and shall accept
possession of the Premises in "as is" condition with all faults and without
warranty or representation by Landlord as to the condition of the Premises or
the suitability of the Premises for a particular purpose or in any other
respect.
(b) Tenant shall notify Landlord of any damage to the Premises,
regardless of the cause of damage. Except for any damage resulting from any
wanton or negligent act of Landlord, or its employees or agents and subject to
the provisions of Section 6 and Section 16 hereof, Tenant shall at its own
expense keep the Premises in good repair and tenantable condition and, except
if Landlord elects to make such repairs at Tenant's expense as hereinafter
provided, shall promptly and adequately repair all damage to the Premises
caused by Tenant or any of its employees, agents, licensees, invitees or
contractors, including replacing or repairing all damaged or broken glass,
fixtures and appurtenances resulting from any such damage, under the
supervision and with the reasonable approval of Landlord and within any
reasonable period of time specified by Landlord. If Tenant does not make
repairs promptly and adequately when required to do so, Landlord may, but need
not, make such repairs and replacements and Tenant shall pay Landlord, on
written demand, the cost thereof, and, in addition, Tenant shall pay to
Landlord on written demand, an amount equal to seven percent (7%) of such cost
as an overhead and supervision fee and interest at the rate specified in
Section 27(h) from the date of such demand.
(c) This Lease does not grant any rights to light or air over or about
the real property of Landlord. Except as otherwise provided in this Lease,
Landlord specifically excepts and reserves to itself the use of any roofs, the
exterior portions of the Premises, all rights to and the land and improvements
below the improved floor level of the Premises, to the improvements and air
rights above the Premises and to the improvements and air rights located
outside the demising walls of the Premises and to such areas within the
Premises required for installation of utility lines and other installations
required to serve any occupants of the Building and to maintain and repair
same, and no rights with respect thereto are conferred upon Tenant, unless oth
erwise specifically provided herein. Notwithstanding the foregoing, Landlord
agrees that it will not construct any improvements on the Land within fifty
(50) feet of the windows constructed by Tenant that would block the light and
air to such windows, except as required by governmental mandate.
(d) Landlord shall maintain in good order and repair the following
portions of the Project during the Term: the roof and roof membrane of the
Building, the structural supports and load-bearing walls of the Building, the
foundation and floor slab of the Building, all utilities lines, mains and
conduits to their point of entry into the Premises, the exterior of the
Building (including exterior glass and entrances), the common or public areas
in the Building, the Landlords's property and grounds (including landscaping)
about the Building, HVAC Equipment, the chiller units serving the Premises,
the elevators and escalators, the sprinkler system, the public areas in the
Building, and Tenant's Parking Area, excepting any damage to any such
components caused by the act or omission of Tenant or any subtenant or their
respective employees, agents, licensees, contractors or invitees, in which
event such damage shall be promptly repaired at the expense of Tenant. In
addition, Landlord shall ensure that the Premises are reasonably free from
noise or vibration from neighboring tenants such that Tenant shall experience
no material interference with Tenant's business operations as a result of any
such noise or vibration. Landlord further agrees that, except as otherwise
provided in this Lease, Landlord shall be responsible for the compliance of
the common areas of the Building with applicable statutes, laws, codes and
governmental rules and regulations, and any condition of the Premises on the
date on which Tenant commenced its improvements to the Premises that
constitutes a violation of applicable statutes, laws, codes and governmental
rules and regulations except to the extent that such condition was remedied by
Tenant's improvement of the Premises in accordance with Plans or would have
been remedied but for violations of applicable statutes, laws, codes and/or
governmental rules and regulations due to the improper installation or
construction of the improvements contemplated by the Plans and except for any
condition of the Premises in violation of applicable statutes, laws, codes
and/or governmental rules and regulations required to be corrected or remedied
due to Tenant's improper manner of use of the Premises, as opposed to mere
office use in the manner permitted hereunder, or in conjunction with
improvements on or about the Premises by Tenant subsequent to the improvements
contemplated by the Plans or due to Tenant's application for a building or
other similar permit therefor.
(e) Tenant agrees to make all repairs to, and keep and maintain in
sightly appearance, good order, condition and repair (including replacements
necessary in Landlord's reasonable judgment), the Premises and every part
thereof, except as otherwise specifically provided herein, including all
utility facilities and related equipment within the Premises, plumbing, drain,
waste and sewage facilities within the Premises, including free flow up to the
common sewer line, fixtures, and facilities and equipment for electricity,
heating, and air-conditioning, within the Premises, all in compliance with and
as may be required by applicable building, zoning, environmental, safety, fire
and other laws and codes, including legally required fire extinguishers and
safety or health improvements, except as otherwise specifically provided in
this Lease.
(f) Landlord shall provide for the operation of a sandwich shop in the
Building containing approximately 2,200 square feet during the hours of 7:00
a.m. to 5:00 p.m., Monday through Friday.
9. Surrender of Premises.
(a) At the termination of this Lease by lapse of time or otherwise, or
upon termination of Tenant's right of possession without terminating this
Lease, Tenant shall surrender possession of the Premises to Landlord and
deliver all keys to the Premises to Landlord and make known to Landlord the
combination of all locks of vaults then remaining in the Premises, and shall,
subject to the following subparagraphs, return the Premises and all equipment
and fixtures of Landlord therein to Landlord in as good condition as when
Tenant originally took possession, ordinary wear, loss or damage by fire or
other insured casualty, and damage resulting from the act of Landlord or any
of its respective employees and agents excepted, failing which Landlord may
restore the Premises and such equipment and fixtures to such condition and
Tenant shall pay the cost thereof to Landlord on demand.
(b) All installations, additions, partitions, hardware, light fixtures,
supplementary heating or air conditioning units, non-trade fixtures and
improvements, except movable furniture, equipment, and other personal property
and trade fixtures belonging to Tenant, in or upon the Premises, whether
placed there by Tenant or Landlord, shall be Landlord's property and shall
remain upon the Premises upon expiration of the Term or sooner termination of
this Lease or Tenant's possession hereunder, all without compensation,
allowance or credit to Tenant; provided, however, that if prior to such
expiration or termination or within ten (10) days thereafter Landlord so
directs by written notice, Tenant, at Tenant's sole cost and expense, shall
promptly remove such of the installations, additions, partitions, hardware,
light fixtures, supplementary heating or air conditioning units, non-trade
fixtures and improvements placed in the Premises by Tenant as are designated
in such notice and repair any damage to the Premises caused by such removal,
failing which Landlord may remove the same and repair the Premises and Tenant
shall pay the cost thereof to Landlord on written demand. All movable
furniture, equipment, trade fixtures and personal property shall remain the
property of Tenant and, provided no continuing event of default exists
hereunder with respect to Tenant's obligations, may be removed from the
Premises at any time without Landlord's consent. Notwithstanding the
foregoing, Tenant shall not remove, or be required to remove, any improvements
shown in the Plans, except for those items specified in Exhibit F attached
hereto and made a part hereof, which Tenant shall be entitled to remove upon
the expiration or sooner termination of the Term so long as Tenant complies
with the other terms and provisions of this Section 9(b), and except as
provided in Section 35(j) below. In addition, in the event that Tenant makes
additional improvements to the Premises beyond those contemplated by the
Plans, Landlord shall not unreasonably withhold its consent to Tenant's
request that Tenant not be required to remove such improvements upon
expiration or sooner termination of the Term provided that such additional
improvements are comparable in utility and quality to those specified in the
Plans.
(c) Tenant shall leave in place any floor covering. Tenant shall remove
Tenant's furniture, machinery, safes, trade fixtures and other items of
personal property of every kind and description from the Premises and repair
any damage to the Premises caused thereby, such removal and restoration to be
performed prior to the expiration of the Term or no later than ten (10) days
following the earlier termination of this Lease or Tenant's right of pos
session, whichever might be earlier (and upon prior written notice to
Landlord, in the event such removal occurs after termination of this Lease or
Tenant's right to possession), failing which Landlord may do so and thereupon
the provisions of Section 18(f) shall apply.
(d) All obligations of Tenant under this Section 9 shall survive the
expiration of the Term or sooner termination of this Lease.
10. Holding Over. If Tenant or any party claiming under Tenant remains
in possession of the Premises or any part thereof after the termination or
expiration of this Lease, such holdover shall be deemed to create a tenancy at
will on a month-to-month basis subject to the terms and provisions of this
Lease except that Monthly Base Rent shall be one hundred fifty percent (150%)
of the Monthly Base Rent due prior to the commencement of such holdover during
the first two (2) months of such holdover and thereafter, two hundred percent
(200%) of the Monthly Base Rent due prior to the commencement of such
holdover. The foregoing shall not be construed to limit (i) Landlord's right
to terminate such month-to-month tenancy at will in accordance with Florida
law, or (ii) Landlord's rights and remedies in accordance with this Lease and
Florida law to evict Tenant or otherwise terminate Tenant's possession of the
Premises in the event of such termination and seek damages (including without
limitation consequential damages) resulting from such holdover; provided,
however, that the Landlord shall not be entitled to damages resulting from the
first two (2) months of any holdover by Tenant.
11. Rules and Regulations. Tenant agrees to observe and not to
interfere with the rights reserved to Landlord contained in Section 12 hereof
and elsewhere in this Lease, and agrees, for itself, its employees, agents,
invitees, licensees and contractors, to comply with the rules and regulations
set forth in Exhibit B attached to this Lease, and elsewhere in this Lease,
and such other rules and regulations as shall be adopted by Landlord pursuant
to Section 12(h) or any other Section of this Lease. To the extent that the
Rules and Regulations, current or amended, conflict with the provisions of the
rest of this Lease, the Lease shall govern. Landlord agrees not to enforce
such rules and regulations selectively.
Any violation by Tenant, or by any of its employees, agents, licensees,
invitees or contractors, of any of the rules and regulations contained in
Exhibit B attached to this Lease or other Section of this Lease, or as may
hereafter be adopted by Landlord pursuant to Section 12(h) or any other
Section of this Lease, may be restrained or treated as a default hereunder or
both following the applicable notice and cure period set forth in Section
18(a)(v); but whether or not so restrained, Tenant acknowledges and agrees
that it shall be and remain liable for all damages, losses, costs and expenses
resulting from any violation by Tenant, or by any of its employees, agents,
licensees, invitees or contractors, of any of said rules and regulations.
Nothing in this Lease contained shall be construed to impose upon Landlord any
duty or obligation to enforce said rules and regulations or the terms,
covenants or conditions of any other lease against any other tenant or any
other person, although Landlord shall not enforce the rules and regulations
selectively, and Landlord shall not be liable to Tenant for violation of the
same by any other tenant, its employees, agents, licensees, invitees or
contractors, or by any other person.
12. Rights Reserved to Landlord. Landlord reserves the following
rights, exercisable without notice and without liability to Tenant for damage
or injury to property, person or business, and without effecting an eviction
or disturbance of Tenant's use or possession or giving rise to any claim for
setoff or abatement of Rent or affecting any of Tenant's obligations under
this Lease:
(a) To change the name of the Building, provided that the Building shall
not be named after a competitor of Tenant..
(b) To install and maintain signs on the exterior and interior of the
Building.
(c) To retain at all times, and to use in appropriate instances
following reasonable notice except in the event of an emergency, pass keys to
the Premises.
(d) To have access for Landlord and other tenants or occupants of the
Building to any mail chutes according to the rules of the United States Postal
Service.
(e) With reasonable notice to Tenant, except in case of emergency when
no notice shall be required, to enter the Premises at reasonable hours for
reasonable purposes, including without limitation for inspection and to meet
Landlord's obligations under the Lease, in accordance with the terms and
provisions of this Lease.
(f) To require all persons entering or leaving the Building during such
hours as Landlord may from time to time reasonably determine to identify
themselves to security personnel by registration or otherwise in accordance
with Building security control. Landlord shall not be liable in damages for
any error with respect to admission to or eviction or exclusion from the
Building of any person. In case of fire, casualty, invasion, insurrection,
mob, riot, civil disorder, public excitement or other commotion, or threat
thereof, Landlord reserves the right to limit or prevent access to the
Building during the continuance of the same, shut down elevator service,
activate elevator emergency controls, or otherwise take such action or
preventive measures deemed necessary by Landlord for the safety or security of
the tenants or other occupants of the Building or the protection of the
Building and the property in the Building. Tenant agrees to cooperate in any
reasonable safety or security program developed by Landlord.
(g) To control access to the Building in a manner that shall not
unreasonably interfere with Tenant's rights hereunder.
(h) From time to time to make and adopt such reasonable rules and
regulations, in addition to or other than or by way of amendment or
modification of the rules and regulations contained in Exhibit B attached to
this Lease or other Sections of this Lease, or adopted pursuant to this or
other Sections of this Lease, including, without limitation, the right to
prohibit all smoking in the Building, for the protection or welfare of the
Building or its tenants or occupants, as Landlord may determine, and Tenant
agrees to abide by and comply with all such rules and regulations. Landlord
shall provide Tenant with a copy of any such modifications or new rules and
regulations.
(i) To have access to the telephone closet described in Section 6(a)(iv)
and to use such telephone closet for the distribution of telephone lines
throughout the Building, including without limitation other tenants' demised
premises therein.
13. Alterations. Tenant shall not make any alterations in or additions
or improvements to the Premises ("Alterations") without Landlord's advance
written consent which shall not be unreasonably withheld, conditioned, or
delayed, in each instance. All Alterations shall be at Tenant's expense,
except as to the Allowance, and shall comply with all insurance requirements
and with all ordinances and regulations of the municipality in which the
Building is located or any department or agency thereof, with the requirements
of all statutes and regulations of the State in which the Premises are located
or of any subdivision, department or agency thereof, and with the American
with Disabilities Act, 11 U.S.C. Section 12181, et seq. All working drawings
and specifications for Alterations required by Landlord shall be prepared by
an architect, space planner or engineers reasonably acceptable to Landlord at
Tenant's expense. Landlord shall have fifteen (15) days to disapprove such
drawings and specifications and the basis for any disapproval shall be stated
with reasonable specificity. If Landlord shall not disapprove the drawings
and specifications within such fifteen (15) day period, the drawings and
specifications shall be deemed approved. Landlord shall reasonably cooperate,
at no expense to Landlord, with Tenant's efforts to obtain the required
governmental permits and approvals for any Alterations approved by Landlord.
Except as specifically set forth in this Lease, all Alterations shall,
immediately when installed, be deemed to have attached to the freehold and to
have become the property of Landlord and shall remain for the benefit of
Landlord as the expiration or earlier termination of the Term in as good order
and condition as they were when installed, reasonable wear and tear excepted;
provided, however, if prior to the expiration or termination of the Term, or
within thirty (30) days thereafter, Landlord so directs, Tenant shall remove
all or any of the installations which were placed in the Premises by Tenant as
the same are designated in Landlord's notice and shall repair any damage
occasioned by such removal, and in default thereof, Landlord may effect such
removal and repairs at Tenant's expense plus interest at the rate of 18% per
annum or such lower non-usurious rate as permitted by applicable law.
Provided that Tenant's engineer establishes to Landlord's satisfaction that
the structural integrity of the Building shall not in any manner be adversely
affected and subject to Landlord's review and approval of Tenant's plans and
specifications, Tenant shall be entitled to install windows in the exterior
side walls of the Premises. Landlord will not charge Tenant a supervisory
fee, utility costs or freight elevator charges in conjunction with Tenant's
initial improvement of the Premises. Landlord hereby approves the Plans;
Tenant's contractor, The Auchter Company; architect, KBJ Architects, Inc.; and
engineer, Evans and Hammond, Inc.
14. Assignment and Subletting.
(a) Tenant shall not, without the prior written consent of Landlord in
each instance except as otherwise provided herein, which consent shall not be
unreasonably withheld, conditioned, or delayed, subject to Section 14(e),
either prior or subsequent to the Commencement Date, (i) assign, transfer,
mortgage, pledge, hypothecate or encumber or subject to or permit to exist
upon or be subjected to any lien or charge, this Lease or any interest under
it, (ii) allow to exist or occur any transfer of or lien upon this Lease or
the Tenant's interest herein by operation of law, (iii) sublet the Premises or
any part thereof, or (iv) permit the use or occupancy of the Premises or any
part thereof for any purpose not provided for under Section 5 of this Lease or
by anyone other than the Tenant and Tenant's employees. In no event shall
this Lease be assigned or assignable by voluntary or involuntary bankruptcy
proceedings or otherwise, and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings, except as provided by law. Notwithstanding the
foregoing, Tenant shall be entitled to assign or transfer this Lease or sublet
the Premises or a portion thereof to an affiliate or a wholly owned subsidiary
corporation of Tenant without Landlord's consent. An "affiliate" is an entity
in which Tenant or Tenant's parent has no less than a direct or indirect fifty
percent (50%) ownership interest or any successor to Tenant by merger,
consolidation or other operation of law.
(b) Notwithstanding anything to the contrary contained in Section 14(a)
above, Tenant shall have the right, without the consent of Landlord, from time
to time and at any time, to permit any business entities or persons which are
Correspondents (as hereinafter defined) of Tenant to sublet or license
portions of the Premises, not to exceed in the aggregate five percent (5%)
thereof, for any of the purposes permitted under this Lease, subject, however,
to compliance with Tenant's obligations under this Lease. As used in this
subsection (b), the term "Correspondent" shall mean entities or persons which
either provide to or receive from Tenant material business services or engage
in business with Tenant to provide business services to others. Such
subletting or licensing shall neither be deemed to vest in any such
Correspondent any right or interest in this Lease or the Premises nor shall it
relieve Tenant of its obligations under this Lease.
(c) No assignment, subletting, use, occupancy, transfer or encumbrance
or Landlord's consent thereto shall operate to relieve Tenant from any
covenant or obligation hereunder except to the extent, if any, expressly
provided for in Landlord's consent or other writing, or be deemed to be a
consent to or relieve Tenant from obtaining Landlord's consent to any
subsequent assignment, subletting, use, occupancy, transfer or encumbrance by
Tenant or anyone claiming by, through or under Tenant, which shall not
unreasonably be withheld or delayed. Tenant shall pay all of Landlord's
costs, charges and expenses, including without limitation, reasonable
attorneys' fees, incurred in connection with any assignment, subletting, use,
occupancy, transfer or encumbrance made or requested by Tenant.
(d) Tenant shall, by notice in writing, advise Landlord of its intention
from, on and after a stated date (which shall not be less than thirty (30)
days after the date of the giving of Tenant's notice to Landlord) to assign
this Lease or sublet any part or all of the Premises for the balance or any
part of the Term. Tenant's notice shall include the name and address of the
proposed assignee or subtenant, a true and complete copy of the proposed
assignment or sublease and sufficient information as Landlord reasonably deems
necessary to permit Landlord to determine the financial responsibility,
experience and character of the proposed assignee or subtenant.
(e) Landlord will not unreasonably withhold or delay its consent to
Tenant's assignment of this Lease or subletting the space covered by its
notice. Landlord shall not be deemed to have unreasonably withheld its
consent to a proposed assignment of this Lease or to a proposed sublease of
part or all of the Premises if its consent is withheld because: (i) Tenant is
then in default hereunder; (ii) any notice of termination of this Lease or
termination of Tenant's possession shall have been given under Section 18
hereof; (iii) either the portion of the Premises which Tenant proposes to
sublease, or the remaining portion of the Premises, or the means of ingress or
egress to either the portion of the Premises which Tenant proposes to sublease
or the remaining portion of the Premises, or the proposed use of the Premises
or any portion thereof by the proposed assignee or subtenant will violate any
city, state or federal law, ordinance or regulation, including, without limi
tation, any applicable building code or zoning ordinances; (iv) the proposed
use of the Premises by the proposed assignee or subtenant does not conform
with the use set forth in Section 5 hereof; or (v) in the reasonable judgment
of Landlord the proposed assignee or subtenant is of a character or is engaged
in a business which would be deleterious to the reputation of the Building or
Landlord, or the proposed assignee or subtenant is not sufficiently
financially responsible or experienced to perform its obligations under the
proposed assignment or sublease; provided, however, that the foregoing are
merely examples of reasons for which Landlord may withhold its consent and
shall not be deemed exclusive of any permitted reasons for reasonably withhold
ing consent, whether similar or dissimilar to the foregoing examples. Tenant
agrees that all advertising by Tenant or on Tenant's behalf with respect to
the assignment of this Lease or subletting of any part of the Premises must be
approved in writing by Landlord prior to publication, which approval shall not
be unreasonably conditioned, withheld or delayed.
(f) Fifty percent (50%) of the profits from any assignment, subletting
or other transfer of Tenant's interest in the Premises, whether consented to
by Landlord or not, shall be payable to Landlord as and when received by
Tenant and as Additional Rent. For purposes of the foregoing, "profits" shall
mean any and all consideration paid by any assignee, sublessee, or other
transferee to Tenant after deduction of any Rent paid by Tenant for the period
of such party's occupancy of the Premises and the costs incurred by Tenant in
altering the Premises for such party's use, reasonable brokerage commissions
and reasonable legal fees.
(g) If Tenant shall assign this Lease as permitted herein, the assignee
shall execute a written instrument reasonably satisfactory to Landlord and
furnished to Landlord not later than fifteen (15) days prior to the effective
date of the assignment pursuant to which the assignee shall assume all duties
and obligations of Tenant under this Lease from and after the effective date
of the assignment. If Tenant shall sublease the Premises as permitted herein,
Tenant shall obtain and furnish to Landlord, not later than fifteen (15) days
prior to the effective date of such sublease and in form reasonably
satisfactory to Landlord, the written agreement of such subtenant to the
effect that the subtenant will attorn to Landlord under the terms of the
sublease, at Landlord's option and written request, in the event this Lease
terminates before the expiration of the sublease.
(h) If Tenant is a corporation (other than a corporation whose stock is
traded through a national or regional exchange or over-the-counter), any trans
action or series of transactions (including without limitation any
dissolution, merger, consolidation or other reorganization of Tenant, or any
issuance, sale, gift, transfer or redemption of any capital stock of Tenant,
whether voluntary, involuntary or by operation of law, or any combination of
any of the foregoing transactions) resulting in the transfer of control of
Tenant, other than by reason of death, shall be deemed to be transfer of
Tenant's interest under this Lease for the purpose of Sections 14(a) and
14(c). If Tenant is a partnership, any transaction or series of transactions
(including without limitation any withdrawal or admittance of a partner or any
change in any partner's interest in Tenant, whether voluntary, involuntary or
by operation of law, or any combination of any of the foregoing transactions)
resulting in the transfer of control of Tenant, other than by reason of death,
shall be deemed to be a transfer of Tenant's interest under this Lease for the
purposes of Sections 14(a) and 14(c). The term "control, as used in this
Section 14(h) means the power to directly or indirectly direct or cause the
direction of the management or policies of Tenant. If Tenant is a private
corporation, a change or series of changes in ownership of stock which would
result in direct or indirect change in ownership by the stockholders or an
affiliated group of stockholders of less than fifty percent (50%) of the
outstanding stock as of the date of the execution and delivery of this Lease
shall not be considered a change of control. Notwithstanding anything to the
contrary contained herein, the transfer of shares of Tenant (if Tenant is a
corporation or trust) for purposes of this Section shall not include the sale
of shares by persons other than those deemed "insiders" within the meaning of
the Securities Exchange Act of 1934, as amended, which sale is effected
through the "over-the-counter market" or through any recognized stock
exchange.
15. Waiver of Certain Claims; Indemnity by Tenant and Landlord.
(a) If any damage to the Premises or the Building or any equipment or
appurtenance therein, whether belonging to Landlord or to other tenants or
occupants of the Building, results from any act or neglect of Tenant, its
employees, agents, licensees, invitees or contractors, Tenant shall be liable
therefor. If Tenant does not repair such damage within thirty (30) days after
written notice or such shorter period as Landlord may reasonably require,
Landlord may at its option repair such damage and Tenant shall upon demand by
Landlord reimburse Landlord for all costs of such repairs and damages in
excess of amounts, if any, paid to Landlord under insurance covering such
damages plus a fee to cover Lessor's administrative expenses in an amount
equal to twenty percent (20%) of all such costs and interest on all such
amounts at the rate specified in Section 27(h) accruing from the date of such
demand. All personal property belonging to Tenant or any occupant of the
Premises that is in the Building or the Premises shall be there at the risk of
Tenant or other person only, and Landlord shall not be liable for damage
thereto or theft or misappropriation thereof, except as provided in
subparagraph (c) of this Section 15.
(b) Tenant agrees to indemnify, defend and hold Landlord, the managing
agent of the Real Property, and their respective agents, partners and
employees, harmless against all loss, damages, liabilities, claims, liens,
costs and expenses, including without limitation reasonable attorneys' fees,
in connection with injuries to any persons or damage to or theft or
misappropriation or loss of property occurring in or about the Premises,
arising from any negligence or tortious act of Tenant or from any breach or
default on the part of Tenant in the performance of any covenant or agreement
on the part of Tenant to be performed pursuant to the terms of this Lease;
provided, however, in no event shall Landlord be entitled to any
consequential, special or punitive damages from any breach or default by
Tenant under this Lease except as specifically provided in this Lease.
(c) Landlord agrees to indemnify, defend and hold Tenant, and its
directors, officers, employees, shareholders, invitees, agents and
representatives, harmless against all loss, damages, liabilities, claims,
liens, costs and expenses, including without limitation reasonable attorneys'
fees, in connection with injuries to any persons or damage to or theft or
misappropriation or loss of property occurring in or about the common areas of
the Building, arising from any negligence or tortious acts of Landlord in or
about the common areas of the Building or from any breach or default on the
part of Landlord in the performance of any covenant or agreement on the part
of Landlord to be performed pursuant to the terms of this Lease; provided,
however, in no event shall Tenant be entitled to any consequential, special or
punitive damages from any breach or default by Landlord under this Lease.
16. Damage or Destruction by Casualty.
(a) If the Premises or the Building shall be damaged by fire or other
casualty and if such damage does not render all or a substantial portion of
the Premises or the Building untenantable, then Landlord shall proceed with
reasonable promptness to repair and restore the Premises or the Building so as
to render the Premises tenantable, subject to reasonable delays for insurance
adjustments and delays caused by matters beyond Landlord's reasonable control,
and also subject to zoning laws and building codes then in effect. If any
such damage renders untenantable all or a substantial portion of the Premises
or the common areas of the Building used by the office tenants or any other
portions of the Building such that any services which Landlord is required
hereunder to render to Tenant are interrupted or materially impaired or
Tenant's operation of its business in the Premises is otherwise materially and
adversely affected, Landlord shall, with reasonable promptness after the
occurrence of such damage, provide an estimate from an independent architect
of the length of time that will be required to substantially complete the
repair and restoration of the Premises or such common areas or other portions
of the Building, as the case may be, necessitated by such damage and shall by
notice advise Tenant of such estimate. If it is so estimated that the amount
of time required to substantially complete such repair and restoration will
exceed two hundred seventy (270) days from the date such damage occurred, then
either Landlord or Tenant (but as to Tenant, only if at least thirty percent
[30%] of the Premises is rendered untenantable and either [i] the estimated
time required to substantially complete such repair or restoration of the
Premises or such common areas or other portions of the Building will exceed
such two hundred seventy [270] day period or [ii] less than six [6] months of
the Term will remain after completion of Landlord's and Tenant's repair and
restoration work) shall have the right to terminate this Lease as of the date
of such damage by giving notice to the other at any time within twenty (20)
days after Landlord gives Tenant the notice containing said estimate (it being
understood that Landlord may, if it elects to do so, also give such notice of
termination together with the notice containing said estimate). In no event
may Landlord terminate unless terminating the tenancies of substantially all
other office tenants of the Building. Unless this Lease is terminated as
provided above, Landlord shall proceed with reasonable promptness to repair
and restore the Building, the common areas thereof and/or the Premises so as
to render the Premises tenantable, subject to reasonable delays for insurance
adjustments and delays caused by matters beyond Landlord's reasonable control,
and also subject to zoning laws and building codes then in effect. Landlord
shall have no liability to Tenant, and Tenant shall not be entitled to
terminate this Lease (except as hereinafter provided) if such repairs and
restoration are not in fact completed within the time period estimated by
Landlord, as aforesaid, or within said two hundred seventy (270) days.
Notwithstanding anything to the contrary herein set forth: (i) Landlord shall
have no duty pursuant to this Section 16 to repair or restore any portion of
improvements, additions or alterations made by or on behalf of Tenant in the
Premises; (ii) Landlord shall not be obligated (but may, at its option, so
elect) to repair or restore the Premises or Building if the damage is due to
an uninsurable casualty or if insurance proceeds are insufficient to pay for
such repair or restoration, or if any Mortgagee (defined in Section 19)
applies proceeds of insurance to reduce its loan balance, and the remaining
proceeds, if any, available to Landlord are not sufficient to pay for such
repair or restoration; and (iii) Tenant shall not have the right to terminate
this Lease pursuant to this Section 16 if the damage or destruction was caused
by the intentional or negligent act of Tenant, its agents or employees.
(b) In the event any such fire or casualty damage renders the Premises
or any portion thereof untenantable and if this Lease shall not be terminated
pursuant to the foregoing provisions of this Section 16 by reason of such
damage, then Rent shall abate during the period beginning with the date of
such damage and ending with the date when Tenant completes its repair and
restoration of its tenant improvements but in no event later than sixty (60)
days after Landlord substantially completes its repair or restoration required
hereunder. Such abatement shall be in an amount bearing the same ratio to the
total amount of Rent for such period as the portion of the Premises being
untenantable by Tenant and not theretofore delivered to Tenant from time to
time bears to the entire Premises. In the event of termination of this Lease
pursuant to this Section 16, Rent shall be apportioned on a per diem basis and
be paid to the date of the fire or casualty.
(c) In the event of any such fire or other casualty, and if this Lease
is not terminated pursuant to the foregoing provisions of this Lease, Tenant
shall repair and restore any portion of alterations, additions or improvements
made by or on behalf of Tenant in the Premises which Landlord is not required
to restore pursuant to Section 16(a)(i) hereof.
(d) In the event of any such fire or other casualty which results in a
termination of this Lease, Landlord shall receive all insurance proceeds
payable with respect to the additions, improvements and alterations to the
Premises required to be insured by Tenant pursuant to Section 21(a), with any
deductible to be paid by Tenant to Landlord within thirty (30) days of such
termination. Notwithstanding anything to the contrary contained herein,
Tenant's only obligation pursuant to this Section 16(d) shall be to turn over
or pay to Landlord any insurance proceeds paid to or collected by Tenant from
Tenant's insurance company in connection with any such casualty and to pay to
Landlord the amount of any deductible; provided, however, that nothing
contained herein shall require Tenant to incur any cost or expense, or bring
or commence any action or proceeding, in connection with the payment or
collection of any such insurance proceeds. Tenant agrees to assign to
Landlord any claim that Tenant has against Tenant's insurance company in
connection with any such casualty. In the event of a casualty which results
in a termination of this Lease, against which casualty Tenant has self-insured
pursuant to Section 21(a), Tenant shall pay Landlord the full replacement cost
of all additions, improvements and alterations damaged or destroyed by such
casualty within thirty (30) days of such termination.
17. Eminent Domain. If the entire Building or a substantial part
thereof or any part thereof which includes all or a substantial part of the
Premises, shall be taken or condemned by any competent authority for any
public or quasi-public use or purpose (a "Taking"), either Landlord or Tenant
may terminate this Lease by giving written notice to the other party within
thirty (30) days of the Taking. Such termination shall be effective on the
earlier of the date when the possession of the part so taken shall be required
for such use or purpose or the effective date of the taking, and without
apportionment of the award to or for the benefit of Tenant. If this Lease is
not terminated by Landlord or Tenant after any such taking or condemnation,
Landlord shall proceed with reasonable diligence and to the extent of
condemnation proceeds received by Landlord to repair, alter and restore the
remaining part of the Building and Premises to substantially their former
condition, due allowance being made for the impact of such taking or
condemnation. In such case, all Rent shall be diminished from the date of
such taking by an amount representing the part of the Rent properly allocated
to the portion of the Premises which are unusable by Tenant. In the case that
all of the Premises are taken, Tenant's Rent shall abate from the date of the
Taking to the date of termination or the date the Premises are restored to
their former condition. In the event of a temporary taking (defined to mean
thirty (30) days or less) of the Premises and/or Building, Landlord (at its
expense) will restore the Premises and/or Building to its former condition,
and a proportionate allowance shall be made to Tenant for the Rent
corresponding to the time during which, and to the part of which, the Premises
are untenantable. Tenant shall have no right to claim or share in any
condemnation award, whether for a total or partial taking, for loss of
Tenant's leasehold or other loss or expenses; provided, however, Tenant may
prosecute a separate claim for Tenant's relocation costs, loss of fixtures and
business losses, but only to the extent that any award made pursuant to such
claim shall not diminish Landlord's award.
18. Default; Rights and Remedies.
(a) The occurrence of any one or more of the following matters consti
tutes a Default by Tenant under this Lease:
(i) Failure by Tenant to pay any Base Rent or Additional Rent within ten
(10) business days after the date when said rent is due and owing under the
Lease;
(ii) Failure by Tenant to pay, within ten (10) business days after
Tenant's receipt of written notice thereof to Tenant, any other moneys
required to be paid by Tenant under this Lease;
(iii) Failure by Tenant to cure within three (3) business days after
receipt of notice from Landlord any breach of the covenants in respect of
assignment, subletting or other transfer of Tenant's interest under this Lease
set forth in Section 14; provided, however, in the event that such cure cannot
reasonably be effected in such three (3) business day period, Tenant shall
have an additional reasonable period not to exceed thirty (30) days to
complete such cure so long as Tenant commences such cure within such three (3)
business day period and diligently thereafter pursues such cure to completion;
(iv) Failure by Tenant to cure within three (3) business days after
receipt of notice from Landlord, any hazardous condition which Tenant has
created or permitted in violation of law or of this Lease;provided, however,
in the event that such cure cannot reasonably be effected in such three (3)
business day period, Tenant shall have an additional reasonable period not to
exceed thirty (30) days to complete such cure so long as Tenant commences such
cure within such three (3) business day period and diligently thereafter
pursues such cure to completion;
(v) Failure by Tenant to observe or perform any other covenant,
agreement, condition or provision of this Lease, if such failure shall
continue for thirty (30) days after written notice thereof from Landlord to
Tenant, unless a cure would take longer and Tenant has begun to cure within 30
days and diligently pursues it to completion;
(vi) The levy upon execution or the attachment by legal process of the
leasehold interest of Tenant, or the filing or creation of a lien in respect
of such leasehold interest, which lien shall not be released, discharged or
transferred to bond within thirty (30) days from the date of such filing;
(vii) Tenant abandons the Premises;
(viii) Tenant becomes insolvent or bankrupt or admits in writing its
inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors, or applies for or consents to the appointment of a
trustee or receiver for Tenant or for the major part of its property;
(ix) A trustee or receiver is appointed for Tenant or for the major part
of its property and is not discharged within ninety (90) days after such
appointment;
(x) Bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings for relief under any bankruptcy law, or
similar law for the relief of debtors, are instituted (A) by Tenant or (B)
against Tenant and are allowed against it or are consented to by it or are not
dismissed within ninety (90) days after such institution; or
(xi) Any matter described elsewhere in this Lease as a Default and Tenant
fails to cure such Default for thirty (30) days after written notice thereof
from Landlord to Tenant, unless a cure would take longer and Tenant has begun
to cure within 30 days and diligently pursues it to completion.
(b) If a Default occurs, Landlord shall have the rights and remedies
hereinafter set forth, which shall be distinct, separate and cumulative and
shall not operate to exclude or deprive Landlord of any other right or remedy
allowed it at law or in equity or elsewhere in this Lease:
(i) Landlord may terminate this Lease by giving to Tenant written notice
of Landlord's election to do so, in which event the Term of this Lease shall
end, and all right, title and interest of Tenant hereunder shall expire, on
the date stated in such notice;
(ii) Landlord may terminate the right of Tenant to possession of the
Premises without terminating this Lease by giving written notice to Tenant
that Tenant's right of possession shall end on the date stated in such notice,
whereupon the right of Tenant to possession of the Premises or any part
thereof shall cease on the date stated in such notice; and
(iii) Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of Landlord hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, and for the enforcement of any other appropriate legal or
equitable remedy, including without limitation injunctive relief, and for the
accelerated payment of all moneys due or to become due from Tenant under any
of the provisions of this Lease.
(c) If Landlord exercises any of the remedies provided for in
subparagraphs (i) and (ii) of the foregoing Section 18(b), Tenant shall
surrender possession of and vacate the Premises and immediately deliver
possession thereof to Landlord, and Landlord may re-enter and take complete
and peaceful possession of the Premises by process of law, full and complete
license so to do being hereby granted to Landlord, and Landlord may remove all
occupants and property therefrom, using such force as may be necessary, with
out being deemed in any manner guilty of trespass, eviction or forcible entry
and detainer, and without relinquishing Landlord's right to Rent or any other
right given to Landlord hereunder or by law or in equity.
(d) If Landlord terminates the right of Tenant to possession of the
Premises without terminating this Lease, such termination of possession shall
not release Tenant, in whole or in part, from Tenant's obligation to pay the
Rent hereunder for the full Term. In addition and regardless of whether
Landlord terminates Tenant's right of possession to the Premises, Landlord
shall have the right, from time to time, to recover from Tenant, and Tenant
shall remain liable for, all Rent and any other sums thereafter accruing as
they become due under this Lease during the period from the date of such
notice of termination of possession to the stated end of the Term. In any
such case, Landlord shall use reasonable efforts to mitigate its damages, but
Landlord shall not be required to accept any tenant offered by Tenant or to
observe any instructions given by Tenant with regard to any reletting. Also,
in any such case, Landlord may make repairs, alterations and additions in or
to the Premises and redecorate the same to the extent deemed by Landlord
necessary or desirable, and in connection therewith Landlord may change the
locks to the Premises, and Tenant shall upon written demand pay the cost
thereof together with Landlord's expenses of reletting. Landlord may collect
the rents from any such reletting and apply the same first to the payment of
the expenses of reentry, redecoration, repair and alterations and the expenses
of reletting, and second to the payment of Rent herein provided to be paid by
Tenant, and any excess or residue shall operate only as an offsetting credit
against the amount of Rent due and owing or paid as a result of acceleration
or as the same thereafter becomes due and payable hereunder, but the use of
such offsetting credit to reduce the amount of Rent due Landlord, if any,
shall not be deemed to give Tenant any right, title or interest in or to such
excess or residue and any such excess or residue shall belong to Landlord
solely; provided that in no event shall Tenant be entitled to a credit on its
indebtedness to Landlord in excess of the aggregate sum (including Base Rent
and Additional Rent) which would have been paid by Tenant for the period for
which the credit to Tenant is being determined, had no Default occurred. No
such re-entry, repossession, repairs, alterations, additions or reletting
shall be construed as an eviction or ouster of Tenant or as an election on
Landlord's part to terminate this Lease, unless a written notice of such
intention is given to Tenant, or shall operate to release Tenant in whole or
in part from any of Tenant's obligations hereunder, and Landlord may, at any
time and from time to time, sue and recover judgment for any deficiencies from
time to time remaining after the application from time to time of the proceeds
of any such reletting.
(e) In the event of the termination of this Lease by Landlord as pro
vided for by subparagraph (i) of Section 18(b), Landlord shall be entitled to
recover from Tenant all the fixed dollar amounts of Rent accrued and unpaid
for the period up to and including such termination date, as well as all other
additional sums payable by Tenant, or for which Tenant is liable or in respect
of which Tenant has agreed to indemnify Landlord under any of the provisions
of this Lease, which may be then owing and unpaid, and all costs and expenses,
including without limitation court costs and reasonable attorneys' fees
incurred by Landlord in the enforcement of its rights and remedies hereunder,
and in addition, Landlord shall be entitled to recover as damages for loss of
the bargain and not as a penalty (i) the aggregate sum which at the time of
such termination represents the excess, if any, of the present value on the
aggregate rents at the same annual rate for the remainder of the Term as then
in effect pursuant to the applicable provisions of Sections 3 and 4 of this
Lease, over the then present value of the then aggregate fair rental value of
the Premises for the balance of the Term, such present value to be computed in
each case on the basis of a seven percent (7%) per annum discount from the
respective dates upon which such rentals would have been payable hereunder had
this Lease not been terminated; and (ii) any damages in addition thereto,
including reasonable attorneys' fees and court costs, which Landlord shall
have sustained by reason of the breach of any of the covenants of this Lease
other than for the payment of rent.
(f) All property removed from the Premises by Landlord pursuant to any
provisions of this Lease or by law may be handled, removed or stored by
Landlord at the cost and expense of Tenant, and Landlord shall in no event be
responsible for the value, preservation or safekeeping thereof. Tenant shall
pay Landlord for all expenses incurred by Landlord in such removal and for
storage charges for such property so long as the same shall be in Landlord's
possession or under Landlord's control. All such property not removed from
the Premises or retaken from storage by Tenant within thirty (30) days after
the end of the Term, however terminated, shall, at Landlord's option, be
conclusively deemed to have been conveyed by Tenant to Landlord as by bill of
sale, without further payment or credit by Landlord to Tenant.
(g) In the event that at any time during the term of this Lease either
Landlord or Tenant shall institute any action or proceeding against the other
relating to the provisions of this Lease, or any default hereunder, the
unsuccessful party in such action or proceeding agrees to reimburse the
successful party for the reasonable expenses of attorneys' fees and paralegal
fees and disbursements incurred therein by the successful party. Such
reimbursement shall include all reasonable legal expenses incurred prior to
trial, at trial and at all levels of appeal and post judgment proceedings.
(h) Landlord shall be in default under this Lease if Landlord fails to
perform any obligation under this Lease and such failure continues for thirty
(30) days after Tenant's written notice or such additional period as may be
necessary to perform any such obligation provided that Landlord has commenced
such performance within the thirty (30) day period and pursues such
performance diligently thereafter. In the event of such default, Tenant may
elect either (i) to cure such default and receive reimbursement from Landlord
for the Tenant's actual, reasonable expenses incurred in curing such default
(including an amount equal to seven percent [7%] of such expenses as an
overhead and supervision fee), and in the event that Landlord fails to
reimburse Tenant for such expenses within thirty (30) days of Tenant's written
demand, Tenant shall be entitled to offset such costs against Rent, or (ii) to
enforce Landlord's obligations under this Lease, but in no event shall Tenant
be entitled to terminate this Lease except as specifically provided in Section
7 or to seek damages, actual or consequential, except to the extent of
Tenant's actual, reasonable expenses incurred in curing Landlord's default as
provided above.
(i) Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matters whatsoever arising out of or in any way connected with
this Lease or any claim of injury or damage. In the event that Landlord
commences any proceedings for non-payment of Rent, Tenant will not interpose
any counterclaim of whatever nature or description in any such proceedings.
This shall not, however, be construed as a waiver of Tenant's right to assert
such claims in any separate action brought by Tenant. However, Tenant shall
not move to consolidate any such separate action with any action brought by
Landlord for Rent or possession or both.
19. Subordination.
(a) Landlord may have heretofore or may hereafter encumber with a
mortgage the Building, the Land, the Real Property or any interest therein,
and may have heretofore and may hereafter sell and lease back the Land, or any
part of the Real Property, and may have heretofore or may hereafter encumber
the leasehold estate under such lease with a mortgage or trust deed. (Any
such mortgage or trust deed is herein called a "Mortgage" and the holder of
any such mortgage is herein called a "Mortgagee". Any such lease of the
underlying land is herein called a "Ground Lease" and the lessor under any
such lease is herein called a "Ground Lessor". Any Mortgage which is a first
lien against the Building, the Land, the Real Property, the leasehold estate
under a Ground Lease or any interest therein is herein called a "First
Mortgage" and the holder or beneficiary of any First Mortgage is herein called
a "First Mortgagee".) Landlord hereby warrants and represents that the
Building, Land and Real Property are not encumbered by a Mortgage or Ground
Lease as of the date of this Lease.
(b) If requested by a Mortgagee or Ground Lessor, Tenant will either (i)
subordinate its interest in this Lease to the lien of the Mortgage or to the
Ground Lease, and to any and all advances made thereunder and to the interest
thereon, and to all renewals, replacements, supplements, amendments,
modifications and extensions thereof, or (ii) make certain of Tenant's rights
and interest in this Lease superior thereto; and Tenant will promptly execute
and deliver such agreement or agreements as may be reasonably required by such
Mortgagee or Ground Lessor; provided, however, Tenant covenants it will not
subordinate this Lease to any Mortgage other than a First Mortgage without the
prior written consent of the First Mortgagee. Moreover, Tenant may condition
delivery of any instrument subordinating Tenant's interest in this Lease to a
Mortgage or a Ground Lease upon receipt of a non-disturbance and attornment
agreement on the Mortgagee's or Ground Lessor's standard form.
(c) It is further agreed that (a) if any Mortgage shall be foreclosed,
or if any Ground Lease be terminated, (i) the liability of the Mortgagee or
purchaser at such foreclosure sale or the liability of a subsequent owner
designated as Landlord under this Lease shall exist only so long as such
Mortgagee, purchaser or owner is the owner of the Building, Land or Real
Property, and such liability shall not continue or survive after further
transfer of ownership; and (ii) upon request of the Mortgagee, if the Mortgage
shall be foreclosed, Tenant will attorn, as Tenant under this Lease, to the
purchaser at any foreclosure sale under any Mortgage or upon request of the
Ground Lessor, if any Ground Lease shall be terminated, Tenant will attorn as
Tenant under this Lease to the Ground Lessor, and Tenant will execute such
instruments as may be necessary or appropriate to evidence such attornment so
long as such new landlord agrees to recognize Tenant and not to disturb the
tenancy created by this Lease except in accordance with the terms and
provisions of this Lease; and (b) this Lease may not be modified or amended so
as to reduce the Rent or shorten the term provided hereunder, or so as to
adversely affect in any other respect to any material extent the rights of the
Landlord, nor shall this Lease be canceled or surrendered by the mutual
agreement of Landlord and Tenant, without the prior written consent, in each
instance, of the First Mortgagee or any Ground Lessor.
(d) Should any prospective Mortgagee or Ground Lessor require execution
of a short form of lease for recording (containing, among other customary
provisions, the names of the parties, a description of the Premises and the
Term of this Lease), Tenant agrees to execute such short form of lease and
deliver the same to Landlord within ten (10) days following the request
therefor.
20. Mortgagee Protection. Tenant agrees to give any Mortgagee, by
registered or certified mail, a copy of any notice or claim of default served
upon the Landlord by Tenant, provided that prior to such notice Tenant has
been notified in writing (by way of service on Tenant of a copy of an
assignment of Landlord's interests in leases, or otherwise) of the address of
such Mortgagee. If required by the Mortgage, Tenant further will agree that
if Landlord shall have failed to cure such default within twenty (20) days
after such notice to Landlord (or if such default cannot be cured or corrected
within that time, then such additional time as may be necessary if Landlord
has commenced within such twenty (20) days and is diligently pursuing the
remedies or steps necessary to cure or correct such default), then the
Mortgagee shall have an additional thirty (30) days within which to cure or
correct such default (or if such default cannot be cured or corrected within
that time, then such additional time as may be necessary if such Mortgagee has
commenced within such thirty (30) days and is diligently pursuing the remedies
or steps necessary to cure or correct such default), before Tenant may
exercise any right or remedy which it may have on account of any such default
of Landlord.
21. Insurance and Subrogation.
(a) Tenant shall carry insurance during the entire Term hereof and any
extension thereof insuring Tenant, and insuring Landlord, the managing agent
for the Real Property and their respective agents, partners and employees, as
their interests may appear, with terms, coverages and in companies reasonably
satisfactory to Landlord, Tenant shall maintain the following coverages in the
following amounts:
(i) Public liability insurance with the broad form comprehensive general
liability endorsement, including contractual liability insurance covering
Tenant's indemnity obligations hereunder, in an amount not less than
$1,000,000 combined single limit per occurrence, together with umbrella and
excess liability coverage of $5,000,000.
(ii) "All risk" physical damage insurance including fire, sprinkler
leakage, vandalism and extended coverage for the full replacement cost of all
additions, improvements and alterations to the Premises and of all office
furniture, trade fixtures, office equipment, merchandise and all other items
of Tenant's property on the Premises.
(iii) Business interruption or extra expense insurance with limits
not less than those carried by a prudent tenant.
(iv) Worker's compensation insurance in the amounts required by
applicable law.
Any company having a rating from A.M. Best of A+/XII or higher shall be
satisfactory if authorized to do business in Florida. Such insurance may be
carried under a blanket policy covering the Premises and any other of Tenant's
businesses provided the coverage limits set forth herein are available without
limitation or any deductible for the Premises. In addition, so long as Tenant
has a net worth of not less than Five Billion Dollars ($5,000,000,000.00), as
determined in accordance with generally accepted accounting principles and as
reflected in financial statements reasonably approved by Landlord in writing,
Tenant (a) may carry the insurance coverages required above with one or more
companies having an A.M. Best rating of A-/VIII or higher if authorized to do
business in Florida with deductibles not exceeding One Million Dollars
($1,000,000.00) for the public liability insurance and Two Hundred Fifty
Thousand Dollars ($250,000.00) for the "all risk" physical damage insurance,
or (b) may self-insure for the insurance coverages required in subparagraphs
(i), (ii) and (iii) above.
Tenant shall, prior to the commencement of the Term and from time to time
during the Term, furnish to Landlord policies or certificates evidencing the
foregoing insurance coverage. Tenant's policies shall state that such
insurance coverage may not be reduced, canceled or not renewed without at
least thirty (30) days' prior written notice to Landlord and Tenant (unless
such cancellation is due to non-payment of premium, and in that case only ten
(10) days' prior written notice shall be sufficient).
(b) During the entire Term of this Lease, Landlord shall maintain the
following coverages in the following amounts, naming Tenant as an additional
insured:
(i) Public liability insurance with the broad form comprehensive general
liability endorsement, including contractual liability insurance covering
Tenant's indemnity obligations hereunder, in an amount not less than
$1,000,000 combined single limit per occurrence, together with umbrella and
excess liability coverage of $5,000,000.
(ii) "All risk" physical damage insurance including fire, sprinkler
leakage, vandalism and extended coverage for the full replacement cost of
physical damage insurance on the Building, including all mechanical and
electrical equipment therein, and the Land, together with adequate Boiler and
Machinery coverage.
(iii) Business interruption or extra expense insurance in amounts not
in excess of those carried by a prudent landlord.
(iv) Worker's compensation insurance in the amounts required by
applicable law.
Landlord shall, prior to the commencement of the Term and from time to
time during the Term, furnish to Tenant policies or certificates evidencing
the foregoing insurance coverage. Landlord's policies shall state that such
insurance coverage may not be reduced, canceled or not renewed without at
least thirty (30) days' prior written notice to Tenant and Landlord (unless
such cancellation is due to non-payment of premium, and in that case only ten
(10) days' prior written notice shall be sufficient).
(c) Landlord and Tenant agree to have all fire and extended coverage and
material damage insurance which may be carried by either of them endorsed with
a clause providing that any release from liability of or waiver of claim for
recovery from the other party or any of the parties named as additional
insureds entered into in writing by the insured thereunder prior to any loss
or damage shall not affect the validity of said policy or the right of the
insured to recover thereunder, and Landlord's and Tenant's policies shall
provide further that the insurer waives all rights of subrogation which such
insurer might have against any of the named insureds. Without limiting any
release or waiver of liability or recovery contained in any other Section of
this Lease but rather in confirmation and furtherance thereof, Landlord waives
all claims for recovery from Tenant and its agents and employees, and Tenant
waives all claims for recovery from Landlord and its agents, partners,
servants and employees for any loss or damage to any of its property insured
under valid and collectible insurance policies to the extent of any recovery
collectible under such insurance policies.
Notwithstanding the foregoing or anything contained in this Lease to the
contrary, any release or any waiver of claims shall not be operative, nor
shall the foregoing endorsements be required, in any case where the effect of
such release or waiver is to invalidate insurance coverage or invalidate the
right of the insured to recover thereunder or increase the cost thereof
(provided that in the case of increased cost the other party shall have the
right, within ten (10) days following written notice, to pay such increased
cost, thereby keeping such release or waiver in full force and effect).
(d) Tenant and Landlord shall comply with all applicable laws and
ordinances, all orders and decrees of court and all requirements of other
governmental authority, and shall not directly or indirectly make any use of
the Premises or the Building or the Land which may thereby be prohibited or be
dangerous to person or property or which may jeopardize any insurance
coverage, or may increase the cost of insurance or require additional
insurance coverage. Notwithstanding the foregoing if Tenant shall make any
use of the Premises other than the Permitted Use which may increase or has
increased the cost of Landlord's insurance, Tenant shall pay the cost of such
increased insurance within thirty (30) days' written notice.
22. Nonwaiver. Except as otherwise provided herein, no waiver of any
condition expressed in this Lease shall be implied by any neglect of Landlord
or Tenant to enforce any remedy on account of the violation of such
condition, whether or not such violation be continued or repeated
subsequently, and no express waiver shall affect any condition other than the
one specified in such waiver and that one only for the time and in the manner
specifically stated. It is agreed that no receipt of moneys by Landlord from
Tenant after the termination in any way of the Term or of Tenant's right of
possession hereunder or after the giving of any notice shall reinstate,
continue or extend the Term or affect any notice given to Tenant prior to the
receipt of such moneys. It is also agreed that after the service of notice or
the commencement of a suit or after final judgment for possession of the
Premises, Landlord may receive and collect any moneys due, and the payment of
said moneys shall not waive or affect any said notice, suit or judgment.
23. Estoppel Certificate. Landlord and Tenant agree that from time to
time upon not less than twenty (20) days' prior written request by the other
party (the "Requesting Party"), or any existing or prospective Mortgagee or
Ground Lessor, and Tenant will cause any subtenant, licensee, concessionaire
or other occupant of the Premises claiming by, through or under Tenant to,
complete, execute and deliver to Landlord or Landlord's designee or to any
Mortgagee or Ground Lessor, a written estoppel certificate certifying (a) that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that the lease as modified is in full force and effect and
identifying the modifications); (b) the date upon which Tenant began paying
Rent and the dates to which the Rent and other charges have been paid; (c)
that, to the certifying party's knowledge, the Requesting Party is not in
default under any provision of this Lease, or, if in default, the nature
thereof in detail; (d) that the Premises have been completed in accordance
with the terms hereof and Tenant is in occupancy and paying Rent on a current
basis with no rental offsets or claims of which Tenant has knowledge; (e) that
there has been no prepayment of Rent other than that provided for in this
Lease; (f) that there are no actions, whether voluntary or otherwise, pending
against the certifying party under the Bankruptcy Code or the bankruptcy laws
of any state; and (g) such other matters as may be reasonably required by the
Requesting Party, Mortgagee, or Ground Lessor, including, without limitation,
any other information concerning the status of this Lease or the parties,
performance hereunder reasonably requested by the party to whom such estoppel
certificate is to be addressed. Tenant's failure to complete, execute and
deliver any such estoppel certificate within the aforesaid twenty (20) day
period shall be deemed to be a Default under Section 18 of this Lease.
24. Corporate Authority. Landlord and Tenant each represents and
warrants that this Lease has been duly authorized, executed and delivered by
and on behalf of Landlord's and Tenant's respective corporations and
constitutes the valid and binding agreement of the parties hereto in
accordance with the terms hereof. If either party so requests, the other
party shall deliver to it, concurrently with the delivery of this Lease,
certified resolutions of the board of directors authorizing the party's
execution and delivery of this Lease and the performance of its obligations
hereunder.
25. Real Estate Brokers. Landlord and Tenant represent and warrant to
each other that it has directly dealt with and only with the Brokers in
connection with this Lease and agrees to indemnify and hold the other party,
harmless from all losses, damages and liabilities, claims, liens, costs and
expenses including, without limitation, reasonable attorneys' fees, arising
from any breach of the foregoing representation. Landlord shall be solely
responsible for any commission due Phoenix Realty Group, Inc. and LaSalle
Partners Asset Management Limited ("LaSalle") pursuant to the terms and
provisions of a separate agreement. Such agreement shall provide that LaSalle
shall be solely responsible for any commission or other compensation due
Heitman Financial Ltd. and McCoy Realty Group. If Landlord does not pay
LaSalle the commission within thirty (30) days of when due, Tenant may pay
LaSalle and receive a credit against Rent.
26. Notices. All notices to or demands upon Landlord or Tenant desired
or required to be given under any of the provisions hereof shall be in
writing. Any notices or demands from Landlord to Tenant shall be mailed by
United States registered or certified mail, return receipt requested, or sent
by nationally recognized courier service such as Federal Express or Airborne,
addressed to Tenant at:
The Prudential Insurance Company of America
Two Gateway Center
17th Floor
100 Mulberry Street
Newark, New Jersey 07102
Attention: Vice President of Corporate Real
Estate and General Counsel.
Any notices or demands from Landlord to Tenant may be signed by Landlord, the
managing agent for the Real Property or any agent of any of them. Any notices
or demands from Tenant to Landlord shall be mailed by registered or certified
mail, return receipt requested, or sent by a nationally recognized courier
service such as Federal Express or Airborne, addressed to Landlord at
Landlord's address for payment of Rent as designated in Section 3 of this
Lease. Either party may, upon notice to the other, change its address for
receipt of notices or demands. All notices to or demands upon Landlord or
Tenant shall be deemed served at the time the same were received.
27. Miscellaneous.
(a) Each provision of this Lease shall extend to and shall bind and
inure to the benefit not only of Landlord and Tenant, but also their
respective heirs, legal representatives, successors and assigns, but this
provision shall not operate to permit any assignment, subletting, mortgage,
lien, charge, or other transfer or encumbrance contrary to the provisions of
this Lease.
(b) No modification, waiver or amendment of this Lease or of any of its
conditions or provisions shall be binding upon Landlord or Tenant unless in
writing signed by Landlord and Tenant.
(c) Submission of this instrument for examination shall not constitute a
reservation of or option for the Premises or in any manner bind Landlord or
Tenant, and no lease or obligation on Landlord or Tenant shall arise until
this instrument is signed and delivered by Landlord and Tenant.
(d) The word "Tenant" whenever used herein shall be construed to mean
Tenants or any one or more of them in all cases where there is more than one
Tenant; and the necessary grammatical changes required to make the provisions
hereof apply either to corporations or other organizations, partnerships or
other entities, or individuals, shall in all cases be assumed as though in
each case fully expressed. In all cases where there is more than one person
or entity comprising Tenant, the liability of each shall be joint and several.
(e) Clauses, plats, exhibits and riders, if any, affixed to this Lease
are made an integral part hereof.
(f) The headings of Sections are for convenience only and do not limit,
expand or construe the contents of the Sections.
(g) Time is of the essence of this Lease and of each and all provisions
thereof.
(h) All amounts (including, without limitation, Base Rent and Additional
Rent) owed by either party pursuant to any provision of this Lease shall bear
interest from the date due until paid at the annual rate equal to the lesser
of eighteen percent (18%) per annum or the highest non-usurious rate permitted
by law.
(i) The invalidity of any provision of this Lease shall not impair or
affect in any manner the validity, enforceability or effect of any other provi
sions of this Lease.
(j) All understandings and agreements, oral or written, heretofore made
between the parties hereto and any of their agents (other than their brokers)
are merged in this Lease, which alone fully and completely expresses the
agreement between Landlord and Tenant.
(k) Without limiting any provisions of this Lease, if Landlord fails to
perform timely any of the terms, covenants and conditions of this Lease on
Landlord's part to be performed, and such failure is due in whole or in part
to any strike, lockout, labor trouble, civil disorder, inability to procure
materials, failure of power, restrictive governmental laws and regulations,
riots, insurrections, war, fuel shortages, accidents, casualties, acts of God,
acts caused directly or indirectly by Tenant (or Tenant's employees, agents,
licensees, invitees or contractors) or any other cause beyond the reasonable
control of Landlord, then Landlord shall not be deemed in default under this
Lease as a result of such failure.
(l) Any payment received from Tenant may be applied by Landlord at any
time against any obligation due and owing by Tenant under this Lease, not
withstanding any statement appearing on or referred to in any remittance from
Tenant or any prior application of such payment. If a petition under the Bank
ruptcy Code is initiated within ninety (90) days after receipt by Landlord of
any such payment, the payment shall be deemed applicable to any unpaid
obligations then due in the inverse order of their maturity.
(m) This Lease may be executed in counterparts, which when taken
together, shall constitute the binding agreement of the parties hereto.
28. Landlord. The term "Landlord" as used in this Lease means only the
owner of the Real Property from time to time. In the event of any conveyance,
once or successively, of the Real Property, said Landlord making such
conveyance shall be and hereby is entirely freed and relieved of all covenants
and obligations of Landlord hereunder accruing after such conveyance, and
Tenant agrees to look solely to such grantee with respect thereto as long as
this Lease shall not be affected. A mortgagee shall not be deemed such a
grantee under this Section 28, unless and until the foreclosure of any
Mortgage or the conveyance or transfer of Landlord's interest under this Lease
in lieu of foreclosure, and then subject to the provisions of Section 19.
This Lease shall not be affected by any such conveyance, and Tenant agrees to
attorn to the purchaser, grantee or assignee as more specifically set forth in
Section 19.
29. Title and Covenant Against Liens. Landlord's title is and always
shall be paramount to the title of Tenant, and nothing in this Lease contained
shall empower Tenant to do any act which can, shall or may encumber the title
of Landlord. Tenant covenants and agrees not to suffer or permit any lien of
mechanics or materialmen to be placed upon or against the Premises, the
Building, the Land or against the Tenant's leasehold interest in the Premises
and, in case of any such lien attaching, within thirty (30) days either to pay
and remove same or to transfer the lien to bond. Tenant has no authority or
power to cause or permit any lien or encumbrance of any kind whatsoever,
whether created by act of Tenant, operation of law or otherwise, to attach to
or be placed upon the Premises, the Building or the Land, and any and all
liens and encumbrances created by Tenant shall attach only to Tenant's
interest in the Premises. If any such liens so attach and Tenant fails to pay
and remove the same or transfer the liens to bond within thirty (30) days
after written demand by Landlord, such failure shall be an event of Default
hereunder, and Landlord, at its election, may pay and satisfy the same, and in
such event the sums so paid by Landlord, with interest from the date of
payment at the rate set forth in Section 27(h) hereof for amounts owed
Landlord by Tenant, shall be deemed to be Additional Rent due and payable by
Tenant immediately upon written notice from Landlord.
30. Signage. With Landlord's prior written consent, which shall not be
unreasonably withheld, and subject to compliance with all applicable codes and
the other terms and provisions of this Lease, Tenant shall be entitled (i) to
erect Tenant's signage in an area not to exceed four feet by eight feet (4'x
8') on the west side of the lower span on the exterior face of the front of
the Building pursuant to signage specifications approved by Landlord in
writing; provided, however, in no event shall Tenant be entitled to mount any
signage or other apparatus whatsoever on the roof of the Building or to make
any penetrations of the roof membrane for any reason whatsoever or make or
perform any alterations or improvements in any way affecting the roof or the
roof membrane, and (ii) to place on the west set of entrance doors to the
common area lobby of the Building Tenant's name in a manner comparable to that
of the existing America Online signage on the east set of such doors.
31. Exculpatory Provisions. It is expressly understood and agreed by
and between the parties hereto, anything herein to the contrary
notwithstanding, that each and all of the representations, warranties,
covenants, undertakings and agreements herein made on the part of any Landlord
while in form purporting to be the representations, warranties, covenants,
undertakings and agreements of such Landlord are nevertheless each and every
one of them made and intended, not as personal representations, warranties,
covenants, undertakings and agreements by such Landlord, or for the purpose or
with the intention of binding such Landlord personally, but are made and
intended for the purpose only of subjecting such Landlord's interest in the
Premises and the Real Property to the terms of this Lease and for no other
purpose whatsoever, and in case of default hereunder by such Landlord (or
default through, under or by any of its beneficiaries, or any of the agents or
representatives of said beneficiaries), Tenant shall look solely to the
interests of such Landlord in the Premises and the Real Property.
32. Hazardous Substances.
(a) Tenant agrees not to generate, store, use, treat or dispose of, nor
to allow, suffer or permit the generation, storage, use treatment or disposal
of, any "Hazardous Waste" or "Hazardous Substance" (as those terms are defined
in Resource Conservation and Recovery Act, 42 U.S.C., Section 6901, et seq.,
as amended ("RCRA"), or the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C., Section 9601, et seq., as amended ("CERCLA"),
and any rules and regulations now or hereafter promulgated under either of
such acts) or any pollutants or other contaminant (including, without
limitation, petroleum-related products) on, in, from or about the Premises,
Building or the Real Property, except in strict accordance with applicable
laws and regulations and following written notice of same to Landlord. Tenant
shall and hereby does indemnify and hold Landlord harmless from and against
any and all loss, damages, expenses, fees, claims, costs and liabilities
(including, but not limited to, attorneys' fees and costs of litigation)
arising out of or in any manner related to the "release" or "threatened
release" of, and for any clean-up responsibility imposed under any federal,
state or local law, ordinance, rule or regulations now or hereafter in effect,
with respect to, any "Hazardous Waste" or "Hazardous Substance", or any
pollutant, or other contaminant (including, without limitation,
petroleum-related products) or environmental condition on, in from or about
the Premises, Building or the Real Property or any portion thereof, which
release or threatened release of pollutant or environmental condition arises
out of or is in any manner related to Tenant's use or occupancy of the
Premises, Building or Real Property by Tenant, its agents, employees,
contractors or invitees. Tenant shall not be responsible for and shall have
no liability with regard to any "Hazardous Waste" or "Hazardous Substance" or
other pollutant or other contaminant or environmental condition established to
be in, on, under or about the Building or the Land on the date of this Lease.
(b) Landlord hereby warrants and represents that it has no actual,
present knowledge of any "Hazardous Waste" or "Hazardous Substance" in, on,
under or about the Building or the Land except as described in that certain
Preliminary Groundwater Investigation dated May 3, 1994, prepared by Dames &
Moore and addressed to Landlord. Landlord shall and hereby does indemnify and
hold Tenant harmless from and against any and all loss, damages, expenses,
fees, claims, costs and liabilities (including, but not limited to, attorneys'
fees and costs of litigation) arising out of or in any manner related to the
"release" or "threatened release" by Landlord, its agents, employees or
contractors, of, and for any clean-up responsibility imposed under any
federal, state or local law, ordinance, rule or regulations now or hereafter
in effect, with respect to, any "Hazardous Waste" or "Hazardous Substance", or
any pollutant, or other contaminant (including, without limitation, petroleum-
related products) or environmental condition on, in from or about the
Premises, Building or the Real Property or any portion thereof; provided,
however, in no event shall Landlord have any liability to Tenant for any such
"release" or "threatened release" by any tenant of the Project or any agent,
employee, contractor or invitee of any tenant of the Project.
33. Radon Gas. Section 404.056(7), Florida Statutes, requires the
following disclosure: Radon is a naturally occurring radioactive gas that,
when it has accumulated in 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.
34. Access. Landlord's agents, employees, contractors, prospective
purchasers, mortgagees and, during the last two hundred seventy (270) days of
the Term, prospective tenants, shall have the right to enter the Premises at
reasonable hours upon notice to Tenant for the purpose of inspecting the
same, and further, Landlord, its employees, agents and contractors shall have
the right to enter the Premises at reasonable hours upon notice to Tenant or
at any time without notice in the case of an emergency for the purpose of
making repairs thereto and to the Building and its mechanical systems and for
the purpose of performing the services to be performed by Landlord pursuant to
the terms hereof; provided in all cases, however, that any such right of entry
shall be subject to such security regulations or procedures as may reasonably
be imposed by Tenant or any governmental authority having jurisdiction
thereof, and provided further, however, that in each case Landlord shall use
reasonable efforts to minimize the disturbance to Tenant and to protect
Tenant's fixtures, alterations and personal property. Landlord, having used
such reasonable efforts, shall incur no liability to Tenant for such
inconvenience, annoyance or disturbance as shall result from such entry.
Landlord shall also use reasonable efforts to minimize disturbance caused by
Landlord doing repairs or construction in other parts of the Building and,
having used such reasonable efforts, shall incur no liability to Tenant for
inconvenience, annoyance or disturbance as shall result from such repairs or
construction. During the prosecution and immediately after the completion of
any such repairs or construction, Landlord shall clean the Premises and the
common areas of the Building and shall remove any debris therefrom. Nothing
in this Section 34 shall be deemed to limit Tenant's rights pursuant to
Section 7(d) in the event of an interruption of services.
35. Satellite Antenna Receiving Dish. Landlord hereby grants permission
to Tenant to furnish and install, at Tenant's sole cost and expense, a wall-
mounted satellite antenna receiving dish, subject to the following terms and
conditions to which Tenant hereby agrees:
(a) The dish shall be no more than thirty-six inches (36") in
diameter and will be installed at a location mutually acceptable to Landlord
and Tenant on the east side of the Building (the dish, and all wiring,
equipment and other property in any way related to it, are herein collectively
called the "Device"). At all time the Device will be maintained, repaired and
protected by and at the expense of Tenant. Landlord will have the right to
approve the Device and the installation thereof. Landlord's approval of the
Device and its location will not be unreasonably withheld.
(b) If, by reason of the Device, the rate(s) for any of Landlord's
liability, fire and/or other insurance coverage(s) should at any time(s)
increase, Tenant will pay such increase to Landlord upon request and as
Additional Rent.
(c) Placement and keeping of the device in the Building, and use of
any part of the Building by Tenant in connection therewith, will be at
Tenant's sole risk. Tenant hereby agrees to defend on behalf of Landlord,
with counsel reasonably acceptable to Landlord, any and all claims, actions
and demands relating to persons and/or property in which Landlord may be named
and relating in any way to the Device. Tenant further agrees to and hereby
does indemnify, defend, protect and hold Landlord harmless against all
liabilities, costs and expenses so resulting, arising or connected. Without
limiting the foregoing, on request Tenant will pay to Landlord, as Additional
Rent, all sums that may be incurred by Landlord for repairing or replacing any
property of Landlord and/or any other tenant(s) or occupant(s) of the Building
that may be damaged or destroyed by reason of anything resulting from or in
any way connected with the installation, use, maintenance, repair or removal
of the Device.
(d) Tenant will conform to and comply with all applicable present
and future laws, codes, rules, regulations and ordinances of all governmental
and quasi-governmental authorities having jurisdiction and the requirements
and recommendations of Landlord's insurance carriers regarding the Device and
the installation, use, maintenance, repair and removal thereof. All requisite
licenses, authorizations and permits will be obtained and maintained by
Tenant, at its expense, and will be available for inspection by Landlord upon
request throughout the Term.
(e) Intentionally Omitted.
(f) Landlord shall provide reasonable access to the Device and
means to connect the Device to the Premises; provided, however, that Tenant
shall not enter upon or use, nor allow anyone acting on Tenant's behalf to
enter upon or use, the roof of the Building or any part thereof in connection
with the Device.
(g) Landlord will not be responsible for furnishing any utilities
or other services for or in connection with the Device. Tenant, with the
prior written consent of Landlord (which consent Landlord agrees will not be
unreasonably withheld), will arrange for the furnishing of any necessary
services to the Device and Tenant will pay for the same. Landlord will not be
liable for any losses or damages directly or indirectly resulting from
cessation or interruption of any services to the Device. However, if any
service rendered to the Device is interrupted by reason of the act of
Landlord, Landlord agrees to use reasonable diligence in the restoration of
such service. Landlord reserves the right to interrupt any services or
facilities respecting the Device at such time(s) and for as long as Landlord
may deem reasonably necessary by reason of accidents or strikes or the making
of repairs, alterations or improvements, or by reason of any cause beyond
Landlord's reasonable control; except in an emergency, Landlord will give
Tenant prior notice of any such interruption (which notice need not be
written, notwithstanding Section 26).
(h) Landlord and its designees may (but will not be required to)
enter upon the portion of the Building where the Device is located at all
hours for such purposes as Landlord may deem necessary or advisable, including
inspecting the Device and making such changes in and to the Building as
Landlord may reasonably determine.
(i) Landlord may terminate Tenant's right to use the Device, after
written notice to Tenant, provided (a) such termination is due to interference
with presently existing communications facilities caused by or in any way
related to the Device and (b) relocation of the Device to an area of the
Building reasonably satisfactory to Landlord will not eliminate the
interference. For the purposes of this paragraph, "interference" is defined
as a condition which constitutes interference within the meaning of the
provisions of the recommended practices of the Electronics Industry
Association and/or the rules and regulations of the Federal Communications
Commission or any other governmental or quasi-governmental authority, and/or a
condition which adversely affects the proper and efficient maintenance,
servicing and/or operation or the Real Property or any part(s) thereof or any
equipment in or about the Building. Notwithstanding the foregoing, if Tenant
can eliminate the interference within a time frame and in a manner reasonably
acceptable to Landlord, Tenant, at its expense, may restore the Device to
operation.
(j) Notwithstanding anything contained in Section 9 of this Lease
to the contrary, upon expiration or sooner termination of the Term, Tenant
will remove the Device and repair any damage caused thereby. Failure to do so
will entitle Landlord to effect such removal, at Tenant's expense, payable on
request and as Additional Rent. Property removed by Landlord may be disposed
of as Landlord determines, without liability or accountability therefor.
(k) Tenant agrees to coordinate Tenant's use of the Device with use
by Landlord and others who may now or at any time hereafter have use of the
general area where the Device is located.
(l) If Landlord requires Tenant to relocate or temporarily remove
the Device to accommodate installations by Landlord or any other tenant(s) or
occupant(s) of the Building, the same will be done by Tenant, at the expense
of Landlord or such other tenant(s) or occupant(s).
(m) Notwithstanding any contrary provision hereof, Tenant's use of
the general area of the Building where the Device is located will be strictly
limited to such actions, and to such places within such general area, as are
reasonably necessary for Tenant to exercise its rights hereunder.
IN WITNESS WHEREOF, this Lease was executed as of the Effective Date.
Signed, sealed and delivered
in the presence of: LANDLORD:
IMESON CENTER, INC., a Florida corporation
/S/ DALE GLANTON By:/S/ W. ARIS NEWTON
Name:Dale Glanton Name:W. Aris Newton
Title:President
/S/ W. CAREY WEBB
Name: W. Carey Webb
TENANT:
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
/S/ RANDALL H. STEPHENS By:/S/ MICHAEL BAUMANN
Name:Randall H. Stephens Name:Michael Baumann
Title:Vice President - Real Estate
/S/ MICHAEL J. HUGHES
Name:Michael J. Hughes
EXHIBIT A
PREMISES
Graphical depiction of mezzanine level and second floor floor plans.
EXHIBIT A-1
SITE PLAN SHOWING TENANT'S PARKING AREA
Graphical depiction of tenant's parking area.
EXHIBIT B
RULES AND REGULATIONS
1. The sidewalks, walks, plaza entries, corridors, concourses, ramps,
staircases, escalators and elevators shall not be obstructed or used for any
purpose other than ingress and egress to and from the Premises. No bicycle or
motorcycle shall be brought into the Building or kept on the Premises without
the consent of Landlord.
2. No freight, furniture or bulky matter of any description will be
received into the Building or carried into the elevators except in such a
manner, during such hours and using such elevators and passageways as may be
approved by Landlord, and then only having been scheduled in advance. Any
hand trucks, carryalls or similar appliances used for the delivery or receipt
of merchandise or equipment shall be equipped with rubber tires, side guards
and such other safeguards as Landlord shall require.
3. Landlord shall have the right to prescribe the weight, position and
manner of installation of safes and/or other heavy equipment which shall, if
considered necessary by Landlord, be installed in a manner which shall insure
satisfactory weight distribution. All damage done to the Building by reason
of a safe or any other article of Tenant's office equipment being on the
Premises shall be repaired at the expense of Tenant. The time and manner of
moving safes and/or other heavy equipment shall be subject to prior approval
by Landlord.
4. Only persons authorized by Landlord will be permitted to furnish
towels, barbering, and other similar services to Tenant on the Premises, and
only at hours and under regulations fixed by Landlord.
5. Tenant, or the employees, agents, servants, visitors or licensees of
Tenant shall not at any time, place, leave or discard any rubbish, paper,
articles or objects of any kind whatsoever outside the doors of the Premises
or in the corridors or passageways of the Building. No animals or birds shall
be brought or kept in or about the Building.
6. Landlord shall have the right to prohibit any advertising about the
Building by Tenant which, in Landlord's opinion, tends to impair the
reputation of the Building or its desirability for offices, and upon written
notice from Landlord, Tenant will refrain from or discontinue such
advertising.
7. Tenant shall not place, cause or allow to be placed any sign or
lettering whatsoever, at, in, about or upon the Premises, except in and at
such places as may be designated by Landlord and consented to by Landlord in
writing. All lettering and graphics on corridor doors shall conform to the
standard prescribed by Landlord.
8. Canvassing, soliciting or peddling in the Building is prohibited and
Tenant shall cooperate to prevent same.
9. All persons in or entering the Building shall be required to comply
with the security policies of the Building. Landlord will provide all
security services for the Building, provided that if Tenant desires any
additional security service for the Premises, Tenant shall have the right
(with the advance written consent of Landlord) to obtain such additional
service at Tenant's sole cost and expense.
10. Only workmen approved by Landlord (and such approval shall not be
unreasonably withheld) may be employed for repairs, installation, alterations,
painting, material moving and other similar work that may be done on the
Premises.
11. Except as otherwise provided in the Lease, Tenant shall not do any
cooking or conduct any restaurant, luncheonette or cafeteria for the sale or
service of food or beverages to its employees or to others. Tenant may,
however, operate a kitchen by and for its employees in accordance with the
terms and provisions of this Lease.
12. Tenant shall not bring or permit to be brought or kept in or on the
Premises any inflammable, combustible, corrosive, caustic, poisonous or
explosive fluid, material, chemical or substance, or cause or permit any odors
to permeate in or emanate from the Premises.
13. Tenant shall not mark, paint, drill into, or in any way deface any
part of the Building or the Premises. No boring, cutting or stringing of
wires shall be permitted, except with the prior written reasonable consent of
Landlord. Tenant shall not install any resilient tile or similar floor
covering in the Premises except with the prior approval of Landlord, such
approval not to unreasonably be withheld.
14. No locks or bolts of any kind, other than Tenant's badge-lock system
shall be placed on any door in the Building or the Premises and no lock on any
door therein shall be changed or altered in any respect without Landlord's
prior consent, not to be unreasonably withheld. Landlord shall furnish two
keys for each lock on doors in the Premises and shall, on Tenant's request and
at Tenant's expense, provide additional duplicate keys. All keys shall be
returned to Landlord upon the termination of this Lease. Landlord may at all
times keep a pass key to the Premises. All entrance doors to the Premises
shall be left closed at all times, and left locked when the Premises are not
in use.
15. Tenant shall give immediate notice to Landlord in case of known
accidents in the Premises or in the Building or of known defects therein or in
any fixtures or equipment, or of any known emergency in the Building.
16. Tenant shall not use the Premises or permit the Premises to be used
for photographic, multilith or multigraph reproduction except in connection
with its own business.
17. Tenant shall not use or permit any portion of the Premises to be
used as an office for a public stenographer or typist, offset printing, the
sale of liquor or tobacco, a barber or manicure shop, an employment bureau, a
doctor's or dentist's office, a dance or music studio, any type of school, or
for any use other than those specifically granted in this Lease.
18. Tenant shall not advertise for laborers giving the Premises as an
address, nor pay laborers at a location in the Premises. The foregoing shall
not be deemed to prohibit Tenant from advertising for and hiring employees
consistent with Tenant's Permitted Use.
19. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry and
which is allowed by law. Business machines and mechanical equipment belonging
to Tenant which cause noise, vibration or any other nuisance that are
transmitted to the structure or other portions of the Building or to the
Premises, to such a degree as to be objectional to Landlord or which interfere
with the use or enjoyment by other tenants of their premises or the public
portions of the Building, shall be placed and maintained by Tenant, at
Tenant's expense, in settings of cork, rubber or spring type vibration
eliminators sufficient to eliminate noise and vibration.
20. No draperies, shutters or other covering may be installed by Tenant
between the Building Standard window covering and the exterior windows or
walls. Installation and use of lighting which is visible from the exterior of
the Building, except for Building Standard lights, are subject to the prior
written approval of Landlord, not to be unreasonably withheld.
21. Except as otherwise provided in the Lease, Tenant shall not place,
install or operate within the Premises or any other part of the Building any
engine, stove or machinery, or conduct mechanical operations therein, without
the written consent of Landlord.
22. No portion of the Premises or any other part of the Building shall
at any time be used or occupied as sleeping or lodging quarters.
23. Tenant shall not permit its employees to smoke anywhere on the Real
Property other than the smoking area designated by Landlord pursuant to the
terms of this Lease.
EXHIBIT C
ANNUAL AND MONTHLY BASE RENT
Lease Year Annual Base Annual Monthly
of Term Rent/RSF Base Rent Base Rent
1 $ 6.95 $ 966,036.10 $ 80,503.01
2 $ 7.20 $ 1,000,785.60 $ 83,398.80
Renewal Option Term of Four (4) Lease Years
3 $ 7.50 $ 1,042,485.00 $ 86,873.75
4 $ 7.80 $ 1,084,184.40 $ 90,348.70
5 $ 8.10 $ 1,125,883.80 $ 93,823.65
6 $ 8.40 $ 1,167,583.20 $ 97,298.60
Renewal Option Term of Six (6) Months
Monthly Base Rent - $ 86,873.75
EXHIBIT C-1
MONTHLY BASE RENT
FOR SPACE ON EACH FLOOR OF THE PREMISES
Mezzanine Level Space of Premises
(90,026 rentable square feet) $52,140.06
Second Floor Space of Premises
(48,972 rentable square feet) $28,362.95
EXHIBIT D
LEGAL DESCRIPTION OF THE LAND
EXHIBIT E
DESCRIPTION OF PLANS
EXHIBIT F
SCHEDULE OF ITEMS SHOWN IN THE PLANS WHICH TENANT MAY REMOVE
FROM THE PREMISES IN ACCORDANCE WITH SECTION 9(b).
1. Telephone switch, telephones and LAN/WAN servers and any
supplemental or replacement equipment relating to such equipment.
2. UPS 160 kva Module and any supplemental or replacement equipment
relating to such equipment.
EXHIBIT G
COPY OF PROPOSAL FROM THE AUCHTER COMPANY
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
IMESON CENTER, INC., A FLORIDA CORPORATION
ASSIX AUTOMOTIVE, INC., A FLORIDA CORPORATION
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,047,166
<SECURITIES> 0
<RECEIVABLES> 451,168
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,183,923
<PP&E> 8,378,084
<DEPRECIATION> 648,792
<TOTAL-ASSETS> 10,936,428
<CURRENT-LIABILITIES> 1,967,073
<BONDS> 0
0
0
<COMMON> 4713
<OTHER-SE> 7,106,642
<TOTAL-LIABILITY-AND-EQUITY> 10,936,428
<SALES> 3,344,700
<TOTAL-REVENUES> 3,344,700
<CGS> 0
<TOTAL-COSTS> 2,661,356
<OTHER-EXPENSES> 842,123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,400
<INCOME-PRETAX> (210,179)
<INCOME-TAX> (266,000)
<INCOME-CONTINUING> 64,821
<DISCONTINUED> 155,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 219,821
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
