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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/ / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED:
/X/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM OCTOBER 1, 1997 TO JUNE 30, 1998
Commission File No. 33-24464-NY
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IMTEK OFFICE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2958856
(State of Incorporation) (I.R.S. Employer Identification
No.)
2111 VAN DEMAN ST., BALTIMORE, MD 21224
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (410) 633-5700
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 / / No /X/
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked price of
such stock, as of a specified date within 60 days prior to the date of filing.
There is currently no market for the issuer's stock.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as the latest practicable date. 7,532,366 shares of
common stock, par value $.000001 per share, and 6,740 shares of Series A
Convertible Preferred Stock, par value $100 per share, were issued and
outstanding as of September 18, 1998.
Documents Incorporated by Reference: None.
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IMTEK OFFICE SOLUTIONS, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
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Part I
Item 1. Business..................................................................................... 4
Item 2. Properties................................................................................... 16
Item 3. Legal Proceedings............................................................................ 17
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 18
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters........................ 19
Item 6. Selected Financial Data...................................................................... 19
Item 7. Management's Discussion and Analysis of Financial Condition And Results of Operations........ 20
Item 8. Financial Statements and Supplementary Data.................................................. 24
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......... 52
Part III
Item 10. Directors and Executive Officers of the Registrant........................................... 54
Item 11. Executive Compensation....................................................................... 56
Item 12. Security Ownership of Certain Beneficial Owners and Management............................... 57
Item 13. Certain Relationships and Related Transactions............................................... 58
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................. 59
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PART I
FORWARD LOOKING INFORMATION
This report includes or incorporates by reference certain statements which
are "forward looking statements" within the meaning of the Private Securities
Litigation Act of 1995. Forward-looking statements are based on various factors
and assumptions that include known and unknown risks and uncertainties, changes
in economic conditions, increases in inventory and equipment costs, subcontract,
labor costs and general competitive factors may cause actual results to differ
materially. Certain words, such as "goal", "expect", "believe" and similar
expressions, as they relate to the Registrant, are intended to identify
forward-looking statements. Such statements reflect the current views of the
Registrant with respect to future events and are subject to certain risks,
uncertainties and assumptions that could cause actual results to differ
materially from those reflected in the forward-looking statement. No assurance
can be given that the results in any forward-looking statement will be achieved.
ITEM 1. BUSINESS.
INTRODUCTION
Imtek Office Solutions, Inc. (the "Registrant"), formerly Spectrum Equities,
Inc., effectively commenced operations on April 1, 1997 and engages in the
wholesale and retail sale of copiers and facsimile machines, the servicing of
office equipment, rebuilding and rental of high volume copiers and duplicators,
the provision of commercial printing and duplicating services and, to a lesser
extent, the retail sale of office supplies. The Registrant also provides
specialty finance and merchant banking services such as viatical settlements,
office equipment leasing, accounts receivable financing and factoring. The
Registrant principally operates in the Mid-Atlantic region, consisting of
Philadelphia, Pennsylvania, Baltimore, Maryland, Washington, D.C., Richmond,
Virginia, the Tidewater area of Southeastern Virginia and the Atlanta, Georgia
metropolitan market.
HISTORY
The Registrant was organized as a Delaware corporation by filing a
certificate of incorporation with the Delaware Secretary of State on November 9,
1987, under the name Vision Capital, Inc. After its organization, the Registrant
conducted business as a photo-finishing laboratory, processing and printing film
for commercial photographers and photographic studios, including portrait studio
operations.
On March 31, 1989, the Registrant completed a public stock offering of
10,000 shares at a price of $5.00 per share. The shares were included in a
registration statement filed with the Securities and Exchange Commission.
WILMOTH ACQUISITION.
On May 31, 1990, the Registrant entered into an agreement with Wilmoth's
Color Lab, Inc., a Tennessee corporation ("Wilmoth"), to acquire all of the
issued and outstanding shares of common stock of Wilmoth in exchange for a total
of 15,340,000 newly issued shares of the Registrant's common stock, which
transaction resulted in a change in the voting control, principal business, and
management of the Registrant. By September 1, 1990, the merger of Wilmoth into
the Registrant was consummated and the Registrant changed its name to
Diversified Photographic Industries, Inc., and continued the operations of
Wilmoth as a photo-finishing laboratory located in Memphis, Tennessee.
Wilmoth conducted operations in that location through the date of the
transaction with the Registrant. The Registrant continued its operations as a
photo-finishing laboratory until it ceased operations on March 15, 1992. At that
time, the secured creditors foreclosed upon the principal assets of the
Registrant and the remaining unencumbered assets were sold to United Color Labs,
Inc., on August 21, 1992 for the sum of $85,000.
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CHAPTER 11 REORGANIZATION.
The Registrant filed for reorganization under Chapter 11 of the Bankruptcy
Code in U.S. Bankruptcy Court for the Northern District of Texas and its plan of
Reorganization was approved in 1995 and the Registrant emerged as a corporate
shell with no liabilities relating to its prior business ventures. On February
26, 1996, the Registrant changed its name to Spectrum Equities, Inc.
ACQUISITION OF IMTEK CORPORATION.
On April 22, 1997, the Registrant acquired all the issued and outstanding
common stock of Imtek Corporation, a Maryland corporation, and changed its name
to Imtek Office Solutions, Inc., as set forth in the report on Form 8-K filed by
the Registrant on April 22, 1997, which is incorporated into this report by
reference.
BENEFICIAL ASSISTANCE, INC. AND THOMPSON BUSINESS PRODUCTS, INC. ACQUISITION.
On October 1, 1997, the Registrant initiated its acquisition strategy.
During that month, the Registrant acquired substantially all of the business of
Beneficial Assistance, Inc. ("Beneficial"), a financial services corporation
specializing in viatical settlements, business involving the buying and
reselling of life insurance policies owned by terminally ill individuals. The
acquisition was consummated through two separate transactions: an asset purchase
(the "Asset Purchase") and an exchange of stock (the "Exchange").
On October 1, 1997, Imtek Services Corporation ("Services"), a direct
wholly-owned subsidiary of the Registrant, purchased a computer system from
Beneficial and entered into non-competition agreements with Brad C. Thompson,
Robert W. Hoover and Andrew J. Walter, the stockholders of Beneficial
(hereinafter, the "Beneficial Stockholders"), in exchange for a one-year
installment note payable to the Beneficial Stockholders in the aggregate
principal amount of $240,000, bearing interest compounded annually at a rate of
8% (the "Installment Note").
Effective October 1, 1997, Beneficial distributed its assets, except for
approximately $35,000 in cash and the computer system purchased by the
Registrant in the Asset Purchase, and its liabilities, except for certain
contingent liabilities carried on the books of Beneficial, to the Beneficial
Stockholders (hereinafter, the "Distribution").
The Beneficial Stockholders then contributed the assets and liabilities
received in the Distribution to Thompson Business Products, Inc., a Maryland
corporation formed on October 10, 1997, in exchange for 50,000 shares of common
stock of Thompson, constituting all of the authorized share capital of Thompson
(the "Contribution").
Immediately following the Contribution, the Registrant acquired Thompson in
a transaction in which Services exchanged 1,000,000 shares of the Registrant's
common stock for all 50,000 shares of capital stock of Thompson. The effect of
the transaction was to make Thompson a direct wholly-owned subsidiary of
Services.
In addition to the 1,000,000 shares of the Registrant's common stock paid by
the Registrant in the Exchange, the Registrant and the Beneficial Stockholders
entered into an agreement to pay up to $185,000 to Messrs. Thompson, Hoover and
Walter in the event that certain revenue targets were met as of September, 1998
(hereinafter, the "Earnout"). The targets were met and the Earnout paid by June,
1998.
The written agreements originally entered into by the parties in connection
with the Asset Purchase, the Exchange and the Earnout did not accurately reflect
the intentions of the parties nor the manner in which the Asset Purchase,
Exchange and Earnout was actually consummated. As a result, the parties to the
Asset Purchase, the Exchange and the Earnout entered into a Restated Asset
Purchase Agreement, a Restated Exchange Agreement, and the Restated Earnout
Agreement, respectively, on September 30, 1998.
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On December 23, 1997, Thompson changed its name to Imtek Funding Corporation
("Funding"). Funding has continued Thompson's and Beneficial's viatical
settlement business, which has experienced significant growth. As a result, the
Registrant's revenues on a consolidated basis have increased materially. As of
June 30, 1998, $21,088,000 in revenues are attributable to Funding's viatical
settlement business. The viatical settlement business is intrinsically different
from the office products and equipment sale and leasing business of the
Registrant which the Registrant otherwise conducts.
At the time Thompson became a wholly-owned subsidiary of Services, its
assets consisted of $1,200,000 in restricted cash held in customer escrow
accounts pending completion of the viatical sale. The restricted cash was
treated as an asset on Thompson's books, and the matching amounts held in the
customer escrow accounts were treated as a liability on Thompson's books. The
consideration provided by the Registrant in the Asset Purchase, Exchange and
Earnout represented a negotiated price.
The persons from whom the Thompson common stock was acquired were Brad C.
Thompson, Robert W. Hoover, Andrew J. Walter and certain members of their
respective families (collectively, the "Thompson Stockholders"). The 1,000,000
shares of Registrant's common stock received in the Exchange was distributed
pro-rata to the Thompson Stockholders according to their ownership of Thompson
capital stock immediately prior to the Exchange.
On November 18, 1997, each of the Beneficial Stockholders became directors
of the Registrant, Brad C. Thompson became Chief Financial Officer and Senior
Vice President of the Registrant and Vice President of each of the Registrant's
subsidiaries, Robert W. Hoover became Executive Vice President of the Registrant
and Vice President of each of the Registrant's subsidiaries, and Andrew J.
Walter became president of Funding, Senior Vice President of the Registrant and
Vice President of each of the Registrant's subsidiaries. Andrew J. Walter has
resigned from all of his positions with the Registrant and its subsidiaries
effective July 1, 1998.
Prior to November 18, 1997, none of the Beneficial Stockholders were
officers, directors, or beneficial or record holders of the Registrant's
securities or otherwise affiliated with the Registrant or any of its affiliates,
directors, officers or associates of such directors or officers.
The funds used by the Registrant to pay the Earnout Obligation and amounts
due under the Installment Note were funds from earnings of the Registrant earned
in the ordinary course of its business.
ACQUISITION OF RICHMOND BUSINESS SYSTEMS, INC. AND BOHANAN BUSINESS SYSTEMS,
INC.
In October, 1997, the Registrant purchased two copier equipment dealers
located in Richmond, Virginia. The first acquisition was Richmond Business
Systems, Inc. The Registrant paid $39,500 for assets, consisting of $17,000 in
accounts receivable, $11,000 in inventory, $9,500 in furniture and fixtures, and
$2,000 of goodwill.
The second Richmond, Virginia purchase was Bohanan Business Systems, Inc., a
Virginia corporation. The Registrant acquired certain assets consisting of
$17,000 in accounts receivable, $12,000 in inventory, and $5,000 in furniture
and fixtures, and assumed certain liabilities, relating to accounts
payable--trade, of approximately $27,000 and a note payable in the amount of
$7,000.
ACQUISITION OF OFFICE SUPPLY LINE HOLDINGS, INC. AND OFFICE SUPPLY LINE, INC.
In November 1997, the Registrant issued approximately 465,500 shares of its
common stock and cash of approximately $142,000 in exchange for all the issued
and outstanding shares of common stock of Office Supply Line Holdings, Inc., a
Virginia corporation ("Holdings").
Following the acquisition of Holdings, the Registrant purchased assets
consisting of inventory and equipment from Office Supply Line, Inc. ("OSL"),
pursuant to an Inventory Purchase and Sale Agreement entered into as of November
1, 1997 between OSL, Imtek Corporation and Michael L. Lowe (the "OSL
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Inventory Purchase Agreement"). Prior to November 1, 1997, OSL was engaged in
the business of retail office supply sales. Pursuant to the OSL Inventory
Purchase Agreement, the Registrant assumed $70,000 in trade accounts payable,
issued a note payable in the amount of $92,000 and paid $75,000 in cash to OSL
in exchange for the purchased inventory and equipment. The $92,000 note payable
included interest at 10% per annum and was scheduled to mature in August 1998.
This note was paid in full in September, 1998.
The number of shares of the Registrant's common stock issued to the former
stockholders of Holdings pursuant to the Holdings Exchange Agreement and the
consideration paid to OSL by the Registrant under the OSL Inventory Purchase
Agreement represented a negotiated price.
The assets acquired in connection with the acquisition of the inventory and
equipment of OSL were used by OSL in connection with its business and continue
to be used after the acquisition by the Registrant in connection with the
Registrant's business of selling, leasing and servicing of photocopy equipment,
typewriters, facsimile machines and other automated office equipment.
Michael L. Lowe, President, Director and majority stockholder of Holdings
and OSL, became a Director, the Vice President and Chief Operating Officer of
the Registrant on November 18, 1997. The funds used by the Registrant to acquire
all of the issued and outstanding stock of Holdings and the inventory and
equipment acquired pursuant to the OSL Inventory Purchase Agreement were funds
from earnings of the Registrant.
ACQUISITION OF CAPITAL PREPRESS HOLDINGS, INC.
On October 31, 1997, the Registrant acquired all the issued and outstanding
common shares of Capital Prepress Holdings, Inc. ("CPHI"), a Maryland
corporation, through the issuance of approximately 1,010,611 shares of its
common stock and a cash payment of $7,000. The Registrant acquired assets
consisting principally of accounts receivable, inventory, and furniture and
fixtures. CPHI provides electrical imaging for press operations. Prior to the
acquisition CPHI had no significant operations.
ACQUISITION OF GLS HOLDINGS, INC.
The Registrant also purchased GLS Holdings, Inc., a Maryland corporation, in
November, 1997, by exchanging approximately 56,250 shares of its common stock
and a cash payment of $21,636 for all the issued and outstanding shares of GLS
Holdings, Inc. GLS Holdings, Inc. was formed in October 1997 to provide
litigation support and copying services in the Baltimore, Maryland and Richmond,
Virginia markets.
The above transactions have been recorded under the purchase method of
accounting; accordingly, the results of operations of the entities from their
respective acquisition dates are included in the consolidated financial
statements for the nine month period ended June 30, 1998.
SERIES A CONVERTIBLE PREFERRED STOCK OFFERING.
In order to raise additional capital, the Registrant issued a private
placement memorandum dated January 10, 1998 seeking to raise a minimum of
$500,000 and a maximum of $7,500,000 through the issuance of up to 75,000 shares
of Series A Convertible, non-voting, $100 par value Preferred Stock. The
offering was on a best efforts basis with a 5,000 share minimum and a 75,000
share maximum basis at a price of $100 per share. Proceeds from this offering
were designated to assist the Registrant in financing acquisitions and to a
lesser extent, fund working capital. Proceeds of the offering were placed in
escrow until a minimum of 5,000 shares had been sold. Had the Registrant been
unable to successfully raise $500,000, the escrowed monies would have been
returned to investors without interest or deduction. Additionally, the
Registrant agreed to pay sales commission of 7% and other anticipated offering
expenses of $50,000. The Registrant expected to receive proceeds, net of
offering expenses and sales commission, of
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$450,000 at a minimum and a maximum of $7,450,000. The preferred shares carry an
annual dividend rate of 9%, with dividends accruing on a daily basis and payable
annually beginning October 1, 2001. At the option of the preferred shareholder,
the preferred shares may be converted into common stock of the Registrant at
rates which vary according to the number of days the preferred stockholders hold
the preferred shares. The conversion rate varies from 12 shares of common stock
for each share of preferred held between 91 and 180 days to 21 shares of common
stock for each share of preferred held if the holding period exceeds 900 days.
In the event that a share was converted into common stock, the accrued dividends
would be waived. The Registrant reserves the right to redeem the preferred
shares beginning 91 days following the issue date. The redemption price is $100
per share, plus accrued and unpaid dividends, plus a cash call premium also
based upon a floating scale of $2 for each share held between 91 to 180 days up
to a maximum of $20 per share for shares held longer than 900 days.
The Registrant raised $626,820, net of offering expenses of $47,180. The
Registrant has ceased taking additional subscriptions.
SIRROM CAPITAL CORPORATION FINANCING.
On April 9, 1998, the Registrant entered into a letter of intent with
Ferris, Baker Watts, Inc. to provide investment-banking services and assist the
Registrant in evaluating its financing options. This letter of intent provides,
among other things, that the Registrant shall issue 250,000 warrants to Ferris,
Baker Watts to purchase a like number of shares of common stock of the
Registrant at a $5 exercise price. Such warrants shall not be exercisable,
however, until April 9, 2000, one year after a public offering, or immediately
upon a change in control of the Registrant.
On May 29, 1998, the Registrant and its subsidiaries entered into a
financing arrangement with Sirrom Capital Corporation ("Sirrom") for a six
million dollar subordinated acquisition line of credit pursuant to a Loan
Agreement dated the same date (the "Sirrom Loan Agreement"). Advances under this
line bear interest at a rate of 14% per annum, payable monthly through May 28,
2003, at which time the entire outstanding principal balance becomes due. Under
the terms of this facility, the Registrant issued Sirrom 119,891 warrants to
purchase the Registrant's common stock at a .01 strike price. Should the
Registrant be unable to repay this note by May, 2001 or if the Registrant does
not complete a bona fide public offering with net proceeds to the Registrant in
excess of $15,000,000 by May, 1999 the Registrant agreed to issue Sirrom
additional warrants ranging in number from 40,779 to 450,000.
ACQUISITION OF CERTAIN ASSETS AND LIABILITIES OF AMI GROUP, INC.
In May, 1998, the Registrant deposited approximately $460,000 to acquire the
book of business of the AMI Group, Inc., a Washington D.C. based office
equipment and copier dealer. This acquisition was completed in August 1998, and
required the Registrant to assume additional liabilities of approximately
$150,000.
ACQUISITION OF PERFECT COPY, INC.
On June 1, 1998, the Registrant, through its direct wholly-owned subsidiary
Imtek Corporation, purchased the business and certain assets of Perfect Copy,
Inc., a Georgia corporation ("Perfect Copy"), pursuant to an Agreement for the
Sale of Assets made effective as of June 1, 1998 (the "Agreement for the Sale of
Perfect Copy Assets"). Prior to the acquisition, Perfect Copy was engaged in the
business of selling, leasing and servicing photocopy equipment, typewriters,
facsimile machines and other automated office equipment (the "Business"). Jimi
Epps was the sole owner of Perfect Copy.
The assets acquired by Corporation include all furniture, fixtures,
equipment, automobiles, supplies, tools of trade, accounts receivable,
inventory, contract rights and leasehold interests, books and records, cash in
transit, goodwill, intellectual property, price lists, supplier lists, customer
lists, advertising, and the non-competition obligations of Jimi Epps and Donald
Blackburn (the "Purchased Assets").
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The Agreement excludes from Purchased Assets all cash on hand or on deposit,
the cash surrender value of any life insurance policies, marketable securities
and certain other assets set forth in the schedules to the Agreement.
Corporation did not expressly assume any liabilities in connection with the
acquisition, except that Corporation agreed to assume Perfect Copy's liabilities
and responsibilities under the unexpired terms of certain maintenance and
service contracts, provided such liabilities do not exceed One Hundred Thousand
Dollars ($100,000) in the aggregate (the "Assumed Contractual
Responsibilities").
In exchange for the Purchased Assets, Imtek Corporation paid Perfect Copy
Three Hundred Sixty Thousand Dollars ($360,000) at closing, which occurred on
June 3, 1998, and is obligated to pay Fifty Thousand Dollars ($50,000) to
Perfect Copy within one year of closing. In addition, Imtek Corporation agreed
to assume the Assumed Contractual Responsibilities. Imtek Corporation paid a
business broker $23,000 in connection with the acquisition of Perfect Copy.
Payment of the cash consideration by Imtek Corporation is subject to a right of
set-off in the event that Perfect Copy fails to pay all of its liabilities,
accounts payable or other obligations which are not expressly disclosed or which
are not expressly assumed by Imtek Corporation pursuant to the Agreement.
The consideration provided by the Agreement represents a price which was
negotiated between the management of the Registrant and Imtek Corporation, on
the one hand, and the management of Perfect Copy, on the other. As of the date
of this report, $360,000 has been paid to Perfect Copy under the Agreement and
$50,000 has been deposited with Perfect Copy's attorney and will be paid to
Perfect Copy in accordance with the Agreement for the Sale of Assets on June 1,
1999.
The Purchased Assets, including the equipment and other physical property
acquired under the Agreement, were used by Perfect Copy in connection with the
Business and continue to be used after the closing date by Corporation in
connection with Corporation's business of selling, leasing and servicing of
photocopy equipment, typewriters, facsimile machines and other automated office
equipment.
None of the officers, directors or beneficial or record holders of Perfect
Copy securities were officers, directors, or beneficial or record holders of the
Registrant's securities or otherwise affiliated with the Registrant or any of
its affiliates, directors, officers or associates of such directors or officers.
The funds used by the Registrant to acquire Perfect Copy were funds made
available to the Registrant from Sirrom under the Sirrom Loan Agreement.
BARBERA BUSINESS SYSTEMS, INC. ACQUISITION.
On July 1, 1998, the Registrant organized Imtek Acquisition Corporation a
Maryland corporation and wholly-owned subsidiary ("Imtek Acquisition") for the
purpose of acquiring Barbera Business Systems, Inc. On July 22, 1998, the
Registrant, through Imtek Acquisition, purchased 600 shares of capital stock of
Barbera Business Systems, Inc., a Maryland corporation ("Barbera"); 300 of such
shares were purchased from Joseph S. Barbera, and 300 of such shares were
purchased from Kathleen P. Barbera (the "Stock Acquisition"), all pursuant to
that certain Stock Purchase Agreement and Plan of Merger (the "Barbera
Acquisition Document"). The 600 shares of Barbera capital stock acquired by
Imtek Acquisition (the "Acquired Securities") represented at the time of the
Stock Transaction, and represent on the date of filing of this report, 60% of
the issued and outstanding shares of Barbera.
The Barbera Acquisition Documents also provide that, on or prior to November
1, 1998, or December 1, 1998 in the event Imtek Acquisition or the Registrant
pays Joseph P. Barbera and Patricia A. Buddemeyer $2,500 each prior to November
1, 1998, Imtek Acquisition will, subject to the terms and conditions of the
Barbera Acquisition Document, acquire the remaining 40% interest in Barbera held
by Joseph P. Barbera and Patricia A. Buddemeyer by merger (the "Merger
Transaction" and, together with the Stock Transaction, the "Barbera
Acquisition"). Following the closing of the Merger Transaction, Imtek
Acquisition will be the successor.
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In the event the Merger Transaction is consummated, (i) Imtek Acquisition
shall succeed to all of the assets and liabilities of Barbera, and the same
shall be automatically vested in Imtek Acquisition, and (ii) all of the issued
and outstanding shares of Barbera capital stock held by Joseph P. Barbera and
Patricia A. Buddemeyer will be automatically canceled, and each of Joseph P.
Barbera and Patricia A. Buddemeyer shall be entitled to receive 100,000 shares
of the registrant's common stock, par value $0.000001 per share, all upon the
consummation of the Merger Transaction.
The assets to be acquired in the Barbera Acquisition include customer lists,
inventory, tools, spare parts and supplies, leasehold and other interests in
machinery and equipment, furniture and other personal property, the Barbera
name, customer and supplier contracts, accounts receivable, prepaid items and
books and records (the "Acquired Assets"). Prior to the Barbera Acquisition, the
Acquired Assets were used in connection with Barbera's sale and leasing of
office products and equipment, and such use will be continued after the closing
of the Stock Transaction and the Merger Transaction.
The aggregate consideration given by the registrant and Imtek Acquisition
for the Acquired Securities was $1,498,000, of which $10,000 is being held in
escrow pursuant to the Acquisition Documents to satisfy any liabilities arising
out of an IRS audit of Barbera for Barbera's fiscal year ending June 30, 1995
and any other federal or state audit of Barbera for any period ending prior to
the date of the Stock Acquisition (the "Audit"). The aggregate consideration to
be given by the registrant for the remaining 40% interest in Barbera to be
acquired in the Merger Acquisition is 200,000 shares of the Registrant's common
stock. The consideration provided and to be provided under the Barbera
Acquisition document represents a price negotiated between the Registrant and
Acquisition, on the one hand, and the Barbera Stockholders, on the other.
Imtek Acquisition purchased the Acquired Securities from Joseph S. Barbera
and Kathleen P. Barbera in exchange for $1,498,000, of which $10,000 is being
held in escrow pursuant to the Acquisition Documents to satisfy any liabilities
arising out of the Audit, and Imtek Acquisition will, subject to the terms and
conditions of the Barbera Acquisition Document, acquire the remaining 40%
interest in Barbera in the Merger Transaction in exchange for 100,000 shares of
registrant's common stock to be issued to Joseph P. Barbera and 100,000 shares
of registrant's common stock to be issued to Patricia A. Buddemeyer.
The Barbera Acquisition Document provides that Joseph P. Barbera and
Patricia A. Buddemeyer shall serve as directors of Barbera until the closing
date of the Merger Transaction, at which time Joseph P. Barbera and Patricia A.
Buddemeyer will resign from the Board of Directors of Barbera. The funds used by
the Registrant to acquire Barbera were funds made available to the Registrant
from Sirrom pursuant to the Sirrom Loan Agreement.
PHILADELPHIA ACQUISITIONS.
In July 1998, the Registrant acquired two additional office equipment
dealers located in the metropolitan Philadelphia, Pennsylvania market. The
Registrant purchased Forbes Enterprises, Inc. a Pennsylvania corporation, for
approximately $865,000, acquiring accounts receivable of approximately $250,000,
furniture and equipment of approximately $335,000, inventory of approximately
$302,000 and acquired covenants not to compete from Leighton Forbes and Jill
Forbes for $10,000 each. The Registrant also acquired Keystone Digital
Equipment, Inc., a Pennsylvania corporation, for approximately $1,071,000. The
Registrant purchased cash of approximately $40,000, accounts receivable of
approximately $266,600, inventory of approximately $616,600, furniture and
fixtures of approximately $234,000, goodwill of around $638,800 and acquired
covenants not to compete from Ricardo Salcado and Edmund D. Peach, III for
$15,000 each.
MERCANTILE FINANCING.
On August 30, 1998 Imtek Corporation entered into a $3,000,000 revolving
credit facility with the Mercantile Bank and Trust Company of Baltimore Maryland
("Mercantile"), which is guaranteed by the
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Registrant and Imtek Services Corporation, all pursuant to that certain Loan and
Security Agreement between the Registrant, Imtek Corporation, Imtek Services
Corporation and Mercantile (the "Mercantile Loan Agreement"). Advances under the
Mercantile Loan Agreement are collateralized by substantially all of the
Registrant's assets. Funds borrowed under the revolving credit facility bear
interest at the prime rate plus 1% payable monthly.
ACQUISITION STRATEGY -- OFFICE SOLUTIONS BUSINESS.
The Registrant's office solutions business continues the implementation of
its growth strategy by means of acquiring smaller office equipment dealers
located within specified geographic markets. The Registrant's strategy has been
and remains to expand its business through the strategic acquisition of
companies with similar products and services. Additionally, the Registrant
anticipates acquiring other entities in the future which may provide the
Registrant with expanded, enhanced, or additional products, services or markets,
but can provide no assurances that such acquisitions will indeed provide such
beneficial products, services or markets. Management believes that acquisitions
of entities with similar products and services would benefit from the
Registrant's centralized management, systems of internal control, additional
financial resources, and the Registrant's marketing efforts, although there can
be no assurances that such benefits will ever be realized.
Management believes that adequate acquisition opportunities exist. The
Registrant anticipates that significant acquisitions would be funded principally
from issuance of authorized but unissued shares of the Registrant's common
stock, external financing sources, such as the Sirrom Loan Agreement and
Mercantile Loan Agreement and, to a lesser extent, from funds from current
operations. The Registrant's future success with acquisitions will be dependent
upon the timing and size of the acquisition, the Registrant's ability to
integrate the acquisition into its operations with a minimum of integration
costs, and the Registrant's ability to successfully grow its infrastructure to
sustain and manage the combined operations. The Registrant evaluates the
potential acquisition of candidates after holding discussions with the
management of the potential acquisition and, as a general rule, does not
publicly announce any such acquisition until a definitive agreement is executed.
COMPETITION
The Registrant's office solutions business is highly competitive with
numerous competitors in its existing geographic markets, as well as in
anticipated expansion markets. The Registrant is in direct competition with
local, regional, and national equipment suppliers and dealers, mass
merchandisers, local buying clubs, and to a lesser extent, internet on-line
competitors. Principal areas of competition focus on quality and response time
of after-the-sale service, parts availability, product capability, rental
agreements, financing, and price. The Registrant competes with companies that
have greater financial strength and marketing resources.
As of June 30, 1998, the Registrant's merchant banking business consisted
primarily of providing viatical settlement services -- the purchase and resale
to third parties of life insurance policies owned by terminally ill individuals.
The viatical settlement industry is relatively new, with numerous competitors
throughout the continental United States and no barriers to entry. Management
believes that the Registrant is one of the largest viatical settlement companies
in a very fragmented industry. The Registrant is in direct competition with many
small, privately held viatical settlement companies as well as viatical
settlement companies which are owned by, or are divisions of, large insurance
companies. Principal areas of competition in connection with the purchase of
policies focus on the bid price offered to the terminally ill individual and the
timeliness of responses to any requests for bids. The Registrant is in direct
competition with financial institutions and other investment vehicles in
connection with funding the resale of the policies purchased. In connection with
viatical settlements, the Registrant competes with other entities having greater
financial strength and marketing resources.
10
<PAGE>
CUSTOMERS
The Registrant focuses its office solutions segment marketing efforts
primarily on small and mid-size businesses, regional offices of large companies,
professional service firms, hospitals, educational institutions, and
governmental agencies located in or near the area where the Registrant maintains
a physical presence. Sales representatives and sales management are compensated
based on a combination of gross sales revenue and point-of-sale profits. A key
element of the Registrant's operating philosophy is to provide all sales
representatives and managers with an ongoing program of in-house training,
manufacturer provided training and other educational courses and seminars. The
Registrant additionally holds weekly sales meetings to reinforce the consistent
application of its procedures, policies, and strategies. Manufacturers'
advertising campaigns and cooperative advertising arrangements generally enhance
the Registrant's marketing efforts, where appropriate.
The Registrant has marketed its merchant-banking segment through its
existing sales force and, where appropriate, through registered broker/dealers,
print media, and mass communication media such as radio and newspapers. At June
30, 1998, no one customer accounted for more than 5% of gross segment sales.
VENDORS AND SUPPLIERS
Products purchased and distributed by the Registrant may be acquired from
numerous domestic and international suppliers. The Registrant has not
experienced, and does not anticipate experiencing, any significant difficulty in
obtaining these products and supplies, although the Registrant cannot provide
any assurances that such difficulties will not arise.
The Registrant's primary products for the office solutions segment are
photocopiers, facsimile equipment, personal computers, office products, and
technologies and services used in offices to manage information and documents.
Management believes that it is in the Registrant's best interest to maintain a
close working relationship with a number of equipment manufactures so as to
allow the Registrant to purchase equipment and related parts and supplies at
competitive prices. The inability of the Registrant to maintain these key
relationships could result in disruptions of Registrant operations.
Because the Registrant's business is dependent upon its vendors and
suppliers, the Registrant has identified several of the world's largest
manufacturers of photocopiers and facsimile machines and has established several
close working relationships with those manufacturers. The Registrant acquires
products and supplies for resale from such sources as Mita, Cannon, Ricoh,
Sharp, Konica, and Gestetner. The Registrant entered into renewable dealer
agreements with MITA Copystar America, Inc., ("MITA") dated November 26, 1997,
Sharp Electronics Corp, dated January 6, 1998, Gestetner Corp, dated January 5,
1998, and Dex Business Systems, dated January 26, 1998, as reported on the
Registrant's Forms 10-K for the year ended September 30, 1997 and 10-Q for the
quarter ended March 31, 1998. These agreements, among other covenants and
restrictions, provide for a minimum level of purchases by the Registrant,
establishment of purchase pricing, establishment of business locations, and
termination provisions.
In July, 1998, MITA Corporation, based in Japan, announced that it had filed
for bankruptcy protection. MITA Corporation advised the Registrant that it did
not expect any significant disruption in supplying its customers with quality
equipment, parts, and supplies on a timely basis. To date, the Registrant has
not experienced any significant disruption in its ability to obtain products or
parts from MITA Corporation, but cannot provide any assurances that such
disruptions will not occur in the future. Management believes that its strategic
alliance with MITA and its alternative suppliers will provide the Registrant
with sufficient product for sale at competitive prices.
11
<PAGE>
EMPLOYEES
As of June 30, 1998, the Registrant employed 203 persons, none of whom were
covered by a collective bargaining agreement. Management believes that its
employee relations are good, and that the Registrant provides wages and working
conditions that compare favorably to industry norms.
Sales personnel turnover is common in the office solutions industry and the
Registrant expends considerable effort to retain high quality, dedicated,
professional sales personnel. Management believes that the Registrant's sales
personnel compensation plan compares favorably to the industry norm.
Additionally, management has implemented an extensive training program with
clearly defined sales goals and career paths for its sales force. By
establishing clearly defined goals, providing extensive training and support and
career path for its sales force, management believes it can maintain a high
quality sales force with turnover lower than the industry average, although
there can be no assurances of such an effect on sales force turnover. The
Registrant relies heavily on its senior management and the loss of any one of
them could have a material adverse effect on the Registrant's financial
condition and the Registrant's ability to successfully grow and implement its
strategic acquisition policy, which remains extremely important to the
Registrant and its ongoing operations.
TECHNOLOGY
The Registrant believes that the office equipment market will continually
change with the advent of digital technology, which allows one piece of office
equipment to network directly with other office equipment. Management further
believes that this technology may result in fewer stand-alone units being sold
and that this shift to multi-functioning equipment may result in increased
training costs for the Registrant's service technicians. With continued
technological improvements which add complexity to the internal working
components of equipment, the costs of training service personnel may increase.
ENVIRONMENTAL REGULATION
The Registrant's business and product lines generally do not generate
significant hazardous waste. Federal, state, and the various local regulations
have not had, and are not expected to have, a material adverse affect upon the
Registrant or its financial condition.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
<TABLE>
<CAPTION>
1998(3) 1997(4) 1996(5)
------------ ---------- -------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Viatical Business(1)........................................................ 21,088,242 0 0
Office Solutions Business(2)................................................ 5,854,400 2,094,972 0
Intersegment sales or transfers............................................. 0 0 0
Operating profit or loss:
Viatical Business........................................................... 1,767,198 0 0
Office Solutions Business................................................... (644,461) 72,433 0
Identifiable Assets:
Viatical Business........................................................... 7,797,192 0 0
Office Solutions Business................................................... 8,022,467 1,007,339 0
</TABLE>
- ------------------------
(1) The Registrant commenced its viatical settlement business in October, 1997,
with the acquisition of Beneficial Assistance and Thompson Business
Products, as more fully set forth in Part I, Item 1 of this report.
(2) The Registrant commenced its office solutions business on April 22, 1997.
12
<PAGE>
(3) Figures in this column are presented for the Registrant(1)s 1998 Fiscal Year
which began October 1, 1997 and ended June 30, 1998.
(4) Figures in this column are presented for the Registrant(1)s 1997 Fiscal Year
which began October 1, 1996 and ended September 30, 1997. Prior to April,
1997, the Registrant conducted no operations.
(5) The Registrant conducted no business during its 1996 fiscal year.
ITEM 2. PROPERTIES.
The Registrant's policy is to lease its business locations, rather than
purchase them outright. The Registrant leases numerous properties for
administration, sales and service. In general, the Registrant's lease agreements
require a payment from the Registrant for its proportionate share of taxes,
utilities, and other common area maintenance expenses. Management believes that
the properties it occupies are suitable and adequate for its use. All properties
are of brick or block construction and management believes that all properties
are adequately maintained. As of September 18, 1998, the Registrant leased 15
locations from independent landlords as follows:
The Registrant leases three facilities in the Baltimore metropolitan market.
The first location is an 8,000 square foot office space which is rented month to
month through February, 1999. This facility serves as corporate headquarters and
is the office for the Registrant's merchant banking operations. The second
Baltimore facility is an outsourcing sales and production office consisting of
approximately 3,000 square feet. The lease on this location expires November,
2000. The third Baltimore location is an office equipment sales and service
facility consisting of approximately 12,000 square feet which lease expires
November, 2001.
The Registrant also has approximately 30,000 square feet of sales, service
and warehouse space located in Glen Dale, Maryland. This lease expires July,
2007.
The Registrant leases three facilities in Richmond, Virginia. The first
lease is for the office solutions headquarters and accounting offices. This
facility consists of roughly of 5,000 square feet of prime downtown office
space. This lease expires December, 1998. The second Richmond lease is for a
2,600 square foot office equipment sales and service location, which lease
expires September 30, 1998. As of September 18, 1998 it is management's
intention to maintain this location on month to month rental. There can be no
assurances, however, that management will maintain this location or maintain
this location under terms beneficial to the Registrant. The third Richmond
location is an outsourcing sales and service facility consisting of
approximately 1,500 square feet. This lease expires July 2000.
The Registrant has an office supplies sales location in Hopewell, Virginia
consisting of approximately 10,000 square feet rented on a month to month basis.
The Registrant has two facilities in the tidewater, Virginia area. The first
facility is rented on a month-to-month basis and is located in Hampton, Virginia
as an office equipment sales and service location. This facility consists of
approximately 11,000 square feet. The second Tidewater location is a Virginia
Beach office equipment sales office consisting of approximately 3,500 square
feet leased through December, 1999.
The Registrant has two office equipment sales and service offices located in
the Atlanta, Georgia metropolitan market. The first facility is located in
Gainesville, Georgia consisting of approximately 3,500 square feet and is leased
on a month-to-month basis. The second Atlanta location is located in Athens,
Georgia consisting of approximately 1,500 square feet rented through February
1999.
As of September 18, 1998, the Registrant leased two office equipment and
service facilities in the Philadelphia metropolitan market. The first facility
is located in Exton, Pennsylvania consisting of 6,700 square feet with the lease
expiring June 2003. The second facility is located in Broomall, Pennsylvania
consisting of 3,000 square feet and is leased through August 2004.
13
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
As previously reported in Item 1 of this report, hereby incorporated into
this item by reference, the Registrant filed a voluntary petition for
reorganization pursuant to Chapter 11 of the Bankruptcy Code on January 5, 1995
with the U.S. Bankruptcy Court for the Northern District of Texas. The
Registrant's plan of reorganization was approved by the court on October 5,
1995.
On August 10, 1998, an order of dismissal was entered in the lawsuit styled
LEGAL AMERICA OF VIRGINIA, LTD. V. IMTEK OFFICE SOLUTIONS, INC., GEORGE L.
SIMPSON, AND MICHAEL LOWE, Richmond Circuit Court (Chancery), Case No. HJ-420-1.
As a result of this settlement, the Registrant is not currently a party to any
legal proceedings and management is unaware of any threatened or pending
litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 27, 1998, stockholders holding 4,030,934 shares of the Registrant's
common stock, representing a majority of the issued and outstanding voting
shares of the Registrant, executed a written consent in accordance with the
By-laws of the Registrant and Delaware General Corporation Law, in lieu of a
special meeting (the "May 27 Written Consent"). The May 27 Written Consent
removed the existing board of directors effective May 27, 1998, set the number
of directors constituting the entire board of directors at six, and elected
Edwin C. Hirsch, Michael L. Lowe, Robert J. Brown, Brad C. Thompson, Andrew J.
Walter and Robert W. Hoover to serve as directors of the Registrant from May 27,
1998 until the next annual meeting of stockholders and until their successors
are duly elected and qualify. This actions affected by the May 27 Written
Consent did not change the composition of the Board of Directors at last
reported to the Securities and Exchange Commission in a report on Form 10-K
filed for the fiscal year ended September 30, 1997.
In addition, on May 28, 1998, the same stockholders holding 4,030,934 shares
of the Registrant's common stock executed another written consent in accordance
with the By-laws of the Registrant and Delaware General Corporation Law, in lieu
of a special meeting (the "May 28 Written Consent"). The May 28 Written Consent
approved the amendment and restatement of the Certificate of Incorporation of
the Registrant and authorized the officers of the Registrant to file the
approved Amended and Restated Certificate of Incorporation.
Notice was provided by the Registrant to all of the Registrant's
stockholders not participating in the May 27 Written Consent and the May 28
Written Consent in accordance with Delaware General Corporation Law.
Stockholders having the right to vote 3,507,427 shares of the Registrant's stock
did not participate in the Written Consent but were provided notice in
accordance with Delaware General Corporation Law.
14
<PAGE>
PART II
ITEM 5. MARKET PRICE FOR REGISTRANTS COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS.
There is no known market for the Registrant's common or preferred stock. As
of the latest practicable date there were 161 common stockholders of record and
23 preferred stockholders of record. The Registrant did not pay dividends during
the fiscal years ended September 30, 1997 and June 30, 1998, and does not
anticipate paying dividends in the future.
Information responsive to Item 701 relating to securities sold by the
Registrant (which were not registered pursuant to the Securities Act) during the
period covered by this report is set forth under Item 1 of this report and is
incorporated into this Item by reference. All such sales were made pursuant to
Section 4(2) of the Securities Act.
Pursuant to the terms of the Mercantile Loan Agreement, neither Imtek
Corporation nor Imtek Services Corporation may make any dividend or other
distribution, direct or indirect (other than stock dividends payable to the
their holders of capital stock), on account of any equity interest in either of
them now or hereafter outstanding until such time as all obligations have been
satisfied under the Mercantile Loan Agreement.
Pursuant to the terms of the Sirrom Loan Agreement, neither the Registrant
nor any of its subsidiaries may declare or pay any dividend of any kind (other
than stock dividends payable to the holders of capital stock), whether in cash
or in property, on any class of capital stock of any of them.
ITEM 6. SELECTED FINANCIAL DATA.
The selected consolidated financial data presented below as of and for the
Company's year ended September 30, 1997 and period ended June 30, 1998 have been
derived from the audited consolidated financial statements of the Company. The
data set forth below are qualified in their entirety by, and should be read in
conjunction with, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements,
the notes thereto and the other financial and statistical information included
elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
JUNE 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
Sales..................................................................... $ 26,942,642 $ 2,094,972
Operating income.......................................................... $ 1,122,737 $ 72,433
Net income................................................................ $ 603,068 $ 58,367
Earnings per share:
Basic................................................................... .08 .03
Diluted................................................................. .08 .03
------------------ ------------------
Total assets.............................................................. $ 16,524,757 $ 1,007,339
------------------ ------------------
Notes payable............................................................. 4,062,561 --
------------------ ------------------
Obligations under capital lease........................................... 1,222,659 --
------------------ ------------------
Put option obligation..................................................... 335,695 --
------------------ ------------------
Preferred stock........................................................... 674,000 --
------------------ ------------------
Total stockholders' equity................................................ 2,755,991 774,072
------------------ ------------------
</TABLE>
15
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The Registrant effectively commenced operations on April 22, 1997. For the
year ended September 30, 1997, the Company was primarily engaged in the retail
and wholesale sale of copiers and facsimile equipment, servicing of office
equipment, providing commercial printing and duplicating services, and to a
lesser extent, the retail sale of office supplies. Effective October 1, 1997,
the Registrant began its merchant banking operations, primarily providing
viatical settlements--the purchase and resale of life insurance policies of
terminally ill individuals. The Registrant operates principally in the
Mid-Atlantic region-- Philadelphia, Pennsylvania; Baltimore, Maryland;
Washington D.C.; Richmond Virginia; the Tidewater area of Southeastern Virginia
and the metropolitan Atlanta, Georgia market.
BACKGROUND
On April 22, 1997, the shareholders of Spectrum Equities, Inc., (Spectrum),
a Delaware corporation, executed a 400 for 1 reverse stock split. After the
stock split, Spectrum had 625,000 shares of common stock, all of one class,
issued and outstanding. Furthermore, on April 22, 1997, Spectrum's shareholders
authorized and approved the acquisition of Imtek Corporation by the issuance of
4,375,000 shares of Spectrum stock for all 50,000 authorized, issued and
outstanding shares of Imtek Corporation. The acquisition resulted in a
restatement of additional paid-in-capital and accumulated deficit to reflect the
acquisition as a reverse acquisition, treating Imtek Corporation as the
acquirer. Previous financial statements reflected Spectrum Equities as the
acquirer. Subsequently, the shareholders approved the corporation's name to be
changed to Imtek Office Solutions, Inc. The acquisition and name change have
been reported on Form 8-K of April 22, 1997, which is hereby incorporated by
reference.
Prior to April 22, 1997, the Registrant was a development stage company with
no significant operations. Additionally, the Registrant has changed its fiscal
year end from September 30 to June 30, effective June 30, 1998 as reported on
Form 8-K of July 30, 1998, which is incorporated by reference. Because the
Registrant was in start-up mode during 1997, and because of the Registrant's
limited activity during fiscal year ended September 30, 1997 (a period of
approximately 5 months), and the transition period ended as of June 30, 1998 (a
period of 9 months), there are no meaningful comparisons to prior years' results
of operations and changes in financial condition and liquidity.
During the first quarter of fiscal year 1998, as previously reported, the
Company effectively created two (2) distinct operating businesses. The first
business, representing the historical core of the business, is the sale at
retail and wholesale, of office products, copier sales and service, and
commercial printing and copying services. The Company refers to this business as
its "Office Solutions" business. The second business, referred to as the
"Merchant Banking" business consists principally of viatical settlements and to
a lesser extent specialty finance services, including copier and office
equipment leasing, accounts receivable financing and factoring.
RESULTS OF OPERATIONS
OFFICE SOLUTIONS BUSINESS.
For the fiscal year ended June 30, 1998, a period of 9 months, the Office
Solutions business of the Registrant generated total gross revenue of $5.9
million compared to $2.1 million for the fiscal year ended as of September 30,
1997 (representing approximately 5 months of operations). Thus, gross revenue
increased by $3.8 million, or 181%, as compared to the prior year. As compared
to gross revenue as if the prior year consisted of a period of nine months, then
current year gross revenue increased by $2,120,000. However, acquisitions during
the year generated revenue of $3,118,000. Thus, same location revenue decreased
by $998,000. As previously reported, during the year, the Registrant's
management applied additional resources to these two locations to better
position these divisions to more effectively compete within their markets.
16
<PAGE>
The Office Solutions business generated a gross profit of $2.38 million, or
40.65% of revenue during fiscal year 1998 as compared to $.23 million or 10.80%
of revenue in the prior period. During the prior year, a related party, CMS
Holdings, Inc., had a servicing agreement with the Company wherein CMS Holdings,
Inc. provided certain maintenance, repair, marketing, and administrative tasks
for the Registrant. During fiscal year 1997, the Company paid approximately
$977,000 to this related party service provider, which amount was included as an
expense in the calculation of gross profit. This service contract was terminated
October 1, 1997.
General and Administrative and Selling expenses for the 9 month period from
October 1, 1997 to June 30, 1998 were $2.9 million, or 51.14% of June 30, 1998
revenue, as compared to $.15 million or 7.34% of revenue for the year ended
September 30, 1997. Again, projecting fiscal year 1997 expense to equal the same
period as fiscal year 1998, general and administrative expense would have been
approximately $277,000. Thus, comparing fiscal 1998 actual expense to 1997
projected expense results in an increase of $2,630,000. Additionally, as
previously reported, the Company expended additional resources in its two
original locations to equip those location with sufficient resources to more
effectively compete within their markets. The remaining increase is related to
increased costs associated with the transformation process of the acquisitions,
including the direct costs of the acquisition.
The Company anticipates a certain level of transformation expenditures with
each acquisition. Such transformation costs consist principally of additional
marketing efforts to be applied to the new market, training costs to ensure
sales and service personnel operate at the highest level of professionalism and
competency within their product line and in accordance with established company
policy and procedures, and additional general and administrative expenses
associated with the improvement of the acquisition's infrastructure. Management
believes that as a percentage of revenue, these costs should begin to stabilize
in future periods, but can provide no assurances in that regard.
Based upon the above, the Office Solutions business of the Registrant
produced a loss from operations of approximately $642,000 during the year ended
as of June 30, 1998 as compared to an operating profit of $72,433 for the year
ended September 30, 1997.
MERCHANT BANKING BUSINESS.
Fiscal year ended June 30, 1998 was the first period for the Registrant's
Merchant Banking business and thus there is no comparison to prior years. The
Registrant's Merchant Banking business is conducted through Imtek Funding
Corporation, a wholly-owned subsidiary of Imtek Services Corporation, which is
itself a wholly-owned subsidiary of the Registrant.
The segment produced total revenue of $21.1 million dollars for the nine
months ended as of June 30, 1998. After subtracting direct costs, the business
produced gross profit of $3.1 million, or 14.91% of gross revenue. Selling and
General and Administrative expenses amounted to $1.4 million, or 6.7% of gross
revenue. Thus, income from operations was $1.7 million, or 8.1% of gross
revenue, before income tax expense.
As previously discussed, the Merchant Banking business derives its revenue
and associated costs from financing activities of copier and office equipment,
accounts receivable financing and factoring and, principally, from viatical
settlements. It is anticipated that this portion of the business will continue
to expand in the foreseeable future. The profit margin, within a relevant range,
generally varies by the expected term of viatication. As the viatication period
lengthens, the profit margins generally increase. The Registrant considers these
viatication periods to be the product mix.
17
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
As previously reported, the Registrant anticipates significant growth
through acquisitions such that period to period comparisons may not provide
meaningful analysis. Also, consistent with the commencement of operations, the
Company will experience fluctuations in certain balance sheet accounts.
The Registrant's ability to receive dividends from its subsidiaries is
restricted by the Sirrom Loan Agreement and the Mercantile Loan Agreement. Under
the terms of the Mercantile Loan Agreement, neither Imtek Corporation nor Imtek
Services Corporation may make any dividend or other distribution, direct or
indirect (other than stock dividends payable to the their holders of capital
stock), on account of any equity interest in either of them now or hereafter
outstanding until such time as all obligations have been satisfied under the
Mercantile Loan Agreement. The Sirrom Loan Agreement provides that neither the
Registrant nor any of its subsidiaries may declare or pay any dividend of any
kind (other than stock dividends payable to the holders of capital stock),
whether in cash or in property, on any class of capital stock of any of them.
The Registrant is using the Sirrom credit facility primarily to assist in
funding certain acquisitions and to a lesser extent, working capital. At
September 18th, 1998 the Company had employed the entire line of credit. The
Registrant is utilizing borrowings under the Mercantile Loan Agreement, among
other things, to assist it in financing working capital requirements of certain
of its acquisitions.
If the Company is to continue its growth strategy through acquisitions,
management anticipates that the Registrant will need to enter into additional
subordinated acquisition lines of credit and quite possibly additional working
capital lines of credit. The Registrant has engaged Ferris, Baker Watts to
assist it in its search for additional acquisition funding. There can be no
assurance that financing for future acquisitions can be obtained on terms
acceptable to the Registrant.
OFFICE SOLUTIONS BUSINESS.
Total assets for the Office Solutions business, exclusive of intercompany
accounts, increased from $1.0 million to $9.3 million as of June 30, 1998, an
increase of $8.3 million over the prior year. The increase in trade accounts
receivable accounted for $887,000 of this increase. Additionally, inventory
increased from $486,000 as of June 30, 1997 to $1,641,000, an increase of
$1,155,000 or an increase of approximately 239%. However, as a percentage of
sales, inventory remained relatively constant at 28% to 23%. The other
significant increase relates to property and equipment, which increased by
$1,847,000 over the prior year. This increase is directly related to the
required operating equipment necessary to accommodate the acquisitions during
the year, and additional expenditures for the segment's computer operating
systems. Finally, the segment recognized approximately $829,000 in goodwill,
loan origination fees, and deposits, which are directly related to acquisitions
during the year.
The Office Solutions business recognized significant increases in certain
liability accounts during the year. Specifically, accounts payable increased
$563,000, accrued expenses increased by $148,000, which again relate to the
acquisitions during the year. Notes Payable increased by $4,063,000 during the
year. This increase is related primarily to the Sirrom Capital acquisition
credit facility discussed in Item 1 of this report. Finally, the segment
recognized a lease payable to an affiliated company during the year in the
amount of $1,222,659.
MERCHANT BANKING BUSINESS.
For the year ended June 30, 1998, the merchant banking business reported
total assets, exclusive of intercompany accounts, of $7.2 million. The business
effected several viatical settlements during the last few days of the year which
were not settled until after year end. Thus, the business reported an accounts
receivable of $110,000.
18
<PAGE>
YEAR 2000 STATEMENT.
The year 2000 ("Y2K") issue is the result of computer programs using a
two-digit year, such that the computer system may interpret the year 2000 as
1900. Should this occur, a system-wide failure of computer systems would be
eminent and may lead to company-wide disruptions. The costs of such company-wide
disruptions could have a material adverse effect on the Registrant's results of
operations and financial condition.
The Registrant has created a three-phase plan to address its Y2K issues. The
first phase is to identify the known sources of potential Y2K problems. The
second phase is to develop and implement a plan of action to resolve known Y2K
problems. The third and final phase is to test the results of phase two. The
Registrant intends to complete phase two by the end of 1st quarter of calendar
year 1999, with phase three completed by the end of the second calendar quarter
of 1999.
The Registrant has substantially completed phase one of its three phase plan
and has identified its significant risk exposure areas. The Registrant has
identified a number of applications within its financial systems, including the
Registrant's core financial and reporting systems, which are Y2K compliant due
to their recent implementation, which applications were acquired from third
party vendors. In other areas, the Registrant either has or is in the process of
contacting vendors to ensure the applicable software and computer based hardware
is or will be Y2K compliant. To date, significant third party vendors have
assured the Registrant that they are or will be Y2K compliant in the near term.
Management does not anticipate significant additional expenses in future
periods associated with the known Y2K issues confronting the Registrant.
NEWLY ISSUED ACCOUNTING STANDARDS.
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS FOR
AN ENTERPRISE AND RELATED INFORMATION (SFAS 131), which is effective for fiscal
years beginning after December 15, 1997. The statement establishes revised
standard under which an entity must report business segment information in its
financial statements. The Company plans to adopt SFAS 131 in the fiscal year
beginning July 1, 1998 and does not believe its current segment data will change
significantly under the newly adopted standards, which requires reporting on the
basis that is used internally for evaluating segment performance.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FINANCIAL STATEMENTS AND SCHEDULE II
JUNE 30, 1998 AND SEPTEMBER 30, 1997
FORMING A PART OF
ANNUAL REPORT PURSUANT TO
THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
OF
IMTEK OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
(FORMERLY SPECTRUM EQUITIES, INC.)
19
<PAGE>
IMTEK OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
(FORMERLY SPECTRUM EQUITIES, INC.)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Reports of Independent Certified Public Accountants........................................................ F-3
Consolidated Balance Sheets................................................................................ F-5
Consolidated Statements of Earnings........................................................................ F-7
Consolidated Statements of Stockholders' Equity............................................................ F-8
Consolidated Statements of Cash Flows...................................................................... F-9
Notes to Consolidated Financial Statements................................................................. F-11
Schedule II -- Valuation and Qualifying Accounts........................................................... F-29
</TABLE>
20
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Imtek Office Solutions, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Imtek Office
Solutions, Inc. and Subsidiaries as of June 30, 1998 and the related
consolidated statements of earnings, stockholders' equity and cash flows for the
nine months in the period ended June 30, 1998. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1998 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Imtek
Office Solutions, Inc. and Subsidiaries as of June 30, 1998, and the
consolidated results of their operations and their consolidated cash flows for
the nine months then ended in conformity with generally accepted accounting
principles.
We have also audited Schedule II--Valuation and Qualifying Accounts for the
nine month period ended June 30, 1998. In our opinion, this schedule presents
fairly, in all material respects, the information required to be set forth
therein.
/S/ Grant Thornton LLP
BALTIMORE, MARYLAND
SEPTEMBER 23, 1998
21
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Imtek Office Solutions, Inc.
We have audited the accompanying balance sheet of Imtek Office Solutions,
Inc. and subsidiaries as of September 30, 1997 and the related statements of
income, shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As discussed in Note B to the financial statements, the Company restated its
financial statements to reflect the change in its method of accounting for the
business combination of Spectrum Equities, Inc. and Imtek Corporation as a
reverse acquisition during the year ended September 30, 1997.
In our opinion, the 1997 financial statements referred to above present
fairly, in all material respects, the financial position of Imtek Office
Solutions, Inc. as of September 30, 1997, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
We have also audited Schedule II--Valuation and Qualifying Accounts for the
year ended September 30, 1997. In our opinion, this schedule presents fairly, in
all material respects, the information required to be set forth therein.
/S/ Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
December 19, 1997 (except as to Note B, as
to which the date is September 23, 1998)
22
<PAGE>
IMTEK OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
(AS RESTATED)
ASSETS
CURRENT ASSETS
Cash......................................................................... $ 2,949,168 $ 29,118
Escrow deposits.............................................................. 5,054,220 --
Accounts receivable, less allowance for doubtful accounts of $0 at June 30,
1998 (1997--$4,000)........................................................ 1,390,302 393,062
Other receivables............................................................ 151,235 --
Inventory.................................................................... 1,641,309 485,661
Notes receivable--related parties............................................ -- 20,466
Notes receivable--other...................................................... -- 5,075
Deposit on equipment......................................................... -- 40,000
Deferred tax assets.......................................................... 82,124 --
Prepaid expenses and other current assets.................................... 783,480 --
------------- ------------------
Total current assets..................................................... 12,051,838 973,382
PROPERTY AND EQUIPMENT--at cost, less accumulated depreciation and
amortization................................................................. 1,880,888 33,957
OTHER NONCURRENT ASSETS........................................................ 497,516 --
DEFERRED FINANCING COSTS, less accumulated amortization of $6,135 at June 30,
1998 (1997--$0).............................................................. 361,941 --
OTHER INTANGIBLE ASSETS, less accumulated amortization of $72,119 at June 30,
1998 (1997--$0).............................................................. 1,732,574 --
------------- ------------------
$16,524,757 $1,007,339
------------- ------------------
------------- ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of notes payable.......................................... $ 560,055 $ --
Current maturities of obligations under capital lease........................ 234,081 --
Accounts payable--trade...................................................... 644,506 81,825
Accounts payable--related party.............................................. 795,205 73,063
Accrued expenses............................................................. 985,473 35,411
Customer escrow accounts..................................................... 5,054,220 --
Deferred revenue............................................................. 168,153 --
Income taxes payable......................................................... 434,804 20,600
Notes payable--related party................................................. -- 22,368
------------- ------------------
Total current liabilities................................................ 8,876,497 233,267
NOTES PAYABLE, net of current maturities and original issue discount of
$330,100..................................................................... 3,502,506 --
OBLIGATIONS UNDER CAPITAL LEASE, net of current maturities..................... 988,578 --
DEFERRED TAX LIABILITY......................................................... 65,490 --
PUT OPTION OBLIGATION.......................................................... 335,695 --
COMMITMENTS AND CONTINGENCIES.................................................. -- --
STOCKHOLDERS' EQUITY
Preferred stock, $100 par value; authorized 75,000 shares; liquidation
preference of $674,000; issued and outstanding, 6,740 shares in 1998....... 674,000 --
Common stock, $.000001 par value; authorized 250,000,000 shares; issued and
outstanding, 7,532,366 shares in 1998 and 5,000,000 shares in 1997......... 8 5
Additional paid-in-capital................................................... 1,420,548 715,700
Retained earnings............................................................ 661,435 58,367
------------- ------------------
2,755,991 774,072
------------- ------------------
$16,524,757 $1,007,339
------------- ------------------
------------- ------------------
</TABLE>
23
<PAGE>
IMTEK OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED STATEMENTS OF EARNINGS
NINE MONTHS ENDED JUNE 30, 1998 AND YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
REVENUE
Equipment and supplies....................................................... $ 5,854,400 $ 2,094,972
Merchant banking............................................................. 21,088,242 --
------------- ------------------
26,942,642 2,094,972
COST OF REVENUE
Equipment and supplies....................................................... 3,474,636 1,868,703
Merchant banking............................................................. 17,943,694 --
------------- ------------------
21,418,330 1,868,703
------------- ------------------
Gross profit............................................................... 5,524,312 226,269
SELLING AND GENERAL EXPENSE.................................................... 4,401,575 153,836
------------- ------------------
Operating income........................................................... 1,122,737 72,433
INTEREST EXPENSE (INCOME)...................................................... 121,989 (6,534)
------------- ------------------
Income before taxes........................................................ 1,000,748 78,967
INCOME TAXES................................................................... 397,680 20,600
------------- ------------------
NET INCOME................................................................. 603,068 58,367
PREFERRED STOCK DIVIDENDS...................................................... 5,055 --
------------- ------------------
INCOME AVAILABLE TO COMMON STOCKHOLDERS........................................ $ 598,013 $ 58,367
------------- ------------------
------------- ------------------
EARNINGS PER SHARE
Basic........................................................................ $ 0.08 $ 0.03
------------- ------------------
------------- ------------------
Diluted...................................................................... $ 0.08 $ 0.03
------------- ------------------
------------- ------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic........................................................................ 7,412,033 2,253,425
------------- ------------------
------------- ------------------
Diluted...................................................................... 7,419,789 2,253,425
------------- ------------------
------------- ------------------
</TABLE>
24
<PAGE>
IMTEK OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JUNE 30, 1998 AND YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
PREFERRED STOCK
---------------------
<S> <C> <C>
SHARES AMOUNT
--------- ----------
BALANCE AT OCTOBER 1, 1996.................................................................. -- $ --
Issuance of common stock.................................................................. -- --
1 for 400 share reverse stock split....................................................... -- --
Exchange of stock for Imtek Corporation stock............................................. -- --
Net income for the year................................................................... -- --
BALANCE AT SEPTEMBER 30, 1997--AS PREVIOUSLY STATED......................................... -- --
--------- ----------
Adjustment to prior period................................................................ -- --
BALANCE AT SEPTEMBER 30, 1997--AS RESTATED.................................................. -- --
Shares issued in connection with acquisitions............................................. -- --
Issuance of preferred stock............................................................... 6,740 674,000
Issuance of stock warrants
Net income for the period................................................................. -- --
--------- ----------
BALANCE AT JUNE 30, 1998.................................................................... 6,740 $ 674,000
--------- ----------
--------- ----------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
-------------------------- (DEFICIT)
PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
- -------------- ----------- ------------- ---------------- ------------
<S> <C> <C> <C> <C>
243,901,667 $ 244 $ 78,613 $ (76,715) $ 2,142
6,098,333 6 2,994 3,000
(249,375,000) (249) 249 -- --
4,375,000 4 710,559 -- 710,563
-- -- -- 58,367 58,367
----- ------------- -------- ------------
5,000,000 5 792,415 (18,348) 744,072
-- -- (76,715) 76,715 --
----- ------------- -------- ------------
5,000,000 5 715,700 58,367 774,072
2,532,361 3 354,528 -- 354,531
-- -- (47,180) -- 626,820
-- 397,500 -- 397,500
-- -- -- 603,068 603,068
----- ------------- -------- ------------
7,532,361 $ 8 $ 1,420,548 $ 661,435 $2,755,991
------------
------------
</TABLE>
25
<PAGE>
IMTEK OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1998 AND YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................................... $ 603,068 $ 58,367
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization.............................................. 188,085 3,925
Amortization of original issue discount.................................... 5,595
Changes in assets and liabilities
Accounts and other receivables........................................... 329,529 (36,210)
Inventory................................................................ (664,648) (131,950)
Accounts payable and accrued expenses.................................... (276,786) 190,299
Deferred revenue......................................................... 168,153 --
Accounts payable--related parties........................................ 720,240 --
Deferred income taxes.................................................... (16,634) --
Prepaid expenses......................................................... (385,980) --
Other assets............................................................. (481,516) --
Income tax payable....................................................... 414,204 20,600
------------- ----------
Net cash provided by operating activities.............................. 603,310 105,031
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property and equipment......................................... (556,567) (35,740)
Cash paid for acquisitions and intangibles................................... (842,219) --
Cash deposit paid............................................................ -- (40,000)
------------- ----------
Net cash used in investing activities.................................. (1,398,786) (75,740)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock..................................................... -- 3,000
Proceeds from notes payable.................................................. 3,570,000 22,368
Payments on notes payable.................................................... (95,182) --
Notes receivable advances.................................................... -- (25,541)
Deferred financing costs..................................................... (368,076) --
Payments on obligations under capital lease.................................. (18,036) --
Issuance of preferred stock.................................................. 626,820 --
------------- ----------
Net cash provided by (used in) financing activities.................... 3,715,526 (173)
------------- ----------
NET INCREASE IN CASH................................................... 2,920,050 29,118
CASH AT BEGINNING OF YEAR...................................................... 29,118 --
------------- ----------
CASH AT END OF YEAR............................................................ $ 2,949,168 $ 29,118
------------- ----------
------------- ----------
DISCLOSURE OF CASH FLOW SUPPLEMENTAL INFORMATION:
Cash paid during the year for interest....................................... $ 68,656 $ --
Cash paid during the year for taxes.......................................... -- --
</TABLE>
26
<PAGE>
IMTEK OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED JUNE 30, 1998 AND YEAR ENDED SEPTEMBER 30, 1997
NONCASH TRANSACTIONS:
During fiscal 1998:
The Company purchased all of the stock of Thompson, Perfect Copy, OSL, CPHI,
GLS and Chesapeake for 2,532,361 shares of common stock, representing an
aggregate price of $2,063,497, including cash, assumed liabilities, and notes of
$1,708,966.
The Company acquired $1,240,695 of office equipment under capital lease.
The Company issued 119,891 warrants to purchase common stock in connection
with a note payable.The warrants had a fair market value of $335,695.
The Company issued 250,000 warrants to purchase common stock in connection
with a consulting agreement.The warrants had a fair value of $397,500.
The Company has received $5,054,220 of deposits from third party purchasers,
which have been placed in an escrow account.
During fiscal 1997:
The Company issued 4,375,000 shares of stock in exchange for certain assets
of Imtek Corporation as follows:
<TABLE>
<S> <C>
Inventory......................................................... $ 353,954
Accounts receivable............................................... 356,609
---------
$ 710,563
---------
---------
</TABLE>
27
<PAGE>
NOTE A--SUMMARY OF ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements follows.
BASIS OF PRESENTATION
The consolidated financial statements of the Company include the accounts of
Imtek Office Solutions, Inc., a Delaware corporation, and its wholly-owned
subsidiaries, Imtek Corporation, a Maryland corporation, and Imtek Services
Corporation (Services), a Maryland corporation.
During 1998, Imtek Corporation acquired Office Supply Line (OSL), Capital
Prepress Holdings, Inc. (CPHI), GLS Holdings, Inc. (GLS), Richmond Business
Systems (RBS), Bohanon Business Systems, Inc. (BBS) and Perfect Copy. The
acquisitions were accounted for as purchases and revenue and results of
operations from the respective dates of acquisition have been included in the
accompanying financial statements.
Services' wholly-owned merchant banking subsidiary is Imtek Funding
(Funding). In October 1997, Funding acquired Thompson Office Products, a company
engaged in the purchase and resale of viaticated insurance policies. The
acquisition was accounted for as a purchase, and revenue and results of
operations from the date of acquisition have been included in the accompanying
financial statements.
Significant intercompany transactions have been eliminated in consolidation.
BUSINESS OPERATIONS
Imtek Corporation is in the business of selling and servicing copiers,
facsimile machines and printers, sales of office supplies, and commercial
printing and copying. The Company conducts business in the Baltimore,
Washington, D.C., Richmond and Tidewater, Virginia, and Atlanta, Georgia
metropolitan areas and grants credit to customers in those regions.
Funding's principal business activity is the purchase and resale of
viaticated insurance policies of terminally ill individuals. Funding contracts
with such individuals who desire to sell their life insurance policies for cash.
Funding conducts this business through a broker network it has established
throughout the continental United States.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
REVENUE RECOGNITION
Imtek Corporation recognizes revenue on equipment sales and supplies upon
shipment of the sale. Revenue for servicing of the equipment is recognized at
the time the service is performed. Deferred revenue consists of unearned
maintenance contract revenue that is recognized using the straight-line method
over the life of the related contract, generally twelve months.
Imtek Funding recognizes revenue on viatical contracts at the time when
title to the policy has been transferred to the purchaser.
ACCOUNTS RECEIVABLE
For financial reporting purposes, the Company utilizes the allowance method
of accounting for doubtful accounts. The Company performs ongoing credit
evaluations of its customers and maintains an
28
<PAGE>
NOTE A--SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
allowance for potential credit losses. The allowance is based on an experience
factor and review of current accounts receivable. Uncollectible accounts are
written off against the allowance accounts when deemed uncollectible. At June
30, 1998, management estimates that all of the accounts receivable are
collectible.
INVENTORY
Inventories consist of copy machines, facsimile machines, duplicators, and
parts and supplies used in the maintenance of office machines and consumable
supplies. Inventories are stated at lower of cost or market using the first-in,
first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
The Company provides depreciation and amortization for financial statement
purposes over the estimated useful lives of the fixed assets using the
straight-line method. Expenditures for maintenance and repairs are charged to
expense in the period the charges are incurred.
The estimated service lives used in determining depreciation and
amortization are as follows:
<TABLE>
<S> <C>
Furniture and fixtures, production equipment and equipment held for
leases................................................................. 5-7 years
Computer equipment and software.......................................... 5 years
5-10
Leasehold improvements................................................... years
Vehicles................................................................. 5 years
</TABLE>
DEFERRED FINANCING COSTS
Deferred financing costs represent costs incurred in obtaining funding under
a note payable. The costs are being amortized over the life of the related note.
OTHER INTANGIBLE ASSETS
Other intangible assets represent costs in excess of net assets acquired and
non-compete agreements in connection with businesses acquired. Costs in excess
of net assets acquired are being amortized to operations on a straight-line
basis over fifteen years. Non-compete agreements are being amortized over the
life of the agreement, generally 3 to 5 years.
ORIGINAL ISSUE DISCOUNT
The original issue discount, which is shown as a reduction of the note
payable, represents the value of warrants issued in connection with the related
note payable. The original issue discount is being amortized over the life of
the note.
FINANCIAL INSTRUMENTS
The Company's financial instruments include cash, accounts receivable,
accounts payable, and long-term debt. The carrying amount of these financial
instruments approximates their fair market value.
LONG-LIVED ASSETS
The recoverability of long-lived assets is evaluated at the operating unit
level by an analysis of operating results and consideration of other significant
events or changes in the business environment. If an operating unit has current
operating losses and there is a likelihood that such operating losses will
continue, the Company will determine if impairment exists based on the
undiscounted expected future
29
<PAGE>
NOTE A--SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
cash flows from operations before interest. Impairment losses would be measured
based on the amount by which the carrying amount exceeds the fair value.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
INCOME TAXES
Income taxes are provided based on the liability method for financial
reporting purposes. Deferred and prepaid taxes are provided for on temporary
differences in the basis of assets and liabilities which are recognized in
different periods for financial and tax reporting purposes.
RECLASSIFICATIONS
Certain items in the fiscal 1997 financial statements have been reclassified
to conform to the current presentation.
EARNINGS PER SHARE
Basic earnings per share amounts have been computed based on the weighted
average number of common shares outstanding. Diluted earnings per share reflects
the increase in average common shares outstanding that would result from the
assumed exercise of outstanding securities, calculated using the treasury stock
method.
FISCAL YEAR CHANGE
In July 1998, the Board of Directors approved a change in the Company's
fiscal year end from September 30 to June 30, effective with the fiscal period
beginning October 1, 1997.
NEWLY ISSUED ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION (SFAS 131), which is effective for fiscal
years beginning after December 15, 1997. The statement establishes revised
standards under which an entity must report business segment information in its
financial statements. The Company plans to adopt SFAS 131 in the fiscal year
beginning July 1, 1998 and does not believe its current segment data will change
significantly under the newly adopted standards, which requires reporting on the
basis that is used internally for evaluating segment performance.
NOTE B--PRIOR PERIOD ADJUSTMENT
Additional paid-in capital and accumulated deficit were restated as of
September 30, 1997 to reflect the acquisition of Imtek Corporation by Spectrum
Equities, Inc. as a reverse acquisition, treating Imtek Corporation as the
acquirer. Previous financial statements reflected Spectrum Equities as the
acquirer.
Prior to the acquisition, Spectrum Equities, Inc. was a public shell
corporation with no operations since 1992. Imtek Corporation was an operating
company prior to the acquisition .
Simultaneous with the acquisition, the Company was renamed Imtek Office
Solutions, Inc.
30
<PAGE>
NOTE C--ESCROW DEPOSITS AND CUSTOMER ESCROW ACCOUNTS
Prospective purchasers of viaticated life insurance policies deposit funds
in a "Viatical Trust" bank account administered by an independent trustee
(Trustee.) If the prospective purchaser decides not to purchase a policy, the
Trustee refunds the deposit, without interest. Upon a sale, the escrowed funds
are disbursed by the Trustee to the insured for the agreed purchase price of the
life insurance policy. The ownership of the policy is transferred to the Trustee
and the purchaser is designated as the beneficiary. The Trustee also makes a
disbursement to Funding including fees to the Trustee for its services.
Upon sale the Trustee also deposits funds into a separate escrow account to
pay future premiums on the policy based upon the estimated remaining life of the
insured. Funding does not guarantee the future payment of these premiums beyond
the amounts deposited.
Upon the death of the insured, the Trustee collects the policy proceeds and
remits those funds to the purchaser.
NOTE D--BUSINESS ACQUISITIONS
On April 22, 1997, the Company purchased a 100% interest in Imtek
Corporation for 4,375,000 of the Company's common stock (see Note B). Imtek
Corporation was incorporated on April 1, 1997.
The balance sheet of Imtek Corporation consisted of:
<TABLE>
<S> <C>
Assets
Inventory....................................................... $ 353,954
Trade notes receivable.......................................... 356,609
---------
$ 710,563
---------
---------
</TABLE>
On October 1, 1997, the Company acquired all of the issued corporate stock
of Thompson Business Products ("Thompson"), an entity owned by officers of the
Company, in exchange for 1,000,000 shares of the Company's common stock valued
at $140,000 and cash of $172,826. Thompson purchases and resells insurance
policies of terminally ill individuals.
On October 1, 1997, the Company acquired certain assets of Richmond Business
Systems, Inc. ("RBS") for cash of $37,500 and a cash payment of $2,000. The
assets acquired included accounts receivable ($17,000), inventory ($11,000),
furniture and fixtures ($9,500), and intangibles ($2,000).
On October 1, 1997, the Company acquired certain assets of Bohanon Business
Systems, Inc. ("BBS"). The assets acquired included accounts receivable
($17,000), inventory ($12,000) and furniture and fixtures ($5,000). The
transaction was funded through the assumption of trade payables of $27,000 and a
note payable of $7,000.
On October 31, 1997, the Company acquired all of the outstanding common
stock of Capital Prepress Holdings, Inc. ("CPHI") in exchange for 1,010,611
shares of common stock valued at $141,486 and a cash payment of $7,000. CPHI is
a provider of digital imaging services.
On November 1, 1997, the Company acquired all of the common stock of Office
Supply Line Holding, Inc. ("OSLHI"), an entity owned by one of the Company's
officers, in exchange for 465,000 shares of the Company's common stock valued at
$65,170 and cash of $142,161. Additionally, the Company acquired the inventory
of Office Supply Line, Inc., an entity related to OSLHI for $237,000, payable in
$75,000 cash, $70,000 of assumed trade payables, and a $92,000 note payable. The
Office Supply Line entities operate a retail office supply business.
31
<PAGE>
NOTE D--BUSINESS ACQUISITIONS (CONTINUED)
On November 1, 1997, the Company acquired all of the outstanding common
stock of GLS Holdings, Inc. ("GLS") in exchange for 56,250 shares of
common stock valued at $7,875 and a cash payment of $21,636. GLS is a
provider of litigation support copy services.
On June 1, 1998, the Company acquired certain assets of Perfect Copy. The
assets acquired included furniture and fixtures ($90,000), accounts receivable
($50,000), inventory ($242,000), rental equipment ($20,000), and a non compete
agreement ($35,000). The transaction was funded by a cash payment of $410,000 at
settlement, a $50,000 escrow deposit and the assumption of maintenance contract
liabilities in the amount of $100,000.
The fiscal 1998 transactions have been recorded under the purchase method of
accounting; accordingly, the results of operations of the entities from their
respective acquisition dates are included in the accompanying consolidated
financial statements. The purchase prices have been allocated to assets acquired
and liabilities assumed based on fair market value at the dates of acquisition.
The fair value of assets acquired and liabilities assumed are summarized as
follows:
<TABLE>
<CAPTION>
PERFECT OSLHI
THOMPSON COPY AND OSL CPHI GLS RBS BBS
---------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Current assets..................................... $1,388,929 $ 292,000 $ 237,000 $ -- $ -- $ 28,000 $ 29,000
Property and equipment............................. -- 110,000 -- -- -- 9,500 5,000
Other assets....................................... -- -- -- -- 7,875 -- --
Intangibles........................................ 30,000 35,000 -- -- -- -- --
Goodwill........................................... 1,253,269 123,000 132,331 148,486 29,511 2,000 --
Current liabilities................................ (1,279,929) (50,000) -- -- -- -- --
Long-term liabilities.............................. (1,079,443) (100,000) -- -- -- -- --
</TABLE>
The following table reflects unaudited pro forma combined results of
operations of the Company and the above acquisitions on the basis that the
acquisitions had taken place at the beginning of the fiscal period for each of
the periods presented:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
Revenues............................................................. $ 27,726,255 $ 8,958,416
Net income........................................................... 676,781 40,856
Net income per common share:
Basic.............................................................. .09 .01
Diluted............................................................ .09 .01
Shares used in computation
Basic.............................................................. 7,532,361 7,532,361
Diluted............................................................ 7,540,117 7,532,361
</TABLE>
In management's opinion, the unaudited pro forma combined results of
operations are not indicative of the actual results that would have occurred had
the acquisitions been consummated at the beginning of 1997 or at the beginning
of 1998 or of future operations of the combined companies under the ownership
and management of the Company.
NOTE E--NOTES RECEIVABLE
During the year ended September 30, 1997, the Company advanced monies to CMS
Holdings, Inc. (CMS), an entity controlled by certain of the Company's officers.
These funds were advanced in the anticipation of performance in connection with
a service agreement entered into by the Company and CMS (see Note M). This note
of $20,466 was paid in 1998.
32
<PAGE>
NOTE F--PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
Production equipment........................................................... $ 1,351,830 $ 35,740
Computer equipment and software................................................ 60,355 --
Furniture and fixtures......................................................... 427,840 --
Leasehold improvements......................................................... 27,448 --
Vehicles....................................................................... 5,029 --
Equipment held for leases...................................................... 20,000 --
------------- -------
Total property and equipment................................................. 1,992,502 35,740
Less accumulated depreciation and amortization................................. 111,614 1,783
------------- -------
Property and equipment, net.................................................. $ 1,880,888 $ 33,957
------------- -------
------------- -------
</TABLE>
NOTE G--ACCOUNTS PAYABLE--RELATED PARTY
The Company used the trade credit facilities of CMS and Amerilease, entities
owned by certain of the Company's officers. The balance payable at June 30, 1998
and September 30, 1997 was $795,205 and $73,063, respectively.
NOTE H--NOTES PAYABLE
On May 29, 1998, the Company entered into a subordinated acquisition line of
credit agreement with Sirrom Capital Corporation (Sirrom) for $6,000,000. The
Company is using this facility to assist in financing acquisitions and working
capital. As of June 30, 1998, the balance outstanding under this note was
$3,370,000.
Interest on the balance, at 14% per annum, is payable monthly through May
28, 2003, at which time the entire outstanding principal balance is due.
This note is collateralized by substantially all of the Company's assets.
Sirrom has agreed to subordinate its security position to a future senior
lender. As additional consideration, the Company granted Sirrom warrants
for 119,891 shares, which have been reflected as an original issue
discount of $335,695 and will be amortized over the term of the loan on a
straight-line basis.
The note is collateralized by all of the outstanding stock of the Company's
subsidiaries.
Subsequent to June 30, 1998, the Company borrowed the remaining $2,630,000
available under this facility.
The Company has a note payable to Crestar Bank for $51,475 at June 30, 1998.
The note calls for monthly installments of $922 including principal and interest
at 8.56%, through February 15, 2002. The note is collateralized by substantially
all assets of the Company. The note was paid subsequent to June 30, 1998.
The Company has a $350,000 revolving line-of-credit with Regency Bank, which
bears interest at prime plus >% payable monthly. The line is collateralized by
all accounts receivable, chattel paper, certain inventory and general
intangibles. The loan is guaranteed by the Company and all subsidiaries. The
balance of $200,000 at June 30, 1998 was paid subsequent to year-end.
In conjunction with the acquisition of Thompson, the Company entered into an
unsecured note payable with a former owner of Thompson. The note has a balance
of $705,099 at June 30, 1998. The note
33
<PAGE>
NOTE H--NOTES PAYABLE (CONTINUED)
requires a balloon payment of $160,000 on July 1, 1998 and monthly payments
thereafter of $13,333 including interest at 8% through June 1, 2002.
The Company has unsecured working capital notes payable to two individuals
which have an aggregate outstanding balance of $66,087 at June 30, 1998. The
notes require monthly payments ranging from $744 to $850 and bear interest at
10%. The notes are due on August 1, 2001.
Scheduled maturities of notes payable for the next five years are as
follows:
<TABLE>
<S> <C>
1999............................................................. $ 560,055
2000............................................................. 146,822
2001............................................................. 159,359
2002............................................................. 156,425
2003............................................................. 3,370,000
</TABLE>
NOTE I--OBLIGATION UNDER CAPITAL LEASE
The Company leases printing equipment under capital leases with Amerilease,
an entity owned by certain of the Company's officers expiring at various dates
through 2002. The following is a schedule of property leased under capital
leases as of June 30, 1998:
<TABLE>
<S> <C>
Printing equipment.............................................. $1,240,695
Less accumulated depreciation................................... (66,466)
---------
$1,174,229
---------
---------
</TABLE>
Minimum future lease payments under the capital leases as of June 30, 1998
are as follows:
<TABLE>
<S> <C>
1999............................................................ $ 333,356
2000............................................................ 175,501
2001............................................................ 268,706
2002............................................................ 254,796
2003............................................................ 527,691
---------
Total minimum lease payments.................................... 1,560,050
Less amount representing interest............................... 337,391
---------
Present value of net minimum lease payments..................... $1,222,659
---------
---------
Current......................................................... $ 234,081
Long-term....................................................... 988,578
---------
$1,222,659
---------
---------
</TABLE>
NOTE J--PUT OPTION OBLIGATION
Under an agreement dated May 29, 1998, the warrant holder (Sirrom) is
granted the right to purchase 119,891 shares (Base Amount) of the Company's
common stock. The number of shares which may be purchased increases based on
borrowings under the note to Sirrom at certain dates. At May 29, 2001, the base
increases to 160,670 shares. On May 29, 2002, the base increases to 201,868
shares and on May 29, 2003, the base increases to 243,491 shares. The Base
Amount further increases to 569,885 shares in the event the Company does not
complete a secondary public offering with net proceeds to the Company of at
least $15,000,000 by May 29, 1999. If the initial Base Amount is increased as
set forth above, the
34
<PAGE>
NOTE J--PUT OPTION OBLIGATION (CONTINUED)
outstanding debt shall be adjusted to increase the adjusted initial Base Amount
by 0.5% for each year the note remains outstanding beyond May 29, 2001.
The warrants may be exercised at any time until July 31, 2003 at $.01 per
share.
The Company granted a Put Option on the warrants which grants to the holder
the right to require the Company to redeem the warrants for a period of 60 days
immediately prior to their expiration for the fair market value of the shares of
common stock represented by the warrants. As a result of this Put Option, the
amount has been classified as a long-term obligation.
NOTE K--COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company conducts its operations in leased facilities. These facilities
are leased under operating leases which expire at various dates through 2007 and
require monthly payments ranging from $540 to $8,549.
In June 1997, the Company entered into a lease agreement for three high
volume Xerox copiers from a related party. These copiers are rented on a
month-to-month basis with a thirty-day notification period required to terminate
the lease. Monthly lease payments are computed based upon $.01 per copy.
The following is a schedule by year of base rentals due on operating leases
that have initial or remaining lease terms in excess of one year as of June 30,
1998.
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1999.............................................................................. $ 368,700
2000.............................................................................. 323,800
2001.............................................................................. 262,300
2002.............................................................................. 210,900
2003.............................................................................. 170,000
Thereafter........................................................................ 330,000
</TABLE>
Total rent expense for the nine months ended June 30, 1998 and year ended
September 30, 1997 was $271,910 and $7,674, respectively.
FINANCIAL ADVISOR AGREEMENT
During 1998, the Company entered into a one year agreement with Ferris,
Baker Watts (FBW), to provide financial advisory services to the Company. Under
terms of this agreement, the Company issued FBW 250,000 warrants to purchase the
Company's common stock for $5 per share. The warrants expire May 2003 and are
exercisable the earlier of (1) March 2, 2000, (2) one year after a public
offering, or (3) upon a change of control transaction.
The Company agreed to pay FBW a fee equal to 5% of the gross proceeds raised
in private placements of equity, 3% of the gross proceeds raised in the private
placement of debt and 2% of the purchase price of any merger/acquisition
transactions brokered by FBW.
In the event of a public offering, the Company agreed to grant FBW the
option to purchase an additional 15% of the Company's offered Common Stock up to
30 days subsequent to the public offering at a price which approximates 93% of
the gross price.
35
<PAGE>
NOTE K--COMMITMENTS AND CONTINGENCIES (CONTINUED)
LITIGATION
The Company is currently involved in litigation which alleges copyright
infringement and breach of contract claiming damages of $500,000. Neither the
Company, nor any of its subsidiaries is a defendant in the case, however, the
Company has agreed to indemnify one of the former owners of Thompson in the
case. Management of the Company believes that the claim is without merit and
intends to defend the suit vigorously. Based on currently available information,
management believes that the resolution of the matter will not have a material
adverse effect on the Company's operating results or financial position.
NOTE L--STOCKHOLDERS' EQUITY
PREFERRED STOCK
In January 1998, the Company issued a private placement memorandum for an
offering of up to $7,500,000 of non-voting, convertible preferred stock.
Proceeds from the issuance are to fund acquisitions. In March, 1998 the Company
terminated the offering after having sold 6,740 shares for $626,820, net of
issuance costs.
The preferred shares carry an annual dividend rate of 9.0% payable annually
beginning October 1, 2001. In the event of a conversion of the shares into
common stock, any accrued and unpaid dividends will be waived. At June 30, 1998
the aggregate amount of cumulative dividends in arrears was $5,055 or $.75 per
share.
The Company may redeem the shares for $100 per share, plus accrued and
unpaid dividends, plus a cash call premium based on the elapsed time between the
issue date and cash redemption which ranges from $2.00 for 91 days to $20 for
over 900 days.
Upon liquidation, dissolution, or winding up of the Company, holders of
shares will receive $100 per share plus accrued and unpaid dividends. Such
distributions have priority over any distribution to common stockholders.
At the option of the holder, the shares are convertible into common stock.
The conversion rate is based upon the conversion date and ranges from 12 to 21
shares of common stock.
NOTE M--RELATED PARTY TRANSACTIONS
Through October 1, 1997, the Company had a servicing agreement with CMS, an
entity owned by certain of the Company's officers. CMS performed certain
maintenance, repair, marketing and administrative tasks for the Company. Total
service expense for the year ended September 30, 1997 to CMS was approximately
$977,000.
During 1997, the Company also engaged in trade credit facility transactions
with Amerilease, a company owned by certain of the Company's officers. The total
expense for the year ended September 30, 1997 to Amerilease was approximately
$107,000.
During fiscal 1998, the Company leased equipment with a value of $1,240,695
from Amerilease under a capital lease.
From October 1, 1997 through December 31, 1997, the Company paid $150,000 in
management fees to Beneficial Assistance, Inc., an entity owned by officers of
the Company operating Thompson.
36
<PAGE>
NOTE N--DEPENDENCE ON MAJOR VENDORS
During 1997 the Company purchased copiers, facsimile machines and other
office equipment primarily from one manufacturer. The cost of the equipment
purchased from this manufacturer was approximately $744,000. During 1998 there
was no vendor or manufacturer which represented more than 10% of purchases.
NOTE O--CONCENTRATIONS OF CREDIT RISKS
The Company maintains its cash balances at several financial institutions.
The Federal Deposit Insurance Corporation insures deposits at each institution
up to $100,000. Balances in excess of this amount are $2,749,168 for the year
ended June 30, 1998. The company has not experienced any losses in such accounts
and believes it is not exposed to any significant credit risk on cash and cash
equivalents.
NOTE P--EARNINGS PER COMMON SHARE
The following table reconciles the numerators and denominators of the basic
and diluted earnings per share (EPS) computations.
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
Basic EPS
Income available to common stockholders...................................... $ 598,013 $ 58,367
Weighted average number of common shares outstanding......................... 7,412,033 2,253,425
------------- ------------------
Basic EPS.................................................................. $ .08 $ .03
------------- ------------------
------------- ------------------
Diluted EPS
Income available to common stockholders...................................... $ 598,013 $ 58,367
Less impact of assumed conversions........................................... -- --
------------- ------------------
Income available to common stockholders on a diluted basis................. 598,013 58,367
Weighted average number of common shares outstanding......................... 7,412,033 2,253,425
Effect of convertible preferred stock........................................ 7,756 --
------------- ------------------
Adjusted weighted average number of common shares outstanding.............. 7,419,789 2,253,425
------------- ------------------
Diluted EPS................................................................ $ .08 $ .03
------------- ------------------
------------- ------------------
</TABLE>
During 1998, warrants for 250,000 shares of common stock have been excluded,
as they are anti-dilutive.
NOTE Q--INCOME TAXES
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109), which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax basis
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.
37
<PAGE>
NOTE Q--INCOME TAXES (CONTINUED)
The components of income tax expenses are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
Currently payable.......................................... $ 414,314 $ 20,600
Deferred................................................... 16,634) --
------------- -------
$ 397,680 $ 20,600
------------- -------
------------- -------
</TABLE>
The Company's provision for income taxes differs from the anticipated
Federal statutory rate. Differences between the statutory rate and the Company's
provision are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
--------------- -------------------
<S> <C> <C>
Taxes at statutory rate.................................... 34.0% 34.0%
Benefit of operating loss carryforwards.................... -- (15.0)
State income taxes......................................... 5.7 7.0
--- -----
39.7% 26.0%
--- -----
--- -----
</TABLE>
Deferred taxes at June 30, 1998 and September 30, 1997 are comprised as
follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- -------------------
<S> <C> <C>
Current deferred tax asset
Operating loss carryforward................................ $ 56,948 $ --
Deferred expense on stock warrants......................... 25,176 --
------------- -----
82,124 --
Non-current deferred tax liability
Depreciation and amortization.............................. (65,490) --
------------- -----
$ 16,634 $ --
------------- -----
------------- -----
</TABLE>
NOTE R--INDUSTRY SEGMENTS
The Company currently operates in two principal areas, product sales and
service and merchant banking. Product sales and service includes the sale of
business equipment and the service thereof. Merchant banking is comprised
principally of the processing of viatical settlements.
38
<PAGE>
NOTE R--INDUSTRY SEGMENTS (CONTINUED)
Information by industry segment is as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
JUNE 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
INDUSTRY SEGMENT DATA
Net sales to unaffiliated customers
Products sales and service.......................... $ 5,854,400 $ 2,094,972
Merchant banking.................................... 21,088,242 --
------------------ ------------------
$ 26,942,642 $ 2,094,972
------------------ ------------------
------------------ ------------------
Operating (loss) income
Products sales and service.......................... $ (644,461) $ 72,433
Merchant banking.................................... 1,767,198 --
------------------ ------------------
$ 1,122,737 $ 72,433
------------------ ------------------
------------------ ------------------
Assets
Products sales and service.......................... $ 8,022,467 $ 1,007,339
Merchant banking.................................... 8,502,290 --
------------------ ------------------
$ 16,524,757 $ 1,007,339
------------------ ------------------
------------------ ------------------
Capital expenditures
Products sales and service.......................... $ 1,715,055 $ 35,740
Merchant banking.................................... 241,707 --
------------------ ------------------
$ 1,956,762 $ 35,740
------------------ ------------------
------------------ ------------------
Depreciation and amortization expense
Products sales and service.......................... $ 141,689 $ 3,925
Merchant banking.................................... 46,396 --
------------------ ------------------
$ 188,085 $ 3,925
------------------ ------------------
------------------ ------------------
</TABLE>
NOTE S--RETIREMENT PLAN
The Company sponsors a defined contribution 401(k) Profit Sharing Plan
covering all full time employees who have been employed for six months. The Plan
is noncontributory by the Company and allows participants to contribute a
portion of their annual salary up to limitations established by ERISA.
NOTE T--SUBSEQUENT EVENTS
In July 1998, the Company entered into agreements with five companies to
acquire assets or stock. The transactions are summarized below:
FORBES ENTERPRISES
On July 1, 1998, the Company acquired certain assets of Forbes Enterprises
in exchange for cash of $115,000, assumption of liabilities and notes payable of
approximately $750,000.
KEYSTONE DIGITAL IMAGING, INC. (KDI)
On July 22, 1998, the Company acquired certain assets of KDI, a Pennsylvania
corporation engaged in the sale, leasing, rental, servicing and wholesaling of
office equipment, products and supplies. The
39
<PAGE>
NOTE T--SUBSEQUENT EVENTS (CONTINUED)
transaction was funded through the cash payment of $800,000 at settlement, a
note payable of $130,000 and the assumption of maintenance contract liabilities
of $141,000.
BARBERA BUSINESS SYSTEMS, INC (BARBERA)
The Company acquired all of the common stock of Barbera, a Maryland
corporation in the retail business of selling, leasing and servicing office
equipment and related supplies throughout Maryland and Washington DC, in
exchange for a cash payment of $1,500,000, a note payable of $225,119 and
200,000 shares of common stock.
AMI
In July, 1998, the Company entered into an agreement with AMI Group, Inc., a
Maryland corporation involved in selling photocopy equipment and providing third
party administrative and marketing services for equipment resellers. Under the
terms of the agreement, the Company, in exchange for the assumption of
liabilities amounting to $460,000, purchased certain customer accounts. The
Company has placed the purchase price in escrow at June 30, 1998.
RUTTENBERG
In July, 1998 the Company entered into an agreement with Ruttenberg &
Associates, an Illinois corporation involved in the sale of viaticated insurance
policies. The transaction was accounted for as a purchase with a cash payment of
$78,000 at settlement.
MERCANTILE LINE-OF-CREDIT
Subsequent to June 30, 1998, the Company entered into a two-year
line-of-credit agreement with Mercantile-Safe Deposit & Trust Company for a
$3,000,000 credit facility to meet short-term working capital needs. Advances
under the line will be limited to 70% of eligible accounts receivable and
leases. The borrowings bear interest at prime plus 1% and provide for a facility
fee of % of the average unused portion of the line. The borrowings are
collateralized by a first priority lien on accounts receivable, inventory,
equipment and all other assets and stipulates certain financial covenants.
STOCK OPTION PLAN
On August 23, 1998, the Board of Directors adopted the Company's 1998 Stock
Option Plan. All present and future employees of the Company are eligible to
receive incentive awards under the Plan. Nonemployee directors and consultants
or other independent contractors are also eligible. The Plan authorizes the
reservation of 25,000,000 shares of common stock for issuance pursuant to
incentive awards. No more than 1,000,000 shares may be awarded to an employee in
any year. An independent committee will administer the Plan.
Options to purchase shares of common stock granted under the Plan may be
incentive stock options or nonstatutory options. The option price covered by an
incentive stock option may not be less than 100% (or, in the case of an
incentive stock option granted to a 10% stockholder, 110%) of the fair market
value of the common stock on the date of the grant. In addition, no more than
$100,000 of incentive stock options, based on the exercise price, may be
initially exercisable in any calendar year under the Plan. The exercise price a
nonstatutory option may not be less than 100% of the fair market value of the
stock on the date of grant. There are no options presently outstanding under the
plan.
40
<PAGE>
NOTE U--QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1998
--------------------------------------------------------
<S> <C> <C> <C> <C>
FIRST SECOND THIRD TOTAL FOR
QUARTER QUARTER QUARTER NINE MONTHS
------------ ------------ ------------- -------------
Revenue................................................ $ 6,591,531 $ 9,938,742 $ 10,412,368 $ 26,942,642
Gross profit........................................... 1,671,367 2,101,577 1,751,367 5,524,312
Net income............................................. 268,231 323,644 11,193 603,068
Per share data:
Basic................................................ .04 .04 .00 .08
Diluted.............................................. .04 .04 .00 .08
</TABLE>
<TABLE>
<CAPTION>
1997
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER FOR YEAR
----------- ----------- ---------- ------------ ------------
Revenue................................................ $ -- $ -- $ 867,535 $ 1,227,437 $ 2,094,972
Gross profit........................................... -- -- 77,556 148,713 226,269
Net income............................................. -- -- 37,947 20,420 58,367
Per share data:
Basic................................................ -- -- .02 .01 .03
Diluted.............................................. -- -- .02 .01 .03
</TABLE>
Schedule II--Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
PERIOD ENDED JUNE 30, 1998
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
-------------------------------------
<CAPTION>
BALANCE CHARGED CHARGED
AT TO COSTS TO BALANCE
BEGINNING AND OTHER AT END
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful receivables........................ $ 4,000 $ -- $ -- $ 4,000 $ --
----------- ----- ----- ----------- -----
----------- ----- ----- ----------- -----
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1997
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS
---------------------------------------
<CAPTION>
BALANCE CHARGED CHARGED
AT TO COSTS TO BALANCE
BEGINNING AND OTHER AT END
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
------------- ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful receivables......................... -- $ 4,000 $ -- $ -- $ 4,000
--- ----------- ----- ----- ---------
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
In October, 1997, the Registrant dismissed Grant-Schwartz Associates, CPAs,
the independent accountant engaged to audit the Registrant's financial
statements for at least the fiscal years ended September 30, 1996 and 1995, as
reported on Form 8-K dated October 24, 1997, which is hereby incorporated by
reference. This decision was approved by the Registrant's Board of Directors.
There were no disagreements between the Registrant and Grant-Schwartz
Associates, CPAs on any matter of accounting principles or practices, financial
disclosure or audit scope or procedures.
41
<PAGE>
NOTE U--QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)
The Accountants' report issued by Grant-Schwartz Associates for the years
ended September 30, 1996 and 1995 and dated October 15, 1996 and May 16, 1996,
respectively, were qualified as to "going concern".
On October 24, 1997, the Registrant appointed Rosenberg, Rich, Baker, Berman
and Registrant as its accountants to audit the financial statements for the year
ended September 30, 1997, as reported on Form 8-K dated October 24, 1997, which
is hereby incorporated by reference.
On July 31, 1998, the Registrant disengaged Rosenberg, Rich, Baker, Berman
as its independent accountants. This decision was approved by the Registrant's
Board of Directors. The accountants' report issued by Rosenberg, Rich, Baker,
Berman for the year ended September 30, 1997 dated December 19,1997 was
unqualified. There were no disagreements between the Registrant and Rosenberg,
Rich, Baker, Berman and Company on any matter of accounting principles,
practices, financial disclosure or auditing scope or procedure.
On July 31, 1998 the Registrant appointed Grant Thornton, LLP as its new
accountants as reported on Form 8-K dated July 31, 1998, which is hereby
incorporated by reference.
42
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors, executive officers and key management employees of the
Registrant as of September 18, 1998 are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Edwin C. Hirsch...................................... 50 Chairman of the Board, Chief Executive Officer
Robert W. Hoover..................................... 52 Director, President
Michael L. Lowe...................................... 43 Director, Vice President, Chief Operating Officer
Brad C. Thompson..................................... 42 Director, Chief Financial Officer, Assistant
Secretary
Robert J. Brown...................................... 52 Senior Vice President; Secretary
Richard H. Guilford.................................. 70 Director
Peter B. Lilly....................................... 50 Director
</TABLE>
Edwin C. Hirsch has been the Registrant's Chief Executive Officer and
Chairman of the Board of Directors since April 22, 1997. Mr. Hirsch served as
President of the Registrant from April 22, 1997 to June, 1998. From August, 1995
through October, 1997, Mr. Hirsch was the President of CMS Inc. From 1990
through 1996 Mr. Hirsch served as the President of Reptech, Inc., A US-China
Joint Venture entity in connection with the sale and production of high energy
magnets. Mr. Hirsch currently serves on the Board of Directors of Reptech, Inc.
From 1984 through 1989, Mr. Hirsch was a principal in Commonwealth Financial
Associates, Inc., a merchant banking company. Mr. Hirsch holds a BS in
Engineering from the US Military Academy at West Point. After completing his
military obligation, Mr. Hirsch began his professional career in sales with IBM
and Commercial Credit Company.
Robert W. Hoover, has been the Registrant's President since June 1998 and
has been a director of the Registrant since November 18, 1997. Prior to that
time Mr. Hoover was the Executive Vice President of the Registrant since joining
the registrant November 18, 1997. From 1995 through September 30, 1997, Mr.
Hoover was the President of Beneficial Assistance, Inc., an entity acquired by
the Registrant in October, 1997. The business of Beneficial Assistance, Inc. is
currently conducted by Imtek Funding, a wholly-owned indirect subsidiary of the
Registrant. From 1984 through 1994, Mr. Hoover was a principal with Commonwealth
Financial Associates. From 1977 through 1983 Mr. Hoover was employed by
Commercial Credit Company holding several senior management positions. Mr.
Hoover holds a Bachelor of Arts degree from Loyola College, Baltimore.
Michael L. Lowe, has been the Registrant's Chief Operating Officer since
April, 1997. From 1991 through 1995, Mr. Lowe was a senior manager and a
Divisional Vice President at Danka Business Systems, Inc. From 1995 to 1997, Mr.
Lowe was the president of Office Supply Line, Inc., a retailer of office
supplies located in Hopewell, Virginia. After graduating from West Liberty
College, Mr. Lowe began his professional sales and management career with
Northwestern Insurance Company prior to starting-up his own Cannon Copier
dealership in Charlestown, West Virginia. Mr. Lowe has been a director of the
Registrant since November 18, 1997.
Brad C. Thompson , CPA, has been the Registrant's Chief Financial Officer
and Director since November 18, 1997. From January, 1997 until September 30,
1997, Mr. Thompson served as Vice President
43
<PAGE>
of Beneficial Assistance, Inc., an entity acquired by the Registrant in October,
1997. From 1993 through October, 1997, Mr. Thompson was a director and
shareholder in the public accounting firm of Schiller, Holinsky & Gardyn, PA.
From 1980 through 1993, Mr. Thompson was a senior manager with Grant Thornton --
an international public accounting firm. Prior to that Mr. Thompson was employed
by a local Baltimore accounting firm. Mr. Thompson is a 1978 graduate of Loyola
College in Baltimore.
Robert J. Brown, has served as a Senior Vice President and Secretary since
April, 1997. Mr. Brown served as director of the Registrant from April 1997
through September 11, 1998. Prior to joining the Registrant, Mr. Brown owned and
managed several equipment leasing and financial services companies including
American Banking Services, Inc. which managed equipment and lease portfolios for
the RTC and several banks. From 1967 through 1982, Mr. Brown was employed by
Commercial Credit Company where he held a variety of credit and marketing
management positions. Mr. Brown is a graduate of the University of Baltimore.
Richard H. Guilford, was elected as a director of the Registrant on
September 11, 1998. Mr. Guilford is currently the President of the United States
Company, a Richmond, Virginia management consulting firm which he co-founded in
1995. Mr. Guilford currently serves as the Chairman of the Board of Directors of
Market-Pro, Inc. an Atlanta Georgia based employment placement firm and the Star
Group Ltd., an environmental engineering firm and is a member of the board of
directors of Environmetrics, Inc. In 1986, Mr. Guilford founded HazWaste
Industries, Inc. and served as its Chairman, President and Treasurer until the
Registrant was sold in 1995. Prior to 1986, Mr. Guilford served at the senior
management level of several financial services companies. Mr. Guilford attended
the University of Richmond and completed the Executive Program from the Darden
Graduate School of Business, University of Virginia.
Peter B. Lilly, was elected a director of the Registrant on September 11,
1998. Mr. Lilly currently serves as a director for Peabody Holding Company,
Inc., the National Coal Association and the National Mining Association. From
1991 through 1998, Mr. Lilly served as the President and Chief Operating Officer
of Peabody Holding Company, Inc. From 1980 through 1991, Mr. Lilly served as a
Senior Vice President of the Kerr-McGee Corporation and was the President of
Kerr-McGee Coal Corporation. Mr. Lilly received a BS in Engineering from the US
Military Academy, an MBA in Industrial Marketing and Operations Management from
Harvard University and graduated from the Kellogg School at Northwestern
University.
All directors hold office until the next annual meeting of the shareholders
of the Registrant and until their successors are elected and qualified. Officers
hold office until the first meeting of the directors following the annual
meeting of shareholders and until their successors are elected and qualified,
subject to earlier removal by the Board of Directors.
Messrs. Guilford and Lilly were elected to the Board of Directors and agreed
to serve in that capacity effective September 11, 1998. Mr. Brown did not seek
re-election.
44
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEARS(6) SALARY(7)
- ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Edwin C. Hirsch...........................................................................
Chief Executive Officer 1998 1997 61,167 0(8)
Robert W. Hoover..........................................................................
Executive Vice President 1998 1997 60,333 0(9)
Michael L. Lowe...........................................................................
Chief Operating Officer 1998 1997 60,333 0(10)
Brad C. Thompson..........................................................................
Chief Financial Officer 1998 1997 57,317 0(11)
Robert J. Brown...........................................................................
Senior Vice President 1998 1997 54,817 0(12)
Andrew J. Walter..........................................................................
Vice President(13) 1998 1997 50,000 0(14)
</TABLE>
- ------------------------
(6) The Registrant's 1998 fiscal year began October 1, 1997 and ended June 30,
1998 (the "1998 Fiscal Year"). The Registrant's 1997 fiscal year began
October 1, 1996 and ended September 30, 1997 (the "1997 Fiscal Year"). The
Registrant conducted no operations prior to April, 1997. Therefore, no
information is provided with respect to periods prior to the 1997 Fiscal
Year.
(7) Salaries stated for Fiscal Year 1998 represent amounts actually earned
during the 9 month period between October 1, 1997 and June 30, 1998. Prior
to January 1, 1998, none of the persons listed were compensated for their
services. From January 1, 1998 through May 31, 1998, the stated salaries of
each of the listed persons was $100,000 per year. After June 1, 1998, Mr.
Hirsch was paid at a rate of $180,000 per year, Messrs. Hoover and Lowe were
each paid at a rate of $170,000 per year, Mr. Thompson was paid at a rate of
$150,000 per year, and Mr. Brown was paid at a rate of $125,000 per year.
Mr. Walter was not compensated after June 30, 1998. Prior to such time, he
was paid at a rate of $100,000 per year.
(8) During the 1997 Fiscal Year, Mr. Hirsch served as the Company's Chief
Executive Officer from April, 1997 to September 30, 1997. During such time,
Mr. Hirsch received no compensation.
(9) Robert W. Hoover was not employed by the Registrant during the 1997 fiscal
year.
(10) Mr. Lowe has served as the Chief Operating Officer of the Registrant since
April, 1997, but received no salary for his services during the 1997 fiscal
year.
(11) Mr. Thompson was not employed by the Registrant during the 1997 fiscal
year.
(12) Mr. Brown served as a Senior Vice President and Secretary of the Registrant
since April, 1997, but received no salary for his services during the 1997
fiscal year.
(13) Mr. Walter served as Vice President of the Registrant from October, 1997 to
July 1, 1998.
(14) Mr. Walter was not employed by the Registrant during the 1997 fiscal year.
The officers of the Registrant received no compensation for their services
to the Registrant prior to January 1, 1998. Previously, a management fee was
paid to the previous owners, related parties to the Company, for management of
the business.
45
<PAGE>
The Registrant has not adopted a policy for compensating its directors. The
Registrant's Board of Directors has not elected committees. It is anticipated
that the Board will establish, at a minimum, an audit committee and a
compensation committee. The Registrant did not compensate any Director in
connection with their service on the Board. The Registrant compensated its
directors who are also officers as noted above, in their capacity as officers of
the Registrant.
During the fiscal year ended June 30, 1998 the Registrant entered into a
consulting agreement with Mr. Guilford, a director of the Registrant. Under the
terms of this agreement, the Registrant paid Mr. Guilford $23,000, which was
charged to earnings during the year ended June 30, 1998.
On July 1, 1998, the Registrant and its subsidiaries entered into a
Severance Agreement and General Release with Andrew J. Walter, under which Mr.
Walter terminated his employment and resigned from all positions with the
Registrant and its subsidiaries and provided the Registrant and its subsidiaries
with a general release. Under the agreement, the Registrant made a cash payment
of $160,000 to Mr. Walter, less standard withholdings required by law, and made
a commitment to pay Mr. Walter $160,000 a year for the four year period
following July 1, 1998 on a bi-weekly basis in accordance with its regular
payroll policies and practices. In addition, the Registrant agreed to purchase
150,000 shares of common stock of the Registrant from Mr. Walter at a price of
$5 per share upon the effective date of a registration statement relating to a
public offering by the Registrant of its common stock or December 31, 1999,
whichever is earlier, and agreed to provide Mr. Walter with registration rights
in connection with shares of common stock of the Registrant which are not to be
purchased pursuant to the Severance Agreement and General Release and certain
other consideration.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table shows the amount of common stock owned as of September
18, 1998 by each director, and by all directors and officers as a group
consisting of seven persons. Each individual has beneficial ownership of the
shares and each individual has sole voting and investment power with respect to
the number of shares beneficially owned. In addition, the table also shows those
persons or entities beneficially known to own more than 5% of the outstanding
common stock as of September 18, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(15)
- -------------------------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Edwin C. Hirsch................................................................. 2,131,033(16) 28.29
Director, Chief Executive Officer
704 Severnside Ave
Severna Park, MD 21146
Michael L. Lowe................................................................. 709,325(17) 9.42
Director, Chief Operating Officer
12205 Renwich Ct.
Glen Allen, VA 23060
Robert J. Brown................................................................. 1,989,147(18) 26.41
Senior Vice President
1210 Lorene Dr
Pasadena, MD 21122
Brad C. Thompson................................................................ 423,500(19) 5.62
Director, Chief Financial Officer
8348 Fairwood Ct.
Pasadena, MD 21122
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(15)
- -------------------------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Andrew J. Walter(20)............................................................ 369,500 4.91
Vice President (October , 1997 to July 1, 1998)
11851 Drawbridge Rd.
Princess Anne, MD 21853
Robert W Hoover................................................................. 679,000(21) 9.01
Director, President
2593 Lawnside Rd.
Timonium, MD 21093
Richard H. Guilford............................................................. 0 0
Peter Lilly..................................................................... 0 0
All officers and Directors as a group (7 persons)............................... 5,059,575 67.17
American Trading Services(22)................................................... 602,303(23) 7.99
2111 Van Deman Street,
Baltimore, MD 21224
</TABLE>
- ------------------------
(15) Class consists of common stock, par value $.000001 per share. Figures are
rounded to the nearest one-hundredth of one percent.
(16) Includes (i) 943,000 shares owned of record by Mr. Hirsch with respect to
which Mr. Hirsch has exclusive voting and investment power, (ii) 314,217
shares owned of record by Mr. Hirsch's spouse, Janet M. Eckman, (iii)
631,930 shares owned of record by American Trading Services, Inc. and with
respect to which Mr. Hirsch shares voting and investment power with Mr.
Brown, as 50% owner of American Trading Services, Inc., (iv) 233,886 shares
which are owned by of record by Ambol Investment, LLC, of which Mr. Hirsch
is sole member, and (v) 8,000 shares owned of record by Bison Financial,
LLC, of which Mr. Hirsch is sole member.
(17) Includes (i) 463,325 shares owned of record by Mr. Lowe and his spouse as
joint tenants, (ii) 10,000 shares owned of record by Karen W. Lowe, Mr.
Lowe's spouse, (iii) 2,750 shares owned of record by Matthew W. Lowe, Mr.
Lowe's son, (iv) 2,750 shares owned of record by Brian M. Lowe, Mr. Lowe's
son, and (v) 230,500 shares owned of record by Toas, LLC, a limited
liability company, with respect to which Mr. Lowe shares voting and
investment power with Mr. Thompson, as 50% member of Toas, LLC.
(18) Includes (i) 1,043,000 shares owned of record by Mr. Brown with respect to
which Mr. Brown has exclusive voting and investment power, (ii) 314,217
shares owned by Pamela Brown, Mr. Brown's spouse, and (iii) 631,930 shares
which are owned of record by American Trading Services, Inc. and with
respect to which Mr. Brown shares voting and investment power with Mr.
Hirsch as 50% owner of American Trading Services, Inc.
(19) Includes (i) 123,000 shares owned of record by Mr. Thompson, with respect
to which Mr. Thompson has exclusive voting and investment power, (ii) 50,000
shares owned of record by Janice F. Thompson, Mr. Thompson's spouse, (iii)
10,000 shares owned of record by Eric F. Thompson, Mr. Thompson's son, (iv)
10,000 shares owned of record by Mary E. Thompson, Mr. Thompson's daughter,
and (v) 230,500 shares owned of record by Toas, LLC, a limited liability
company, with respect to which Mr. Thompson shares voting and investment
power with Mr. Lowe, as 50% member of Taos, LLC.
(20) Mr. Walter ceased his employment with the Registrant as of July 1, 1998.
47
<PAGE>
(21) Includes (i) 179,000 shares owned of record by Mr. Hoover, with respect to
which Mr. Hoover has exclusive voting and investment power, (ii) 200,000
shares owned of record by Sandra Hoover, Mr. Hoover's wife, (iii) and
300,000 shares owned of record by Wilderness, LLC, a limited liability
company wholly-owned by Mr. Hoover.
(22) American Trading Services, Inc. is 50% owned by Edwin C. Hirsch, an officer
and director of the Registrant, and 50% owned by Robert J. Brown, Senior
Vice President of the Registrant. American Trading Services, Inc. purchased
all 602,303 shares from Joseph Walega, his spouse, Carole Walega, and their
daughter, Kristin Walega on October 1, 1998.
(23) Includes (i) 570,891 shares owned of record by Joseph Walega, (ii) 26,162
shares owned of record by Carole Walega, and (iii) 5,250 shares owned of
record by Kristin Walega.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For the period from April 22, 1997 (the date of commencement of operations)
through September 30, 1997, the Company had a servicing agreement with CMS, Inc.
("CMS"), an entity equally owned by Edwin C. Hirsch, an officer and a director
of the Registrant, and Robert J. Brown, an officer of the Registrant. Under the
terms of this agreement, CMS performed certain maintenance, repair, marketing
and administrative tasks for the Registrant. The Company paid approximately
$977,000 for these services during the year ended September 30, 1997. This
contract was terminated October 1, 1997.
During the year ended June 30, 1998, the Registrant used the trade credit
facilities of CMS. The balance due CMS at June 30, 1998 was approximately
$511,000.
During the year ended June 30, 1998, the Registrant purchased certain
equipment for resale through Amerilease, Inc. ("AI"), an entity owned equally be
Messrs. Hirsch and Brown. Equipment purchased under this arrangement amounted to
approximately $366,000. The Registrant owed AI approximately $388,000 under this
arrangement at June 30, 1998.
The Registrant also leases certain equipment from AI. The equipment involved
in connection with these leases, having an approximate value of $1,241,000, have
been accounted for as capital leases on the Registrant's financial statements.
Under the terms of these leases, the Registrant paid AI $114,300 during the year
ended June 30, 1998. The present value of the net minimum lease payments at June
30, 1998 is approximately $1,223,000.
From October 1 through December 31, 1997, the Registrant paid $150,000 in
management fees to Beneficial Assistance, Inc., an entity owned by Robert W.
Hoover, Brad Thompson (current officers and directors of the Registrant) and
Andrew J. Walter, a former officer and director of the Company.
On July 1, 1998, the Registrant and its subsidiaries entered into a
Severance Agreement and General Release with Andrew J. Walter, under which Mr.
Walter terminated his employment and resigned from all positions with the
Registrant and its subsidiaries and provided the Registrant and its subsidiaries
with a general release. Under the agreement, the Registrant made a cash payment
of $160,000 to Mr. Walter, less standard withholdings required by law, and made
a commitment to pay Mr. Walter $160,000 a year for the four year period
following July 1, 1998 on a bi-weekly basis in accordance with its regular
payroll policies and practices. In addition, the Registrant agreed to purchase
150,000 shares of common stock of the Registrant from Mr. Walter at a price of
$5 per share upon the effective date of a registration statement relating to a
public offering by the Registrant of its common stock or December 31, 1999,
whichever is earlier, and agreed to provide Mr. Walter with registration rights
in connection with shares of common stock of the Registrant which are not to be
purchased pursuant to the Severance Agreement and General Release and certain
other consideration.
48
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) List of Financial Statements. The following Consolidated Financial
Statements of Imtek Office Solutions and Subsidiaries are included in
Item 8 on pages 24 through 52 of this report:
(i) Consolidated Balance Sheets at June 30, 1998 and September 30,
1997.
(ii) Consolidated Statements of Operations for Nine months ended June
30, 1998 and year ended September 30, 1997.
(iii) Consolidated Statements of Stockholders' Equity for Nine Months
ended June 30, 1998 and year ended September 30, 1997.
(iv) Consolidated Statements of Cash Flows for Nine months ended June
30, 1998 and year ended September 30, 1997.
(v) Notes to Consolidated Financial Statements for June 30, 1998 and
September 30, 1997.
(2) List of Financial Statement Schedules. The schedules for which
provision is made in the applicable accounting regulation of the
Securities and Exchange Commission are not required under the related
instruction or are inapplicable, and therefore have been omitted.
(3) List of Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -----------
<S> <C>
2. Plans of Acquisition. Schedules to the following agreements have been omitted. The Registrant will
furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon
request.
2.1 Restated Beneficial Assistance Asset Purchase Agreement dated September 30, 1998 but made effective
October 1, 1997.
2.2 Restated Thompson Exchange Agreement dated September 30, 1998 but made effective October 30, 1997.
2.3 Restated Earnout Agreement dated September 30, 1998 but made effective October 30, 1997.
2.4 Holdings Exchange Agreement dated as of November 1, 1997 between the Registrant, Office Supply Line
Holdings, Inc., Michael L. Lowe and certain other shareholders of Office Supply Line Holdings, Inc.
2.5 OSL Inventory Purchase Agreement dated as of November 1, 1997 between the Registrant, Office Supply
Line, Inc., and Michael L. Lowe.
2.6 Perfect Copy Agreement for Sale of Assets dated June 3, 1998 between but made effective June 1, 1998
between Imtek Corporation and Perfect Copy, Inc.
3. Articles of Incorporation and Bylaws.
3.1 Amended and Restated Certificate of Incorporation adopted by stockholders by unanimous written consent
on May 28, 1998.
3.2 Certificate of Designation of Series A Convertible Preferred Stock of Registrant, as filed with the
Delaware Secretary of State on March 23, 1998.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -----------
<S> <C>
3.3 Amended and Restated Bylaws, as amended and restated by the Board of Directors on September 11, 1998.
10. Material Contracts.
10.1 Renewable dealer agreement with MITA Copystar America, Inc., ("MITA") dated November 26, 1997, was
filed as an exhibit to Registrant's annual report on Form 10-K for the year ended September 30, 1997
and 10-Q for the quarter ended March 31, 1998, and incorporated herein by reference.
10.2 Renewable dealer agreement with Sharp Electronics Corp, dated January 6, 1998 as reported on the
Registrant's annual report on Form 10-K for the year ended September 30, 1997 and Form 10-Q for the
quarter ended March 31, 1998, and incorporated herein by reference.
10.3 Renewable dealer agreement with Gestetner Corporation, dated January 5, 1998 as reported on the
Registrant's annual report on Form 10-K for the year ended September 30, 1997 and Form 10-Q for the
quarter ended March 31, 1998, and incorporated herein by reference.
10.4 Renewable dealer agreement with Dex Business Systems, Inc., dated January 26, 1998, as reported on the
Registrant's annual report on Form 10-K for the year ended September 30, 1997 and Form 10-Q for the
quarter ended March 31, 1998, and incorporated herein by reference.
10.5 Restated Beneficial Assistance Asset Purchase Agreement dated September 30, 1998 but made effective
October 1, 1997 is set forth as Exhibit 2.1 to this report and is incorporated herein by reference.
10.6.1 Lease with Riggs Distler & Co., Inc. for 2111 Van Deman Street expiring February 15, 1999.
10.6.2 Lease with The Morris Weinman Company for 111 Water Street expiring November 26, 2000.
10.6.3 Lease with Glenn Dale Business Center, L.L.C. for Glenn Dale Business Center location expiring July
2007.
10.6.4 Lease with White Marsh Business Center Limited Partnership expiring November 2001.
10.6.5 Lease with Athens Associates Limited for 2375 W. Broad Street, Suite A, Athens, Georgia location.
10.6.6 Lease with Executive Cove, L.L.C. for 5604 Executive Cove Center expiring December 31, 1999.
10.6.7 Lease with E&M Realty Holding Company for the 10th floor of the 8th and Main Building expiring December
30, 1998.
10.6.8 Lease with Pied Ventures, LLC for office space on 1st and 2nd floor of the building located at 20 North
8th Street, Richmond Virginia.
10.6.9 Lease with Larry Bielfeldt, Agent for office space known as Suite 3, 1603 Visa Dr., Normal, IL.
10.7 Severance Agreement and General Release between the Registrant and its subsidiaries and Andrew J.
Walter dated July 1, 1998.
11. Statement re: Computation of Earnings Per Share.
Exhibit 11 is included on page 30 of this report.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -----------
<S> <C>
13. Annual report to security holders, Form 10-Q or quarterly report to security holders.
13.1 Annual Report on Form 10-K for fiscal year ended September 30, 1997.
13.2 Quarterly Report on Form 10-Q for quarter ended March 31, 1998.
14. Subsidiaries of the Registrant.
14.1 Imtek Corporation, a Maryland corporation.
14.2 Imtek Services Corporation, a Maryland corporation.
14.3 Imtek Funding Corporation, a Maryland corporation doing business under the name of Beneficial
Assistance, is a wholly owned subsidiary of Imtek Services Corporation.
14.4 Imtek Acquisition Corporation, a Maryland corporation.
14.5 Barbera Business Systems, Inc., a Maryland corporation, is 60% owned by the Registrant.
27. Financial Data Schedule.
</TABLE>
51
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
IMTEK OFFICE SOLUTIONS, INC.
By: /s/ EDWIN C. HIRSCH
-----------------------------------------
October 2, 1998 Edwin C. Hirsch, PRESIDENT
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ EDWIN C. HIRSCH Chairman (Principal
- ------------------------------ Executive Officer), October 2, 1998
Edwin C. Hirsch President and Director
Chief Financial Officer
/s/ BRAD C. THOMPSON (Principal Financial and
- ------------------------------ Accounting Officer) and October 2, 1998
Brad C. Thompson Director
/s/ MICHAEL J. LOWE Director
- ------------------------------ October 2, 1998
Michael J. Lowe
/s/ ROBERT J. BROWN Director
- ------------------------------ October 2, 1998
Robert J. Brown
/s/ ROBERT W. HOOVER Director
- ------------------------------ October 2, 1998
Robert W. Hoover
52
<PAGE>
Exhibit 2.1
RESTATED ASSET PURCHASE AGREEMENT
THIS RESTATED ASSET PURCHASE AGREEMENT (this "Agreement") is executed on
September , 1998 but made effective as of the 1st day of October, 1997, by
and between Beneficial Assistance, Inc., a Maryland corporation, Robert
Hoover, Andrew Walter and Brad Thompson (collectively referred to as
"Seller") and Imtek Services Corporation ("Buyer").
RECITALS
WHEREAS, the parties entered into an Asset Purchase Agreement dated
October 1, 1997 which did not accurately reflect the intentions of the
parties (the "October Agreement");
WHEREAS, the parties now desire to enter into this Restated Asset
Purchase Agreement in order to accurately memorialize the intentions of the
parties with respect to the transactions contained herein, which shall
supercede the October Agreement;
WHEREAS, this Agreement accurately reflects Buyer's desire to acquire
certain assets of Beneficial Assistance, Inc. set forth on Exhibit A,
attached hereto and incorporated herein by reference, in exchange for the
consideration provided herein; and
WHEREAS, the parties desire this Agreement to be effective as of October
1, 1997;
NOW, THEREFORE, in consideration of the mutual promises,
covenants, and representations contains herein, the receipt and sufficiency
of which the parties hereby acknowledge, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchased Assets. Seller agrees to sell to Buyer, and Buyer
agrees to buy from Seller all of Seller's rights, title and interest in the
assets shown in Exhibit A, attached hereto and made a part of this Agreement
(the "Purchased Assets")
1.2 Payment for Purchased Assets. At Closing, Buyer agrees to pay to
Seller the sum of One Hundred-Seventy Thousand Dollars ($170,000.00) for the
Purchased Assets.
1.3 Closing Date. The Closing Date shall be October 1, 1997.
<PAGE>
ARTICLE II
SELLER REPRESENTATIONS and WARRANTIES
2.1 Authority to Sell. Seller is duly and legally authorized to enter
into this Agreement and sell the Purchased Assets to Buyer.
2.2 Assets. Seller has good and marketable title to the Purchased
Assets and such Purchased Assets are free and clear of any liens, claims and
encumbrances.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Non-Compete. In consideration of Thirty Thousand Dollars
($30,000.00), Robert Hoover, Andrew Walter and Brad Thompson each agree not
to compete with the business of Buyer. The term "not to compete" with the
business of the Buyer shall mean that Robert Hoover, Andrew Walter and Brad
Thompson shall not directly or indirectly, or in any capacity, on behalf of
themselves or on behalf of any other firm, engage or compete in a business
substantially similar or competitive to the business of the Company for a
period of four years from the date of this Agreement.
3.2 Promissory Note. The amounts payable hereunder shall be paid
pursuant to a one-year installment note in the aggregate principal amount of
$240,000, bearing interest compounded annually at a rate of 8%.
3.3 Governing Law. The parties agree that this Agreement shall be
construed, and the rights and obligations of the parties under the Agreement
shall be determined in accordance with the laws of the State of Maryland.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and sealed as of the day and year first written above.
BUYER SELLER
/s/ Edwin C. Hirsch /s/ Robert Hoover
Imtek Services Corporation Beneficial Assistance, Inc.
Edwin C. Hirsch - Vice President Robert Hoover - President
/s/ Robert Hoover
Robert Hoover
/s/ Andrew Walter
Andrew Walter
/s/ Brad Thompson
Brad Thompson
<PAGE>
Exhibit 2.2
RESTATED EXCHANGE AGREEMENT
THIS RESTATED EXCHANGE AGREEMENT (the "Agreement"), executed on
September 18, 1998 but effective as of the 1st day of October, 1997 (the
"Effective Date"), by and among IMTEK OFFICE SOLUTIONS, a Delaware
corporation ("Imtek"), and Imtek Services Corporation, a Maryland corporation
("Services" and, together with Imtek, the "Buyer") and the undersigned
individuals, representing all of the holders (each a "Shareholder" and
collectively, the "Shareholders") of shares of common stock of THOMPSON
BUSINESS PRODUCTS, INC., a Maryland corporation ("Thompson") on the Effective
Date.
WHEREAS, the parties entered into an Agreement dated October 1, 1997
which did not accurately reflect the intentions of the parties (the "October
Agreement");
WHEREAS, the parties now desire to enter into this Restated Exchange
Agreement in order to accurately memorialize the intentions of the parties
with respect to the transactions contained herein, which shall supercede the
October Agreement;
WHEREAS, this Agreement accurately reflects Buyer's desire to acquire
all 1,000,000 shares of issued and outstanding common stock of Thompson (the
"Thompson Stock"), in exchange for 1,000,000 issued shares of common stock of
Imtek (the "Imtek Stock");
WHEREAS, this Agreement accurately reflects Shareholders' desire to
exchange all of their shares of Thompson Stock for the Imtek Stock in
accordance with the terms of this Agreement (the "Exchange Offer"); and
WHEREAS, the parties desire this Agreement to be effective as of October
1, 1997;
NOW, THEREFORE, in consideration of the mutual promises,
covenants, and representations contains herein, the receipt and sufficiency
of which the parties hereby acknowledge, the parties agree as follows:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 Issuance of Shares. Subject to all of the terms of this Agreement,
Buyer agrees to issue the Imtek Stock in exchange for the Thompson Stock on
the Closing Date. Stock certificates evidencing the Thompson Stock shall be
delivered by the Shareholders at closing to Services, duly endorsed to
Services or in blank. The Imtek Stock shall be issued to each of the
Shareholders in accordance with Exhibit 1.1 hereof on the Closing Date
against proper delivery of stock certificates evidencing the Thompson Stock
in accordance with the terms of this Agreement.
<PAGE>
1.2 Exemption from Registration. The parties hereto intend that the
Imtek Stock to be issued by Imtek to the Shareholders shall be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Act") and the rules and regulations promulgated thereunder and applicable
sections of the Maryland statutes.
1.3 Tax Free Exchange. The parties hereto intend that the exchange
herein be tax-free pursuant to Section 368 of the Internal Revenue Code of
1968. Nevertheless no revenue ruling or opinion of counsel is being sought
in this regard and such tax treatment is not a condition of closing herein.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders hereby represent and warrant to Buyer on October 1,
1997 that, as of the Effective Date:
2.1 Organization. Thompson is a corporation duly organized, validly
existing, and in good standing under the laws of Maryland, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the states where its business requires qualification.
2.2 Capital. The authorized capital stock of Thompson
consists of 1,000,000 shares of common stock, no par value, of which
1,000,000 shares are currently issued and outstanding. The shares currently
outstanding are owned by the shareholders of Thompson set forth in Exhibit
1.1 hereto in the respective amounts set forth opposite their names thereon.
All of the issued and outstanding shares of Thompson are duly and validly
issued, fully paid, and nonassessable. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments,
convertible securities, or other agreements or commitments obligating
Thompson to issue or to transfer from treasury any additional shares of its
capital stock of any class.
2.3 Subsidiaries. Thompson does not have any subsidiaries or own any
interest in any other enterprise (whether or not such enterprise is a
corporation).
2.4 Directors and Officers. Exhibit 2.4 contains the names and titles
of all directors and officers of Thompson as of the Effective Date.
2.5 Financial Statements. Exhibit 2.5 includes the balance sheet for
October 1, 1997.
2.6 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, Buyer
and/or its accountants and attorneys shall have the opportunity to meet with
Thompson's accountants and attorneys to discuss the financial condition,
business and operations of Thompson. Thompson shall make available to Buyer
and/or its representatives all books and records of Thompson. If the
transaction contemplated hereby is not
<PAGE>
completed, all documents received by Buyer and/or its representatives shall
be returned to Thompson and all information so received shall be treated as
confidential.
2.7 Compliance with Laws. Thompson has complied with, and is not in
violation of, applicable federal, state or local statues, laws and
regulations (including, without limitation, any applicable building, zoning
or other law, ordinance or regulation) affecting its properties or the
operation of its business, except for matters which would not have a material
affect on Thompson or its properties.
2.8 Litigation, Claims or Assessments. Except as set forth in
Exhibit 2.8 hereto, Thompson is not a party to any suit, claim, assessment,
action, arbitration or legal, administrative other proceeding, or
governmental investigation pending or, to the best knowledge of Thompson,
threatened against or affecting Thompson or its business, assets or financial
condition, except for matters which would not have a material affect on
Thompson or its properties. Thomspon is not in default with respect to any
order, writ injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality applicable to it. Thompson is
not engaged in any lawsuits to recover any material amount of monies due to
it except in the ordinary course of business.
2.9 Authority. The Shareholders will have full power and authority
to execute, deliver and perform this Agreement and this Agreement will be a
legal, valid and binding obligation of the Shareholders, enforceable in
accordance with its terms and conditions, except as may be limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally.
2.10 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by the Shareholders and the performance by them or their
obligations hereunder will not cause, constitute or conflict with or result
in (a) any material breach or violation of any of the provisions of or
constitute a material default under any license, indenture, mortgage,
charter, instrument, articles of incorporation, by-laws, or other agreement
or instrument to which Thompson is a party, or by which it may be bound, nor
will any other consents or authorizations of the Shareholders be required,
(b) an event that would permit any party to any material agreement or
instrument to terminate it or to accelerate the maturity of any indebtedness
or other obligation of Thompson, or (c) an event that would result in the
creation or imposition of any material lien, charge, or encumbrance of any
asset of Thompson.
2.11 Full Disclosure. None of the representations and warranties
made by the Shareholders herein, or in any exhibit, certificate, schedule or
memorandum furnished or to be furnished to Buyer hereunder, contains or will
contain any untrue statement of material fact or omit any material fact the
omission of which would be misleading.
2.12 Assets. Thompson has good and marketable title to all of its
property listed in Exhibit 2.12 hereto.
<PAGE>
2.13 Liabilities. Thompson has liabilities listed in Exhibit 2.13
hereto.
2.14 Material Contracts. Except as listed in Exhibit 2.13 hereto, or
as otherwise disclosed herein, Thompson has no material contracts to which it
is a party or by which it is bound.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Imtek represents and warrants to each Shareholder as of the
Effective Date that:
3.1 Organization. Imtek is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, has all necessary
corporate powers to own properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good
standing in each of the states where its business requires qualification.
3.2 Capital. The authorized capital stock of Imtek consists of
250,000,000 shares of .000001 par value common stock, of which 5,490,565
shares of common stock will be issued and outstanding immediately prior to
the Effective Date. All of the issued and outstanding shares are duly and
validly issued, fully paid and nonassessable. There are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements or commitments obligating Imtek to issue or to transfer from
treasury any additional shares of its capital stock of any class as of the
Effective Date.
3.3 Subsidiaries. As of the Effective Date, Imtek has 2 wholly-owned
subsidiaries, Imtek Corporation and Imtek Services Corporation.
3.4 Directors and Officers. Exhibit 3.4 annexed hereto and hereby
incorporated herein by reference, contains the names and titles of all
directors and officers of Imtek as of the Effective Date.
3.5 Financial Statements. Exhibit 3.5 annexed hereto and hereby
incorporated herein by reference, consists of unaudited financial statements
of Imtek as of June 30, 1997 containing the balance sheets of Imtek and the
related statements of income and retained earnings for the period then ended,
and the financial statements have been prepared in accordance with generally
accepted accounting principles and practices consistently followed by Imtek
throughout the period indicated, and fairly present the financial position of
Imtek as of the dates of the balance sheets included in the financial
statements, and the results of operations for the period indicated.
<PAGE>
3.6 Absence of Changes. Since June 30, 1997 there has not been any
change in the financial condition or operations of Imtek, except for changes
in the ordinary course of business, which changes have not in the aggregate
been materially adverse.
3.7 Absence of Undisclosed Liabilities. As of October 1, 1997, Buyer
did not have any material debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due or to
become due, that is not reflected in Imtek's balance sheet as of June 30,
1997.
3.8 Tax Returns. Within the time and in the manner prescribed by
law, Imtek has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable. The
provisions for taxes, if any, reflected in those balance sheets included in
Exhibit 3.5 are adequate for any and all federal, state, county and local
taxes for the periods ending on the date of those balance sheets and for all
prior periods, Imtek.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein,
Shareholders shall have the opportunity to meet with Imtek's accountants and
attorneys to discuss the financial condition of Imtek and Services. Imtek
shall make available to Shareholders all books and records of Imtek and
Services which Shareholders agree to keep confidential and return to Imtek or
Services upon request.
3.10 Compliance with Laws. Imtek has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and
regulations (including, without limitation, any applicable building, zoning,
environmental or other law, ordinance, or regulation) affecting its
properties or the operation of its business.
3.11 Litigation. Imtek is not a party to any suit, claim, assessment,
action, arbitration, or legal, administrative, or other proceeding or
governmental investigation pending or, to the best knowledge of Imtek,
threatened against or affecting Imtek or its business, assets, or financial
condition. Imtek is not in default with respect to any order, writ,
injunction, or decree of any federal, state, local, or foreign court,
department agency, or instrumentality. Imtek is not engaged in any legal
action to recover moneys due to it except in the ordinary course of business.
3.12 Authority. The board of Directors of Imtek has authorized the
execution of this Agreement and the transactions contemplated herein, and
Imtek has full power and authority to execute, deliver and perform this
Agreement and this Agreement is the legal, valid and binding obligation of
Imtek, is enforceable in accordance with its terms and conditions, except as
may be limited by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally. The approval of Imtek's shareholders is
not necessary for this transaction.
3.13 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by Imtek and the performance by Imtek of its
<PAGE>
obligations hereunder in the time and manner contemplated will not cause,
constitute or conflict with or result in (a) any material breach or violation
of any of the provisions of or constitute a default under any license,
indenture, mortgage, charter, instrument, certificate of incorporation,
bylaw, or other agreement or instrument to which Imtek is a party, or by
which it may be bound, nor will any consents or authorizations of any party
other than those hereto be required, (b) an event that would permit any party
to any material agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of Imtek, or (c) an event
that would result in the creation or imposition of any material lien, charge,
or encumbrance of any asset of Imtek.
3.14 Validity of Buyer Shares. The shares of Imtek Stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
3.15 Full Disclosure. None of the representation and warranties made
by Imtek herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by Imtek, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading as of the Effective Date.
3.16 Assets. Imtek has good marketable title to all of its property
free and clear of any and all liens, claims and encumbrances.
3.17 Material Contracts. Imtek has no material contracts to which it
is a party or by which it is bound.
3.18 Indemnification. Imtek agrees to indemnify, defend and hold the
shareholders harmless against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties, and reasonable attorney fees,
that they shall incur or suffer, which arise out of, result from or relate to
any breach of, or failure by Imtek to perform any of it representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by
Imtek under this Agreement.
ARTICLE 4
ADDITIONAL SHAREHOLDER REPRESENTATIONS
4.1 Share Ownership. The Shareholders hold shares of Thompson's
common stock as set forth in Exhibit 1.1 hereto. Such shares are owned of
record and beneficially by each holder there of, and such shares are not
subject to any lien, encumbrance or pledge. Each Shareholder holds authority
to exchange such shares pursuant to this Agreement.
4.2 Investment Intent. Each Shareholder understands and acknowledges
that the Imtek Stock is being offered for exchange in reliance upon the
exemption provided in Section 4(2) of the Securities
<PAGE>
Act of 1933 (the "Securities Act") for nonpublic offerings; and each
Shareholder makes the following representations and warranties with the
intent that the same may be relied upon in determining the suitability of
each Shareholder as a purchaser of securities.
(a) The Imtek Stock is being acquired solely for the account of each
Shareholder, for investment purposes only, and not with a view to, or for
sale in connection with, any distribution thereof and with no present
intention of distributing or reselling any part of the Imtek Stock.
(b) Each Shareholder agrees not to dispose of his or her Imtek Stock or
any portion thereof unless and until counsel for Imtek shall have determined
that the intended disposition is permissible and does not violate the
Securities Act or any applicable state securities laws, or the rules and
regulations thereunder.
(c) Each Shareholder acknowledges that Imtek has made all documentation
pertaining to all aspects of the Exchange Offer available to him and to his
qualified representatives, if any, and has offered such person or persons an
opportunity to discuss the Exchange Offer with the officers of Imtek.
(d) Each Shareholder is knowledgeable and experienced in making and
evaluating investments of this nature and desires to accept the Exchange
Offer on the terms and conditions set forth.
(e) Each Shareholder is able to bear the economic risk of an investment,
as a result of the Exchange Offer, in the Imtek Stock.
(f) Each Shareholder understands that an investment in the Imtek Stock
is a speculative investment, is not liquid, and each Shareholder has adequate
means of providing for current needs and personal contingencies and has no
need for liquidity in this investment.
4.3 Indemnification. Each Shareholder recognizes that the offer of
the Imtek Stock to him or her is based upon the representations and
warranties set forth and contained herein and hereby agrees to indemnify, and
hold harmless Buyer against all liability, costs or expenses (including
reasonable attorney's fees) arising as a result of any misrepresentations
made herein by such Shareholder.
4.4 Legend. Each Shareholder agrees that the certificates evidencing
the Imtek Stock acquired pursuant to this Agreement will have a legend placed
thereon stating that the securities have not been registered under the Act or
any state securities laws and setting forth or referred to the restrictions
on transferability and sale of the Imtek Stock.
4.5 Release. As of the Effective Date, Shareholders do hereby release
Thompson from all claims, debts and liabilities, except for those listed on
Exhibit 4.5 hereto, if any.
ARTICLE 5
<PAGE>
COVENANT
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's properties, books, contracts, commitments, and records for the
purpose of examining the same. Each party shall furnish the other party with
all information concerning each party's affairs as the other party may
reasonably request.
5.2 Conduct of Business. Prior to the Closing, Imtek and Thompson
shall each conduct its business in the normal course, and shall not sell,
pledge, or assign any assets, without the prior written approval of the other
party, except in the regular course of business. Prior to the Closing,
neither Imtek nor Thompson shall amend its Articles of Incorporation or
Bylaws, or declare dividends, redeem or sell stock or other securities, incur
additional or newly-funded liabilities, acquire or dispose of fixed assets,
change employment terms, enter into any material or long-term contract,
guarantee obligations of any third party, settle or discharge any balance
sheet receivable for less than its stated amount, pay more on any liability
than its stated amount, or enter into any other transaction other than in the
regular course of business.
5.3 Compliance with Securities Laws. The Shareholders acknowledge
that Imtek is subject to the SEC filing and information requirements under
the Securities Exchange Act of 1934. Shareholders shall cooperate with Imtek
in connection with any and all requirements of such Act, including, without
limitation, the preparation and filing of Form 8-K reporting the consummation
of the transaction herein and all subsequent reports and filing required by
the Act and the rules and regulations thereunder relating to the transactions
contemplated hereby in the manner and at the time required.
5.4 Change of Management. Imtek will cause new officers and directors
selected by Imtek to be elected as of the Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
6.1 Conditions. Buyer's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article VI. Buyer may waive any or all of these conditions in whole or
in part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by Buyer of any other condition of or any
of Buyer's other rights or remedies, at law or in equity, if Thompson shall
be in default of any of their representations, warranties, or covenants under
this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Shareholders in the
Agreement or in any written statement that shall be delivered to Buyer under
this agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
<PAGE>
6.3 Performance. Thompson shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing
Date.
6.4 Absence of Litigation. No action, suit, or proceeding before
any court of any governmental body of authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall
have been instituted or threatened against Thompson or any of the
Shareholders on or before the Closing Date.
6.5 Acceptance by Thompson Shareholders. The holders of an
aggregate of not less than 100% of the issued and outstanding share of
common stock of Thompson shall have agreed to exchange their shares for
shares of Imtek Stock in accordance with this Agreement.
6.6 Certificate. Shareholders shall have delivered to Imtek a
certificate, dated the Closing Date, and signed by the Shareholders and
the President of Thompson, certifying that each of the conditions
specified in Sections 6.2 through 6.6 hereof have been fulfilled.
ARTICLE 7
CONDITIONS PRECEDENT TO SHAREHOLDERS' PERFORMANCE
7.1 Conditions. Shareholders' obligations hereunder shall be subject
to the satisfaction, at or before the Closing, of all the conditions set
forth in this Article 7. Shareholders may waive any or all of these
conditions in whole or in part without prior notice; provided, however, that
no such waiver of a condition shall constitute, a waiver by Shareholders of
any other condition of or any of Thompson's and Shareholders' rights or
remedies, at law or in equity, if Buyer shall be in default of any of its
representations, warranties, or covenants under this Agreement
7.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by Buyer in this Agreement
or in any written statement that shall be delivered to Shareholders by Buyer
under this Agreement shall be true and accurate on and as of the Closing Date
as though made at that time.
7.3 Performance. Buyer shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by it, on or before the Closing Date.
7.4 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Buyer on or before the Closing Date.
7.5 Officers' Certificate. Imtek shall have delivered to Shareholders
a certificate, dated the Closing Date and signed by the President of Imtek
certifying that each of the conditions specified in Sections 7.2 through 7.4
have been fulfilled.
<PAGE>
ARTICLE 8
CLOSING
8.1 Closing. The closing of this transaction shall be held at the
offices of Imtek, or such other place as shall be mutually agreed upon, on
such date as shall be mutually agreed upon by the parties but no later than
October 31, 1997. At the Closing:
(a) Each Shareholder shall present the certificates representing his
shares of Thompson being exchanged to Services, and such certificates will be
duly endorsed to Services or in blank.
(b) Each Shareholder shall receive a certificate or certificates
representing the number of shares of Imtek for which the shares of Thompson
common stock shall have been exchanged.
(c) Imtek shall deliver an officer's certificate, as described in
Section 7.5 hereof, dated the Closing Date, that all representations,
warranties, covenants and conditions set forth in this Agreement on behalf of
Imtek are true and correct as of, or have been fully performed and complied
with by, the Closing Date.
(d) Buyer shall deliver a signed consent and/or Minutes of the
Directors of Imtek approving this Agreement and each matter to be approved by
the Directors of Imtek under this Agreement.
(e) Shareholders shall deliver a Shareholders' certificate, as
described in Section 6.6 hereof, dated the Closing Date, that all
representations, warranties, covenants and conditions set forth in this
Agreement on behalf of Shareholders are true and correct as of, or have been
fully performed and complied with by, the Closing Date.
ARTICLE 9
NON-COMPETE
9.1 General Non-Compete. The Shareholders listed in Exhibit 1 attached
hereto, acknowledge the receipt of Imtek Stock and other value consideration
and agree not to compete with the business of the Buyer, it successors or
assigns for a period of 5 years commencing from the date of this Agreement.
The term "not compete" with the business of the Imtek shall mean that the
Shareholders shall not directly or indirectly, or in any capacity, on behalf
of themselves or on behalf of any other firm, engage or compete in a business
substantially similar or competitive to the business of Thompson, Imtek or
Services.
<PAGE>
9.2 Non-Compete in the Viatical Settlement Business. The Shareholders
listed in Exhibit 1 of this Agreement, acknowledge the receipt of valuable
shares of Imtek Stock and other value consideration in exchange for
Thompson's viatical settlement business and agree not to directly or
indirectly, as an owner, officer, director, employee, consultant, or
stockholder, engage in the viatical settlement business for a period of 5
years commencing with the date of this Agreement. The Shareholders
acknowledge and agree herein that the non-compete agreements described in
this Article 9 specifically prohibits any solicitation of funds, life
insurance policies or services from any companies, brokers, agents,
consultants, physicians, attorneys, hospitals, health care service providers
and medical testing laboratories listed in Exhibit 2.14. Thompson's viatical
settlement business shall mean the origination, buying, funding, servicing,
and selling of life insurance policies owned by terminally ill individuals.
ARTICLE 10
MISCELLANEOUS
10.1 Headings. The Article and paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
10.2 No Oral Change. This Agreement and any provision hereof, may not
be waived, changed, modified, or discharged orally, but it can be changed by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, or discharge is sought.
10.3 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressed in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to
insist in any one or more cases upon the performance of any of the
provisions, covenants, or conditions of this Agreement or to exercise any
option herein contained shall not be construed as a waiver or relinquishment
for the future of any such provisions, covenants, or conditions, (ii) the
acceptance of performance of anything required by this Agreement to be
performed with knowledge of the breach or failure of a covenant, condition,
or provision hereof shall not be deemed a waiver of such breach or failure,
and (iii) no waiver by any party of one breach by another party shall be
construed as a waiver with respect to any other subsequent breach.
10.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
10.5 Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
<PAGE>
10.6 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Maryland.
10.7 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
10.8 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given on the date of service if served personally on the
party to whom notice is to be given, or on the third day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly addressed as follows:
If to Services or Imtek:
Imtek Office Solutions, Inc.
8028 Ritchie Highway, Suite 208
Pasadena, MD 21122
If to Thompson or the Shareholders:
Shareholders: C/O Beneficial Assistance
1818 Pot Spring Road, Suite 252
Timonium, MD 21093
10.9 Binding Effect. This Agreement shall insure to and be binding
upon the heirs, executors, personal representatives, successors and assigns
of each of the parties to this Agreement.
10.10 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein. .
10.11 Announcements. Buyer and Shareholders will consult and cooperate
with each other as to the timing and content of any announcements of the
transactions contemplated hereby to the general public or the employees,
customers or suppliers.
10.12 Expenses. Each party will pay its own legal, accounting and
any other out-of-pocket expenses reasonably incurred in connection with this
transaction, whether or not the transaction contemplated hereby is
consummated.
10.13 Survival of Representations and Warranties. The representation,
warranties, covenants and agreements of the parities set forth in this
Agreement or in any instrument, certificate, opinion, or other writing
providing for in it, shall survive the Closing irrespective of any
investigation made by or on behalf of any party.
<PAGE>
10.14 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided herein above, including any
items referenced therein or required to be attached thereto. Each of the
Exhibits shall be deemed incorporated herein by reference and to be part of
this Agreement. Any material changes to the information set forth in the
Exhibits prior to the Closing Date shall be immediately disclosed to the
other party.
AGREED TO AND ACCEPTED as of the date first above written.
IMTEK OFFICE SOLUTIONS, INC. THOMPSON BUSINESS PRODUCTS, INC.
By:/s/ Edwin C. Hirsch
Edwin C. Hirsch - President
By:/s/ Robert W. Hoover
Robert W. Hoover - President
IMTEK SERVICES CORPORATION
By:/s/ Edwin C. Hirsch By:/s/ Brad Thompson
Edwin C. Hirsch - President Brad Thompson
By:/s/ Robert Hoover By:/s/ Sandra Hoover
Robert Hoover - President Sandra Hoover
By:/s/ Andrew Walter By:/s/ Janice Thompson
Andrew Walter Janice Thompson
By:/s/ David Hoover By:/s/ Steven Warren
David Hoover Steven Warren
By:/s/ Charles Firth By:/s/ Eric Thompson
Charles Firth Eric Thompson
By:/s/ Mary Ellen Thompson By:/s/ Louis Thompson
Mary Ellen Thompson Louis Thompson
By:Margaret Thompson By:/s/ Kimberly Walter
Margaret Thompson Kimberly Walter
By:Karen Walter By:/s/ Roberta Walter
Karen Walter Roberta Walter
By:/s/ Joyce Walter By:/s/ John Hoover
Joyce Walter John Hoover
By:/s/ Betty Firth
Betty Firth
<PAGE>
Exhibit 2.3
RESTATED EARNOUT AGREEMENT
THIS RESTATED EARNOUT AGREEMENT (this "Agreement") is executed on
September __, 1998 but made effective as of the 30th day of October, 1997, by
and among IMTEK OFFICE SOLUTIONS, a Delaware corporation ("Imtek") and persons
executing this Agreement on behalf of certain of the shareholders (the
"Shareholders") of THOMPSON OFFICE PRODUCTS, INC., a Maryland corporation
("Thompson").
WHEREAS, the parties entered into an Agreement relating to certain
earnout payments to be made to the Shareholders in the event revenue milestones
are reached, which did not accurately reflect the intentions of the parties (the
"Original Agreement");
WHEREAS, the parties now desire to enter into this Restated Earnout
Agreement in order to accurately memorialize the intentions of the parties with
respect to the transactions contained herein, which shall supercede the Original
Agreement;
WHEREAS, Imtek has acquired all of the issued and outstanding shares of
common stock of Thompson in exchange for 1,000,000 issued shares of Common Stock
of Imtek (the "Exchange Offer"); and
WHEREAS, Imtek agreed, in a Memorandum of Understanding dated August
23, 1997, to pay the Shareholders additional remuneration for the attainment of
revenue milestones.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contains herein, the parties agree as follows:
ARTICLE 1
PAYMENT FOR ACHIEVING REVENUE MILESTONES
1.1 Earn Out. Subject to all of the terms of this Agreement, Imtek
agrees to pay to the Shareholders the amounts shown below ("Earn Out") when
revenues from acquired Thompson business operations exceed the cumulative
revenues shown in Section 1.2, below ("Earn Out Table").
1.2 Earn Out Table.
<TABLE>
<CAPTION>
Cumulative Revenues Earn Out Amount
------------------- ---------------
<S> <C>
$400,000 $46,000
$500,000 $46,000
$600,000 $46,000
$700,000 $46,000
</TABLE>
ARTICLE 2
<PAGE>
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders hereby represent and warrant to Imtek that:
2.1 Organization. Thompson is a corporation duly organized, validly
existing, and in good standing under the laws of Maryland, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the states where its business requires qualification.
2.2 Compliance with Laws. Company has complied with, and is not in
violation of, applicable federal, state or local statues, laws and regulations
(including, without limitation, any applicable building, zoning or other law,
ordinance or regulation) affecting its properties or the operation of its
business, except for matters which would not have a material affect on Company
or its properties.
2.3 Authority. The board of Directors of Thompson has authorized the
execution of this Agreement and the transactions contemplated herein, and
Thompson has full power and authority to execute, deliver and perform this
Agreement and this Agreement is the legal, valid and binding obligation of
Thompson is enforceable in accordance with its terms and conditions, except as
may be limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally. The approval of Thompson's shareholders is not
necessary for this transaction.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF IMTEK
Imtek represents and warrants to Shareholders that:
3.1 Organization. Imtek is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, has all necessary
corporate powers to own properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the states where its business requires qualification.
3.2 Compliance with Laws. Imtek has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and regulations
(including, without limitation, any applicable building, zoning, environmental
or other law, ordinance, or regulation) affecting its properties or the
operation of its business.
3.3 Litigation. Imtek is not a party to any suit, claim, assessment,
action, arbitration, or legal, administrative, or other proceeding or
governmental investigation pending or, to the best knowledge of Imtek,
threatened against or affecting Imtek or its business, assets, or financial
condition. Imtek is not in default with respect to any order, writ, injunction,
or decree of any federal, state, local, or foreign court, department agency, or
instrumentality. Imtek is not engaged in any legal action to recover moneys due
to it except in the ordinary course of business.
<PAGE>
3.4 Authority. The board of Directors of Imtek has authorized the
execution of this Agreement and the transactions contemplated herein, and Imtek
has full power and authority to execute, deliver and perform this Agreement and
this Agreement is the legal, valid and binding obligation of Imtek, is
enforceable in accordance with its terms and conditions, except as may be
limited by bankruptcy and insolvency laws and by other laws affecting the rights
of creditors generally. The approval of Imtek's shareholders is not necessary
for this transaction.
3.5 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by Imtek and the performance by Imtek or their obligations
hereunder in the time and manner contemplated will not cause, constitute or
conflict with or result in (a) any material breach or violation of any of the
provisions of or constitute a default under any license, indenture, mortgage,
charter, instrument, certificate of incorporation, bylaw, or other agreement or
instrument to which Imtek is a party, or by which it may be bound, nor will any
consents or authorizations of any party, or by which it may be bound, nor will
any consents or authorizations of any party other than those hereto be required,
(b) an event that would permit any party to any material agreement or instrument
to terminate it or to accelerate the maturity of any indebtedness or other
obligation of Imtek, or (c) an event that would result in the creation or
imposition of any material lien, charge, or encumbrance of any asset of Imtek.
ARTICLE 4
CONDITIONS PRECEDENT TO IMTEK'S PERFORMANCE
4.1 Conditions. Imtek's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article VI. Imtek may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Imtek of any other condition of or any of Imtek's
other rights or remedies, at law or in equity, if Company shall be in default of
any of their representations, warranties, or covenants under this Agreement.
4.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Shareholders in the Agreement
or in any written statement that shall be delivered to Imtek under this
agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
4.3 Performance. Company shall have perform, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
4.4 Absence of Litigation. No action, suit, or proceeding before any
court of any governmental body of authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Company or Shareholders on or before the
Closing Date.
<PAGE>
ARTICLE 5
CONDITIONS PRECEDENT TO
THOMPSON'S SHARHOLDERS PERFORMANCE
5.1 Conditions. Thompson's obligations hereunder shall be subject to
the execution, at or before the Closing, of the Exchange Agreement.
ARTICLE 6
CLOSING
6.1 Closing. The closing of this transaction shall be held at the
offices of Imtek, or such other place as shall be mutually agreed upon, on such
date as shall be mutually agreed upon by the parties.
ARTICLE 7
NON-COMPETE
7.1 General Non-Compete. The Shareholders listed in Exhibit 1 attached
hereto, acknowledge the receipt of Imtek's Stock and other value consideration
and agree not to compete with the business of the Imtek, it successors or
assigns for a period of 4 years commencing from the date of this Agreement. The
term "not compete" with the business of the Imtek shall mean that the
Shareholders shall not directly or indirectly, or in any capacity, on behalf of
themselves or on behalf of any other firm, engage or compete in a business
substantially similar or competitive to the business of Thompson.
7.2 Non-Compete in the Viatical Settlement Business. The Shareholders
listed in Exhibit 1 of this Agreement, acknowledge the receipt of valuable
shares of the Imtek's Stock and other value consideration in exchange for
Thompson's viatical settlement business and agree not to directly or indirectly,
as an owner, officer, director, employee, consultant, or stockholder, engage in
the viatical settlement business for a period of 4 years commencing with the
date of this Agreement. The Shareholders acknowledge and agree herein that the
non-compete agreements described in this Article 8 specifically prohibits any
solicitation of funds, life insurance policies or services from any companies,
brokers, agents, consultants, physicians, attorneys, hospitals, health care
service providers and medical testing laboratories listed in the Exchange Offer.
Thompson's viatical settlement business shall mean the origination, buying,
funding, servicing, and selling of life insurance policies owned by terminally
ill individuals.
ARTICLE 8
MISCELLANEOUS
8.1 Headings. The Article and paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit, or add to the meaning of any provision of this Agreement.
<PAGE>
8.2 No Oral Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharge is sought.
8.3 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressed in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision hereof
shall not be deemed a waiver of such breach or failure, and (iii) no waiver by
any party of one breach by another party shall be construed as a waiver with
respect to any other subsequent breach.
8.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
<PAGE>
8.5 Choice of Law. This Agreement and its application shall be governed
by the laws of the State of Maryland.
8.6 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.7 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
Imtek: Imtek Office Solutions, Inc.
8028 Ritchie Highway, Suite 208
Pasadena, MD 21122
Thompson Office Products, Inc.
1818 Pot Spring Road, Suite 242
Timonium, MD 21093
8.8 Binding Effect. This Agreement shall insure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
8.9 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein. .
8.10 Announcements. Imtek and Shareholders will consult and cooperate
with each other as to the timing and content of any announcements of the
transactions contemplated hereby to the general public or the employees,
customers or suppliers.
8.11 Expenses. Each party will pay its own legal, accounting and any
other out-of-pocket expenses reasonably incurred in connection with this
transaction, whether or not the transaction contemplated hereby is consummated.
8.12 Survival of Representations and Warranties. The representation,
warranties, covenants and agreements of the parities set forth in this Agreement
or in any instrument, certificate, opinion, or other writing providing for in
it, shall survive the Closing irrespective of any investigation made by or on
behalf of any party.
AGREED TO AND ACCEPTED as of the date first above written.
IMTEK OFFICE SOLUTIONS, INC.
/s/ Edwin C. Hirsch
Edwin C. Hirsch - President
<PAGE>
/s/ Robert W. Hoover
Robert W. Hoover
/s/ Andrew Walter
Andrew Walter
/s/ Brad Thompson
Brad Thompson
<PAGE>
Exhibit 2.4
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement"), made this 1st day of November, 1997, by
and among IMTEK OFFICE SOLUTIONS, INC. a Delaware corporation ("Buyer"), Michael
L. Lowe (referred to as "Majority Shareholder") who owns 96% of the outstanding
shares of OFFICE SUPPLY LINE HOLDINGS, INC. a Maryland corporation (the
"Company") and persons executing this Agreement (referred to collectively as
"Shareholders" and individually as "Shareholder") who own 4% of the outstanding
shares of the Company.
WHEREAS, Buyer desires to acquire all of the issued and outstanding shares
of common stock of the Company in exchange for 465,500 issued shares of Common
Stock of Buyer (the "Common Stock"); and
WHEREAS, Shareholders desire to exchange all of their shares of Company
common stock for 465,500 shares of Buyer's Common Stock (the "Exchange Offer");
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contains herein, the parties agree as follows:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 ISSUANCE OF SHARES. Subject to all of the terms of this Agreement,
Buyer agrees to exchange 465,500 shares of its Common Stock for all of the
outstanding Company common stock with the holders of such stock as set forth in
Exhibit 1.1 hereto. The Common Stock will be issued directly to the
Shareholders of the Company on the Closing.
1.2 EXEMPTION FROM REGISTRATION. The parties hereto intend that the
Common Stock to be issued by the Company to the Shareholders Shall be exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act") and the rules and regulations promulgated thereunder and applicable
sections of the Maryland statutes.
1.3 TAX FREE EXCHANGE. The parties hereto intend that the exchange
herein be tax-free pursuant to Section 368 of the Internal Revenue Code of 1968.
Nevertheless no revenue ruling or opinion of counsel is being sought in this
regard and such tax treatment is not a condition of closing herein.
Page 1 of 26
<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
The Shareholders hereby represent and warrant to Buyer that:
2.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of Maryland, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the states where its business requires qualification.
2.2 SUBSIDIARIES. As of the date of this Agreement, Company does not
have any subsidiaries or own any interest in any other enterprise (whether or
not such enterprise is a corporation).
2.3 ASSETS. Company has good and marketable title to all of its property
and such property is subject only to liens and encumbrances created by the
security agreements and other contracts listed in Exhibit 2.3 hereto. Exhibit
2.3 to this Agreement, the text of which is hereby incorporated herein by
reference, includes the assets of the Company as of October 31, 1997.
2.4 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner
reducing or otherwise mitigating the representations contained herein, Buyer
and/or its accountants and attorneys shall have the opportunity to meet with
Company's accountants and attorneys to discuss the financial condition,
business and operations of Company. Company shall make available to Buyer
and/or its representatives all books and records of Company. If the
transaction contemplated hereby is not completed, all documents received by
Buyer and/or its representatives shall be returned to Company and all
information so received shall be treated as confidential.
2.5 COMPLIANCE WITH LAWS. Company has complied with, and is not in
violation of, applicable federal, state or local statues, laws and regulations
(including, without limitation, any applicable building, zoning or other law,
ordinance or regulation) affecting its properties or the operation of its
business, except for matters which would not have a material affect on Company
or its properties.
2.6 LITIGATION, CLAIMS OR ASSESSMENTS. Except as set forth in Exhibit
2.6 hereto, Company is not a party to any suit, claim, assessment, action,
arbitration or legal, administrative
Page 2 of 26
<PAGE>
or other proceeding, or governmental investigation pending, or to the best
knowledge of Company, threatened against or affecting Company or its business,
assets or financial condition, except for matters which would not have a
material affect on Company or its properties. Company is not in default with
respect to any order, writ injunction or decree of any federal, state, local or
foreign court, department, agency or instrumentality applicable to it. Company
is not engaged in any lawsuits to recover any material amount of monies due to
it except in the ordinary course of business.
2.7 AUTHORITY. The Shareholders will have full power and authority to
execute, deliver and perform this Agreement and this Agreement will be a legal,
valid and binding obligation of the Shareholders, enforceable in accordance with
its terms and conditions, except as may be limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors generally.
2.8 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of this
Agreement by the Shareholders and the performance by them or their obligations
hereunder will not cause, constitute or conflict with or results in (a) any
material breach or violation of any of the provisions of or constitute a
material default under any license, indenture, mortgage, charter, instrument,
articles of incorporation, by-laws, or other agreement or instrument to which
Company is a party, or by which it may be bound, nor will any consents or
authorizations of the Shareholders and the performance by them of their
obligations hereunder in the time and manner any party other than those hereto
be required, (b) an event that would permit any party to any material agreement
or instrument to terminate it or to accelerate the maturity of any indebtedness
or other obligation of Company, or (c) an event that would result in the
creation or imposition of any material lien, charge, or encumbrance of any asset
of Company.
2.9 FULL DISCLOSURE. None of the representations and warranties made by
the Shareholders herein, or in any exhibit, certificate, schedule or memorandum
furnished or to be furnished by Buyer hereunder, contains or will contain any
untrue statement of material fact or omit any material fact the omission of
which would be misleading.
2.10 MATERIAL CONTRACTS. Except as listed in Exhibit 2.10 hereto, or as
otherwise disclosed herein, Company has no material contracts to which it is a
party or by which it is bound.
2.11 CUSTOMER LIST. Exhibit 2.11 to this Agreement, the text of which is
hereby incorporated by reference, includes a list of the Company's customers.
Page 3 of 26
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Shareholders that:
3.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, has all necessary
corporate powers to own properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the states where its business requires qualification.
3.2 CAPITAL. The authorized capital stock of Buyer consists of
250,000,000 shares of .000001 par value Common Stock of which 6,075,000 shares
of Common Stock will be issued and outstanding immediately prior to the closing
herein. All of the issued and outstanding shares are duly and validly issued,
fully paid and non assessable. There are no outstanding subscriptions, options,
rights, warrants, convertible securities, or other agreements or commitments
obligating Buyer to issue or to transfer from treasury any additional shares of
its capital stock of any class.
3.3 SUBSIDIARIES. As of the date of this Agreement, Buyer has two (2)
whooy owned subsidiaries as follows: (a) Imtek Corporation; and (b) Imtek
Services Corporation.
3.4 DIRECTORS AND OFFICERS. Exhibit 3.4 annexed hereto and hereby
incorporated herein by reference, contains the names and titles of all directors
and officers of Buyer as of the date of this Agreement.
3.5 FINANCIAL STATEMENTS. Exhibit 3.5 annexed hereto and hereby
incorporated herein by reference, consists of unaudited financial statements of
Buyer as of as of June 30, 1997, containing the balance sheets of Buyer and the
related statements of income and retained earnings for the period then ended,
and the financial statements have been prepared in accordance with generally
accepted accounting principles and practices consistently followed by Buyer
throughout the period indicated, and fairly present the financial position of
Buyer as of the dates of the balance sheets included in the financial
statements, and the results of operations for the period indicated.
Page 4 of 26
<PAGE>
3.6 ABSENCE OF CHANGES. Since June 30, 1997, there has not been any
change in the financial condition or operations of Buyer, except for changes in
the ordinary course of business, which changes have not in the aggregate been
materially adverse.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. As of October 31, 1997, Buyer did
not have any material debt, liability, or obligation of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected in Buyer's balance sheet as of October 31, 1997. There
have been no new liabilities incurred since October 31, 1997, other than such
liabilities incurred in the ordinary course of Buyer's business.
3.8 TAX RETURNS. Within the time and in the manner prescribed by law,
Buyer has filed all federal, state and local tax returns required by law and has
paid all taxes, assessments and penalties due and payable. The provisions for
taxes, if any, reflected in those balance sheets included in Exhibit 3.5 are
adequate for any and all federal, state, county and local taxes for the periods
ending on the date of those balance sheets and for all prior periods, whether or
not disputed. There are no present disputes as to taxes of any nature payable
by Buyer.
3.9 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, Shareholders shall
have the opportunity to meet with Buyer's accountants and attorneys to discuss
the financial condition of Buyer. Buyer shall make available to Shareholders all
books and records of Buyer which Shareholders agree to keep confidential and
return to Buyer upon request.
3.10 COMPLIANCE WITH LAWS. Buyer has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and regulations
(including, without limitation, any applicable building, zoning, environmental
or other law, ordinance, or regulation) affecting its properties or the
operation of its business.
3.11 LITIGATION. Buyer is not a party to any suit, claim, assessment,
action, arbitration, or legal, administrative, or other proceeding or
governmental investigation pending or, to the best knowledge of Buyer,
threatened against or affecting Buyer or its business, assets, or financial
condition. Buyer is not in default with respect to any order, writ,
injunction, or degree of any federal, state, local, or foreign court,
department agency, or instrumentality. Buyer is not engaged in any legal
action to recover moneys due to it except in the ordinary course of business.
Page 5 of 26
<PAGE>
3.12 AUTHORITY. The board of Directions of Buyer has authorized the
execution of this Agreement and the transactions contemplated herein, and Buyer
has full power and authority to execute, deliver and perform this Agreement and
this Agreement is the legal, valid and binding obligation of Buyer, is
enforceable in accordance with its terms and conditions, except as may be
limited by bankruptcy and insolvency laws and by other laws affecting the rights
of creditors generally. The approval of Buyer's shareholders is not necessary
for this transaction.
3.13 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of this
Agreement by Buyer and the performance by Buyer or their obligations hereunder
in the time and manner contemplated will not cause, constitute or conflict with
or result in (a) any material breach or violation of any of the provisions of or
constitute a default under any license, indenture, mortgage, charter,
instrument, certificate of incorporation, bylaw, or other agreement or
instrument to which Buyer is a party, or by which it may be bound, nor will any
consents or authorizations of any party, or by which it may be bound, nor will
any consents or authorizations of any party other that those hereto be required,
(b) an event that would permit any party to any material agreement or instrument
to terminate it or to accelerate the maturity of any indebtedness or other
obligation of Buyer, or (c) an event that would result in the creation or
imposition of any material lien, charge, or encumbrance of any asset of Buyer.
3.14 VALIDITY OF BUYER SHARES. The shares of Buyer Common stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and non assessable.
3.15 FULL DISCLOSURE. None of the representation and warranties made by
Buyer herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by Buyer, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
3.16 ASSETS. Buyer has good marketable title to all of its property free
and clear of any and all liens, claims and encumbrances.
3.17 MATERIAL CONTRACTS. Buyer has no material contracts to which it is a
party or by which it is bound and has not operations.
3.18 INDEMNIFICATION. Buyer agrees to indemnify, defend and hold the
shareholders
Page 6 of 26
<PAGE>
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties, and reasonable attorney fees, that they shall
incur or suffer, which arise out of, result from or relate to any breach of, or
failure by Buyer to perform any of it representations, warranties, covenants or
agreements in this Agreement or in any schedule, certificate, exhibit or other
instrument furnished or to be furnished by Buyer under this Agreement.
ARTICLE 4
ADDITIONAL SHAREHOLDER REPRESENTATIONS
4.1 SHARE OWNERSHIP. The Shareholders hold shares of Company's common
stock as set forth in Exhibit 1.1 hereto. Such shares are owned of record and
beneficially by each holder there of, and such shares are not subject to any
lien, encumbrance or pledge. Each Shareholder holds authority to exchange such
shares pursuant to this Agreement.
4.2 INVESTMENT INTENT. Each Shareholder understands and acknowledges that
the shares of Buyer Common Stock (the "Buyer Shares") are being offered for
exchange in reliance upon the exemption provided in Section 4(2) of the
Securities Act of 1933 (the "Securities Act") for nonpublic offerings; and each
Shareholder makes the following representations and warranties with the intent
that the same may be relied upon in determining the suit-ability of each
Shareholder as a purchaser of securities.
(a) The Buyer Shares are being acquired solely for the account of each
Shareholder, for investment purposes only, and not with a view to, or for sale
in connection with, any distribution thereof and with no present intention of
distributing or reselling any part of the Buyer shares.
(b) Each Shareholder agrees not to dispose of his buyer Shares or any
portion thereof unless and until counsel for Buyer shall have determined that
the intended disposition is permissible and does not violate the Securities Act
or any applicable state securities laws, or the rules and regulations
thereunder.
(c) Each Shareholder acknowledges that Buyer has made all documentation
pertaining to all aspects of the Exchange Offer available to him and to his
qualified representatives, if any, and has offered such person or persons an
opportunity to discuss the Exchange Offer with the officers of Buyer.
(d) Each Shareholder is knowledgeable and experienced in making and
evaluating investments of this nature and desires to accept the Exchange Offer
on the terms and conditions set forth.
Page 7 of 26
<PAGE>
(e) Each Shareholder is able to bear the economic risk of an investment, as
a result of the Exchange Offer, in the Buyer Shares.
(f) Each Shareholder understands that an investment in the Buyer Shares is
a speculative investment, is not liquid, and each Shareholder has adequate means
of providing for current needs and personal contingencies and has no need for
liquidity in this investment.
4.3 INDEMNIFICATION. Each Shareholder recognizes that the offer of the
Buyer shares to him is based upon his representations and warranties set forth
and contained herein and hereby agrees to indemnify, and hold harmless Buyer
against all liability, costs or expenses (including reasonable attorney's fees)
arising as a result of any misrepresentations made herein by such Shareholder.
4.4 LEGEND. Each Shareholder agrees that the certificates evidencing the
Buyer Shares acquired pursuant to this Agreement will have a legend placed
thereon stating that the securities have not been registered under the Act or
any state securities laws and setting forth or referred to the restrictions on
transferability and sales of the Buyer Shares.
4.5 RELEASE. As of the Closing herein, Shareholders do hereby release
the Company from all claims, debts and liabilities to them with the exception
of the assumed liabilities listed in Exhibit 4.5 hereto.
ARTICLE 5
COVENANT
5.1 INVESTIGATIVE RIGHTS. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's properties, books, contracts, commitments, and records for the purpose
of examining the same. Each parity shall furnish the other party with all
information concerning each party's affairs as the other party may reasonably
request.
5.2 CONDUCT OF BUSINESS. Prior to the Closing, Buyer and Company shall
each conduct its business in the normal course, and shall not sell, pledge,
or assign any assets, without the prior written approval of the other party,
except in the regular course of business. Neither Buyer or Company shall
amend its Articles of Incorporation or Bylaws, declare dividends, redeem or
sell stock or other securities, incur additional or newly-funded liabilities,
acquire or dispose of fixed assets, change employment terms, enter into any
material or long-term
Page 8 of 26
<PAGE>
contract, guarantee obligations of any third party, settle or discharge any
balance sheet receivable for less than its stated amount, pay more on any
liability than its stated amount, or enter into any other transaction other than
in the regular course of business.
5.3 COMPLIANCE WITH SECURITIES LAWS. The Shareholders acknowledge that
Buyer is subject to the SEC filing and information requirements under the
Securities Exchange Act of 1934. Shareholders shall cause the Company to comply
with the requirements of such Act, including filing of Form 8-K reporting the
consummation of the transaction herein and all subsequent reports and filing
required by the Act and the rules and regulations thereunder in the manner and
at the time required.
5.4 CHANGE OF MANAGEMENT. Buyer will cause new officers and directors
selected by the Shareholders to be elected as of the Closing.
ARTICLE 6
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
6.1 CONDITIONS. Buyer's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article VI. Buyer may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Buyer of any other condition of or any of Buyer's
other rights or remedies, at law or in equity, if Company shall be in default of
any of their representations, warranties, or covenants under this Agreement.
6.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by Shareholders in the Agreement
or in any written statement that shall be delivered to Buyer under this
agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
6.3 PERFORMANCE. Company shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
6.4 ABSENCE OF LITIGATION. No action, suit, or proceeding before any
court of any governmental body of authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Company
Page 9 of 26
<PAGE>
or Shareholders on or before the Closing Date.
6.5 ACCEPTANCE BY COMPANY SHAREHOLDERS. The holders of an aggregate of
not less than 100% of the issued and outstanding share of common stock of
Company shall have agreed to exchange their shares for shares of Buyer Common
Stock.
6.6 CERTIFICATE. Shareholders shall have delivered to Buyer a
certificate, dated the Closing Date, and signed by the Shareholders and the
President of Company, certifying that each of the conditions specified in
Sections 6.2 through 6.6 hereof have been fulfilled.
ARTICLE 7
CONDITIONS PRECEDENT TO SHAREHOLDERS' PERFORMANCE
7.1 CONDITIONS. Shareholders' obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set forth in
this Article 7. Shareholders may waive any or all of these conditions in whole
or in part without prior notice; provided, however, that no such waiver of a
condition shall constitute, a waiver by Shareholders of any other condition of
or any of Company's and shareholder rights or remedies, at law or in equity, if
Buyer shall be in default of any of its representations, warranties, or
covenants under this Agreement.
7.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by Buyer in this Agreement or in
any written statement that shall be delivered to Shareholders by Buyer under
this Agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
7.3 PERFORMANCE. Buyer shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the closing date.
7.4 ABSENCE OF LITIGATION. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Buyer on or before the Closing Date.
7.5 OFFICERS' CERTIFICATE. Buyer shall have delivered to Shareholders a
certificate, dated
Page 10 of 26
<PAGE>
the Closing Date and signed by the President of Buyer certifying that each of
the conditions specified in Sections 7.2 through 7.4 have been fulfilled.
ARTICLE 8
CLOSING
8.1 CLOSING. The closing of this transaction shall be held at the offices
of Buyer, or such other place as shall be mutually agreed upon, on such date as
shall be mutually agreed upon by the parties but no later than October 31, 1997.
At the Closing:
(a) Each Shareholder shall present the certificates representing his
shares of Company being exchanged to Buyer, and such certificates will be duly
endorsed.
(b) Each Shareholder shall receive a certificate or certificates
representing the number of shares of Buyer Common Stock for which the shares of
Company common stock shall have been exchanged.
(c) Buyer shall deliver an officer's certificate, as described in Section
7.5 hereof, dated the Closing Date, that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of Buyer are true
and correct as of, or have been fully performed and complied with by, the
Closing Date.
(d) Buyer shall deliver a signed consent and/or Minutes of the Directors
of Buyer approving this Agreement and each matter to be approved by the
Directors of Buyer under this Agreement.
(e) Shareholders shall deliver a Shareholders' certificate, as described
in Section 6.6 hereof, dated the Closing Date, that all representations,
warranties, covenants and conditions set forth in this Agreement on behalf of
Shareholders are true and correct as of, or have been fully performed and
complied with by, the Closing Date.
ARTICLE 9
MISCELLANEOUS
9.1 HEADINGS. The Article and paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit, or add to the meaning of any provision of this Agreement.
9.2 NO ORAL CHANGE. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, or
Page 11 of 26
<PAGE>
discharge is sought.
9.3 NON-WAIVER. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressed in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to
insist in any one or more cases upon the performance of any of the
provisions, covenants, or conditions of this Agreement or to exercise any
option herein contained shall not be construed as a waiver or relinquishment
for the future of any such provisions, covenants, or conditions, (ii) the
acceptance of performance of anything required by this Agreement to be
performed with knowledge of the breach or failure of a covenant, condition,
or provision hereof shall not be deemed a waiver of such breach or failure,
and (iii) no waiver by any party of one breach by another party shall be
construed as a waiver with respect to any other subsequent breach.
9.4 TIME OF ESSENCE. Time is of the essence of this Agreement and of
each and every provision hereof.
9.5 ENTIRE AGREEMENT. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
9.6 CHOICE OF LAW. This Agreement and its application shall be
governed by the laws of the State of Maryland.
9.7 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.8 NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if served personally on the party to whom
notice is to be given, or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
Buyer: Imtek Office Solutions, Inc.
Baltimore, MD
Page 12 of 26
<PAGE>
Shareholders: C/O Michael L. Lowe
Glen Allen, VA
9.9 BINDING EFFECT. This Agreement shall insure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
9.10 MUTUAL COOPERATION. The parties hereto shall cooperate with each other
to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein.
9.11 ANNOUNCEMENTS. Buyer and Shareholders will consult and cooperate with
each other as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or the employees, customers or
suppliers.
9.12 EXPENSES. Each party will pay its own legal, accounting and any other
out-of-pocket expenses reasonable incurred in connection with this transaction,
whether or not the transaction contemplated hereby is consummated.
9.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representation,
warranties, covenants and agreements of the parties set forth in this
Agreement or in any instrument, certificate, opinion, or other writing providing
for in it, shall survive the Closing irrespective of any investigation made by
or on behalf of any party.
9.14 EXHIBITS. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided herein above, including any items
referenced therein or required to be attached thereto. Any material changes to
the Exhibits shall be immediately disclosed to the other party.
AGREED TO AND ACCEPTED as of the date first above written.
IMTEK OFFICE SOLUTIONS, INC. MAJORITY SHAREHOLDER
/s/ Edwin C. Hirsch /s/ Michael L. Lowe
- ------------------------------ --------------------------
Edwin C. Hirsch - President Michael L. Lowe
Page 13 of 26
<PAGE>
ATTACHED EXHIBITS
<TABLE>
<S> <C>
1.1 Company- Shareholders
2.4 Company- Directors and Officers
2.5 Company- Financial Statements
2.8 Company- Litigation, Claims or Assessments
2.12 Company- Assets Acquired by Buyer
2.13 Company- Material Contracts
2.14 Company- Customer List
3.4 Buyer- Directors and Officers
3.5 Buyer- Financial Statements
4.5 Company- Liabilities Assumed by Buyer
</TABLE>
Page 14 of 26
<PAGE>
INVENTORY
PURCHASE AND SALE AGREEMENT
between
Office Supply Line, Inc.,
Michael L. Lowe
and
Imtek Corporation
Dated as of November 1, 1997
<PAGE>
INVENTORY PURCHASE AND SALE AGREEMENT
THIS INVENTORY PURCHASE AND SALE AGREEMENT ("Agreement") is made and
entered into as of November 1, 1997, by and between Office Supply Line, Inc., a
Virginia Corporation ("Seller"), Imtek Corporation, a Maryland corporation
("Buyer") and Michael L. Lowe.
WITNESSETH:
WHEREAS, Seller is the owner of and wishes to sell the inventory more
particularly described in Exhibit A, attached hereto and made a part hereof
("Inventory"); and
WHEREAS, Buyer wishes to buy from Seller the Inventory; and
WHEREAS, Seller and Buyer wish to enter into an agreement setting forth the
terms and conditions of the purchase and sale of the Inventory.
NOW THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby expressly acknowledged, the parties hereto agree
as follows:
ARTICLE I
PURCHASE AND SALE OF INVENTORY
1.1 Purchase Price. Seller hereby agrees to sell to Buyer, and Buyer
hereby agrees to buy from Seller all of Seller's right, title and interest in
the Inventory Note for the purchase price of Two Hundred Thirty Seven Thousand
Dollars ($237,000).
1.2 Closing, The Closing of the purchase and sale of the Inventory shall
take place no latter than November 30, 1997.
1.3 Payment of Purchase Price. Buyer agrees to pay Seller an amount
equal to the Purchase Price. Buyer shall remit payment of the Purchase price
to Seller as follows: (a) $75,000 by certified check, cashier's check or bank
wire at Closing; (b) assumption of $70,000 in liabilities described in
Exhibit B attached hereto and made a part hereof ("Assumed Liabilities"); and
(c) a Promissory Note for $92,000, attached hereto and made a part hereof.
1.4 Transfer of Title to Inventory. Upon payment in full of the
Purchase Price, Seller shall execute and deliver to Buyer a Bill of Sale. In
addition, Seller shall execute and deliver such assignments of security
agreements, financing statements and similar document as Seller, in its
reasonable discretion, deems to be necessary or appropriate for the legal
transfer of Seller's right, title and interest in the Inventory immediately
upon the receipt of the full amount of Payment Price as described in section
1.3, above. Should any assignment in addition to those delivered by Seller be
required by applicable law, Buyer shall prepare and submit such additional
<PAGE>
assignments to Seller for execution, and Buyer agrees to execute such additional
assignments.
1.5 Use of Proceeds from Resale of Inventory. The parties agree hereto
to permit the resale of Inventory only as follows: (a) Buyer may negotiate
the sale of all or part of the Inventory with the approval of Michael L.
Lowe; (b) any proceeds from sale on any of the Inventory must be used to
reduce pay any unpaid Assumed Liabilities and the Promissory Note until the
Purchase Price described in section 11.3 above has been paid in full.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
2.1 Seller's Warranties and Representations. Seller hereby represents
and warrants to Buyer the statements in Section 2.2, Section 2.3 and Section
2.4 are true and correct, as of the date of this Agreement, and shall be true
and correct as of the Closing.
2.2 Authority to Sell. Seller is duly and legally authorized to enter
into this Agreement, and to sell, transfer, convey and assign the Inventory.
2.3 Liens and Encumbrances. The Inventory is free and clear of any liens,
judgements or encumbrances.
2.4 Seller Indemnification. Seller warrants it will hold harmless and
indemnify Buyer from any adverse claims.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Severability. Each part of this Agreement is intended to
severable. If any term, covenant, condition or provision of this Agreement is
unlawful, invalid or unenforceable, such legality, invalidity or
unenforceability shall not effect the remaining provisions of this Agreement,
which shall remain in full force and effect and shall be binding upon the
parties.
3.2 Headings. The headings and the Articles and Sections of this
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision thereof.
3.3 Governing Law. The parties agree that this Agreement shall be
construed, and the rights and obligations of the parties under the Agreement
shall be determined in accordance with the laws of the State of Virginia.
3.4 Entire Agreement. This Agreement, including any Exhibits,
constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes any and all
<PAGE>
prior agreements, representations and understandings of the parties, written or
oral.
3.5 Waiver. No waiver by either party of the other party's breach of
any terms, covenant or condition contained in this Agreement shall be deemed
to be a waiver of any subsequent breach of the same or any other term,
covenant or condition of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and sealed as of the day and year first written above.
IMTEK CORPORATION
/s/ [Illegible]
------------------------
OFFICE SUPPLY LINE, INC.
/s/ Michael L. Lowe
------------------------
MICHAEL L. LOWE
/s/ Michael L. Lowe
-----------------------
<PAGE>
PROMISSORY NOTE
PROMISE TO PAY. Imtek Corporation ("Borrower") promises to pay to Office
Supply Line ("Lender"), or order, in lawful money of the Untied States of
America, the principal amount of Ninety Two Thousand and 00/100 Dollars
($92,000.00), together with interest of 10% per anum on the unpaid balance
until paid in full.
INTEREST PAYMENTS. Borrower will pay Lender monthly payments of $9,626.92
Borrower's first payment is due December 15, 1997, and all subsequent payments
are due on the same day of each month after that.
PRINCIPAL PAYMENT. The entire unpaid principal and any accrued interest shall be
payable UPON DEMAND of the Lender.
PREPAYMENT. Borrower may pay without penalty all of the amount owed at any time.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due, (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to perform promptly at the
time and strictly in the manner provided in this Promissory Note, (c)
Borrower becomes insolvent, a receiver is appointed for any part of
Borrower's property. Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws.
ASSIGNABILITY. This Promissory Note may be legally assigned by Lender or any
holder at any time.
GENERAL PROVISIONS. Lender may delay or forego enforcing any of its rights or
remedies under this Promissory Note without losing them. Borrower, to the
extent allowed by law, waive presentment, demand for payment, protest and
notice of dishonor. This Promissory Note shall be governed, construed and
interpreted in accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, the Borrower has executed this Promissory Note intending
this Promissory Note to constitute an instrument under seal.
WITNESS/ATTEST: BORROWER:
/s/ [Illegible] /s/ [Illegible]
- ----------------------------------- ---------------------------------
<PAGE>
ATTACHMENT B
Assumed Liabilities
<PAGE>
Exhibit 2.6
AGREEMENT FOR SALE OF ASSETS
AGREEMENT made and entered into by and between Perfect Copy, Inc., a
Georgia corporation with a usual place of business at 322 Oak Street,
Gainesville, GA 30501 and a second location at 2375 West Broad St Suite A,
Athens, GA, 30506 ("SELLER"), and Imtek Corporation, a Maryland corporation
qualified to do business in the Commonwealth of Virginia ("BUYER"), with its
principal place of business at 707 E. Main Street, Suite 1050, Richmond, VA
23219.
WHEREAS, Seller operates a business engaged in the sale, leasing,
rental, servicing and wholesaling of office equipment products and supplies,
including photocopy machines, typewriters, facsimile machines and various other
related equipment and products at its leased premises located at the address
herein stated; and is desirous of selling the assets of the same to BUYER as a
going business concern; and
WHEREAS, BUYER is willing to purchase said assets and continuing the
operation of the business engaged in the sale, leasing, rental, servicing and
wholesaling of office equipment products and supplies, including photocopy
machines, typewriters, facsimile machines and various other related equipment
and products on the terms as herein contained; and
NOW, THEREFORE, it is for good and valuable consideration and in
consideration of the covenants, agreements, representations, warranties, terms,
and provisions as herein contained, and mutually, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I: Sale and Purchase of Business Assets
1.1 Transfer of Assets. Subject to the terms and conditions of this
Agreement, Buyer, in reliance upon the representations and warranties of Seller
herein made and in the exhibits and schedules annexed hereto, will at the
Closing (hereinafter defined), acquire from Seller, and Seller, in reliance upon
the representations and warranties of Buyer herein made and in the exhibits and
schedules annexed hereto, will at the Closing, transfer and convey to the Buyer,
with the exceptions set forth herein, the business, assets, properties and
contract rights of Seller, of every type and description, real, personal or
mixed, whether tangible or intangible, including the following:
(a) All of the furniture, fixtures, equipment, autos, supplies, tools
of trade and assets of every kind and description relating to or involved in any
manner with the Seller's sale, lease, rental, servicing of photocopy equipment,
typewriters, facsimile machines and other automated office equipment from its
leased business premises.
(b) All of Sellers accounts receivable of whatever source of the
Business Being Purchased, including trade and manufacturer's receivable, in the
exact amount of (accounts receivable shall be determined as of the Date of
Closing), and such amount shall be guaranteed to be collectible by the Seller
and subject to the set-off rights of Buyer as hereinafter provided.
<PAGE>
The Schedule of Accounts Receivable to be purchased by Buyer shall be agreed to
by the Buyer and Seller and a copy shall be attached hereto as Exhibit A.
(c) All inventory, including machines, equipment, furniture, parts,
supplies, miscellaneous and rental machines located at customer's business
premises, as described on the Schedule of Inventory, of the Business Being
Purchased shall be agreed to by the Seller and Buyer and the Schedule of
Inventory shall be attached hereto as Exhibit B on the Closing Date.
(d) All rights under contracts, agreements, franchises and leases of
whatever nature, including parts and service contracts and warranty performance
agreements, books and records and all other property and rights of every kind
and nature owned or held by Seller with regard to the Business Being Purchased
on the date of Closing, as such rights and property shown on the Schedule of
Contracts to be attached hereto as Exhibit C on the Date of Closing.
(e) All of Seller's cash in transit as of the date of this Agreement.
(f) All of the goodwill and the exclusive right, privilege and
ownership in perpetuity to the logos, trademarks and name "Perfect Copy", in any
manner or form including but not limited to policy manuals, price lists,
supplier lists, customer lists, advertising, promotion, signs or otherwise of
the Business Being Purchased.
ARTICLE II: Assets to be Retained by Seller
2.1 Excluded Assets. There shall be excluded from Seller's Assets being
sold and transferred hereunder the following:
(a) All cash on hand or on deposit as of the close of business in May
31, 1998.
(b) All refundable income taxes; the cash surrender value of any life
insurance policies; and investments in marketable securities; specified
automobiles and motor vehicles; as such terms are defined and itemized on the
Schedule of Seller's Excluded Assets to be attached hereto as Exhibit D on the
Closing Date.
(c) Any liabilities, accounts payable or obligations of Seller
including any trade payables and open accounts due to the manufacturers, which
are either not expressly disclosed or which are not expressly assumed by the
Buyer herein or in a Schedule hereto, which liabilities and obligations shall
remain the responsibility of Seller and shall be paid by Seller in accordance
with their terms. The failure of Seller to pay any such debts, liabilities or
obligations shall entitle Buyer, at Buyer's option to pay same on behalf of
seller deduct any such payments, including Attorney's fees and costs incurred by
Buyer from any deferred sums due Seller as hereinafter stated or as may be
otherwise due Seller from Buyer.
ARTICLE III: Purchase Price
3.1 Purchase Price. The total purchase price to be paid to Seller for
the sale and transfer of Seller's Assets to Buyer in accordance with the
provisions of this Agreement is the approximate sum of Three Hundred Eighty
<PAGE>
Seven Thousand and no/100 ($387,000.00) Dollars plus the buyer shall assume the
sellers liability in an amount not to exceed One Hundred Thousand and no/100
($100,000.00) Dollars for service and performance of the unexpired term for any
maintenance contracts as listed in Exhibit E. The purchase price shall be
payable in cash as provided in paragraph 3.1(a) below; and, the Buyer shall
assume the Seller's liability for service and performance of the unexpired term
for any photocopy and facsimile equipment service contracts renewed and invoiced
by Seller prior to June 1, 1998.
(a) At time of closing, Buyer shall pay the Seller the sum Three
Hundred Thirty Seven Thousand ($337,000.00) Dollars, less any sums paid directly
to Seller's creditors provided in subparagraph (c) hereinafter, and one year
from closing date, Buyer shall pay the Seller the sum of Fifty Thousand and
no/100 ($50,000.00) Dollars subject to any setoff, each of which sums shall be
payable by the Buyer's corporate check.
(b) The buyer shall assume the Seller's liability for service and
performance of the un-expired term for any photocopy and facsimile equipment
service contracts renewed and invoiced by Seller prior to June 1, 1998. The
Seller shall prepare an itemized list with terms of all such contracts. The
Schedule of Maintenance Contracts, which the Buyer is assuming hereunder and a
copy shall be attached hereto as Exhibit E on the closing Date.
(c) The buyer shall assume no other liabilities, accounts, debts or
notes payables of the Seller. All liabilities, accounts, debts and obligations,
except with respect to deferred service contracts as set forth in paragraph (b)
above, shall be paid by the Seller prior to closing or at closing from the
proceeds of the transaction or the Buyer may pay any such liabilities or debts
directly to the Seller's creditor deducting the amounts so paid from the cash
paid to the Seller at Closing as provided in Section (a) above. Attached hereto
as Schedule 3.l(c) is an itemization of the Seller's liabilities to be paid at
Closing directly by the Buyer. In the event any additional liabilities and
obligations of the Seller which accrued prior to the Closing Date and which are
not paid by the Seller or directly by the Buyer as herein provided are asserted
against the Buyer or the Assets subsequent to the Closing, the Seller shall pay
any such liabilities immediately upon demand and of the Buyer or Buyer may, in
its sole discretion, pay same on behalf of the Seller and deduct any such
payments from the deferred sums due Seller as hereinafter provided.
For illustration only, if the cost value of the inventory is determined
to be Two Hundred Forty Two Thousand ($242,000) Dollars the total purchase price
shall be Three Hundred Eighty Seven Thousand ($387,000) Dollars.
ARTICLE IV: Allocation of Purchase Price
The purchase price shall be allocated in the manner following:
<TABLE>
<S> <C>
$ 90,000.00 For Article Ia assets
Furniture, Fixtures & Equipment
$ 100,000.00 For Article Ib assets
Accounts Receivable
$ 242,000.00 For Article 1c assets
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Inventory
$ 20,000.00 Rental Equipment
$ 35,000.00 For Article Id assets
Non Compete
</TABLE>
ARTICLE V: Payment of Purchase Price
The purchase price as herein above to be determined in accordance with Article
III; shall be paid in the manner following:
Three Hundred Forty Thousand ($340,000) at the time of closing, payable
by Buyer's corporate check.
Fifty Thousand ($50,000) Dollars to be paid to Seller in one year. All
sums due Seller are subject to the Buyer's rights of set off as provided herein.
ARTICLE VI: Sale Free and Clear
Seller agrees that it shall sell said assets free and clear of all liens,
encumbrances, liabilities and claims of parties adverse thereto. Seller agrees
that it shall:
1. Waive all the conditions and requirements of the Bulk Sales Act; but
Seller shall complete and execute an affidavit annexed as Exhibit F.
2. At time of closing, Seller shall provide Buyer with a tax waiver
from the Department of Revenue.
3. That any and all liens, encumbrances, security agreements, tax liens
or attachments of record shall be fully discharged at time of closing.
4. Seller shall provide Buyer with an indemnity agreement as annexed as
Exhibit G, indemnifying Buyer from any asserted claims against assets sold to
Buyer.
ARTICLE VII: Seller's Warranties and Representations
The SELLER warrants and represents to BUYER with knowledge the BUYER shall rely
on same to enter into this transaction, each and all of the foregoing:
(a) That the Seller owns all and singular the assets being sold
hereunder and has full marketable title to same.
(b) That the Seller has full right and authority to enter into this
agreement and right to perform and sell hereunder.
(c) That there are no known eminent domain, condemnation or eviction
proceedings affecting the premises area containing the business or any of its
common areas.
<PAGE>
(d) That at the time of the sale, all fixtures, office equipment, other
equipment, air conditioners, heating equipment and other apparatus shall be in
good working order at the time of passing.
(e) That seller does not have any undisclosed liabilities which have
not heretofore been paid and discharged, except (a) to the extent disclosed in
this Agreement or in any schedule annexed to this Agreement if such liabilities
are to be assumed by the Buyer; (b) those liabilities to be paid by Seller at
the closing from the proceeds of the transaction described in this Agreement;
(c) those liabilities to be paid by the Seller subsequent to the closing for
continuing obligations of the Seller.
(f) Seller has timely filed with the appropriate Federal and State
governmental agencies all tax returns and tax reports required to be filed by it
including sales tax returns and reports. Seller has paid all taxes, assessments,
fees and other governmental charges levied upon its assets and income, other
than those not yet due and payable or delinquent which Seller will pay before
delinquency. Seller has not had its federal income tax returns audited by the
Internal Revenue Service, nor has it had a State of Georgia state sales tax
audit within the last two fiscal years preceding the date of this agreement.
(g) Seller has no litigation, including any arbitration investigation
or other proceeding of or before any court, arbitrator, or governmental or
regulatory official body or authority pending or to the best knowledge of the
Seller, threatened against Seller or which relates to the Seller's Assets or the
transactions contemplated by this Agreement, nor does the Seller know of any
reasonable likely basis for any such litigation, the result of which could
adversely affect Seller, its Assets or the transactions contemplated hereby.
(h) No representations and or warranty by Seller in this Agreement, or
any documents provided hereunder, contains or will contain any untrue statement
or omits or will omit to state any material fact necessary to make the
statements contained herein not misleading.
ARTICLE VIII: Covenant Not To Compete
Jimi Epps and Donald Blackburn shall have entered into the Restrictive Covenants
Agreement in the form attached hereto as Exhibit H.
ARTICLE IX: Seller's Obligation Pending Closing
Seller agrees, warrants and covenants that during the pendency of this
agreement, that:
(a) Seller shall maintain customary hours.
(b) Seller shall maintain its customary and usual pricing and
promotional programs.
(c) Seller shall maintain an adequate stock necessary to maintain the
goodwill of the business.
<PAGE>
(d) Seller shall maintain the current employees for the benefit of
BUYER; however nothing herein shall prevent a discharge for cause or require
BUYER to employ any present employees.
ARTICLE X: Casualty
The risk of any loss, destruction or other damage to the Seller's Assets, other
than ordinary wear and tear, between the date of execution hereof and the
completion of the Closing, shall be solely that of Seller.
ARTICLE XI: Conditions-Precedent-Concurrent-and-Subsequent
This agreement and all of BUYER'S obligations hereunder shall be fully
conditional upon the occurrence of the following:
(a) All representations and warranties of Seller contained in this
Agreement shall be true in all material respects as of and at the Closing Date.
(b) Seller shall have performed and complied with all agreements, terms
and conditions required by this Agreement on or before the Closing Date.
(c) No change other than as contemplated or permitted by this
Agreement, or other than in the normal course of Seller's business, shall have
occurred from May 15, 1998 to the Closing Date.
(d) Jimi Epps and Donald Blackburn shall have entered into the
Restrictive Covenant Agreement in the form attached hereto as Exhibit H.
(e) Seller agrees to order and deliver to Buyer appropriate Atax
clearance letters from the Department of Revenue and/or State of Georgia
evidencing current payment of all state imposed sales and/or use taxes of any
nature due or to become due through the Effective Date.
(f) At or prior to closing, Seller will obtain valid, binding, and
enforceable releases, satisfactions and/or discharges, as the case may be, of
all of the liens, charges, and encumbrances affecting Seller's Assets, except
those expressly assumed and accepted by Buyer hereunder or to be payable by
Seller after closing.
(g) Jimi Epps and Don Blackburn agree and shall have entered into the
employment contract guaranteeing a minimum one-year of service to Imtek in the
form attached hereto as Exhibit I.
ARTICLE XII: Brokers
The parties warrant and represent to each other that Jeff Sturm served as a
broker in the transaction and will be paid $23,000.00 by Imtek.
ARTICLE XIII: Miscellaneous
(1) To the extent previously not furnished to Buyer, all of Seller's
business records and papers and any order, contracts, agreements, purchase
orders, accepted or unaccepted, quotations, and any other property or records
<PAGE>
used and usable in connection with the continued operation of Business Being
Purchased.
(2) This Agreement supersedes any and all agreements, if any,
previously made between the parties relating to the subject matter hereof, and
there are no understandings or agreements other than those included herein.
(3) Any notice, payment, request, instruction or other document to be
delivered hereunder shall be deemed sufficiently given if in writing and
delivered personally or mailed by certified mail, postage prepaid, if to Buyer:
IMTEK CORPORATION
Michael Lowe
President
707 East Main Street Suite 1050
Richmond, VA 23219
and if addressed to Seller:
Jimi Epps
322 Oak Street, Suite 1
Gainesville, GA 30501
unless in each case Buyer and Seller shall have notified the other in writing of
a different address.
(4) Headings are for convenience only and are not an integral part of
this Agreement.
(5) For value received, the receipt of which is hereby acknowledged,
any covenant, agreement, representation, warranty, or other commitment herein
made by Seller is unconditionally, individually and severally made and
guaranteed by Jimi Epps the sole shareholder of the Seller who joins in and who
executes this Agreement for such express purpose.
(6) All fees, costs, charges, expenses, taxes required to be paid or
imposed in connection withs with the negotiation, preparation or transfer of any
Seller's Assets pursuant to the terms of this Agreement shall be paid by the
Seller.
(7) The parties shlal do, undertake, execute and perform all acts and
documents reasonably required to carry out the tenor and provisions of this
Agreement.
ARTICLE XIV: Closing
The Closing shall be on June 3, 19998 with the agreement of sale of assets to be
effective June 1, 1998 at the office of the Seller, 322 Oak Street, Gainsville,
GA.
In witness whereof, the partied have executed this Agreement this
1st day of June 1998.
BUYER
<PAGE>
IMTEK CORPORATION
BY: /s/ Michael L. Lowe
Michael L. Lowe
Its Authorized Representative
SELLER
PERFECT COPY, INC.
BY: Jimi Epps
Jimi Epps
President
GUARANTOR
Jimi Epps
BY: /s/ Jimi Epps
Jimi Epps
Individually
<PAGE>
Exhibit 3.1
Amended and Restated
Certificate of Incorporation
of
Imtek Office Solutions, Inc.
Imtek Office Solutions, Inc., a Delaware corporation (the "Corporation")
hereby files this Amended and Restated Certificate of Incorporation.
NOW, THEREFORE, IT IS HEREBY CERTIFIED THAT:
1. The name of the corporation filing this Amended and Restated Certificate of
Incorporation is Imtek Office Solutions, Inc., a Delaware corporation.
2. The Corporation was originally incorporated under the name of Vision
Capital, Inc., a Delaware corporation ("Vision"). Vision originally filed
its Certificate of Incorporation with the Secretary of State of Delaware on
November 9, 1987.
3. This Amended and Restated Certificate of Incorporation hereby amends and
restates in its entirety the Certificate of Incorporation of the
Corporation to read as follows:
Amended and Restated
Certificate of Incorporation
Of
Imtek Office Solutions, Inc.
Article I.
Name
The name of this corporation is Imtek Office Solutions, Inc.
Article II.
Registered Office; Registered Agent
The address of the registered office of the corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the registered agent of the
corporation in the State of Delaware at such address is The Corporation Trust
Company.
Article III.
Purpose
<PAGE>
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
Article IV.
Capital Stock
A. General Authorization. The Corporation is authorized to issue
two classes of stock to be designated, respectively, "Common Stock" and
"Preferred Stock". The total number of shares of all classes of stock which
the Corporation shall have the authority to issue shall be Two Hundred and
Fifty-Five Million (255,000,000) shares. Two Hundred and Fifty Million
(250,000,000) shares shall be Common Stock, each having a par value of
$.000001 per share. Five Million (5,000,000) shares shall be Preferred
Stock, each having a par value of $0.01 per share.
B. Common Stock. The Common Stock of the Corporation shall have such
designations, voting powers, preferences, and such other special rights and
qualifications, limitations and restrictions thereon as are provided by
Delaware General Corporation Law.
C. Preferred Stock. (1) The Preferred Stock may be issued from time
to time in one or more series. The Board of Directors is hereby authorized,
by filing a certificate pursuant to the Delaware General Corporation Law, to
fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations
or restrictions thereof, including without limitation the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), redemption price or prices,
and the liquidation preferences of any wholly unissued series of Preferred
Stock, and to establish from time to time the number of shares constituting
any such series and the designation thereof, or any of them (a "Preferred
Stock Designation"), and to increase or decrease the number of shares of any
series subsequent to the issuance of shares of that series, but not below the
number of shares of such series then outstanding. In case the number of
shares of any series shall be decreased in accordance with the foregoing
sentence, the shares constituting such decrease shall resume the status that
they had prior to the adoption of the resolution originally fixing the number
of shares of such series. Different series of Preferred Stock shall not be
considered to constitute different classes of shares for the purpose of
voting by classes (except as otherwise fixed by the Board of Directors with
respect to any series at the time of the creation thereof).
(2) The Corporation has authority to issue 75,000 shares of its
Preferred Stock as Series A Convertible Preferred Stock, par value $.01 per
share, pursuant to that certain Certificate of Designation of Series A
Convertible Preferred Stock of the Corporation filed with the Secretary of
State of
<PAGE>
Delaware on March 23, 1998 (the "Series A Convertible Preferred
Designation"). The designation, voting powers or lack thereof, preferences,
and such other special rights and qualifications, limitations and
restrictions of the Series A Convertible Preferred Stock are as set forth in
the Series A Convertible Preferred Designation.
D. Negation of Preemptive Rights. Except as set forth in a duly adopted
resolution of the Board of Directors or pursuant to a written agreement duly
authorized by the Board of Directors, the holders of the capital stock of the
Corporation shall have no preemptive rights to subscribe for any shares of any
class of stock of the Corporation whether now or hereafter authorized.
Article V.
Board of Directors and Stockholders
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted from time to time by the Board
of Directors.
B. From and after the closing of the Corporation's initial public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of the Common Stock (the
"Initial Public Offering"), the directors of the Corporation shall be divided
into three classes designated as Class I, Class II and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors prior to the
Initial Public Offering. At the first annual meeting of stockholders
following the Initial Public Offering, the term of office of the Class I
directors shall expire and Class I directors shall be elected for a full term
of three years. At the second annual meeting of stockholders following the
closing of the Initial Public Offering, the term of office of the Class II
directors shall expire and Class II directors shall be elected for a full
term of three years. At the third annual meeting of stockholders following
the closing of the Initial Public Offering, the term of office of the Class
III directors shall expire and Class III directors shall be elected for a
full term of three years. At each succeeding annual meeting of stockholders,
directors shall be elected for a full term of three years to succeed the
directors of the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director shall
serve until his
<PAGE>
successor is duly elected and qualified or until his death, resignation or
removal. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
C. The Board of Directors is expressly authorized to alter,
amend, or repeal or adopt new Bylaws by the affirmative vote of a majority of
directors present and voting at a meeting of directors duly called and
noticed at which a quorum of directors is present.
D. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
E. From and after the Initial Public Offering, any director, or
the entire Board of Directors, may be removed from office only (i) for cause,
and (ii) by the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the voting stock.
Article VI.
Alteration, Amendment or Repeal of Certain Articles
From and after the Initial Public Offering and notwithstanding any
other provisions of this Certificate of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the
voting stock required by law, this Certificate of Incorporation or any
Preferred Stock Designation, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the voting stock, voting together as a single
class, shall be required to alter, amend or repeal Article V, Article VI ,
Article VIII or Article IX hereof.
Article VII.
Section 102(b)(2) Statement
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for this
corporation under Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under Section 279 of Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or
<PAGE>
class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court at which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
Article VIII.
Reservation of Right to Amend, Alter, Change or Repeal Certificate of
Incorporation
Subject to Article VI hereof, the corporation reserves the right at
any time, and from time to time, to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, and other
provisions authorized by the laws of the State of Delaware at the time in
force may be added or inserted, in the manner now or hereafter prescribed by
law, and all rights, preferences and privileges of whatsoever nature
conferred upon the stockholders, directors or any other persons whomsoever by
and pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the rights reserved in this Article.
Article IX.
Limitation of Liability and Indemnification
A. The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under Delaware
law.
B. The Corporation is authorized to provide indemnification of
agents (as defined in Section 145 of the Delaware General Corporation Law)
for breach of duty to the Corporation and its stockholders through bylaw
provisions, through agreements with the agents, and/or through stockholder
resolutions, or otherwise, in excess of the indemnification otherwise
permitted by Section 145 of the Delaware General Corporation Law.
C. Any repeal or modification of this Article IX shall be
prospective and shall not affect the rights under this Article IX in effect
at the time of the alleged occurrence of any act or omission to act giving
rise to liability or indemnification.
4. The Board of Directors of the Corporation adopted a resolution
setting forth this Amended and Restated Certificate of Incorporation herein
certified, declaring its advisability and submitting this Amended and
Restated Certificate of Incorporation to the stockholders entitled to vote in
respect thereof in order to consider the adoption of this Amended and
Restated Certificate of Incorporation.
<PAGE>
5. Pursuant to the aforementioned resolution of the Corporation's
Board of Directors, the Amended and Restated Certificate of Incorporation
herein certified was duly adopted in accordance with Section 242 of the
Delaware General Corporation Law by the consent of at least a majority of the
outstanding stock entitled to vote thereon, and a majority of the outstanding
stock of each class entitled to vote thereon as a class. This Amended and
Restated Certificate of Incorporation herein certified has been duly adopted
in accordance with the provisions of Sections 242 and 245 of the Delaware
General Corporation Law.
<PAGE>
6. This Amended and Restated Certificate of Incorporation shall become
effective when filed with the Secretary of State of Delaware.
SIGNED AND ACKNOWLEDGED: IMTEK OFFICE SOLUTIONS, INC.
ATTEST:
By: /s/ Edwin C. Hirsch
/s/ Robert J. Brown --------------------------------
- -------------------------------- Edwin C. Hirsch, President
Robert J. Brown, Secretary
<PAGE>
Exhibit 3.2
[LETTERHEAD]
CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
IMTEK OFFICE SOLUTIONS, INC.
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is IMTEK
OFFICE SOLUTIONS, INC.
2. The certificate of Incorporation of the Company (the "Certificate
of Incorporation") authorizes the issuance of Five Million (5,000,000) shares
of preferred stock, $.01 par value per share, and expressly vests in the
Board of Directors of the Company the authority provided therein to issue any
or all undesignated preferred shares in one or more series and by resolution
or resolutions to establish the designation and number and to fix the
relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a series of preferred stock to be designated as "Series A
Convertible Preferred Stock".
RESOLVED, that 75,000 authorized but undesignated shares of preferred
stock of the Company shall be designated Series A Convertible Preferred
Stock, $.01 par value per share, and shall possess the rights and preferences
set forth below:
Section 1. Designation and Amount. 75,000 shares of the Company's
authorized but undesignated preferred stock shall be designated as Series A
Convertible Preferred Stock (the "Series A Convertible Preferred Stock") par
value $.01 per share. The Series A Convertible Preferred Stock shall have a
stated value of $100.00 per share (the "Original Series A Convertible Issue
Price").
Section 2. Rank. The Series A Convertible Preferred Stock shall
rank: (1) junior to any other class or series of capital stock of the Company
hereafter created specifically ranking by its terms senior to the Series A
Convertible preferred Stock (collectively, the "Senior Securities"); (ii)
prior to all of the Company's Common Stock ("Common Stock"); (iii) prior to
any class or series of capital stock of the Company hereafter created
specifically ranking by its terms junior to any Series A Convertible
Preferred Stock (collectively, with the Common Stock, "Junior Securities");
and (iv) on parity with any class or series of capital stock of the Company
hereafter created specifically ranking by its terms on parity with the series
A Convertible Preferred Stock ("Parity Securities") in each case as to
distributions of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary (all such distributions being
referred to collectively as "Distributions").
Section 3. Dividends. The holders of the then outstanding Series A
Convertible Preferred
<PAGE>
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of any funds legally available therefor, cumulative dividends
at the annual rate of $9.00 per share, payable in cash annually on each
January 1, commencing on January 1, 1998. Such dividends shall accrue on each
share from December 1, 1997 or original issue date, which ever occurs later,
and shall accrue from day to day, whether or not earned or declared. Such
dividends shall be cumulative so that, except as provided in paragraph 5(f)
below, if such dividends in respect of any previous or current annual
dividend period, at the annual rate specified above, shall not have been paid
or declared and a sum sufficient for the payment thereof set apart, the
deficiency shall first be fully paid before any dividend or other
distribution shall be paid on or declared and set apart for the Junior
Securities. Any accumulation of dividends on the Series A Convertible
Preferred Stock shall not bear interest.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding
up of the Company ("Liquidation Events"), either voluntary or involuntary,
the Holders of shares of Series A Convertible Preferred Stock shall be
entitled to receive, immediately after any distributions to Senior Securities
required by the Company's Certificate of Incorporation or any certificate of
designation, and prior in preference to any distribution to Junior Securities
but in parity with any distribution to Parity Securities, an amount per share
equal to the sum of (1) $100,000 and (ii) all accrued and unpaid dividends
thereon, whether or not earned or declared, and no more. If upon the
occurrence of such event, and after payment in full of the preferential
amounts with respect to the Senior Securities, the assets and funds available
to be distributed among the Holders of the Series A Convertible Preferred
Stock and Parity Securities shall be insufficient to permit the payment to
such Holders of the full preferential amounts due to the Holders of the
Series A Convertible Preferred Stock and the Parity Securities, respectively,
then the entire assets and funds of the Company legally available for
distribution shall be distributed among the Holders of the Series A
Convertible Preferred Stock and the Parity Securities pro rata, based on the
respective liquidation amounts to which the Holders of each such series are
entitled by the Company's Articles of Incorporation and any certificate(s) of
designation relating thereto.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in this Company, they shall be distributed
to holders of Junior Securities in accordance with the Company's Articles of
Incorporation including any duly adopted certificate(s) of designation.
Section 5. Conversion. The record Holders of this Series A
Convertible Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each record Holder of Series A
Convertible Preferred Stock shall be entitled (at the times set forth below)
to convert (in multiples of one preferred share) any or all of the shares of
Series A Convertible Preferred Stock held by such Holder at any time after
ninety (90) days following the date of the last closing of purchase and sale
of Series A Convertible Preferred Stock that occurs pursuant to the offering
of the Series A Convertible Preferred Stock by the Company ("the Last Closing
Date"), into that number of fully-paid and non-assessable shares of Common
Stock of the Company calculated in accordance with the following (the
"Conversion Rate"):
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Days between 91 181 271 361 451 541 631 721 811 Over
Last Closing Date and to to to to to to to to to 900
Company's Receipt of 180 270 360 450 540 630 720 810 900 days
Notice of Conversion
- --------------------------------------------------------------------------------------------------------------------
Number of Shares of
Common Stock to be 12 13 14 15 16 17 18 19 20 21
Issued Upon
Conversion
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Mechanics of Conversion. Before any holder of Series A
Convertible Preferred Stock shall be entitled to convert the same into shares
of Common stock, he shall surrender the certificate or certificates thereof,
duly endorsed, at the office of the Company or of any transfer agent for the
Common Stock, and shall give written notice to the Company (the "Notice of
Conversion") at such office that he elects to convert the same and shall state
therein the number of shares of Series A Convertible Preferred Stock being
converted. Thereupon the Company shall promptly issue and deliver at such
office to such holder of Series A Convertible Preferred Stock a certificate
or certificates for the number of shares of Common Stock to which he shall be
entitled. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of
Series A Convertible Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders
of such shares of Common stock on such date.
(i) Lost or Stolen Certificates. Upon receipt by the Company of
evidence of the loss, theft, destruction or mutilation of any Preferred stock
Certificates, and (in the case of loss, theft or destruction) of indemnity or
security reasonably satisfactory to the Company and its Transfer Agent, and
upon surrender and cancellation of the Preferred Stock Certificate(s), if
mutilated, the Company shall execute and deliver new Preferred Stock
Certificate(s) of like tenor and date. However, Company shall not be
obligated to re-issue such lost or stolen Preferred Stock Certificates if
Holder contemporaneously requests Company to convert such Series A
Convertible Preferred Stock into Common Stock.
(ii) No Fractional Shares. If any conversion of the Series A
Convertible Preferred Stock would create a fractional share of Common Stock
to a holder or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of Common Stock issuable
upon conversion, shall be the next higher number of shares, or the Company
may at its option pay cash equal to the fair value of the fractional share
based on the fair market value of one share of the Company's Common Stock on
the date of conversion, as determined in good faith by the Board of Directors.
(c) Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the Series A Convertible Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then
<PAGE>
outstanding Series A Convertible Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding Shares of Series
A Convertible Preferred Stock; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding Series A Preferred Stock, the Company will
immediately take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(d) Adjustment to Conversion rate.
(i) Adjustment due to Stock Split, Stock Dividend, Etc. If, prior
to the conversion of all the Series A convertible Preferred Stock, the number
of outstanding shares of Common Stock is increased by a stock split, stock
dividend, or other similar event, the Conversion Rate shall be
proportionately increased.
(ii) Adjustment Due to Merger, Consolidation, etc. If, prior to
the conversion of all Series A Convertible Preferred Stock, there shall be
any merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which shares of Common
Stock of the Company shall be changed into the same or a different number of
same or another class or classes of stock or securities of the Company or
another entity (each a "Business Combination Event"), then the Holders of
Series A Convertible Preferred Stock shall thereafter have the right to
receive upon conversion of Series A Convertible Preferred Stock, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities and /or other assets which Preferred Stock been converted
immediately prior to such transaction, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the
Holders of the Series A Convertible preferred Stock to the end that the
provision hereof (including, without limitation, provisions for the
adjustment of the Conversion Rate and of the number of shares issuable upon
conversion of the Series A Convertible Preferred Stock) shall thereafter be
applicable, as nearly as may be practicable in relation to any securities
thereafter deliverable upon the exercise hereof.
(iii) No Fractional Shares. If any adjustment under this Section
5(e) would require the issuance of a fractional share of Common Stock to a
holder, such fractional share shall be disregard and the number of shares of
Common Stock issuable upon conversion shall be the next higher full number
of shares.
(e) Effect on Accrued and Unpaid Dividends. In the event that
any shares of Series A Convertible Preferred Stock shall be converted into
Common Stock, no accrued and unpaid dividends on such converted Series A
Convertible Preferred Stock shall be paid upon or after such conversion.
Section 6. Redemption by Company.
(a) Company's Right to Redeem at its Election. At any time,
commencing ninety (90) days after the Last Closing Date, the Company shall
the right, at its sole discretion, to redeem
<PAGE>
("Redemption at Company's Election"), from time to time, any or all of the
Series A Convertible Stock; provided (i) Company shall first provided thirty
(30) days advance written notice as provided in subparagraph 6(b)(ii) below
(which can be given beginning on the ninety first (91st) day after the Last
Closing Date). If the Company elects to redeem some, but not all, of the
Series A Convertible Preferred Stock.
(i) Redemption Price at Company's Election. The "Redemption Price
at the Company's Election" shall be an amount per share equal to the sum of
(i) $100.00 and (ii) all accrued and unpaid dividends thereon, whether or not
earned or declared, and (iii) a Cash Call Premium based upon the elapsed time
between the Last Closing Date and the date of the Company's Notice of
Redemption as follows:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Days between 91 181 271 361 451 541 631 721 811 Over
Last Closing Date and to to to to to to to to to 900
Company's Mailing of 180 270 360 450 540 630 720 810 900 days
Redemption
- ---------------------------------------------------------------------------------------------------------------------
Cash Conversion
Premium $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Mechanics of Redemption at Company's Election. The Company shall
effect each such redemption by giving at least thirty (30) day prior
written notice ("Notice of Redemption") to the Holders of the Series A
Convertible Preferred Stock selected for redemption, by first class, mail,
postage prepaid at the address set forth on the stockholder records for the
Series A Convertible Preferred Stock. Such Notice of Redemption shall
indicate (1) the number of shares of Series A Convertible Preferred Stock
that have been selected for redemption, (ii) the date which such redemption
is to become effective (the "Date of Redemption At Company's Election") which
shall not be less than 30 days or greater than 60 days following the mailing
of Notice of Redemption and (iii) the applicable Redemption Price At Company's
Election, as defined in (b)(1) above. Notwithstanding the above, Holder
may convert into Common Stock, prior to the close of business on the Date of
Redemption at Company's Election, any Series A Convertible Preferred Stock
which it is otherwise entitled to convert.
(c) Company Must Have Immediately Available Funds or Credit
Facilities. The Company shall not be entitled to effect any redemption or
begin any redemption procedure (including the delivery of any notice required
by this Section 6) Under Section 6(a) or Section 6(b) unless it has.
(i) the full amount of the redemption price in cash, available in
a demand or other immediately available account in a bank or similar
financial institution; or
immediately available credit facilities, in the full amount of the
redemption price with a bank or similar financial institution; or
(ii) an agreement with any underwriter or investor willing to
purchase from the Company a sufficient number of shares of stock to provide
proceeds necessary to redeem any stock
<PAGE>
that is not converted prior to redemption; or
(iii) a combination of the items set forth in (i), (ii) and
(iii) above, aggregating the full amount of the redemption price.
(d) Payment of Redemption Price.
Each Holder submitting Preferred Stock being redeemed under this
Section 6 shall send its Series A Convertible Preferred Stock Certificates so
redeemed to the Company, and the Company shall pay the applicable redemption
price to that Holder by within five (5) business days of the Company's
receipt of Preferred Stock Certificates representing the Series A Convertible
Preferred Stock to be redeemed. The Company shall not be obligated to deliver
the redemption price unless the Preferred Stock Certificates so redeemed are
delivered to the Transfer Agent, or, in the event one or more certificates
have been lost, stolen, mutilated or destroyed, the Holder has complied with
Section 5(b)(i).
(ii) Mechanics of Redemption at Company's Election. The Company
shall effect each such redemption by giving at least thirty (30) day prior
written notice ("Notice of Redemption") to the Holders of the Series A
Convertible Preferred Stock selected for redemption, by first class mail,
postage prepaid at the address set forth on the stockholder records for the
Series A Convertible Preferred Stock. Such Notice of Redemption shall
indicate (i) the number of shares of Series A Convertible Preferred Stock
that have been selected for redemption, (ii) the date which such redemption
is to become effective (the "Date of Redemption At Company's Election") which
shall not be less than 30 days or greater than 60 days following the
mailing of the Notice of Redemption and (iii) the applicable Redemption Price
At Company's Election, as defined in (b)(i) above. Notwithstanding the above,
Holder may convert into Common Stock, prior to the close of business on the
Date of Redemption at Company's Election, any Series A Convertible Preferred
Stock which it is otherwise entitled to convert.
(c) Company Must Have Immediately Available Funds or Credit
Facilities. The Company shall not be entitled to effect any redemption or
begin any redemption procedure (including the delivery of any notice required
by this Section 6) Under Section 6(a) or Section 6(b) unless it has:
(i) the full amount of the redemption price in cash,
available in a demand or other immediately available account in a bank or
similar financial institution; or immediately available credit facilities, in
the full amount of the redemption price with a bank or similar financial
institution; or
(ii) an agreement with any underwriter or investor willing to
purchase from the Company a sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not converted prior to
redemption; or
(iii) a combination of the items set forth in (i), (ii) and
(iii) above, aggregating the full amount of the redemption price.
<PAGE>
(d) Payment of Redemption Price.
Each Holder submitting Preferred Stock being redeemed under this
Section 6 shall send its Series A Convertible Preferred Stock Certificates so
redeemed to the Company, and the Company shall pay the applicable redemption
price to that Holder by within five (5) business days of the Company's
receipt of Preferred Stock Certificates representing the Series A Convertible
Preferred Stock to be redeemed. the Company shall not be obligated to deliver
the redemption price unless the Preferred Stock Certificates so redeemed are
delivered to the Transfer Agent, or, in the event one or more certificates
have been lost, stolen, mutilated or destroyed, the Holder has complied with
Section 5(b)(i).
Section 7. Voting Rights. The Holders of the Series A Convertible
Preferred Stock shall have no voting power whatsoever, and no Holder of Series
A Convertible Preferred Stock shall vote or otherwise participate in any
proceeding in which actions shall be taken by the Company or the shareholders
thereof or be entitled to notification as to any meeting of the shareholders
except as otherwise provided by the Delaware Business Corporation Act
("Delaware Law").
To the extent that under Delaware Law the vote of the Holders of the
Series A Convertible Preferred Stock, voting separately as a class, is
required to authorize a given action of the Company, the affirmative vote or
consent of the Holders of at least a majority of the shares of the Series A
Convertible Preferred Stock represented at a duly held meeting at which a
quorum is present or by written consent of a majority of the shares of Series
A Convertible Preferred Stock (except as otherwise may be required under
Delaware Law) shall constitute the approval of such action by the class. To
the extent that under Delaware Law the Holders of the Series A Convertible
Preferred Stock are entitled to vote on a matter with holders of Common
Stock, voting together as one class, each share of Series A Convertible
Preferred Stock shall be entitled to a number of votes equal to the number of
shares of Common Stock into which it is then convertible using the record
date for the taking of such vote of stockholders as the date as of which the
Conversion Rate is calculated. Holders of the Series A Convertible Preferred
Stock shall be entitled to notice of all shareholder meetings or written
consents with respect to which they would be entitled to vote, which notice
would be provided pursuant to the Company's By-laws and applicable statutes.
Section 8. Status of Redeemed or Converted Stock. In the event any
shares of Series A Convertible Preferred Stock shall be redeemed or converted
pursuant to Section 5 or Section 6 hereof, the shares so converted or
redeemed shall be canceled, shall return to the status of authorized but
unissued Preferred Stock of no designated series, and shall not be issuable
by the Company as Series A Convertible Preferred Stock.
Signed on January 5, 1998.
/s/ Edwin C. Hirsch
--------------------------------
Edwin C. Hirsch, President
Attest:
- -------------------------------
<PAGE>
Exhibit 3.3
BYLAWS
OF
IMTEK ACQUISITION CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
ARTICLE I MEETINGS OF STOCKHOLDERS
1.1 PLACE ................................................... 1
1.2 ORGANIZATION MEETING; ANNUAL MEETING .................... 1
1.3 MATTERS TO BE CONSIDERED AT ANNUAL MEETING .............. 1
1.4 SPECIAL MEETINGS ........................................ 1
1.5 NOTICE .................................................. 1
1.6 SCOPE OF NOTICE ......................................... 1
1.7 QUORUM .................................................. 1
1.8 VOTING .................................................. 2
1.9 PROXIES ................................................. 2
1.10 CONDUCT OF MEETINGS ..................................... 2
1.11 TABULATION OF VOTES ..................................... 2
1.12 INFORMAL ACTION BY STOCKHOLDERS ......................... 3
1.13 VOTING BY BALLOT ........................................ 3
ARTICLE II DIRECTORS
2.1 GENERAL POWERS .......................................... 3
2.2 OUTSIDE ACTIVITIES ...................................... 3
2.3 NUMBER, TENURE AND QUALIFICATION ........................ 4
2.4 NOMINATION OF DIRECTORS ................................. 4
2.5 ANNUAL AND REGULAR MEETINGS ............................. 4
2.6 SPECIAL MEETINGS ........................................ 4
2.7 NOTICE .................................................. 4
2.8 QUORUM .................................................. 4
2.9 VOTING .................................................. 5
2.10 CHAIRMAN OF THE BOARD ................................... 5
2.11 CONDUCT OF MEETINGS ..................................... 5
2.12 RESIGNATIONS ............................................ 5
2.13 REMOVAL OF DIRECTORS .................................... 5
2.14 VACANCIES ............................................... 5
2.15 INFORMAL ACTION BY DIRECTORS ............................ 6
2.16 COMPENSATION ............................................ 6
2.17 TELEPHONE CONFERENCE .................................... 6
2.18 INFORMAL ACTION BY BOARD OF DIRECTORS ................... 6
ARTICLE III COMMITTEES
3.1 NUMBER, TENURE AND QUALIFICATION .......................... 6
3.2 DELEGATION OF POWER ....................................... 6
3.3 QUORUM AND VOTING ......................................... 7
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3.4 CONDUCT OF MEETINGS ....................................... 7
3.5 INFORMAL ACTION BY COMMITTEES ............................. 7
ARTICLE IV OFFICERS
4.1 TITLES AND ELECTION ....................................... 7
4.2 REMOVAL ................................................... 7
4.3 OUTSIDE ACTIVITIES ........................................ 8
4.4 VACANCIES ................................................. 8
4.5 PRESIDENT ................................................. 8
4.6 CHIEF OPERATING OFFICER ................................... 8
4.7 CHIEF FINANCIAL OFFICER ................................... 9
4.8 VICE PRESIDENTS ........................................... 9
4.9 SECRETARY ................................................. 9
4.10 TREASURER ................................................. 9
4.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS ............ 9
4.12 OTHER OFFICERS ............................................ 10
4.13 SALARIES .................................................. 10
ARTICLE V SHARES OF STOCK
5.1 NO CERTIFICATES FOR STOCK ................................. 10
5.2 ELECTION TO ISSUE CERTIFICATES ............................ 10
5.3 STOCK LEDGER .............................................. 10
5.4 RECORDING TRANSFERS OF STOCK .............................. 11
5.5 LOST CERTIFICATES ......................................... 11
5.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE ........ 11
ARTICLE VI DIVIDENDS AND DISTRIBUTIONS
6.1 DECLARATION ............................................... 12
6.2 CONTINGENCIES ............................................. 12
ARTICLE VII INDEMNIFICATION
7.1 INDEMNIFICATION TO THE EXTENT PERMITTED BY LAW ............ 12
7.2 INSURANCE ................................................. 13
7.3 NON-EXCLUSIVE RIGHT TO INDEMNITY: HEIRS AND
PERSONAL REPRESENTATIVES .................................. 13
7.4 NO LIMITATION ............................................. 13
ARTICLE VIII NOTICES
8.1 NOTICES ................................................... 13
8.2 SECRETARY TO GIVE NOTICE .................................. 13
8.3 WAIVER OF NOTICE .......................................... 13
ARTICLE IX MISCELLANEOUS
9.1 BOOKS AND RECORDS ......................................... 14
9.2 INSPECTION OF BYLAWS AND CORPORATE RECORDS ................ 14
9.3 CONTRACTS ................................................. 14
9.4 CHECKS, DRAFTS, ETC........................................ 14
9.5 LOANS ..................................................... 14
9.6 FISCAL YEAR ............................................... 15
9.7 BYLAWS SEVERABLE .......................................... 15
ARTICLE X AMENDMENT OF BYLAWS
10.1 BY DIRECTORS .............................................. 15
10.2 BY STOCKHOLDERS ........................................... 15
</TABLE>
<PAGE>
ARTICLE I
MEETINGS OF STOCKHOLDERS
1.1 PLACE. All meetings of the holders of the issued and outstanding
capital stock of the Corporation (the "Stockholders") shall be held at the
principal executive office of the Corporation or such other place within the
United States as shall be stated in the notice of the meeting.
1.2 ORGANIZATION MEETING; ANNUAL MEETING. An annual meeting of the
Stockholders for the election of Directors and the transaction of such other
business as properly may be brought before the meeting shall be held on the last
Wednesday in January of each year or at such other date and time as may be fixed
by the Board of Directors. If the date fixed for the annual meeting shall be a
legal holiday, such meeting shall be held on the next succeeding business day.
If no annual meeting is held on the date designated, a special meeting in lieu
thereof may be held, and such special meeting shall have, for purposes of these
Bylaws or otherwise, all the force and effect of an annual meeting. Any and all
references hereinafter in these Bylaws to an annual meeting or to annual
meetings shall be deemed to refer also to any special meeting(s) in lieu
thereof.
1.3 MATTERS TO BE CONSIDERED AT ANNUAL MEETING. Except as provided by
Title 2, Subtitle 5, of the Maryland General Corporation Law, as amended from
time to time, any business may be conducted and any proposals may be acted upon
at an annual meeting of Stockholders. The purpose of the annual meeting of
Stockholders need not be specified in the notice of the annual meeting of
Stockholders.
1.4 SPECIAL MEETINGS. The Chairman of the Board, the President or a
majority of the Board of Directors may call special meetings of the
Stockholders. Special meetings of Stockholders shall also be called by the
Secretary upon the written request of the holders of shares entitled to cast 25%
or more of the votes entitled to be cast at such meeting. Such request shall
state the purpose or purposes of such meeting and the matters proposed to be
acted on thereat.
1.5 NOTICE. Not less than ton (10) nor more than ninety (90) days
before the date of every meeting of Stockholders, written or printed notice of
such meeting shall be given, in accordance with Article VIII, to each
Stockholder entitled to vote or entitled to notice by statute, stating the time
and place of the meeting and, in the case of a special meeting or as otherwise
may be required by statute, the purpose or purposes for which the meeting to
called.
1.6 SCOPE OF NOTICE. No business shall be transacted at a special
meeting of Stockholders except that specifically designated in the notice of the
meeting. Any business of the Corporation may be transacted at the annual meeting
without being specifically designated in the notice, except such business as is
required by statute to be stated in such notice.
1.7 QUORUM. At any meeting of stockholders, the presence in person or
by proxy of Stockholders entitled to cast a majority of the votes shall
constitute a quorum; but this Section shall not affect any requirement under any
statute or the Articles of Incorporation of the Corporation, as amended
<PAGE>
from time-to-time (the "Charter"), for the vote necessary for the adoption of
any measure. If, however, a quorum is not present at any meeting of the
Stockholders, the Stockholders present in person or by proxy shall have the
power to adjourn the meeting from time to time without notice other than by
announcement at the meeting until a quorum is present, and the meeting so
adjourned may be reconvened without further notice. At any adjourned meeting at
which a quorum is present, any business may be transacted that might have been
transacted at the meeting as originally notified. The Stockholders present at a
meeting which has been duly called and convened and at which a quorum is present
at the time counted may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Stockholders to leave less than a
quorum.
1.8 VOTING. A majority of the votes cast at a meeting of Stockholders
duly called and at which a quorum is present shall be sufficient to take or
authorize action upon any matter which may properly come before the meeting,
unless more than a majority of the votes cast is specifically required by
statute, the Charter or the Bylaws. Unless otherwise provided by statute, the
Charter or these Bylaws, each outstanding share (a "Share") of capital stock of
the Corporation (the "Stock"), regardless of class, shall be entitled to one
vote upon each matter submitted to a vote at a meeting of Stockholders. Pursuant
to Section 3-702 of the Maryland General Corporation Law, any and all
acquisitions of Shares of Stock are hereby exempted from the provisions of Title
3, Subtitle 7 of the Maryland General Corporation Law, which relates to voting
rights of certain control shares. Shares of its own Stock directly or indirectly
owned by the Corporation shall not be voted in any meeting and shall not be
counted in determining the total number of outstanding Shares entitled to vote
at any given time, but Shares of its own voting Stock held by it in a fiduciary
capacity may be voted and shall be counted in determining the total number of
outstanding Shares at any given time.
1.9 PROXIES. A Stockholder may vote the Shares owned of record by him
or her, either in person or by proxy executed in writing by the Stockholder or
by his or her duly authorized attorney in fact. Such proxy shall be filed with
the Secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven (11) months from the date of its execution, unless
otherwise expressly provided in the proxy.
1.10 CONDUCT OF MEETINGS. The Chairman of the Board or, in the absence
of the Chairman, the President, or, in the absence of the Chairman, President
and Vice Presidents, a presiding Officer elected at the meeting, shall preside
over meetings of Stockholders. The Secretary of the Corporation, or, in the
absence of the Secretary and Assistant Secretaries, the person appointed by the
presiding Officer of the meeting, shall act as secretary of such meeting.
1.11 TABULATION OF VOTES. At any annual or special meeting of
Stockholders, the presiding Officer shall be authorized to appoint a teller for
such meeting (the "Teller"). The Teller may, but need not, be an Officer or
employee of the Corporation. The Teller shall be responsible for tabulating, or
causing to be tabulated Shares voted at the meeting and reviewing or causing to
be reviewed all proxies. In tabulating votes, the Teller shall be entitled to
rely in whole or in part on tabulations and analyses made by personnel of the
Corporation, its counsel, its transfer
<PAGE>
agent, its registrar or such other organizations that are customarily employed
to provide such services. The Teller shall be authorized to determine the
legality and sufficiency of all votes cast and proxies delivered under the
Corporation's Charter, Bylaws and applicable law. The presiding Officer may
review all determinations made by the Teller hereunder and, in doing so, the
presiding Officer shall be entitled to exercise his or her sole judgment and
discretion and he or she shall not be bound by any determinations made by the
Teller.
1.12 INFORMAL ACTION BY STOCKHOLDERS. An action required or permitted
to be taken at a meeting of Stockholders may be taken without a meeting if a
consent in writing, setting forth such action, is signed by all the Stockholders
entitled to vote on the subject matter thereof and any other Stockholders
entitled to notice of a meeting of Stockholders (but not to vote thereat) have
waived in writing any rights which they may have to dissent from such action,
and such consents and waivers are filed with the minutes of proceedings of the
Stockholders. Such consents and waivers may be signed by different Stockholders
on separate counterparts, and facsimile signatures appearing thereon may be
accepted for all purposes in lieu of original signatures.
1.13 VOTING BY BALLOT. Voting an any question or in any election may
be viva voce unless the presiding Officer shall order or any Stockholder shall
demand that voting be by ballot.
ARTICLE II
DIRECTORS
2.1 GENERAL POWERS. The business and affairs of the Corporation shall
be managed by its Board of Directors. All powers of the Corporation may be
exercised by or under the authority of the Board of Directors, except as
conferred on or reserved to the Stockholders by statute, the Charter or these
Bylaws.
2.2 OUTSIDE ACTIVITIES. The Board of Directors and its members are
required to spend only such time managing the business and affairs of the
Corporation as is necessary to carry out their duties in accordance with Section
2-405.1 of the Maryland General Corporation Law. The Board of Directors, each
Director, and the agents, officers and employees of the Corporation or of the
Board of Directors or of any Director may engage with or for others in business
activities of the types conducted by the Corporation. Except as set forth in the
Charter or by separate agreement, none of such individuals has an obligation to
notify or present to the Corporation or each other any investment opportunity
that may come to such person's attention even though such investment might be
within the scope of the Corporation's purposes or various investment objectives.
Any interest (including any interest as defined in Section 2-419(a) of the
Maryland General Corporation Law) that a Director has in any investment
opportunity presented to the Corporation must be disclosed by such Director to
the Board of Directors (and, if voting thereon, to the Stockholders or to any
committee of the Board of Directors) within ten (10) days after the later of the
date upon which such Director becomes aware of such interest or the date upon
which such Director becomes aware that the Corporation is considering such
investment opportunity. If such interest comes to the interested Director's
<PAGE>
attention after a vote to take such investment opportunity, the voting body
shall be notified of such interest and shall reconsider such investment
opportunity if nor already consummated or implemented.
2.3 NUMBER, TENURE AND QUALIFICATION. The number of Directors of the
Corporation shall be that number set forth in the Charter or such other number
as may be designated from time to time by resolution of a majority of the entire
Board of Directors; provided, however, that the number of Directors shall never
be more than nine (9) nor less than the number required by Section 2-402 of the
Maryland General Corporation Law, as amended from time to time, and further
provided that the tenure of office of a Director shall not be affected by any
decrease in the number of Directors. Each Director shall serve for the term set
forth in the Charter and until his or her successor is elected and qualified.
2.4 NOMINATION OF DIRECTORS. Nominations of candidates for election as
Directors of the Corporation at any annual meeting of Stockholders may be made
(i) by, or at the direction of, a majority of the Board of Directors or (ii) by
any holder of record (both as of the time of notice and as of the record date
for the annual meeting in question) of any shares of the Corporation's capital
stock entitled to vote at such meeting. Nominations of candidates for election
as Directors of the corporation need not be made in advance of the annual
meeting in question.
2.5 ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of
Directors may be held immediately after and at the same place as the annual
meeting of Stockholders, or at such other time and place, either within or
without the State of Maryland, as is selected by resolution of the Board of
Directors, and no notice other than this Bylaw of such resolution shall be
necessary. The Board of Directors may provide, by resolution, the time and
place, either within or without the State of Maryland, for the holding of
regular meetings of the Board of Directors without other notice than such
resolution.
2.6 SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by or at the request of the Chairman of the Board, the President or a
majority of the Directors then in office. The person or persons authorized to
call special meetings of the Board of Directors may fix any place, either within
or without the state of Maryland, as the place for holding any special meeting
of the Board of Directors called by them.
2.7 NOTICE. Notice of any special meeting to be provided herein shall
be given, in accordance with Article VIII by written notice delivered
personally, telegraphed or telecopied to each director at his or her business or
residence at least twenty-four (24) hours, or by mail at least five (5) days,
prior to the meeting. Neither the business to be transacted at, nor the purpose
of, any annual, regular or special meeting of the Board of Directors need be
specified in the notice,unless specially required by statute, the Charter or
these Bylaws.
2.8 QUORUM. A majority of the Board of Directors then in office shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors. If less than a majority of the Board of Directors is present at
said meeting, a majority of the Directors present may adjourn the meeting from
time to time without further notice.
<PAGE>
2.9 VOTING. The act of a majority of the Directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors,
unless the concurrence of a greater proportion is required for such action by
applicable statute, the Charter or these Bylaws; provided, however, that no act
relating to any matter in which a Director (or affiliate of such Director) has
any interest shall be the act of the Board of Directors unless such act has been
approved by a majority of the Board of Directors that includes a majority of the
disinterested Directors.
2.10 CHAIRMAN OF THE BOARD. The Board of Directors may appoint a
Chairman of the Board, who may sign and execute all authorized bonds, contracts
or other obligations in the name of the Corporation, except in cases where the
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other Officer or agent of the Corporation or shall be
required by law to be otherwise signed or executed.
2.11 CONDUCT OF MEETINGS. All meetings of the Board of Directors shall
be called to order and presided over by the Chairman of the Board or, in the
absence of the Chairman of the Board, by the President (if a member of the Board
of Directors) or, in the absence of the Chairman of the Board and the President,
by a member of the Board of Directors selected by the members present. The
Secretary of the Corporation, or in the absence of the Secretary, any Assistant
Secretary, shall act as secretary at all meetings of the Board of Directors, and
in the absence of the Secretary and Assistant Secretaries, the presiding Officer
of the meeting shall designate any person to act as secretary of the meeting.
Members of the Board of Directors may participate in meetings of the Board of
Directors by conference telephone or similar communications equipment by means
of which all Directors participating in the meeting can hear each other at the
same time, and participation in a meeting in accordance herewith shall
constitute presence in person at such meeting for all purposes of these Bylaws.
2.12 RESIGNATIONS. Any Director may resign from the Board of Directors
or any committee thereof at any time. Such resignation shall be made in writing
and shall take effect at the time specified therein, or if no time be specified,
at the time of the receipt of notice of such resignation by the President or the
Secretary.
2.13 REMOVAL OF DIRECTORS. The Stockholders may, at any time, remove
any Director, with or without cause, by the affirmative vote of a majority of
all the votes entitled to be cast on such matter, and may elect a successor to
fill any resulting vacancy for the balance of the term of the removed Director.
2.14 VACANCIES. The Stockholders may elect a successor to fill a
vacancy on the Board of Directors which results from the removal of a Director.
Furthermore, any vacancy occurring on the Board of Directors for any cause other
than by reason of an increase in the number of Directors may be filled by a
majority vote of the remaining Directors, although such majority is less than a
quorum. Any vacancy occurring on the Board of Directors by reason of an increase
in the number of Directors may be filled by a majority vote of the entire Board
of Directors. A Director elected by the Board of Directors to fill a vacancy
shall hold office until the next
<PAGE>
annual meeting of Stockholders and until his or her successor is elected and
qualifies.
2.15 INFORMAL ACTION BY DIRECTORS. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a
meeting, if a consent in writing to such action is signed by all of the
Directors and such written consent is filed with the minutes of the Board of
Directors. Consents may be signed by different Directors on separate
counterparts.
2.16 COMPENSATION. An annual fee for services and payment for expenses
of attendance at each meeting of the Board of Directors, or of any committee
thereof, may be allowed to any Director by resolution of the Board of Directors.
2.17 TELEPHONE CONFERENCE. Members of the Board of Directors may
participate in meetings of the Board of Directors by conference telephone or
similar communications equipment by means of which all Directors participating
in the meeting can hear each other at the same time, and participation in a
meeting in accordance herewith shall constitute presence in person at such
meeting for all purposes of these Bylaws.
2.18 INFORMAL ACTION BY BOARD OF DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a written consent to such action is signed by all members
of the Board of Directors and such written consent is filed with the minutes of
proceedings of the Board of Directors. Consents may be signed by different
Directors on separate counterparts, and facsimile signatures appearing thereon
may be accepted for all purposes in lieu of original signatures.
ARTICLE III
COMMITTEES
3.1 NUMBER, TENURE AND QUALIFICATION. The Board of Directors may
appoint from among it members an Executive Committee and other committees,
composed of two or more Directors, to serve at the pleasure of the Board of
Directors.
3.2 DELEGATION OF POWER. The Board of Directors may delegate to these
committees in the intervals between meetings the Board of Directors any of the
powers of the Board of Directors to manage the business and affairs of the
Corporation, except those powers which the Board of Directors is specifically
prohibited from delegating pursuant to Section 2-411(a)(2) of the Maryland
General Corporation Law or by the Charter.
3.3 QUORUM AND VOTING. A majority of the members of any committee
shall constitute a quorum for the transaction of business by such committee, and
the act of a majority of the quorum shall constitute the act of the committee.
3.4 CONDUCT OF MEETINGS. Each committee shall designate a presiding
Officer of such committee, and if such Officer is not present at a particular
meeting, the committee shall elect a presiding Officer for such meeting.
<PAGE>
Members of any committee may participate in meetings of such committee by
conference telephone or similar communications equipment by means of which all
Directors participating in the meeting can hear each other at the same time, and
participation in a meeting in accordance herewith shall constitute presence in
person at such meeting for all purposes of these Bylaws. Each committee shall
keep minutes of its meetings, and report the results of any proceedings at the
next succeeding annual or regular meeting of the Board of Directors.
3.5 INFORMAL ACTION BY COMMITTEES. Any action required or permitted to
be taken any meeting of a committee of the Board of Directors may be taken
without a meeting, if a written consent to such action is signed by all members
of the committee and such written consent is filed with the minutes of
proceedings of such committee. Consents may be signed by different members on
separate counterparts.
ARTICLE IV
OFFICERS
4.1 TITLES AND ELECTION. The Corporation shall have a President,
Secretary and Treasurer to comply with MGCL Section 2-412(a), and such
subordinate Officers as the Board of Directors, or any committee or officer
appointed by the Board of Directors for such purpose, may from time to time
elect. The officers of the Corporation shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of Stockholders. If the election of Officers shall not be held at such
meeting, such election shall be held as soon thereafter as may be convenient.
Each Officer shall hold office until his or her successor is duly elected and
qualified or until his or her death, resignation or removal in the manner
hereinafter provided. Any two or more offices except President and Vice
President may be held by the same person. Election or appointment of an Officer
or agent shall not of itself create contract rights between the Corporation and
such Officer or agent.
4.2 REMOVAL. Any Officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person
removed. The fact that a person is elected to an office, whether or not for a
specified term, shall not by itself constitute any undertaking or evidence of
any employment obligation of the Corporation to that person.
4.3 OUTSIDE ACTIVITIES. The Officers and agents of the Corporation are
required to spend only such time managing the business and affairs of the
Corporation as is necessary to carry out their duties in accordance with the law
and these Bylaws. The Officers and agents of the Corporation may engage with or
for others in business activities of the types conducted by the Corporation.
Except as set forth in the Charter or by separate agreement, none of such
individuals has an obligation to notify or present to the Corporation or each
other any investment opportunity that may come to such person's attention even
though such investment might be within the scope of the Corporation's purposes
or various investment objectives. Any interest (including any interest within
the meaning of Section 2-419(a) of the
<PAGE>
Maryland General Corporation Law as if the officer or agent were a Director of
the Corporation) that an Officer or an agent has in any investment opportunity
presented to the Corporation must be disclosed by such Officer or agent to the
Board of Directors (and, if voting thereon, to the Stockholders or to any
committee of the Board of Directors) within ten (10) days after the later of the
date upon which such Officer or agent becomes aware of such interest or the date
upon which such Officer or agent becomes aware that the Corporation is
considering such investment opportunity. If such interest comes to the attention
of the interested Officer or agent after a vote to take such investment
opportunity, the voting body shall be notified of such interest and shall
reconsider such investment opportunity if not already consummated or
implemented.
4.4 VACANCIES. A vacancy in any office may be filled by the Board of
Directors for the unexpired portion of the term.
4.5 PRESIDENT. Unless the Board of Directors shall otherwise
determine, the President shall be the Chief Executive Officer and general
manager of the Corporation and shall in general supervise and control all of the
business and affairs of the Corporation. In the absence of the Chairman of the
Board, the President shall preside at all meetings of the Stockholders and of
the Board of Directors (if a member of the Board of Directors). The President
may sign any deed, mortgage, bond, contract or other instruments on behalf of
the Corporation except in cases where the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other Officer or
agent of the Corporation or shall be required by law to be otherwise signed or
executed. In general, the President shall perform all duties incident to the
office of President and such other duties as may be prescribed by the Board of
Directors from time to time.
4.6 CHIEF OPERATING OFFICER. The Board of Directors may appoint a
Chief Operating Officer in the absence of the President. In the event of a
vacancy in such office, the Chief Operating officer shall perform the duties of
the President and when so acting shall have all the powers of and be subject to
all the restrictions upon the President. The Chief Operating Officer may sign
any deed, mortgage, bond, contract or other instruments on behalf of the
Corporation except in cases where the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other Officer or
agent of the Corporation or shall be required by law to be otherwise signed or
executed. In general, the Chief Operating Officer shall perform all duties
incident to the office of Chief Operating Officer and such other duties as may
be prescribed by the Board of Directors from time to time.
4.7 CHIEF FINANCIAL OFFICER. The Board of Directors may appoint a
Chief Financial Officer. In general, the Chief Financial Officer shall perform
all duties incident to the office of Chief Financial Officer and such other
duties as may be prescribed by the Board of Directors from time to time.
4.8 VICE PRESIDENTS. The Board of Directors may appoint one or more
Vice Presidents. In the absence of both the President and the Chief Operating
Officer or in the event of a vacancy in both such offices, the Vice President
(or in the event there be more than one Vice President, the Vice Presidents in
the order designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall
<PAGE>
perform the duties of the President and when so acting shall have all the powers
of and be subject to all the restrictions upon the President. Every Vice
President shall perform such other duties as from time to time may be assigned
to him or her by the President or the Board of Directors.
4.9 SECRETARY. The Secretary shall (i) keep the minutes of the
proceedings of the Stockholders and Board of Directors in one or more books
provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these Bylaws or an required by law; (iii) be
custodian of the corporate records of the Corporation; (iv) unless a transfer
agent is appointed, keep a register of the post office address of each
Stockholder that shall be furnished to the Secretary by such Stockholder and
have general charge of the Stock Ledger of the Corporation; (v) when authorized
by the Board of Directors or the President, attest to or witness all documents
requiring the same; (vi) perform all duties as from time to time may be assigned
to him or her by the President or by the Board of Directors; and (vii) perform
all the duties generally incident to the office of secretary of a corporation.
4.10 TREASURER. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at the regular meetings of the Board
of Directors or whenever they may require it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation. The
Board of Directors may engage a custodian to perform some or all of the duties
of the Treasurer, and if a custodian is so engaged then the Treasurer shall be
relieved of the responsibilities set forth herein to the extent delegated to
such custodian and, unless the Board of Directors otherwise determines, shall
have general supervision over the activities of such custodian. The custodian
shall not be an Officer of the Corporation.
4.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Board of
Directors may appoint one or more Assistant Secretaries or Assistant Treasurers.
The Assistant Secretaries (i) when authorized by the Board of Directors or the
President, shall have the power to attest to or witness all documents requiring
the same and (ii) shall perform such duties as shall be assigned to them by the
Secretary or by the President or the Board of Directors. The Assistant
Treasurers shall perform such duties as shall be assigned to them by the
Treasurer or by the President or the Board of Directors.
4.12 OTHER OFFICERS. The Corporation shall have such other Officers as
the Board of Directors may from time to time elect. Each such Officer shall hold
office for such period and perform such duties as the Board of Directors, the
President or any designated committee or Officer may prescribe.
4.13 SALARIES. The salaries, if any, of the Officers shall be fixed
from time to time by the Board of Directors. No Officer shall be prevented
<PAGE>
from receiving such salary, if any, by reason of the fact that he or she is also
a Director of the Corporation.
ARTICLE V
SHARES OF STOCK
5.1 NO CERTIFICATES FOR STOCK. Unless the Board of Directors
authorizes the issuance of certificates pursuant to Section 5.2, none of the
Stock shall be represented by certificates.
5.2 ELECTION TO ISSUE CERTIFICATES. The Board of Directors may
authorize the issuance of certificates representing some or all of the Shares of
any or all of the classes or series of Stock. If the Board of Directors so
authorizes certificates, such certificates shall be of such form, not
inconsistent with the Charter, as shall be approved by the Board of Directors.
All certificates, if issued, shall be signed by the President or a Vice
President and countersigned by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary. Any signature or counter-signature may be
either a manual or facsimile signature. All certificates, if issued, for each
class of stock shall be consecutively numbered.
5.3 STOCK LEDGER. The Corporation shall maintain at its principal
executive office, at the office of its counsel, accountants or transfer agent or
at such other place designated by the Board of Directors an original or
duplicate Stock Ledger containing the names and addresses of all the
Stockholders and the number of shares of each class hold by each Stockholder.
The Stock Ledger shall be maintained pursuant to a system that the Corporation
shall adopt allowing for the issuance, recordation and transfer of its Stock by
electronic or other means that can be readily converted into written form for
visual inspection and not involving any issuance of certificates. Such system
shall include provisions for notice to acquirers of Stock (whether upon issuance
or transfer of Stock) in accordance with Sections 2-210 and 2-211 of the
Maryland General Corporation Law. The Corporation shall be entitled to treat the
holder of record of any Share or Shares as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Share on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Maryland. Until a transfer is duly effected on the Stock Ledger,
the Corporation shall nor be affected by any notice of such transfer, either
actual or constructive. Nothing herein shall impose upon the Corporation, the
Board of Directors or Officers or their agents and representatives a duty or
limit their rights to inquire as to the actual ownership of Shares.
5.4 RECORDING TRANSFERS OF STOCK. If transferred in accordance with
any restrictions on transfer contained in the Charter, these Bylaws or
otherwise, Shares shall be recorded as transferred in the Stock Ledger upon
provision to the Corporation or the transfer agent of the Corporation of an
executed stock power duly guaranteed and any other documents reasonably
requested by the Corporation and the surrender of the certificate or
certificates, if any, representing such Shares. Upon receipt of such documents,
the Corporation shall issue the statements required by Sections 2-210 and 2-211
of the Maryland General Corporation Law, issue as needed a new certificate or
certificates (if the transferred Shares were certificated) to
<PAGE>
the persons entitled thereto, cancel any old certificates and record the
transaction upon its books.
5.5 LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in the place of any certificate theretofore issued
by the Corporation alleged to have been stolen, lost or destroyed upon the
making of an affidavit of that fact by the person claiming the certificate of
Stock to be stolen, lost or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such stolen, lost or
destroyed certificate or his legal representative to advertise the same in
such manner as it shall require and/or to give bond, with sufficient surety,
to the Corporation to indemnify it against any lose or claim which may arise
by reason of the issuance of a new certificate.
5.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
5.6.1 The Board of Directors may fix, in advance, a date as the
record date for the purpose of determining Stockholders entitled to notice
of, or to vote at, any meeting of Stockholders, or Stockholders entitled to
receive payment of any dividend or the allotment of any rights, or in order
to make a determination of Stockholders for any other proper purpose. Such
date, in any case, shall not be prior to the close of business on the day the
record date in fixed and shall be not more than sixty (60) days, and in case
of a meeting of Stockholders not less than ten (10) days, prior to the date
on which the meeting or particular action requiring such determination of
Stockholders is to be held or taken.
5.6.2 If, in lieu of fixing a record date, the stock transfer
books are closed by the Board of Directors in accordance with Section 2-511
of the Maryland General Corporation Law for the purpose of determining
Stockholders entitled to notice of or to vote at a meeting of Stockholders,
such books shall be closed for at least ten (10) days, but not more than
twenty (20) days, immediately preceding such meeting.
5.6.3 If no record date is fixed and the stock transfer books
are not closed for the determination of Stockholders, (a) the record date for
the determination of Stockholders entitled to notice of, or to vote at, a
meeting of Stockholders shall be at the close of business on the day on which
the notice of meeting is mailed or the 30th day before the meeting, whichever
is the closer date to the meeting and (b) the record date for the
determination of Stockholders entitled to receive payment of a dividend or an
allotment of any rights shall be at the close of business on the day on which
the resolution of the Board of Directors declaring the dividend or allotment
of rights in adopted.
5.6.4 When a determination of Stockholders entitled to vote at
any meeting of Stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except where the
determination has been made through the closing of the stock transfer books
and the stated period of closing has expired.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
<PAGE>
6.1 DECLARATION. Dividends and other distributions upon the Stock may
be declared by the Board of Directors as set forth in the applicable provisions
of the Charter and any applicable law, at any meeting, limited only to the
extent of Section 2-311 of the Maryland General Corporation Law. Dividends and
other distributions upon the stock may be paid in cash, property or Stock of the
Corporation, subject to the provisions of law and of the Charter.
6.2 CONTINGENCIES. Before payment of any dividends or other
distributions upon the Stock, there may be set aside (but there is no duty to
set aside) out of any funds of the Corporation available for dividends or other
distributions such sum or sums an the Board of Directors may from time to time,
in its absolute discretion, think proper as a reserve fund to meet
contingencies, for repairing or maintaining any property of the Corporation or
for such other purpose an the Board of Directors shall determine to be in the
best interests of the Corporation, and the Board of Directors may modify or
abolish any such reserve in the manner in which it was created.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION TO THE EXTENT PERMITTED BY LAW. Unless the Board
of Directors otherwise determines prospectively in the case of any one or more
specified individuals, the Corporation shall indemnify, to the full extent
permitted by the Maryland General Corporation Law, any person who is or was a
Director or Officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust, or other enterprise (an AIndemnified Person@), including
the advancement of expenses under procedures provided under such law; provided,
however, that no indemnification shall be provided for expenses relating to any
willful or grossly negligent failure to make disclosures required by the next to
last sentence of Section 2.2 or Section 4.3 hereof as applied to Directors and
Officers respectively.
7.2 INSURANCE. The Corporation shall have the power to purchase and
maintain insurance on behalf of any Indemnified Person against any liability,
whether or not the Corporation would have the power to indemnify him or her
against such liability.
7.3 NON-EXCLUSIVE RIGHT TO INDEMNITY: HEIRS AND PERSONAL
REPRESENTATIVES. The rights to indemnification set forth in this Article VII
are in addition to all rights to which any Indemnified Person may be entitled as
a matter of law, pursuant to a resolution of the Stockholders or disinterested
Directors, as agreed or otherwise, and shall inure to the benefit of the heirs
and personal representatives of each Indemnified Person.
7.4 NO LIMITATION. In addition to any indemnification permitted by
these Bylaws, the Board of Directors shall, in its sole discretion, have the
power to grant such indemnification as it deems to be in the interest of the
Corporation to the full extent permitted by law. This Article shall not limit
the Corporation's power to indemnify against liabilities other than those
arising from a person's serving the Corporation as a Director or Officer.
<PAGE>
ARTICLE VIII
NOTICES
8.1 NOTICES. Whenever notice is required to be given pursuant to these
Bylaws, it shall be construed to mean either written notice personally served
against written receipt or notice in writing transmitted by mail, by depositing
the same in a Post Office or letter box, in a post-paid sealed wrapper,
addressed, if to the Corporation, at 2111 Van Deman Street, Baltimore, Maryland
21224 (or any subsequent address selected by the Board of Directors), attention
President, or if to a Stockholder, Director or Officer, at the address of such
person as it appears on the books of the Corporation or in default of any other
address at the general post office situated in the city or county of his or her
residence. Unless otherwise specified, notice sent by mail shall be deemed to be
given at the time mailed.
8.2 SECRETARY TO GIVE NOTICE. All notices required by law or these
Bylaws to be given by the Corporation shall be given by the Secretary or any
other Officer of the Corporation designated by the President. If the Secretary
and Assistant Secretary are absent or refuse or neglect to act, the notice may
be given by any person directed to do so by the President, or with respect to
any meeting called pursuant to these Bylaws upon the request of any Stockholders
or Directors, or by any person directed to do so by the Stockholders or
Directors upon whose request the meeting is called.
8.3 WAIVER OF NOTICE. Whenever any notice is required to be given
pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically
required by statute. The attendance of any person at any meeting shall
Constitute a waiver of notice of such meeting, except where such person attends
a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE IX
MISCELLANEOUS
9.1 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of its account and transactions and minutes of the proceedings
of its Stockholders and Board of Directors and of its executive or other
committees when exercising any of the powers or authority of the Board of
Directors. The books and records of the Corporation may be in written form or in
any other form that may be converted within a reasonable time into written form
for visual inspection. minutes shall be recorded in written form, but may be
maintained in the form of a reproduction.
9.2 INSPECTION OF BYLAWS AND CORPORATE RECORDS. These Bylaws, the
accounting books and records of the Corporation, the minutes of proceedings of
the Stockholders, the Board of Directors and committees thereof, annual
statements of affairs and voting trust agreements on record shall be open to
inspection upon written demand delivered to the Corporation by any
<PAGE>
Stockholder or holder of a voting trust certificate at any reasonable time
during usual business hours, for a purpose reasonably related to such holders
interests as a Stockholder or as the holder of such voting trust certificate.
9.3 CONTRACTS. The Board of Directors may authorize any Officer(s) or
agent(s) to enter into any contract or to execute and deliver any instrument in
the name of and on behalf of the Corporation, and such authority may be general
or confined to specific instances.
9.4 CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for
payment Of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such Officers or agents of the Corporation
and in such manner as shall from time to time be determined by resolution of the
Board of Directors.
9.5 LOANS.
9.5.1 Such Officers or agents of the Corporation as from time
to time have been designated by the Board of Directors shall have authority
(i) to effect loans, advances or other forms of credit are any time or times
for the Corporation, from such banks, trust companies, institutions
corporations, firms or persons, in such amounts and subject to such terms and
conditions, as the Board of Directors from time to time has designated; (ii)
as security for the repayment of any loans, advance or other forms of credit
so authorized, to assign, transfer, endorse and deliver, either originally or
in addition or substitution, any or all personal property, real property,
stocks, bonds, deposits, accounts, documents, bills, accounts receivable and
other commercial paper and evidence of debt or other securities, or any
rights or interests at any time hold by the Corporation; (iii) in connection
with any loans, advances or other forms of credit so authorized, to make,
execute and deliver one or more notes, mortgages, deeds of trust, financing
statements, security agreements, acceptances or written obligations of the
Corporation, on such terms and with such provisions as to the security or
sale or disposition of them as those Officers or agents deem proper; and (iv)
to sell to, or discount or rediscount with, the banks, trust companies,
institutions, corporations, firms or persons making those loans, advances or
other forms of credit any and all commercial paper, bills, accounts
receivable, acceptances and other instruments and evidences of debt at any
time hold by the Corporation, and, to that end, to endorse, transfer and
deliver the same.
9.5.2 From time to time the Corporation shall certify to each
bank, trust company, institution, corporation, firm or person so designated
the signatures of the Officers or agents so authorized. Each bank, trust
company, institution, corporation, firm or person no designated is authorized
to rely upon such certification until it has received written notice that the
Board of Directors has revoked the authority of those Officers or agents.
9.6 FISCAL YEAR. The Board of Directors shall have the power, from
time to time, to fix the fiscal year of the Corporation by a duly adopted
resolution.
9.7 BYLAWS SEVERABLE. The provisions of these Bylaws are severable,
and if any provision shall be held invalid or unenforceable, that invalidity or
unenforceability shall attach only to that provision and shall not in any
<PAGE>
manner affect or render invalid or unenforceable any other provision of these
Bylaws, and these Bylaws shall be carried out as if the invalid or unenforceable
provision were nor contained herein.
ARTICLE X
AMENDMENT OF BYLAWS
10.1 BY DIRECTORS. The Board of Directors shall have the power, at any
annual or regular meeting, or at any special meeting if notice thereof is
included in the notice of such special meeting, to alter or repeal any Bylaws of
the Corporation and to make new Bylaws; provided, that no alteration or repeal
of Section 7.1 may affect the right of any indemnified persons to
indemnification arising, and in connection with conduct, prior to such
amendment; and, provided, further, that the Board of Directors shall not alter
or repeal this Section 10.1 or Section 10.2.
10.2 BY STOCKHOLDERS. The Stockholders, by, affirmative vote of a
majority of the shares of common stock of the Corporation, shall have the power,
at any annual meeting or at any special meeting if notice thereof if included in
the notice of such special meeting, to alter or repeal any Bylaws of the
Corporation and to make new Bylaws; provided, that no alteration or repeal of
Section 7.1 may affect the rights of any Indemnified Person to indemnification
arising, and in connection with conduct, prior to such amendment; and, provided,
further, that the Stockholders shall not alter or repeal Section 10.1 or this
Section 10.2.
The foregoing are certified as the Bylaws of the Corporation.
<PAGE>
OFFICE LEASE AGREEMENT
between
RIGGS DISTLER & CO., INC.
(Landlord)
and
IMTEK CO., INC.
(Tenant)
(Building)
2111 VAN DEMAN STREET
BALTIMORE, MARYLAND 21224
(Address)
<PAGE>
INDEX
<TABLE>
<S> <C>
ARTICLE 1 - TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 LENGTH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 CONFIRMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.03 SURRENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.04 HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.01 BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02 REAL ESTATE TAXES . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.03 OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.04 WHEN DUE AND PAYABLE. . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.05 PRORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.06 LATE PENALTIES. . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.07 SECURITY DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - USE OF PREMISES. . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3.01 USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.02 LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.03 COMMON AREAS. . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.04 RELOCATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV - INSURANCE AND INDEMNIFICATION . . . . . . . . . . . . . . . . . 5
SECTION 4.01 TENANT'S INSURANCE. . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.02 LANDLORD'S INSURANCE. . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.03 WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4.04 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V - IMPROVEMENTS TO PREMISES . . . . . . . . . . . . . . . . . . . . 6
SECTION 5.01 INITIAL IMPROVEMENTS. . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5.02 ACCEPTANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.03 TENANT'S ALTERATIONS. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5.04 MECHANICS' LIENS. . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5.05 FIXTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI - MAINTENANCE AND SERVICES. . . . . . . . . . . . . . . . . . . . 8
SECTION 6.01 ORDINARY SERVICES . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6.02 EXTRAORDINARY SERVICES. . . . . . . . . . . . . . . . . . . . . 8
SECTION 6.03 EXCESSIVE USE . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6.04 MAINTENANCE BY TENANT . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6.05 MAINTENANCE BY LANDLORD . . . . . . . . . . . . . . . . . . . . 9
SECTION 6.06 INTERRUPTION. . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VII - RIGHT OF ENTRY . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7.01 RIGHT OF ENTRY. . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VIII - CASUALTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8.01 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8.02 SUBSTANTIAL DESTRUCTION . . . . . . . . . . . . . . . . . . . . 9
SECTION 8.03 TENANT'S NEGLIGENCE . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IX - CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 9.01 RIGHT TO AWARD. . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 9.02 EFFECT OF CONDEMNATION. . . . . . . . . . . . . . . . . . . . . 10
SECTION 9.03 INTERRUPTION. . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE X - ASSIGNMENT AND SUBLETTING. . . . . . . . . . . . . . . . . . . . 10
SECTION 10.01 CONSENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 10.02 NO RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 10.03 EXCESS RENTS . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 10.04 LANDLORD'S TRANSFERS . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE XI - RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . 11
SECTION 11.01 LANDLORD'S RULES . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE XII - MORTGAGE LENDERS . . . . . . . . . . . . . . . . . . . . . . . 11
i
<PAGE>
SECTION 12.01 SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 12.02 WRITTEN AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 12.03 ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE XIII - ENVIRONMENTAL COVENANTS . . . . . . . . . . . . . . . . . . . 12
SECTION 13.01 PROHIBITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 13.02 INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 13.03 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE XIV - DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 12
SECTION 14.01 DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 14.02 GRACE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 14.03 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 14.04 DAMAGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 14.05 LANDLORD'S LIEN. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 14.06 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XV - QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 15.01 COVENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XVI - NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 16.01 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XVII - GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 17.01 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 17.02 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 17.03 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 17.04 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 17.05 TIME OF ESSENCE. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 17.06 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 17.07 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 17.08 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . 16
SECTION 17.09 COMMISSIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 17.10 RECORDATION. . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 17.11 PERPETUITIES . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 17.12 LIABILITY LIMITATION . . . . . . . . . . . . . . . . . . . . . 16
SECTION 17.13 REPRESENTATIONS AND WARRANTIES OF TENANT . . . . . . . . . . . 16
SECTION 17.14 EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
EXHIBIT A FLOOR PLAN OF PREMISES
EXHIBIT B SPACE PLAN OF THE PREMISES
EXHIBIT C RULES & REGULATIONS
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OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT ("Lease") is made this ___ day of
____________, 19__, by and between Riggs Distler & Co., Inc. (the "Landlord")
and ____________, as formed and existing under the laws of the State of
Maryland and Imtek Co., Inc. (the "Tenant").
WITNESSETH, that for good and valuable consideration, the Landlord
hereby leases to the Tenant, and the Tenant hereby leases from the Landlord,
certain space containing an agreed-upon amount of 8,300 rentable square feet
of floor area (the "Premises") on the floor of an office building known as
2111 Van Deman Street (the "Building"), as more particularly shown on the
floor plan attached hereto as Exhibit A, which Building together with other
real property and improvements is located at ____________ in ____________,
(collectively the "Property"), all upon the following terms and conditions:
ARTICLE I - TERM
SECTION 1.01 LENGTH.
This Lease shall be for eighteen (18) months (the "Term") which begins
on that date (the "Commencement Date") which is the earlier of (i)
November 15, 1997 (the "Target Date"), (ii) the first date on which the
initial improvements to the Premises described are substantially complete
(i.e., sufficient for the Tenant to occupy such Premises and undertake
business therein), or (iii) the date on which Tenant actually moves into
occupancy of the Premises and conducts business therein. The Term shall be
for one year and six months and shall expire at midnight on the last day of
the calendar month in which the term shall end May 15, 1999 (the "Expiration
Date"). In the event that the Tenant enters into occupancy of the Premises
prior to the Commencement Date for the purpose of constructing improvements
or installing fixtures therein (and without conducting business therein),
then all terms of this Lease except that regarding the payment of rent and
other charges shall apply to such occupancy.
SECTION 1.02 CONFIRMATION.
Landlord shall, within 30 days after the commencement of the Term, confirm
to Tenant in writing the actual dates of the Commencement Date and the
Expiration Date.
SECTION 1.03 SURRENDER.
The Tenant shall at the expiration of the Term or any earlier
termination of this Lease (a) promptly surrender to the Landlord possession
of the Premises, including any fixtures or other improvements which under the
provisions of this Lease are property of the Landlord, all in good order and
repair (ordinary wear and tear excepted) and broom clean, (b) remove
therefrom the Tenant's signs, goods and effects and any machinery, trade
fixtures and equipment used in conducting the Tenant's trade or business and
not owned by the Landlord, and (c) repair any damage to the Premises or the
Building caused by such removal.
SECTION 1.04 HOLDING OVER.
If the Tenant continues to occupy the Premises beyond the Expiration Date
or any earlier termination of this Lease, such occupancy shall be subject to all
of the same terms and conditions as are contained in this Lease, except that the
rental payable during the period of such occupancy shall be equal to two times
the amount of all Rent which was last in effect during the Term. Nothing in the
foregoing shall be deemed in any way to limit or impair the Landlord's right to
immediately evict the Tenant or exercise its other rights and remedies under the
provisions of this Lease or applicable law, including collection of
consequential damages, on account of the Tenant's occupancy of the Premises
without having obtained Landlord's prior consent.
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ARTICLE II - RENT
SECTION 2.01 BASE RENT.
Tenant shall pay a minimum annual rental in each one-year period during the
Term hereof which shall be referred to hereinafter as "Base Rent." Base Rent
shall be calculated and increased for each such year as follows:
(1) Base Rent for the first one-year period in the Lease Term shall be
the sum of $99,600.00 payable in equal monthly installments of $8,300.00 each.
(2) Base Rent for the second sixth (6) month period in the Lease Term
shall be the sum of $51,294.00, payable in equal monthly installments of
$8,549.00 each.
SECTION 2.02 REAL ESTATE TAXES.
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SECTION 2.04 WHEN DUE AND PAYABLE.
(A) All rental obligations set forth in the foregoing provisions and
elsewhere in this Lease, except for Base Rent, shall be referred to
hereinafter as "Additional Rent." All Base Rent and Additional Rent are
sometimes hereinafter together referred to as "Rent."
(B) The Base Rent for each year (or part thereof) during the Term
shall be due and payable in 12 consecutive, equal monthly installments, in
advance, on the first day of each calendar month during the Term, provided
that the installment of Rent for the first full calendar month of the Term
shall be due upon execution of this Lease. All payments shall be sent to the
notice address shown in this Lease, or to such other address as Landlord may
designate in writing.
(C) Tenant shall pay all Additional Rent within 30 days after being
billed therefor by Landlord. However, Landlord may, at its discretion, (a)
make from time to time during the Term a reasonable estimate of the
Additional Rent which may become due for any year, (b) require the Tenant to
pay to the Landlord such Additional Rent in equal installments at the time
and in the manner that the Tenant is required hereunder to pay monthly
installments of Base Rent, and (c) at the Landlord's reasonable discretion,
increase or decrease from time to time during such year the amount initially
estimated for such year, all by giving the Tenant written notice thereof. In
such event, the Landlord shall cause the actual amount of such Additional
Rent to be calculated, and the Tenant or the Landlord shall within 30 days
pay to the other the amount of any deficiency or overpayment, whichever the
case may be.
(D) Landlord shall have the right to apply any payment of Rent by
Tenant to any amounts outstanding, in any order, in Landlord's sole
discretion. Acceptance by Landlord of any partial payment of Rent shall not
be deemed a waiver or satisfaction of the Tenant's obligation to pay all
remaining amounts of Rent hereunder, which amounts shall remain due in their
entirety according to the terms of this Lease.
SECTION 2.05 PRORATION.
All items of Rent shall be prorated, based on actual days elapsed, for
any month during the Term which is not a full calendar month or in which two
different rental rates are applicable. Appropriate prorations shall also be
made in determining the Tenant's proportionate share of increases in Real
Estate Taxes to the extent the tax/fiscal year is not a calendar year. In
addition, at Landlord's election, the Tenant's proportionate share of
increases in Real Estate Taxes and in Operating Expenses may be calculated on
a per square foot basis; in this case, the Tenant's proportionate share shall
be equal to (a) the difference between (1) the total Real Estate Taxes or
Operating Expenses (as the case may be) for the year in question divided by
the square footage of the Building and (2) the Base Real Estate Taxes or Base
Operating Expenses (as the case may be) divided by the square footage of the
Building, (b) multiplied by the number of rentable square feet in the
Premises. If only part of any calendar year falls within the Term, the amount
computed as Additional Rent for such calendar year under the foregoing
provisions of this section shall be appropriately prorated, but the
expiration of the Term before the end of a calendar year shall not limit the
Tenant's obligation hereunder to pay the prorated portion of Additional Rent
applicable to that portion of such calendar year falling within the Term.
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SECTION 2.06 LATE PENALTIES.
Each such payment of Rent shall be made promptly when due, without any
demand, deduction or setoff whatsoever, at the place directed by Landlord.
Any payment of Rent not made when due shall, at Landlord's sole option, bear
interest at the rate of 18% per annum from the due date until paid.
Additionally, any payment of Rent not paid within 10 days of when due shall
be considered delinquent and subject to a late payment charge, for each
occurrence of delinquency, of 5% of the amount overdue and payable. This late
payment charge shall be in addition to the interest provided for above and
shall be due and payable with the next succeeding Rent payment. The
obligation to pay Rent shall survive termination of this Lease.
SECTION 2.07 SECURITY DEPOSIT.
Upon signing this Lease, Tenant shall deposit with the Landlord the sum
of $8,300.00, which shall be retained by the Landlord as security for the
Tenant's payment of Rent and performance of all of its other obligations
under the provisions of this Lease. On the occurrence of an Event of Default
(as defined herein), the Landlord shall be entitled, at its sole discretion,
to (i) apply any or all of such sum in payment of any Rent then due and
unpaid, any expense incurred by the Landlord in curing any such default,
and/or any damages incurred by the Landlord by reason of such default
(including but not limited to attorneys' fees), in which event Tenant shall
immediately restore the amount so applied, and/or (ii) to retain any or all
of such sum in liquidation of any or all damages suffered by the Landlord by
reason of such default. However, the foregoing shall not serve in any event
to limit the rights, remedies and damages accruing to Landlord under Article
XIV or any other provision of this Lease on account of default by Tenant. The
security deposit shall not be applied to the last month's installment of
Rent; rather, upon the termination of this Lease, any of such security
deposit then remaining shall be returned to the Tenant. Such security deposit
shall not bear interest while being held by the Landlord hereunder.
ARTICLE III - USE OF PREMISES
SECTION 3.01 USE.
The Tenant shall use the Premises as a business office and for no other
purposes.
SECTION 3.02 LAWS.
Tenant shall comply with any and all federal, state and local laws,
ordinances and regulations, including but not limited to the Americans With
Disabilities Act, applicable to the Premises, to the Tenant's use of the
Premises or to any common areas of the Property, and Tenant shall make any
changes or improvements to the Premises required thereby, subject to Section
5.03 hereof.
SECTION 3.03 COMMON AREAS.
The Landlord hereby grants to the Tenant a non-exclusive license to use
(a) all elevators, stairways, lobbies, hallways and other common areas of the
Building, and (b) all portions of the grounds on which the Building is
located which are manifestly designed and intended for common use by the
occupants of the Building, all for pedestrian ingress and egress to and from
the Premises. Such license shall be exercised in common with the Landlord and
other tenants and their respective employees and invitees and in accordance
with the Rules and Regulations promulgated from time to time pursuant to the
provisions of Article XI.
SECTION 3.04 RELOCATION.
The Landlord shall have the right from time to time during the Term, at
the Landlord's expense, to relocate the Tenant's Premises from its present
location within the Building to another location within the Building having
at least the same floor area, provided that the Landlord gives the Tenant
written notice of the Landlord's intention to do so at least 60 days before
undertaking such relocation. In such event, the Landlord shall, at the
Landlord's expense, install within the Premises as so relocated improvements
of the same quality and quantity as those made by the Tenant or the Landlord
to the Premises, and on the completion of such installation shall cause the
Tenant's machinery, furniture, fixtures and equipment within the Premises to
be moved to the Premises as so relocated. Upon the completion of such
relocation, this Lease shall automatically cease to cover the space
constituting the Premises immediately before such relocation, and shall
automatically thereafter cover the space to which the Premises have been
relocated, as aforesaid, all on the same terms and subject to the same
conditions as those set forth in the provisions of this
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Lease as in effect immediately before such relocation, and all without the
necessity of further action by either party hereto. Also, the Base Rent shall
be adjusted on the basis of the per square foot rates otherwise in effect,
and the Tenant's Proportionate Share of Real Estate Taxes and Operating
Expenses shall be proportionately adjusted, to reflect any difference between
the size of the Premises prior to relocation and that after relocation. Each
party hereto shall, promptly upon its receipt of a written request therefor
from the other, enter into such amendment of this Lease as the requesting
party considers reasonably necessary to confirm such relocation.
ARTICLE IV - INSURANCE AND INDEMNIFICATION
SECTION 4.01 TENANT'S INSURANCE.
The Tenant shall procure and maintain, at its expense and throughout the
Term, the following insurance:
(a) General public liability insurance against loss or liability
in connection with bodily injury, death, property damage or destruction
occurring within the Premises or arising out of the use thereof by the Tenant
or its agents, employees, invitees and licensees, having such limits as are
reasonably required by the Landlord from time to time, but in any event not
less than (i) $1,000,000 for bodily injury to or death of any one person
during any one occurrence, (ii) $2,000,000 for bodily injury to or death of
all persons in any one occurrence, and (iii) $500,000 for property damage or
destruction during any one occurrence;
(b) Contractual liability insurance covering all contractual
indemnities by Tenant contained in this Lease;
(c) All-risk casualty insurance covering all alterations and
improvements to the Premises (regardless of ownership) and all furniture,
equipment and fixtures of the Tenant in the Premises up to the replacement
value of such property. Each liability policy shall name the Tenant, the
Landlord, and the Landlord's managing agent (and, at the Landlord's request,
any mortgagee) as the insureds thereunder. Each liability, property, and
other policy shall (i) by its terms, not be cancelable without at least 30
days' prior written notice to the Landlord (and, at the Landlord's request,
any mortgagee), and (ii) be issued by an insurer of recognized responsibility
licensed to issue such policy in the state in which the premises are located
and having a Best's rating of A- or better. At least 5 days before the
Commencement Date, Tenant shall deliver to the Landlord a copy or certificate
of each such policy. At least 30 days before any such policy expires, Tenant
shall deliver to the Landlord a certificate of renewal or replacement
therefor.
SECTION 4.02 LANDLORD'S INSURANCE.
The Landlord shall maintain throughout the Term all-risk or fire and
extended coverage insurance upon the Building in an amount of at least 80% of
the replacement value thereof. The cost of the premiums for such insurance
and of each endorsement thereto shall be deemed, for purposes of Section 2.03
hereof, to be a cost of operating and maintaining the Property.
SECTION 4.03 WAIVER OF SUBROGATION.
Landlord and Tenant agree that neither shall be liable to the other for
loss or injury to the extent such loss or injury is required to be insured
against hereunder. This agreement shall be binding whether or not such loss
or injury is caused by negligence of either party or their contractors,
agents, employees, invitees or licensees. Each party further agrees that each
will cause its policies of insurance to contain a clause providing that the
insurance shall not be invalidated should the insured waive in writing prior
to a loss any or all right of recovery against any person or entity for loss
covered by such insurance.
SECTION 4.04 INDEMNIFICATION.
Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any cost, damage, claim, liability or expense (including attorney's
fees) incurred by or claimed against Landlord, directly or indirectly, as a
result of or in any way arising from Tenant's use and occupancy of the
Premises or in any other manner which relates to the business of Tenant. The
liability of Tenant to indemnify Landlord shall not extend to any matter
against which Landlord shall be effectively protected by insurance, provided,
however, that if any such liability exceeds the amount of effective and
collectable insurance, said liability of Tenant shall apply to such excess.
Furthermore, Tenant acknowledges that Landlord is not responsible for any
theft, damage, or other loss, regardless of the reason or cause, to the
equipment, appliances, furniture,
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or other personal property of the Tenant or Tenant's employees or customers
occurring in or about the Premises.
ARTICLE V - IMPROVEMENTS TO PREMISES
SECTION 5.01 INITIAL IMPROVEMENTS.
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SECTION 5.02 ACCEPTANCE.
Except for latent defects or work to be performed by Landlord pursuant
to Section 5.01 above but remaining incomplete, the Tenant shall for all
purposes of this Lease be deemed to have accepted the Premises as is upon
assuming occupancy thereof and to have acknowledged the Premises to be in the
condition required hereunder.
SECTION 5.03 TENANT'S ALTERATIONS.
The Tenant shall not make any alteration, addition or improvement to the
Premises, whether structural or nonstructural and including any signs or
other items which may be visible from the exterior of the Premises, without
the Landlord's prior written consent. Tenant shall provide such drawings,
plans and specifications as are requested by Landlord in reviewing any such
proposed improvements. If the Landlord consents to any such proposed
alteration, addition or improvement, it shall be made at the Tenant's sole
expense (and the Tenant shall hold the Landlord harmless from any cost
incurred on account thereof), and at such time and in such manner as to not
unreasonably interfere with the use and enjoyment of the remainder of the
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Property by any other tenant or other person. All such alterations and
improvements shall comply in all respects with any and all applicable
federal, state and local laws, ordinances and regulations, including but not
limited to the Americans With Disabilities Act and regulations promulgated
thereunder. Furthermore, Tenant shall indemnify Landlord from all damages,
losses or liability arising from such alterations or improvements or the
construction thereof by Tenant or by any other party other than Landlord.
SECTION 5.4 MECHANICS' LIENS.
The Tenant shall (a) immediately bond or have released any mechanics',
materialman's or other lien filed or claimed against any or all of the
Premises, the Building, or any other property owned or leased by the Landlord
by reason of labor or materials provided for the Tenant or any of its
contractors or subcontractors, or otherwise arising out of the Tenant's use
or occupancy of the Premises, and (b) defend, indemnify and hold harmless the
Landlord against and from any and all liability or expense (including but not
limited to attorneys' fees) incurred by the Landlord on account of any such
lien or claim.
SECTION 5.05 FIXTURES.
Any and all improvements, repairs, alterations or other property attached
to, used in connection with or otherwise installed within the Premises by the
Landlord or the Tenant shall, immediately on the completion of their
installation, become the Landlord's property without payment therefor by the
Landlord, except that any furniture, appliances and office equipment
installed by the Tenant and used in the conduct of the Tenant's trade or
business (rather than to service the Premises or any of the remainder of the
Building or the Property) shall remain the Tenant's property.
ARTICLE VI - MAINTENANCE AND SERVICES
SECTION 6.01 ORDINARY SERVICES.
During the hours of 8:00 a.m. to 6:00 p.m. Monday through Friday and 8:00
a.m. to 1:00 p.m. on Saturdays (except federal holidays) in the appropriate
seasons of the year, Landlord shall provide heating and air-conditioning to
the Premises for the comfortable use and occupancy of the Premises. In
addition, Landlord shall provide (a) electricity and water suitable for the
use of the Premises in accordance with the provisions of Section 3.01, (b)
automatic elevator service within the Building, and (c) janitorial service
and trash removal service.
SECTION 6.02 EXTRAORDINARY SERVICES.
The Landlord shall not be obligated to provide to or for the benefit of
the Premises any of the services referred to in the provisions of Section
6.01 above other than during the hours referred to therein. If the Tenant
requests such services to be continued during extended hours, Tenant shall
pay to the Landlord as Additional Rent the amount from time to time charged
by the Landlord for such extended service, such amount to be calculated as a
function of the costs to provide such services during extended hours and the
number of tenants sharing same at the time requested.
SECTION 6.03 EXCESSIVE USE.
The Tenant shall not, without first obtaining the Landlord's written
consent thereto, install within the Premises any electrical machinery,
appliances or equipment (including, by way of example rather than of
limitation, any electrical heating, cooking, water-heating or refrigeration
equipment, kitchen equipment, photocopying equipment, electronic data
processing machinery, reproduction equipment or punch-card machinery) which
uses electrical current in excess of that which is standard for the Building,
and Tenant shall pay as Additional Rent the additional expense incurred by
the Landlord as a result of any of the foregoing, including that resulting
from any installation of such equipment. In the event Landlord determines
Tenant is consuming a disproportionate amount of electricity or other
utilities at the Premises in relation to other tenants, and regardless of
whether such determination is reached by surveys, submetering, or other
methods, Landlord may, at its option, either (a) install at Tenant's expense
a submeter gauging consumption of the respective utility at the Premises, in
which case Tenant shall arrange to pay such utility directly to the supplier,
or (b) require that Tenant pay Landlord monthly, as Additional
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Rent, the cost of such additional electricity or other utilities, which cost
shall be estimated on a monthly basis by the Landlord using its reasonable
discretion.
SECTION 6.04 MAINTENANCE BY TENANT.
The Tenant shall at all times maintain the interior of the Premises in
good, clean and safe repair and condition, ordinary wear and tear excepted.
SECTION 6.05 MAINTENANCE BY LANDLORD.
The Landlord shall furnish, supply and maintain in good order and repair
(a) the roof and other structural portions of the exterior of the Building,
(b) all hallways, stairways, lobbies, elevators, heating and air-conditioning
facilities and restroom facilities, (c) all standard interior light fixtures
and bulbs, including that within the Premises, and (d) all other common areas.
SECTION 6.06 INTERRUPTION.
The Landlord shall have no liability to the Tenant on account of any
failure, modification or interruption of electricity, water or other utility
or HVAC or other service, but in the event of interruption Landlord shall
take reasonable steps to provide for the resumption of such service to the
extent the same is within Landlord's control.
ARTICLE VII - RIGHT OF ENTRY
SECTION 7.01 RIGHT OF ENTRY.
Landlord and its agents and contractors shall be entitled to enter the
Premises at any time (a) to inspect the Premises, (b) to exhibit the Premises
to any existing or prospective purchaser, tenant or mortgagee thereof, (c) to
make any alteration, improvement or repair to the Building or the Premises,
or (d) for any other purpose relating to the operation or maintenance of the
Property, all provided that the Landlord shall (1) give the Tenant at least
24 hours' prior notice of its intention to enter the Premises (unless doing
so is impractical or unreasonable because of emergency), and (2) use
reasonable efforts to avoid interfering with the Tenant's use and enjoyment
thereof.
ARTICLE VIII - CASUALTIES
SECTION 8.01 GENERAL.
If the Premises are damaged by fire or other casualty during the Term,
then the following shall apply:
(A) The Landlord shall restore the Premises with reasonable promptness,
taking into account the time required by the Landlord to effect a settlement
with, and to procure any insurance proceeds from, any insurer against such
casualty, to substantially the same condition as existed immediately before
such casualty. Landlord may temporarily enter and possess any or all of the
Premises for such purpose. The Landlord shall not be obligated to repair,
restore or replace any fixture, improvement, alteration, furniture or other
property owned or installed by the Tenant.
(B) The times for commencement and completion of any such restoration
shall be extended for the period of any delay arising due to force majeure
causes beyond the Landlord's control. If the Landlord undertakes to restore
the Premises and such restoration is not accomplished within 180 days plus
the period of any extension for force majeure as aforesaid, the Tenant may
terminate this lease by giving written notice thereof to the Landlord within
30 days after the expiration of such period as so extended.
(C) From the time of such casualty to the completion of restoration as
described above, Tenant's rental obligations shall be abated proportionately
from that portion of the Premises which is rendered untenantable as a result
of the casualty.
SECTION 8.02 SUBSTANTIAL DESTRUCTION.
Anything contained in the foregoing provisions of this section to the
contrary notwithstanding:
(A) If during the Term the Building is so damaged by fire or other
casualty that (a) either the Premises or the Building are rendered
substantially unfit for occupancy, as reasonably determined by the Landlord,
or (b) the Building is damaged to the extent that the Landlord elects to
demolish the Building, or if any mortgagee or lender requires that any or all
of the insurance
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proceeds issued on account thereof be used to retire any or all of the debt
secured by mortgage, then in any such case the Landlord may elect to
terminate this Lease as of the date of such casualty by giving written notice
thereof to the Tenant within 60 days after such date; and
(B) In such event, (1) the Tenant shall pay to the Landlord the Base Rent
and any Additional Rent payable by the Tenant hereunder and accrued through
the date of such casualty, (2) the Landlord shall repay to the Tenant any and
all prepaid Rent for periods beyond such casualty, and (3) the Landlord may
enter upon and repossess the Premises without further notice.
SECTION 8.03 TENANT'S NEGLIGENCE.
Anything contained in any provision of this Lease to the contrary
notwithstanding, if any such damage to the Premises, the Building or Property
are caused by or result from the negligent or intentional act or omission of
the Tenant or any of its employees, contractors, agents, invitees or
licensees, then (a) the Rent shall not be abated or apportioned as aforesaid,
and (b) the Tenant shall pay to the Landlord upon demand, as Additional Rent,
the cost of (i) any repairs and restoration made or to be made as a result of
such damage, or (ii) (if the Landlord elects not to restore the Building) any
damage or loss which the Landlord incurs as a result of such damage, except
if and to the extent that the Tenant is released from liability therefor
pursuant to the provisions of Section 4.03 hereof.
ARTICLE IX - CONDEMNATION
SECTION 9.01 RIGHT TO AWARD.
If any or all of the Premises are taken by the exercise of any power of
eminent domain or are conveyed to or at the direction of any governmental
entity under a threat of any such taking (each of which a "Condemnation"),
the Landlord shall be entitled to collect from the condemning authority
thereunder the entire amount of any award or consideration for such
conveyance, without deduction therefrom for any leasehold or other estate
held by the Tenant under this Lease. The Landlord shall be entitled to
conduct any condemnation proceeding and any settlement connected therewith
free of interference from the Tenant, and the Tenant hereby waives any right
which it has to participate therein. However, the Tenant may seek, in a
separate proceeding, a separate award on account of any damages or costs
incurred by the Tenant as a result of any such Condemnation, so long as such
separate award in no way diminishes any award or payment which the Landlord
would otherwise receive as a result of such Condemnation.
SECTION 9.02 EFFECT OF CONDEMNATION.
If (a) all of the Premises are covered by a Condemnation, or (b) any part
of the Premises is covered by a Condemnation and the remainder is
insufficient for the reasonable operation of the Tenant's business, or (c)
any of the Building is covered by a Condemnation and, in the Landlord's
reasonable opinion, it would be impractical to restore the remainder thereof,
or (d) any of the rest of the Property is covered by a Condemnation and, in
the Landlord's reasonable opinion, it would be impractical to continue to
operate the remainder of the Property thereafter, then, in any such event,
the Term shall terminate on the date on which possession of the property
covered by such Condemnation is taken by the condemning authority thereunder,
and all Rent (including any Additional Rent and other charges payable
hereunder) shall be apportioned and paid to such date. If there is a
Condemnation and the Term does not terminate pursuant to the foregoing
provisions of this subsection, the operation and effect of this Lease shall
be unaffected by such Condemnation, except that the Base Rent shall be
reduced in proportion to the square footage of floor area, if any, of the
Premises covered by such Condemnation.
SECTION 9.03 INTERRUPTION.
If there is a Condemnation, the Landlord shall have no liability to the
Tenant on account of any (a) interruption of the Tenant's business upon the
Premises, (b) diminution in the Tenant's ability to use the Premises, or (c)
other injury or damage sustained by the Tenant as a result of such
Condemnation.
ARTICLE X - ASSIGNMENT AND SUBLETTING
SECTION 10.01 CONSENT.
Tenant agrees to not (a) assign any of its rights under this Lease or (b)
make or permit any sublease, license, mortgage, pledge or other transfer of
any part of the Premises (any of the
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foregoing in (a) or (b) hereinafter referred to as a "Transfer"), without
first obtaining the Landlord's written consent thereto, which consent may be
given or withheld by the Landlord in its sole and absolute subjective
discretion. If consent to any one Transfer is given, such consent shall not
extend to any subsequent Transfer. The Landlord shall be entitled, at its
sole discretion, to condition any such consent upon the entry by such person
into an agreement with (and in form and substance satisfactory to) the
Landlord, by which it assumes all of the Tenant's obligations hereunder. Any
person to whom any Transfer is attempted without such consent shall have no
claim, right or remedy whatsoever hereunder against the Landlord, and the
Landlord shall have no duty to recognize any person claiming under or through
such Transfer. The sale, assignment or other transfer of a controlling
interest in the ownership of Tenant (if a corporation), the sale, assignment
or other transfer of any general partnership interest in Tenant (if a
partnership), the sale of substantially all of Tenant's assets, and the
merger of Tenant into another organization, after which merger Tenant shall
not be the surviving corporation or partnership, shall each be considered a
Transfer for the purposes of this Lease.
SECTION 10.02 NO RELEASE.
No such Transfer or other action taken with or without the Landlord's
consent shall in any way relieve or release the Tenant from full liability
for the timely performance of all of the Tenant's obligations under this
Lease.
SECTION 10.03 EXCESS RENTS.
In the event that Tenant effects a Transfer and at any time receives
periodic rent and/or other consideration which exceeds that which Tenant is
obligated to pay to Landlord hereunder, Tenant shall pay to Landlord all of
such excess rent or other consideration promptly (but in no event later than
2 days) after receipt of such monies.
SECTION 10.04 LANDLORD'S TRANSFERS.
Landlord shall have the unrestricted right to assign or transfer this
Lease to purchasers of the Building, to holders of mortgages or deeds of trust
on the Building, or to any other party.
ARTICLE XI - RULES AND REGULATIONS
SECTION 11.01 LANDLORD'S RULES.
The Landlord shall have the right to impose and subsequently modify, from
time to time and at its sole discretion, reasonable rules and regulations
(hereinafter referred to as the "Rules and Regulations") having uniform
applicability to all tenants of the Building (subject to the provisions of
their respective leases) and governing their use and enjoyment of the
Building and the remainder of the Property. The Tenant and its agents,
employees, invitees and licensees shall comply with such Rules and
Regulations. A copy of the Rules and Regulations in effect on the date hereof
is attached hereto as Exhibit C.
ARTICLE XII - MORTGAGE LENDERS
SECTION 12.01 SUBORDINATION.
This Lease shall be subject and subordinate to the lien, operation and
effect of each mortgage, deed of trust, ground lease and/or other similar
instrument covering any or all of the Premises or the Property, and each
renewal, modification or extension thereof (each of which referred to as a
"Mortgage"), all automatically and without the necessity of any further
action by either party hereto, provided, however, that in the event the
beneficiary under any such Mortgage (referred to as a "Mortgagee") succeeds to
the interest of Landlord hereunder through foreclosure or otherwise, such
Mortgagee shall honor this Lease and not disturb Tenant in its possession of
the Premises except upon an Event of Default (defined in Section 14.01
below). In addition, Tenant shall attorn to any such Mortgagee and agrees that
such Mortgagee shall not be liable to Tenant for any defaults by Landlord
under this Lease or for any other event occurring prior to such Mortgagee's
succeeding to the interest of Landlord hereunder.
SECTION 12.02 WRITTEN AGREEMENT.
The Tenant shall, within 7 days after request by the Landlord or any
Mortgagee, execute, acknowledge and deliver such further instrument as is
requested by Landlord or any Mortgagee to acknowledge the rights of the
parties described in Section 12.01 above and providing such other
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information and certifications as is reasonably requested. Any Mortgagee may
at any time subordinate the lien of its Mortgage to the operation and effect
of this Lease without obtaining the Tenant's consent thereto, in which event
this Lease shall be deemed to be senior to such Mortgage without regard to
their respective dates of execution, delivery and/or recordation among the
land records of the jurisdiction in which the Property is located.
SECTION 12.03 ESTOPPEL CERTIFICATE.
The Tenant shall from time to time, within 7 days after request by the
Landlord or any Mortgagee, execute, acknowledge and deliver to the Landlord
(or, at the Landlord's request, to any existing or prospective purchaser,
assignee or Mortgagee) a written certification (a) that this Lease is
unmodified and in full force and effect (or, if there has been any
modification, stating the nature of such modification), (b) as to the dates
to which the Base Rent and any Additional Rent and other charges arising
hereunder have been paid, (c) as to the amount of any prepaid Rent or any
credit due to the Tenant hereunder, (d) that the Tenant has accepted
possession of the Premises and all improvements thereto are as required
hereunder, and the date on which the Term commenced, (e) as to whether, to
the best knowledge, information and belief of the Tenant, the Landlord or
the Tenant is then in default in performing any of its obligations hereunder
(and, if so, specifying the nature of each such default), and (f) as to any
other fact or condition reasonably requested by the Landlord or such other
party. Any such certificate may be relied upon by the Landlord and any such
other party to whom the certificate is directed.
ARTICLE XIII - ENVIRONMENTAL COVENANTS
SECTION 13.01 PROHIBITIONS.
Tenant agrees that Tenant, its employees, licensees, invitees, agents and
contractors shall not use, manufacture, release, store or dispose of on,
under or about the Premises any explosives, flammable substances, radioactive
materials, asbestos in any form, paint containing lead, materials containing
urea formaldehyde, polychlorinated biphenyls, or any other hazardous, toxic or
dangerous substances, wastes or materials, whether having such
characteristics in fact or defined as such under federal, state or local laws
or regulations and any amendments thereto (all such materials and substances
being hereinafter referred to as "Hazardous Materials") provided that Tenant
may store products which are of a type customarily found in offices (such as
toner for copiers and the like) in a safe and lawful manner and without
contaminating the Premises or the environment.
SECTION 13.02 INSPECTION.
Landlord, in addition to its other rights under this Lease, may enter
upon the Premises at any time for the purposes of inspecting to determine
whether the Premises or the environment have become contaminated with
Hazardous Materials. In the event Landlord discovers the existence of any
such Hazardous Materials due to fault or other act of Tenant or its agents,
employees, invitees or licensees, Tenant shall reimburse Landlord upon demand
for the costs of such inspection, sampling and analysis.
SECTION 13.03 INDEMNIFICATION.
Without limiting the above, Tenant shall indemnify and hold harmless
Landlord from and against any and all claims, losses, liabilities, damages,
costs and expenses, including without limitation attorneys' fees and the
costs of any required or necessary repair, cleanup or detoxification, arising
out of or in any way connected with the existence, use, manufacture, storage
or disposal of Hazardous Materials by Tenant or its employees, agents,
invitees, licensees or contractors on, under or about the Premises, the
Building or the Property. The indemnity obligations of Tenant under this
clause shall survive any termination of this Lease.
ARTICLE XIV - DEFAULTS AND REMEDIES
SECTION 14.01 DEFAULTS.
As used in the provisions of this Lease, each of the following events
shall constitute, and is hereinafter referred to as, an "Event of Default".
(A) If the Tenant fails to (1) pay any Rent or any other sum which it is
obligated to pay by any provision of this Lease, when and as due and payable
hereunder, or (2) perform any of its other obligations under the provisions
of this Lease; or
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(B) If the Tenant or any guarantor of this Lease (1) applies for or
consents to the appointment of a receiver, trustee or liquidator of the Tenant
or of all or a substantial part of its assets, (2) is subject to a petition
in bankruptcy or admits in writing its inability to pay its debts as they
come due, (3) makes an assignment for the benefit of its creditors, (4) files
a petition or an answer seeking a reorganization or an arrangement with
creditors, or seeks to take advantage of any insolvency law, (5) performs any
other act of bankruptcy, or (6) files an answer admitting the material
allegations of a petition filed against the Tenant in any bankruptcy,
reorganization or insolvency proceeding; or
(C) If the Tenant fails to assume possession and occupancy of the
Premises within 15 days after the Commencement Date, or if thereafter the
Tenant vacates or abandons the Premises for more than 3 continuous days.
SECTION 14.02 GRACE PERIOD.
Anything contained in the provisions of this article to the contrary
notwithstanding, on the occurrence of an Event of Default, the Landlord shall
not exercise any right or remedy which it holds under any provision of this
Lease or applicable law unless and until:
(A) The Landlord has given written notice thereof to the Tenant, and
(B) The Tenant has failed, (1) if such Event of Default consists of a
failure to pay money, to pay all such money within 5 days after such notice,
or (2) if such Event of Default consists of something other than a failure to
pay money, to fully cure such Event of Default within 15 days after such
notice or, if such Event of Default cannot be cured within 15 days and Tenant
commences to cure same within 15 days, to fully cure such Event of Default
within 30 days; all provided, that
(C) No such notice shall be required, and the Tenant shall be entitled
to no such grace period, (1) in any emergency situation in which the Landlord
acts to cure such Event of Default pursuant to the provisions of Paragraph
(B) in Section 14.03 below, or (2) an Event of Default occurs more than twice
during any 12 month period, or (3) if the Tenant has substantially terminated
or is in the process of substantially terminating its continuous occupancy
and use of the Premises, or (4) in the case of any Event of Default
enumerated in the provisions of Paragraph (B) in Section 14.01 above.
SECTION 14.03 REMEDIES.
Upon the occurrence of any Event of Default, the Landlord may (subject to
Section 14.02 above) take any or all of the following actions:
(A) Sell at public or private sale all or any part of the fixtures,
equipment, inventory and other property belonging to Tenant and in which the
Tenant has granted a lien to Landlord under Section 14.05 below, at which
sale Landlord shall have the right to become the purchaser upon being the
highest bidder, and apply the proceeds of such sale, first, to the payment of
all costs and expenses of seizing and storing such property and conducting
the sale (including all attorneys' fees), second, toward the payment of any
indebtedness, including (without limitation) that for Rent, which may be or
may become due from Tenant to Landlord, and, third, to pay Tenant any surplus
remaining after all indebtedness of Tenant to Landlord including expenses has
been fully paid;
(B) Perform on behalf of and at the expense of Tenant any obligation of
Tenant under this Lease which Tenant has failed to perform, without prior
notice to Tenant, the total cost of which by Landlord, together with interest
thereon at the rate of 18% per annum from the date of such expenditure, shall
be deemed Additional Rent and shall be payable by Tenant to Landlord upon
demand;
(C) With or without terminating this Lease and the tenancy created
hereby, re-enter the Premises with or without court action or summary
proceedings, remove Tenant and all other persons and property from the
Premises, and store any such property in a public warehouse or elsewhere at
the costs of and for the account of Tenant, all without resort to legal
process and without Landlord being deemed guilty of trespass or liable for
any loss or damage occasioned thereby;
(D) With or without terminating this Lease, and from time to time, make
such improvements, alterations and repairs as may be necessary in order to
relet the Premises, and relet the Premises or any part thereof upon such term
or terms (which may be for a term extending beyond the term of this Lease) at
such rental or rentals and upon such other terms and conditions (which may
include concessions, free rent and/or improvements) as Landlord in its sole
discretion may deem advisable; and, upon each such reletting, all rentals
received by Landlord shall be applied, first, to the payment of any
indebtedness other than Rent due hereunder from Tenant to
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Landlord, second, to the payment of all costs and expenses of such reletting
(including but not limited to brokerage fees, attorneys' fees and costs of
improvements, alterations and repairs), third, to the payment of all Rent due
and unpaid hereunder, and the balance, if any, shall be held by Landlord and
applied in payment of future rent as the same may become due and payable
hereunder; and/or
(E) Exercise any other legal or equitable right or remedy which it may
have by law or otherwise.
No reentry or taking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a written
notice of such intention be given to Tenant or unless the termination thereof
be decreed by a court of competent jurisdiction. Notwithstanding that
Landlord may have re-leased the Premises without termination, Landlord may at
anytime thereafter elect to terminate this Lease for any previous default. If
the Premises or any part thereof is re-leased, Landlord shall not be liable
for, nor shall Tenant's obligations hereunder be diminished by reason of, any
failure by Landlord to relet the Premises or any failure by Landlord to
collect any rent due upon such reletting. No action taken by the Landlord
under the provisions of this section shall operate as a waiver of any right
which the Landlord would otherwise have against the Tenant for the Rent
hereby reserved or otherwise, and the Tenant shall at all times remain
responsible to the Landlord for any loss and/or damage suffered by the
Landlord by reason of any Event of Default.
SECTION 14.04 DAMAGES.
Upon any Event of Default, Tenant shall remain liable to the Landlord for
the following amounts: (a) any Rent of any kind whatsoever which may have
become due with respect to the period in the Term which has already expired,
(b) all Rent which becomes due during the remainder of the Term, (c) all
costs, fees and expenses incurred by Landlord in leasing the Premises to
others from time to time, including but not limited to leasing commissions,
construction and other build-out costs, design and permitting costs and the
like, and (d) all costs, fees and expenses incurred by Landlord in pursuit of
its remedies hereunder, including but not limited to attorneys' fees and
court costs. All such amounts shall be due and payable immediately upon
demand by Landlord and shall bear interest at 18% per annum until paid.
Furthermore, at Landlord's option, Tenant shall be obligated to pay, in lieu
of item (b) above in this Section 14.04, an amount (the "Substitute Amount")
which is equal to the present value of all Rent which would become due during
the remainder of the Term, including all Additional Rent which shall be
deemed to continue and increase over such remainder of the Term at the
average rate of increase occurring over the then-expired portion of the Term,
with such present value to be determined by discounting at an annual rate of
interest which is equal to 5%. Provided that the Substitute Amount is
actually paid in full to Landlord and the Premises are surrendered by Tenant,
Landlord shall affirmatively list the Premises with its broker as available
for lease (to the extent Landlord's contract with such broker does not
already apply to all vacant space at the Building), and Tenant shall receive
a reduction and reimbursement of all such amounts which is equal to the
amount of any rent actually received from others to whom the Premises may be
rented during the remainder of the original Term. Tenant and Landlord
acknowledge and agree that payment to Landlord of the foregoing Substitute
Amount, together with the corresponding reduction by reimbursement to Tenant
of any rent paid by substitute tenants, are a reasonable forecast of the
actual damages which will be suffered by Landlord in case of an Event of
Default by Tenant, which actual damages are otherwise difficult or impossible
to ascertain, and therefore such payment and reimbursement together
constitute liquidated damages and not a penalty. Any suit or action brought
by Landlord to collect any such liquidated damages shall not in any manner
prejudice any other rights or remedies of Landlord hereunder.
SECTION 14.05 LANDLORD'S LIEN.
Tenant hereby grants to Landlord an express first and prior contract lien
and security interest on all fixtures, equipment, inventory and other
property which may be placed in the Premises or affixed or attached thereto
and also upon all proceeds of any insurance which may be issued on account of
damage to any such property. All exemption laws are hereby waived in favor of
said lien and security interest benefiting Landlord. This lien and security
interest is given in addition to any statutory lien benefiting Landlord and
shall be cumulative thereto or alternative thereto as elected by Landlord at
any time. If requested by Landlord, Tenant shall execute, deliver to Landlord
and/or file at Tenant's expense with the public records Uniform Commercial
Code financing statements in sufficient form to perfect the security interest
hereby given.
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Landlord shall, in addition to all of its rights under the Lease, also have
all of the rights and remedies of a secured party under the Uniform
Commercial Code of the state in which the Premises are located.
SECTION 14.06 WAIVER OF JURY TRIAL.
All parties hereto, both the Landlord and Tenant as principals and any
guarantors, hereby release and waive any and all rights provided by law to a
trial by jury in any court or other legal proceeding initiated to enforce the
terms of this Lease, involving any such parties, or connected in any other
manner with this Lease.
ARTICLE XV - QUIET ENJOYMENT
SECTION 15.01 COVENANT.
Landlord hereby covenants that the Tenant, on paying the Rent and
performing the covenants set forth herein, shall peaceably and quietly hold
and enjoy throughout the Term the Premises and such rights as the Tenant may
hold hereunder with respect to the remainder of the Property.
ARTICLE XVI - NOTICES
SECTION 16.01 NOTICES.
Any notice, demand or other communication to be provided hereunder to a
party hereto shall be (a) in writing, (b) deemed to have been given (i) three
(3) days after being sent in the United States mails, postage prepaid, (ii)
one day after being sent by overnight courier, or (iii) immediately upon its
actual delivery, and (c) addressed to the Premises if directed to the Tenant,
or addressed in c/o Colliers Pinkard, 100 Light Street, Suite 1400,
Baltimore, Maryland 21202 if directed to the Landlord.
ARTICLE XVII - GENERAL
SECTION 17.01 ENTIRE AGREEMENT.
This Lease represents the entire agreement between the parties hereto as
to the subject matter hereof and supersedes all prior written or oral
negotiations, representations, warranties, statements or agreements between
the parties hereto as to the same.
SECTION 17.02 AMENDMENT.
This Lease may be amended by and only by a written instrument executed
and delivered by each party hereto.
SECTION 17.03 APPLICABLE LAW.
This Lease shall be given effect and construed by application of the law
of the state in which the Property is located.
SECTION 17.04 WAIVER.
The Landlord shall not be deemed to have waived the exercise of any right
which it holds hereunder unless such waiver is made expressly and in writing,
and no delay or omission by the Landlord in exercising any such right shall
be deemed to be a waiver of its future exercise. No such waiver as to any
instance involving the exercise of any such right shall be deemed a waiver as
to any other such instance or any other such right.
SECTION 17.05 TIME OF ESSENCE.
Time shall be of the essence of this Lease.
SECTION 17.06 HEADINGS.
The headings of the articles, subsections, paragraphs and subparagraphs
hereof are provided herein only for convenience of reference and shall not be
considered in construing their contents.
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SECTION 17.07 SEVERABILITY.
No determination by any court, governmental body or otherwise that any
provision of this lease or any amendment hereof is invalid or unenforceable
in any instance shall affect the validity or enforceability of any other such
provision or such provision in any circumstance not controlled by such
determination. Each such provision shall be valid and enforceable to the
fullest extent allowed by, and shall be construed wherever possible as being
consistent with, applicable law.
SECTION 17.08 SUCCESSORS AND ASSIGNS.
This Lease shall be fully binding upon the parties hereto and each of
their respective successors and assigns. Whenever two or more parties
constitute the Tenant, all such parties shall be jointly and severally liable
for performing the Tenant's obligations hereunder.
SECTION 17.09 COMMISSIONS.
Each party hereto represents and warrants to the other that in connection
with the leasing of the Premises hereunder, the party so representing and
warranting has not dealt with any real estate broker, agent or finder, except
for W.C. Pinkard & Co., Inc. d/b/a Colliers Pinkard (the "Broker"). Each
party hereto shall indemnify the other against any inaccuracy in such
party's representation. Landlord hereby agrees that it shall pay a commission
to the Broker according to a separate agreement. The parties acknowledge and
agree that the Broker shall be a third party beneficiary of the foregoing
covenants.
SECTION 17.10 RECORDATION.
This Lease may not be recorded among the land records or among any other
public records, without the Landlord's prior written consent.
SECTION 17.11 PERPETUITIES.
If the rule against perpetuities would invalidate this Lease or any
portion hereof, or would limit the time during which this Lease shall be
effective, due to the potential failure of an interest in property created
herein to vest within a particular time, then notwithstanding anything to the
contrary herein, each such interest in property must vest, if at all, before
the passing of 21 years from the date of this Lease, or this Lease shall
become null and void upon the expiration of such 21 year period and the
parties shall have no further liability hereunder.
SECTION 17.12 LIABILITY LIMITATION.
Neither Landlord nor any trustee, director, officer, employee,
representative, asset manager, investment advisor or agent of Landlord, nor
any of their respective successors and assigns, shall be personally liable in
any connection with this Lease, and Tenant shall resort solely to the
Building for the payment to Tenant of any claim or for any performance by
Landlord hereunder.
SECTION 17.13 REPRESENTATIONS AND WARRANTIES OF TENANT.
Tenant represents and warrants to the Landlord that it is duly organized
and validly existing under the laws of the State of and qualified to transact
business in the State of Maryland; that the name and address of its resident
agent in the State of Maryland are: ; that this Lease was duly approved by
the Tenant's board of directors, officers, or other required parties, and is
binding upon and enforceable against Tenant in accordance with its terms.
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SECTION 17.14 EXHIBITS.
Each exhibit, addendum or other attachment hereto is hereby made a part
of this Lease having the full force of all other provisions herein.
IN WITNESS WHEREOF, each party hereto has executed this Lease under seal
on the day and year written first above.
WITNESS: LANDLORD: RIGGS DISTLER & CO., INC.
/s/ Michael A. DiVenti By: /s/ L. M. Shawker (SEAL)
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Name: L. M. SHAWKER
-------------------------
TITLE: TREASURER
-------------------------
WITNESS TENANT: IMTEK CO., INC.
/s/ Mark Massoni By: /s/ R. W. Howen (SEAL)
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MARK MASSONI Name: R.W. HOWEN
------------------------
Title: V.P.
------------------------
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EXHIBIT A
FLOOR PLAN OF PREMISES
<PAGE>
EXHIBIT B
SPACE PLAN OF THE PREMISES
<PAGE>
EXHIBIT C PAGE 1 OF 2
RULES AND REGULATIONS
1. Neither the whole nor any part of the sidewalks, plaza areas,
entrances, passages, courts, elevators, vestibules, stairways, corridors or
halls of the Building shall be obstructed or encumbered by any tenant or used
for any purpose other than ingress and egress to and from the premises of
such tenant.
2. No awning, canopy, sign or other projection shall be attached to
the outside walls or windows of the Building without Landlord's prior written
consent. No curtain, blind, shade, or screen (other than those furnished by
Landlord as building standard) shall be attached to, hung in or used in
connection with any window or door of the premises of any tenant.
3. No tenant shall mark, paint, drill/nail into, or in any way deface any
part of the Building or its premises. No boring, cutting, or stringing of wires
shall be permitted.
4. No tenant shall make, or permit to be made, any unseemly or disturbing
noises (whether by the use of any musical instrument, radio, television or other
audio device) or allow any unsavory odors to emanate from its space, nor shall
any tenant annoy, disturb or interfere with other tenants or occupants of the
Building or neighboring buildings.
5. No change shall be made in door locks without Landlord's prior written
consent. Each tenant must upon the termination of its tenancy restore to
Landlord all keys and card keys to building, offices and toilet rooms either
furnished to, or otherwise procured by, such tenant. In the event of the loss of
any keys during the Term, Tenant shall pay Landlord the reasonable cost of
replacement keys, and/or replacement locks.
6. Landlord reserves the right to control and operate the public
portions of the Building and the public facilities, as well as facilities
furnished for the common use of the tenants, in such manner as it deems best
for the benefit of the tenants generally, including, without limitation, the
right to exclude from the Building, except during the hours the Building is
open to the public, all persons who do not present suitable identification
satisfactory to Landlord.
7. Each tenant, before closing and leaving its premises at any time,
shall see that all entrance doors are locked and that all electrical appliances
are turned off. Suite and entrance doors shall remain closed at all times.
8. No premises shall be used, or permitted to be used, for lodging or
sleeping or for any immoral or illegal purpose.
9. Canvassing soliciting and peddling in the Building are prohibited.
[Illegible Copy]
<PAGE>
EXHIBIT C, PAGE 2 OF 2
13. No vending machines shall be permitted to be placed or installed in
any part of the Building or premises by any tenant without the prior written
consent of Landlord. Landlord reserves the right to place or install vending
machines in any of the common areas of the Building.
14. No plumbing or electrical fixtures shall be installed by any tenant
without the prior written consent of Landlord.
15. Bicycles, motorcycles or any other type of vehicle shall not be
brought into the lobby or elevators of the Building or into the premises of any
tenant.
16. Tenant will refer all contractors, contractor's representatives
and installation technicians, rendering any services on or to the premises
for tenant, to Landlord for Landlord's approval and supervision before
performance of any service. This provision shall apply to all work performed
in the Building, including installation of telephones, telegraph equipment,
electrical devices and attachments and any installation of any nature
affecting floors, walls, woodwork, trim, windows, ceilings, equipment or any
other physical portion of the Building. Such approval, if given, shall in no
way make Landlord a party to any contract between tenant and any such
contractor, and Landlord shall have no liability therefor.
17. No trash or other objects shall be placed in the public corridors or
sidewalks of the Building.
18. Landlord does not clean or maintain suite finishes which are
non-standard, such as kitchens, bathrooms, wallpaper, special lights, etc.
19. Landlord reserves the right, at any time and from time to time, to
rescind, alter, or waive, in whole or in part, or to add to any of these Rules
and Regulations when it is deemed necessary, desirable or proper, in Landlord's
judgment, for its best interest or for the best interests of all tenants.
20. LANDLORDS'S ENVIRONMENTAL CLAUSE
(a) Tenant shall not cause, allow or permit the escape, disposal
or release of toxic or hazardous substances or materials, including those
which are biologically active or chemically active, which shall include, but
not be limited to, those substances listed in the Environmental Statutes, as
defined below, polychlorinated biphenyls ("PCB's"), asbestos and materials
containing PCB's and asbestos (hereinafter collectively "Hazardous Materials"),
in around or from the Premises. Tenant shall not store, use or allow the
storage or use of
[Illegible Copy]
<PAGE>
EXHIBIT D
LEASE TERMINATION NOTICE
In the event the Landlord is successful in procuring a tenant to lease the
entire facility, or procure a buyer for the purchase of the property, Landlord
reserves the right to terminate this Lease with six (6) months prior written
notice, to tenant.
<PAGE>
EXHIBIT E
LANDLORD'S PERSONAL PROPERTY
(ATTACHMENT TO LEASE)
The following items have been included in the Lease for Tenant's use while
the Lease is in effect:
BOARD ROOM:
The following items are in excellent condition with no damage such as
stains, scratches or watermarks:
* 12 Board Room Arm Chairs (Light Oak with Fabric)
* 1 12' x 3 1/2' (Approx.) Light Oak Board Room Conference Table
* 3 2' x 3' Light Oak Cabinets
KITCHEN:
* Various Appliances * 7 3' x 3' Tables
* Sony 19" Color TV * 28 Plastic/Metal Chairs
* Magnavox VCR
GENERAL:
* Various Fire Extinguishers throughout the 1st floor.
* Offer Workstations/Cubicles
* Coffee Machine
<PAGE>
SCHEDULE OF KEYS GIVEN TO LEASEE:
The following 4 sets of keys turned over to Leasee on 11/14/97
<TABLE>
<CAPTION>
MARKING ON KEYS:
- ---------------
<C> <S>
D Loading Dock Door (Entrance/Exit)
- WHEN DISARMING/ARMING ALARM SYSTEM
O Outside Double Doors to Building
F Inside Front Double Doors to Building (Foyer)
L Inside Lobby Door to First Floor Offices
C First Floor Computer Room
M Mail Room (Behind Reception Area)
K Kitchen (Into Office Area)
</TABLE>
<PAGE>
EXHIBIT D
LEASE TERMINATION NOTICE
In the event the Landlord is sucessful in procuring a tenant to lease the entire
facility, or procure a buyer for the purchase of the property, Landlord reserves
the right to terminate this Lease with six (6) months prior written notice, to
tenant.
<PAGE>
OFFICE LEASE AMENDMENT
THIS OFFICE LEASE AMENDMENT, executed this 6th day of January, 1998,
changes the name of the tenant from Imtek Co., Inc. to Imtek Office Solutions,
Inc. and shall include all related entities (such as, but not limited to, Imtek
Funding Corporation, Beneficial Assistance, Inc., and Imtek Corporation) and
other related entities created in the future.
These changes are incorporated by reference into the lease dated
November 7, 1997 between Riggs Distler and Imtek for the office rental located
at 2111 Van Deman Street - Baltimore, Maryland 21224.
WITNESS: LANDLORD: RIGGS DISTLER & CO., INC.
/s/ Michael A. DiVenti By: /s/ L.M. Shawker
- ----------------------------------- ------------------------------
Name: L.M. SHAWKER
-----------------------
Title: TREASURER
----------------------
WITNESS: TENANT: IMTEK OFFICE SOLUTIONS, INC.
/s/ Richard F. Hirsch By: /s/ Brad C. Thompson, CFO
- ----------------------------------- ------------------------------
Name: BRADLEY C. THOMPSON
-----------------------
Title: CFO
----------------------
<PAGE>
111 WATER STREET
BALTIMORE, MD
RETAIL LEASE
BY AND BETWEEN
THE MORRIS WEINMAN COMPANY
(LANDLORD)
AND
IMTEK CORPORATION
(TENANT)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTIONS PAGE
- -------- ----
<S> <C>
Section 1. Definitions
Section 2. Premises; Measurement
Section 3. Term
Section 4. Rent; Security Deposit
Section 5. Taxes
Section 6. Use of Premises and Common Areas
Section 7. Insurance and Indemnification
Section 8. Utilities
Section 9. Repairs and Maintenance
Section 10. Improvements
Section 11. Landlord's Right of Entry
Section 12. Damage or Destruction
Section 13. Condemnation
Section 14. Assignment and Subletting
Section 15. Rules and Regulations
Section 16. Subordination and Attornment
Section 17. Defaults and Remedies
Section 18. Estoppel Certificate
Section 19. Quiet Enjoyment
Section 20. Notices
Section 21. General
</TABLE>
EXHIBITS
- --------
A Site Plan showing Property and Building
B Drawing showing approximate location of Premises
C Landlord's Work
D Current Rules and Regulations
RIDERS
- ------
1
- - i -
<PAGE>
RETAIL LEASE
THIS LEASE is made on this _____ day of ____________________, 1997 (the
"EFFECTIVE DATE"), by and between THE MORRIS WEINMAN COMPANY, a Maryland
corporation (the "LANDLORD"), and IMTEK CORPORATION, a Maryland corporation (the
"TENANT").
IN CONSIDERATION of the agreements and covenants hereinafter set forth,
Landlord and Tenant mutually agree as follows:
1. DEFINITIONS.
1.1. As used herein, the following terms shall have the following
meanings:
"ADDITIONAL RENT" has the meaning given it in subsection 4.2.
"ALTERATIONS" has the meaning given it in subsection 10.2.
"BASE RENT" has the meaning given it in subsection 4.1.
"BUILDING" means the building known as 111 Water Street and
located at 111 Water Street in Baltimore City, Maryland. The Building, which
contains approximately 24,250 rentable square feet, is more particularly shown
on EXHIBIT A.
"BUILDING SERVICE EQUIPMENT" means all apparatus, machinery,
devices, fixtures, appurtenances, equipment and personal property now or
hereafter located on the Premises and owned by the Landlord.
"COMMON AREAS" has the meaning given it in subsection 6.5.1.
"CONDEMNATION" has the meaning given it in subsection 13.1.
"EVENT OF DEFAULT" has the meaning given it in subsection 17.1.
"INSURANCE PREMIUMS" means the aggregate of any and all premiums
paid by the Landlord for hazard, liability, loss-of-rent, workmens' compensation
or similar insurance upon any or all of the Property.
"LANDLORD" means the Person hereinabove named as such and its
successors and assigns.
"LANDLORD'S WORK" has the meaning given to it in subsection 10.1.
"LEASE YEAR" means (a) the period commencing on the Rent
Commencement Date and terminating at 11:59 p.m. on the first anniversary of the
last day of the month in which the Rent Commencement Date occurs, and (b) each
successive period of twelve (12) calendar months thereafter during the Term.
"LIQUIDATED DAMAGES" has the meaning given it in subsection 17.3.
<PAGE>
"MORTGAGE" has the meaning given it in subsection 16.1.
"OPERATING COSTS" means any and all costs and expenses incurred
by the Landlord for services performed by the Landlord or by others on behalf of
the Landlord with respect to the operation and maintenance of the Property and
the Common Areas located therein and serving or allocable to the Premises,
including, without limitation, all costs and expenses of:
(a) operating, maintaining, repairing, lighting, signing,
cleaning, removing trash from, painting, striping, controlling of traffic in,
controlling of rodents in, policing and securing the Common Areas (including,
without limitation, the costs of uniforms, equipment, assembly permits,
supplies, materials, alarm and life safety systems, and maintenance and service
agreements);
(b) purchasing and maintaining in full force insurance
(including, without limitation, liability insurance for personal injury, death
and property damage, rent insurance, insurance against fire, extended coverage,
theft or other casualties, workers' compensation insurance covering personnel,
fidelity bonds for personnel, insurance against liability for defamation and
claims of false arrest occurring on or about the Common Areas, and plate glass
insurance);
(c) removing snow, ice, water, litter and debris;
(d) operating, maintaining, repairing and replacing machinery,
furniture, accessories and equipment used in the operation and maintenance of
the Common Areas, and the personal property taxes and other charges incurred in
connection with such machinery, furniture, accessories and equipment;
(e) maintaining and repairing roofs, awnings, paving, curbs,
walkways, sidewalks, drainage pipes, ducts, conduits, grease traps and lighting
fixtures throughout the Common Areas;
(f) planting, replanting and replacing flowers, shrubbery,
trees, grass and planters;
(g) providing electricity, heating, ventilation and air
conditioning to the Common Areas, and operating, maintaining and repairing any
equipment used in connection therewith, including, without limitation, costs
incurred in connection with determining the feasibility of installing,
maintaining, repairing or replacing any facilities, equipment, systems or
devices which are intended to reduce utility expenses of the Property as a
whole;
(h) water and sanitary sewer services and other services, if
any, furnished to the Common Areas for the non-exclusive use of tenants;
(i) janitorial services for the Building;
(j) enforcing any operating agreements pertaining to the Common
Areas or any portions thereof, and any easement and/or rights agreements entered
into by the Landlord for the benefit and use of the Landlord, the Property or
tenants thereof, or any arbitration or judicial actions undertaken with respect
to the same;
(k) maintaining and repairing the Property, including, without
limitation, exhaust systems, sprinkler systems, pumps, fans, switchgear, loading
docks and ramps, freight elevators, escalators, passenger elevators, stairways,
service corridors, delivery passages, utility plants, transformers, doors,
walls,
- - 2 -
<PAGE>
floors, skylights, ceilings, windows and fences;
(l) accounting, audit and management fees and expenses, payroll,
payroll taxes, employee benefits and related expenses of all personnel engaged
in the operation, maintenance, security and management of the Property,
including, without limitation, security and maintenance personnel, secretaries
and bookkeepers (including, specifically, uniforms and working clothes and the
cleaning thereof, tools, equipment and supplies used by such personnel, and the
expenses imposed on or allocated to the Landlord or its agents pursuant to any
collective bargaining or other agreement);
(m) the cost and expense of complying with all federal, state
and local laws, orders, regulations and ordinances applicable to the Property
which are now in force, or which may hereafter be in force;
(n) the cost of all capital improvements made to the Building
and which are not provided for in subsections (a) through (m) above; provided
that the cost of each such capital improvement, together with any financing
charges incurred in connection therewith, shall be amortized over the useful
life thereof, as reasonably determined by Landlord; and
(o) INTENTIONALLY DELETED
"OPERATING COSTS STATEMENT" has the meaning given it in
subsection 4.3.2.
"ORIGINAL TERM" has the meaning given it in subsection 3.1.
"PARKING AREAS" has the meaning given it in subsection 6.5.1.
"PERSON" means a natural person, a trustee, a corporation, a
limited liability company, a partnership and/or any other form of legal entity.
"PREMISES" means that certain space having a rentable area of 980
rentable square feet and located on the ground floor of the Building and known
as 106 E. Lombard Street, as more particularly depicted on EXHIBIT B; provided,
that if at any time hereafter any portion of the Premises becomes no longer
subject to this Lease, "Premises" shall thereafter mean so much thereof as
remains subject to this Lease.
"PROPERTY" means that certain parcel of land containing
approximately ___NA___ acres, more or less, together with the Building thereon.
The Property is more particularly shown on EXHIBIT A.
"RENT" means all Base Rent and all Additional Rent.
"RENT COMMENCEMENT DATE" has the meaning given to it in
subsection 3.1.
"RULES AND REGULATIONS" has the meaning given to it in section
15.
"TAX YEAR" means the 12-month period beginning July 1 of each
year or such other 12-month period (deemed for the purposes of this Lease to
have 365 days) established as a real estate tax year by the taxing authority
having lawful jurisdiction over the Property.
"TAXES" means the aggregate of any and all real property and
other taxes, metropolitan district charges, front-foot benefit assessments,
special assessments and other taxes or public
- - 3 -
<PAGE>
or private assessments or charges levied against any or all of the tax parcel
containing the Premises, including but not limited to any such charges
imposed under any private covenants encumbering the title to any or all of
the Property, and regardless of whether any of the same are ordinary or
extraordinary, foreseen or unforeseen, recurring or nonrecurring, or special
or general.
"TENANT" means the Person hereinabove named as such and its
successors and permitted assigns hereunder.
"TENANT'S PROPORTIONATE SHARE" (a) means the percentage assigned
to the Premises for purposes of allocating Operating Costs and Taxes to the
Premises (and the rest of the net rentable spaces within the Property), and (b)
as of the Effective Date shall be FOUR AND THREE HUNDREDTHS (4.03%) PERCENT.
"TERM" means the Original Term.
"TERMINATION DAMAGES" has the meaning given it in subsection
17.3.
"TERMINATION DATE" has the meaning given it in subsection 3.1.
"TRANSFER" has the meaning given it in subsection 14.1.
1.2. OTHER TERMS. Any other term to which meaning is
expressly given in this Lease shall have such meaning.
2. PREMISES; MEASUREMENT. The Landlord hereby leases to the
Tenant, and the Tenant hereby leases from the Landlord, the Premises in "AS
IS, WHERE IS" condition (subject, however, to the Landlord's obligations set
forth in subsection 10.1), together with the right to use, in common with
others, the Common Areas. The rentable area of the Premises shall be
reasonably determined by the Landlord.
3. TERM.
3.1. ORIGINAL TERM: RENT COMMENCEMENT DATE. This Lease shall be
for a term (the "ORIGINAL TERM") commencing on the Effective Date and ending at
11:59 p.m. on the Thirty Sixth (36th) anniversary of the first day of the month,
in which the Rent Commencement Date shall occur (which date is hereinafter
referred to as the "TERMINATION DATE"). Monthly rent payments and additional
rent shall commence on December 1, 1997 (which date is hereinafter referred to
as the "RENT COMMENCEMENT DATE").
3.2. CONFIRMATION OF COMMENCEMENT AND TERMINATION. The Landlord
and the Tenant at the Landlord's option and request after (a) the Rent
Commencement Date or (b) the expiration of the Term or any earlier termination
of this Lease by action of law or in any other manner, shall confirm in writing
by instrument in recordable form that, respectively, such rent commencement or
such termination has occurred, setting forth therein, respectively, the Rent
Commencement Date and the Termination Date.
3.3. SURRENDER. The Tenant, at its expense at the expiration
of the Term or any earlier termination of this Lease, shall (a) promptly
surrender to the Landlord possession of the Premises (including any fixtures
or other improvements which are owned by the Landlord) in good order and
repair (ordinary wear and tear excepted) and broom clean, (b) remove
therefrom all signs, goods, effects, machinery, fixtures and equipment used
in conducting the Tenant's trade or business which are neither part of the
Building Service Equipment nor owned by the Landlord, and (c) repair any
damage caused by such removal.
- - 4 -
<PAGE>
3.4. HOLDING OVER. If the Tenant continues to occupy the
Premises after the expiration of the Term or any earlier termination of this
Lease after obtaining the Landlord's express, written consent thereto, then:
(a) such occupancy (unless the parties hereto otherwise
agree in writing) shall be deemed to be under a month-to-month tenancy, which
shall continue until either party hereto notifies the other in writing, at least
one month before the end of any calendar month, that the notifying party elects
to terminate such tenancy at the end of such calendar month, in which event such
tenancy shall so terminate;
(b) anything in this section to the contrary
notwithstanding, the Rent payable for each monthly period shall equal the sum
of (a) one-twelfth (1/12) of that amount which is equal to twice the Base
Rent for the Lease Year during which such expiration of the Term or
termination of this Lease occurs, plus (b) the Additional Rent payable under
subsection 4.2; and
(c) except as provided herein, such month-to-month
tenancy shall be on the same terms and subject to the same conditions as
those set forth in this Lease; provided, however, that if the Landlord gives
the Tenant, at least one month before the end of any calendar month during
such month-to-month tenancy, written notice that such terms and conditions
(including any thereof relating to the amount and payment of Rent) shall,
after such month, be modified in any manner specified in such notice, then
such tenancy shall, after such month, be upon the said terms and subject to
the said conditions, as so modified.
4. RENT: SECURITY DEPOSIT. As Rent for the Premises, the Tenant
shall pay to the Landlord all of the following:
4.1. BASE RENT. An annual rent (the "BASE RENT") as follows:
<TABLE>
<CAPTION>
Monthly Installment
Lease Year Base Rent of Base Rent
---------- --------- -------------------
<S> <C> <C>
One $ 8,400.00 $ 700.00
Two $10,800.00 $ 900.00
Three $12,000.00 $1,00.00
</TABLE>
4.2. ADDITIONAL RENT. Additional rent ("ADDITIONAL RENT")
shall include any and all charges or other amounts which the Tenant is
obligated to pay to the Landlord under this Lease, other than the Base Rent.
4.3. OPERATING COSTS.
4.3.1. COMPUTATION. Within one hundred twenty (120) days
after the end of each calendar year during the Term, the Landlord shall
compute the total of the Operating Costs incurred for the Property during
such calendar year, and the Landlord shall allocate them to each separate
rentable space within the Property in proportion to the respective operating
costs percentages assigned to such spaces; provided that anything in this
subsection 4.3 to the contrary notwithstanding, whenever the Tenant and/or
any other tenant of space within the Property has agreed in its lease or
otherwise to provide any item of such services partially or entirely at its
own expense, or wherever in the Landlord's sole judgment any such significant
item of expense is not incurred with respect to or for the benefit of all of
the net rentable space
- - 5 -
<PAGE>
within the Building (including but not limited to any such expense which, by
its nature, is incurred only with respect to those spaces which are
occupied), in allocating the Operating Costs pursuant to this subsection, the
Landlord shall make an appropriate adjustment, using generally accepted
accounting principles, as aforesaid, so as to avoid allocating to the Tenant
or to such other tenant (as the case may be) those Operating Costs covering
such services already being provided by the Tenant or by such other tenant at
its own expense, or to avoid allocating to all of the net rentable space
within the Building those Operating Costs incurred only with respect to a
portion thereof, as aforesaid. The Tenant shall have the right, during normal
business hours at the Landlord's offices, to review the books and records of
the Landlord with respect to the calculation of Operating Costs for the prior
Lease Year, at the Tenant's sole expense, provided (i) the Tenant provides at
least fifteen (15) days' advance written notice to the Landlord of its desire
to inspect such books and records, and (ii) such request is made within sixty
(60) days after the Operating Costs Statement is delivered by the Landlord to
the Tenant. If the Tenant does not notify the Landlord within such 60-day
period, then all sums included as Operating Costs shall be deemed acceptable
to the Tenant and thereafter the Tenant shall have no right to dispute in any
manner any sums included within Operating Costs for such prior Lease Year.
LANDLORD SHALL EXCLUDE THE FOLLOWING ITEMS FROM THE CALCULATION OF OPERATING
COSTS: JANITORIAL SERVICES AND BUILDING SECURITY.
4.3.2. PAYMENT AS ADDITIONAL RENT. Within fifteen (15) days
after demand therefor by the Landlord (with respect to each calendar year during
the Term), accompanied by a statement setting forth the Operating Costs for such
calendar year (the "OPERATING COSTS STATEMENT"), the Tenant shall pay to the
Landlord, as Additional Rent, the amount equaling Tenant's Proportionate Share
of the Operating Costs for such calendar year. IN ADDITION TO THE BASE RENT,
TENANT SHALL PAY ON A MONTHLY BASIS, AN ESTIMATED PAYMENT TOWARDS ITS OBLIGATION
FOR OPERATING COSTS. THE MONTHLY PAYMENTS SHALL BE THREE HUNDRED AND 00/00
DOLLARS ($300.00) PER MONTH.
4.3.3. PRORATION. If only part of any calendar year falls
within the Term, the amount computed as Additional Rent for such calendar year
under this subsection shall be prorated in proportion to the portion of such
calendar year falling within the Term (but the expiration of the Term before the
end of a calendar year shall not impair the Tenant's obligation hereunder to pay
such prorated portion of such Additional Rent for that portion of such calendar
year falling within the Term, which amount shall be paid on demand, as
aforesaid).
4.3.4. LANDLORD'S RIGHT TO ESTIMATE. Anything in this
subsection to the contrary notwithstanding, the Landlord, at its reasonable
discretion, may (a) make from time to time during the Term a reasonable
estimate of the Additional Rent which may become due under this subsection
for any calendar year, (b) require the Tenant to pay to the Landlord for each
calendar month during such year one twelfth (1/12) of such Additional Rent,
at the time and in the manner that the Tenant is required hereunder to pay
the monthly installment of the Base Rent for such month, and (c) increase or
decrease from time to time during such calendar year the amount initially so
estimated for such calendar year, all by giving the Tenant written notice
thereof, accompanied by a schedule setting forth in reasonable detail the
expenses comprising the Operating Costs, as so estimated. In such event, the
Landlord shall cause the actual amount of such Additional Rent to be computed
and certified to the Tenant within one hundred twenty (120) days after the
end of such calendar year. Any overpayment or deficiency in the Tenant's
payment of Tenant's Proportionate Share of Operating Costs shall be adjusted
between the Landlord and the Tenant; the Tenant shall pay the Landlord or the
Landlord shall credit to the Tenant's account (or, if such adjustment is at
the end of the Term, the Landlord shall pay to the Tenant), as the case may
be, within fifteen (15) days after such notice to the Tenant, such amount
necessary to effect such adjustment. The Landlord's failure to provide such
notice within the time prescribed above shall not relieve the Tenant of any
of its obligations hereunder.
- - 6 -
<PAGE>
4.4. WHEN DUE AND PAYABLE.
4.4.1. BASE RENT. The Base Rent for any Lease Year shall be
due and payable in twelve (12) consecutive, equal monthly installments, in
advance, on the first (1st) day of each calendar month during such Lease Year.
In addition, the Base Rent for the first full calendar month shall be due and
payable upon execution of the Lease. Rent for any partial calendar month shall
be due and payable five (5) days after the Rent Commencement Date.
4.4.2. ADDITIONAL RENT. Any Additional Rent accruing to the
Landlord under this Lease, except as is otherwise set forth herein, shall be due
and payable when the installment of Base Rent next falling due after such
Additional Rent accrues and becomes due and payable, unless the Landlord makes
written demand upon the Tenant for payment thereof at any earlier time, in which
event such Additional Rent shall be due and payable at such time.
4.4.3. NO SET-OFF; LATE PAYMENT. Each such payment shall be
made promptly when due, without any deduction or setoff whatsoever, and without
demand, failing which the Tenant shall pay to the Landlord as Additional Rent,
after the fifth (5th) day after such payment remains due but unpaid, a late
charge equal to five percent (5%) of such payment which remains due but unpaid.
In addition, any payment that is not paid by the tenth (10th) day after such
payment is due shall bear interest at the rate of twelve percent (12%) per
annum. Any payment made by the Tenant to the Landlord on account of Rent may be
credited by the Landlord to the payment of any Rent then past due before being
credited to Rent currently falling due. Any such payment which is less than the
amount of Rent then due shall constitute a payment made on account thereof, the
parties hereto hereby agreeing that the Landlord's acceptance of such payment
(whether or not with or accompanied by an endorsement or statement that such
lesser amount or the Landlord's acceptance thereof constitutes payment in full
of the amount of Rent then due) shall not alter or impair the Landlord's rights
hereunder to be paid all of such amount then due, or in any other respect.
4.5. WHERE PAYABLE. The Tenant shall pay the Rent, in lawful
currency of the United States of America, to the Landlord by delivering or
mailing it to the Landlord's address which is set forth in section 20, or to
such other address or in such other manner as the Landlord from time to time
specifies by written notice to the Tenant.
4.6 TAX ON LEASE. If federal, state or local law now or
hereafter imposes any tax, assessment, levy or other charge directly or
indirectly upon (a) the Landlord with respect to this Lease or the value
thereof, (b) the Tenant's use or occupancy of the Premises, (c) the Base
Rent, Additional Rent or any other sum payable under this Lease, or (d) this
transaction, then the Tenant shall pay the amount thereof as Additional Rent
to the Landlord upon demand, unless the Tenant is prohibited by law from
doing so, in which event the Landlord at its election may terminate this
Lease by giving written notice thereof to the Tenant.
- - 7 -
<PAGE>
5. TAXES.
5.1. PROPORTIONATE SHARE. The Tenant shall pay to the Landlord,
as Additional Rent, Tenant's Proportionate Share of all Taxes levied upon or
assessed against the Property. Taxes shall be adjusted on a proportionate basis
for any period which shall be less than a Tax Year.
5.2. PAYMENT. Tenant's Proportionate Share of Taxes shall be
paid by the Tenant, at the Landlord's election (i) in advance, in equal
monthly installments in such amounts as are estimated and billed for each Tax
Year by the Landlord at the commencement of the Term and at the beginning of
each successive Tax Year during the Term, each such installment being due on
the first day of each calendar month or (ii) in a lump sum, following the
Landlord's receipt of the tax bill for the Tax Year in question, and
calculation of Tenant's Proportionate Share with respect thereto. If the
Landlord has elected that the Tenant pay Tenant's Proportionate Share of
Taxes in installments, in advance, then, at any time during a Tax Year, the
Landlord may re-estimate Tenant's Proportionate Share of Taxes and thereafter
adjust the Tenant's monthly installments payable during the Tax Year to
reflect more accurately Tenant's Proportionate Share of Taxes. Within one
hundred twenty (120) days after the Landlord's receipt of tax bills for each
Tax Year, the Landlord will notify the Tenant of the amount of Taxes for the
Tax Year in question and the amount of Tenant's Proportionate Share thereof.
Any overpayment or deficiency in the Tenant's payment of Tenant's
Proportionate Share of Taxes for each Tax Year shall be adjusted between the
Landlord and the Tenant; the Tenant shall pay the Landlord or the Landlord
shall credit to the Tenant's account (or, if such adjustment is at the end of
the Term, the Landlord shall pay the Tenant), as the case may be, within
fifteen (15) days after such notice to the Tenant, such amount necessary to
effect such adjustment. The Landlord's failure to provide such notice within
the time prescribed above shall not relieve the Tenant of any of its
obligations hereunder.
5.3. TAXES ON RENT. In addition to Tenant's Share of Increased
Taxes, the Tenant shall pay to the appropriate agency any sales, excise and
other tax (not including, however, the Landlord's income taxes) levied, imposed
or assessed by the State of Maryland or any political subdivision thereof or
other taxing authority upon any Rent payable hereunder. The Tenant shall also
pay, prior to the time the same shall become delinquent or payable with penalty,
all taxes imposed on its inventory, furniture, trade fixtures, apparatus,
equipment, leasehold improvements installed by the Tenant or by the Landlord on
behalf of the Tenant and any other property of the Tenant.
6. USE OF PREMISES AND COMMON AREAS.
6.1 NATURE OF USE. The Tenant shall use the Premises only for
GENERAL OFFICES AND PHOTO COPY SHOP. Blueprinting or the use
of the diazo printing process will not be allowed on the Premises.
6.2 COMPLIANCE WITH LAW AND COVENANTS. The Tenant, throughout
the Term and
- - 8 -
<PAGE>
at its sole expense, in its use and possession of the Premises, shall:
(a) comply promptly and fully with (i) all laws, ordinances,
notices, orders, rules, regulations and requirements of all federal, state
and municipal governments and all departments, commissions, boards and
officers thereof, including but not limited to The Americans with
Disabilities Act, 42 U.S.C. Section 12101 et. seq., and the ADA Disability
Guidelines promulgated with respect thereto, and (ii) all requirements (Y) of
the National Board of Fire Underwriters (or any other body now or hereafter
constituted exercising similar functions) which are applicable to any or all
of the Premises, or (Z) imposed by any policy of insurance covering any or
all of the Premises and required by section 5 to be maintained by the Tenant,
and (iii) all covenants and restrictions which may encumber the title to any
or all of the Premises, all if and to the extent that any of such
requirements relate to any or all of the Premises or to any equipment,
pipes, utilities or other parts of the Property which exclusively serve the
Premises, whether any of the foregoing are foreseen or unforeseen, or are
ordinary or extraordinary;
(b) (without limiting the generality of the foregoing
provisions of this subsection) keep in force throughout the Term all
licenses, consents and permits necessary for the lawful use of the Premises
for the purposes herein provided;
(c) pay when due all personal property taxes, income taxes,
license fees and other taxes assessed, levied or imposed upon the Tenant or
any other person in connection with the operation of its business upon the
Premises or its use thereof in any other manner;
(d) not obstruct, annoy or interfere with the rights of other
tenants, and
(e) not allow the transmission of any loud or objectionable
sounds or noises or vibration from Tenants copy machines from the Premises; and
(f) be responsible for the security of the Premises.
With respect to The Americans with Disabilities Act and the ADA Disability
Guidelines thereto, the Tenant shall be responsible for the entire Premises,
including all entry doors and signage (subject, however, to the provisions of
subsection 10.2), and the Landlord shall be responsible for the Building and
the Common Areas.
6.3 MECHANICS' LIENS.
6.3.1. Without limiting the generality of the foregoing
provisions of this section, the Tenant shall not create or permit to be
created, and if created shall discharge or have released, any mechanics' or
materialmens' lien arising while this Lease is in effect and affecting any or
all of the Premises, the Building and/or the Property, and the Tenant shall
not permit any other matter or thing whereby the Landlord's estate, right and
interest in any or all of the Premises, the Building and/or the Property
might be impaired. The Tenant shall defend, indemnify and hold harmless the
Landlord against and from any and all liability, claim of liability or
expense (including but not limited to that of reasonable attorneys' fees)
incurred by the Landlord on account of any such lien or claim.
6.3.2. If the Tenant fails to discharge any such lien within
fifteen (15) days after it first becomes effective against any of the
Premises, the Building and/or the Property, then, in addition to any other
right or remedy held by the Landlord on account thereof, the Landlord may (a)
discharge it by paying the amount claimed to be due or by deposit or bonding
proceedings, and/or (b) in any such event compel the prosecution of any
action for the foreclosure of any such lien by the lienor and pay the amount
of any judgment in favor of the lienor with interest, costs and allowances.
The Tenant shall reimburse the
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Landlord for any amount paid by the Landlord to discharge any such lien and all
expenses incurred by the Landlord in connection therewith, together with
interest thereon at the rate of twenty percent (20%) per annum from the
respective dates of the Landlord's making such payments or incurring such
expenses (all of which shall constitute Additional Rent).
6.3.3. Nothing in this Lease shall be deemed in any way (a) to
constitute the Landlord's consent or request, express or implied, that any
contractor, subcontractor, laborer or materialmen provide any labor or materials
for any alteration, addition, improvement or repair to any or all of the
Premises, the Building and/or the Property, or (b) to give the Tenant any right,
power or authority to contact for or permit to be furnished any service or
materials, if doing so would give rise to the filing of any mechanics' or
materialmens' lien against any or all of the Premises, the Building and/or the
Property, or the Landlord's estate or interest therein, or (c) to evidence the
Landlord's consent that the Premises, the Building and/or the Property be
subjected to any such lien.
6.4. SIGNS. The Tenant shall have no right to erect signs upon the
Premises or the remainder of the Building or the Property unless the Landlord
has given its express, written consent thereto, which consent shall not be
unreasonably withheld. Tenant shall be permitted to place it's business name on
the canopy in front of the Premises and/or the glass portion of the entry door
to the Premises, LANDLORD SHALL CONTRIBUTE A NOT TO EXCEED AMOUNT OF THREE
($300.00) DOLLARS TOWARDS THE REPLACEMENT OF THE FABRIC PORTION OF THE CANOPY AT
THE FRONT DOOR OF THE PREMISES AND THE PRINTING OF THE TENANT'S NAME ON THE
CANOPY. Tenant's sign is subject to Landlord's approval.
6.5. LICENSE.
6.5.1. GRANT OF LICENSE. The Landlord hereby grants to the
Tenant a non-exclusive license to use (and to permit it's officers,
directors, agents, employees and invitees to use), in the course of
conducting business at the Premises, those areas and facilities of the
Property which may be designated by the Landlord from time to time as common
areas (portions of which may from time to time be relocated and/or
reconfigured by the Landlord in its sole discretion so long as reasonable
access to and from the Premises is maintained) (the "COMMON AREAS"), which
Common Areas include footways, sidewalks, Parking Areas, lobbies, elevators,
stairwells, corridors, restrooms and certain exterior areas on the Property,
subject, however, to the Rules and Regulations. "PARKING AREAS" shall mean
those portions of the Common Areas which from time to time are designated by
the Landlord for the parking of the automobiles and other automotive vehicles
while engaged in business upon the Premises (other than while being used to
make deliveries to and from the Premises). The Landlord hereby reserves the
right to determine the hours during which tenants may use lobbies, elevators,
stairwells, corridors and the like.
6.5.2. NON-EXCLUSIVE LICENSE. Such license shall be
exercised in common with exercise thereof by the Landlord, the other tenants
or occupants of the Property, and their respective officers, directors,
agents, employees and invitees.
6.5.3. PARKING AREAS; CHANGES. The Landlord reserves the
right to change the entrances, exits, traffic lanes, boundaries and locations
of the Parking Areas, IF APPLICABLE. All Parking Areas and facilities which
may be furnished by the Landlord in or near the Property, including any
employee parking areas, truckways, loading docks, pedestrian sidewalks and
ramps, landscaped areas and other areas and improvements which may be
provided by the Landlord for the Tenant's exclusive use or for general use,
in common with other tenants, their officers agents, employees and visitors,
shall at all times be subject to the Landlord's exclusive control and
management, and the Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect
thereto. The Landlord shall have the right to (a) police the Common Areas,
(b) establish and from time to time to change the level of parking
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surfaces, (c) close all or any portion of the Common Areas to such extent as,
in the opinion of the Landlord's counsel, may be legally sufficient to
prevent a dedication thereof or the accrual of any rights to any person or to
the public therein, (d) close temporarily all or any portion of the Parking
Areas, (e) discourage non-tenant parking, and (f) do and perform such other
acts in and to the Common Areas as, in the use of good business judgment, the
Landlord determines to be advisable with a view to the improvement of the
convenience and use thereof by tenants, their officers, agents, employees and
visitors. The Tenant shall cause its officers, agents and employees to park
their automobiles only in such areas as the Landlord from time to time may
designate by written notice to the Tenant as employee parking areas, and the
Tenant shall not use or permit the use of any of the Common Areas in any
manner which will obstruct the driveways or throughways serving the Parking
Areas or any other portion of the Common Areas allocated for the use of
others. The Tenant shall not keep parked vehicles on the Parking Areas
overnight.
6.5.4. ALTERATIONS. The Landlord reserves the right at any
time and from time to time (i) to change or alter the location, layout,
nature, or arrangement of the Common Areas or any portion thereof, including
but not limited to the arrangement and/or location of entrances, passageways,
doors, corridors, stairs, lavatories, elevators, parking areas, and other
public areas of the Building, and (ii) to construct additional improvements
on the Property and make alterations thereof or additions thereto and build
additional stories on or in any such buildings adjoining the same; provided,
however, that no such change or alteration shall deprive the Tenant of access
to the Premises.
6.5.5. USE OF COMMON AREAS.
(a) The Landlord shall at all times have full and exclusive
control, management and direction of the Common Areas. Without limiting the
generality of the foregoing, the Landlord shall have the right to maintain and
operate lighting facilities on all of the Common Areas and to police the Common
Areas.
(b) The Tenant shall keep the sidewalks and service areas
adjacent to the Premises swept and free from trash, rubbish, garbage and other
refuse.
(c) The Tenant shall maintain in a neat and clean
condition that area designated by the Landlord as the refuse collection area,
and shall not place or maintain anywhere within the Property, other than
within the area which may be designated by the Landlord from time to time as
such refuse collection area, any trash, garbage or other items, except as may
otherwise be expressly permitted by this Lease; provided, however, that in
the event there is no room in the refuse collection area for the Tenant's
trash, the Landlord shall notify the Tenant thereof and the Tenant shall be
required to make its own arrangements for the removal of its trash from the
Premises.
(d) In its use of the Common Areas, the Tenant shall not
take, or permit its agents, employees, invitees, visitors and guests to take,
any of the following actions:
(i) the parking or storage of automobiles, or other
automotive vehicles anywhere within the Property if such vehicles lack
current, valid license plates, or other than in the Parking Areas (and the
individual parking spaces from time to time designated therein), or anywhere
within the Property if the body, windows or other exterior portions of such
vehicles are in an obvious state of damage or disrepair;
(ii) the performance of any body work, maintenance
or other repairs to vehicles, or the painting of any vehicle, anywhere within
the Premises or the rest of the Property; or
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(iii) the parking or storage of any trucks or vans
weighing over three-quarters (3/4) of one ton, except for purposes of temporary
loading and unloading.
6.6. LIABILITY OF LANDLORD. The Landlord and its agents and
employees shall not be liable to the Tenant or any other person whatsoever
(a) for any injury to person or damage to property caused by any defect in or
failure of equipment, pipes, wiring or broken glass, or the backing up of
any drains, or by gas, water, steam, electricity or oil leaking, escaping or
flowing into the Premises, or (b) for any loss or damage that may be
occasioned by or through the acts or omissions of any other tenant of the
Property or of any other person whatsoever, other than the gross negligence
of the Landlord's duly authorized employees or agents.
6.7. FLOOR LOAD. The Tenant shall not place a load upon any
floor of the Premises exceeding the floor load per square foot area which
such floor was designed to carry. The Landlord reserves the right to
prescribe the weight and position of all sales and other heavy equipment, and
to prescribe the reinforcing necessary, if any, which in the opinion of the
Landlord may be required under the circumstances, such reinforcing to be at
the Tenant's sole expense. Business machines and mechanical equipment shall
be placed and maintained by the Tenant in settings sufficient in the
Landlord's judgment to absorb and prevent vibration and noise, and the Tenant
shall, at its sole expense, take such steps as the Landlord may direct to
remedy any such condition.
6.8. HAZARDOUS MATERIALS. The Tenant warrants and agrees
that the Tenant shall not cause or permit any Hazardous Material to be
brought upon, kept or used in or about the Premises by the Tenant, its
agents, employees, contractors or invitees. If the Tenant breaches the
obligations stated in the preceding sentence, then the Tenant shall
indemnify, defend and hold the Landlord harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities or losses
(including, without limitation, diminution in value of the Premises, the
Building and the Property generally, damages for the loss or restriction on
use of rentable or usable space or of any amenity of the Building or the
Property generally, damages from any adverse impact on marketing of space in
the Building, and sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees) which arise during or after the Term as a
result of such contamination. This indemnification of the Landlord by the
Tenant includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any governmental authority because of Hazardous
Material present in the soil or ground water or under the Premises or the
Property generally. As used herein (i) "ENVIRONMENTAL LAWS" means the Clean
Air Act, the Resource Conservation Recovery Act of 1976, the Hazardous
Material Transportation Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Occupational Safety and
Health Act, the Consumer Product Safety Act, the Clean Water Act, the Federal
Water Pollution Control Act, the National Environmental Policy Act, Md. Nat.
Res. Code Ann., Title 8, and Md. Env. Code Ann., Title 7, as each of the
foregoing shall be amended from time to time, and any similar or successor
laws, federal, state or local, or any rules or regulations promulgated
thereunder, and (ii) "HAZARDOUS MATERIALS" means and includes asbestos; "oil,
petroleum products and their by-products" "hazardous substances;" "hazardous
wastes" or "toxic substances," as those terms are used in Environmental Laws;
or any substances or materials listed as hazardous or toxic in the United
State Department of Transportation, or by the Environmental Protection Agency
or any successor agency under any Environmental Laws.
7. INSURANCE AND INDEMNIFICATION.
7.1. INSURANCE. At all times from and after the earlier of
(i) the entry by the Tenant into the Premises, or (ii) the Rent Commencement
Date, the Tenant shall take out and keep in full force and effect, at its
expense:
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(a) commercial general liability insurance, including
Blanket Contractual Liability, Broad Form Property Damage, Completed
Operations/Products Liability, Personal Injury Liability, Premises Medical
Payments, Interest of Employees as additional insureds, Incidental Medical
Malpractice and Broad Form General Liability Endorsement, with a combined
single limit of not less than One Million Dollars ($1,000,000) per occurrence
and Two Million Dollars ($2,000,000) in the aggregate;
(b) special form property insurance (including but not
limited to burglary and theft insurance and plate glass insurance) written at
full replacement cost value with endorsement covering all of Tenant's
property, including, without limitation, inventory, trade fixtures, floor
coverings, furniture, electronic data processing, equipment and any other
property removable by Tenant under the provisions of this Lease, except for
improvements which are part of the Landlord's Work;
(c) worker's compensation or similar insurance in form and
amounts required by law; and
(d) such other insurance in such types and amounts as Landlord
may reasonably require.
7.2. TENANT'S CONTRACTOR'S INSURANCE. The Tenant shall require any
contractor of the Tenant performing work in, on or about the Premises to take
out and keep in full force and effect, at no expense to the Landlord:
(a) commercial general liability insurance, including
Contractor's Liability coverage, Blanket Contractual Liability coverage,
Broad Form Property Damage Endorsement, Contractor's Protective Liability,
Completed Operations/Products Liability (Completed Operations/Products
Liability coverage to be provided for at least two (2) years after final
completion of work). Personal Injury, Premises Medical Payments, Interest of
Employees as additional insureds, Incidental Medical Malpractice and Broad
Form General Liability Endorsement, in an amount not less than One Million
Dollars ($1,000,000) combined single limit per occurrence and Two Million
Dollars ($2,000,000) in the aggregate;
(b) comprehensive automobile liability insurance, with a
combined single limit of not less than One Million Dollars ($1,000,000)
covering all owned, non-owned or hired automobiles to be used by the
contractor;
(c) worker's compensation or similar insurance in form and
amounts required by law; and
(d) employers liability coverage, including All States
Endorsement, in an amount not less than One Million Dollars ($1,000,000).
7.3. POLICY REQUIREMENTS.
7.3.1. The company or companies writing any insurance which
the Tenant is required to take out and maintain or cause to be taken out or
maintained pursuant to subsections 7.1 and/or 7.2, as well as the form of
such insurance, shall at all times be subject to the Landlord's approval, and
any such company or companies shall be licensed to do business in the State
of Maryland and have a rating of at least A or better and a financial size
rating of XII or larger from BEST'S KEY RATING GUIDE AND SUPPLEMENTAL SERVICE
(or comparable rating from a comparable insurance rating service). Public
liability and all-risk casualty insurance policies evidencing such insurance
shall name the Landlord, Valley Management Group, Inc. and
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<PAGE>
their designees (including, without limitation, any Mortgagee) as additional
insureds, shall be primary and noncontributory, and shall also contain a
provision by which the insurer agrees that such policy shall not be
cancelled, materially changed, terminated or not renewed except after thirty
(30) days' advance written notice to the Landlord and/or such designees. All
such policies, or certificates thereof, shall be deposited with the Landlord
promptly upon commencement of the Tenant's obligation to procure the same.
None of the insurance which the Tenant is required to carry and maintain or
cause to be carried or maintained pursuant to subsections 7.1 and/or 7.2
shall contain deductible provisions in excess of Two Thousand Five Hundred
Dollars ($2,500), unless approved in writing in advance by the Landlord. If
the Tenant fails to perform any of its obligations pursuant to this section
7, the Landlord may perform the same and the cost thereof shall be payable by
the Tenant as Additional Rent upon the Landlord's demand therefor.
7.3.2. The Landlord and the Tenant agree that on
January 1 of the second (2nd) full calendar year during the Term and on
January 1 of every second (2nd) calendar year thereafter, the Landlord will
have the right to request commercially reasonable changes in the character
and/or amounts of insurance required to be carried by the Tenant pursuant to
the provisions of this section 7, and the Tenant shall comply with any
requested change in character and/or amount within thirty (30) days after the
Landlord's request therefor.
7.4 INDEMNITIES BY TENANT AND LANDLORD.
7.4.1. Notwithstanding any policy or policies of
insurance required of the Tenant, the Tenant, for itself and its successors
and assigns, to the extent permitted by law, shall defend, indemnify and hold
harmless the Landlord, the Landlord's agents, Valley Management Group, Inc.
and any Mortgagee against and from any and all liability or claims of
liability by any person asserted against or incurred by the Landlord and/or
such agent or Mortgagee in connection with (i) the use, occupancy, conduct,
operation or management of the Premises by the Tenant or any of its agents,
contractors, servants, employees, licensees, concessionaires, suppliers,
materialmen or invitees during the Term; (ii) any work or thing whatsoever
done or not done on the Premises during the Term; (iii) any breach or
default in performing any of the obligations under the provisions of this
Lease and/or applicable law by the Tenant or any of its agents, contractors,
servants, employees, licensees, suppliers, materialmen or invitees during the
Term; (iv) any negligent, intentionally tortuous or other act or omission by
the Tenant or any of its agents, contractors, servants, employees, licensees,
concessionaires, suppliers, materialmen or invitees during the Term; or (v)
any injury to or death of any person or any damage to any property occurring
upon the Premises (whether or not such event results from a condition
existing before the execution of this Lease or resulting in the termination
of this Lease), and from and against all costs, expenses and liabilities
incurred in connection with any claim, action, demand, suit at law, in equity
or before any administrative tribunal, arising in whole or in part by reason
of any of the foregoing (including, by way of example rather than of
limitation, the fees of attorneys, investigators and experts), all regardless
of whether such claim, action or proceeding is asserted before or after the
expiration of the Term or any earlier termination of this Lease.
7.4.2. If any such claim, action or proceeding is
brought against the Landlord and/or any agent or Mortgagee, the Tenant, if
requested by the Landlord or such agent or Mortgagee, and at the Tenant's
expense, promptly shall resist or defend such claim, action or proceeding or
cause it to be resisted or defended by an insurer. The Landlord, at its
option, shall be entitled to participate in the selection of counsel,
settlement and all other matters pertaining to such claim, action or
proceeding, all of which shall be subject, in any case, to the prior written
approval of the Landlord.
7.4.3. Subject to the provisions of subsection 7.8, the
Landlord hereby agrees for itself and its successors and assigns to indemnify
and save the Tenant harmless from and against any liability or claims of
liability arising solely out of the gross negligence or intentional acts and
omissions of
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the Landlord, its agents or employees.
7.5. LANDLORD NOT RESPONSIBLE FOR ACTS OF OTHERS. The
Landlord shall not be responsible or liable to the Tenant, or to those
claiming by, through or under the Tenant, for any loss or damage which may be
occasioned by or through the acts or omissions of persons occupying or using
space adjoining the Premises or any part of the premises adjacent to or
connecting with the Premises or any other part of the Building or the
Property, or for any loss or damage resulting to the Tenant (or those
claiming by, through or under the Tenant) or its or their property, from (a)
the breaking, bursting, stoppage or leaking of electrical cable and/or wires,
or water, gas, sewer or steam pipes, (b) falling plaster, or (c) dampness,
water, rain or snow in any part of the Building. To the maximum extent
permitted by law, the Tenant agrees to use and occupy the Premises, and to
use such other portions of the Property as the Tenant is herein given the
right to use, at the Tenant's own risk.
7.6. LANDLORD'S INSURANCE. During the Term, the Landlord may
maintain, in commercially reasonable amounts, (a) Insurance on the Property
against loss or damage by fire and all of the hazards included in the
extended coverage endorsement, (b) comprehensive liability and property
damage insurance with respect to the Common Areas, against claims for
personal injury or death, or property damage suffered by others occurring in,
on or about the Property, and (c) any other insurance, in such form and in
such amounts as are deemed reasonable by the Landlord, including, without
limitation, rent continuation and business interruption insurance, theft
insurance and workers' compensation, and boiler and machinery insurance. The
costs and expenses of any and all insurance carried by the Landlord pursuant
to the provisions of this subsection 6.6 shall be deemed a part of Operating
Costs.
7.7. INCREASE IN INSURANCE PREMIUMS. The Tenant shall not do
or suffer to be done, or keep or suffer to be kept, anything in, upon or
about the Premises, the Building or the Property which will contravene the
Landlord's policies of hazard or liability insurance or which will prevent
the Landlord from procuring such policies from companies acceptable to the
Landlord. If anything done, omitted to be done, or suffered by the Tenant to
be kept in, upon or about the Premises, the Building or the Property shall
cause the rate of fire or other insurance on the Premises, the Building or
the Property to be increased beyond the minimum rate from time to time
applicable to the Premises or to any such other property for the use or uses
made thereof, the Tenant shall pay to the Landlord, as Additional Rent, the
amount of any such increase upon the Landlord's demand therefor.
7.8. WAIVER OF RIGHT OF RECOVERY. To the extent that any
loss or damage to the Premises, the Building the Property, any building,
structure or other tangible property, or resulting loss of income, are
covered by insurance, neither party shall be liable to the other party or to
any insurance company insuring the other party (by way of subrogation or
otherwise), even though such loss or damage might have been occasioned by the
negligence of such party, its agents or employees; provided, however, that
if, by reason of the foregoing waiver, either party shall be unable to obtain
any such insurance, then such waiver shall be deemed not to have been made by
such party. Notwithstanding the foregoing, in the event that such waiver of
subrogation shall not be available to the Tenant except through the payment
of additional premium therefor, the Tenant shall pay such additional premium.
8. UTILITIES.
8.1. UTILITIES PROVIDED BY TENANT. The Tenant shall; (i) make
application in the Tenant's own name for all utilities not provided by the
Landlord, (ii) comply with all utility company regulations for such
utilities, including requirements for the installation of meters, and (iii)
obtain such utilities directly from, and pay for the same when due directly
to the applicable utility company. The term "utilities" for purposes
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hereof shall include but not be limited to electricity, gas, water, sewer,
steam, fire protection, telephone and other communication and alarm services,
HVAC, and all taxes or other charges thereon. The Tenant shall install and
connect all equipment and lines required to supply such utilities to the
extent not already available at or serving the Premises, or at the Landlord's
option shall repair, alter or replace any such existing items. The Tenant
shall maintain, repair and replace all such items, operate the same, and keep
the same in good working order and condition. The Tenant shall not install
any equipment or fixtures, or use the same, so as to exceed the safe and
lawful capacity of any utility equipment or lines serving the same. The
installation, alteration, replacement and connection of any utility equipment
and lines shall be subject to the requirements for alterations of the
Premises set forth in subsection 10.3. The Tenant shall ensure that all HVAC
equipment is installed and operated at all times in a manner to prevent roof
leaks, damage, and noise due to vibrations or improper installation,
maintenance or operation. The Tenant shall at all times keep the Premises
sufficiently heated or air conditioned such that heated or chilled air is not
drawn to or from the Premises.
8.2 UTILITIES PROVIDED BY LANDLORD. The Landlord reserves
the right from time to time to provide any or all utilities to the Premises.
In such case, the Tenant shall pay such charges as the Landlord may establish
from time to time, which the Landlord may determine on a per-square-foot
basis applicable to the square footage of the Premises as a monthly charge,
or which the Landlord may determine based on the quantity of utilities used
or consumed at the Premises on a monthly or other regular basis. Such charges
shall not exceed the rates, if any, that the Landlord is permitted to charge
pursuant to applicable law. In addition, if the Landlord establishes charges
based on consumption or use: (i) such charges shall not be in excess of the
rate that the Tenant would be charged directly by the utility company serving
the general area in which the Property is located, (ii) if the Premises are
separately metered for such utilities, the Tenant shall pay for amounts of
such utilities based on such meters, and (iii) if the Premises are not
separately metered for such utilities, the Tenant shall pay for amounts of
such utilities based on the reasonable estimates of the Landlord's engineer
or consultant, or, at the Landlord's election, shall pay the Landlord's cost
for installing separate meters, and shall thereafter pay based on such
meters. Except to the extent prohibited by applicable law, the Landlord may
also impose a reasonable administrative charge to cover meter-reading and
other overhead expenses. All such charges shall be payable as Additional Rent
ten (10) days after billed by the Landlord. The Landlord may discontinue
providing any utilities then being provided by the Landlord upon fifteen (15)
days' advance written notice to the Tenant (in which case the Tenant shall
obtain such utilities directly from the applicable utility company). If the
Landlord supplies ventilated air or chilled or heated air or water for
air-conditioning or heating of the Premises, the Landlord may nevertheless
require that the Tenant, at the Tenant's expense, maintain, repair and
replace any portion of the systems and equipment therefor exclusively serving
the Premises, including without limitation any air handling equipment,
ductwork and lines. THE TENANT SHALL PAY FOR IT'S SHARE OF THE ELECTRICITY,
WHICH SHALL BE AT TWO TIMES THE TENANT'S PROPORTIONATE SHARE, WHICH SHALL BE
EIGHT AND SIX HUNDREDTHS PERCENT (8.06%).
8.3 INTERRUPTIONS. The Landlord does not warrant that any
utilities provided by any utility company or the Landlord will be free from
shortages, failures, variations or interruptions caused by repairs,
maintenance, replacements, improvements, alterations, changes of service,
strikes, lockouts, labor controversies, accidents, inability to obtain
services, fuel, steam, water or supplies, governmental requirements or
requests, or other causes beyond the Landlord's reasonable control. None of
the same shall be deemed an eviction or disturbance of the Tenant's use and
possession of the Premises or any part thereof, or render the Landlord liable
to the Tenant for abatement of Rent, or relieve the Tenant from performance
of the Tenant's obligations under this Lease. The Landlord in no event shall
be liable for damages by reason of such shortage, failure or variation,
including without limitation loss of profits, business interruption or other
incidental or consequential damages.
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9. REPAIRS AND MAINTENANCE.
9.1 LANDLORD'S DUTY TO MAINTAIN STRUCTURE. The Landlord
shall maintain or cause to be maintained in good operating condition the
structure of the Building and shall be responsible for structural repairs to
the exterior walls, load bearing elements, foundations, roofs, structural
columns and structural floors with respect thereto, and the Landlord shall
make all required repairs thereto, provided, however, that if the necessity
for such repairs shall have arisen, in whole or in part, from the negligence
or willful acts or omissions of the Tenant, its agents, concessionaires,
officers, employees, licensees, invitees or contractors, or by any unusual
use of the Premises by the Tenant, then the Landlord may collect the cost of
such repairs, as Additional Rent, upon demand.
9.2 TENANT'S DUTY TO MAINTAIN PREMISES.
9.2.1 Except as provided in subsection 9.1, the Tenant
shall keep and maintain the Premises and all fixtures, equipment, light
fixtures and bulbs, doors (including, but not limited to, entrance doors,
patio doors and balcony doors), door hardware, carpeting, floor and wall
tiles, window and door glass, security systems, ventilation fans, window and
door treatments (including, but not limited to, blinds, shades, screens and
curtains), plumbing fixtures and drains, ceiling tiles and grids, counters,
shelving, light switches, base cove and moldings, locks, bathroom and kitchen
equipment and appliances (including, but not limited to, tissue dispensers,
handrails, mirrors, cabinets, disposals, dishwashers, sinks, faucets, drinking
fountains and water purifiers) located therein in a good, safe, clean and
sanitary condition consistent with the operation of a first-class office
building, and in compliance with all legal requirements with respect thereto.
Except as provided in subsection 9.1, all injury, breakage and damage to the
Premises (and to any other part of the Building and/or the Property, if
caused by any act or omission of the Tenant, its agents, concessionaires,
officers, employees, licensees, invitees or contractors) shall be repaired or
replaced by the Tenant at its expense. The Tenant shall keep and maintain all
pipes and conduits and all mechanical, electrical and plumbing systems
contained within the Premises in good, safe, clean and sanitary condition,
shall make all required repairs thereto, shall maintain a contract with a
licensed and qualified contractor to provide semiannual preventive
maintenance for the HVAC system and shall provide evidence from time to time
that such contract is in full force and effect, see Rider Number ONE. In the
event the Landlord agrees, upon request by the Tenant, to repair or maintain
any of the items listed in this subsection 9.2.1, the Tenant shall pay all
costs and expenses in connection with the Landlord's repair or maintenance
services, including, but not limited to, wages, materials and mileage
reimbursement.
9.2.2. The Tenant shall keep the Premises in a neat,
clean and orderly appearance to a standard of cleanliness and hygiene
reasonably satisfactory to the Landlord. The Tenant also shall maintain the
Premises free of all pests. The Tenant shall (a) surrender the Premises at
the expiration of the Term or at such other time as the Tenant may vacate the
Premises in as good condition as when received, except for (i) ordinary wear
and tear, (ii) damage by casualty (other than such damage by casualty which
is caused, in whole or in part, by the negligence or willful act or omissions
of the Tenant, its agents, officers, employees, licensees, invitees or
contractors and which is not wholly covered by the Landlord's hazard
insurance policy), or (iii) acts of God, and (b) take care not to overload the
electrical wiring serving the Premises or located within the Premises.
10. IMPROVEMENTS
10.1. BY LANDLORD. The Landlord shall not make improvements
to the Premises. The Premises hereby leased are leased to Tenant in it's
current "AS IS/WITH ALL FAULTS" condition, except as may be specifically
stated in EXHIBIT C (THE "LANDLORDS WORK").
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10.2. LANDLORD APPROVAL. The Tenant shall not make any
alteration, improvement or addition (collectively "ALTERATIONS") to the
Premises without first (a) presenting to the Landlord plans, drawn and sealed
by a licensed architect or space planner of a reasonable scale and amount of
detail to clarify the work to be done, and specifications, therefor and
obtaining the Landlord's written consent thereto (which shall not, in the
case of (i) non-structural interior Alterations, or (ii) Alterations which
would not affect any electrical, mechanical, plumbing or other Building
systems, be unreasonably withheld so long as such Alterations will not
violate applicable law or the provisions of this Lease, or impair the value
of the Premises, the Building or the rest of the Property or be visible from
the exterior of the Building) and (b) obtaining any and all governmental
permits or approvals for such Alterations, which are required by applicable
law; provided, that (i) any and all contractors or workmen performing such
Alterations must first be approved by the Landlord, (ii) all work is
performed in a good and workmanlike manner in compliance with all applicable
codes, rules, regulations and ordinances, and (iii) all persons, contractors,
tradesman or workman performing such improvements or alteration work shall be
a licensed tradesman for the type of work they are doing on the property,
evidence of which shall be submitted to the Landlord prior to the
commencement of the work and (iv) the Tenant shall restore the Premises to
its condition immediately before such Alterations were made, free of Tenants
fixtures and furniture by not later than the date on which the Tenant vacates
the Premises or the Termination Date, whichever is earlier, with the
exception of all Landlord approved partitions. The Tenant, at its own
expense, shall repair promptly any damage to the Building caused by bringing
therein any property for its use, or by the installation or removal of such
property, regardless of fault or by whom such damage is caused. As a further
condition for approving any such Alterations, the Landlord shall have the
right to require the Tenant and/or its contractor(s) to execute a copy of the
Landlord's "Contractor Policies and Procedures."
10.3 ACCEPTANCE OF POSSESSION. The Tenant shall for all
purposes of this Lease be deemed to have accepted the Premises and the
Building and to have acknowledged them to be in the condition called for
hereunder.
10.4 FIXTURES. Any and all improvements, repairs,
alterations and all other property attached to, used in connection with or
otherwise installed within the Premises by the Landlord or the Tenant shall
become the Landlord's property, without payment therefor by the Landlord,
immediately on the completion of their installation; provided that any
machinery, equipment or fixtures installed by the Tenant and used in the
conduct of the Tenant's trade or business (rather than to service the
Premises, the Building or the Property generally) and not part of the
Building Service Equipment shall remain the Tenant's property; but further
provided that if any leasehold improvements made by the Tenant replaced any
part of the Premises, such leasehold improvements that replaced any part of
the Premises shall be and remain the Landlord's property.
11. LANDLORD'S RIGHT OF ENTRY. The Landlord and its authorized
representatives shall be entitled to enter the Premises at any reasonable
time during the Tenant's usual business hours, after giving the Tenant at
least twenty-four (24) hours' oral or written notice thereof, (a) to inspect
the Premises, (b) to exhibit the Premises (i) to any existing or prospective
purchaser or Mortgagee thereof, or (ii) to any prospective tenant thereof,
provided that in doing so the Landlord and each such invitee observes all
reasonable safety standards and procedures which the Tenant may require, and
(c) to make any repair thereto and/or to take any other action therein which
the Landlord is permitted to take by this Lease or applicable law (provided,
that in any situation in which, due to an emergency or otherwise, the
Landlord reasonably believes the physical condition of the Premises, the
Building or any part of the Property would be unreasonably jeopardized unless
the Landlord were to take such action immediately, the Landlord shall not be
required to give such notice to the Tenant and may enter the same at any
time). Nothing in this section shall be deemed to impose any duty on the
Landlord to make any such repair or take any such action, and the Landlord's
performance thereof shall not constitute a waiver of the Landlord's right
hereunder to have the Tenant perform such work. The Landlord shall not in any
event be liable to the Tenant for any inconvenience,
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annoyance, disturbance, loss of business or other damage sustained by the Tenant
by reason of the making of such repairs, the taking of such action or the
bringing of materials, supplies and equipment upon the Premises during the
course thereof, and the Tenant's obligations under this Lease shall not be
affected thereby.
12. DAMAGE OR DESTRUCTION.
12.1. OPTION TO TERMINATE. If during the Term either the Premises
or any portion of the Building or the Property are substantially (meaning more
than 33% of the floor area of either) damaged or destroyed by fire or other
casualty, the Landlord shall have the option (which it may exercise by giving
written notice thereof to the Tenant within sixty (60) days after the date on
which such damage or destruction occurs) to terminate this Lease as of the date
specified in such notice (which date shall not be earlier than the thirtieth
(30th) day after such notice is given). On such termination, the Tenant shall
pay to the Landlord all Base Rent, Additional Rent and other sums and charges
payable by the Tenant hereunder and accrued through such date (as justly
apportioned to the date of such termination). If the Landlord does not terminate
this Lease pursuant to this section, the Landlord shall restore the Premises as
soon thereafter as is reasonably possible to their condition on the date of
completion of the Landlord's Work, taking into account any delay experienced by
the Landlord in recovering the proceeds of any insurance policy payable on
account of such damage or destruction and in obtaining any necessary permits.
Until the Premises are so repaired, the Base Rent (and each installment thereof)
and the Additional Rent shall abate in proportion to the floor area of so much,
if any, of the Premises as is rendered substantially unusable by the Tenant by
such damage or destruction.
12.2. NO TERMINATION OF LEASE. Except as is otherwise expressly
permitted by subsection 12.1. no total or partial (meaning less than 33% of the
floor area) damage to or destruction of any or all of the Premises shall
entitle either party hereto to surrender or terminate this Lease, or shall
relieve the Tenant from its liability hereunder to pay in full the Base Rent,
any Additional Rent and all other sums and charges which are otherwise payable
by the Tenant hereunder, or from any of its other obligations hereunder, and the
Tenant hereby waives any right now or hereafter conferred upon it by statute or
otherwise, on account of any such damage or destruction, to surrender this
Lease, to quit or surrender any or all of the Premises, or to have any
suspension, diminution, abatement or reduction of the Base Rent or any
Additional Rent or other sum payable by the Tenant hereunder.
13. CONDEMNATION.
13.1. TERMINATION OF LEASE. If any or all of the Premises and/or
of that portion of the Property underlying the Premises is taken by the
exercise of any power of eminent domain or is conveyed to or at the direction
of any governmental entity under a threat of any such taking (each of which is
herein referred to as a "CONDEMNATION"), this Lease shall terminate on the date
on which the title to so much of the Premises as is the subject of such
Condemnation vests in the condemning authority, unless the parties hereto
otherwise agree in writing. If all or any substantial portion of the Building or
the Property other than that portion thereof underlying the Premises is taken or
conveyed in a Condemnation, the Landlord shall be entitled, by giving written
notice thereof to the Tenant, to terminate this Lease on the date on which the
title to so much thereof as is the subject of such Condemnation vests in the
condemning authority. If this Lease is not terminated pursuant to this
subsection, the Landlord shall restore any of the Premises damaged by such
Condemnation substantially to its condition immediately before such
Condemnation, as soon after the Landlord's receipt of the proceeds of such
Condemnation as is reasonably possible under the circumstances.
13.2. CONDEMNATION PROCEEDS. Regardless of whether this Lease is
terminated under this section, the Tenant shall have no right in any such
Condemnation to make any claim on account
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thereof against the condemning authority, except that the Tenant may make a
separate claim for the Tenant's moving expenses and the value of the Tenant's
trade fixtures, provided that such claim does not reduce the sums otherwise
payable by the condemning authority to the Landlord. Except as aforesaid, the
Tenant hereby (a) waives all claims which it may have against the Landlord or
such condemning authority by virtue of such Condemnation, and (b) assigns to the
Landlord all such claims (including but not limited to all claims for leasehold
damages or diminution in value of the Tenant's leasehold interest hereunder).
13.3. EFFECT ON RENT. If this Lease is terminated under this
section, any Base Rent, any Additional Rent and all other sums and charges
required to paid by the Tenant hereunder shall be apportioned and paid to the
date of such termination. If this Lease is not so terminated in the event of a
Condemnation, the Base Rent (and each installment thereof) and the Additional
Rent shall be abated from the date on which the title to so much, if any, of the
Premises as is the subject of such Condemnation vests in the condemning
authority, through the Termination Date, in proportion to the floor area of such
portion of the Premises as is the subject of such Condemnation.
13.4. NO TERMINATION OF LEASE. Except as otherwise expressly
provided in this section, no total or partial Condemnation shall entitle either
party hereto to surrender or terminate this Lease, or shall relieve the Tenant
from its liability hereunder to pay in full the Base Rent, any Additional Rent
and all other sums and charges which are otherwise payable by the Tenant
hereunder, or from any of its other obligations hereunder, and the Tenant hereby
waives any right now or hereafter conferred upon it by statute or otherwise, on
account of any such Condemnation, to surrender this Lease, to quit or surrender
any or all of the Premises, or to receive any suspension, diminution, abatement
or reduction of the Base Rent or any Additional Rent or other sum payable by the
Tenant hereunder.
14. ASSIGNMENT AND SUBLETTING.
14.1. LANDLORD'S CONSENT REQUIRED. The Tenant shall not assign
this Lease, in whole or in part, nor sublet all or any part of the Premises, nor
license concessions or lease departments therein, nor otherwise permit any other
person to occupy or use any portion of the Premises (collectively, a
"TRANSFER"), without in each instance first obtaining the written consent of the
Landlord, which consent will not be unreasonably withheld or delayed, provided
that, among other things as reasonably required by Landlord, the net worth and
financial condition of the proposed assignee or transferee is the same or better
than that of the Tenant on the effective date hereof, in Landlord's sole
discretion. This prohibition includes any subletting or assignment which would
otherwise occur by operation of law, merger, consolidation, reorganization,
transfer or other change of the Tenant's corporate or proprietary structure
(including, without limitation, the transfer of partnership interests, the
creation of additional partnership interests or the transfer of corporate shares
or beneficial interests), or an assignment or subletting to or by a receiver or
trustee in any federal or state bankruptcy, insolvency or other similar
proceedings. Consent by the Landlord to any assignment, subletting, licensing or
other transfer shall not (i) constitute a waiver of the requirement for such
consent to any subsequent assignment, subletting, licensing or other Transfer,
(ii) relieve the Tenant from its duties, responsibilities and obligations under
the Lease, or (iii) relieve any guarantor of this Lease from such guarantor's
obligations under its guaranty agreement.
14.2. TRANSFER, ISSUANCE OF CORPORATE SHARES; CREATION OF
PARTNERSHIP INTERESTS. If the Tenant (or any general partner of the Tenant, or
any guarantor of the Tenant) is a corporation (other than a corporation the
outstanding voting stock of which is listed on a "national securities exchange,"
as defined in the Securities Exchange Act of 1934), or a general or limited
partnership or a limited liability company, the Tenant shall give the Landlord
notice with fifteen (15) days following the date upon which (i) additional
voting stock is issued by the Tenant or by any such general partner or guarantor
or member of Tenant, or any part or all of the corporate shares of the Tenant or
any such general partner or guarantor or member is
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Transferred, or (ii) additional partnership or member interests are created by
the Tenant or by any such guarantor, general partner or member, or any part or
all of the partnership or member interests of the Tenant or of any such
guarantor are Transferred, by sale, assignment, pledge, bequest, inheritance,
operation of law or otherwise. In the event of a Transfer and whether or not
the Tenant has given such notice, the Landlord may elect, in the Landlord's sole
discretion, to deem such Transfer to be an Event of Default hereunder, thereby
entitling the Landlord to all of the rights and remedies set forth in section
17.
14.3. ACCEPTANCE OF RENT FROM TRANSFEREE. The acceptance by the
Landlord of the payment of Rent from any person following any act, assignment or
other Transfer prohibited by this section shall not constitute a consent to such
act, assignment or other Transfer, nor shall the same be deemed to be a waiver
of any right or remedy of the Landlord's hereunder.
14.4. CONDITIONS OF CONSENT.
14.4.1. If the Tenant receives consent to a Transfer under
subsection 14.1 above, then, in addition to any other terms and conditions
imposed by the Landlord in the giving of such consent, the Tenant and the
transferee shall execute and deliver, on demand, an agreement prepared by the
Landlord providing that the transferee shall be directly bound to the Landlord
to perform all obligations of the Tenant hereunder including, without
limitation, the obligation to pay all Rent and other amounts provided for
herein; acknowledging and agreeing that there shall be no subsequent Transfer of
this Lease or of the Premises or of any interest therein without the prior
consent of the Landlord pursuant to subsection 14.1 above; acknowledging that
the Tenant as originally named herein shall remain fully liable for all
obligations of the tenant hereunder, including the obligation to pay all Rent
provided herein and including any and all obligations arising out of any
subsequent amendments to this Lease made between the Landlord and the transferee
(whether or not consented to by the Tenant), jointly and severally with the
transferee; and such other provisions as the Landlord shall require.
14.4.2. All costs incurred by the Landlord in connection
with any request for consent to a Transfer, including costs of investigation and
the fees of the Landlord's counsel, shall be paid by the Tenant on demand as a
further condition of any consent which may be given.
14.5. PROFITS FROM USE OR TRANSFER.
14.5.1. Neither the Tenant nor any other person having an
interest in the use, occupancy or other utilization of space in the Premises
shall enter into any lease, sublease, license, concession or other Transfer
which provides for rent or other payment for such use, occupancy or utilization
based in whole or in part on the net income or profits derived from the
Premises, and any such purported lease, sublease, license, concession or other
Transfer shall be absolutely void and ineffective as a conveyance or creation of
any right or interest in the possession, use, occupancy or utilization of any
part of the Premises.
14.5.2. The Tenant agrees that in the event of a Transfer,
the Tenant shall pay the Landlord, within ten (10) days after receipt thereof,
one hundred percent (100%) of the excess of (i) any and all consideration, money
or thing of value, however characterized, received by the Tenant or payable to
the Tenant in connection with or arising out of such Transfer, over (ii) all
amounts otherwise payable by the Tenant to the Landlord pursuant to this Lease.
15. RULES AND REGULATIONS. The Landlord shall have the right to
prescribe, at its sole discretion, reasonable rules and regulations (the "RULES
AND REGULATIONS") having uniform applicability to all tenants of the Property
(subject to their respective leases) and governing their use and enjoyment of
the
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Property; provided, that the Rules and Regulations shall not materially
interfere with the Tenant's use and enjoyment of the Premises in accordance with
this Lease for the purposes listed in subsection 6.1. The Rules and Regulations
may govern, without limitation, the use of sound apparatus, noise or vibrations
emanating from machinery or equipment, obnoxious fumes and/or odors, the parking
of vehicles, lighting and storage and disposal of trash and garbage. The Tenant
shall adhere to the Rules and Regulations and shall cause its agents, employees,
invitees, visitors and guests to do so. A copy of the Rules and Regulations in
effect on the date hereof is attached hereto as EXHIBIT D. The Landlord shall
have the right to amend the Rules and Regulations from time to time.
16. SUBORDINATION AND ATTORNMENT.
16.1. SUBORDINATION.
16.1.1. Unless a Mortgagee otherwise shall elect as provided
in subsection 15.2, the Tenant's rights under this Lease are and shall remain
subject and subordinate to the operation and effect of any mortgage, deed of
trust or other security instrument constituting a lien upon the Premises, and/or
the Property, whether the same shall be in existence on the date hereof or
created hereafter (any such lease, mortgage, deed of trust or other security
instrument being referred to herein as a "MORTGAGE," and the party or parties
having the benefit of the same, whether as beneficiary, trustee or noteholder,
being referred to hereinafter collectively as "MORTGAGEE"). The Tenant's
acknowledgment and agreement of subordination as provided for in this section is
self-operative and no further instrument of subordination shall be required;
however, the Tenant shall execute, within ten (10) days after request therefor,
a document providing for such further assurance thereof and for such other
matters as shall be requisite or as may be requested from time to time by the
Landlord or any Mortgagee.
16.1.2. The Landlord hereby directs the Tenant, upon (i)
the occurrence of any event of default by the Landlord, as mortgagor under
any Mortgage, (ii) the receipt by the Tenant of a notice of the occurrence of
such event of default under such Mortgage from the Landlord or such
Mortgagee, or (iii) a direction by the Mortgagee under such Mortgage to the
Tenant to pay all Rent thereafter to such Mortgagee, to make such payment to
such Mortgagee, and the Landlord agrees that in the event that the Tenant
makes such payments to such Mortgagee, as aforesaid, the Tenant shall not be
liable to the Landlord for the same.
16.2. MORTGAGEE'S UNILATERAL SUBORDINATION. If a Mortgagee shall
so elect by notice to the Tenant or by the recording of a unilateral declaration
of subordination, this Lease and the Tenant's rights hereunder shall be superior
and prior in right to the Mortgage of which such Mortgagee has the benefit, with
the same force and effect as if this Lease had been executed, delivered and
recorded prior to the execution, delivery and recording of such Mortgage,
subject, nevertheless, to such conditions as may be set forth in any such
notice or declaration.
16.3. ATTORNMENT. If any Person shall succeed to all or any part
of the Landlord's interest in the Premises, whether by purchase, foreclosure,
deed in lieu of foreclosure, power of sale, termination of lease or otherwise
and if such successor-in-interest requests or requires, the Tenant shall attorn
to such successor-in-interest and shall execute within ten (10) days after
receipt thereof an agreement in confirmation of such attornment in a form as may
be reasonably requested by such successor-in-interest. Failure to respond
within such (10) day period shall be deemed to be a confirmation by the Tenant
of the facts and matters set forth therein.
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17. DEFAULTS AND REMEDIES.
17.1. "EVENT OF DEFAULT" DEFINED. Any one or more of the
following events shall constitute a default under the terms of this Lease
("EVENT OF DEFAULT"):
(a) the failure of the Tenant to pay any Rent or other sum
of money due hereunder to the Landlord or any other person, within five (5) days
after the same is due;
(b) the sale of the Tenant's interest in the Premises under
attachment, execution or similar legal process without the Landlord's prior
written approval;
(c) the filing of a petition proposing the adjudication of
the Tenant as a bankrupt or insolvent, or the reorganization of the Tenant, or
an arrangement by the Tenant with its creditors, whether pursuant to the Federal
Bankruptcy Act or any similar federal or state proceeding, unless such petition
is filed by a party other than the Tenant and is withdrawn or dismissed within
sixty (60) days after the date of its filing;
(d) the admission in writing by the Tenant of its inability
to pay its debts when due;
(e) the appointment of a receiver or trustee for the
business or property of the Tenant, unless such appointment is vacated within
sixty (60) days of its entry;
(f) the making by the Tenant of an assignment for the
benefit of its creditors;
(g) a default by the Tenant in the performance or
observance of any covenant or agreement of this Lease to be performed or
observed by the Tenant (other than as set forth in clauses (a) through (f)
above), which default is not cured within thirty (30) days after the giving of
written notice thereof by the Landlord, unless such default is of such nature
that it cannot be cured within such 30-day period, in which event an Event of
Default shall not be deemed to have occurred if the Tenant institutes a cure
within the 30-day period and thereafter diligently and continuously prosecutes
the curing of the same until completion, but in no event shall such cure period
exceed ninety (90) days; provided, however, that if the Tenant defaults in the
performance of any such covenant or agreement more than two (2) times during the
Term, then notwithstanding that such defaults have each been cured by the
Tenant, any further defaults shall be deemed an Event of Default without the
ability to cure; or
(h) the vacating or abandonment of the Premises by the
Tenant at any time during the Term.
17.2 LANDLORD'S REMEDIES. Upon the occurrence of an Event of
Default, the Landlord, without notice to the Tenant in any instance (except
where expressly provided for below), may do any one or more of the following:
(a) perform, on behalf and at the expense of the Tenant,
any obligation of the Tenant under this Lease which the Tenant has failed to
perform beyond any applicable grace or cure periods and of which the Landlord
shall have given the Tenant notice (except in an emergency situation in which no
notice is required), the cost of which performance by the Landlord, together
with interest thereon at the rate of fifteen percent (15%) per annum from the
date of such expenditure, shall be deemed Additional
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Rent and shall be payable by the Tenant to the Landlord as otherwise set forth
herein;
(b) elect to terminate this Lease and the tenancy created
hereby by giving notice of such election to the Tenant without any right on the
part of the Tenant to save the forfeiture by payment of any sum due or by other
performance of condition, term, agreement or covenant broken, or elect to
terminate the Tenant's possessory rights and all other rights of the Tenant
without terminating this Lease, and in either event, at any time thereafter
without notice or demand and without any liability whatsoever, re-enter the
Premises by force, summary proceedings or otherwise, and remove the Tenant and
all other persons and property from the Premises, and store such property in a
public warehouse or elsewhere at the cost and for the account of the Tenant
without resort to legal process and without the Landlord being deemed guilty of
trespass or becoming liable for any loss or damage occasioned thereby;
(c) accelerate the Rent and any other charges, whether or
not stated to be Additional Rent, for the entire balance of the Term, or any
part of such Rent, and any costs, whether chargeable to the Landlord or the
Tenant, as if by the terms of this Lease the balance of the Rent and other
charges and expenses were on that date payable in advance.
(d) cause an attorney for the Landlord to proceed in any
competent court for judgment in ejectment against the Tenant and all persons
claiming under the Tenant for the recovery by the Landlord of possession of the
Premises, and if for any reason after such action has been commenced it is
canceled or suspended and possession of the Premises remains in or is restored
to the Tenant, the Landlord shall have the right upon any subsequent default or
upon the expiration or termination of this Lease, or any renewal or extension
hereof, to bring one or more actions to recover possession of the Premises; and
(e) exercise any other legal and/or equitable right or
remedy which it may have at law or in equity, including rights of specific
performance and/or injunctive relief, where appropriate.
In any action for possession of the Premises or for monetary damages,
including Termination Damages and Liquidated Damages, or for the recovery of
Rent due for the balance of the Term, the Landlord may cause to be filed in such
action an affidavit setting forth the facts necessary to authorize the entry of
judgment. If a true copy of this Lease (and of the truth of the copy, such
affidavit shall be sufficient proof) must be filed in such action, it shall not
be necessary to file the original, notwithstanding any law, rule of court,
custom or practice to the contrary.
17.3. DAMAGES
(a) If this Lease is terminated by the Landlord pursuant to
subsection 17.2, the Tenant nevertheless shall remain liable for any Rent and
damages which may be due or sustained prior to such termination, as well as all
reasonable costs, fees and expenses, including, without limitation, sheriffs' or
other officers' commissions whether chargeable to the Landlord or the Tenant,
watchmen's wages, brokers' and attorneys' fees, and repair and renovation costs
incurred by the Landlord in pursuant of its remedies hereunder, and/or in
connection with any bankruptcy proceedings of the Tenant, and/or in connection
with renting the Premises to others from time to time (all such Rent, damages,
costs, fees and expenses being referred to herein as "TERMINATION DAMAGES"),
plus additional damages for all Rent treated as in arrears ("LIQUIDATED
DAMAGES"). At the election of the Landlord, Termination Damages shall be an
amount equal to either.
(i) the Rent which, but for the termination of this
Lease, would have become due during the remainder of the Term, less the amount
or amounts of rent, if any, which the Landlord receives during such period from
others to whom the Premises may be rented (other than any
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additional rent received by the Landlord as a result of any failure of such
other person to perform any of its obligations to the Landlord), in which case
Termination Damages shall be computed and payable in monthly installments, in
advance, on the first business day of each calendar month following the
termination of this Lease and shall continue until the date on which the Term
would have expired but for such termination, and any action or suit brought to
collect any such Termination Damages for any month shall not in any manner
prejudice the right of the Landlord to collect any Termination Damages for any
subsequent months by similar proceeding; or
(ii) the present worth (as of the date of such
termination) of the Rent which, but for the termination of this Lease, would
have become due during the remainder of the Term, less the fair rental value of
the Premises, as determined by an independent real estate appraiser or broker
selected by the Landlord, in which case such Termination Damages shall be
payable to the Landlord in one lump sum on demand, and shall bear interest at
the rate of fifteen percent (15%) per annum. "Present worth" shall be computed
by discounting such amount to present worth at a rate equal to one percentage
point above the discount rate then in effect at the Federal Reserve Bank.
(b) Notwithstanding anything to the contrary set forth in
this subsection 17.3, in the event (i) the Landlord must initiate legal action
to enforce any one or more of the provisions of this Lease against the Tenant,
its successors or assigns, or (ii) the Landlord must consult with and/or engage
an attorney(s) in order (A) to enforce any one or more of the provisions of this
Lease against the Tenant, its successors or assigns, or (B) in connection with
any bankruptcy proceeding of the Tenant, whether or not such consultation and/or
engagement results in the initiation of any judicial action or termination of
this Lease, then and in any of such events, the Tenant, its successors and
assigns, undertakes and agrees to pay any and all reasonable costs incurred by
the Landlord in connection therewith, including, by way of illustration and not
of limitation, all reasonable attorneys' fees (inclusive of consultation fees,
research costs and correspondence fees), court costs (if awarded post-judgment)
and any similar professional fees or costs associated therewith.
17.4. WAIVER OF JURY TRIAL. Each party hereto hereby waives any
right which it may otherwise have at law or in equity to a trial by jury in
connection with any suit or proceeding at law or in equity brought by the other
against the waiving party or which otherwise relates to this lease, as a result
of an event of default or otherwise. The Tenant further agrees that in the
event the Landlord commences any summary proceeding for nonpayment of rent or
possession of the Premises, the Tenant will not, and hereby waives, all right to
interpose any counterclaim of whatever nature in any such proceeding.
17.5. LANDLORD'S SECURITY INTEREST. In addition to any lien for
Rent available to the Landlord, the Landlord shall have, and the Tenant hereby
grants to the Landlord, a continuing security interest for all Rent and other
sums of money becoming due hereunder from the Tenant, upon all the Tenant's
accounts receivable, inventory, equipment and all other personal property
located on the Premises. If an Event of Default occurs, the Landlord shall
have, in addition to any other remedies provided herein or by law, all of the
rights and remedies afforded to secured parties under the Uniform Commercial
Code, as codified in Maryland ("the U.C.C."), including but not limited to (a)
the right to sell the Tenant's said property at public or private sale upon ten
(10) days' notice to the Tenant, and (b) the right to take possession of such
property without resort to judicial process in accordance with the provisions of
Section 9-503 of the U.C.C. The Tenant, on its receipt of a written request
therefor from the Landlord, shall execute such financing statements and other
instruments as are necessary or desirable, in the Landlord's judgment, to
perfect such security interest.
17.6 CONFESSION OF JUDGMENT. If any Event of Default occurs which
is not cured within any applicable grace period provided herein, the Tenant and
any guarantor of any of the Tenant's obligations hereunder hereby authorizes and
empowers any attorney of any court of record within the United
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<PAGE>
States to appear for the Tenant and any such guarantor or any one or more of
them in any court in one or more proceedings or before any clerk thereof, and
confess judgment against the Tenant and each such guarantor without prior
notice, or opportunity for prior hearing, in favor of the Landlord for all
unpaid Rent and other sums due hereunder, hereby waiving and releasing, to the
extent permitted by law, all errors and all rights of exemption, appeal, stay of
execution, inquisition and extension upon any levy on real estate or personal
property to which the Tenant or any such guarantor may otherwise be entitled
under the laws of the United States or of any state or possession of the United
States now in force or which may hereafter be passed. Such authority and power
may be exercised on one or more occasions, from time to time, in the same or
different jurisdictions, as often as the Landlord deems necessary or desirable,
for all of which this Lease shall be a sufficient warrant.
18. ESTOPPEL CERTIFICATE. The Tenant shall, without charge, at
any time and from time to time, within ten (10) days after receipt of request
therefor from the landlord, execute, acknowledge and deliver to the Landlord,
and to such Mortgagee or other party as may be designated by the Landlord, a
written estoppel certificate in form and substance as may be requested from time
to time by the Landlord, the other party or any Mortgagee, certifying to the
other party, any Mortgagee, any purchaser of Landlord's interest in all or any
part of the Property, or any other person or entity designated by the other
party, as of the date of such estoppel certificate, the following: (a) whether
the Tenant is in possession of the Property; (b) whether this Lease is in full
force and effect; (c) whether there are any amendments to this Lease, and if so,
specifying such amendments; (d) whether there are any then-existing setoffs or
defenses against the enforcement of any rights hereunder, and if so, specifying
such matters in detail; (e) the dates, if any, to which any rent or other sums
due hereunder have been paid in advance and the amount of any security deposit
held by the Landlord; (f) that the Tenant has no knowledge of any then-existing
defaults of the Landlord under this Lease, or if there are such defaults,
specifying them in detail; (g) that the Tenant has no knowledge of any event
having occurred that authorized the termination of this Lease by the Tenant, or
if such event has occurred, specifying it in detail; (h) the address to which
notices to the Tenant should be sent; and (i) any and all other matters
reasonably requested by the Landlord, any Mortgagee and/or any other person or
entity designed by the Landlord. Any such estoppel certificate may be relied
upon by the person or entity to whom it is directed or by any other person or
entity who could reasonably be expected to rely on it in the normal course of
business. The failure of the Tenant to execute, acknowledge and deliver such a
certificate in accordance with this section within fifteen (15) days after a
request therefor by the Landlord shall constitute an acknowledgment by the
Tenant, which may be relied on by any person or entity who would be entitled to
rely upon any such certificate, that such certificate as submitted by the
requesting party to the other party is true and correct, and the requesting
party is hereby authorized to so certify.
19. QUIET ENJOYMENT. The Landlord hereby warrants that, so long
as all of the Tenant's obligations hereunder are timely performed, the Tenant
will have during the Term quiet and peaceful possession of the Premises and
enjoyment of such rights as the Tenant may hold hereunder to use the Common
Areas, except if and to the extent that such possession and use are terminated
pursuant to this Lease. The Tenant hereby acknowledges that it has examined the
Premises, the title thereto, the zoning thereof, the streets, sidewalks, parking
areas, curbs and access ways adjoining them, any surface and subsurface
conditions thereof, and the present uses and nonuses thereof, if any, and that
it accepts each of them in its present condition or state, without restriction,
representation, covenant or warranty, express or implied, in fact or at law, by
the Landlord or any other person, and without recourse to the Landlord, as to
the title thereto, any encumbrances thereon, any appurtenances thereto, the
nature, condition or usability thereof, or the uses to which any or all of the
Premises may be put.
20. NOTICES. Except as may be otherwise provided in this Lease,
any notice, demand, consent, approval, request or other communication or
document to be provided hereunder to the Landlord or
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<PAGE>
the Tenant (a) shall be in writing, and (b) shall be deemed to have been
provided (i) two (2) days following the date sent as certified mail in the
United States mails, postage prepaid, return receipt requested, (ii) on the day
following the date it is deposited prior to the close of business with FedEx or
another national courier service or (iii) on the date of hand delivery (if such
party's receipt thereof is acknowledged in writing), in each case to the address
of such party set forth hereinbelow or to such other address as such party may
designate from time to time by notice to each other party hereto.
If to the Landlord, notice shall be sent to:
The Morris Weinman Company
106 Old Court Road, #300
Baltimore, MD 21208
All rent and other payments shall be sent to:
The Morris Weinman Company
P.O. Box 5992
Baltimore, MD 21282-5992
If to the Tenant, notice shall be sent to:
IMTEK Corporation
8028 Ritchie Highway, #208
Pasadena, MD 21122
Attn: Mike Lowe
21. GENERAL
21.1 EFFECTIVENESS. This Lease shall become effective on
and only on its execution and delivery by each party hereto.
21.2 COMPLETE UNDERSTANDING. This Lease represents the
complete understanding between the parties hereto as to the subject matter
hereof, and supersedes all prior negotiations, representations, guaranties,
warranties, promises, statements and agreements, either written or oral, between
the parties hereto as to the same.
21.3 AMENDMENT. This Lease may be amended by and only by an
instrument executed and delivered by each party hereto, provided, however, that
the Landlord shall have the right at any time, and from time to time, during the
Term unilaterally to amend the provisions of this Lease if the Landlord (or any
of its partners) is advised by its counsel that all or any portion of the monies
paid, directly or indirectly, by the Tenant to the Landlord (and/or its
partners) hereunder are, or may be deemed to be, unrelated business income
within the meaning of the United States Internal Revenue Code or regulations
issued thereunder, and the Tenant agrees that it will execute all documents or
instruments necessary to effect such amendment or amendments, provided that no
such amendment shall result in the Tenant having to pay in the aggregate a
larger sum of money on account of its occupancy of the Premises under the terms
of this Lease as so amended, and provided further that no such amendment or
amendments shall result in the Tenant receiving under the provisions of this
Lease less services than it is entitled to receive, nor services or a lesser
quality. Furthermore, the Tenant agrees not to take any steps or actions
knowingly which may jeopardize the Landlord's (and/or its partners') tax-exempt
status.
21.4 WAIVER. No party hereto shall be deemed to have waived
the exercise of any right which it holds hereunder unless such waiver is made
expressly and in writing (and, without limiting the generality of the foregoing,
no delay or omission by any party hereto in exercising any such right shall be
deemed a waiver of its future
- - 27 -
<PAGE>
exercise). No such waiver made in any instance involving the exercise of any
such right shall be deemed a waiver as to any other such instance or any other
such right. Without limiting the generality of the foregoing provisions of this
subsection, the Landlord's receipt or acceptance of any Base Rent, Additional
Rent of other sum from the Tenant or any other person shall not be deemed a
waiver of the Landlord's right to enforce any of its rights hereunder on account
of any default by the Tenant in performing its obligations hereunder.
21.5 APPLICABLE LAW. This Lease shall be given effect and
construed by application of the laws of Maryland, and any action or proceeding
arising hereunder shall be brought in the courts of Maryland; provided, however,
that if any such action or proceeding arises under the Constitution, laws or
treaties of the United States of America, or if there is a diversity of
citizenship between the parties thereto, so that it is to be brought in a United
States District Court, it may be brought only in the United States District
Court for Maryland or any successor federal court having original jurisdiction.
21.6 COMMISSIONS. The parties hereto hereby acknowledge and
agree that, in connection with the leasing of the Premises hereunder, they have
used the services of MILLER CORPORATE REAL ESTATE SERVICES. Any and all
commissions due such brokers shall be paid in accordance with the terms and
conditions set forth in a separate written agreement or agreements between the
Landlord and MILLER CORPORATE REAL ESTATE SERVICES. Subject to the foregoing,
each party hereto hereby represents and warrants to the other that, in
connection with such leasing, the party so representing and warranting has not
dealt with any real estate broker, agent or finder, and there is no commission,
charge or other compensation due on account thereof. Each party hereto shall
indemnify and hold harmless the other against and from any inaccuracy in such
party's representation.
21.7 LANDLORD'S LIABILITY. No Person holding the Landlord's
interest hereunder (whether or not such Person is named as the "Landlord"
herein) shall have any liability hereunder after such Person ceases to hold such
interest, except for any such liability accruing while such Person holds such
interest. No Mortgagee not in possession of the Premises shall have any
liability hereunder. Neither the Landlord nor any principal of the Landlord,
whether disclosed or undisclosed, shall have any personal liability under this
Lease. If the Landlord defaults in performing any of its obligations hereunder
or otherwise, the Tenant shall look solely to the Landlord's equity, interest
and rights in the Property to satisfy the Tenant's remedies on account thereof.
21.8 DISCLAIMER OF PARTNERSHIP STATUS. Nothing in this
Lease shall be deemed in any way to create between the parties hereto any
relationship of partnership, joint venture or association, and the parties
hereto hereby disclaim the existence of any such relationship.
21.9. REMEDIES CUMULATIVE. No reference to any specific
right or remedy shall preclude the Landlord from exercising any other right or
from having any other remedy or from maintaining any action to which it may
otherwise be entitled at law or in equity. No failure by the Landlord to insist
upon the strict performance of any agreement, term, covenant or condition
hereof, or to exercise any right or remedy consequent upon a breach thereof, and
no acceptance of full or partial Rent during the continuance of any such breach,
shall constitute a waiver of any such breach, agreement, term, covenant or
condition. No waiver by the Landlord of any breach by the Tenant under this
Lease or of any breach by any other tenant under any other lease of any portion
of the Building shall affect or alter this Lease in any way whatsoever.
21.10. SEVERABILITY. No determination by any court,
governmental or administrative body or agency or otherwise that any provision of
this Lease or any amendment hereof is invalid or unenforceable in any instance
shall affect the validly or enforceability of (a) any other provision hereof, or
(b) such provision in any circumstance not controlled by such determination.
Each such provision shall remain valid and enforceable to the fullest extent
allowed by and shall be construed wherever possible as being consistent with,
applicable law.
21.11. AUTHORITY. If the Tenant is a corporation,
partnership, limited liability company or similar entity, the person executing
this Lease on behalf of the Tenant represents and warrants that (a) the Tenant
is duty organized and validly existing and (b) this Lease (i) has been
authorized by all necessary parties, (ii) is validly executed by an authorized
officer or agent of the Tenant and (iii) is binding upon and enforceable against
the Tenant in accordance with its terms.
21.12. JOINT AND SEVERAL LIABILITY. If the Tenant shall be
one or more individuals, corporations
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<PAGE>
or other entities, whether or not operating as a partnership or joint
venture, then each such individual, corporation, entity, joint venturer or
partner shall be deemed to be both jointly and severally liable for the
payment of the entire Rent and other payments specified herein.
21.13. RECORDATION. Neither this Lease, any
amendment to this Lease, nor any memorandum, affidavit or other item with
respect thereto shall be recorded by the Tenant or by anyone acting through,
under or on behalf of the Tenant, and the recording thereof in violation of
this provision shall (i) be deemed an Event of Default and (ii) at the
Landlord's election, make this Lease null and void.
21.14. TIME OF ESSENCE. Time shall be of the essence
with respect to the performance of the parties' obligations under this Lease.
21.15. INTERPRETATION. The Landlord and the Tenant
hereby agree that both parties were equally influential in preparing and
negotiating this Lease, and each had the opportunity to seek the advice of legal
counsel prior to the execution of this Lease. Therefore, the Landlord and the
Tenant agree that no presumption should arise construing this Lease more
unfavorably against any one party.
21.16. HEADINGS. The headings of the sections,
subsections, paragraphs and subparagraphs hereof are provided herein for and
only for convenience of reference and shall not be considered in construing
their contents.
21.17. CONSTRUCTION. As used herein, all references
made (a) in the neuter, masculine or feminine gender shall be deemed to have
been made in all such genders; (b) in the singular or plural number shall be
deemed to have been made, respectively, in the plural or singular number as
well; and (c) to any section, subsection, paragraph or subparagraph shall be
deemed, unless otherwise expressly indicated, to have been made to such
section, subsection, paragraph or subparagraph of this Lease.
21.18. EXHIBITS. Each writing or drawing referred to
herein as being attached hereto as a schedule, an exhibit or otherwise
designated herein as a schedule or an exhibit hereto is hereby made a part
hereof.
21.19. NET LEASE. The Tenant acknowledges and agrees
that this Lease is intended to be a complete net lease to the Landlord (except
as expressly set forth herein) and that the Landlord is not responsible for any
costs, charges, expenses or outlays of any nature whatsoever arising from or
relating to the Premises, the use and occupancy thereof, or the contents
thereof. The Tenant shall pay all charges, impositions, costs and expenses of
every nature and kind relating to the Premises (except as expressly set forth
herein).
IN WITNESS WHEREOF, each party hereto has executed and ensealed this
Lease, or caused it to be executed and ensealed on its behalf by its duly
authorized representatives, on the date first above written.
WITNESS OR ATTEST: LANDLORD: THE MORRIS WEINMAN COMPANY
By: (SEAL)
- ------------------------------ ---------------------------
Mark S. Weinman, V.P.
WITNESS OR ATTEST: TENANT: IMTEK Corporation
/s/ Robert J. Brown By:/s/ Brad C. Thompson CFO (SEAL)
- ------------------------------ ---------------------------
Brad C. Thompson CFO
67164.02
11/26/97
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<PAGE>
EXHIBIT "A"
111 WATER STREET
BALTIMORE CITY, MD
NOT TO SCALE
[MAP]
<PAGE>
EXHIBIT B
DRAWING SHOWING APPROXIMATE LOCATION OF PREMISES
[MAP]
<PAGE>
EXHIBIT C
LANDLORD'S WORK
1) Landlord shall partition the existing corridor adjacent to the existing
premises, so as to demise approximately 132 square feet as noted on the
attached plan, Exhibit C Schedule One.
2) Landlords work shall include:
a) Removal of the existing shelves and fixtures.
b) Install approximately 13 lf of demising wall.
c) Install one 3' x 6'-8" door and door frame to fire exit.
d) Install two 2' x 4' florescent light fixtures with switch.
e) Install one exit light.
e) One coat of paint, one color; on all paintable wall surfaces.
f) The floor and ceiling finish to remain as is, in the original
condition.
3) Landlord reserves the right to extend one HVAC register from the Premises
to the common area lobby adjacent to the Premises.
4) Landlord shall complete its work within 30 days of the effective date of
the Lease.
5) No other improvements shall be made by Landlord unless specifically stated
or listed herein. All additional improvements to the premises shall be
made by the Tenant at Tenants sole cost and expense and in accordance to
the terms stated in the lease.
<PAGE>
EXHIBIT C. SCHEDULE ONE
[MAP]
<PAGE>
EXHIBIT D
CURRENT RULES AND REGULATIONS
1. The sidewalks, passages and stairways shall not be obstructed by
the Tenant or used by the Tenant for any purpose other than ingress and
egress from and to the Tenant's premises. The Landlord shall in all cases
retain the right to control or prevent access thereto by any person whose
presence, in the Landlord's judgment, would be prejudicial to the safety,
peace, character or reputation of the Property or of any tenant of the
Property.
2. The toilet rooms, water closets, sinks, faucets, plumbing and
other services apparatus of any kind shall not be used by the Tenant for any
purpose other than those for which they were installed, and no sweepings,
rubbish, rags, ashes, chemicals or other refuse or injurious substances shall
be placed therein or used in connection therewith by the Tenant, or left by
the Tenant in the lobbies, passages, elevators or stairways of the Building.
The expense of any breakage, stoppage or damage to such sinks, toilets and
the like shall be borne by the tenant who, or whose employees, contractors or
invitees, caused it.
3. No skylight, window, door or transom of the Building shall be
covered or obstructed by the Tenant, and no window shade, blind, curtain,
screen, storm window, awning or other material shall be installed or placed
on any window or in any window space, except as approved in writing by the
Landlord. If the Landlord has installed or hereafter installs any shade,
blind or curtain in the Premises, the Tenant shall not remove it without
first obtaining the Landlord's written consent thereto which shall not be
unreasonably withheld.
4. No sign, lettering, insignia, advertisement, notice or other thing
shall be inscribed, painted, installed, erected or placed in any portion of
the Premises which may be seen from outside the Building, or on any window,
window space or other part of the exterior or interior of the Building,
unless first approved in writing by the Landlord. Names on suite entrances
may be provided by and only by the Landlord and at the Tenant's expense,
using in each instance lettering of a design and in a form consistent with the
other lettering in the Building, and first approved in writing by the
Landlord. The Tenant shall not erect any stand, booth or showcase or other
article or matter in or upon the Premises, the Building and/or the Property
without first obtaining the Landlord's written consent thereto which shall
not be unreasonably withheld.
5. The Tenant shall not place any other or additional lock upon any
door within the Premises or elsewhere upon the Property, and the Tenant shall
surrender all keys for all such locks at the end of the Term. The Landlord
shall provide the Tenant with one set of keys to the Premises when the Tenant
assumes possession thereof.
6. The Tenant shall not do or permit to be done anything which
obstructs of interferes with the rights of any other tenant of the Property.
No bird, fish or animal shall be brought into or kept in or about the
Premises, the Building and/or the Property.
7. If the Tenant desires to install signaling, telegraphic,
telephonic, protective alarm or other wires, apparatus or devices within the
Premises, the Landlord shall direct where and how they are to be installed
and, except as so directed, no installation, boring or cutting shall be
permitted. The Landlord shall have the right (a) to prevent or interrupt the
transmission of excessive, dangerous or annoying current of electricity or
otherwise into or through the Premises, the Building and/or the Property, (b)
to require the changing of wiring connections or layout at the Tenant's
expense, to the extent that the Landlord may deem necessary, (c) to require
compliance with such reasonable rules as the Landlord may establish relating
thereto, and (d) in the event of noncompliance with such requirements or
rules, immediately to cut wiring or do whatever else it considers necessary
to remove the danger, annoyance or electrical interference with apparatus in
any part of the Building and/or the Property.
8. Intentionally deleted
9. The Landlord shall in no event be responsible for admitting or
excluding any person from the Premises. In cases of invasion, hostile
attack, insurrection, mob violence, riot, public excitement or other
commotion, explosion, fire or any casualty, the Landlord shall have the right
to bar or limit access to the Property to protect the safety of occupants of
the Property, or any property within the Property.
<PAGE>
10. The use of any area within the Property as sleeping quarters is
strictly prohibited at all times.
11. The Tenant shall keep the windows and doors of the Premises
(including those opening on corridors and all doors between rooms entitled to
receive heating or air conditioning service and rooms not entitled to receive
such service) closed while the heating or air-conditioning system is
operating, in order to minimize the energy used by, and to conserve the
effectiveness of, such systems. The Tenant shall comply with all reasonable
rules and regulations from time to time promulgated by the Landlord with
respect to such systems or their use.
12. The Landlord shall have the right to prescribe the weight and
position of inventory and of other heavy equipment or fixtures, which shall,
if considered necessary by the Landlord, stand on plank strips to distribute
their weight. Any and all damage or injury to the Property arising out of
the Tenant's equipment being on the Property shall be repaired by the Tenant
at his expense. The Tenant shall not install or operate any machinery whose
installation or operation may affect the structure of the Building without
first obtaining the Landlord's written consent thereto, and the Tenant shall
not install any other equipment of any kind or nature whatsoever which may
necessitate any change, replacement or addition to, or in the use of, the
water system, the heating system, the plumbing system, the air-conditioning
system or the electrical system of the Premises, the Building or the Property
without first obtaining the Landlord's written consent thereto. Business
machines and mechanical equipment belonging to the Tenant which cause noise
or vibration that may be transmitted to the structure of the Building, any
other buildings on the Property, or any space therein to such a degree as to
be objectionable to the Landlord or to any tenant, shall be installed and
maintained by the Tenant, at its expense, on vibration eliminators or other
devices sufficient to eliminate such noise and vibration. The Tenant shall
remove promptly from any sidewalks and other areas on the Property any of the
Tenant's furniture, equipment, inventory or other material delivered or
deposited there.
13. The Tenant shall not place or permit its agents, employees or
invitees to place any thing or material on the roof or in the gutters and
downspouts of the Building or cut, drive nails into or otherwise penetrate the
roof, without first obtaining the Landlord's written consent thereto. The
Tenant shall be responsible for any damage to the roof caused by its
employees or contractors. The Tenant shall indemnify the Landlord and hold
the Landlord harmless against expenses incurred to correct any damage to the
roof resulting from the Tenant's violation of this rule, as well as any
consequential damages to the Landlord or any other tenant of the Property.
The Landlord shall repair damage to the roof caused by the Tenant's acts,
omissions or negligence and the Tenant shall reimburse the Landlord for all
expenses incurred in making such repairs. The Landlord or its agents may
enter the Premises at all reasonable hours to make such roof repairs. If the
Landlord makes any expenditure or incurs any obligation for the payment of
money in connection therewith, including but not limited to attorneys' fees
in instituting, prosecuting or defending any action or proceeding, such sums
paid or obligations incurred, with interest at the rate of twenty percent
(20%) per annum, and costs, shall be deemed to be Additional Rent and shall
be paid by the Tenant to the Landlord within five (5) days after rendition of
any bill or statement to the Tenant therefor. The Tenant shall not place
mechanical or other equipment on the roof without the Landlord's prior
written consent, which shall be conditioned in part upon the Landlord's
approval of the Tenant's plans and specifications for such installations. The
costs of any roof improvements made pursuant hereto shall be borne by the
Tenant.
14. The Landlord reserves the right to institute energy management
procedures when necessary.
15. The Tenant shall assure that the doors of the Premises and closed
and locked and that all water faucets, water apparatus and utilities are shut
off before the Tenant and its employees leave the Premises each day.
16. The Landlord shall have the right to rescind, suspend or modify
these Rules and Regulations and to promulgate such other rules or regulations
as, in the Landlord's reasonable judgment, are from time to time needed for
the safety, care, maintenance, operation and cleanliness of the Building or
the Property, or for the preservation of good order therein. Upon the
Tenant's having been given notice of the taking of any such any action, the
Rules and Regulations as so rescinded, suspended, modified or promulgated
shall have the same force and effect as if in effect at the time at which the
Tenant's lease was entered into (except that nothing in the Rules and
Regulations shall be deemed in any way to alter or impair any provision of
such lease).
17. Nothing in these Rules and Regulations shall give any Tenant any
right or claim against the Landlord or any other person if the Landlord does
not enforce any of them against any other tenant or person (whether or not
the Landlord has the right to enforce them against such tenant or person),
and no such nonenforcement with respect to any tenant shall constitute a
waiver of the right to enforce them as to the Tenant or any other tenant or
person.
D-2
<PAGE>
RIDER NUMBER ONE
HVAC MAINTENANCE AND REPAIR
This Rider is attached to and made a part of the attached lease dated
_______________, 1997 (the "Lease"), between THE MORRIS WEINMAN COMPANY (the
"Landlord") and IMTEK CORPORATION (the "Tenant"). All capitalized terms used
herein shall have the same meaning as such terms have in the Lease. Wherever
there is a conflict between this Rider and the Lease, this Rider shall modify
and supersede such other part of the Lease to the extent necessary to
eliminate any such conflict, but no further.
MAINTENANCE AND REPAIR OF HVAC
1) At the time Tenant takes possession of the premises, the
Heating Venting and Air Conditioning (HVAC) shall be in good working order.
Landlord shall provide a ninety day (90) warranty for the operation of the
HVAC equipment. The Tenant shall have the right to verify the condition of
the equipment at Tenant's sole cost and expense.
2) During the term of the lease or any renewal period, Tenant
shall be responsible for the maintenance and repair of the HVAC equipment
that serves the premises at Tenants sole cost and expense.
3) Tenant shall maintain in full force and effect a maintenance
contract for the HVAC equipment with a licensed and qualified HVAC technician
or contractor during the term of the lease or any renewal period. The
equipment shall be maintained a minimum of three (3) times each year. The
maintenance shall include a minimum of the following items shown on Schedule:
ONE. Tenant shall provide Landlord with a copy of the maintenance contract
upon request by Landlord.
4) The Landlord shall pay all cost for repair to the HVAC
equipment that exceeds One Thousand and 00/00 Dollars ($1,000.00) per lease
year (excluding the cost of the preventative maintenance); if and only if the
Tenant has written evidence of regular service to the equipment as described
above and if the repairs are not the result of Tenants negligence in
maintaining or operating the HVAC equipment. In the event that tenant fails
to provide written evidence of regular maintenance service or in the event of
Tenants negligence in operating the equipment, the full cost of the repairs
shall be paid by the Tenant. If the Landlord is required to make the
repairs, Landlord in its sole discretion shall have the option to repair or
replace the HVAC equipment.
IN WITNESS WHEREOF, the parties have executed this Lease Rider
Number ONE, under seal on the date first above written.
Witness Landlord
- ---------------------------------- ----------------------------------------
Tenant
- ---------------------------------- ----------------------------------------
<PAGE>
RIDER # ONE SCHEDULE # ONE
HVAC PREVENTATIVE MAINTENANCE SCHEDULE
SPLIT SYSTEMS
ANNUAL INSPECTION - (One (1) Time Per Year)
(1) Check compressor oil level.
(2) Check operation of oil heater and thermostat.
(3) Remove oil from compressor reservoir, if required.
(4) Replace oil, and oil filter cartridge, if required.
(5) Replace refrigerant filter dryers, if applicable.
(6) Check condition of moisture indicators.
(7) Check and calibrate all safety controls.
(8) Check and calibrate all operating controls.
(9) Inspect condenser and evaporator coils for dirt and leaks.
(10) Check oil pressure and temperature.
(11) Inspect inverter contacts and electrical connections.
(12) Check operation of motor protection, if applicable.
(13) Check unloading devices.
(14) Lubricate all non-sealed bearings and shafts.
(15) Replace air filters.
PERIODIC OPERATIONAL INSPECTION - (Three (3) Times Per Year)
(1) Inspect condenser coils for cleanliness.
(2) Inspect fans for proper operation.
(3) Check amperage draw.
(4) Check controls for proper operation.
(5) Replace the air filters.
scope3
<PAGE>
EXHIBIT 10.6.3
LANDLORD:
GLENN DALE BUSINESS CENTER, L.L.C.
TENANT:
ASSOCIATED PACKAGING ENTERPRISES, INC.
----------------------
LEASE
----------------------
Dated:
July 31, 1997
GLENN DALE BUSINESS CENTER
Trade Name: Associated Packaging Enterprises, Inc.
<PAGE>
LEASE BY AND BETWEEN
GLENN DALE BUSINESS CENTER, L.L.C., LANDLORD,
and ASSOCIATED PACKAGING ENTERPRISES INC., TENANT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
1. Payment of Rental...................................... 2
2. Use.................................................... 2
3. Utilities.............................................. 2
4. Assignment and Subletting.............................. 3
5. Loading Capacity....................................... 3
6. Increase in Landlord's Insurance Rates................. 3
7. Insurance-Indemnification.............................. 3
8. Alterations............................................ 4
9. Ownership of Alterations............................... 4
10. Repairs and Maintenance................................ 5
11. Tax Escalation......................................... 6
12. Default................................................ 6
13. Total or Partial Destruction........................... 7
14. Possession............................................. 8
15. Exterior of Premises - Signs........................... 8
16. Relocation............................................. 8
17. For Rent/Sale Signs.................................... 8
18. Right of Entry......................................... 8
19. Termination of Term.................................... 8
20. Condemnation........................................... 9
21. Subordination/Estoppel/Non-Disturbance................. 9
22. Attornment............................................. 9
23. Parking and Common Area................................ 10
24. Compliance with Laws................................... 11
25. Notices................................................ 12
26. Non-Waiver............................................. 12
27. Successors and Assigns................................. 12
28. Security Deposit/Construction.......................... 12
29. Accord and Satisfaction................................ 13
30. Notices to Mortgagee................................... 13
31. Estoppel Certificate................................... 13
32. Mechanic's Liens....................................... 13
33. Waiver of Jury Trial and Right to Counterclaim......... 13
34. Brokerage.............................................. 14
35. Tenant Representative.................................. 14
36. No Offer............................................... 14
37. Tenant's Right to Audit................................ 14
38. Miscellaneous.......................................... 14
</TABLE>
EXHIBITS
Exhibit A - Plat of Premises
Exhibit B - Construction Specifications
Exhibit C - Common Facilities
Guaranty Agreement
<PAGE>
THIS LEASE, made this 31st day of July, 1997, by and between GLENN
DALE BUSINESS CENTER, L.L.C. by Continental Realty Corp., Agent, having an
address at 17 West Pennsylvania Avenue, Towson, Maryland 21204, (hereinafter
called "Landlord"), and ASSOCIATED PACKAGING ENTERPRISES, INC., a Maryland
corporation, having an address at 7100 Holiday Tyler Road, Glenn Dale
Business Center, Glen Dale, Maryland 20769, (hereinafter called "Tenant").
WITNESSETH, that in consideration of the rental hereinafter agreed
upon and the performance of all the conditions and covenants hereinafter set
forth on the part of the Tenant to be performed, the Landlord does hereby
lease unto the said Tenant, and the latter does lease from the former, the
following Premises (hereinafter sometimes called the "Premises"):
BEING all those Premises crosshatched and outlined in red on
the Plat attached hereto as Exhibit A, which Premises shall be
deemed to contain approximately 18,000 square feet, said Premises
being located within a building known as Glenn Dale Business
Center, 7100 Holiday Tyler Road, Glen Dale, Maryland 20769, which
building contains approximately 310,000 square feet located on
approximately 32 acres.
for the term of ten (10) years, beginning on August 1, 1997 ("Commencement
Date"), and ending on the last day of July, 2007 at and for the annual rent
of Three Dollars and Seventy-Five Cents ($3.75) per square foot or Sixty
Seven Thousand Five Hundred Dollars ($67,500) per annum, payable in advance,
in equal monthly installments, as follows: Five Thousand Six Hundred Twenty
Five Dollars (5,625.00), on the first day of each and every month during the
term of this Lease, without setoff, recompense or deduction, for the first
year of the Lease; thereafter, effective each July 1 of the term, rent shall
increase per annum by three percent (3%) over the rent payable for the
preceding lease year. If the term of this Lease shall commence on a date
other than the first day of a month, the rental for the period from the date
of commencement of the term to the first day of the next full calendar month
of the term shall be prorated and shall be payable on the first day of the
term; if the term of this Lease shall end on a date other than the last day
of a month, the rent for the period from the first day of the last month of
the term to the date the term ends shall be prorated and shall be payable on
the first day of the last month of the term. See further Rider, Page 1(a).
Notwithstanding anything contained in this Lease to the contrary,
Tenants in consideration of the construction which it will be doing in its
Premises shall be given a rent abatement for the first five (5) months of the
term, from August 1, 1997, through December 31, 1997, of fifty percent (50%)
of the monthly minimum rental payable during each of those months; at the
beginning of the second year of the Lease term, after Landlord has assessed
the three percent (3%) increase over the prior year, Tenant will once again
be given a rental abatement from August 1, 1998, through December 31, 1998,
of fifty percent (50%) of the monthly minimum rent payable during those
months.
Landlord hereby grants Tenant the preceding abatement of half of the
minimum rent for the period from August 1, 1997 to December 31, 1997 and for
the period from August 1, 1998 through December 31, 1998, ("Rent Abatement"),
provided Tenant shall keep, perform and observe all the terms, covenants and
conditions of the Lease herein contained, and shall be free from any default
in the payment of rent and any additional rent, charges and amounts payable
hereunder, for the entire term of this Lease. Upon the occurrence of an event
of default in the payment of rent or any other amount payable under the
Lease, Landlord may rescind the Rent Abatement granted in this paragraph, and
promptly upon demand by Landlord Tenant shall pay as additional rent
hereunder, the full amount of the Rent Abatement.
At any time after the Commencement Date, Landlord may remeasure the
floor space in the Premises. If the floor space differs from the size stated
herein, the Landlord may send notice of the remeasurement to Tenant and the
rent and any additional charges or additional rental measured by the floor
space shall be adjusted either from the date of the notice or from the rent
commencement date, as Landlord shall elect or at such time Tenant shall
relinquish all but 18,000 square feet (or 25,000 square feet, as the case may
be). Tenant hereby represents and warrants to Landlord that Tenant has made
its own investigation and examination of all the relevant data relating to or
affecting the Premises and is relying solely on its own judgment in entering
into this Lease, specifically, and without limitation. Tenant represents and
warrants to Landlord that Tenant has had an opportunity to measure the actual
dimensions of the Premises and agrees to the square footage figures set forth
hereinabove for all purposes of this Lease (except in the event of a
condemnation or casualty that decrease the size of the Premises as more fully
provided elsewhere in this Lease).
1
<PAGE>
RIDER
Tenant shall have the option to extend its Premises to 25,000 square
feet by adding an additional 7,000 square feet shown on Exhibit A "Expansion
Space," anytime before August 1, 1998, by providing Landlord with at least
two (2) months prior written notice of its intention to expand, upon receipt
of which notice. Landlord will then commence the Expansion Space Work as
detailed on Exhibit B of this Lease. Once Landlord completes its work and
delivers the Expansion Space to Tenant, then upon delivery, the Expansion
Space shall be deemed part of the Premises, and the annual rent payable
hereunder shall increase to Ninety Three Thousand Seven Hundred Fifty Dollars
($93,750) per annum, or Seven Thousand Eight Hundred Twelve Dollars and Fifty
Cents ($7,812.50) per month.
1a
<PAGE>
If Tenant shall, during the whole of said term and any renewal or
extension thereof, well and faithfully keep and perform the terms, covenants
and conditions in this Lease contained on Tenant's part to be kept and
performed, Tenant shall have the option to renew the term of this Lease for
one (1) consecutive term of five (5) years following the expiration of the
original term. The renewal term shall be on the same terms, covenants and
conditions as the original term, including that the minimum rent shall be
adjusted annually as provided above (three percent (3%) per annum increase),
and except there shall be no further right of renewal after the renewal term
provided for herein.
Such right of renewal must be exercised by delivery to Landlord of an
unequivocal written notice of election to renew at least six (6) months prior
to the expiration of the original term, and upon the giving of such notice
and without any further instrument this Lease shall be deemed to be renewed,
subject to the conditions herein provided.
All rentals shall be paid to Landlord at: P.O. Box 10147, Baltimore,
Maryland 21285, or at such other place or to such appointee of the Landlord
as Landlord may from time to time designate in writing.
THIS LEASE IS MADE SUBJECT TO THE FOLLOWING ADDITIONAL
TERMS, COVENANTS AND CONDITIONS:
1. PAYMENT OF RENTAL. Tenant covenants and agrees to pay the rental
herein reserved and each installment thereof promptly when and as due,
without setoff, recoupment or deduction whatsoever.
2. USE. Tenant covenants to use the Premises for the purpose of
packaging manufacturing and the incidental office use related to its
operation as a packaging manufacturing, storage and distribution facility
(the "Permitted Use") and for no other purpose or purposes. Tenant shall
operate the Premises in the name of Associated Packaging Enterprises, Inc.,
as well as D.C. Ventures, Inc., Image Systems Packaging, Inc., and/or
Professional Packaging Solutions, Inc., and under no other name or trade
names unless approved in writing by Landlord.
Tenant agrees to comply with all applicable zoning and other laws,
regulations and requirements of governmental authorities and provide and
install at its own expense any additional equipment or alternations required
to comply with all such laws, regulations and requirements as may be
promulgated from time to time. In addition, if Tenant adds a new function to
its operations or changes the use set forth in this Paragraph 2, even if with
Landlord's consent, Tenant agrees further to comply with any and all
requirements of Landlord's insurance carrier(s) and applicable law(s).
3. UTILITIES.
(a) Water/Sewer. Tenant agrees to pay, as additional rent, its
proportionate share of the water and sewer charges billed to Landlord, which
"proportionate share" shall be determined as follows: Tenant's square
footage divided by the total square footage of the building actually leased
and occupied.
(b) Gas and Electricity. Landlord anticipates that it will, within
one (1) year of the commencement of this Lease, meter or sub-meter Tenant's
gas and electric so that Tenant will pay based on sub-meter readings to
Landlord or, based on meter readings directly to the utility company. Until
Landlord separately meters the gas and electric service in the building so
that each tenant has its own meter or sub-meter to measure its gas and
electrical usage, Tenant agrees to pay as additional rent its fair share of
the gas and electricity charges billed to the total building which "fair
share" shall be determined by Landlord at its reasonable discretion. When
Tenant's gas and electrical service is separately metered or sub-metered,
Tenant agrees to pay as additional rent all gas and electrical service
charges for the Premises based on its meter or sub-meter readings, directly to
the utility company in the event of a separate meter being provided, or to
the Landlord within fifteen (15) days after Landlord bills the Tenant in the
event of a sub-meter.
(c) Miscellaneous. In addition to the preceding, Tenant shall pay
all costs of telephone and any other utilities used and consumed on the
Premises, or by the Tenant for Tenant's operations, together with all taxes,
levies or other charges on such utilities, either directly to the utility
supplying said services or to the Landlord, if the Landlord supplies said
services to Tenant.
Wherever Landlord is required to bill Tenant for any utilities charges,
Tenant agrees that it shall pay Landlord within fifteen (15) days of its
receipt of Landlord's billing, and said charges shall be deemed to be
additional rent due.
2
<PAGE>
Landlord shall have the right at anytime and from time to time during
the Lease term to either contract for service from a different company or
companies providing electric service or gas service or other utilities or to
continue to contract for service from the service provider currently
providing service (variously, "Utility Service Provider"). In conjunction
therewith, Tenant shall cooperate with Landlord and Utility Service Provider
at all times and, as reasonably necessary, shall allow Landlord and/or
Utility Service Provider reasonable access to the building's electric lines,
feeders, risers, wiring, plumbing lines and any other machinery or equipment
located within the Premises. Landlord shall in no way be liable or
responsible for any loss, damage, or expense Tenant may incur or sustain by
reason of any change, failure, interference, disruption or defect in the
supply or character of the electric energy or the gas service or other
utility service furnished to the Premises or if the quantity or character of
the electric energy or gas service or other utility service supplied by
Utility Service Provider is no longer available or suitable for Tenant's
requirements, and no such change, failure, defect, unavailability, or
unsuitability shall constitute no actual or constructive eviction, in whole
or in part, or entitle Tenant so any abatement or diminution of rent, or
relieve Tenant from any of its obligation under the Lease.
4. ASSIGNMENT AND SUBLETTING.
(a) Tenant covenants and agrees not to assign this Lease, in whole
or in part, nor sublet the Premises, or any part or portion thereof, nor
grant any license or concession for all or any part thereof, without the
prior written consent of the Landlord in each instance first had and
obtained, which consent shall not be unreasonably withheld. If such
assignment or subletting is permitted, Tenant shall not be relieved from any
liability whatsoever under this Lease. In the event that the amount of the
rent or other consideration to be paid to the Tenant by any assignee or
sublessor is greater than the rent required to be paid by the Tenant to the
Landlord pursuant to this Lease, Tenant shall pay to Landlord any such excess
net of Tenant's initial cost of subletting as is received by Tenant from such
assignee or sublessee. An assignment for the benefit of Tenant's creditors
or otherwise by operation of law shall not be effective to transfer or assign
Tenant's interest under this Lease unless Landlord shall have first consented
thereto in writing.
(b) In the event this Lease contains a renewal option exercisable
by Tenant, Landlord's consent to an assignment or sublease of the Premises or
any portion thereof during the original Lease term shall be deemed to be
conditioned upon the agreement of Tenant and such assignee or sublessee that
such renewal right or option shall terminate and be of no further force or
effect unless Landlord's consent to such assignment or sublease expressly
provides otherwise.
(c) In the event Tenant desires to assign this Lease or to
sublease all or any substantial portion of the Premises, Landlord shall have
the right and option to terminate this Lease, which right of option shall be
exercisable by written notice from Landlord to Tenant within thirty (30) days
from the date Tenant gives Landlord written notice of its desire to assign or
sublease.
5. LOADING CAPACITY. Tenant covenants and agrees that it shall not
load the Premises beyond its present carrying or loading capacity.
6. INCREASE IN LANDLORD'S INSURANCE RATES. Tenant will not do, or
suffer to be done, anything in or about the Premises, or keep or suffer to be
kept, anything in or about the Premises which will circumvent or affect any
policy of insurance, now existing or which the Landlord may hereafter place
thereon, or which will prevent the Landlord from procuring such policies in
companies acceptable to Landlord at standard rates. Tenant will, at Tenant's
sole expense, take all such actions and make any installations or alterations
as may be necessary to obtain the greatest possible reduction in the
insurance rates for the Premises and the building in which the Premises are
located, caused by the occupancy of Tenant, the nature of the business
carried on by Tenant in the Premises, or otherwise resulting from any act of
Tenant, its agents, servants, employees or customers.
7. INSURANCE INDEMNIFICATION.
(a) Tenant shall maintain the following insurance: (i)
comprehensive general public liability insurance in respect of the Premises
and the conduct and operation of Tenant's business thereto, with Landlord as
an additional named insured and at Landlord's written request with the lessor
of any ground or underlying lease of all or any part of the Premises as
additional named insured, with limits of not less than $1,000,000 for bodily
injury or death to any one person, $3,000,000 for bodily injury or death to
any number of persons in any one occurrence and $1,000,000 for property
damage, including water damage and sprinkler leakage and liability, (if
sprinklered); (ii) steam boiler, air conditioning, and machinery insurance,
if applicable, protecting Landlord and Tenant, with limits of not less than
$500,000, but only if there is a boiler or pressure object or either similar
equipment in the Tenant's Premises; (iii) fire
3
<PAGE>
insurance with extended coverage and broad form all-risk endorsements
covering all of Tenant's stock and trade, fixtures, furniture, furnishings,
floor coverings, equipment, signs, and all other property belonging to Tenant
or entrusted to Tenant or demised hereby, including installations and
improvements of Tenant made in, on or about the Premises in any amounts
required by any lender, but not less than the full insurable replacement
value of the property covered and not less than the amount sufficient to
avoid the effect of the co-insurance provisions of the applicable policy or
policies; (iv) business interruption insurance in an amount sufficient to
meet any co-insurance requirements, but in no event less than the equivalent
of twelve (12) months' rent (unless Landlord provides rental insurance and
bills Tenant for it pursuant to Tenant's obligations to pay increases in
Landlord's costs of insuring the building, as set forth in Paragraph 23(c)).
Tenant shall deliver to Landlord such fully paid for policies or certificates
of insurance at least ten (10) days before the Commencement Date of this
Lease. Tenant shall procure and pay for renewal of such insurance from time
to time before the expiration thereof, and Tenant shall deliver to Landlord
and any additional named insured(s) such renewal policy at least thirty (30)
days before the expiration of any existing policy. If Tenant fails to comply
with any portion of this provision, Landlord may, but shall not be obligated
to, obtain insurance for Tenant and keep same in effect and Tenant shall pay
Landlord all costs incurred, upon demand, plus 15% for
overhead/administrative expenses. Landlord shall not be liable for any
damage or loss arising from the bursting, overflowing, or leaking of the roof
or of water, sprinkler, sewer, or steam pipes, or for malfunctioning heating,
air conditioning or plumbing fixtures or from electric wire or fixtures or
arising from any other cause whatsoever, unless caused by Landlord's
negligent or willful misconduct.
(b) Tenant shall and does hereby indemnify and save harmless
Landlord, its successors or assigns, from all claims and demands of every
kind, that may be brought against it, them or any of them for or on account
of any damage, loss or injury to persons or property in or about the Premises
or the building and appurtenances in which the Premises are situated, arising
from or out of Tenant's use or occupancy thereof or occasioned wholly or in
part by any act or omission of Tenant, its agents, servants, contractors,
employees or invitees, and from any and all costs and expenses, counsel fees,
and other charges which may be imposed upon Landlord, its successors or
assigns, or which it or they may be obligated to incur in consequence
thereof. All personal property and fixtures in the Premises shall remain at
Tenant's sole risk. Tenant shall insure such property and fixtures against
loss or damage by fire and casualties ordinarily included in the extended
coverage endorsement in use in Maryland in an amount equal to 100% of the
replacement value thereof.
(c) Landlord may, in its reasonable business judgment, maintain
insurance on the property including but not limited to equipment and systems
in or pertaining to the building or property and including but not limited to
public liability insurance, property damage insurance, automobile insurance,
sign insurance, fire and extended coverage insurance, rent insurance, boiler
liability and casualty insurance, flood and earthquake insurance, and plate
glass insurance. For any insurance maintained by Landlord with respect to
the property and/or its equipment, Tenant agrees to pay as additional rent
Tenant's proportionate share of any increases in said premiums for any
insurance carried on the property or any portion thereof, in excess of the
insurance premiums paid for the base year October 1, 1997, through September
30, 1998. If this Lease shall be in effect for less than a full insurance
year, Tenant shall pay its proportionate share of the increase in the
insurance premium based upon the number of months that this Lease is in
effect. For purposes of calculating Tenant's "proportionate share", the
increase in the insurance premium bill will be multiplied by a fraction, the
numerator of which shall be the Floor Space of the Tenant's Premises, and the
denominator of which shall be the leasable Floor Space of the building. All
computations shall be made in accordance with generally accepted accounting
principles and the "Floor Space" referred to herein will be based upon the
Floor Space occupied or ready for occupancy (whether or not leased) on the
first day of each month during the period in question. The Floor Space of
the building at the time of the Lease execution is 310,000 square feet. Any
payment due hereunder shall be deemed to be additional rental pursuant to
this Lease and shall be paid within ten (10) days of Landlord's billing.
8. ALTERATIONS. Tenant shall not make any structural or non-structural
alterations to the Premises, or any part thereof, without prior written
consent of Landlord in each instance first had and obtained. If Tenant shall
desire to make such alterations, plans for the same shall first be submitted
to and approved by Landlord, and all work and installation shall be performed
by Tenant at its own expense in accordance with approved plans. Tenant
agrees that all such work shall be done in a good and workmanlike manner,
that the structural integrity of the building shall not be impaired, and that
no liens shall attach to the Premises by reason thereof. Tenant agrees to
obtain, at Tenant's expense, all permits required for such alterations.
9. OWNERSHIP OF ALTERATIONS. Unless Landlord shall elect that all or
part of any alteration made by Tenant to the Premises (including any
alteration consented to by Landlord pursuant to Paragraph 8 hereof) shall
remain on the Premises after the termination of this Lease, the Premises
shall be restored to their original condition by Tenant before the expiration
of this Lease at Tenant's sole expense.
4
<PAGE>
Upon such election by Landlord, any such alterations, improvements,
betterments or mechanical equipment, including but not limited to, heating
and air conditioning systems, shall become the property of the Landlord at
the expiration or sooner of the termination of this Lease, and all right,
title and interest thereof of Tenant shall immediately cease, unless
otherwise agreed to in writing by Landlord.
Tenant shall repair promptly, at its own expense, any damage to the
Premises caused by bringing into the Premise any property for Tenant's use,
or by the installation or removal of such property, regardless of fault or by
whom such damage shall be caused.
10. REPAIRS AND MAINTENANCE.
(a) The Premises hereby leased, are leased to Tenant "As Is,"
except as specifically provided in Exhibit B. Further, except as herein
expressly provided, Landlord shall be under no liability, nor have any
obligation to do any work or make any repairs in or to the Premises, and any
work which may be necessary to outfit the Premises for Tenant's occupancy or
for the operation of Tenant's business therein is the sole responsibility of
Tenant and shall be performed by Tenant at its own cost and expense. Tenant
acknowledges that it has fully inspected the Premises prior to the execution
of this Lease, and Tenant further acknowledges hat Landlord has made no
warranties or representations with respect to the condition or state of
repairs of the Premises, except as specifically set forth in Exhibit B.
(b) Tenant will, during the term of this Lease, keep the Premises
and appurtenances (including windows, doors, plumbing, heating and electrical
facilities and installations), in good order and repair and will make all
necessary repairs thereof at its own expense, except that Landlord will make
all necessary repairs (except painting) to the exterior walls and roof of the
building, after being notified in writing by Tenant of the need for such
repairs, and shall have a reasonable time in which to complete such repairs.
After Landlord's warranty (Exhibit B) expires, Tenant agrees to carry a
maintenance and/or service agreement or policy on the HV/AC system in the
Premises. Tenant shall provide Landlord with a copy of such policy or
certificate evidencing such coverage. In the event that the repairs required
to be made by Landlord are necessitated as a result of negligence or misuse
by Tenant, its agents, servants, employees, licensees or guests, or by any
contractor engaged by or on behalf of Tenant, such repairs shall be made by
and be paid for by Tenant.
Tenant will, at the expiration of the term or at the sooner
termination, deliver up the Premises in the same good order and condition as
they were at the beginning of the tenancy, reasonable wear and tear and
damage by casualty excepted, (where Lease is terminated due to the casualty
provision of this Lease). In addition, Tenant must remove all of its trade
fixtures and equipment and must fill any and all holes in the floor after
removing said trade fixtures and equipment, topping the filled holes with a
six inch concrete cap, reinforced with a reinforced steel rebar. Moreover,
the Premises must be broom swept and clean and any office area cleaned and
straightened out.
Tenant further agrees that it will maintain the Premises at its own
expense in a clean, orderly and sanitary condition, free of insects, rodents,
vermin and other pests; and that it will not permit undue accumulation of
garbage, trash, rubbish or other refuse, but will remove the same at its own
expense and will keep such refuse in proper containers inside the Premises
until removed. At any time after the commencement of this Lease, Landlord
may designate areas outside the Premises for storage of Tenant
refuse/garbage. In the event of any Tenant default pursuant to this
obligation, Tenant specifically agrees that Landlord can have Tenant's
garbage, trash, rubbish or other refuse removed and Tenant will be required
to pay, as additional rental, any costs which Landlord incurs in said removal
plus fifteen percent (15%) Landlord administrative/overhead expenses. Tenant
further agrees that it will not install any additional electrical wiring or
plumbing unless it has first obtained Landlord's written consent thereto, and,
if such consent is given, Tenant will install the same at its own cost and
expense, and Tenant shall obtain, at Tenant's expense, all permits required
for such installation.
(c) In the event Tenant shall not proceed promptly and diligently
to make any repairs or perform any obligation imposed upon it by
subparagraphs (a) and (b) hereof within forty-eight (48) hours, after
receiving written notice from Landlord to make such repairs or perform such
obligation, then and in such event, Landlord may, at its option, enter the
Premises and do and perform the things specified in said notice, without
liability on the part of Landlord for any loss or damage resulting from any
such action by Landlord, and Tenant agrees to pay promptly upon demand any
cost or expense incurred by Landlord in taking such action.
(d) Tenant shall keep all of its Premises sufficiently heated
during freezing weather in order to keep any water pipes in the Premises or
serving the Premises from freezing.
5
<PAGE>
(e) If governmental regulations require recycling of any or all of
the trash generated in the Premises, Tenant hereby agrees to participate in
any recycling program and to assume any obligation for recycling which may be
imposed upon Landlord as the property owner, with respect to the refuse,
garbage and trash generated by the Premises' operation.
11. TAX ESCALATION. As of the Commencement Date of this Lease, the
Premises hereby leased comprise approximately five and eight tenths percent
(5.8%) of the total land and/or buildings within which the Premises are
located. Tenant agrees to pay as additional rent, within thirty (30) days of
Landlord billing, Tenant's proportionate share of any increases in real
estate taxes assessed against the land and/or building, as improved, in
excess of the taxes for the 1997/1998 tax year, whether as a result of an
increase in the tax rate, or the levy assessment or imposition of any tax on
real estate as such not now levied, assessed or imposed. Increases in real
estate taxes shall be deemed to include any increases assessed against the
land and/or buildings generally, and not resulting from improvements placed
therein by Tenant. In the event of any increases in real estate taxes
resulting from improvements, alterations or additions made by Tenant, Tenant
shall pay one hundred percent (100%) of the amount of said increase. If this
Lease shall be in effect for less than a full fiscal year, Tenant shall pay
its proportionate share of the increase in taxes, based upon the number of
months that this Lease is in effect. For purposes of calculating Tenant's
"proportionate share", the increase in the real estate tax bill will be
multiplied by a fraction, the numerator of which shall be the Floor Space of
the Tenant's Premises, and the denominator of which shall be the leasable
Floor Space of the building. All computations shall be made in accordance
with generally accepted accounting principles and the "Floor Space" referred
to herein will be based upon the Floor Space occupied or ready for occupancy
(whether or not leased) on the first day of each month during the period in
question. The Floor Space of the building at the time of the Lease execution
is 310,000 square feet. Any payment due hereunder shall be deemed to be
additional rental pursuant to this Lease and shall be paid within ten (10)
days of Landlord's billing. "Taxes" or "real estate taxes" as used herein
shall include, but not by way of limitation, all paving taxes, special paving
taxes, Metropolitan District Charges, and any and all other benefits or
assessments which may be levied on the Premises or the land and/or
building(s) in which the same are situated, as well as any and all costs or
fees incurred by Landlord in contesting any real estate tax assessment, but
shall not include any income tax on the income or rent payable hereunder.
12. DEFAULT.
(a) Any of the following events shall constitute a default by
Tenant:
(i) If the rent (basic or additional) shall be in arrears, in
whole or in part; or
(ii) If Tenant shall have failed to perform any other term,
condition or covenant of this Lease on its part to be performed for a period
of ten (10) days after notice of such failure by Landlord; or
(iii) If the Premises are vacant, unoccupied or deserted for
a period of fifteen (15) days or more at any time during the term; or
(iv) If Tenant is adjudicated a bankrupt or insolvent by any
court of competent jurisdiction, or if any such court enters any order,
judgment or decree finally approving any petition against Tenant seeking
reorganization, liquidation, dissolution or similar relief or if a receiver,
trustee, liquidator or conservator is appointed for all or substantially all
of Tenant's assets and such appointment is not vacated within ten (10) days
after the appointment, or if Tenant seeks or consents to any of the relief
hereinabove enumerated in this subparagraph (iv) or files a voluntary
petition in bankruptcy or insolvency or makes an assignment of all or
substantially all of its assets for the benefit of creditors or admits in
writing of its inability to pay its debts generally as they come due or files
Articles of Dissolution, or similar writing indicating its intention to wind
up or liquidate its business, with the appropriate authority of the place of
its incorporation; or
(v) If Tenant's leasehold interest under this Lease is sold
under execution, attachment or decree of court to satisfy any debt of Tenant,
or if any lien (including a mechanic's lien) is filed against Tenant's
leasehold interest and is not discharged within ten (10) days thereafter.
(b) In the event of default as defined in paragraph (a) hereof,
Landlord, in addition to any and all legal and equitable remedies it may
have, shall have the following remedies:
(i) To distrain for any rent or additional rent in default;
and
(ii) At any time after default, without notice, to declare
this Lease terminated and enter the Premises with or without legal process,
and in such event Landlord shall have the benefit of all provisions
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of law now or hereafter in force respecting the speedy recovery of possession
from Tenant's holding over or proceedings in forcible entry and detainer, and
Tenant waives any and all provisions for notice under such laws.
Notwithstanding any such reentry and/or termination, Tenant shall
immediately be liable to Landlord for the sum of the following: (a) all rent
and additional rent then in arrears, without apportionment to the termination
date, including but not limited to Tenant's contribution to taxes and
utilities under Paragraphs 3 and 11 and Tenant's contribution to common area
costs under Paragraph 23 for the year of termination; (b) all other
liabilities of Tenant and damages sustained by Landlord as a result of
Tenant's default, including, but not limited to, the reasonable costs of
reletting the Premises and any broker's commissions payable as a result
thereof; (c) all of Landlord's costs and expenses (including reasonable
counsel fees) in connection with such default and recovery of possession; (d)
the rent and additional rent reserved under this Lease at the times herein
stipulated for payment of rent and additional rent for the balance of the
term, less any amount received by Landlord during such period from others to
whom the Premises may be rented on such terms and conditions and at such
rentals as Landlord, in its sole discretion, shall deem proper; and (e) any
other damages recoverable by law, in the event Landlord brings any action
against Tenant to so force compliance by Tenant with any covenant or
condition of this Lease, because of Tenant's default in performing any such
covenant or condition. Tenant shall pay to Landlord all costs and expenses
incurred by Landlord in bringing and prosecuting such action against Tenant,
including reasonable attorneys' fees.
(c) In the event Tenant fails to pay Landlord any rental payment or
other charge due hereunder within ten (10) days from the date on which such
payment was due, Landlord may, at its option, charge Tenant a late charge
equal to fifteen percent (15%) of the rental payment or other such charge,
which late charge shall be collectible as additional rent and shall be
payable by Tenant to Landlord after written notice from Landlord to Tenant
assessing the same. In addition, Tenant shall be liable for an
administrative charge of Twenty-five Dollars ($25.00) for each check or draft
which is not honored by the drawee for any reason.
13. TOTAL OR PARTIAL DESTRUCTION.
(a) Tenant shall give prompt notice to Landlord in case of any
fire or other damage to the Premises. If (i) the Premises shall be damaged
by fire or other occurrence to the extent of more than seventy-five percent
(75%) of the cost of replacement thereof, or (ii) if the entire building
shall be damaged by fire or other occurrence to the extent of more than
seventy-five percent (75%) of the aggregate cost of replacement of the entire
building, or (iii) the building shall be damaged by fire or other occurrence
and the loss shall not be covered by Landlord's insurance or the net
insurance proceeds (after deducting all expenses in connection with obtaining
same) shall, by reasonable anticipation, be insufficient to pay for the
repair or restoration work to be done by Landlord, or (iv) the Premises shall
be damaged by fire or other occurrence to the extent of more than fifty
percent (50%) of the cost of replacement thereof during the last two (2)
years of the term, then in any such event Landlord may terminate this Lease
by notice given within ninety (90) days after such event and upon the date
specified in such notice, which shall not be less than thirty (30) days nor
more than sixty (60) days after the giving of said notice, this Lease shall
terminate. If the Premises shall be damaged by fire or other casualty to the
extent of more than fifty (50%) percent of the cost of replacement thereof
during the last two years of the term, Tenant may terminate this Lease by
notice given before Landlord commences any repair or restoration work and in
any event within thirty (30) days after such damage, and this Lease shall
terminate upon the giving of such notice.
(b) If this Lease shall not be terminated after damage by fire or
other casualty pursuant to the preceding sub-paragraph, Landlord and Tenant
shall, promptly after receipt of insurance proceeds for such damage and to
the extent that insurance proceeds are available, proceed with the
restoration of the Premises and the building to substantially the condition
in which the same existed prior to the damage with such changes or additions
as Landlord may desire to make. In no event, however, shall Tenant's
stock-in-trade, trade fixtures, furniture, furnishings, removable floor
coverings, equipment, signs and other property be Landlord's responsibility
and Tenant shall promptly proceed with restoration or replacement of same
together with any alterations or improvements it has made to its Premises and
Tenant's liability for said restoration or replacement shall not be limited
to its insurance proceeds.
(c) If this Lease shall not be terminated by fire or other
casualty, Landlord's and Tenant's restoration shall be completed as promptly
as reasonably possible, and, to the extent that the Premises is unusable (on
a per square foot basis), rent (but not additional rental such as utilities,
taxes or common area charges) reserved hereunder shall abate in proportion to
the area of the Premises damaged until Landlord's work is completed.
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(d) Despite anything contained to the contrary in this Paragraph,
and without limiting Landlord's rights or remedies hereunder, rental shall
not be abated under this provision if in Landlord's opinion, any damage or
destruction is caused by any fault, neglect, default, negligent act or
negligent omission of Tenant or those for whom Tenant is in law responsible
or by any other person entering upon the Premises under express or implied
invitation of Tenant.
14. POSSESSION. In case possession of the Premises, in whole or in
part, cannot be given to Tenant on or before the commencement date of the
term of this Lease, Landlord agrees to abate the rent and additional rent
proportionately until possession is given to Tenant, and Tenant agrees to
accept such pro rata abatement as liquidated damages for the failure to
obtain possession on the commencement date herein specified. The parties
hereto covenant and agree that if the term of this Lease commences on a date
other than the date herein specified, they will, upon the request of either
of them, execute an agreement in recordable form setting forth the new
commencement and termination dates of the Lease term. Under no circumstances
shall Landlord be under any liability for failure to deliver possession of
the Premises to Tenant on the date herein specified.
15. EXTERIOR OF PREMISES--SIGNS.
(a) Tenant covenants and agrees that it will not place or permit
any sign or other thing of any kind, in or about the exterior of the Premises
or the building in which the Premises are situate, nor paint or make any
change in, to or on the exterior of said Premises to change the uniform
architecture, paint or appearance of the building, without in each such
instance obtaining the prior written consent of Landlord. Tenant shall not
display any "going out of business" sign without prior written consent of
Landlord. If Landlord shall install a roadside sign, then Landlord shall
permit Tenant to install signs showing names of its various entities at its
sole expense, which signage shall be subject to Landlord's prior written
approval.
(b) Tenant further covenants and agrees not to pile or place
anything on the sidewalk, parking lot or other exterior portion of the
Premises or building in the front, rear, or sides of the building, nor block
the side walk, parking lot or other exterior portion of the Premises or
building, nor do anything that directly or indirectly will interfere with any
of the rights of ingress or egress or of light from any other tenants, nor do
anything which will, in any way, change the uniform and general design of any
property of Landlord in which the Premises are situate. Landlord will at all
times control all outside areas of the property and exterior portions of the
Premises and building including sidewalks and parking lots.
16. RELOCATION. Landlord reserves the right all times to require that
Tenant relocate the Premises hereby leased, at Tenant's expense, to another
location in the building comparable to that leased hereunder, provided
Landlord gives Tenant at least thirty (30) days prior written notice of such
relocation, and provided Landlord gives Tenant a one (1) month's rent
abatement in consideration of Tenant's moving expenses. Moreover, if Tenant
is relocated during the first year of the Lease term, Landlord will provide
up to 1,000 square feet of office and a storefront entrance with windows in
Tenant's new location at Landlord's sole cost and expense, and will give
Tenant access to a loading dock with at least three (3) dock-level doors plus
a drive-in door in its new location.
17. FOR RENT/SALE SIGNS. Landlord shall have the right to place a "For
Rent" sign on any portion of said Premises for six (6) months prior to
termination of this Lease and to place a "For Sale" sign thereon at any time.
During such six-month period, Landlord may show the Premises and all parts
thereof to prospective tenants/purchasers between the hours of 9:00 a.m. and
5:00 p.m. on any day except Sunday or any legal holiday on which Tenant shall
not be open for business.
18. RIGHT OF ENTRY. Landlord and its agents, servants, employees,
including any builder or contractor employed by Landlord, shall have the
absolute and unconditional right, license and permission, at any and all
reasonable times, to enter and inspect the Premises or any part thereof, and
at the option of Landlord, to make such reasonable repairs and/or changes in
the Premises as Landlord may deem necessary or proper and/or to enforce and
carry out any provision of this Lease.
19. TERMINATION OF TERM. It is agreed that the term of this Lease
shall expire and terminate at the end of the original term hereof (or at the
expiration of the last renewal term, if this Lease contains a renewal option
and the same is properly exercised), without the necessity of any notice by
or to any of the parties hereto, unless otherwise provided herein. If Tenant
shall occupy the Premises after such expiration or termination, it is
understood that Tenant shall hold the Premises as a tenant from
month-to-month, subject to all the other terms and conditions of this Lease,
at an amount equal to double the highest monthly rental installment reserved
in this Lease.
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20. CONDEMNATION
(a) If, during the term of this Lease, all or twenty-five (25%) or more
of the Premises shall be taken by any public or quasi-public authority under
power of condemnation, eminent domain, or expropriation, or in the event of
conveyance of twenty-five percent (25%) or more of the Premises in lieu
thereof, this Lease shall terminate as of the day possession shall be taken by
such authority, and the rent (including additional rent) shall be apportioned
to and above from and after, the date of taking. Tenant shall have no right
to participate in any award or damages for such taking and hereby assigns all
of its right, title and interest therein to Landlord.
(b) If, during the Lease term, less than twenty-five percent (25%) of
the Premises is taken, this Lease shall remain in full force and effect
according to its terms and Tenant shall not have the right to participate in
any award or damages for such taking and Tenant hereby assigns all of its
right, title and interest in and to the award to Landlord. In such event
Landlord shall, at its expense, promptly make such repairs and improvements
as may be necessary to make the remainder of the Premises adequate to permit
Tenant to carry on its business to substantially the same extent and with
substantially the same efficiency as before the taking; provided that in no
event shall Landlord be required to expend an amount to excess of the award
received by Landlord for such taking.
(c) Nothing herein shall be deemed to prevent Tenant from claiming and
receiving from the condemning authority, if legally payable, compensation for
the taking of Tenant's own tangible property and such amount as may be payable
by stature or ordinance toward Tenant's damages for Tenant's loss of
business, removal and relocation expenses.
21. SUBORDINATION/NON-DISTURBANCE. Landlord shall have the right to
place a mortgage or mortgages on the Premises and the property of whcih the
Premises is a part, and this Lease shall be subordinate to any such mortgage
or mortgages or superior thereto, as the mortgagee(s) may elect from time to
time. Notice of such election shall be given to Tenant in connection with
any mortgage foreclosure.
Within ten (10) days after a written request from time to time made by
Landlord, Tenant shall deliver to Landlord a signed and acknowledged
statement in writing setting forth: (i) that this Lease is unmodified, in
full force and effect, free of existing defaults of Landlord and free of
defenses against enforceability (or if there have been modifications or
defaults, or if Tenant claims defenses against the enforceability hereof,
then stating the modifications, defaults and/or defenses), (ii) the dates to
which Rent and Additional Charges have been paid, and the amount of any
advance rentals paid, (iii) the commencement and expiration dates of the
Term, (iv) whether Tenant has given written notice exercising its rights, if
any, to renew this Lease, and if so, the renewal term so opted, and (v) that
Tenant has no outstanding claims against Landlord (or if there are any
claims, then stating the nature and amount of such claims); it being intended
that any such statement may be relied upon by any purchaser or mortgagee of
Landlord's interest in the Premises, or any prospective purchaser or
mortgagee.
Anything in the foregoing sections notwithstanding, this Lease is
expressly contingent upon Landlord obtaining from Tenant a Subordination,
Non-Disturbance and Allotment Agreement from Landlord's mortgagee, upon
satisfaction of the following conditions: submission of Tenant's financial
statement in such form and for such periods as Landlord's mortgagee may
reasonably require; completion and execution by Tenant of a Tenant Estoppel
Certificate; payment by Tenant of mortgagee's fee, if any, for the issuance
of such Agreement.
22. ATTORNMENT.
(a) If Landlord assigns this Lease or the rents hereunder to a creditor
as security for a debt, Tenant shall, after notice of such assignment and
upon demand by Landlord or the assignee, pay all sums thereafter becoming due
Landlord hereunder both to Landlord and such assignee. Tenant shall also,
upon receipt of such notice, have all policies of insurance required
hereunder endorsed so as to protect the assignee's interest as it may appear
and shall deliver such policies, or certificates thereof, to assignee.
(b) In the event the Premises are sold at any foreclosure sale or
sales, by virtue of any judicial proceedings or otherwise, this Lease shall
continue in full force and effect and Tenant agrees, upon request, to attorn
to and acknowledge the foreclosure purchaser or purchasers at such sale as
the landlord hereunder. It is understood that such purchaser or purchasers
may, at its or their option, terminate this Lease immediately upon giving
written notice thereof to Tenant.
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23. PARKING AND COMMON FACILITIES.
(a) Landlord hereby further demises and leases to Tenant the right to
use thirty (30) parking spaces within the parking lot adjacent to the
building (which parking spaces are outlined in red and crosshatched on
Exhibit A-I) for the use solely of Tenant's employees, agents, officers and
invitees. Tenant agrees not to use, and not to permit its employees, agents,
officers and invitees to use, any other parking spaces except the parking
spaces made available to Tenant by Landlord. Tenant agrees that it will, at
Landlord's request, furnish Landlord with a list of license plate numbers of
all automobiles regularly used by Tenant's employees, agents, officers and
invitees. Tenant further agrees that if any automobiles of Tenant's agents,
employees, officers or invitees are found in parking areas other than those
designated for Tenant's use, Landlord shall have the right to have such
improperly parked vehicles towed away by a towing company designated by
landlord, and Tenant shall pay Landlord, upon demand, all costs incurred by
Landlord. Landlord reserves the right to relocate any of Tenant's parking
spaces by reassigning to Tenant other parking spaces within the property
shown on Exhibit A, or on parking lots which Landlord provides on properties
adjacent to the bulding for the use of Tenant's employees, agents, officers
and invitees; provided Landlord gives Tenant written notice of such
reassignment at least ten (10) days prior to the effective date thereof. In
the event Landlord gives such notice to Tenant, Tenant shall instruct all of
its employees, agents, officers and invitees to use only the reassigned
spaces and to cease use of the spaces formerly assigned.
(b) As of the Commencement Date of this Lease, the Premises hereby
leased comprise approximately five and eight tenths percent (5.8%) of the
total land and/or buildings within which the Premises are located. Tenant
agrees to pay as additional rent, within thirty (30) days of Landlord's
billing, Tenant's proportionate share of any increases in Landlord's costs of
operating, maintaining, repairing, replacing and insuring the common
facilities (as hereinafter defined), including, but not limited to, loading
areas, parking areas, pavements and walkways, and the cost of utilities for
such common facilities as well as any costs incurred by Landlord in
maintaining the leased facilities (as hereinafter defined) but shall not
include the cost of any work which Landlord performs specifically for the
exclusive use of any tenant of the bulding, nor any capital improvements
which Landlord performs, in excess of such Landlord's costs for calendar year
1997. For purposes of calculating Tenant's "proportionate share", the
increase in Landlord's Common Facilities costs and expenses described on
Exhibit C will be multiplied by a fraction, the numerator of which shall be
the floor space of the Tenant's Premises, and the denominator of which shall
be the leasable floor space of the building. All computations shall be made
in accordance with generally accepted accounting principles and the "Floor
Space" referred to herein will be based upon the Floor Space occupied or
ready for occupancy (whether or not leased) on the first day of each month
during the period in question. The Floor Space of the building at the time
of the Lease execution is 310,000 square feet. Any payment due hereunder
shall be deemed to be additional rental pursuant to this Lease and shall be
paid within thirty (30) days of Landlord's billing. In the event Tenant
expands, Tenant's proportionate share shall increase in conjunction with such
expansion.
(c) Tenant shall have the right to the exclusive use of any entrances,
exits, storage areas, and loading docks within the leased Premises or
exclusively serving the leased Premises ("Leased Facilities"), subject to
the condition that Landlord shall at all times have the right and privilege of
determining the nature and extent to which such leased facilities may be used.
In addition, Tenant shall have the right to the non-exclusive use of any
walkways, entrances, exits, parking areas, outside storage areas or trash
areas, if any, outside the leased Premises, serving the building in common
with other tenants, ("Common Facilities") subject to the condition that
Landlord shall at all times have the right and privilege of determining the
nature and extent to which such common facilities may be used, and of making
such changes, rearrangements, additions or reductions therein or thereto,
which in Landlord's opinion are deemed to be desirable and in the best
interests of all tenants of the building, or which are required as the result
of any law or regulation. Tenant's non-exclusive right to use the common
facilities is a license and not an easement. Tenant's non-exclusive license
to use the common facilities shall be a license to access over and through
the common facilities but not to store anything on the common facilities or
to erect any structures, permanent or temporary, or to make any other use of
the common facilities except as specifically permitted by Landlord. Where
Landlord has designated a portion of the common facilities for any individual
tenant's exclusive use, such as assigning parking spaces in a parking area to
an individual tenant or creating a storage or trash disposal area to be used
by an individual tenant, that individual tenant shall be deemed to have no
further rights with respect to other parking areas and/or other trash removal
areas or storage areas, but such individual tenants shall be limited to the
specified areas provided by Landlord and such areas shall still be deemed to
be part of the common facilities, although only made available by Landlord to
designated tenants.
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Tenant agrees that Landlord may establish and from time to time change,
alter and enforce against Tenant such reasonable rules and regulations as
Landlord may deem necessary or advisable for the proper and efficient use,
operation and maintenance of such common facilities. Landlord shall, at all
times, have sole and exclusive control, management and direction of such
common facilities, and may, at any time and from time to time, exclude and
restrain any person from use or occupancy thereof. It shall be the duty of
Tenant to keep all such facilities free and clear of any obstructions created
or permitted by Tenant or resulting from Tenant's use. Tenant shall be fully
liable for any damage to any of such facilities resulting from the negligence
or misuse by Tenant, its agents, employees, contractors or invitees.
Landlord may, at any time and from time to time, either temporarily or
permanently, close all or any portion of such common facilities to make
repairs or changes, and to do and perform such other acts as, in the exercise
of good business judgment, Landlord shall determine to be advisable with a
view to the improvement of the convenience and use thereof by tenants, their
employees, agents and invitees.
24. COMPLIANCE WITH LAWS.
(a) Tenant covenants and agrees that it will, at its own expense,
observe, comply with and exercise all laws, orders, rules, requirements and
regulations of all govermental agencies, and all rules, directions,
requirements and recommendations of the local board of fire underwriters and
the fire insurance rating organizations having jurisdiction over the area in
which the Premises are situated, or other bodies or agencies now or hereafter
exercising similar functions in the area in which the Premises are situated,
in any way pertaining to the Premises or the use and occupancy there.
(b) The preceding shall include, but not be limited to, the following
which Tenant shall not cause or permit to occur: (i) any violation of any
federal, state or local law, ordinance or regulation now or hereafter
enacted, related to environmental conditions on, under, or about the
Premises, arising from Tenant's use or occupancy of the Premises, including,
but not limited to, soil and ground water conditions; or (ii) the use,
generation, release, manufacture, refining, production, processing, storage,
or disposal of any "Hazardous Substance" (as defined herein) on, under or
about the Premises, or the transportation to or from the Premises of any
Hazardous Substance.
(c) Tenant shall, at Tenant's own expense, comply with all laws
regulating the use, generation, storage, transportation, or disposal of
Hazardous Substances and Tenant shall, at Tenant's own expense, make all
submissions to, provide all information required by, and comply with all
requirements of all governmental authorities pursuant to said laws. Should
any authority or any third party demand that a clean-up plan be prepared and
that a clean-up be undertaken because of any deposit, spill, discharge or
other release of Hazardous Substances that occurs as a result of Tenant's use
or occupancy of the Premises, then Tenant shall, at Tenant's own expense,
prepare and submit the required plans and all related bonds and other
financial assurances; and Tenant shall carry out all such clean-up plans.
Tenant shall promptly provide all information regarding the use, generation,
storage, transportation or disposal of Hazardous Substances that is requested
by Landlord. If Tenant fails to fulfill any duty imposed under this
Paragraph within a reasonable time, Landlord may do so; and in such case
Tenant shall cooperate with Landlord in order to prepare all documents
Landlord deems necessary or appropriate to determine the applicability of the
laws to the Premises and Tenant's use thereof, and for compliance there with,
and Tenant shall execute all documents promptly upon Landlord's request. No
such action by Landlord and no attempt made by Landlord to mitigate damages
shall constitute a waiver of any of Tenant's obligations under this Paragraph
and Tenant's obligations and liabilities hereunder shall survive the
expiration of this Lease.
(d) The term "Hazardous Substances" as used in this Lease shall
include, without limitation, flammables, explosives, radioactive materials,
asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer
or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, petroleum and petroleum products, and
substances declared to be hazardous or toxic under any law or regulation now
or hereafter enacted or promulgated by any governmental authority including
without limitation "oil, petroleum products and their by-products" as defined
by Maryland Natural Resources Code Ann. Section 8-1411-(a)(3) as amended from
time to time, any "Hazardous Waste" as defined by the Resource Conservation
and Recovery Act of 1976, as amended from time to time, and regulations
promulgated thereunder, any "Hazardous Substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended from time to time, and any "Hazardous Substances" as defined by
Maryland Health Environmental Code Ann., Title 7, Subtitle 2, as amended from
time to time, and regulations promulgated thereunder).
(e) Tenant shall indemnify, defend, and hold harmless the Landlord, the
manager of the property and their respective officers, directors,
beneficiaries, share-holders, partners, agents and employees from all fines,
suits, procedures, claims and actions of every kind, and all costs associated
therewith (including reasonable attorneys' and consultants' fees) arising out
of, or in any way connected
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with any deposit, spill, discharge or other release of Hazardous Substances
that occurs as a result of Tenants use or occupancy of the Premises, or from
Tenant's failure to provide all information, make all submissions, and take
all steps required by all governmental authorities under the laws. Tenant's
obligations and liabilities under this sub-paragraph shall survive the
expiration of this Lease.
25. NOTICES. Any notice required by this Lease shall be sent by
certified mail to Landlord at: 17 West Pennsylvania Avenue, Baltimore,
Maryland 21204, Attention: Lawrence Rief, with copy to Legal Department,
P.O. Box 10147, Baltimore, Maryland 21285. Any notice required by this Lease
shall be sent by certified mail to Tenant at: ASSOCIATED PACKAGING
ENTERPRISES, INC., having an address at 7100 Holiday Tyler Road, Glenn Dale
Business Center, Glen Dale, Maryland 20769 (if no other address specified,
such notices to Tenant shall be addressed to the leased Premises). Either
party may, at any time, or from time to time, designate in writing a
substitute address for that above set forth, and therefore all notices to
such party shall be sent by certified mail to such substitute address.
26. NON-WAIVER. It is understood and agreed that nothing herein shall
be construed to be a waiver of any of the terms, covenants or conditions
herein contained, unless the same shall be in writing, signed by the party to
be charged with such waiver and no waiver of the breach of any covenant
herein shall be construed as a waiver of such covenant or any subsequent
breach thereof. No mention in this Lease of any specific right or remedy
shall preclude Landlord from exercising any other right or from having any
other remedy or from maintaining any action to which it may be otherwise
entitled either at law or in equity.
27. SUCCESSORS AND ASSIGNS. Except as herein otherwise specifically
provided, this Lease and the covenants and conditions herein contained shall
extend to, bind and inure to the benefit of the parties hereto and their
respective personal representatives, heirs, successors and permitted assigns.
In the event of any sale or transfer of the fee of any Premises which
includes the Premium devised hereunder, (other than a sale with a leaseback
to the Grantor) or any assignment of any ground or underlying lease of any
Premises which includes the Premium demised hereunder, the Grantor,
transferor, or assignee, as the case may be, shall be and hereby is entirely
relieved and freed of all obligations under this Lease.
Further, notwithstanding any provision herein to the contrary, Tenant
shall look solely to the estate and property of Landlord in and to the
property (or the proceeds received by Landlord on the sale of such estate and
property, but not the proceeds of any financing or refinancing thereof) in
the event of any claim against the Landlord arising out of or in connection
with this Lease, the relationship of Landlord and Tenant for Tenant's use of
the Premises, and such claim shall be limited to such estate and property of
Landlord (or sale proceeds). No other properties or assets of Landlord shall
be subject to levy, execution or other enforcement procedures for the
satisfactin of any judgment, (or other judicial process) or for the
satisfaction of any other remedy of Tenant arising out of or in connection
with this Lease, the relationship of Landlord and Tenant, and Tenant's use of
the Premises, and if Tenant shall acquire a lien on or interest in any other
properties or assets by judgment or otherwise, Tenant shall promptly release
such lien or interest in such other properties and assets by executing,
acknowledging and delivering to Landlord an instrument to that effect
prepared by Landlord's attorneys.
28. SECURITY DEPOSIT/CONSTRUCTION.
(a) Landlord hereby acknowledges receipt from Tenant of Five Thousand
Six Hundred Twenty Five Dollars ($5,625.00) to be held by Landlord as
security for the faithful performance by Tenant of all of the terms,
covenants and conditions of this Lease. The security deposit shall not
accrue interest. If Tenant expands pursuant to the right of expansion set
forth on page 1(a), then Tenant shall increase the security deposit within
fifteen (15) days of expansion to equal one month's rent as of date of
expansion. Landlord may, in Landlord's sole discretion, invest the deposit in
interest bearing securities or accounts, and interest earned thereon, if any,
shall belong to Landlord. Tenant further agrees that Landlord shall be
entitled to co-mingle said security deposit and interest, if any, with its
own funds. If, during the term of this Lease, or any renewal or extention
thereof, any amount due from Tenant to Landlord as rental or otherwise, shall
become past due, Landlord shall have the right, in its sole discretion, to
apply the said security deposit, or any portion thereof, to satisfy such
obligation and Tenant shall thereafter immediately replenish the security
deposit to the sum specified above in this Section with the next payment of
rental due hereunder. Further, in the event Tenant fails to comply with any
of the terms or conditions contained in this lease, Landlord shall have the
right to apply the security deposit against any brokerage fee paid by
Landlord to secure equity and to repay Landlord for any money it expended in
preparing the Premises for Tenant's occupancy; Tenant shall thereafter
immediately replenish the security deposit to the sum specified above in this
Section. With a reasonable time after
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the termination date of this Lease, the security deposit shall be returned to
Tenant, less all costs incurred by Landlord in correcting or satisfying any
default under this Lease and all costs incurred by Landlord in returning the
Premises to the same condition as it was when delivered to Tenant, excluding
reasonable wear and tear. No right or remedy available to Landlord as
provided in this Section shall preclude or extinguish any other right or
remedy to which Landlord may be entitled under this Lease or at law or in
equity. If for any reason, Tenant has not deposited a security deposit with
the Landlord contemporaneously with the signing of this Lease, Tenant agrees
that it will do so within ten (10) days after written demand therefore by
Landlord. In addition, this Lease is further secured by a Guaranty Agreement
attached hereto and incorporated herein.
(b) For a description of Landlord's Work and Tenant's Work, see further
Exhibit B -- Construction Specifications.
29. ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of any lease amount than the amount stipulated to be paid hereunder
shall be deemed other than on account of the earlier stipulated rent or
additional charges; nor shall any endorsement or statement on any check or
letter by deemed an accord and satisfaction, and Landlord may accept any
check or payment without prejudice to Landlord's right to recover the
balance due or to pursue any other remedy available to Landlord.
30. NOTICES TO MORTGAGES. Tenant agrees that a copy of any notice of
default from Tenant to Landlord shall also be sent to the holder of any
mortgage or deed of trust on the Premises, provided Tenant has been given
written notice of the fact that such mortgage or deed of trust has been made;
and Tenant shall allow said mortgagee or holder of the deed of trust a
reasonable time, not to exceed ninety (90) days from the receipt of said
notice, to cure, or cause to be cured, any such default. If such default
cannot reasonably be cured within the time specified herein, then such
additional time as may be necessary shall be allowed, provided the curing of
such default is commenced and diligently pursued (including, but not limited
to, commencement of foreclosure proceedings if necessary to effect such cure)
in which event this Lease shall not be terminated while such remedies are
being thus diligently pursued.
31. ESTOPPEL CERTIFICATE. Tenant shall, at any time and from time to
time during the term of this Lease or any renewal thereof, upon request of
Landlord, execute, acknowledge, and deliver to Landlord or its designee, a
statement in writing, certifying that this Lease is unmodified and in full
force and effect if such is the fact (or if there have been any modifications
thereof, then the same is in full force as modified and stating the
modifications) and the dates to which the rents and other charges have been
paid in advance, if any. Any such statement delivered pursuant to this
paragraph may be relied upon by any prospective purchaser of the estate of
Landlord or by the mortgagee or any assignee of any mortgagee or the trustee
or beneficiacy of any deed of trust constituting a lien on the Premises or
upon property in which the Premises are situated.
32. MECHANIC'S LIENS. Nothing contained in this Lease shall be deemed,
construed or interpreted to imply any consent or agreement on the part of
Landlord to subject Landlord's interest or estate to any liability under any
mechanic's or other lien law. If Landlord receives any notice to file a
mechanic's or other lien against the building, or any part thereof, or the
Premises, or any part thereof, for any work, labor, services or materials
claimed to have been performed or furnished for or on behalf of Tenant or
anyone holding any part of the Premises through or under Tenant, then Tenant
shall act promptly to have such notice withdrawn and to settle any dispute
that is the subject of such notice. If any petition to establish a
mechanic's or other lien is filed, or if any mechanic's or other lien is
actually established against the building, or any part thereof, or the
Premises, or any part thereof, or if any mechanic's or other lien is actually
established, for any work, labor, services or materials claimed to have been
performed or furnished for or on behalf of Tenant or anyone holding any part
of the Premises through or under Tenant, then Tenant shall cause the same to
be canceled and discharged of record by payment, bond or order of court
within 20 days after notice by Landlord to Tenant. Tenant shall, at
Landlord's request, give written notice to all of Tenant's laborers and
materialmen that Landlord shall not be responsible for labor on the Premises
not at the time of said notice performed, or for materials which have been
furnished. Tenant shall be responsible for paying as additional rent, any
attorneys fees that Landlord actually incurs as a result of Landlord
receiving any notice of intent to file a mechanic's, or other, lien
described herein; as a result of any such petition to file a mechanic's, or
other, lien; or as a result of any such mechanic's, or other, lien being
established against the building or any part thereof, or against the
Premises, or any part thereof.
33. WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM. This Lease shall
be construed in accordance with the laws of the state of Maryland. Landlord
and Tenant shall and they hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties thereto against
the other on any matters arising out of or in any way connected with this
Lease, the
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relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, and any emergency or other statutory remedy. Tenant further agrees
that it shall not interpose any counterclaim(s) in a summary proceeding or in
any action based on holdover or non-payment of rent and/or additional charges.
34. BROKERAGE. Tenant and Landlord each covenants and agrees that it has
had no dealings with any broker or agent in connection with this Lease,
except for Bright Realty Advisors and W.F. Chester Real Estate, Inc., and
each covenants to pay, hold harmless and indemnify the other from and against
any and all costs, expenses and liability for any compensation, commissions
and charges claimed by any broker or agent in respect of this Lease or the
negotiation thereof with whom Tenant or Landlord, as the case may be, is
claimed to have had dealings.
35. TENANT REPRESENTATIVE. Name and telephone number of Tenant
representative to be contacted in the event of emergency: Jack Booz
(301) 262-5164.
36. NO OFFER. The submission of this Lease does not constitute a
binding or irrevocable option or offer by Landlord to lease the Premises to
Tenant on the terms herein set forth, or on any other terms. Neither
Landlord nor Tenant shall be bound or legally obligated in any way until such
time as this Lease is fully executed by both parties hereto, and executed
counterparts thereof are delivered to each of the parties. This Lease may be
executed in any number of counterparts, each of which shall be an original,
but all of which shall together constitute but one Lease.
37. TENANT'S RIGHT TO AUDIT.
(1) Audit Threshold. In the event Tenant's proportionate share of
Common Facilities Costs increases by more than twenty percent (20%) in any
Lease Year, Tenant may audit Landlord's common area operating costs in order
to verify the accuracy of Common Facilities Costs charges provided that:
(a) Tenant specifically designates the fiscal year(s) that Tenant
intends to audit, which shall be a year within three (3) years of the
date of the audit but must be within the Term of this Lease; and
(b) Such audit will be conducted only during regular business
hours at the office where Landlord maintains CAM expense records and
only after Tenant gives Landlord fourteen (14) days notice.
(2) Copy of Audit. Tenant shall deliver to Landlord a copy of the
result of such audit within fifteen (15) days of its receipt by Tenant. No
such audit shall be conducted if any other tenant has conducted an audit for
the time period Tenant intends to audit and Landlord furnishes to Tenant a
copy of the results of such audit.
(3) Tenant Not in Default. No audit shall be conducted any time that
Tenant is in default of any of the terms of the Lease.
(4) Limits for Subtenants and Assignees. No subtenant shall have any
right to conduct an audit and no assignee shall conduct an audit for any
period during which such assignee was not in possession of the Premises.
38. MISCELLANEOUS.
(a) Except for Tenant's obligation to pay rent and additional rental,
the time of Landlord or Tenant, as the case of may be, to perform any of its
respective obligations hereunder shall be extended if and to the extent that
the performance thereof shall be prevented due to any strike, lockouts, civil
commotions, war-like operations, invasions, rebellions, hostilities, military
or usurped power, governmental regulations or controls, acts of God, or other
causes beyond the control of the party whose performance is required. If
Landlord shall be prevented from delivering the Premises to Tenant for causes
beyond the control of Landlord, then the commencement and expiration of the
Term shall be extended accordingly.
(b) In the event that Tenant shall seek the approval by or consent of
Landlord and Landlord shall fail or refuse to give such consent or approval
in respect of any matter where Landlord is required either by this Lease or
by law, not to unreasonably withhold its consent or approval, Tenant shall
not be entitled to any damages for any withholding or delay of such approval
or consent of Landlord, but only shall be entitled to bring an action for
injunction or specific performance.
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(c) This Lease and the Riders and Exhibits attached hereto, if any, set
forth all the covenants, promises, assurances, agreements, and understandings
between Landlord and Tenant concerning the Premises and supersede and revoke
any previous negotiation, arrangements, letters of interest, offers to lease,
lease proposals, and information conveyed.
(d) Irrespective of the place of execution or performance, this Lease
shall be governed by and construed in accordance with the laws of the State
of Maryland. If any provision of this Lease or the application thereof to any
person or circumstances shall, for any reason or to any extent, be invalid or
unenforceable, the remainder of this Lease and the application of that
provision to other persons or circumstances shall not be affected but rather
shall be enforced to the extent permitted by law. The table of contents,
captions, headings and title in this Lease are solely for convenience of
reference and shall not affect its interpretation. This Lease shall be
construed without regard to any presumption or other rule requiring
construction against the party causing this Lease to be drafted. If any words
or phrases in this Lease have been stricken out or added, this Lease shall be
construed as if the words or phrases so stricken out or otherwise eliminated
were never included in this Lease and no implication or inference shall be
drawn from the fact that said words or phrases were so stricken out or
otherwise eliminated. Each covenant, agreement, obligation or other provision
of this Lease shall be deemed and construed as a separate and independent
covenant of the party bound by, undertaking or making same, not dependent on
any other provision of this Lease unless otherwise expressly provided. All
terms and words used in this Lease, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any
other gender as the context may require.
(e) In the event Tenant defaults under any of the terms of this Lease,
Tenant shall pay all costs, expenses and reasonable attorney's fees that may
be incurred or paid by Landlord as a result thereof. Tenant shall be liable
for such attorney fees whether or not Landlord institutes legal proceedings.
However, where legal proceedings are instituted by Landlord against Tenant,
and said proceedings result in a monetary judgment in favor of Landlord,
those responsible attorneys fees for which Tenant shall be liable to Landlord
shall not be less than 15% of said judgment.
(f) Any and all sums of money required to be paid by Tenant under this
Lease, whether or not designated as "additional rent" shall nevertheless be
deemed as "additional rent" and shall be collectible as rent.
(g) This written agreement constitutes the entire agreement and
understanding of the parties, and there are no other, prior or contemporaneous,
written or oral agreements, undertakings, promises, warranties or covenants
not contained herein. This Lease cannot be modified or amended except in a
writing signed by both parties.
AS WITNESS the hands and seals of the parties hereto the day and
year first above written.
WITNESS: LANDLORD:
GLENN DALE BUSINESS CENTER, L.L.C.
??????????????? By: /s/ Lawrence G. Rief (Seal)
- -------------------------- ----------------------------------
Lawrence G. Rief
WITNESS: TENANT:
ASSOCIATED PACKAGING ENTERPRISES, INC.
??????????????? By: /s/ Edward J. Cooksey (Seal)
- -------------------------- ----------------------------------
Edward J. Cooksey, President
15
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STATE OF MARYLAND, CITY/COUNTY OF CARROLL MARYLAND, to wit:
On this 31st day of July, 1997, before me, the subscriber, a Notary
Public of the State of Maryland, personally appeared LAWRENCE G. RIEF, MEMBER
of the above named Landlord, and he acknowledged the above Lease to be the
act of the said Landlord.
IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal.
Carol M. Baker Carol M. Baker
--------------- NOTARY
Notary Public SEAL
My Commission Expires: 11/6/00 Carroll County, MD
STATE OF MARYLAND, CITY/COUNTY OF ANNE ARUNDEL, to wit:
On this 24th day of July, 1997, before me, the subscriber, a Notary
Public of the state aforesaid, personally appeared EDWARD J. COOKSEY,
PRESIDENT of the above named Tenant, and he acknowledged the above Lease to
be the act of the said Tenant.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.
Diane F. Maher
-----------------------
Notary Public
My Commission expires: 10/1/97
--------------
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EXHIBIT A
(Main Level and Lower Level Plan)
<PAGE>
EXHIBIT A-1
(Map of Location)
<PAGE>
GLENN DALE BUSINESS CENTER, L.L.C.
EXHIBIT B
CONSTRUCTION SPECIFICATIONS
A. Landlord will, at its cost and expense, do the following with
respect to the Premises described hereunder. Paint and clean the
existing 500 square foot office. All existing building systems
operational as of the date of delivery to Premises to Tenant by
Landlord. For first year of Lease only, Landlord will pay for all
major replacements of heating equipment in excess of $1,000, if
such replacements are not covered by existing warranty and existing
warranty (to be assigned to Tenant as of the Commencement Date of
the Lease,) and which are not caused by Tenant's negligence or
intentional misconduct. If Tenant properly exercises its option to
expand, then upon receipt of Tenant's expansion notice, Landlord
will re-tile existing office floor, install two (2) dedicated one
(1) 110 volt outlet in office area for copy and fax. Install
temporary air conditioning for office area. Install warehouse gas
heating units. Tenant shall have use of a single office in the
office pod of the building which will have temporary air
conditioning. Install protection around electrical boxes in
warehouse area. Within the first year of the Lease, Landlord will
also separately meter or sub-meter Tenant's gas and electric. In
the event Tenant is not relocated, then the following work shall be
done by Landlord on or before August 1, 1998:
Raise overhead door height (of one door) at interior loading dock
to ten (10) feet or higher;
Re-tile existing office floor;
Exterior glass entrance door with a sidelight window on either side
of entrance door so that there will be two (2) windowed offices;
1,000 square feet of office space in addition to existing warehouse
office to be divided as follows (subject to revision prior to
approval of construction drawings: reception area, conference
room, 3 office);
Create three (3) restrooms: one (1) warehouse, one (1) office
ladies, one (1) office mens;
Install any walls necessary to divide the Premises from the balance
of the space (cinder block with sheetrock with protection);
Existing center HVAC ductwork to be removed;
Rear offices in warehouse area to be demolished;
B. The following shall be incorporated in the construction of the
Premises by the party indicated, but all labor, material and equipment
therefor shall be at Tenant's sole cost and expense. All other items
necessary in order to constitute the Premises as a fully tenantable unit.
C. Except as otherwise indicated, Tenant accepts the Premises in "As
is" condition as of the date of the execution of this Lease.
All work included in or in addition to the foregoing shall be subject to
Landlord's approval as to design, materials and details.
D. Provisions governing work performed by Tenant.
1. All work performed by Tenant shall be performed in a first class
and workmanlike manner and with new materials.
2. Tenant shall be responsible for obtaining all permits required
in connection with the performance of its work.
3. Before Tenant or its contractors commence any work, they shall
arrange with Landlord for allocation of space for storage of equipment
and materials and for access to the site of the work. Storage of all
materials and equipment shall be confined to the areas from time to time
B - 1
<PAGE>
designated by Landlord, and access to the site of the work by Tenant's
contractors, and their employees and suppliers shall be confined to the
routes from time to time designated by Landlord.
4. Connections for utility service for Tenant and its contractors during
the construction period shall not be made without prior notice to Landlord
and without making arrangements satisfactory to Landlord for payment by
Tenant for such connections and service.
5. Tenant shall not engage any contractor for work respecting the
Premises without Landlord's prior written approval of such contractor.
6. Tenant shall require its contractors to comply with all requirements
of Landlord regarding coordination of work in the property.
7. Tenant shall cause its contractors to remove and dispose of debris,
rubbish, surplus materials and temporary structures resulting from Tenant's
work in the Premises, as may be necessary to avoid interference with
construction or when directed by Landlord.
8. Tenant shall cause its contractors to take all reasonable
precautions to protect other work on the property from any damage owing to
work performed by Tenant's contractors; and Tenant shall indemnify Landlord
for any damage to any such other work caused by Tenant's contractors.
9. If required by Landlord, Tenant shall cause its contractors to
furnish performance and labor and material payment bonds from a reputable
surety company and which shall include Tenant, Landlord, and other designees
of Landlord as obligees, without cost to Landlord or its designees.
10. If, in the opinion of Landlord's insurer, builder's risk insurance
is required to be carried on the improvements made by Tenant, in order to
prevent Landlord or its contractors from being deemed co-insurers under the
builder's risk insurance carried on the improvements constructed by Landlord,
Tenant shall carry builder's risk insurance on the work performed by Tenant
in such form and amounts as may be required by Landlord's insurer.
11. All work performed by Tenant shall be performed in compliance with
applicable requirements.
12. Tenant shall cause its contractors to furnish the customary one year
warranty against defects in workmanship and materials and in the event the
Term does not commence or is terminated prior to the expiration of the
warranty period, Landlord shall be entitled to the benefit of such
warranties, which are hereby assigned to Landlord.
13. If any labor dispute is caused by or related to any of Tenant's
contractors, subcontractors, or suppliers, Tenant shall, upon Landlord's
demand, cause the contractor, subcontractor or supplier causing, involved in
or related to such labor dispute to immediately cease work and deliveries in
the Center until further notice from Landlord.
14. If Tenant shall perform any work or make any improvements to the
Premises not conforming to the plans and specifications approved by Landlord,
then Tenant's shall upon request by Landlord promptly make any changes needed
to bring such work or improvements into conformity with the approved plans
and specs. If Tenant fails to make such requested changes promptly upon
request by Landlord, then Landlord may cause such changes to be made at
Tenant's expense; and Tenant shall pay the costs of such work as if such work
were assigned to be done by the Landlord under Section B of this Exhibit B.
15. Landlord shall have no responsibility or liability whatever for any
materials or equipment stored by Tenant or its contractors either in the
Premises or elsewhere in the property pursuant to paragraph 3 above. If
Tenant desires insurance protection for such materials and equipment, it
shall arrange for coverage at its expense.
B - 2
<PAGE>
GLENN DALE BUSINESS CENTER, LLC
EXHIBIT C
COMMON FACILITIES COSTS
Operating costs for the common facilities shall mean, for the purpose of
Paragraph 23 of the Lease, the total expenses incurred in operating and
maintaining the common facilities and any appurtenances thereto and
facilities thereof (or in or on unpaved outdoor areas of the property or
adjacent public streets or rights of way) or operating and maintaining leased
facilities not for the exclusive use of any warrant of the building,
including but not limited to the following:
1. Gardening, landscaping and maintenance of grass, trees, and
shrubbery;
2. All premiums for all insurance carried by the Landlord on the
property, and on any equipment and systems in or pertaining to the building or
property, including but not limited to public liability insurance, property,
damage insurance, automobile insurance, sign insurance, fire and extended
coverage insurance, boiler liability and casualty insurance, and plate glass
insurance (may be billed separately if fiscal year end and insurance year
differ);
3. Watchman service and other security service(s) and security
equipment for the building (but not for individual leased Premises);
4. Water and sewer charges for the property;
5. Any costs, charges, and expenses incurred by Landlord in connection
with any change of any company providing any utility service to the Premises,
including, without limitation, maintenance, repair, installation, and service
costs associated therewith;
6. Building, repairs, replacements and maintenance which is the
responsibility of the Landlord and all other repairs, replacements and
maintenance in and to the property, including but not limited to: paving,
plate glass, sprinkler system (if applicable), restroom facilities (if any)
(and utility conduits and plumbing fixtures pertaining thereto) vehicle area
lighting facilities, energy saving installations of any nature, drainage
facilities and other utility conduits and facilities in the vehicle areas, and
in unpaved areas of the property or adjacent public streets, pumping stations
and force mains (on and/or off site) utilized for sanitary, sewer and water
service in the property, signs and wiring, retaining walls, curbs, gutters,
fences, sidewalks, steps, escalators, elevators and ramps (if any) in the
property or other outdoor areas or public streets; exclusive of casualty loss
replacements covered by insurance, and exclusive of capital improvements;
7. Cleaning;
8. Utility charges (if any) for lighting the vehicle areas, signs, and
operating pumping stations, force mains and other like facilities;
9. Vehicle area line painting and removal of snow and ice;
10. Collection and removal of trash from the common facilities and
outdoor areas, (if undertaken by Landlord);
11. Power and fuel for operating equipment and systems and for operating
vehicles and equipment used for cleaning, maintenance and snow removal;
12. Salaries of personnel directly engaged in operating, cleaning and
maintaining the property (including security personnel and parking
attendants), and all related payroll charges and taxes.
C - 1
<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is given this 31st day of July, 1997 by JEROME
MURPHY, Jointly and Severally, having an address at __________________________
____________________________________; EDWARD COOKSEY, Jointly and Severally,
having an address at ________________________________________________________;
and JACK BOOZ, Jointly and Severally, having an address at ___________________
___________________________________________ (collectively, the "Guarantor")
jointly and severally, to GLENN DALE BUSINESS CENTER L.L.C. (the "Landlord"),
with respect to a Lease (the "Lease") dated of even date herewith between
Landlord and ASSOCIATED PACKAGING ENTERPRISES, INC. ("Tenant"), for premises
in the Glenn Dale Business Center.
WITNESSETH: As an inducement to Landlord to execute the Lease, and in
consideration thereof, Guarantor agrees with Landlord as follows:
1. Guarantor represents that it owns all of the issued and outstanding
capital stock of Tenant, that Tenant is a duly organized corporation, and
that all corporate action requisite for Tenant's execution of the Lease has
been duly taken.
2. Guarantor unconditionally guarantees to Landlord the full and prompt
payment of all rent and additional rent required to be paid by Tenant under
the Lease, the full and prompt performance and observance of all obligations
required to be performed and observed by Tenant under the Lease, and the
prompt payment of all other obligations and damages for which Tenant may be
legally liable to Landlord. Guarantor's liability hereunder shall not exceed
the amount equal to all rent and additional rent due under the Lease for the
twelve months immediately following a default which causes Guarantor's
liability hereunder.
3. Guarantor's liability hereunder shall be primary and not secondary,
and shall be joint and several with that of Tenant. Landlord may proceed
against Guarantor under this Guaranty Agreement without initiating or
exhausting its remedy or remedies against Tenant, and may proceed against
Tenant and/or Guarantor separately or concurrently. If Landlord releases any
rights it may have against any party primarily or secondarily liable on the
Lease, such release shall not affect Guarantor's liability under this
Guaranty.
4. In any action brought by Landlord under Paragraph 2 of this
Guaranty, Guarantor shall not interpose or be entitled to the benefit of any
defenses that are not or would not be available to Tenant if the same action
were brought by Landlord against Tenant, including, but not limited to,
defenses based upon modifications of the Lease, upon extensions, indulgences,
or forebearances granted to Tenant, upon delay by Landlord in enforcing
Tenant's obligations under the Lease, or upon failure of Landlord to notify
Guarantor of any Lease modifications or any extensions, indulgences, or
forebearances granted to Tenant; and Guarantor expressly waives all defenses
negated by this Paragraph 4.
5. Any notices given to Tenant under or with respect to the Lease shall
be conclusively deemed to have been simultaneously given to Guarantor.
6. Guarantor's liability under this Guaranty Agreement shall not in any
way be affected by any assignment of the Lease or a subletting of the
premises demised under the Lease.
7. No discharge, modification, impairment or limitation of the
obligations of Tenant to its creditors generally, or to Landlord under the
Lease, under any law relating to bankruptcy, insolvency, arrangements with
creditors or corporate reorganizations, shall in any way affect or discharge
Guarantor's obligations hereunder, and, to that end, Guarantor specifically
waives any right of indemnification that it may have against Tenant. If any
trustee, receiver or conservator of Tenant appointed under any Federal or
State law relating to bankruptcy, insolvency, arrangements with creditors or
corporate reorganization, rejects the Lease pursuant to any right to do so
under any such law, Guarantor's obligations hereunder shall not thereby be
affected but shall remain in full force and effect the same as if Lease had
not been rejected but continued in force.
8. If Landlord files any action against Guarantor to collect rent or
additional rent payable under the Lease or any other sum for which Tenant is
legally liable to Landlord, and a judgment is rendered for Landlord with
respect thereto, then Guarantor shall pay all reasonable counsel fees
incurred by Landlord in such action.
G-1
<PAGE>
9. Within ten (10) days after Landlord's written request to Guarantor,
Guarantor shall execute and deliver to Landlord a statement in writing
setting forth any amendments to this Guaranty and stating whether or not this
Guaranty is in full force and effect and setting forth what reasons or
defenses, if any, support any claim that this Guaranty is not in full force
and effect. Guarantor acknowledges that such statement may be required in
order for Landlord to consummate a sale or mortgage loan, and that a
purchaser or mortgagee will be entitled to rely on such statement.
10. Guarantor consents to suit in the State and Federal Courts of the
State of Maryland on or with respect to this Guaranty Agreement. Guarantor
waives any objection to the venue of any action filed by Landlord against
Guarantor in any State or Federal court of Maryland and waives any claim of
forum non conveniens or for transfer of any such action to any other court.
Guarantor hereby irrevocably appoints The Corporation Trust Company and its
successors as process agent to receive service of process for Guarantor in
any action brought on or with respect to this Guaranty in the State or
Federal Courts of the State of Maryland. If the said Corporation Trust
Company shall cease to perform such functions for foreign corporations, then
Landlord may appoint a bonded company performing such functions as process
agent. Guarantor authorizes Landlord, as Guarantor's attorney-in-fact, to
deliver a copy or photocopy of this Guaranty Agreement to the process agent
at any time (including delivery made simultaneously with service of process)
to evidence such appointment of such process agent and Guarantor shall
promptly reimburse Landlord for any fees and other expenses required to be
paid to said process agent in connection with its acceptance of such
appointment.
In lieu of services upon the said process agent, service of process may
be made upon Guarantor in any action or with respect to this Guaranty by
mailing such process to Guarantor by U.S. Certified Mail, Return Receipt
Requested, or U.S. Registered Mail, at the address to which notices may
be sent to Guarantor under this Guaranty Agreement.
Nothing herein shall be deemed to preclude Landlord from obtaining
service of process upon Guarantor in any other manner permitted by the laws
of the State of Maryland and the Rules of the Court of Appeals of Maryland.
11. IN THE EVENT THAT ANY SUM DUE HEREUNDER IS NOT PAID WITHIN FIFTEEN
(15) DAYS OF THE DATE WHEN DUE, THE GUARANTORS AUTHORIZE THE CLERK OR ANY
ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR THEM AND ENTER JUDGMENT BY
CONFESSION FOR THE PRINCIPAL BALANCE THEN OUTSTANDING UNDER THIS GUARANTY
AGREEMENT, TOGETHER WITH INTEREST, COURT COSTS AND AN ATTORNEY'S FEE EQUAL TO
15% OF THE SUMS ORIGINALLY GUARANTEED HEREUNDER.
12. Guarantor acknowledges that this Guaranty Agreement has been
delivered in the State of Maryland concurrently with delivery of the Lease
and shall be governed by the laws of the State of Maryland.
13. Any action, proceeding or counterclaim brought by Landlord or
Guarantor against the other with respect to any matter arising out of or in
any way connected with the Lease or this Guaranty shall be tried by the court
alone, sitting without a jury.
14. If this Guaranty is executed by more than one party, the term
"Guarantor" shall be deemed to apply to such parties jointly and severally.
The use of the neuter gender herein shall be deemed to mean the correct gender
applicable to the Guarantor, and the use of the singular shall include the
plural as the context may require.
15. Guarantor shall, upon request of Landlord, promptly join in the
execution of all stipulations and agreements referred to in the Lease.
16. Any notice which Landlord may elect to send to Guarantor shall be
binding upon the Guarantor if mailed to it at the addresses set forth in the
first paragraph of this Guaranty or to the Guarantor's last address known to
Landlord, by U.S. Certified Mail, Return Receipt Requested, or U.S.
Registered Mail.
17. Guarantor waives acceptance of this Guaranty.
18. The Guaranty Agreement shall be binding upon the successors of
Guarantor and the term "Guarantor", as used herein, includes such successors.
This Guaranty Agreement shall inure to the benefit of Landlord's successors
and assigns, and the term "Landlord", as used herein, includes such
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<PAGE>
successors and assigns. The term "Tenant", as used herein, includes the
permitted successors and assigns of Tenant.
IN WITNESS WHEREOF, this Guaranty under seal has been duly signed and
sealed by the Guarantor, as of the day and year first above written.
WITNESS: GUARANTOR:
[Name Illegible] /s/ Jerome Murphy (SEAL)
- --------------------------- ------------------------------
Jerome Murphy
Social Security No: ###-##-####
WITNESS: GUARANTOR:
[Name Illegible] /s/ Edward Cooksey (SEAL)
- --------------------------- ------------------------------
Edward Cooksey
Social Security No: ###-##-####
WITNESS: GUARANTOR:
[Name Illegible] /s/ Jack Booz (SEAL)
- --------------------------- ------------------------------
Jack Booz
Social Security No: ###-##-####
STATE OF MARYLAND, CITY/COUNTY OF ANNE ARUNDEL, to wit:
I HEREBY CERTIFY, that on this 24th day of July, 1997, before me, a
Notary Public of the State aforesaid, personally appeared JEROME MURPHY
who acknowledged that he executed the foregoing instrument for the purposes
herein contained.
WITNESS, my hand and Notarial Seal.
/s/ Diane F. Maher
------------------------------
Notary Public
My Commission Expires: 10-1-97
STATE OF MARYLAND, CITY/COUNTY OF ANNE ARUNDEL, to wit:
I HEREBY CERTIFY, that on this 24th day of July, 1997, before me, a
Notary Public of the State aforesaid, personally appeared EDWARD COOKSEY
who acknowledged that he executed the foregoing instrument for the purposes
herein contained.
WITNESS, my hand and Notarial Seal.
/s/ Diane F. Maher
------------------------------
Notary Public
My Commission Expires: 10-1-97
STATE OF MARYLAND, CITY/COUNTY OF ANNE ARUNDEL, to wit:
I HEREBY CERTIFY, that on this 24th day of July, 1997, before me, a
Notary Public of the State aforesaid, personally appeared JACK BOOZ
who acknowledged that he executed the foregoing instrument for the purposes
herein contained.
WITNESS, my hand and Notarial Seal.
/s/ Diane F. Maher
------------------------------
Notary Public
My Commission Expires: 10-1-97
G - 3
<PAGE>
WHITE MARSH BUSINESS CENTER
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE, is made as of this _____ day of November, 1988,
between WHITE MARSH BUSINESS CENTER LIMITED PARTNERSHIP, a limited
partnership organized and existing under the law of Maryland ("Landlord"),
and TOWSON COPY PRODUCTS, INC., a Maryland corporation ("Tenant").
WITNESSETH, THAT FOR AND IN CONSIDERATION of the rents, and of the mutual
covenants and agreements of the parties hereto, as are hereinafter set
forth, Landlord and Tenant do hereby agree as follows.
SECTION 1. CERTAIN DEFINED WORDS AND PHRASES. As used in this Lease, the
following words or phrases shall have the following meanings.
1.1. "CENTER" That certain office/industrial development commonly known
as White Marsh Business Center and located on Lot ZC as shown on a plat
entitled "Resubdivision of Lot 2, White Marsh Business Community," which plat
is recorded among the Land Records of Baltimore County, Maryland, in Plat
Book EMK3r. No. 52, Folio 143.
1.2. "PREMISES". That portion of the Center leased by Tenant from
Landlord and shown cross-hatched on Exhibit A, containing the agreed upon
equivalent of 5,837 square feet.
1.3. "TERM". A period of four (4) years, and four (4) months, plus the
fractional part of a month commencing on the agreed upon date of FEBRUARY 25,
1989 or if no date is herein set forth, then on the date established pursuant
to Section 3 hereof.
1.4 "LEASE YEAR". A period of twelve (12) consecutive full calendar
months, provided that the fifth Lease Year shall consist of a period equal to
the sixteen (16) consecutive full calendar months then remaining in the Term.
The first Lease Year shall begin on the date of commencement of the term
hereof if the date of commencement of the term hereof shall occur on the
first day of the calendar month; if not, then the first Lease Year shall
commence on the first day of the calendar month next following the date of
commencement of the term hereof. Each succeeding Lease Year shall commence
upon the anniversary date of the first Lease Year.
1.5. "PERMITTED USE". The use of the Premises as sales, administrative,
customer service and general office space.
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1.6. "BASIC RENT". For the first, second and third Lease Years Basic Rent
shall be the annual sum of $44,069.35, payable in equal consecutive monthly
installments of $3,672.45 each, subject to adjustment as set forth in
Subsection 4.1. For the fourth Lease Year the Basic Rent shall be the annual
sum of $49,357.56, payable in consecutive monthly installments of $4,113.13
each.
1.7. "BUILDING". The building situate within the Center and known as 5020
Campbell Boulevard, containing the agreed upon rentable area of 44,645 square
feet (the "Rentable Area").
1.8. "TENANT'S PROPORTIONATE SHARE". Thirteen and One hundredth percent
(13.01%).
1.9. "DEPOSIT". The sum of $7,344,90, of which amount $3,672.45 shall
constitute payment by Tenant of the Basic Rent due hereunder for the fifth
full month of the Term and the balance thereof in the amount of $3,672.45
shall be applied as provided in Section 5.2. The security deposit is due at
signing of the Lease and the sixth month rent is due at occupancy.
1.10. "TENANT NOTICE ADDRESS". The term means:
5020 Campbell Boulevard
Suite 1
Baltimore, Maryland 21236
SECTION 2. LEASE OF PREMISES. Landlord hereby leases to the Tenant and
Tenant rents from the Landlord the Premises, located in the Building within
the Center.
SECTION 3. TERM. The term of this Lease shall commence upon the date
specified in Subsection 1.3, but if no date is specified, then upon the
earlier to occur of (i) the date on which the Tenant opens or uses the
Premises, or (ii) that date which is fifteen (15) days after Landlord gives
written notice to Tenant of substantial completion; and terminating (unless
sooner terminated pursuant to the provisions of this Lease) on the last day
of the last calendar month of the Term. Promptly upon the commencement of the
Term, the parties shall enter into a supplementary agreement or certificate,
setting forth the dates of such commencement and termination. "Substantial
completion" means that the improvements to the Premises to be performed by
Landlord as required by Section 4.1 have been substantially completed except
for so-called punch list items, and that they are ready for Tenant to
commence the installation of its trade fixtures, equipment and inventory, and
so certified to by the Landlord or his representative.
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SECTION 4. CONSTRUCTION OF PREMISES
4.1. COMPLETION OF BUILDING. Landlord will construct on the Center the
Building in which the Premises are to be located, or cause it to be
constructed, as promptly as possible, subject to conditions constituting
force majeure, or other causes beyond Landlord's reasonable control. In
addition, Landlord shall, at its cost and expense, construct the Premises for
Tenant's use and occupancy in accordance with plans and specifications
prepared by Landlord or Landlord's architect, in the following manner. Within
ten (10) days from the date of the execution of this Agreement. Tenant shall
provide Landlord with Final Plans and Specifications (the "Final Plans and
Specifications") prepared by a professional designer, interior designer, or
architect, approved by Landlord in advance, for the layout of the Leased
Premises, including the dimensioned location of all partitions, interior
doors, lighting fixtures, lightpole switches, electrical outlets, telephone
receptacles or systems, together with the specifications therefor and any
other improvements Tenant desires to be made thereto prior to the
commencement of the term of this Lease. If Tenant fails to submit the Final
Plans and Specifications within ten (10) days after the execution of this
Lease then Tenant shall be assessed a penalty equivalent to the one-thirtieth
of the monthly installment of Basic Rent as set forth under Subsection 1.6 of
this Lease for each day late. Upon completion, the Final Plans and
Specifications shall be submitted to Landlord for its review and approval.
The Final Plans and Specifications shall be substantially in the form of the
Preliminary Plans and Specifications (the "Preliminary Plans and
Specifications") attached hereto on Exhibit "B". The parties acknowledge and
agree that the Basic Rent set forth in Subsection 1.6 incorporates the
parties' best estimate, based upon the Preliminary Plans and Specifications
and, as of the date of this Lease, of the cost of completion of Leasehold
Improvements, and that such estimate may differ from the actual cost
calculated with reference to the Final Plans and Specifications. Accordingly,
Landlord shall have the right to adjust the Basic Rent to reflect of the
cost to complete the modified improvements based upon the Final Plans and
Specifications.
Landlord shall notify Tenant of such adjustment, if any, at the time
Landlord notifies Tenant of Landlord's approval of the Final Plans and
Specifications. Tenant shall have five (5) days (not counting any intervening
Saturday or Sunday) to approve or disapprove Landlord's adjustment to Basic
Rent, if any, and shall be deemed to have accepted and approved the
adjustment to Basic Rent, if any, unless Tenant shall have notified Landlord
to the contrary, in writing, in accordance with Section 25 of this Lease,
within such five (5) day period. If Tenant fails to accept the Landlord's
adjustment to Basic Rent within such five (5) day period, then Landlord
shall, at its sole option and discretion, have the right to declare this
Agreement null and void and of no further force and effect. If, however,
Tenant accepts the adjustment to Basic Rent, if any, whether by express
letter of acceptance given within such five (5) day
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<PAGE>
period or by failure to reject the same within such five (5) day period, then
Tenant agrees to execute and acknowledge such instruments confirming such
acceptance as Landlord may from time to time require. Upon Tenant's
acceptance of the adjustment to Basic Rent, if any, in the manner herein
described, Landlord shall construct or cause to be constructed all of the
Leasehold Improvements required by the Final Plans and Specifications. Upon
taking possession and occupying the Leased Premises, Tenant shall thereby be
deemed to have accepted the same and to have acknowledged that the Leased
Premises are in the condition called for hereunder and under the Final Plans
and Specifications. Under no circumstances shall Landlord be liable to Tenant
for damages for any delay in commencing or completing construction of the
Premises or for a total failure to complete or deliver the same.
4.2. RIGHT OF CANCELLATION. Anything herein to the contrary
notwithstanding, if for any reason the Term of this Lease shall not have
commenced within one (1) year from the date of this Lease then either party
shall have the right and option to terminate this Lease by written notice to
the other, whereupon, effective with the giving of such notice, this Lease
shall be cancelled and neither party shall have any liability arising
hereunder, except that Landlord shall return any sum deposited by Tenant
pursuant to Subsection 1.9 hereof, plus any interest accrued if monies were
held in an interest bearing checking account.
4.3. ACCEPTANCE OF PREMISES. By opening for business, Tenant shall be
deemed to have accepted the Premises, to have acknowledged that they are in
the condition called for hereunder and to have agreed that the obligations of
Landlord imposed for the delivery of the Premises have been fully performed.
Landlord agrees to assign for the benefit of Tenant such warranties as may be
available from Landlord's contractors with respect to Landlord's work in the
construction of the Premises.
SECTION 5. RENT. Tenant covenants and agrees to pay to Landlord during
the Term, as Rent for the Premises, the following.
5.1 BASIC RENT. The Basic Rent shall be payable in equal monthly
installments in advance on the first day of each full calendar month during
the Term, without any deduction or setoff whatsoever, and without demand. The
first monthly payment shall include any prorated Basic Rent for the period
from the date of the commencement of the Term to the first day of the first
full calendar month.
5.2 DEPOSIT. Landlord hereby acknowledges receipt from Tenant of the
Deposit. In no instance shall the amount of such Deposit be considered a
measure of liquidated damages. All or any part of the Deposit may be applied
by Landlord in total or partial satisfaction of any default by Tenant. The
application of all or any part of the Deposit to any obligation or default of
Tenant under this Lease shall not deprive
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<PAGE>
Landlord of any other rights or remedies Landlord may have nor shall such
application by Landlord constitute a waiver by Landlord. If all or any part
of the Deposit is applied to an obligation of Tenant under this Agreement
then Landlord shall have the right to call upon Tenant to restore the Deposit
to its original amount by giving notice to Tenant and Tenant shall
immediately restore the Deposit by payment thereof to Landlord. The Deposit
shall be held by Landlord without liability for interest; Landlord shall be
entitled to the full use of the Deposit and shall not be required to keep it
in a segregated account or escrow. It is understood and agreed that should
Landlord convey its interest under this Lease, the Deposit may be turned over
by Landlord to Landlord's grantee or transferee, and upon any such delivery
of the Deposit, Tenant hereby releases Landlord herein named of any and all
liability with respect to the Deposit, its application and return, and Tenant
agrees to look solely to such grantee or transferee, and it is further
understood that this provision shall also apply to subsequent grantees and
transferees. Landlord will return the balance of the Deposit not previously
applied as provided herein, within thirty (30) days after expiration of the
Term, plus any interest accrued if monies were held in an interest bearing
account.
5.3. REAL ESTATE TAXES. Landlord shall pay all Taxes levied upon or
assessed against the land and improvements comprising the Center and the
appurtenances thereto during the Term of this Lease. If the Taxes payable by
Landlord are increased in any Tax Year during the Term of this Lease over the
amount of such Taxes due and payable with respect to the Center for the Tax
Tear in effect as of the Commencement of this Lease, then Tenant shall pay to
Landlord, as Additional Rent, its Proportionate Share of such Tax increase.
The term "Taxes" shall be defined as (i) all real estate and other ad
valorem taxes, including, without limitation, real estate rental, receipt or
gross receipt tax or any other tax on Landlord (excluding Landlord's income
taxes), now or hereafter imposed by any federal, state or local taxing
authority and whether as a substitution for or in addition to the present
method of real property taxation currently in use; (ii) costs of attorney's
and appraiser's fees, if necessary, incurred in connection with any
negotiation, contest or appeal pursued by Landlord in an effort to reduce
taxes, and (iii) any metropolitan district water and sewer charges and other
governmental charges which customarily are part of the real estate tax bill
issued by governmental authorities charged with said responsibility.
Taxes shall be adjusted on a proportionate basis for any period which
shall be less than a Tax Year. The Tax Year shall be the year so established
by the governmental authority charged with that responsibility. Landlord
agrees to provide Tenant with a copy of the Tax bill and the calculation of
Tenant's share thereof within a reasonable time. Tenant agrees to pay its
Proportionate Share of any increase in Taxes above the amount of Taxes due
and payable during the Tax Year in effect as of the commencement of the Term.
Tenant shall pay such Proportionate Share of Taxes within thirty (30) days
after written request therefor by Landlord, and further agrees, in lieu
thereof, at the prior request and
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<PAGE>
election of Landlord, to pay the same in equal monthly installments in such
amounts as are estimated and billed for each Tax Year by Landlord at the
commencement of the Term and at the beginning of each successive Tax Year,
with appropriate adjustment being made at the end of each Tax Year.
5.4. COMMON AREA EXPENSE. During each Lease Year of this Lease, and during
any Lease Year of any renewal term hereof, Tenant will pay to Landlord its
Proportionate Share of Common Area Expense, at the time and in the manner
provided in the last sentence of Section 5.3 hereof. "Common Area Expense"
means the total cost and expense, including reasonable administrative charges
and overhead, incurred by Landlord in the operation, maintenance and repair
of common areas of the Center and all areas, space, equipment, facilities and
improvements thereon and services therein, including, but not by way of
limitation, the operation of the areas and services described in Sections 7
and 10 hereof.
5.5. ADDITIONAL RENT. Tenant's liability for its Proportionate Share of
the expenses described in Subsections 5.3 and 5.4 hereof, together with any
other charges due and payable from Tenant as set forth in the Lease, shall be
deemed Additional Rent.
5.6. ADJUSTMENT OF PROPORTIONATE SHARE. If Landlord, in Landlord's sole
discretion, elects to construct one or more additional buildings ("Additional
Building") within the Center, Landlord shall have the right, by written
notice to Tenant, to adjust Tenant's Proportionate Share. The adjustment
shall be made by adding to the Rentable Area of the Building the rentable
area of any Additional Building upon substantial completion thereof, and by
dividing the total by the Rentable Area of the Premises. Appropriate
proration shall be made for any partial period of a Lease Year resulting from
such adjustment.
5.7. LATE CHARGE FOR FAILURE TO PAY RENT AND ADDITIONAL RENT. If Tenant
fails to pay any Basic Rent or any Additional Rent within ten (10) days of
the time it is due and payable then Landlord, in addition to all other rights
and remedies contained in this Lease, may assess a one-time late charge
against Tenant at a rate of five percent (5%) of the delinquent rental
payment and such unpaid amounts shall bear interest from the due date thereof
to the date of payment at a rate of twelve percent (12%) per annum. Tenant
shall further be responsible for the payment of any reasonable legal expense
and management fees incurred by Landlord in collecting any delinquent Rent
due hereunder.
5.8. ALL CHARGES CONSTITUTE RENT. Notwithstanding anything in this Lease
to the contrary, all amounts payable by Tenant to or on behalf of Landlord
under this Lease, whether or not expressly denominated as Basic Rent or
Additional Rent, and including any and all advances, charges, costs or fees
incurred by Landlord in collecting any sums due from Tenant hereunder, or
otherwise in preserving the rights of
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<PAGE>
Landlord hereunder or in enforcing the rights and obligations of Landlord and
Tenant hereunder, (and specifically including legal expenses and management
fees incurred by Landlord hereunder) shall constitute and shall be referred
to as "Rent" for the purposes of this Lease as well as Section 502(b)(6) of
the Bankruptcy Code, 11 U.S.C. section 502(b)(6).
SECTION 6. PERMITTED USE AND CONTINUED OCCUPANCY. The Premises shall be
used and occupied for the Permitted Use and for no other use or purpose.
Furthermore, the premises shall not be used in any way which may violate any
certificate of occupancy or other governmental requirements or restrictions
of record.
SECTION 7. COMMON AREAS. During the Term of this Lease Tenant shall be
entitled to the non-exclusive use, free of charge, but in common with others,
of the driveways, footways, and parking areas presently existing, provided
that such use shall be subject to such reasonable rules and regulations as
Landlord may from time to time prescribe; and provided further, that Landlord
shall at all times have full and exclusive control, management and direction
of the driveways, footways, and parking areas. Landlord shall further have
the right to police them, to restrict parking by Tenants, their officers,
agents, employees, contractors and invitees; to close temporarily all or any
portion of the parking areas of facilities as may be required for proper
maintenance and/or repair; to discourage non-customer parking; and to do and
perform such other acts in and to such areas as, in the use of its business
judgment, Landlord shall determine to be advisable in order to improve or
make more convenient the use thereof by tenants, their officers, agents,
employees and customers. Landlord may from time to time change the location,
layout and arrangement of the parking areas, driveways, and footways and
reduce them by erecting thereon buildings or other structures or improvements
of any kind including, but not limited to, extensions to the Center; provided
that the convenience of parking facilities available to Tenant shall not be
substantially prejudiced thereby; and provided further that there shall at
all times be provided such parking facilities as meet local governmental
requirements. Landlord shall provide reasonable illumination for the
driveways, footways and parking areas, and will keep them in reasonable
repair and reasonably free of litter and snow.
SECTION 8. ASSIGNMENT AND SUBLETTING. Tenant shall not assign, mortgage
or encumber this Lease, in whole or in part, nor sublease all or any part of
the Premises, nor permit other persons to occupy the Premises or any part
thereof, nor grant any license or concession for all or any part of the
Premises, without the prior written consent of Landlord in each instance,
whose consent shall not be unreasonably withheld. Any consent by Landlord to
an assignment or subletting of this Lease shall not constitute a waiver of
the necessity of such consent as to any
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<PAGE>
subsequent assignment or subletting and shall not relieve Tenant of liability
hereunder. An assignment for the benefit of Tenant's creditors or otherwise
by operation of law shall not be effective to transfer or assign Tenant's
interest under this Lease unless Landlord shall have first consented thereto
in writing. If any partnership interest or corporate shares of stock of
Tenant are transferred by sale, assignment, bequest, inheritance, operation
of law or otherwise, so as to result in a change of the voting control of
Tenant by those owning a majority of the partnership interest or corporate
shares of Tenant as of the date hereof, Tenant shall so notify Landlord of
said change. Landlord may terminate this Lease at any time after any such
change of control by giving Tenant ninety (90) days prior written notice
thereof, but such cancellation shall not relieve Tenant of liability
hereunder. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. section 101, ET SEQ. (the
"Bankruptcy Code"), any and all monies or other considerations payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the Estate of Tenant within
the meaning of the Bankruptcy Code. All monies or other considerations
constituting Landlord's property under the preceding sentence not paid or
delivered to Landlord shall be held in trust for the benefit of Landlord and
be promptly paid or delivered to Landlord.
SECTION 9. REPAIRS.
9.1. EXTERIOR REPAIRS. Landlord shall keep and maintain the roof and other
exterior portions of the Premises (exclusive of doors, windows, and glass) in
repair, provided that Tenant shall give Landlord written notice of the
necessity for such repairs, and provided that the damage thereto shall not
have been caused by Tenant, its agents, contractors, or employees, in which
event Tenant shall be responsible therefor and shall promptly repair it.
Except as expressly set forth in this Subsection 9.1, Landlord shall be under
no liability for repair or maintenance of the Premises, or any part thereof;
nor shall Landlord be under any liability to repair or maintain any
electrical, plumbing, heating, air conditioning or other mechanical
installations or equipment.
9.2. INTERIOR REPAIRS. Tenant shall keep the interior of the Premises,
together with all electrical, plumbing, heating, air conditioning and other
mechanical installations and equipment used by or in connection with the
Premises, in good order, replacement and repair, and promptly replace any
plate glass which may be broken or damaged with glass of like kind and
quality, and surrender the Premises at the expiration of the Term in as good
condition as when received except for ordinary wear and tear and damage by
fire or other casualty included in the extended coverage endorsement to
Landlord's fire insurance policies. Tenant will not overload the electrical
wiring and will not install any additional electrical
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wiring or plumbing unless it has first obtained Landlord's written consent
thereto, and, if such consent is given, Tenant will install them at its own
cost and expense. Tenant will repair promptly, at its own expense, any damage
to the Premises caused by bringing into the Premises any property for
Tenant's use, or by the installation, use or removal of such property,
regardless of fault or by whom such damage shall be caused unless caused by
Landlord, its agents, employees or contractors. In furtherance of Tenants
obligations, Tenant covenants and agrees to obtain a maintenance, repair and
service contract on the HVAC system, such contract to be on such terms and
with such company as shall be approved reasonably by Landlord and delivered
to Landlord within thirty (30) days after commencement of the Term. Landlord
shall transfer all warranties on electrical, plumbing, HVAC and other
mechanical equipment.
9.3. LANDLORD'S RIGHT TO REPAIR. If Tenant does not proceed promptly and
diligently to make any repairs or perform any obligation imposed upon it by
the preceding subsections within forty-eight (48) hours after receiving
written notice from Landlord to make such repairs or perform such obligation,
then Landlord may, at its option, enter the Premises and do and perform the
things specified in the notice, without liability on the part of Landlord for
any loss or damage resulting from any such action by Landlord, and Tenant
agrees to pay promptly upon demand any cost or expense incurred by Landlord
in taking such action. Landlord agrees, after written notice from Tenant, to
make those repairs required of it under this Lease and to perform its
obligations hereunder as promptly as reasonably possible under the
circumstances.
SECTION 10. UTILITIES. Tenant shall reimburse Landlord upon demand for
Tenant's Proportionate Share of all utility charges for the Center not billed
directly to Tenant. Tenant shall pay the charges for all utility services
billed directly to Tenant promptly when due, including but without
limitation, heat, electricity and telephone. If Tenant defaults in the
payment of any such charges, Landlord may, at its option, pay them for
Tenant's account, in which case Tenant shall promptly reimburse Landlord
therefor. Landlord will provide and maintain the necessary mains and
electrical conduits to bring water and electricity to the Premises. Landlord
shall under no circumstances be liable to Tenant in damages or otherwise for
any interruption in service of electricity, water, heat, telephone or air
conditioning whether caused by the making of any repairs or improvements in
the Building or otherwise. The cost of installing any meters, where necessary
to measure Tenant's consumption of said utilities, shall be at Tenant's
expense.
SECTION 11. COMPLIANCE WITH RULES, ORDINANCES, ETC. Tenant shall,
throughout the Term, at Tenant's sole cost and expense, promptly comply with
all laws, ordinances, notices, orders, rules, regulations and requirements of
or made by any and all federal, state or municipal governments of the
appropriate departments, commissions, boards and officers thereof, as well as
any and all notices, orders, rules and
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regulations of the National Board of Fire Underwriters, or any other body now
or hereafter constituted and exercising similar functions, relating to all or
any part of the Premises; provided, however, that Tenant shall not be
required to take any affirmative action in order to comply with the
foregoing laws, ordinances and notices with respect to the exterior of any
portion of the Building other than the Premises unless the need for such
compliance arises out of Tenant's use, manner of use or occupancy of, or
installations within or upon, the Premises or such portion of the Building.
Tenant shall likewise observe and comply with the requirements imposed by any
and all policies of public liability, fire and other insurance at any time in
force with respect to the Premises or with respect to the Building, any other
improvements upon the Premises, and/or equipment therein. Tenant shall comply
with the National Fire Code which prohibits smoking in storage areas
containing combustible products and shall install, at its expense, "No
Smoking" signs in those areas of the Premises. Tenant shall also install fire
extinguishers throughout the Premises and shall inspect such extinguishers at
least once a year and refill and maintain such extinguishers as often as
necessary. Tenant shall also comply with Landlord's rules and regulations
attached hereto as Exhibit C.
SECTION 12. TENANT'S ALTERATIONS. Tenant shall not paint or decorate, or
make any alterations, additions or improvements to the Building or to the
Premises, or any part thereof, without Landlord's prior written consent in
each instance which consent shall not be unreasonably withheld. Tenant shall
present plans and specifications for such work to Landlord at the time
approval is sought. Before making any alterations, additions, installations,
or improvements Tenant shall, at its expense, obtain all permits, approvals
and certificates required by governmental authorities and, upon completion,
certificates of final approval thereof, and shall deliver duplicates of all
such permits, approvals and certificates to Landlord promptly thereafter.
Tenant agrees to carry and will cause Tenant's contractors and subcontractors
to carry such workmen's compensation, general liability, personal and
property damage insurance as Landlord may require. Any alterations, additions
or improvements made by Tenant constituting fixtures shall immediately become
the property of Landlord and shall remain upon the Premises. Alternately,
Landlord may elect to require Tenant to remove such alterations, additions
and improvements and restore the Premises to their original condition, in
which case Tenant shall comply with such requirement prior to the expiration
or other termination of this Lease. Tenant shall not cut or drill into or
secure any fixtures, apparatus or equipment of any kind in or to any part of
the Premises without first obtaining Landlord's written consent. Tenant shall
cause to be removed within ten (10) days after notice thereof any lien,
including any mechanic's lien asserted against work performed upon the
Premises. Tenant shall also defend on Landlord's behalf, at Tenant's sole
cost and expense, any action, suit or proceeding for the enforcement of any
such lien, and Tenant shall pay any damages and satisfy and discharge any
judgment entered thereon and save Landlord harmless from any loss, liability,
expense, including reasonable counsel fees, claims or damages resulting
therefrom.
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SECTION 13. INSURANCE.
13.1. LIABILITY INSURANCE, ETC. Tenant, at Tenant's sole cost and
expense, shall maintain and keep in effect throughout the Term, insurance
against loss or liability in connection with bodily injury or death or
property damage or destruction in or upon the Premises, or arising out of the
use of any portion of the Center by Tenant or its agents, employees,
officers, invitees, visitors and guests, under policies of general public
liability insurance having such limits as to each as may be reasonably
required by Landlord from time to time, but in any event of not less than One
Million Dollars ($1,000,000) for each person and One Million Dollars
($1,000,000) for each occurrence with respect to bodily injury or death, and
One Hundred Thousand Dollars ($100,000) for each occurrence with respect to
property damage or destruction. Such policies shall name Landlord, any other
parties in interest designated by Landlord from time to time, and Tenant as
the insured parties, shall provide that they shall not be cancellable without
at least thirty (30) days prior written notice to Landlord, and shall be
issued by insurers of recognized responsibility licensed to do business in
Maryland. At least five (5) days prior to the commencement of the Term, the
originals or a signed duplicate copy of such policies shall be delivered by
Tenant to Landlord and at least thirty (30) days before any such policy shall
expire Tenant shall deliver the original or a signed duplicate copy of a
replacement policy to Landlord.
13.2 FIRE AND EXTENDED COVERAGE. Landlord shall maintain throughout the
Term all risk or fire and extended coverage insurance on the Building and may
maintain all risk or fire and extended coverage insurance on the equipment,
fixtures and other improvements installed and/or owned by Landlord and used
in connection with the Building and/or the Center, and/or all alterations,
rebuildings, replacements and additions thereto, including but not limited to,
insurance insuring the same against loss or damage by, or abatement of rental
income resulting from fire, and other such hazards, casualties and
contingencies, liability and indemnity insurance (all of which are
hereinafter referred to collectively as "Insurance Costs"). Tenant shall pay
to Landlord, as Additional Rent hereunder, upon demand, the amount, if any, by
which Landlord's premium shall be increased by reason of Tenant's occupancy
of the Premises. If the dollar amount of premiums for Insurance Costs for any
Lease Year while this Lease is in effect is greater than the dollar premiums
for Insurance Costs for the year in which this Lease commences, Tenant shall
pay to Landlord, as Additional Rent hereunder, upon demand, its Proportionate
Share of such increase during the Lease Year in which such increase takes
place and during each Lease Year thereafter.
13.3 RELEASE. Each of the parties hereto hereby releases the other, to
the extent of the releasing party's actual recovery under its insurance
policies, from any and all liability for any loss or damage which may be
inflicted upon the property of such party, even if such loss or damage shall
have arisen out
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of the negligent or intentionally tortious act or omission of the other
party, its agents or employees; provided, however, that this release shall
be effective only with respect to loss or damage occurring during such time as
the appropriate policy of insurance shall contain a clause to the effect that
this release shall not affect the said policy or the right of the insured to
recover thereunder.
SECTION 14. CHANGES TO CENTER. Landlord shall have the exclusive right to
use all or any part of the roof and rear and side walls of the Premises for
any purpose; to erect additional or other structures over all or any part of
the Premises or the Center; to change or revise the layout of improvements
within the Center, or relocate or remove the same; to partition the same; and
to erect and maintain in connection with the construction thereof temporary
scaffolds and other aids to construction on the exterior of the Premises,
provided that access to the interior of the Premises shall not be denied,
that there shall be no encroachment upon the interior of the Premises, and
that the use and enjoyment of the Premises by Tenant and its customers shall
not be unreasonably denied.
SECTION 15. FIRE OR OTHER CASUALTY.
15.1. REPAIR OR DAMAGE. If the Premises are damaged by fire, the
elements, unavoidable accident or other casualty, Landlord shall promptly at
its expense repair the damage and if the Premises are not thereby rendered
untenantable in whole or in part, rent shall not abate. If the Premises are
rendered untenantable only in part, rent shall abate during such period
proportionately as to the portion of the Premises rendered untenantable. If
the entire Premises are untenantable, rent shall abate entirely during the
period of untenantability.
15.2. NO LIABILITY FOR INTERRUPTION TO BUSINESS. In no event shall
Landlord be liable for interruption to Tenant's business or for damage to or
replacement or repair of Tenant's personal property, including inventory,
trade fixtures, floor coverings, furniture, property removable by Tenant
under the provisions of this Lease or leasehold improvements.
15.3. LANDLORD'S ELECTION TO TERMINATE LEASE. If the Premises are (i)
rendered wholly untenantable, or (ii) damaged as a result of any cause which
is not covered under standard fire and extended coverage insurance, or (iii)
substantially damaged during the last two years of the Term, or if the
Building of which the Premises are a part (but not the Premises), is damaged
to the extent that, in Landlord's judgment, reasonably exercised, it is
necessary to demolish the Building and the Premises, then in that case,
Landlord may terminate this Lease by giving to Tenant notice within ninety
(90) days after the
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occurrence of such event. Basic Rent and Additional Rent and other charges
shall be adjusted as of the date of such cancellation.
SECTION 16. SIGNS. Tenant shall not erect or maintain any exterior sign
or any signs within the Premises visible from the outside anywhere upon the
Center or Premises without first obtaining Landlord's written approval as to
the size, design, location, type of composition or material thereof. Design
shall be in accordance with the guidelines established by Landlord from time
to time. Any such sign shall be inscribed, painted or affixed by Landlord, or
a company approved by Landlord, but the entire cost thereof shall be borne by
Tenant. Tenant shall maintain any such sign or signs in good condition and
repair at all times, and pay any taxes imposed thereon.
SECTION 17. EMINENT DOMAIN. If the whole or any part of the Premises is
taken under the power of eminent domain then this Lease shall terminate as to
the part so taken on the date Tenant is required to yield possession thereof
to the condemning authority. Landlord shall make necessary repairs and
alterations to restore the part not taken to useful condition and the Basic
Rent shall be reduced proportionately as to the portion of the Premises so
taken. If the amount of the Premises so taken substantially impairs the
usefulness of the Premises for the purposes set forth in Section 6, then
either party may terminate this Lease as of the date when Tenant is required
to yield possession. All compensation awarded for any taking of the fee and
the leasehold shall belong to and be the property of Landlord; provided,
however, that Tenant, and not Landlord, shall be entitled to any portion of
the award which does not serve to reduce Landlord's award and is made
directly to Tenant in reimbursement for Tenant's cost of removal of its
stock, trade fixtures, moving and relocation costs.
SECTION 18. TRADE FIXTURES. All trade fixtures installed by Tenant in the
Premises, other than improvements made by Tenant to the Premises, shall
remain the property of Tenant and shall be removable from time to time and
also at the expiration of the Term of this Lease or other termination
thereof, provided Tenant shall not at such time be in default under any
covenant or agreement contained in this Lease; otherwise such fixtures shall
not be removable, and Landlord shall have a lien thereon to secure itself
against loss and damage resulting from such default. Tenant further agrees to
restore the Premises to their original condition, fair wear and tear excepted.
SECTION 19. RIGHT OF ENTRY. Landlord and its representatives shall have
the right at all reasonable times to enter the Premises for the purposes of
(a) inspecting them, (b) repairing them or otherwise performing any work
therein as herein provided; and (c) exhibiting them for sale, lease or
financing; and Landlord shall not be liable in any manner for any entry into
the Premises for such purposes.
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SECTION 20. SURRENDER. Promptly upon the expiration or earlier
termination of the Term, Tenant shall yield up the Premises and any and all
improvements, alterations and additions thereto, and all fixtures and
equipment servicing the Premises, clean and neat, and in the same condition,
order and repair in which they are required to be kept throughout the term of
this Lease. Tenant shall remove its signs, goods and effects and machinery,
fixtures and equipment used in the conduct of its trade or business and not
servicing the Building, and shall repair any damage caused by the
installation or the removal thereof. Unless sooner terminated pursuant to the
provisions hereof, this Lease shall expire absolutely upon the expiration of
the Term without the necessity of any notice or other action from or by
either party hereto. Tenant further agrees that during the six (6) month
period preceding the expiration date of the Term, Landlord may place upon the
Premises a FOR RENT sign.
SECTION 21. CURING THE TENANT'S DEFAULTS. If Tenant defaults in the
performance of any of its obligations under this Lease then, in addition to
any other rights it may have in law or equity, and after written notice to
Tenant except in the case of emergency, Landlord shall be entitled (but shall
not be obligated) to cure such default, and Tenant shall reimburse Landlord
for any sums paid or costs incurred by Landlord, including reasonable
attorney's fees, in curing such default, plus interest thereon at the lesser
of the highest rate permitted by law or fifteen percent (15%) per annum,
which sums, costs and interest shall be deemed to be Additional Rent
hereunder and shall be payable by Tenant upon demand by Landlord.
SECTION 22. RESPONSIBILITY OF TENANT. Tenant shall be responsible for,
and shall relieve and hereby relieves Landlord from and agrees to indemnify
Landlord against, any and all liability by reason of any injury or damage to
Tenant or to any other person or property upon the Premises (or in the said
common areas in connection with Tenant's use and enjoyment thereof), caused
by any fire, breakage, leakage, collapse or other event upon the Premises or
any other portion of the Center, whether or not such event results from a
condition which existed prior to the execution of this Lease and whether or
not such event results in the termination of this Lease by reason of damage
to or destruction of the Center or the Premises, unless such fire, breakage,
leakage, collapse or other event, injury or damage was caused by or results
from the negligent or intentionally tortious act or omission of Landlord or
its agents, officers, invitees, visitors or guests.
SECTION 23. SUBORDINATION AND ATTORNMENT. This Lease shall be subject and
subordinate at all times to the lien of any underlying ground leases,
mortgages or deeds of trust now or hereafter placed by Landlord upon the
Center, and to any and all advances to be made thereunder, and to all
renewals, replacements and extensions thereof. This subordination shall be
self-operative, and no further
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agreement or act on the part of Tenant shall be required to effectuate such
subordination. In confirmation thereof, Tenant shall execute such further
assurances as may be requested. Any mortgagee or trustee under any deed
of trust may elect that this Lease shall have priority over its mortgage or
deed of trust, and upon notification of such election by such mortgages or
trustee to Tenant, this Lease shall be deemed to have priority over such
mortgage or deed of trust whether this Lease is dated prior to or subsequent
to the date of such mortgage or deed of trust. If any proceedings are brought
for the foreclosure of any portion of the Center of which the Premises are a
part, or if the power of sale under a mortgage or deed of trust is exercised,
then Tenant, upon request, shall attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the Landlord under this
Lease. Tenant hereby appoints Landlord to be the attorney-in-fact of Tenant
(which appointment is irrevocable and coupled with an interest) to execute
and deliver any such instrument or instruments for and on behalf of and in
the name of Tenant.
SECTION 24. DEFAULTS BY THE TENANT.
24.1. DEFAULT. If any one or more of the following events shall occur:
(a) Tenant shall fail to make any payment hereunder when due, whether for
Rent or otherwise; or (b) any financial report or statement, certificate,
statement, representation or warranty at any time furnished or made by or on
behalf of Tenant or any guarantor of any of Tenant's obligations hereunder,
including, without limitation, any representation or warranty made by Tenant
herein, proves to have been false or misleading in any material respect at
the time as of which the facts therein set forth were stated or certified, or
any such financial report or statement has omitted any material contingent or
unliquidated liability or claim against Tenant or any such guarantor; or (c)
Tenant or any guarantor of any of Tenant's obligations hereunder shall fail
to perform or observe any covenant, condition or agreement to be performed or
observed by it hereunder or under any guaranty agreement; or (d) Tenant or
any guarantor of Tenant's obligations hereunder shall be in breach of or in
default in the payment and performance of any obligation owing to Landlord,
whether or not related to this Lease and howsoever arising, whether by
operation or law or otherwise, present or future, contracted for or acquired,
and whether joint, several, absolute, contingent, secured, unsecured, matured
or unmatured; or (e) Tenant or any guarantor of any of Tenant's obligations
hereunder shall cease doing business as a going concern, make an assignment
for the benefit of creditors, generally not pay its debts as they become due
or admit in writing its inability to pay its debts as they become due, file a
petition commencing a voluntary case under any chapter of the Bankruptcy
Code, 11 U.S.C. Section 101, ET SEQ. (the "Bankruptcy Code"), be adjudicated
an insolvent, file a petition seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
arrangement under any present or future statute, law, rule or regulation, or
file an answer
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admitting the material allegations of a petition filed against it in any such
proceeding, consent to the filing of such a petition or acquiesce in the
appointment of a trustee, receiver, custodian or other similar official for
it or of all or any substantial part of its assets or properties, or take any
action looking to its dissolution or liquidation; or (f) an order for relief
against Tenant or any guarantor of any of Tenant's obligations hereunder
shall have been entered under any chapter of the Bankruptcy Code, or a decree
or order, by a court having jurisdiction in the premises shall have been
entered approving as properly filed a petition seeking reorganization,
arrangement, readjustment, liquidation, dissolution or similar relief against
Tenant or any guarantor of any of Tenant's obligations hereunder under any
present or future statute, law, rule or regulation, or within thirty (30)
days after the appointment without Tenant's or such grantor's consent or
acquiescence of any trustee, receiver, custodian or other similar official
for it or such grantor or of all or any substantial part of its or such
guarantor's assets and properties, such appointment shall not be vacated;
then Landlord may re-enter and repossess the Premises, together with any and
all improvements thereon and additions thereto, and/or pursue any remedy
permitted by law or equity for the enforcement of the provisions hereof. In
the alternative, and at Landlord's election, Landlord may give to Tenant at
any time after the occurrence of such default written notice of Landlord's
election to terminate this Lease on a date to be specified in the notice, not
less than ten (10) days after the giving thereof; and upon the date specified
in the notice, this Lease and the Term shall (except for the continued
liability of Tenant as hereinafter provided) expire and come to an end as
fully and completely as if the date specified in the notice were the date
definitely fixed in this Lease for the expiration of the Term, and Tenant
shall quit and surrender the Premises, on or before the stated date, to the
Landlord, without cost or charge to Landlord.
24.2. LANDLORD'S ADDITIONAL REMEDIES FOR DEFAULT. If this Lease or the
Tenant's possession of the Premises should be terminated as herein provided
or by reentry, summary dispossession proceedings or any other method then
Landlord may, at Landlord's option, as an additional or alternative remedy
(a) relet the Premises or any part or parts thereof for the account of Tenant
for the remainder of the Term, as herein originally specified, or (b) relet
the Premises or any part or parts thereof for a period extending beyond the
date when this Lease would have expired but for such prior expiration on
default or for such reentry and termination, and deem that portion of the
period within the Term, as herein originally specified, as a rental for the
account of Tenant (which such reletting may provide for reasonable
concessions in rent or a reasonable free rent period, but without thereby in
any way affecting Tenant's liability hereunder for the Rent payable under
this Lease for the period of such concession or free rent) and, in any of
such events, Landlord may receive the rent therefor, applying the same first
to the payment of such expenses of every kind and nature as the Landlord may
have incurred or assumed in recovering the possession of the Premises and in
connection with the reletting of the Premises, and then (to the extent of the
remainder of so much
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of the said rental as shall have been received with respect to the Term, as
herein originally specified) to the fulfillment of the covenants and
agreements of Tenant hereunder including the payment of the Rent herein
reserved, and Tenant shall remain liable as herein provided, but there shall
be no obligation on the part of Landlord to relet nor any liability on its
part for failure to relet, and Tenant's liability shall not be diminished or
affected by such failure to relet, or the giving of such rental or other
concessions in the event of any reletting, as aforesaid.
24.3 TENANT'S LIABILITY FOR DEFAULT. If this Lease is terminated as
herein provided, or if Tenant's possession is terminated by reentry, summary
dispossession proceedings or any other method, whether or not the Premises is
relet, then Tenant shall, until the time when this Lease would have expired
but for such prior expiration or for such reentry, summary dispossession or
termination, continue or remain liable for the Rent herein reserved less the
avails of any such reletting (after the deduction therefrom of all expenses
incurred by Landlord in recovering such possession and in reletting
including, but not by way of limitation, broker's fees, reasonable counsel
fees and costs of renovation), if any, and the same shall be due and payable
by Tenant to Landlord at the time specified for the payment thereof, so that
upon each of such days Tenant shall pay to Landlord the amount of the
deficiency then existing. Upon such expiration, termination or reentry as
aforesaid, neither Tenant nor Tenant's creditors and representatives shall
thereafter have any right, legal or equitable, in or to the Center, the
Premises or any portion thereof, or in or to the repossession of same, or in,
to or under this Lease, and Tenant hereby waives any and all right or
redemption which may then be provided by law. The words "reenter" and
"reentry" as used in this Lease shall not be deemed to be restricted to their
technical legal meaning.
24.4 ALL SUMS DEEMED RENT. Any and all mention in this Section 24 of the
"Rent" herein reserved after the termination of this Lease as in this Section
24 provided, or after the termination of Tenant's possession by reentry,
summary dispossession or other method as herein provided, shall be deemed to
refer to the Basic Rent plus all Additional Rent and such additional sums as
the Tenant shall be obligated to pay to Landlord under any of the terms,
covenants and conditions of this Lease, whether or not designated or
indicated herein to be payable as Basic Rent or Additional Rent, and all such
sums shall constitute Rent for the purposes of Section 502(b)(6) of the
Bankruptcy Code, 11 U.S.C. Section 502(b)(6).
24.5 DISTRAINT FOR RENT. In addition to, and not in substitution for the
remedies provided in this Section 24, if Tenant fails to pay any rent when
due, beyond any applicable grace period, Landlord shall have the right to
distrain therefor.
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24.6 NO IMPLIED WAIVER OF LANDLORD'S RIGHT. The failure of Landlord to
insist in any one or more instances upon the performance of any of the
covenant or conditions of this Lease, or to exercise any right or privilege
herein conferred shall not be construed as thereafter waiving or relinquishing
Landlord's right to the performance of any such covenants, conditions, rights
or privileges, and the same shall continue and remain in full force and
effect, and the waiver of one default or right shall not constitute waiver of
any other default, and the receipt of any rent by Landlord from Tenant or any
assignee or subtenant of Tenant, whether the same be Rent that originally was
reserved or that which may become payable under any covenants herein
contained, or of any portion thereof, shall not operate as a waiver of
Landlord's right to enforce the payment of the Additional Rent or of any of
the other obligations of this Lease by such remedies as may be appropriate,
and shall not waive or avoid Landlord's right at any time thereafter to elect
to terminate this Lease, on account of such assignment, sub-letting,
transferring of this Lease or any other breach of any covenant or condition
herein contained, unless evidenced by Landlord's written waiver thereof. The
acceptance of Rent or any other consideration by Landlord at any time shall
not be deemed an accord and satisfaction, and Landlord shall have absolute
discretion to apply same against any sum for any period or reason due
hereunder without the same constituting a release of any other sums remaining
due and unpaid.
24.7 LANDLORD'S COSTS AND EXPENSES. If suit is brought for the recovery
of possession of the Premises, for the recovery of Rent or any other amount
due under the provisions of this Lease, for the preservation or enforcement
of any other rights or remedies accruing to Landlord under this Lease or
because of the breach of any covenant herein contained on the part of the
Tenant to be kept or performed, then Tenant shall pay all of Landlord's
expenses, including reasonable attorneys' fees, and such fees and expenses
shall be deemed Additional Rent.
24.8 TENANT'S WAIVER. Tenant shall and hereby does waive trial by jury in
any action, proceeding or counterclaim brought by Landlord on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Leased
Premises and/or any claim of injury or damage. If Landlord commences any
proceedings for the non-payment of Rent or Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding. This
shall not, however, be construed as a waiver of Tenant's right to assert such
claims in any separate action or actions brought by Tenant.
25. GRACE PERIOD. Anything contained in any of the foregoing provisions
of this Lease to the contrary notwithstanding, neither party hereto will
exercise any right or remedy provided for in this Lease or allowed by law
because of any default of the other, unless such party shall first have given
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notice thereof to the other, and the other, within a period of five (5) days
thereafter, shall have failed to pay the sum or sums due if the default shall
consist of the failure to pay money, or, if the default shall consist of
something other than the payment of money, shall have failed promptly
thereafter to begin to cure such default, and shall have failed to cure such
default within a reasonable period of time in any event not to exceed thirty
(30) days from the date of such notice; provided, that no such notice from
Landlord shall be required, nor shall the Landlord be required to allow any
part of the said notice period, (a) more than two (2) times during any twelve
(12) month period, or (b) if the Tenant shall have removed from or shall be
in the course of removing from the Premises, or (c) if a petition in
bankruptcy or for reorganization shall have been filed by or against the
Tenant, resulting in the entry of an Order For Relief under the Bankruptcy
Code, 11 U.S.C. Section 101, ET SEQ., or (d) if a receiver or trustee shall
have been appointed for Tenant and such appointment and such receivership or
trusteeship shall not be terminated within thirty (30) days thereafter; or
(e) if the Tenant shall have made an assignment for the benefit of creditors,
or (f) if Tenant shall have been levied upon and is about to be sold out upon
the Premises by any sheriff, marshall or constable.
SECTION 26. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be sent by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed given on
the day on which same were posted. Notices to Tenant shall be addressed to
Tenant's Notice Address. Notices to Landlord shall be addressed c/o
Nottingham Properties, Inc., 100 West Pennsylvania Avenue, Towson, Maryland
21204, with a carbon copy to any other persons designated by Landlord. Either
party may, at any time, in the manner set forth for giving notices to the
other, set forth a different address to which notices to it shall be sent.
SECTION 27. TENANT'S CERTIFICATE. Tenant agrees at any time and from time
to time within ten (10) days after Landlord's written request, to execute,
acknowledge and deliver to Landlord a written instrument in recordable form
certifying or stating: (a) that this Lease is unmodified and in full force
and effect (or if there shall then have been modifications, that the same is
in full force and effect as so modified, and setting forth such
modifications); (b) that the Premises have been completed by Landlord in
accordance with Section 4 hereof, (or if not so completed, stating the
respects in which not completed); (c) that Tenant has accepted possession of
the Premises, the date upon which the Term has commenced and the date of the
expiration of the Term of this Lease; (d) the dates to which Rent and other
charges have been paid in advance, if any; (e) whether or not to the best
knowledge of the signer of such certificate Landlord is then in default in
the performance of any covenant, agreement or condition contained in this
Lease and, if so, specifying in detail each such default of which the signer
may have knowledge; (f) as to any other matters as may be reasonably so
requested; and (g) that it is understood that such instrument
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may be relied upon by any prospective purchaser, mortgages, assignee or
lessee of Landlord's interest in this Lease, in the Center, or any portion or
part thereof.
SECTION 28. THE LANDLORD. As used herein, the term "Landlord" means the
Landlord named hereinabove as well as its heirs, personal representatives,
successors and assigns, and any other subsequent owner of the leasehold
estate or reversion in the Premises, as well as the heirs, personal
representatives, successors and assigns of any such subsequent owner, each of
whom shall have the same rights, remedies, powers, authorities and privileges
as he would have had had he originally signed this Lease as Landlord, but any
such person, whether or not named herein, shall have no liability hereunder
after he shall cease to hold the title to or a leasehold interest in the said
real estate, except for obligations which may have theretofore accrued.
Neither Landlord nor any principal of Landlord, whether disclosed or
undisclosed, shall have any personal liability with respect to this Lease or
the Premises, and if Landlord shall breach or default with respect to its
obligations or otherwise under this Lease, Tenant shall look solely to the
Premises and to the rents, profits and issues to be received therefrom.
SECTION 29. THE TENANT. As used herein, the term "Tenant" means the
Tenant named in this Lease as well as its heirs, personal representatives,
successors and assigns, each of which shall be under the same obligations,
liabilities, and disabilities and have only such rights, privileges and
powers as it would have possessed had it originally signed this Lease as
Tenant. However, no such rights, privileges or powers shall inure to the
benefit of any assignee of Tenant, immediate or removed, unless the
assignment to such assignee shall have been consented to in writing by the
Landlord, as aforesaid. Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Section 101, ET
SEQ., shall be deemed without further act or deed to have assumed all of the
obligations arising under this Lease on and after the date of such
assignment. Any such Assignee shall upon demand execute and deliver unto
Landlord an instrument confirming such assumption.
SECTION 30. TENANT'S STATEMENT. Tenant shall furnish Landlord, when
requested, annually, a copy of its annual audited and certified financial
statement. It is mutually agreed that the Landlord may deliver a copy of such
statements to its mortgagee and that Landlord's employees may review such
statements, but otherwise, Landlord shall treat such statements and
information contained therein as confidential.
SECTION 31. RECORDING. Neither this Lease, nor any memorandum, affidavit,
or other writing with respect thereto, shall be recorded by Tenant or by
anyone acting through, under or on behalf of Tenant, and the recording
thereof in violation of this provision, shall make this Lease null and void
at
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Landlord's election. Notwithstanding the foregoing prohibition, either party
may request that the other party execute a memorandum or short form lease
for recording, containing the name of the parties, the legal description and
term of the Lease. The party so requesting such recordation shall pay all of
the costs (including any transfer taxes and Recordation taxes) payable in
connection with such recordation, except that Tenant covenants that if at
any time any mortgagee of Landlord's interest in the Premises, any trustee or
beneficiary under a deed of trust constituting a lien upon the Building of
which deed of trust Landlord is grantor, or a landlord of Landlord in respect
to the real property upon which the Building is situate, shall require the
recordation of this Lease, or if the recordation of this Lease shall be
required by any valid governmental order or if any governmental authority
having jurisdiction in the matter shall assess and be entitled to collect
transfer taxes or recordation taxes, or both such taxes on this Lease, then
Tenant shall execute such acknowledgements as may be necessary to effect such
recordations and pay, upon request of Landlord, all recording fees, transfer
taxes and/or recordation taxes payable on, and/or in connection with this
Lease and/or such recordation.
SECTION 32. APPLICABLE LAW. This Agreement shall be given effect, and
shall be construed by application of the law of Maryland.
SECTION 33. SEVERABILITY. If any term or provision of this Lease shall to
any extent be held invalid or unenforceable, the remaining terms and
provisions of this Lease shall not be affected hereby, but each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
SECTION 34. ACCEPTANCE OF THE PREMISES. By its entry into this Lease,
Tenant represents and acknowledges to Landlord that Tenant has satisfied
itself as to the use which it is permitted to make of the Premises and has
inspected the Premises, and the streets, sidewalks, curbs, utilities and
access ways contiguous to or adjoining the same, that the same are in all
ways acceptable to Tenant for use by Teant pursuant to this Lease, in the
condition or state in which they are now found (or will exist, upon
completion in accordance with such plans and specifications), and that
Landlord has made no express or implied warranty, representation or covenant
to or with Tenant with respect to the same, other than as may be set forth
expressly herein.
SECTION 35. BROKERAGE. Tenant warrants that it has had no dealings with
any broker or agent in connection with this Lease other than Fidelity
Management Company, whose commission Landlord covenants and agrees to pay in
the amount agreed between Landlord and such broker or brokers. Tenant
covenants to pay, hold harmless and indemnify Landlord from and against any
and all costs, expense or liability for any
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<PAGE>
compensation, commissions or charges claimed by any broker other than those
stated above or any other agent with respect to this Lease or the negotiation
thereof.
SECTION 36. ENTIRE AGREEMENT. This Lease and the Exhibits attached hereto
set forth all the promises, agreements, conditions and understandings between
Landlord and Tenant with respect to the Premises, and there are no promises,
agreements, conditions or understandings, either oral or written, between
them other than are herein set forth. No subsequent alteration, amendment,
change or addition to this Lease shall be binding upon Landlord or Tenant
unless reduced to writing and signed and delivered by each of them.
SECTION 37. HEADINGS. The headings of the sections and subsections hereof
are provided herein for convenience of reference only, and shall not be
considered in construing the contents of such sections or subsections.
SECTION 38. WASTE OR NUISANCE. Tenant shall not commit or suffer to be
committed any waste upon the Premises or any nuisance or other act or thing
which may disturb the quiet enjoyment of any other tenant in the Building, or
in the Center, or which may disturb the quiet enjoyment of any person outside
the Building or the Center in contravention of such person's legal rights.
SECTION 39. EXCUSE OF LANDLORD'S PERFORMANCE. Anything in this Agreement
to the contrary notwithstanding, provided such is not due to Landlord's
willful act or neglect, Landlord shall not be deemed in default with respect
to the performance of any of the terms, covenants and conditions of this
Lease if the same shall be due to any strike, lockout, civil commotion,
warlike operation, invasion, rebellion, hostilities, military or usurped
power, sabotage, governmental regulations or controls, inability to obtain
any material, service or financing, through act of God or other causes beyond
control of Landlord.
SECTION 40. JOINT AND SEVERAL LIABILITIES. If two or more individuals,
corporations, partnerships or other business associations (or any combination
of two or more thereof) shall sign this Lease as Tenant, the liability of
each such individual corporation, partnership or other business association
to pay Rent and perform all other obligations hereunder shall be deemed to be
joint and several. In like manner, if the Tenant named in this Lease shall be
a partnership or other business association, the members of which are, by
virtue of statute or general laws subject to personal liability, the
liability of each such member shall be joint and several.
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<PAGE>
SECTION 41. APPROVAL OF LENDER. This Lease Agreement is contingent upon
the approval of any and all mortgagees and other lenders of Landlord.
Landlord shall have thirty (30) days from the execution of this Lease
Agreement to obtain all necessary approvals from its mortgagee and other
lenders; and, thereafter, shall have the right to extend said approval period
for an additional ten (10) days upon written notice to Tenant. If such
approvals cannot be obtained within the aforesaid period, Landlord shall have
the right, at its election, to terminate this Lease upon written notice to
Tenant and shall refund any deposit paid pursuant to Subsection 5.2, and
thereafter the rights and duties of the parties hereunder shall be null and
void and be of no further force and effect.
SECTION 42. RELOCATION. Landlord reserves the right at its option and at
Landlord's sole cost and expense (including all moving expenses of Tenant) to
relocate the Premises hereby leased to another area within the Building in
which the Premises hereby leased is located or within any other building
owned or controlled by Landlord and situate upon any of Lots 2C, 2D, 2E or 2F
as shown on a plat entitled "Resubdivision of Lot 2, White Marsh Business
Center," which plat is recorded among the Land Records of Baltimore County in
Plat Book EHKJr. No. 52, Folio 143, or any resubdivision thereof; provided
such new location shall be comparable to the Premises hereby leased and
provided Landlord gives Tenant thirty (30)* days prior written notice of such
relocation.
*of substantially equivalent space
SECTION 43. ZONING AND LICENSE APPROVALS. Anything herein elsewhere
contained to the contrary, this Lease and all the terms, covenants, and
conditions hereof are in all respects subject and subordinate to all zoning
restrictions affecting the Leased Premises, and the Building in which they are
located, and Tenant agrees to bound by such restrictions. Landlord further
does not warrant that any license or licenses, permit or permits, which may
be required for the business to be conducted by Tenant on the Leased Premises
will be granted, or, if granted, will be continued in effect or renewed, and
any failure to obtain such license or licenses, permit or permits, or any
revocation thereof or failure to renew the same, shall not release the Tenant
from its obligations under this Lease Agreement.
SECTION 44. CORPORATE APPROVAL. If Tenant is a corporation, Tenant
covenants and warrants that it has the requisite corporate approval to enter
into and execute this Lease Agreement and accordingly, shall provide to
Landlord, within ten (10) days of its execution of this Lease Agreement, a
copy attested by a duly authorized officer of such corporation of an executed
resolution by its Board of Directors, authorizing the execution of this Lease
Agreement and authorizing the individual executing this Lease Agreement to
execute said Agreement on behalf of and in the name of the Corporation. If
Tenant shall fail to provide the executed resolution within the time period
required under this Section, Landlord may, at its option, declare this Lease
Agreement to be null and void and of no further force or effect.
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<PAGE>
SECTION 45. RIDER. A Rider consisting of 1 page, with Section numbered 46
and 47 is attached hereto and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Lease, or have caused the same to be executed on their respective behalves by
their duly authorized representatives, the date and year first above written.
LANDLORD:
WITNESS: WHITE MARSH BUSINESS CENTER LIMITED
PARTNERSHIP, by its General Partner,
NOTTINGHAM PROPERTIES, INC.,
a Maryland corporation
- ------------------------------------- By: -----------------------------(SEAL)
P. Douglas Dollenberg,
President
TENANT:
WITNESS OR ATTEST: TOWSON COPY PRODUCTS, INC.,
a Maryland corporation
- ------------------------------------- By: -----------------------------(SEAL)
Kathleen P. Barbera,
President
If Tenant is a corporation, an authorized officer must sign on behalf of
the corporation, and in doing so such officer shall be deemed to have
personally given the covenants and warranties contained in Section 44 hereof.
This Lease must be executed for Tenant, if a corporation, by the president or
vice-president and attested by the secretary or assistant secretary, unless
the by-laws or a resolution of the board of directors shall provide that
another officer is authorized to execute the Lease, in which event, a
certified copy of the by-laws or resolution of the board of directors shall
provide that such other officer is authorized to execute the Lease, and shall
be furnished to Landlord.
STATE OF MARYLAND,
COUNTY OF BALTIMORE, to wit:
I HEREBY CERTIFY that on this _____ day of November, 1988, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared P.
DOUGLAS DOLLENBERG, known to be or satisfactorily proven to be the person
whose name is subscribed to the foregoing instrumnet, who acknowledged that
he is the President of Nottingham Properties, Inc., a Maryland corporation,
which is the General Partner of WHITE MARSH BUSINESS CENTER LIMITED
PARTNERSHIP, a limited partnership organized and existing under the laws of
the State of Maryland, that he has been duly authorized to execute, and has
executed, such instrument on behalf of said partnership for the purposes
therein set forth, and that the same is its act and deed.
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<PAGE>
AS WITNESS my hand and Notarial Seal
---------------------------------------
Notary Public
My Commission Expires: 7/1/90
STATE OF MARYLAND,
COUNTY OF BALTIMORE, to wit:
I HEREBY CERTIFY that on this ____ day of November, 1998, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared
KATHLEEN P. BARBERA, known to me (or satisfactorily proven) to be the
President of TOWSON COPY PRODUCTS, INC., and that she as such officer, being
duly authorized so to do, did execute the foregoing Lease Agreement on behalf
of said Corporation, and she acknowledged the foregoing Lease Agreement to be
the act and deed of said Corporation.
AS WITNESS my hand and Notarial Seal.
---------------------------------------
Notary Public
My Commission Expires:
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<PAGE>
RIDER ATTACHED TO AND MADE A PART OF THE
WHITE MARSH BUSINESS CENTER AGREEMENT OF LEASE
DATED: NOVEMBER ____, 1988
BY AND BETWEEN: WHITE MARSH BUSINESS CENTER
LIMITED PARTNERSHIP AS LANDLORD AND
TOWSON COPY PRODUCTS, INC., AS TENANT
Section 46. RENT ABATEMENT. The Tenant shall pay no Basic Rent for the
first four (4) calendar months of the first Lease Year.
Section 47. RENEWAL OPTION. Provided Tenant is not in default of any of
its obligations hereunder and is in possession of the Premises, Tenant shall
be entitled to renew this Lease for five (5) years immediately following the
expiration of the original or previous Term on the same terms, conditions,
and provisions as are set forth in this Lease with the same force and effect
as though this Lease had originally provided for a nine (9) year, four (4)
month, Term, with the following conditions:
(a) Tenant will give written notification to the Landlord no later than
ninety (90) days prior to the termination date of the original Term of his
election to renew this Lease.
(b) Beginning with and as of the first day of the renewal Term, the
Basic Rent and each monthly installment thereof payable during the renewal
Term shall be adjusted and modified according to the following formula:
If the Consumer Price Index for all Urban Consumers (the "Index") for
Baltimore, Maryland (1967 - 100), as determined and published by the United
States Department of Labor, Bureau of Labor Statistics, based on all items,
for the month preceding the commencement of the renewal term shall exceed
said Index in effect as of the original Term of the Lease, then, in lieu of
the Basic Rent as set forth in Section 1.6 respecting the original Term of
the Lease, the Basic Rent for each year of the renewal Term shall be an
amount equal to the Basic Rent as set forth in Section 1.6 multiplied by a
fraction, the numerator of which shall be the Index for the month preceding
the commencement of the renewal Term and denominator of which shall be the
Index in effect as of the commencement of the original Term of the Lease,
provided, however, that in no event shall the Basic Rent be less than that
set forth in Subsection 1.6. The index will be adjusted in the event that
said Index shall be converted and, if the Index shall cease to be published,
an Index as nearly comparable as possible shall be used by the parties.
In witness whereof the parties have hereto set their hands and seals as of
the day and year first above written.
LANDLORD:
WHITE MARSH BUSINESS CENTER LIMITED
PARTNERSHIP, a Maryland limited
partnership by its General Partner,
WITNESS: NOTTINGHAM PROPERTIES, INC.,
a Maryland corporation
- ------------------------------------- By: ----------------------------- (SEAL)
P. Douglas Dollenberg,
President
TENANT:
WITNESS TOWSON COPY PRODUCTS, INC., a Maryland
corporation
- ------------------------------------- By: ----------------------------- (SEAL)
Kathleen P. Barbera, President
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<PAGE>
[GRAPHIC]
<PAGE>
[GRAPHIC]
<PAGE>
Exhibit 10.6.5
GREATER ATLANTA COMMERCIAL BOARD OF REALTORS, INC.
COMMERCIAL LEASE AGREEMENT
May, 1994
THIS LEASE is made by and among Athens Associates Limited (hereinafter called
"Landlord"), and Perfect Copy, Inc. (hereinafter called "Tenant"), and
Boswell Properties, Inc. (hereinafter called "Broker").
WITNESSETH:
PREMISES
1. Landlord, for and in consideration of the rents, covenants,
agreements, and stipulations hereinafter mentioned, provided for and
contained herein to be paid, kept and performed by Tenant, leases and rents
unto Tenant, and Tenant hereby leases and takes upon the terms and conditions
which hereinafter appear, the following described property (hereinafter
called the "Premises"), to wit:
2375 W. Broad Street, Suite A. Athens, Georgia
and being known as same as above
No casement for light or air is included in the Premises.
TERM
2. The Tenant shall have and hold the Premises for a term of twelve (12)
months beginning on the 1st day of March, 1998, and ending on the 28th day of
February, 1999, at midnight, unless sooner terminated as hereinafter provided.
RENTAL
3. Tenant agrees to pay to ( )Landlord or (X)Broker at the address of
( )Landlord or (X)Broker as stated in this Lease, without demand, deduction or
setoff, an annual rental of $6,480.00 payable in equal monthly installments
of $540.00 in advance on the first day of each calendar month during the term
hereof. Upon execution of this Lease, Tenant shall pay to Landlord the first
full month's rent due hereunder. Rental for any period during the term hereof
which is for less than one month shall be a prorated portion of the monthly
rental due.
LATE CHARGES
4. If ( )Landlord or (X)Broker fails to receive all or any portion of a
rent payment within ten (10) days after it becomes due, Tenant shall pay
Landlord, as additional rental, a late charge equal to ten percent (10%) of
the overdue amount. The parties agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of such
late payment.
SECURITY DEPOSIT
5. Tenant shall deposit with Landlord upon execution of this Lease
$540.00 as a security deposit which shall be held by Landlord, without
liability to Tenant for any interest thereon, as security for the full and
faithful performance by Tenant of each and every term, covenant and condition
of this Lease of Tenant. If any of the rents or other charges of sums payable
by Tenant to Landlord shall be overdue and unpaid or should Landlord make
payments on behalf of Tenant, or should Tenant fail to perform any of the
terms of this Lease, then Landlord may, at its option, appropriate and apply
the security deposit, or so much thereof as may be necessary to compensate
Landlord toward the payment of the rents, charges or other sums due from
Tenant, or towards any loss, damage or expense sustained by Landlord
resulting from such default on the part of Tenant; and in such event Tenant
shall upon demand restore the security deposit to the original sum deposited.
In the event Tenant furnishes Landlord with proof that all utility bills have
been paid through the date of Lease termination, and performs all of Tenant's
other obligations under this Lease, the security deposit shall be returned in
full to Tenant within thirty (30) days after the date of the expiration or
sooner termination of the term of this Lease and the surrender of the
Premises by Tenant in compliance with the provisions of this Lease.
UTILITY BILLS
6. Tenant shall pay all utility bills, including, but not limited to
water, sewer, gas, electricity, fuel, light and heat bills for the Premises,
and Tenant shall pay all charges for garbage collection or other sanitary
services.
COMMON AREA COSTS; RULES AND REGULATIONS
7. If the Premises are part of a larger building or group of buildings,
Tenant shall pay an additional rental monthly. In advance, its pro ratio
share of common area maintenance costs are hereinafter more particularly set
forth in the Special Stipulations. The Rules and Regulations attached hereto
are made a part of this Lease. Tenant agrees to perform and abide by these
Rules and Regulations and such other Rules and Regulations as may be made
from time to time by Landlord.
USE OF PREMISES
8. The Premises shall be used for retail sales and service purposes only
and no other. The Premises shall not be used for any illegal purposes, nor in
any manner to create any nuisance or trespass, nor in any manner to violate
the Insurance or increase the rate of insurance on the Premises.
ABANDONMENT OF THE PREMISES
9. Tenant agrees not to abandon or vacate the Premises during the term
of this Lease and agrees to use the Premises for the purposes herein leased
until the expiration hereof.
Lease Agreement
<PAGE>
TAX AND INSURANCE ESCALATION
[Copy not legible]
INDEMNITY; INSURANCE
11. Tenant agrees to and hereby does indemnify and save Landlord
harmless against all claims for damages to persons or property by reason of
Tenant's use or occupancy of the Premises, and all expenses incurred by
Landlord because thereof, including attorney's fees and court costs.
Supplementing the foregoing and in addition thereto. Tenant shall during the
term of this Lease and any extension or renewal thereof, and at Tenant's
expense, maintain in full force, and effect comprehensive general liability
insurance with limits of $500,000.00 per person and $1,000,000.00 per
incident, and property damage limits of $100,000.00, which insurance shall
contain a special endorsement recognizing and insuring any liability accruing
to Tenant under the first sentence of this paragraph 11, and naming Landlord
as additional insured. Tenant shall provide evidence of such insurance to
Landlord prior to the commencement of the term of this Lease. Landlord and
Tenant each hereby release and relieve the other, and waive its right of
recovery, for loss or damage arising out of or incident to the perils
insured against which perils occur in, on or about the Premises, whether due
to the negligence of Landlord or Tenant or their Brokers, employees,
contractors and/or invitees, to the extent that such loss or damage is within
the policy limits of said comprehensive general liability insurance.
Landlord and Tenant shall, upon obtaining the policies of Insurance required,
give notice to the insurance carrier or carriers that the foregoing mutual
waiver of subrogation is contained in this Lease.
REPAIRS BY LANDLORD
12. Landlord agrees to keep in good repair the roof, foundations and
exterior walls of the Premises (exclusive of all glass and exclusive of all
exterior doors) and underground utility and sewer pipes outside the exterior
walls of the building, except repairs rendered necessary by the negligence or
intentional wrongful acts of Tenant, its brokers, employees or invitees. If
the Premises are part of a larger building or group of buildings, then to the
extent that the grounds are common areas, Landlord shall maintain the grounds
surrounding the building, including paving, the mowing of grass, care of
shrubs and general landscaping. Tenant shall promptly report in writing to
Landlord any defective condition known to it which Landlord is required to
repair and failure so to report such conditions shall make Tenant responsible
to Landlord for any liability incurred by Landlord by reason of such
conditions.
REPAIRS BY TENANT
13. Tenant accepts the Premises in their present condition and as suited
for the uses intended by Tenant. Tenant shall, throughout the initial term of
this Lease, and any extension or renewal thereof, at its expense, maintain in
good order and repair the Premises, including the building, heating and air
conditioning equipment (including but not limited to replacement of parts,
compressors, air handling units and heating units) and other improvements
located thereon, except those repairs expressly required to be made by
Landlord hereunder. Unless the grounds are common areas of a building(s)
larger than the Premises, Tenant further agrees to care for the grounds
around the building, including paving, the mowing of grass, care of shrubs
and general landscaping. Tenant agrees to return the Premises to Landlord at
the expiration, or prior to termination of this Lease, in as good condition
and repair as when first received, natural wear and tear, damage by storm,
fire, lightning, earthquake or other casualty alone excepted.
ALTERATIONS
14. Tenant shall not make any alterations, additions, or improvements
to the Premises without Landlord's prior written consent. Tenant shall
promptly remove any alterations, additions, or improvements constructed in
violation of this Paragraph 14 upon Landlord's written request. All approved
alterations, additions, and improvements will be accomplished in a good and
workmanlike manner, in conformity with all applicable laws and regulations,
and by a contractor approved by Landlord, free of any liens or encumbrances.
Landlord may require Tenant to remove any alterations, additions or
improvements (whether or not made with Landlord's consent) at the termination
of this Lease and to restore the Premises to its prior condition, all at
Tenant's expense. All alterations, additions and improvements which Landlord
has not required Tenant to remove shall become Landlord's property and shall
be surrendered to Landlord upon the termination of this Lease, except that
Tenant may remove any of Tenant's machinery or equipment which can be removed
without material damage to the Premises. Tenant shall repair, at Tenant's
expense, any damage to the Premises caused by the removal of any such
machinery or equipment.
REMOVAL OF FIXTURES
15. Tenant may (if not in default hereunder) prior to the expiration of
this Lease, or any extension or renewal thereof, remove all fixtures and
equipment which it has placed in the Premises, provided Tenant repairs all
damage to the Premises caused by such removal.
DESTRUCTION OF OR DAMAGE TO PREMISES
16. If the Premises are totally destroyed by storm, fire, lightning,
earthquake or other casualty, this Lease shall terminate as of the date of
such destruction and rental shall be accounted for as between Landlord and
Tenant as of that date. If the Premises are damaged but not wholly destroyed
by any such casualties, rental shall abate in such proportion as use of the
Premises has been destroyed and Landlord shall restore the Premises to
substantially the same condition as before damage as speedily as is
practicable, whereupon full rental shall recommence.
GOVERNMENTAL ORDERS
17. Tenant agrees, at its own expense, to comply promptly with all
requirements of any legally constituted public authority made necessary by
reason of Tenant's occupancy of the Premises. Landlord agrees to comply
promptly with any such requirements if not made necessary by reason of
Tenant's occupancy. It is mutually agreed, however, between Landlord and
Tenant that if in order to comply with such requirements, the cost to
Landlord or Tenant, as the case may be, shall exceed a sum equal to one
year's rent, then Landlord or Tenant who is obligated to comply with such
requirements may terminate this lease by giving written notice of termination
to the other party by certified mail, which termination shall become
<PAGE>
effective sixty (60) days after receipt of such notice and which notice shall
eliminate the necessity of compliance with such requirements by giving such
notice unless the party giving such notice of termination shall, before
termination becomes effective, pay to the party giving notice all cost of
compliance in excess of one year's rent, or secure payment of said sum in
manner satisfactory to the party giving notice.
CONDEMNATION
18. If the whole of the Premises, or such portion thereof
as will make the Premises unusable for the purposes herein leased,
are condemned by any legally constituted authority for any public use or
purposes, then in either of said events the term hereby granted shall
cease from the date when possession thereof is taken by public authorities,
and rental shall be accounted for as between Landlord and Tenant as of said
date. Such termination, however, shall be without prejudice to the rights of
either Landlord or Tenant to recover compensation and damage caused by
condemnation from the condemnor. It is further understood and agreed that
neither the Tenant nor Landlord shall have any rights in any award made to
the other by any condemnation authority notwithstanding the termination of
the Lease as herein provided. Broker may become a party to the condemnation
proceeding for the purpose of enforcing his rights under this paragraph.
ASSIGNMENT AND SUBLETTING
19. Tenant shall not, without the prior written consent of Landlord, which
shall not be unreasonably withheld, assign this Lease or any interest
hereunder, or sublet the Premises or any part thereof, or permit the use of the
Premises by any party other than the Tenant. Consent to any assignment or
sublease shall not impair this provision and all inter assignments or
subleases shall be made likewise only on the prior written consent of
Landlord. The assignee of Tenant, at the option of Landlord, shall become
liable to Landlord for all obligations of Tenant hereunder, but no
sublease or assignment by Tenant shall relieve Tenant of any liability
hereunder.
EVENTS OF DEFAULT
20. The happening of any one or more of the following events (hereinafter
any one of which may be referred to as an "Event of Default") during the term
of this Lease, or any renewal or extension thereof, shall constitute a breach
of this Lease on the part of the Tenant: (A) Tenant fails to pay the rental
as provided for herein; (B) Tenant abandons or vacates the Premises; (C)
Tenant fails to comply with or abide by and perform any other obligation
imposed upon Tenant under this Lease; (D) Tenant is adjudicated bankrupt;
(E) a permanent receiver is appointed for Tenant's property and such receiver
is not removed within sixty (60) days after written notice from Landlord to
Tenant to obtain such removal; (F) Tenant, either voluntarily or
involuntarily, takes advantage of any debt or relief proceedings under the
present or future law, whereby the rent or any part thereof is, or is
proposed to be reduced or payment thereof deferred; (G) Tenant makes an
assignment for benefit of creditors; or (H) Tenant's effects are levied upon
or attached under process against Tenant, which is not satisfied or
dissolved within thirty (30) days after written notice from Landlord to Tenant
to obtain satisfaction thereof.
REMEDIES UPON DEFAULT
21. Upon the occurrence of an Event of Default, Landlord, in addition to
any and all other rights or remedies it may have at law or in equity, shall
have the option of pursuing any one or more of the following remedies:
(A) Landlord may terminate this Lease by giving notice of termination,
in which event this Lease shall expire and terminate on the date
specified such notice of termination, with the same force and effect as
though the date so specified were the date herein originally fixed as the
termination date of the term of this Lease, and all rights of Tenant under
this Lease and in and to the Premises shall expire and terminate, and Tenant
shall remain liable for all obligations under this Lease arising up to the
date of such termination and Tenant shall surrender the Premises to Landlord
on the date specified in such notice;
(B) Landlord may terminate this Lease as provided in paragraph 21(A)
hereof and recover from Tenant all damages Landlord may incur by reason of
Tenant's default, including, without limitation, a sum which, at the date of
such termination, represents the then value of the excess, if any, of (i) the
monthly rental and additional rent for the period commencing with the day
following the date of such termination and ending with the date hereinbefore
set for the expiration of the full term hereby granted, or (ii) the aggregate
reasonable rental value of the Premises (less reasonable brokerage commissions,
attorneys' fees and other costs relating to the reletting of the Premises) for
the same period, all of which excess sum shall be deemed immediately due and
payable;
(C) Landlord may, without terminating this Lease, declare immediately due
and payable all monthly rental and additional rent due and coming due under this
Lease for the entire remaining term hereof, together with all other amounts
previously due, at once; provided, however, that such payment shall not be
deemed a penalty or liquidated damages but shall merely constitute payment
in advance of rent for the remainder of said term; upon making such payment,
Tenant shall be entitled to receive from Landlord all rents received by
Landlord from other assignees, tenants and subtenants on account of the Premises
during the term of this Lease, provided that the monies to which Tenant shall
so become entitled shall in no event exceed the entire amount actually paid
by Tenant to Landlord pursuant to this clause (C) less all costs, expenses and
attorneys' fees of Landlord incurred in connection with the reletting of the
Premises; or
(D) Landlord may, from time to time without terminating this Lease, and
without releasing Tenant in whole or in part from Tenant's obligation to pay
monthly rental and additional rent and perform all of the covenants,
conditions and agreements to be performed by Tenant as provided in this
Lease, make such alterations and repairs as may be necessary in order to
relet the Premises, and, after making such alterations and repairs, Landlord
may, but shall not be obligated to, relet the Premises or any part thereof
for such term or terms (which may be for a term extending beyond the term of
this Lease) at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable or
acceptable; upon such reletting, all rentals received by Landlord from such
reletting shall be applied first, to the payment of any indebtedness other
than rent due hereunder from Tenant to Landlord, second, to the payment of
any costs and expenses of such reletting, including brokerage fees and
attorneys' fees, and of costs of such alterations and repairs, third, to the
payment of the monthly rental and additional rent due and unpaid hereunder,
and the residue, if any, shall be held by Landlord and applied against
payments of future monthly rental and additional rent as the same may become
due and payable hereunder; in no event shall Tenant be entitled to any excess
rental received by Landlord over and above charges that Tenant is obligated
to pay hereunder, including monthly rental and additional rent; if such
rentals received from such reletting during any month are less than those to
be paid during the month by Tenant hereunder, including monthly rental and
additional rent, Tenant shall pay any such deficiency to Landlord, which
deficiency shall be calculated and paid monthly; Tenant shall also pay
Landlord as soon as ascertained and upon demand all costs and expenses incurred
by Landlord in connection with such reletting and in making any alterations and
repairs which are not covered by the rentals received from such reletting;
notwithstanding any such reletting without termination, Landlord may at any
time thereafter elect to terminate this Lease for such previous breach.
Tenant acknowledges that the Premises are to be used for commercial purposes,
and Tenant expressly waives the protections and rights set forth in Official
Code of Georgia Annotated Section 44-7-52.
EXTERIOR SIGNS
22. Tenant shall place no signs upon the outside walls or roof of the
Premises except with the written consent of the Landlord. Any and all signs
placed on the Premises by Tenant shall be maintained in compliance with
governmental rules and regulations governing such signs, and Tenant shall be
responsible to Landlord for any damage caused by installation, use or
maintenance of said signs, and all damage incident to such removal.
<PAGE>
LANDLORD'S ENTRY OF PREMISES
23. Landlord may card the Premises "For Rent" or "For Sale" ninety (90)
days before the termination of this Lease. Landlord may enter the Premises at
reasonable hours to exhibit the Premises to prospective purchasers or tenants,
to inspect the Premises to see that Tenant is complying with all of its
obligations hereunder, and to make repairs required of Landlord under the
terms hereof or to make repairs to Landlord's adjoining property, if any.
EFFECT OF TERMINATION OF LEASE
24. No termination of this Lease prior to the normal ending thereof, by
lapse of time or otherwise, shall affect Landlord's right to collect rent for
the period prior to termination thereof.
SUBORDINATION
25. At the option of Landlord, Tenant agrees that this Lease shall
remain subject and subordinate to all present and future mortgages, deeds to
secure debt or other security instruments (the "Security Deeds") affecting
the Building or the Premises), and Tenant shall promptly execute and deliver
to Landlord such certificate or certificates in writing as Landlord may
request, showing the subordination of the Lease to such Security Deeds, and
in default of Tenant so doing, Landlord shall be and is hereby authorized and
empowered to execute such certificate in the name of and as the act and deed
of Tenant, due authority being hereby declared to be coupled with an
interest and to be irrevocable. Tenant shall upon request from Landlord at
any time and from time to time execute, acknowledge and deliver to Landlord a
written statement certifying as follows: (A) that this Lease is unmodified
and in full force and effect (or if there has been modification thereof, that
the same is in full force and effect as modified and stating the nature
thereof); (B) that in the best of its knowledge there are no unsecured
defaults on the part of Landlord (or if any such default exists, the specific
nature and extent thereof); (C) the date to which any rent and other charges
have been paid in advance, if any; and (D) such other matters as Landlord
may reasonably request. Tenant irrevocably appoints Landlord as its
attorney-in-fact, coupled with an interest, to execute and deliver, for and
in the name of Tenant, any documents or instruments provided for in this
paragraph.
QUIET ENJOYMENT
26. So long as Tenant observes and performs the covenants and
agreements contained herein, it shall at all times during the Lease term
peacefully and quietly have and enjoy possession of the Premises, but always
subject to the terms hereof.
NO ESTATE IN LAND
27. This Lease shall create the relationship of Landlord and Tenant
between the parties hereto. No estate shall pass out of Landlord. Tenant has
only a usufruct not subject to levy and sale, and not assignable by Tenant
except by Landlord's consent.
HOLDING OVER
28. If Tenant remains in possession of the Premises after expiration
of the term hereof, with Landlord's acquiescence and without any express
agreement of the parties, Tenant shall be a tenant at will at the rental rate
which is in effect at end of this Lease and there shall be no renewal of this
Lease by operation of law. If Tenant remains in possession of the Premises
after expiration of the term hereof without Landlord's acquiescence, Tenant
shall be a tenant at sufferance and commencing on the date following the date
of such expiration, the monthly rental payable under Paragraph 3 above shall
for each month, or fraction thereof during which Tenant so remains in
possession of the Premises, be twice the monthly rental otherwise payable
under Paragraph 3 above.
ATTORNEY'S FEES
29. In the event that any action or proceeding is brought to enforce any
term, covenant or condition of this Lease on the part of Landlord or Tenant,
the prevailing party in such litigation shall be entitled to recover
reasonable attorney's fees to be fixed by the court in such action or
proceeding, in an amount at lease equal to fifteen percent of any damages due
from the non-prevailing party. Furthermore, Landlord and Tenant agree to pay
the attorney's fees and expenses of (A) the other party to this Lease (either
Landlord or Tenant) if it is made a party to litigation because of its being
a party to this Lease and when it has not engaged in any wrongful conduct
itself, and (B) Broker if Broker is made a party to litigation because of its
being a party to this Lease and when Broker has not engaged in any wrongful
conduct itself.
RIGHTS CUMULATIVE
30. All rights, powers and privileges conferred hereunder upon parties
hereto shall be cumulative and not restrictive of those given by law.
WAIVER OF RIGHTS
31. No failure of Landlord to exercise any power given Landlord
hereunder or to insist upon strict compliances by Tenant of its obligations
hereunder and no custom or practice of the parties at variance with the terms
hereof shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof.
AGENCY DISCLOSURE
32. Landlord and Tenant hereby acknowledge that Broker has acted as an
agent for Landlord in this transaction and will be paid a real estate
commission by Landlord.
BROKER'S COMMISSION
33. Broker has rendered valuable service by assisting in the creation of
the landlord-tenant relationship hereunder. The commission to be paid in
conjunction with the creation of the relationship by this Lease has been
negotiated between Landlord and Broker and Landlord hereby agrees a pay
Broker as compensation for Broker's services in procuring this Lease and
creating the aforesaid landlord-tenant relationship ( ) pursuant to a
separate commission agreement, or (X) follows: Forty Dollars ($40.00) per
month for the lease term or until Tenant vacates the premises, whichever
occurs first.
<PAGE>
Broker's commission shall not apply to any "additional rental" as
that term is used in this Lease. Any separate commission agreement is hereby
incorporated as a part of this Lease by reference and any third party
assuming the rights and obligations of Landlord under this Lease shall be
obligated to perform all of Landlord's obligations to Broker under said
separate commission agreement. If the Tenant becomes a tenant at will or at
sufferance pursuant to Paragraph 28 above, or if the term of this Lease is
extended or if this Lease is renewed or if a new lease is entered into
between Landlord and Tenant covering either the Premises or any part thereof,
or covering any other premises as an expansion of, addition to, or
substitution for the Premises, regardless of whether such premises are
located adjacent to or in the vicinity of the Premises, Landlord, in
consideration of Broker's having assisted in the creation of the
landlord-tenant relationship, agrees to pay Broker additional commissions as
set forth below, it being the intention of the parties that Broker shall
continue to be compensated so long as the parties hereto, their successors
and/or assigns continue the relationship of landlord and tenant which
initially resulted from the efforts of Broker, whether relative to the
Premises or any expansion thereof, or relative to any other premises leased
by Landlord to Tenant from time to time, whether the rental therefor is paid
under this Lease or otherwise. Broker agrees that, in the event Landlord
sells the Premises, and upon Landlord's furnishing Broker with an agreement
signed by the purchaser assuming Landlord's obligations to Broker under this
Lease, Broker will release the original Landlord from any further obligations
to Broker hereunder. If the purchaser of the Premises does not agree in
writing to assume Landlord's obligations to Broker under this Lease, Landlord
will remain obligated to pay Broker the commissions described in this
Paragraph 33 even after the expiration of the original term of this Lease if
the purchaser (A) extends the term of this Lease; (B) renews this Lease; or
(C) enters into a new lease with Tenant covering either the Premises or any
part thereof, or covering any other premises as an expansion of, addition to,
or substitution for the Premises, regardless of whether such premises are
located adjacent to or in the vicinity of the Premises. Voluntary
cancellation of this Lease shall not nullify Broker's right to collect the
commission due for the remaining term of this Lease and the provisions
contained hereinabove relative to additional commissions shall survive any
cancellation or termination of this Lease. In the event that the Premises are
condemned, or sold under threat of and in lieu of condemnation, Landlord
shall, on the date of receipt by Landlord of the condemnation award or sale
proceeds, pay to Broker the commission, reduced to its present cash value at
the existing legal rate of interest, which would otherwise be due to the end
of the term contracted for under Paragraph 2 above.
LIMITATION OF BROKER'S SERVICES AND DISCLAIMER
34. Broker is a party to this Lease for the purpose of enforcing its
rights under Paragraph 33 above. Tenant must look solely to Landlord in
regards to all covenants, agreements and warranties herein contained, and
Broker shall never be liable to Tenant in regard to any matter which may
arise by virtue of this Lease. It is understood and agreed that the
commissions payable to Broker under Paragraph 33 above are compensation
solely for Broker's services in assisting in the creation of the
landlord-tenant relationship hereunder; accordingly, Broker is not obligated
hereunder on account of payment of such commissions to furnish any management
services for the Premises. Landlord and Tenant acknowledge that the Greater
Atlanta Commercial Board of REALTORS, Inc. has furnished this Commercial
Lease Agreement form to its members as a service and that it makes no
representation or warranty as to the enforceability of this Commercial Lease
Agreement form.
PURCHASE OF PROPERTY BY TENANT
35. In the event that Tenant acquires title to the Premises or any
part thereof, or any premises as an expansion of, addition to or substitution
for the Premises at any time during the term of this Lease, or any renewals
thereof, or within six (6) months after the expiration of the term hereof or
the extended term hereof, Landlord shall pay Broker a commission on the sale
of the Premises in lieu of any further commission which otherwise would have
been due under this Lease. Such commission, as negotiated between the
parties, shall be N/A percent (N/A%) of the gross sales price, payable
in full at closing.
ENVIRONMENTAL LAWS
36. Landlord represents to the best of its knowledge and belief,
(A) the Premises are in compliance with all applicable environmental laws,
and (B) there are not excessive levels (as defined by the Environmental
Protection Agency) of radon, toxic waste or hazardous substances on the
Premises. Tenant represents and warrants that Tenant shall comply with all
applicable environmental laws and that Tenant shall not permit any of his
employees, brokers, contractors or subcontractors, or any person present on
the Premises to generate, manufacture, store, dispose or release on, about,
or under the Premises any toxic waste or hazardous substances which would
result in the Premises not complying with any applicable environmental laws.
TIME OF ESSENCE
37. Time is of the essence of this Lease.
DEFINITIONS
38. "Landlord" as used in this Lease shall include the undersigned,
its heirs, representatives, assigns and successors in title to the Premises.
"Tenant" shall include the undersigned and its heirs, representatives,
assigns and successors, and if this Lease shall be validly assigned or
sublet, shall include also Tenant's assignees or subtenants as to the
Premises covered by such assignment or sublease. "Broker" shall include the
undersigned, its successors, assigns, heirs and representatives. "Landlord",
"Tenant" and "Broker" include male and female, singular and plural,
corporation, partnership or individual, as may fit the particular parties.
NOTICES
39. All notices required or permitted under this Lease shall be in
writing and shall be personally delivered or sent by U.S. Certified Mail,
return receipt requested, postage prepaid. Broker shall be copied with all
required or permitted notices. Notices to Tenant shall be delivered or sent
to the address shown below, except that upon Tenant's taking possession of
the Premises, then the Premises shall be Tenant's address for notice
purposes. Notices to Landlord and Broker shall be delivered or sent to the
addresses hereinafter stated, to wit:
Landlord: Athens Associates Limited, c/o Eva Sperber-Porter,
8630 E. Via de Ventura #210, Scottsdale, AZ 85258
Tenant: Perfect Copy, Inc., 322 Oak Street, Suite 1,
Gainesville, GA 30501
Broker: Boswell Properties, Inc., ATTN: Jamie Boswell,
P. O. Box 1823, Athens, GA 30603
All notices shall be effective upon delivery. Any party may change his notice
address upon written notice to the other parties.
<PAGE>
ENTIRE AGREEMENT
40. This Lease contains the entire agreement of the parties hereto, and
no representations, inducements, promises or agreements, oral or otherwise,
between the parties, not embodied herein, shall be of any force or effect.
No subsequent alteration, amendment, change or addition to this Lease, except
as to changes or additions to the Rules and Regulations described in
paragraph 7, shall be binding upon Landlord or Tenant unless reduced to
writing and signed by Landlord and Tenant.
SPECIAL STIPULATIONS
41. Any special stipulations are set forth in the attached Exhibit N/A.
Insofar as said Special Stipulations conflict with any of the foregoing
provisions, said Special Stipulations shall control.
42. Landlord agrees to allow Tenant access to the subject property not
later that February 3, 1998 for the purpose of removal of trash and to
prepare subject property for occupancy by March 1, 1998.
Tenant acknowledges that Tenant has read and understands the terms of this
Lease and has received a copy of it.
IN WITNESS WHEREOF, the parties herein have hereunto set their hands and
seals, in triplicate.
LANDLORD: ATHENS ASSOCIATES LIMITED
(SEAL)
------------------------------
(SEAL)
------------------------------
Date and time executed by Landlord:
---------------
TENANT: PERFECT COPY, INC.
(SEAL)
------------------------------
(SEAL)
------------------------------
Date and time executed by Tenant:
---------------
BROKER: BOSWELL PROPERTIES, INC.
(SEAL)
------------------------------
(SEAL)
------------------------------
Date and time executed by Broker:
---------------
<PAGE>
Exhibit 10.6.6
EXECUTIVE COVE CENTER
A PLANNED RETAIL AND OFFICE COMMUNITY OFFICE LEASE
PARTIES THIS LEASE, Made this 16th day of December, 1996 by and between
Executive Cove, L.L.C., hereafter called "Landlord" a Virginia
Limited Liability Company, with its principal office in
Virginia Beach, Virginia, C.M.S. Holding Co., Inc., hereinafter
called "Tenant", and ___________________, hereinafter called
"Agent", with its principal office in _________________,
Virginia.
PREMISES, WITNESSETH: Landlord hereby leases to Tenant and Tenant hereby
USE AND leases from Landlord room(s) numbered 103 & 104 (hereinafter
RENT called "demised premises"), on the first floor of the office
building known as the 5604 Building (hereinafter called
"Building") at Executive Cove Center in Virginia Beach,
Virginia, to be used as executive and general offices and for
no other purpose whatsoever, for the term of three years unless
sooner terminated as hereinafter provided) beginning on
January 1, 1997 and ending on December 31, 1999 at the rental
of $2,300.00 per month, payable in advance without demand and
without set-off, on the first day of every month during said
Term at _____________, unless and until Tenant is otherwise
notified in writing by Landlord.
COMMON AREA The parties hereto, for themselves, their heirs, personal
CHARGES representatives, successors and assigns, covenant and agree as
follows:
LATE CHARGE 1. Tenant covenants and agrees to pay Landlord as a late charge
the greater of $50.00 or eight percent (8%) of the amount due on all rents
and all other sums due under this Lease, if said sums have not been paid
within ten (10) days of the due date. Landlord expressly reserves all other
rights and remedies provided herein and by law with respect to nonpayment of
the rents provided for herein.
POSSESSION 2. If Landlord, for any reason other than its own willful act, is
unable to deliver possession of the demised premises to Tenant at the
beginning of the term hereof, this lease shall not be affected or impaired in
any way except as herein expressly provided and Landlord shall not be liable
to Tenant for any loss or damage resulting therefrom or caused thereby. In
such event the rent reserved herein shall not become due and payable until
the date on which Landlord gives Tenant written notice that Tenant can take
possession of the demised premises. It is understood between the parties
hereto that if Landlord, for any reason other than its own willful act, is
unable ultimately to deliver possession of the demised premises to Tenant,
then, upon Landlord's giving Tenant written notice to such effect, this lease
shall be terminated and cancelled, and upon the return of any deposit made
hereunder, no party hereto shall have any liability to any other party
hereto. If possession is delivered on a day other than the first day of any
month, Tenant shall pay pro-rata rent for the resulting partial month (at the
time of delivery of possession).
PAYMENT OF RENT ASSIGNMENT, ETC 3. Tenant covenants that (i) it will, without
demand therefore being made, pay the rent at the time and in the manner above
provided, (ii) it will not assign, or otherwise transfer this lease or sublet
the demised premises or suffer to permit the demised premises or any part
thereof (even desk space) to be used by others, and
<PAGE>
??? not use the demised premises for any purpose except as above provided.
Any transfer by sale, encumbrance or otherwise of a majority of Tenant's
issued and outstanding stock (if Tenant is a corporation), or any lawful levy
or sale on execution or other legal process, or any assignment or sale in
bankruptcy or insolvency or under any compulsory procedure, shall be deemed
an assignment within the meaning of this lease.
SERVICES 4. (a) Landlord has the exclusive right to select a janitorial and
cleaning service for the purpose of general cleaning and vacuuming of
carpeting, toilet cleaning, etc; and this service to be at Tenants expense.
Tenant shall pay as additional monthly rent for the above mentioned
services without prior demand being made therefor, and without offset of any
kind, a sum ( ) to reflect the actual cost plus any increases in janitorial
services as may occur from time to time.
Tenants proportionate share of such cost shall be determined by
multiplying the fraction, of which the numerator is the gross square feet of
the floor area leased to tenant and the denominator is the gross square feet
of rentable floor area in the entire building by the total of such costs.
Shampoo of carpets, when necessary, is to be an additional charge paid wholly
by the individual Tenant receiving that service.
(b) Landlord will furnish at its expense the reasonable use of water and
sewer. If Tenant requires more than an ordinary supply of water, Tenant
agrees to reimburse Landlord for the cost of such extra utilities. Tenant
shall not use any method of heating or cooling the demised premises other
than that provided by Landlord.
HOURS OF OPERATIONS 5. The Building shall remain open during regular business
hours daily, Sundays and holidays excepted.
TENANT CARE: ALTERATIONS, ETC. 6. Tenant covenants that during the term it
will take care of the demised premises and the fixtures and equipment
therein, and at its sole cost and expense, keep the same in good condition
and repair throughout the term, making such replacements as may be necessary,
and at the expiration of the term remove any installations or improvements it
made which Landlord wishes removed, and deliver up the demised premises in
good order and condition as the same were in at the time possession thereof
was delivered to Tenant, ordinary wear and tear and damage caused by fire
or other unavoidable casualty excepted. Tenant shall make no alterations,
additions, or improvements to the demised premises without Landlord's prior
written consent. All alterations, additions and improvements made to the
demised premises whether by Landlord or by Tenant, except movable office
furniture and equipment put in at Tenant's expense, shall be the property of
Landlord and shall remain upon and be surrendered with the demised premises
at the termination of this lease. All damage and injury to the demised
premises, its fixtures and appurtenances and equipment, and to the Building,
its fixtures, appurtenances and equipment, caused by Tenant, its servants,
employees, agents, independent contractors or invitees, shall be repaired,
restored or replaced promptly to Landlord's satisfaction by Tenant at Tenant's
sole cost and expense. All installations, repairs, restorations and
replacements shall be equal in quality to the original work.
RULES AND REGULATIONS 7. Tenant covenants that the following rules and
regulations, which may be amended and/or supplemented from time to time by
Landlord, relating to the Building and the demised premises shall be
faithfully observed by Tenant, its employees, servants, agents and
independent contractors:
(a) The entry, passages, and stairways may be used for ingress and
egress only.
(b) Space for admitting natural light into any public area of the
Building shall not be covered or obstructed by Tenant.
(c) Toilets and other like apparatus shall be used only for the purpose
for which they were constructed. Any and all damage from misuse shall
be borne by Tenant.
(d) Landlord reserves the right to determine the number of letters
allowed Tenant on the directory it maintains.
(e) No sign, advertisement, notice, or the like, shall be used in the
Building other than on office doors, and then shall be of color, size
and style, and be done at Tenant's expense by such party, as Landlord
may determine. If Tenant violates the foregoing, Landlord may remove
the violation without liability, and may charge all costs and expenses
incurred in so doing to Tenant.
(f) Tenant shall not throw or permit to be thrown anything out of
windows or doors or down passages or elsewhere in the Building,
or bring or keep any pets or other animals herein, or commit or
make any indecent or improper act or noise, or do or permit
anything which will in any way obstruct, injure, annoy or interfere
with other tenants of those having business with them, or affect any
insurance rate on the Building or violate any provision of any
insurance policy on the Building, or conflict with any rule or
ordinance of the Board of Health, Fire Department, or any governmental
authority and Tenant shall comply with all governmental laws, orders
and regulations with respect to Tenant's use or occupancy of the
demised premises.
(g) Furniture, supplies and equipment of Tenant shall be delivered only
at time designated by Landlord.
(h) Tenant shall not permit cleaning by any person other than employees
of the Building.
(i) Venetian blinds shall be used on all windows. All curtains, blinds,
shades, screens and other fixtures must be of a quality, type, design,
and color, and attached in a manner approved by Landlord.
(j) Landlord will furnish Tenant with one key for the demised premises
and one for each appropriate restroom. All additional keys will be at
Tenant's expense. If Landlord furnishes Tenant a key to the lobby
door of the Building, Tenant agrees to lock the lobby door immediately
upon entering and leaving the Building during such hours as the
Building is closed and Tenant shall be responsible for any and all
damage and/or injury to person and/or property resulting from Tenant's
neglecting to lock said door as aforesaid. All such keys in Tenant's
possession or known by Tenant to be in existence shall be delivered to
the Landlord at the termination of this lease. Tenant shall not place
any additional lock on any door in the Building, and doors leading to
the corridors or main halls shall be keep closed at all times as they
may be used for ingress and egress.
(k) The demised premises shall not be defaced in any way. No nails shall
be driven, no screws inserted, there shall be no boring or cutting of
wires, and no change in electric fixtures or other appurtenances of
the demised premises shall be made.
(l) No bicycles or vehicles of any kind shall be brought into or kept in
or about the demised premises or the lobby or halls of the Building,
and no cooking shall be done or permitted by Tenant on the demised
premises. Tenant shall not cause or permit any unusual or objectionable
odors to be produced upon or emanate from the demised premises.
<PAGE>
(m) Tenant shall not engage or pay any employee on the demised premises,
except those actually working for Tenant on the demised premises, nor
advertise for laborers giving an address at the demised premises. It is
understood that unless specifically authorized by Agent, employees of
Landlord shall not perform nor be asked to perform work other than their
regularly assigned duties.
(n) Landlord shall have the right to prohibit any advertising by Tenant
which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as an office building, and upon written
notice from Landlord, Tenant shall promptly discontinue such
advertising.
(o) Landlord will furnish electric light bulbs or fluorescent tubes in the
fixtures at the time of the original letting of the demised premises,
but Tenant shall furnish such bulbs or tubes thereafter.
(p) Canvassing, soliciting and peddling in the Building is prohibited and
Tenant shall cooperate to prevent the same.
(r) If parking spaces are provided, Landlord shall have no responsibility
whatsoever to anyone whomsoever in respect thereto. All vehicles used by
Tenant's employees (including officers) shall be parked only in such
area as may be designated by Landlord for the purpose. Tenant shall
furnish to Landlord the license number of all such vehicles. Landlord
reserves the right to remove by towing or otherwise any such vehicle
parked in any area not so designated and to charge the cost thereof to
Tenant.
(s) Tenant shall not place a load on any floor of the demised premises
exceeding 50 lb. per square foot. Landlord reserves the right to
prescribe the weight and position of all sales and heavy equipment.
DAMAGE, DESTRUCTION AND RESTORATION 8. If the Building shall be damaged by
fire, elements, or other casually to such an extent that more than 90 working
days of 8 hours each shall be required to restore the Building, Landlord or
Tenant shall have the right to cancel this lease by giving to Tenant written
notice of its intention so to do within 30 days after such damage occurs.
However, that if such damage is the result of the act or omission to act of
Tenant, its servants, employees, agents or visitors, Tenant shall forfeit its
option to cancel. If this lease in cancelled as aforesaid, Landlord shall
cause the Building and the demised premises to be restored with reasonable
dispatch and the rental due shall be equitably and proportionately abated
according to the loss of use of the demised premises, from the time of such
damage until the Building and the demised premises shall have been restored
to tenantable condition, provided; however, that if said damage is the result
of any act or omission to act of Tenant, its servants, employees, agents or
visitors, the rent shall not be abated and the Tenant shall continue to pay
the full rent as hereinbefore set forth.
CONDEMNATION PROCEEDINGS 9. If the whole or any part of the Building, shall
be taken or condemned (or sold pursuant to the threat of such taking) by a
compelent authority for any public or quasi-public use or purpose, then the
term of this lease, at the option of Landlord, shall cease and terminate from
the date when possession is delivered to the condemning authority. In the
event the demised premises are similarly taken, condemned or sold, in whole
or in part, then the term of this lease shall, at the option of either party
hereto, cease and terminate on the date when possession is delivered to the
condemning authority. In no event shall Tenant have any claim to any award
made as the result of such taking, nor shall Tenant have any claim against
Landlord for the value of any unexpired term of this lease, but the rent
shall be abated as of the date of such termination.
DEFAULT 10. In the event Tenant defaults for a period of 10 days in paying
any installment of rent due hereunder or in performing any of the terms,
covenants, conditions, or provision thereof binding upon Tenant or in
observing or performing any of the rules and regulations set forth in
paragraph 7 hereof, as the same may be amended from time to time, or in the
reorganization, or for the appointment of a receiver or trustee for all or a
portion of Tenant's property and Tenant fails to secure a discharge thereof
within 30 days, or if Tenant makes an assignment for the benefit of
creditors, or if Tenant abandons or deserts the demised premises, Landlord
shall have the right, in addition to all other rights and remedies provided
by law, to re-enter the demised premises peaceably or by force, with or
without process of law, and to take possession thereof and to terminate this
lease. No such termination of this lease nor recovering possession of the
demised premises, however, shall deprive Landlord of any waiver of any lien
of Landlord on the property of Tenant and Landlord may (but shall not be
obligated to) relet the demised premises in whole or in part of the unexpired
portion of the term and Tenant shall be obligated to reimburse Landlord for
all of its expenses in connection with such retaking and reletting, including
any loss of rental which might result.
LANDLORD'S LIABILITY 11. It is agreed that neither Landlord nor Agent shall
be liable or responsible in any way for any injury to person or damage to or
loss or theft of property sustained in or about the demised premises or the
Building; however, the same be caused unless due to Landlord's or Agent's own
willful act. Tenant absolves Landlord and Agent from damage to person or
property caused by breakage of glass, or by leaks, breaks or overflow of
roof, pipes, drains or plumbing fixtures or by falling plaster, imperfect
wiring or construction.
ZONING 12. Landlord assumes no responsibility for ascertaining that the
property is zoned for use in conformity with the use clause in this lease.
NOTICE OF ACCIDENT OR DEFECT 13. Tenant shall give to Landlord immediate
notice of any accident to or occurring in and of any known defects in the
demised premises or the Building, including fire, accident involving a
person, and accident to or defects in the water pipes, electric wires,
stairways and which defects shall thereupon be remedied by Landlord with due
diligence unless caused by the acts or omission of Tenant, its agents,
servants, employees, independent contractors or visitors, in which case
the necessary repairs thereto shall be made as provided in paragraph 6 hereof.
ENTRY BY LANDLORD 14. Landlord and Landlord's agents, employees and
independent contractors shall have the right to enter the demised premises at
all times, to examine the same and to show them to prospective purchasers or
lessees of the Building, or any portion thereof, and to make such
decorations, repairs, alterations, improvements or additions as Landlord
deems desirable, and Landlord and Landlord's agents, employees and
independent contractors shall be allowed to take all material into and upon
the demised premises that may be required therefore without the same
constituting an eviction of Tenant in whole, or in part and the rent reserved
shall in no wise abate while such decorations, repairs, alterations,
improvements or additions are being made by reason of loss or interruption of
the use of the demised premises by Tenant or otherwise. During the 6 months
prior to the expiration of this lease, Landlord may exhibit the demised
premises of prospective tenants thereof, and place upon the demised premises
the usual notices "TO LET", which notices the Tenant shall permit to remain
thereon without molestation.
<PAGE>
Tenant or otherwise. During the 6 months prior to the expiration of this
lease, Landlord may exhibit the demised premises to prospective tenants
thereof, and place upon the demised premises the usual notices "TO LET" which
notices the Tenant shall permit to remain thereon without molestation.
RENEWAL 15. It is agreed that unless Landlord gives Tenant or Tenant gives
Landlord written notice of any intention to terminate this Lease at least 120
days before the end of the original or any renewal term hereof, this lease
shall renew itself from month to month until terminated by such notice, at
the highest rental specified herein and subject to all of the conditions
and provisions hereof.
NOTICE 16. Any notice herein provided to be given by Tenant to Landlord shall
be deemed to be given when duly posted in United States registered or
certified mail addressed to Agent. As aforesaid, any notice herein provided
from Landlord to Tenant Shall be deemed to be given if delivered in person to
Tenant or when duly posted in United States registered or certified mail
addressed to Tenant at the demised premises.
NONWAIVER OF CONDITIONS 17. No act or thing done by Landlord or Landlord's
agents or employees during the term hereof shall be deemed an acceptance of a
surrender of the demised premises, save and except an agreement to accept such
surrender in writing and signed by Landlord. Tenant agrees that failure of
Landlord to insist upon strict observance of any of the terms or conditions
hereof at any time shall not be deemed a waiver of its rights to insist on
strict observance hereafter.
MORTGAGES, DEEDS of TRUST 18. This lease is subject or subordinate to all
ground and underlying leases and the liens of all mortgages and deeds of trust
which may now or hereafter be placed on the real property of which the
demised premises form a part, and no further instrument in writing shall be
necessary to effectuate such subordination.
SECURITY 19. Tenant has deposited with Landlord the sum of $7,800.00 as
security for the full and faithful performance by Tenant of all
terms of this lease required to be performed by Tenant. Such sum shall be
returned to Tenant after the expiration of this lease, provided Tenant has
fully and faithfully carried out all of its terms.
WAIVER OF JURY 20. Insofar as permitted by law, Landlord and Tenant waive
trial by jury in any action or proceeding or counterclaim between the parties
hereto, or their successors, arising out of or in any way connected with this
lease or any of its provisions, Tenants use or occupancy of the demised
premises and/or any claim of injury or damage.
OBSERVANCE OF COVENANTS 21. If Tenant shall default in the observance or
performances of any provision or covenant on Tenant's part to be observed
or performed under this lease, Landlord is (in addition to all other remedies
herein or by law provided) may, immediately or at any time thereafter and
without notice to Tenant, perform the same for the account of Tenant, and
if Landlord makes any expenditures or insures any obligations for the payment
of money in connection herewith, prosecuting or defending any action or
proceeding, such sums paid or obligations incurred, with interest at 8% and
costs, shall be deemed to be additional rent hereunder and shall be paid by
Tenant to Landlord within 5 days of addition of any bill or statement to
Tenant therefore and/or Landlord may collect same or any part thereof from
Tenant's security deposit.
????PAROL REPRESENTATIONS 22. Tenant recognizes that neither Landlord nor
Agent nor anyone acting for Landlord has made any representation or promise
with respect to the Building, the land upon which it is erected or the
demised premises, except herein expressly set forth and no rights, assessments
or licenses are acquired by Tenant by implication or otherwise except as
expressly set forth in the provision of this lease. Taking possession of the
demised premises by Tenant shall be conclusive evidence that Tenant accepts
same "as is" and that the demised premises and the Building are in good and
satisfactory condition at the time such possession was so taken.
QUIET ENJOYMENT 23. Landlord covenants and agrees that upon Tenant's paying
the rent and observing and performing all the covenants, conditions and
provisions, on Tenants' part to be observed and performed. Tenant may
peaceably and quietly enjoy the demised premises, subject nevertheless, to
any and all underlying leases and mortgages or deeds of trust now or hereafter
affecting the demised premises.
CONVEYANCE OR ASSIGNMENT 24. The term "Landlord" as used in this Lease means
only the owner, or the mortgages in possession, for the time being of the
land and the Building (or the owner of a lease of the Building or the land
and Building) that in the event of any conveyance or conveyances of said land
and Building or an assignment of such lease, or in the ??? of a lease of the
Building, or of the land and Building, the Landlord specifically named herein
shall be and hereby is entirely freed and relieved of all covenants and
obligations of Landlord hereunder, and it shall be deemed and construed out
further agreement between the parties and the grantee, or the assignee, or
the lessee of the Building of the land Building, that the grantee or the
assignee or the lessee has assumed and agreed to carry out any and all
covenants and obligations of Landlord hereunder.
HEIRS, AND EXECUTORS BOUND 25. The covenants, conditions and agreements
contained in this lease shall bind and to the benefit of Landlord and Tenant
and their respective heirs, distributees, executors, administrators,
successors, except as otherwise provided in this lease, assigns.
<PAGE>
CONTRACT OF LANDLORD WITH AGENT 26. For the services rendered by Agent in
procuring this lease Landlord agrees to pay Agent commission equal to 6% of
the rent paid by Tenant hereunder as and when said rents are collected. If
Landlord releases Tenant from this lease without the prior written consent of
Agent, Landlord will forthwith pay to Agent 6% of the rents which would
thereafter be due and payable to Landlord if this lease were to remain in
effect.
TAX CLAUSE 27. Tenant agrees to pay Landlord as additional rent Tenant's
proportionate share of any increase (whether caused by assessment or rate or
both) in real estate taxes on the Building over and above the real estate
taxes of the tax year during which rent payable by Tenant commences or the
first year thereafter during which the Building is assessed if determined by
multiplying the fraction, of which the numerator is the gross square feet of
floor area leased to Tenant and the denominator is the gross square feet of
rentable floor area in the entire Building, by the total of such increases.
Tenant shall pay each and every such increase from time to time promptly as
and when billed for same by either Landlord or Agent. Landlord expressly
waives all rights, claims and demands whatsoever against Agent, whenever and
however arising, in any way growing out or connected with the provisions of
this paragraph of this lease, it being specifically understood that Agent
shall have no responsibility or liability whatsoever to Landlord for the
administration or enforcement or lack of administration or lack of
enforcement of any or all of said provisions.
ESCALATION PROVISION 28. The annual increase shall be a 3% increase.
HEADINGS 29. The headings appearing at the beginning of each paragraph of
this lease are intended only for convenience of reference and are not to be
considered in construing this lease.
LIABILITY 30. Each and every person, firm, corporation, partnership and
association comprising Tenant shall be jointly and severally liable hereunder
for the full and faithful performance of all the provisions, conditions and
covenants binding upon Tenant.
TENANT'S INDEMNIFICATION AND LIABILITY INSURANCE 31. (a) Tenant agrees that
it will hold Landlord and Agent harmless from any and all injury or damage to
person or property in, on or about the Leased Premises and those portions of
the Common Areas adjoining the Leased Premises, including, without
limitation, all costs, expenses, claims or suits arising in connection
therewith. Tenant covenants that it will, at all times during the term
hereof, at its own cost and expense, carry public liability insurance on the
Leased Premises (including Common Areas adjoining the Leased Premises) with
limits of not less than $300,000.00 for injury or death to one person,
$500,000.00 for injury or death to more than one person, and property damage
of $50,000.00, which insurance shall be so written as to protect Landlord,
its agents and Tenant, as their respective interests may appear. Certificates
of such Insurance policies shall be delivered to Landlord promptly after the
issuance of the respective policies. If Tenants fails to provide such
insurance, Landlord may (but shall not be obligated to) do so and collect the
cost thereof as a part of the rent; (b) Landlord and Agent shall not be liable
for any damage to persons or property sustained in or about the Leased
Premises during the term hereof, howsoever caused.
IN WITNESS WHEREOF any individual parties hereto have hereunto set their
hands and seals and any corporate parties have caused this lease to be
executed in their respective names and behalves by their respective presidents
or vice presidents and their respective corporate seals to be affixed and
attached by their respective secretaries, all as of the day and year first
above written.
LANDLORD'S SIGNATURE:
Executive Cove L.L.C.
----------------------------------
By /s/ Illegible
----------------------------------
____________________________(SEAL)
____________________________(SEAL)
TENANT'S SIGNATURES:
C.M.S. Holdings Co. Inc.
----------------------------------
By /s/ Illegible
----------------------------------
____________________________(SEAL)
____________________________(SEAL)
AGENT'S SIGNATURE
<PAGE>
LEASE PROPOSAL FOR
THE COPY MACHINE STORE, INC.
PREMISES: Building 5604, Suite 102 & 103 consisting of approx. 2,700 sq. ft.
TERM: Three years.
RENT: $2,300 per month plus $100 per month for janitorial services for
year 1
3% increase for year 2 and year 3
IMPROVEMENTS: Landlord will paint Suites 104 & 103.
Landlord will replace carpet in Suite 103.
LEASE TERMS: The remaining terms of the lease will be identical to the
current lease between The Copy Machine Store, Inc. and Executive
Cove Center.
If these terms are acceptable, please sign this sheet and we will proceed
to prepare a lease according to these terms.
SEEN AND AGREED TO: $2,300.00 rent
$100.00 Janitorial
THE COPY MACHINE STORE, INC. $1,258.75 December rent #103
$1,041.25 Security deposit
By:------------------------ ---------
Title:----------------- $4,700.00 Total due Jan. 1, 1997
SEEN AND AGREED TO:
C.M.S. HOLDING CO. INC.
By: Jack T. Welsch C.M.S. Holding Co. agrees to pay Decembers
---------------------- Rent on Suite #103 and additional deposit of
$1,041.25 on or about Jan. .
Title: V.P.
-----------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DEED OF LEASE
BETWEEN
R & M REALTY HOLDING COMPANY,
as Landlord,
AND
IMTEK,
as Tenant
Dated: December 30, 1997
--
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
For Premises Located
At Eighth and Main Building, 707 East Main Street,
Richmond, Virginia 23219
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1: BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3: THE PREMISES . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 4: TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 5: RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 6: SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 7: OPERATING EXPENSES [INTENTIONALLY DELETED] . . . . . . . . . 6
ARTICLE 8: TAXES [INTENTIONALLY DELETED] . . . . . . . . . . . . . . . . 6
ARTICLE 9: PARKING . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 10: USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 11: ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . 7
ARTICLE 12: MAINTENANCE AND REPAIR . . . . . . . . . . . . . . . . . . . 8
ARTICLE 13: ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 14: SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 15: TENANT'S EQUIPMENT AND PROPERTY . . . . . . . . . . . . . . . 11
ARTICLE 16: RIGHT OF ENTRY . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 17: INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 18: LANDLORD SERVICES AND UTILITIES . . . . . . . . . . . . . . . 13
ARTICLE 19: LIABILITY OF LANDLORD . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 20: RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 21: DAMAGE; CONDEMNATION . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 22: DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 23: MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 24: SURRENDER; HOLDING OVER . . . . . . . . . . . . . . . . . . . 21
-i-
<PAGE>
ARTICLE 25: QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 26: HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 27: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
LIST OF EXHIBITS
Exhibit A Plan Showing Premises
Exhibit B [Intentionally Deleted]
Exhibit C Parking
Exhibit D Rules and Regulations
Exhibit E Declaration of Commencement Date
-ii-
<PAGE>
DEED OF LEASE
THIS DEED OF LEASE (this "Lease") is made as of the 30th day of
----
December, 1997 (the "Date of Lease"), by E & M REALTY HOLDING COMPANY, a
Delaware corporation ("Landlord"), and IMTEK, a Maryland corporation
("Tenant").
Landlord and Tenant, intending legally to be bound, hereby covenant
and agree as set forth below.
ARTICLE 1: BASIC LEASE PROVISIONS
The following terms, when used herein, shall have the meanings set
forth below.
1.1 PREMISES. Approximately 1,801 rentable square feet, known as
Suite 1050 and located on the tenth (10th) floor of the Building as outlined
on EXHIBIT A attached hereto and made a part hereof.
1.2 BUILDING. The building containing approximately 323,670
rentable square feet and all alterations, additions, improvements,
restorations or replacements now or hereafter made thereto, with an address
of 707 East Main Street, Richmond, Virginia 23219, and the Parking Facilities.
1.3 TERM. One (1) year.
1.4 COMMENCEMENT DATE. January 1, 1998, subject to adjustment as
set forth in Article 4.
1.5 EXPIRATION DATE. December 31, 1998, subject to adjustment as
set forth in Article 4.
1.6 BASE RENT. $15.00 for each rental square foot of the
Premises, payable in equal monthly installments of Two Thousand Two Hundred
Fifty-One and 25/100 Dollars ($2,251.25).
1.7 SECURITY DEPOSIT. $2,251.25 cash.
1.8 BASE YEAR. [INTENTIONALLY DELETED]
1.9 TENANT'S PROPORTIONATE SHARE OF OPERATING EXPENSES AND REAL
ESTATE TAXES. [INTENTIONALLY DELETED]
1.10 PERMITTED USE. General office uses; however, such uses shall
not include any use that would cause the Premises to be deemed a "place of
public accommodation" under the Americans with Disabilities Act of 1990.
1.11 BROKER(S). Landlord's: Goodman Segar Hogan Hoffler
Tenant's: Harrison & Bates Incorporated
<PAGE>
1.12 LANDLORD'S ADDRESS.
E & M Realty Holding Company
c/o Insignia Commercial Group
707 East Main Street, Suite 210
Richmond, Virginia 23219
Attn: Property Manager
E&M Realty Holding Company
c/o J.P. Morgan Investment Management, Inc.
522 Fifth Avenue, 9th Floor
New York, New York 10036
Attn: Real Estate Investment Group
With a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
901 East Cary Street
Richmond, Virginia 23219
Attn: William F. Gieg, Esq.
1.13 TENANT'S ADDRESS.
Before occupancy:
IMTEK
--------------------------------------------
--------------------------------------------
--------------------------------------------
After Occupancy:
IMTEK
707 East Main Street, Suite 1050
Richmond, Virginia 23219
Attn: Mr. Michael L. Lowe, President
1.14 GUARANTOR AND GUARANTOR'S ADDRESS.
[INTENTIONALLY DELETED]
ARTICLE 2: DEFINITIONS
The following terms, when used herein, shall have the meanings set
forth below.
2.1 AGENTS. Officers, partners, directors, employees, agents,
licensees, customers, contractors and invitees.
2.2 ALTERATIONS. Alterations, decorations, additions or
improvements of any kind or nature to the Premises or the Building,
2
<PAGE>
whether structural or non-structural, interior, exterior or otherwise.
2.3 CALENDAR YEAR. [INTENTIONALLY DELETED]
2.4 COMMON AREA. All areas, improvements, facilities and
equipment from time to time designated by Landlord for the common use or
benefit of Tenant, other tenants of the Building and their Agents, including,
without limitation, entrances and exits, landscaped areas, exterior lighting,
loading areas, pedestrian walkways, sidewalks, atriums, courtyards,
concourses, stairs, ramps, washrooms, maintenance and utility rooms and
closets, exterior utility lines, hallways, lobbies, elevators and their
housing and rooms, common window areas, common walls, common ceilings, common
trash areas and Parking Facilities.
2.5 INTEREST RATE. Per annum interest rate listed as the prime
rate on corporate loans at large U.S. money center commercial banks as
published from time to time under "Money Rates" in the WALL STREET JOURNAL
plus five percent (5%), but in no event greater than the maximum rate
permitted by law. In the event the WALL STREET JOURNAL ceases to publish such
rates, Landlord shall choose at Landlord's sole discretion a similar
publication which publishes such rates.
2.6 LAND. The piece or parcel of land upon which the Building is
located and all rights, easements and appurtenances thereunto belonging or
pertaining, or such portion thereof as shall be allocated by Landlord to the
Building.
2.7 LEASE YEAR. [INTENTIONALLY DELETED]
2.8 MORTGAGE. Any mortgage, deed of trust, security interest or
title retention interest affecting the Building or the Land.
2.9 MORTGAGEE. The holder of any note or obligation secured by a
mortgage, deed of trust, security interest or title retention interest
affecting the Building or the Land, including, without limitation, lessors
under ground leases, sale-leasebacks and lease-leasebacks.
2.10 PARKING FACILITIES. All parking areas now or hereafter owned
by Landlord and now or hereafter made available by Landlord for use by
tenants, including, without limitation, open-air parking, parking decks and
parking areas under or within the Building, whether reserved, exclusive,
non-exclusive or otherwise.
2.11 RENT. Base Rent payable hereunder.
2.12 SUBSTANTIAL COMPLETION. [INTENTIONALLY DELETED]
3
<PAGE>
2.13 SUBSTANTIAL PART. More than fifty percent (50%) of the
rentable square feet of the Premises or the Building, as the case may be.
ARTICLE 3: THE PREMISES
3.1 LEASE OF PREMISES. In consideration of the agreements
contained herein, Landlord hereby leases the Premises to Tenant, and Tenant
hereby leases the Premises from Landlord, for the Term and upon the terms and
conditions hereinafter provided. As an appurtenance to the Premises, Tenant
shall have the non-exclusive right, together with other tenants of the
Building and their Agents, to use the Common Area. Landlord shall retain
absolute dominion and control over the Common Area and shall operate and
maintain the Common Area in such manner as Landlord, in its sole discretion,
shall determine; provided, however, such exclusive right shall not operate to
prohibit Tenant from its use of the Premises for the Permitted Use. Landlord
expressly reserves the right permanently to change, modify or eliminate, or
temporarily to close, any portion of the Common Area. The Premises are leased
subject to, and Tenant agrees not to violate, all present and future
covenants, conditions and restrictions of record which affect the Building.
3.2 LANDLORD'S RESERVATIONS. In addition to the other rights of
Landlord under this Lease, Landlord reserves the right (i) to change the
street address and/or name of the Building, (ii) to install, erect, use,
maintain and repair mains, pipes, conduits and other such facilities to serve
the Building's tenants in and through the Premises, (iii) to grant to anyone
the exclusive right to conduct any particular business or undertaking in the
Building, (iv) to establish a condominium regime for the Building, the Land
and/or the Common Area and to include the Premises therein and (v) to control
the use of the roof and exterior walls of the Building for any purpose.
Landlord may exercise any or all of the foregoing rights without being deemed
to be guilty of an eviction, actual or constructive, or a disturbance or
interruption of the business of Tenant or Tenant's use or occupancy of the
Premises.
ARTICLE 4: TERM
4.1 COMMENCEMENT AND EXPIRATION DATES. The Term shall commence on
the Commencement Date and expire at midnight on the Expiration Date. If
Tenant uses or accepts the Premises before the date set forth in Article 1 as
the Commencement Date, then the Commencement Date shall be the date upon
which Tenant uses or accepts the Premises (e.g. by the moving of any
furnishings or other personalty into the Premises). In such event, the
Expiration Date shall be adjusted accordingly so that the period of the Term
is not changed. If requested by Landlord, Tenant shall within fifteen (15)
days of such request sign a declaration acknowledging
4
<PAGE>
the Commencement Date and the Expiration Date in the form attached hereto and
made a part hereof as EXHIBIT E.
4.2 DELAYED POSSESSION. In the event that Landlord is unable to
deliver possession of the Premises to Tenant on the Commencement Date set
forth in Article 1, Landlord shall not be liable or responsible for any
claims, damages or losses arising in connection with such delay in
possession, and Tenant shall not be excused or released from any obligation
under this Lease as a result of any delay in possession of the Premises.
ARTICLE 5: RENT
5.1 BASE RENT. Tenant shall pay to Landlord the Base Rent as
specified in Section 1.6. Base Rent shall be payable in equal monthly
installments, in advance, without demand, notice, deduction, offset or
counterclaim, on or before the first day of each and every calendar month
during the Term; provided, however, that the installment of the Base Rent
payable for the first full calendar month of the Term (and, if the
Commencement Date occurs on a date other than on the first day of a calendar
month, Base Rent prorated from such date until the first day of the following
month) shall be due and payable on the full execution and delivery of this
Lease. Tenant shall pay the Base Rent, by good check or in lawful currency of
the United States of America, to Landlord at Landlord's Address, or to such
other address or in such other manner as Landlord from time to time specifies
by written notice to Tenant. Any payment made by Tenant to Landlord on
account of Base Rent may be credited by Landlord to the payment of any late
charges then due and payable and to any Base Rent then past due before being
credited to Base Rent currently due.
5.2 ADDITIONAL RENT. [INTENTIONALLY DELETED]
ARTICLE 6: SECURITY DEPOSIT
Simultaneously with the execution of this Lease, Tenant shall
deposit the Security Deposit with Landlord, which shall be held by Landlord,
without obligation for interest, as security, for the performance of Tenant's
obligations and covenants under this Lease. It is expressly understood and
agreed that such deposit is not an advance rental deposit or a measure of
Landlord's damages in case of an Event of Default. If an Event of Default
shall occur or if Tenant fails to surrender the Premises in the condition
required by this Lease, Landlord shall have the right (but not the
obligation), and without prejudice to any other remedy which Landlord may
have on account thereof, to apply all or any portion of the Security Deposit
to cure such default or to remedy the condition of the Premises. If Landlord
so applies the Security Deposit or any portion thereof before the Expiration
Date or earlier termination of this Lease, Tenant shall deposit with
Landlord, upon demand, the amount necessary to restore the Security
5
<PAGE>
Deposit to its original amount. If Landlord shall sell or transfer its
interest in the Building, Landlord shall have the right to transfer the
Security Deposit to such purchaser or transferee, in which event Tenant shall
look solely to the new landlord for the return of the Security Deposit, and
Landlord thereupon shall be released from all liability to Tenant for the
return of the Security Deposit. Although the Security Deposit shall be deemed
the property of Landlord, any remaining balance of the Security Deposit shall
be returned to Tenant at such time after the Expiration Date or earlier
termination of this Lease that all of Tenant's obligations under this Lease
have been fulfilled. Landlord shall conduct a "Post Move-Out Inspection" of
the Premises within fifteen (15) days after the Expiration Date or earlier
termination of this Lease.
ARTICLE 7: OPERATING EXPENSES [INTENTIONALLY DELETED]
ARTICLE 8: TAXES [INTENTIONALLY DELETED]
ARTICLE 9: PARKING
9.1 PARKING SPACES. Tenant and its Agents shall have the right to
use the Parking Facilities in accordance with the terms and provisions of
EXHIBIT C attached hereto. If Landlord shall determine that Tenant and its
Agents are using parking spaces in violation of the terms of EXHIBIT C or if
Tenant defaults under any lease or other agreement with the Parking Manager
(as defined in EXHIBIT C) for use of Parking Facilities and Tenant fails to
remedy such default within fifteen (15) days following written notice from
Landlord or Parking Manager, such default shall be an Event of Default giving
rise to the remedies set forth in Article 22.
9.2 CHANGES TO PARKING FACILITIES. Landlord shall have the right,
from time to time, without Tenant's consent, to change, alter, add to,
temporarily close or otherwise affect the Parking Facilities in such manner
as Landlord, in its sole discretion, deems appropriate including, without
limitation, the right to designate reserves spaces available only for use by
one or more tenants (however, in such event, those parking space shall still
be deemed Common Area for the purpose of the definition of Operating
Expenses), provided that, except in emergency situations or situations beyond
Landlord's control, Landlord shall provide alternative Parking Facilities.
ARTICLE 10: USE
Tenant shall occupy the Premises solely for the Permitted Use. The
Premises shall not be used for any other purpose, or for any use that would
cause the Premises to be deemed a "place of public accommodation" under the
Americans With Disabilities Act of 1990, without the prior written consent of
Landlord. Tenant shall
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comply, at Tenant's expense, with (i) all present and future laws,
ordinances, regulations and orders of the United States of America, the
Commonwealth of Virginia and any other public or quasi-public federal, state
or local authority having jurisdiction over the Premises, and (ii) any
reasonable requests of Mortgagee or any insurance company providing coverage
with respect to the Premises. Tenant shall not use or occupy the Premises in
any manner that is unlawful or dangerous or that shall constitute waste,
unreasonable annoyance or a nuisance to Landlord or the other tenants of the
Building.
ARTICLE 11: ASSIGNMENT AND SUBLETTING
11.1 ASSIGNMENT. Tenant shall not assign, transfer, mortgage or
otherwise encumber this Lease or any part thereof, nor shall any assignment
or transfer of this Lease be effected by operation of law or otherwise,
without the prior written consent of Landlord which may be granted or
withheld in Landlord's sole discretion. For purposes of the foregoing
prohibitions, a transfer at any one time or from time to time of twenty
percent (20%) or more of an interest in Tenant (whether stock, partnership
interest or other form of ownership or control) by any person(s) or
entity(ties) having an interest in ownership or control of Tenant at the Date
of Lease shall be deemed to be an assignment of this Lease.
11.2 SUBLETTING. Tenant shall not sublet or rent or permit a
third party to occupy or use the Premises, or any part thereof, without the
prior written consent of Landlord, which consent may be granted or withheld
in Landlord's sole discretion.
11.3 EFFECT. If Landlord consents to the proposed assignment,
transfers or subletting, the initial Tenant and any Guarantor shall remain
liable under this Lease and the initial Tenant shall pay to Landlord any
amount of rent or other sums directly or indirectly received by Tenant from
any subtenant, assignee or transferee which exceeds the Rent. Any assignment,
transfer, mortgage, encumbrance, or sublease without Landlord's written
consent shall be voidable by Landlord and, at Landlord's election, constitute
an Event of Default hereunder. Neither the consent by Landlord to any
assignment, transfer, encumbrance or subletting nor the collection or
acceptance by Landlord of rent from any assignee, subtenant or occupant shall
be construed as a waiver or release of the initial Tenant or any Guarantor
from the terms and conditions of this Lease or relieve Tenant or any
subtenant, assignee or other party from obtaining the consent in writing of
Landlord to any further assignment, transfer, encumbrance or subletting.
Tenant hereby assigns to Landlord the rent and other sums due from any
subtenant, assignee or other occupant of the Premises and hereby authorizes
and directs each such subtenant, assignee or other occupant to pay such rent
or other sums directly to Landlord; provided, however, that until the occur-
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rence of an Event of Default, Tenant shall have the license to continue
collecting such rent and other sums from subtenants or other occupants, but
not from assignees, who shall pay rent and other sums under this Lease
directly to Landlord.
11.4 SURRENDER. Notwithstanding the foregoing, in the event of a
proposed assignment or subletting, Landlord shall have the right, by notice
to Tenant, to terminate this Lease in the event of an assignment as to all of
the Premises and, in the event of a sublease, as to the subleased portion of
the Premises, and to require that all or part, as the case may be, of the
Premises be surrendered to Landlord for the balance of the Term.
ARTICLE 12: MAINTENANCE AND REPAIR
12.1 LANDLORD'S OBLIGATION. As long as no Event of Default has
occurred and is continuing, Landlord, at its sole cost and expense, shall
keep and maintain in good repair and working order the Building, the Common
Area, the mechanical and electrical systems of the Building, and the
equipment within and serving the Premises and the Building (excluding
Tenant's leasehold improvements in the Premises) that are required for the
normal maintenance and operation of the Premises and the Building. Tenant
shall immediately give Landlord written notice of any defect or need for
repairs. After such notice, Landlord shall have a reasonable opportunity to
repair or cure such defect. Landlord's liability with respect to any defects,
repairs or maintenance for which Landlord is responsible under any of the
provisions of this Lease shall be limited to the cost of such repairs or
maintenance or the curing of such defect.
12.2 TENANT'S OBLIGATION. Tenant shall, at its own expense,
maintain all of Tenant's leasehold improvements in the Premises and other
real and personal property within the Premises in good condition, promptly
making all necessary repairs and replacements. Tenant shall repair at its
expense, any and all damage caused by Tenant or Tenant's agents, contractors
or subcontractors to the Building, the Common Area, or the Premises,
including equipment within and serving the Building, ordinary wear and tear
excepted. Notwithstanding the foregoing, Tenant shall bear the cost of, but
shall not itself perform without Landlord's prior consent, any such repairs
which would affect the Building's structure or mechanical or electrical
systems or which would be visible from the exterior of the Building or from
any interior Common Area of the Building. Where Landlord performs such
repairs, Tenant shall promptly pay to Landlord upon demand all costs incurred
in connection therewith plus interest thereon at the Interest Rate from the
demand date until paid. Without the prior written consent of the Landlord,
Tenant shall not have access to the roof of the Building for any purpose
whatsoever.
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12.3 LANDLORD'S RIGHT TO MAINTAIN OR REPAIR. If, within five (5)
days following notice to Tenant, Tenant fails to commence to repair or
replace any damage to the Premises or Building which is Tenant's obligation
to perform, and diligently pursue timely completion of such repair and
replacement. Landlord may, at its option, cause all required maintenance,
repairs or replacements to be made. Tenant shall promptly pay Landlord all
costs incurred in connection therewith plus interest thereon at the Interest
Rate from the due date until paid.
ARTICLE 13: ALTERATIONS
13.1 ALTERATIONS. Tenant shall not make or permit any Alterations
without the prior written consent of Landlord, which consent may be granted
or withheld in Landlord's sole discretion. Landlord may impose any reasonable
conditions to its consent, including, without limitation, (i) delivery to
Landlord of written and unconditional waivers of mechanic's and materialmen's
liens as to the Premises, the Building and the Land for all work, labor and
services to be performed and materials to be furnished, signed by all
contractors, subcontractors, materialmen and laborers participating in the
Alterations, (ii) prior approval of the plans and specifications and Tenant's
contractor(s) with respect to the Alterations, (iii) supervision by
Landlord's representative at Tenant's expense of the Alterations and (iv)
delivery to Landlord of payment and performance bonds naming Landlord and
Mortgagee as obligees. The Alterations shall conform to the requirements of
Landlord's and Tenant's insurers and of the Federal, state and local
governments having jurisdiction over the Premises, shall be performed in
accordance with the terms and provisions of this Lease in a good and
workmanlike manner befitting a first class office building and shall not
adversely affect the value, utility or character of the Premises. If the
Alterations are not performed as herein required, Landlord shall have the
right, at Landlord's option, to halt any further Alterations, or to require
Tenant to perform the Alterations as herein required or to require Tenant to
return the Premises to its condition before such Alterations. Subject to
Section 13.3 herein, all Alterations and fixtures, whether temporary or
permanent in character, made in or upon the Premises either by Tenant or
Landlord, will immediately become Landlord's property and, at the end of the
Term will remain on the Premises without compensation to Tenant.
13.2 LIENS. Notwithstanding the foregoing, if any mechanic's or
materialmen's lien is filed against the Premises, the Building or the Land
for work claimed to have been done for, or materials claimed to have been
furnished to or for the benefit of, Tenant, such lien shall be discharged of
record by Tenant within ten (10) days by the payment thereof or the filing of
any bond required by law. If Tenant shall fail to discharge any such lien,
Landlord may (but shall not be obligated to) discharge the same, the cost of
which shall be paid by Tenant within three (3) days of
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demand by Landlord. Such discharge by Landlord shall not be deemed to waive
or release the default of Tenant in not discharging the same. Neither
Landlord's consent to the Alterations nor anything contained in this Lease
shall be deemed to be the agreement or consent of Landlord to subject
Landlord's interest in the Premises, the Building or the Land to any
mechanic's or materialmen's liens which may be filed in respect of the
Alterations.
13.3 REMOVAL OF ALTERATIONS. Unless Landlord specifies at the time
Landlord approves such Alterations that such Alterations shall be removed by
Tenant, all or any part of the Alterations (including, without limitation,
wall-to-wall carpet and wiring), whether made with or without the consent of
Landlord, shall remain upon the Premises and be surrendered therewith at the
Expiration Date or earlier termination of this Lease as the property of
Landlord without disturbance, molestation or injury. If Landlord so requires
the removal of all or part of the Alterations, Tenant, at its expense, shall
repair any damage to the Premises or the Building caused by such removal
before the expiration or termination of this Lease. If Tenant fails to remove
such Alterations, then Landlord may (but shall not be obligated to) remove
the same and the cost of such removal and repair of any damage caused by the
same, together with any and all damages which Landlord may suffer and sustain
by reason of the failure of Tenant to remove the same, shall be charged to
Tenant and paid upon demand.
13.4 LANDLORD ALTERATIONS. Landlord shall have no obligation to
make any Alterations in or to the Premises, the Building, the Common Area or
the Land. Landlord hereby reserves the right, from time to time, to make
Alterations to the Building, change the Building dimensions, erect additional
stories thereon and attach other buildings and structures thereto, and to
erect such scaffolding and other aids to construction as Landlord deems
appropriate, and no such Alterations, changes, construction or erection shall
constitute an eviction, constructive or otherwise, or permit Tenant any
abatement of Rent or claim.
ARTICLE 14: SIGNS
No sign, advertisement or notice shall be inscribed, painted,
affixed, placed or otherwise displayed by Tenant on any part of the Land or
the outside or the inside (including, without limitation, the windows) of the
Building or the Premises. Landlord shall, at Landlord's expense, place a
Building-standard suite entry sign on the exterior of the Premises
identifying Tenant's occupancy of the Premises, and shall provide
identification of Tenant and its suite number on a main directory in the
lobby on the first floor of the Building. Any other permitted signs shall be
installed and maintained by Landlord at Tenant's sole expense. If any
prohibited sign, advertisement or notice is nevertheless exhibited by Tenant,
Landlord shall have the right to remove the same, and Tenant shall
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pay any and all expenses incurred by Landlord in such removal, together with
interest thereon at the Interest Rate, upon demand. Landlord shall have the
right to prohibit any sign, advertisement, notice or statement to the public
by Tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as a first class office building.
ARTICLE 15: TENANT'S EQUIPMENT AND PROPERTY
15.1 MOVING TENANT'S PROPERTY. Any and all damage or injury to the
Premises or the Building caused by moving the property of Tenant into or out
of the Premises, or due to the same being on the Premises, shall be repaired
by Landlord, at the expense of Tenant. Tenant shall promptly remove from the
Common Area any of Tenant's furniture, equipment or other property there
deposited.
15.2 INSTALLING AND OPERATING TENANT'S EQUIPMENT. Without first
obtaining the written consent of Landlord, Tenant shall not install or
operate in the Premises (i) any electrically operated equipment or other
machinery, other than standard office equipment that does not require wiring,
cooling or other service in excess of Building standards, (ii) any equipment
of any kind or nature whatsoever which will require any changes, replacements
or additions to, or changes in the use of, any water, heating, plumbing, air
conditioning or electrical system of the Premises or the Building, or (iii)
any equipment which causes the floor load to exceed the load limits set by
Landlord for the Building. Landlord's consent to such installation or
operation may be conditioned upon the payment by Tenant of additional
compensation for any excess consumption of utilities and any additional power,
wiring, cooling or other service (as determined in the sole discretion of
Landlord) that may result from such equipment. Machines and equipment which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein so as to be objectionable to Landlord or any
other Building tenant shall be installed and maintained by Tenant, at its
expense, on vibration eliminators or other devices sufficient to eliminate
such noise and vibration.
ARTICLE 16: RIGHT OF ENTRY
Tenant shall permit Landlord or its Agents, at any time and without
notice as to (i) and (ii) below and upon reasonable notice during normal
business hours as to (iii) and (iv) below, to enter the Premises, without
diminution of Rent, (i) to examine, inspect and protect the Premises and the
Building, (ii) to make such alterations and repairs or perform such
maintenance which in the sole judgment of Landlord may be deemed necessary
or desirable, (iii) to exhibit the same to prospective purchasers of the
Building or to present or future Mortgagees or (iv) to exhibit the same to
prospective tenants during the last twelve (12) months of the Term.
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ARTICLE 17: INSURANCE
17.1 INSURANCE RATING. Tenant shall not conduct or permit any
activity, or place any equipment or material, in or about the Premises, the
Building or the Common Area which will increase the rate of fire or other
insurance on the Building or insurance benefitting any other tenant of the
Building; and if any increase in the rate of insurance is stated by any
insurance company or by the applicable insurance rating bureau to be due to
any activity, equipment or material of Tenant in or about the Premises, the
Building or the Common Area, such statement shall be conclusive evidence that
the increase in such rate is due to the same and, as a result thereof, Tenant
shall pay such increase to Landlord upon demand.
17.2 LIABILITY INSURANCE. Tenant shall, at its sole cost and
expense, procure and maintain throughout the Term a commercial general
liability policy insuring against claims, demands or actions for bodily
injury, death, personal injury, and loss or damage to property arising out of
or in connection with: (i) the Premises; (ii) the condition of the Premises;
(iii) Tenant's operations in, maintenance and use of the Premises, Building
and Common Area, and (iv) Tenant's liability assumed under this Lease. Such
insurance shall have such combined single limit as reasonably required by
Landlord from time to time, but in no event less than Two Million Dollars
($2,000,000.00) per occurrence, on an occurrence basis, and shall be primary
over any insurance carried by Landlord. Endorsements shall be obtained for
cross-liability and contractual liability.
17.3 INSURANCE FOR PERSONAL PROPERTY. Tenant shall, at its sole
cost and expense, procure and maintain throughout the Term a property
insurance policy (written on an "All Risk" basis) insuring all of Tenant's
personal property, including but not limited to equipment, furniture,
fixtures, furnishings and leasehold improvements which are the responsibility
of Tenant, for not less than the full replacement cost of said property. All
proceeds of such insurance shall be used to repair or replace Tenant's
property. In addition, Tenant shall, at its sole cost and expense, procure
and maintain business interruption insurance in an amount not less than the
Base Rent due hereunder.
17.4 REQUIREMENTS OF INSURANCE COVERAGE. All such insurance
required to be carried by Tenant herein shall be with an insurance company
licensed to do business in the Commonwealth of Virginia and rated not lower
than A-XII in the A.M. Best Rating Guide. Such insurance (i) shall contain an
endorsement that such policy shall remain in full force and effect
notwithstanding that the insured has released its right of action against
any party before the occurrence of a loss; (ii) shall name Landlord,
Landlord's managing agent, the Parking Manager, and, at Landlord's request,
any Mortgagee or ground lessor, as additional insured
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parties; and (iii) shall provide that the policy shall not be cancelled,
failed to be renewed or materially amended without at least thirty (30) days'
prior written notice to Landlord and, at Landlord's request, any Mortgagee.
On or before the Commencement Date and, thereafter, not less than thirty (30)
days before the expiration date of the insurance policy, an original of the
policy (including any renewal or replacement policy) or a certified copy
thereof, together with evidence satisfactory to Landlord of the payment of
all premiums for such policy, shall be delivered to Landlord and, at
Landlord's request, to any Mortgagee.
17.5 WAIVER OF SUBROGATION. Each party hereby releases the other
party hereto from liability for any loss or damage to any building, structure
or tangible personal property, or any resulting loss of income, or losses
under worker's compensation laws and benefits, notwithstanding that such
loss, damage or liability may arise out of the negligent or intentionally
tortious act or omission of the other party or its agents, if such loss or
damage is covered by insurance benefitting the party suffering such loss or
damage or was required to be covered by insurance pursuant to this Lease.
Each party hereto shall have a waiver of subrogation clause (providing that
such waiver of right of recovery against the other party shall not impair the
effectiveness of such policy or the insured's ability to recover thereunder)
included in its said policies, and shall promptly notify the other in writing
if such clause cannot be included in any such policy; if such waiver of
subrogation clause shall not be available, then the foregoing waiver of right
of recovery shall be void.
17.6 SECURITY. In the event that Landlord engages the services of
a professional security system for the Building, it is understood that such
engagement shall in no way increase Landlord's liability for occurrences
and/or consequences which such a system is designed to detect or avert and
that Tenant shall look solely to its insurer as set out above for claims for
damages or injury to any person or property.
17.7 LANDLORD'S INSURANCE. Landlord shall procure and maintain
throughout the Term fire and extended coverage insurance on the Building in
such coverage and amounts as reasonably determined by Landlord in its prudent
management of the Building and as necessary to satisfy the requirements of
Landlord's Mortgagee, if any.
ARTICLE 18: LANDLORD SERVICES AND UTILITIES
18.1 ORDINARY SERVICES TO THE PREMISES. As long as no Event of
Default has occurred and is continuing, Landlord shall, at its sole cost and
expense, furnish to the Premises throughout the Term (i) electricity, heating
and air conditioning appropriate for the Permitted Use between 8:00 a.m. and
6:00 p.m., Monday through Friday, and between 9:00 a.m. and 1:00 p.m. on
Saturday (except for
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the following holidays: New Year's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day), (ii) reasonable janitorial service,
(iii) regular trash removal from the Premises, (iv) hot and cold water from
points of supply, (v) restrooms as required by applicable code, and (vi)
elevator service, if there is an elevator in the Building, provided that
Landlord shall have the right to remove such elevators from service as may be
required for moving, freight or for servicing or maintaining the elevators or
the Building. Landlord agrees to furnish landscaping and grounds maintenance
and snow clearing for the areas used in common by the tenants of the
Building. Landlord shall be under no responsibility or liability for failure
or interruption in such services caused by breakage, accident, strikes,
repairs or for any other cause or causes beyond the control of Landlord, nor
in any event for any indirect or consequential damages; and failure or
omission on the part of Landlord to furnish such service shall not be
construed as an eviction of Tenant, nor work an abatement of Rent, nor
render Landlord liable in damages, nor release Tenant from prompt fulfillment
of any of the covenants under this Lease.
18.2 AFTER-HOURS SERVICES TO THE PREMISES. If Tenant requires or
requests that the services to be furnished by Landlord (except Building
standard electricity and elevator service) be provided during periods in
addition to the periods set forth in Section 18.1, then Tenant shall obtain
Landlord's consent thereto and, if such consent is granted, shall pay upon
demand Landlord's additional expenses resulting therefrom. Landlord may, from
time to time during the Term, set a per hour charge for after-hours service
which shall include the cost of utility service, labor costs, administrative
costs and a cost for depreciation of the equipment used to provide such
after-hours service.
18.3 UTILITY CHARGES. All telephone and other utility service
furnished to the Premises shall be paid for directly by Tenant except those
furnished by Landlord as listed in Section 18.1 above. In the event that, or
to determine whether, Tenant's use of utility services exceeds on a pro rata
basis Building standard electricity, heating and air conditioning normally
used by tenants in the Building, Landlord reserves the right separately to
meter or monitor the utility services provided to the Premises. If Tenant's
use of such utilities exceeds the normal use by other tenants in the
Building, Landlord may charge Tenant for such excess use in accordance with
Section 18.2 above, and the cost of any such meter shall be borne by Tenant.
ARTICLE 19: LIABILITY OF LANDLORD
19.1 NO LIABILITY. Except where due to Landlord or its Agents'
gross negligence or willful misconduct, Landlord and its Agents shall not be
liable to Tenant or its Agents for, and Tenant, for itself and its Agents,
does hereby release Landlord and its Agents from liability for, any damage,
compensation or claim
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arising from (i) the necessity of repairing any portion of the Premises or
the Building or the Common Area or any structural defects thereto, (ii) any
interruption in the use of the Premises or the Common Area for any reason
including any interruption or suspension of utility service, (iii) fire or
other casualty or personal or property injury, damage or loss resulting from
the use or operation (by Landlord, Tenant, or any other person whomsoever) of
the Premises or the Building or the Common Area, (iv) the termination of this
Lease, (v) robbery, assault or theft, or (vi) any leakage in the Premises or
the Building from water, rain, snow or other cause whatsoever. No such
occurrence shall give rise to diminution or abatement or Rent or constructive
eviction. Notwithstanding the foregoing, any goods, automobiles, property or
personal effects stored or placed by Tenant or its Agents in or about the
Premises, the Building or the Common Area shall be at the sole risk of
Tenant; Tenant hereby expressly waives its right to recover against Landlord
and its Agents therefor. Tenant hereby waives any claim it might have against
Landlord or its Agents for any consequential damages or business losses
sustained by Tenant arising out of the loss or damage to any person or
property of Tenant, or any interruption in the use of the Premises or the
Common Area, for any reason. Tenant acknowledges its obligation to insure
against such losses and damages.
19.2 INDEMNITY. Tenant shall indemnify, defend, protect and hold
Landlord and its Agents harmless from and against any and all damage, claim,
liability, cost or expense (including, without limitation, attorneys' or
other professionals' fees) of every kind and nature (including, without
limitation, those arising from any injury or damage to any person, property
or business) incurred by or claimed against Landlord or its Agents, directly
or indirectly, as a result of, arising from or in connection with (i)
Tenant's or its Agents' use and occupancy of the Premises, the Building or
the Common Area; (ii) Tenant's breach of any provision of this Lease; or
(iii) any act, omission or negligence of Tenant or its Agents.
ARTICLE 20: RULES AND REGULATIONS
Tenant and its Agents shall at all times abide by and observe the
Rules and Regulations attached hereto as EXHIBIT D and any amendments thereto
that may be promulgated from time to time by Landlord for the operation and
maintenance of the Building and the Common Area and the Rules and Regulations
shall be deemed to be covenants of the Lease to be performed and/or observed
by Tenant. Nothing contained in this Lease shall be construed to impose upon
Landlord any duty or obligation to enforce the Rules and Regulations, or the
terms or provisions contained in any other lease, against any other tenant of
the Building. Landlord shall not be liable to Tenant for any violation by any
party of the Rules and Regulations or the terms of any other Building lease.
If there is any inconsistency between this Lease and the Rules and Regu-
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lations, this Lease shall govern. Landlord reserves the right to amend and
modify the Rules and Regulations as it deems necessary.
ARTICLE 21: DAMAGE; CONDEMNATION
21.1 DAMAGE TO THE PREMISES. If the Premises shall be damaged by
fire or other cause without the fault or negligence of Tenant or its Agents,
Landlord shall diligently and as soon as practicable after such damage occurs
(taking into account the time necessary to effect a satisfactory settlement
with any insurance company involved) repair such damage at the expense of
Landlord; provided, however, that Landlord's obligation to repair such damage
shall not exceed the proceeds of insurance available to Landlord (reduced by
any proceeds retained pursuant to the rights of Mortgagee). Notwithstanding
the foregoing, (i) if more than twenty percent (20%) of the floor area of the
Premises or the Building is damaged or destroyed, or (ii) if the Premises or
the Building is damaged by fire or other cause to such an extent that, in
Landlord's sole judgment, the damage cannot be substantially repaired within
one hundred eighty (180) days after the date of such damage, or (iii) if the
Premises are damaged during the last six (6) months of the Term, then
Landlord may terminate this Lease by notice to Tenant within sixty (60) days
from the date of such damage. During the period that Tenant is deprived of
the use of the damaged portion of the Premises, and provided such damage is
not the consequence of the fault or negligence of Tenant or its Agents, Base
Rent shall be reduced by the ratio that the rentable square footage of the
Premises damaged bears to the total rentable square footage of the Premises
before such damage. All injury or damage to the Premises or the Building
resulting from the fault or negligence of Tenant or its Agents shall be
repaired by Tenant, at Tenant's expense, and Rent shall not abate. If Tenant
shall fail to do so or if Landlord shall so elect, Landlord shall have the
right to make such repairs, and any expense so incurred by Landlord,
together with interest thereon at the Interest Rate, shall be paid by Tenant
upon demand. Notwithstanding anything herein to the contrary, Landlord shall
not be required to rebuild, replace or repair any non-standard tenant
improvements, tenant extras or Alterations or any personal property of Tenant.
21.2 CONDEMNATION. If the whole or a Substantial Part of the
Premises or the Building shall be taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose
(including, without limitation, sale under threat or such a taking), then the
Term shall cease and terminate as of the date when title vests in such
governmental or quasi-governmental authority, and Rent shall be prorated to
the date when title vests in such governmental or quasi-governmental
authority. If less than a Substantial Part of the Premises is taken or
condemned by any governmental or quasi-governmental authority for any public
or quasi-public use or purpose (including, without limitation, sale under
threat of such a taking), Base Rent
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shall be reduced by the ratio that the portion so taken bears to the
rentable square footage of the Premises before such taking, effective as of
the date when title vests in such governmental or quasi-governmental
authority, and this Lease shall otherwise continue in full force and effect.
Tenant shall have no claim against Landlord (or otherwise) as a result of
such taking; and Tenant hereby agrees to make no claim against the condemning
authority for any portion of the amount that may be awarded as compensation
or damages as a result of such taking; provided, however, that Tenant may, to
the extent allowed by law, claim an award for moving expenses and for the
taking of any of Tenant's property (other than its leasehold interest in the
Premises) which does not, under the terms of this Lease, become the property
of Landlord at the termination hereof, as long as such claim is separate and
distinct from any claim of Landlord and does not diminish Landlord's award.
Tenant hereby assigns to Landlord any right and interest it may have in any
award for its leasehold interest in the Premises.
ARTICLE 22: DEFAULT
22.1 EVENTS OF DEFAULT. Each of the following shall constitute an
Event of Default: (i) Tenant fails to pay Rent when due and such failure
continues for five (5) days after notice from Landlord; provided that no such
notice shall be required if at least two such notices shall have been given
during the same Lease Year and, in such event, it shall be deemed an Event of
Default if such failure continues for five (5) days after such Rent is due;
(ii) Tenant fails to observe or perform any other term, condition or covenant
herein binding upon or obligating Tenant within fifteen (15) days after
notice from Landlord, or, if such failure cannot reasonably be corrected
within fifteen (15) days, if Tenant does not begin to correct the failure
within fifteen (15) days after such notice and/or does not thereafter
diligently pursue the correction of such failure to completion within
thirty (30) days after said notice from Landlord; (iii) Tenant abandons or
vacates the Premises; (iv) Tenant makes or consents to a general assignment
for the benefit of creditors or a common law composition of creditors, or a
receiver of the Premises or all or substantially all of Tenant's assets is
appointed, or (v) Tenant files a voluntary petition in any bankruptcy or
insolvency proceeding, or an involuntary petition in any bankruptcy or
insolvency proceeding is filed against Tenant and is not discharged by Tenant
within sixty (60) days.
22.2 LANDLORD'S REMEDIES. Upon the occurrence of an Event of
Default, Landlord, at its option, without further notice or demand to Tenant,
in addition to all other rights and remedies provided in this Lease, at law
or in equity, shall have the right to elect any or all of the following
remedies:
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(i) Terminate this Lease and Tenant's right of possession of the
Premises, and recover all damages to which Landlord is entitled under law,
specifically including but without limitation, all of Landlord's expenses of
reletting (including, without limitation, rental concessions to new tenants,
repairs, Alterations, legal fees and brokerage commissions). If Landlord
elects to terminate this Lease, every obligation of the parties shall cease
as of the date of such termination, except that Tenant shall remain liable
for payment of Rent and performance of all other terms and conditions of this
Lease to the date of termination.
(ii) Terminate Tenant's right of possession of the Premises
without terminating this Lease, in which event Landlord may, but shall not be
obligated to, relet the Premises, or any part thereof, for the account of
Tenant, for such rent and term and upon such other conditions as are
acceptable to Landlord. For purposes of such reletting, Landlord is authorized
to redecorate, repair, alter and improve and Premises to the extent necessary
in Landlord's sole discretion. Until Landlord relets the Premises, Tenant
shall remain obligated to pay Rent to Landlord as provided in this Lease. If
and when the Premises are relet and if a sufficient sum is not realized from
such reletting after payment of all Landlord's expenses of reletting
(including, without limitation, rental concessions to new tenants, repairs,
Alterations, legal fees and brokerage commissions) to satisfy the payment of
Rent due under this Lease for any month, Tenant shall pay Landlord any such
deficiency upon demand. Tenant agrees that Landlord may file suit to recover
any sums due Landlord under this Section from time to time and that such suit
or recovery of any amount due Landlord shall not be any defense to any
subsequent action brought for any amount not previously reduced to judgment
in favor of Landlord;
(iii) Terminate this Lease and Tenant's right of possession of the
Premises, and recover from Tenant the net present value of the Rent due from
the date of termination until the Expiration Date, discounted at the lesser
of the Interest Rate as of the date of termination or six percent (6%) per
annum.
(iv) Re-enter and repossess the Premises and remove all persons
and effects therefrom, by summary proceeding, ejectment or other legal action
or by using such force as may be necessary. Landlord shall have no liability
by reason of any such re-entry, repossession or removal; and/or
(v) Recover from Tenant, to the extent permitted under the laws
of the Commonwealth of Virginia, the value and/or cost of all concessions to
Tenant under this Lease, if any.
22.3 Rights Upon Possession. If Landlord takes possession pursuant to
this Article, with or without terminating this
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Lease, Landlord may, at its option, enter into the Premises, remove Tenant's
Alternations, signs, personal property, equipment and other evidences of
tenancy, and store them at Tenant's risk and expense or dispose of them as
Landlord may see fit, and take and hold possession of the Premises; provided,
however, that if Landlord elects to take possession only without terminating
this Lease, such entry and possession shall not terminate this Lease or
release Tenant or any Guarantor, in whole or in part, from the obligation to
pay the Rent reserved hereunder for the full Term or from any other
obligation under this Lease or any guaranty thereof.
22.4 No Waiver. If Landlord shall institute proceedings against Tenant
and a compromise or settlement thereof shall be made, the same shall not
consititute a waiver of any other covenant, condition or agreement herein
contained, nor of any of Landlord's rights hereunder. No waiver by Landlord
of any breach shall operate as a waiver of such covenant, condition or
agreement, or operate as a waiver of such covenant, condition or agreement
itself, or of any subsequent breach thereof. No payment of Rent by Tenant or
acceptance of Rent by Landlord shall operate as a waiver of any breach or
default by Tenant under this Lease. No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly installment of Rent herein
stipulated shall be deemed to be other than a payment on account of the
earliest unpaid Rent, nor shall any endorsement or statement on any check or
communication accompanying a check for the payment of Rent be deemed an accord
and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Rent or to
pursue any other remedy provided in this Lease. No re-entry by Landlord, and
no acceptance by Landlord of keys from Tenant, shall be considered an
acceptance of a surrender of the Lease.
22.5 Right of Landlord to Cure Tenant's Default. If an Event of Default
shall occur, then Landlord may (but shall not be obligated to) make such
payment or do such act to cure the Event of Default, and charge the amount of
the expense thereof, together with interest thereon at the Interest Rate, to
Tenant. Such payment shall be due and payable upon demand; however, the
making of such payment or the taking of such action by Landlord shall not be
deemed to cure the Event of Default or to stop Landlord from the pursuit of
any remedy to which Landlord would otherwise be entitled. Any such payment
made by Landlord on Tenant's behalf shall bear interest until paid at the
Interest Rate.
22.6 Late Payment. If Tenant fails to pay any Rent within five (5) days
after such Rent becomes due and payable, Tenant shall pay to Landlord a late
charge of five percent (5%) of the amount of such overdue Rent. In addition,
any such late Rent payment shall bear interest from the date such Rent became
due and payable to the date of payment thereof by Tenant at the Interest
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Rate. Such late charge and interest shall be due and payable within two (2)
days after written demand from Landlord.
22.7 Landlord Default. If Landlord shall fail to keep or perform any
of its obligations under this Lease, then Tenant may (but shall not be
obligated to do so) upon the continuance of such failure on Landlord's part
for twenty (20) days after Landlord's receipt of notice from Tenant
specifying the failure (or, in the case of any such failure which cannot
with due diligence be cured within twenty (20) days, within such additional
period, if any, as may be reasonably required by Landlord to cure such
failure with due diligence), and without waiving or releasing Landlord from
any obligation, make such payment or perform such obligation and all sums so
paid by Tenant and all necessary and incidental costs and expenses, including
reasonable attorney's fees paid to independent legal counsel, incurred by
Tenant in making such payment or performing such obligation, together with
interest thereon at the Interest Rate from the date of payment, shall be paid
by Landlord to Tenant on demand, and if not so paid by Landlord, Tenant shall
have the right to pursue any legal remedies available to it to collect
payment, but shall not be entitled to offset such payment against Rent
thereafter payable under this Lease.
ARTICLE 23: MORTGAGES
23.1 Subordination. This Lease is subject and subordinate to all
ground or underlying leases and to any first Mortgage(s) which may now or
hereafter affect such ground or underlying leases or the Land or the Building
and to all renewals, modifications, consolidations, replacements and
extensions thereof. This subordination shall be self-operative; however, in
confirmation thereof, Tenant shall execute promptly any instrument that
Landlord or any first Mortgagee may request confirming such subordination.
Notwithstanding the foregoing, before any foreclosure sale under a Mortgage,
the Mortgagee shall have the right to subordinate the Mortgage to this Lease,
and, in the event of a foreclosure, this Lease may continue in full force and
effect and Tenant shall attorn to and recognize as its landlord the purchaser
of Landlord's interest under this Lease. Tenant shall, upon the request of a
Mortgagee or purchaser at foreclosure, execute, acknowledge and deliver any
instrument that has for its purpose and effect the subordination of the lien
of any Mortgage to this Lease or Tenant's attornment to such Purchaser.
Tenant waives its rights under any statute or law now or hereafter in effect
which may give Tenant any right to terminate or otherwise adversely affect
this Lease in the event any foreclosure proceeding ordered in lieu of
foreclosure is brought under any Mortgage.
23.2 Mortgagee Protection. Tenant agrees to give any Mortgagee by
certified mail, return receipt requested, a copy of any notice of default
served upon Landlord, provided that before such notice Tenant has been
notified in writing of the address of
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such Mortgagee. Tenant further agrees that if Landlord shall have failed to
cure such default within the time provided for in this Lease, then Mortgagee
shall have an additional thirty (30) days within which to cure such default;
provided, however, that if such default cannot be reasonably cured within
that time, then such Mortgagee shall have such additional time as may be
necessary to cure such default so long as Mortgagee has commenced and is
diligently pursuing the remedies necessary to cure such default (including,
without limitation, the commencement of foreclosure proceedings, if
necessary), in which event this Lease shall not be terminated or Rent abated
while such remedies are being so diligently pursued. In the event of the sale
of the Land or the Building, by foreclosure or deed in lieu thereof, the
Mortgagee or purchaser at such sale shall be responsible for the return of
the Security Deposit only to the extent that such Mortgagee or purchaser
actually received the Security Deposit.
23.3 Modification Due to Financing. If, in connection with obtaining
construction or permanent financing for the Premises, the Building or the
Land, any lender (or Mortgagee) shall request reasonable modifications of
this Lease as a condition to such financing, Tenant shall promptly execute a
modification of this Lease, provided such modifications do not materially
increase the financial obligations of Tenant hereunder or materially
adversely affect the leasehold interest hereby created or Tenant's reasonable
use and enjoyment of the Premises. Tenant shall, prior to execution and
throughout the Term, upon request from time to time, provide such financial
information and documentation about itself to Landlord or Mortgagee as may be
requested.
ARTICLE 24: SURRENDER; HOLDING OVER
24.1 Surrender of the Premises. Tenant shall peaceably surrender the
Premises to Landlord on the Expiration Date or earlier termination of this
Lease, in broom-clean condition and in as good condition as when Tenant took
possession, including, without limitation, the repair of any damage to the
Premises caused by the removal of any of Tenant's personal property or trade
fixtures from the Premises, except for reasonable wear and tear and loss by
fire or other casualty not caused by Tenant or its Agents. Any of Tenant's
personal property left on or in the Premises, the Building or the Common Area
after the Expiration Date or earlier termination of this Lease shall be
deemed to be abandoned, and, at Landlord's option, title shall pass to
Landlord under this Lease.
24.2 Holding Over. In the event that Tenant shall not immediately
surrender the Premises to Landlord on the Expiration Date or earlier
termination of this Lease, Tenant shall be deemed to be a month to month
tenant (which tenancy may be cancelled upon thirty (30) days advance notice
by either party) upon all of the terms and provisions of this Lease, except
that, for the first
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twelve (12) months of any holdover period, annual Base Rent shall increase to
$27,825.45 and shall be payable in equal monthly installments of $2,318.79,
and thereafter, the monthly Base Rent during the remainder of any holdover
period shall be $4,673.58. Notwithstanding the foregoing, if Tenant shall
hold over for a period in excess of twelve (12) months following the
Expiration Date or earlier termination of this Lease, and Landlord shall
desire to regain possession of the Premises, then Landlord may forthwith
re-enter and take possession of the Premises without process, or by any legal
process in force in the Commonwealth of Virginia. Tenant shall indemnify
Landlord against all liabilities and damages sustained by Landlord by reason
of tenant's retention of possession of the Premises beyond any permitted
holdover period.
ARTICLE 25: QUIET ENJOYMENT
Landlord covenants that if Tenant shall pay Rent and perform all of the
terms and conditions of this Lease to be quietly performed by Tenant, Tenant
shall during the Term peaceably and quietly occupy and enjoy possession of
the Premises without molestation or hindrance by Landlord or any party
claiming through or under Landlord, subject to the provisions of this Lease
and any Mortgage to which this Lease is subordinate and easements, conditions
and restrictions of record affecting the Land.
ARTICLE 26: HAZARDOUS MATERIALS
26.1 Prohibition. Tenant shall not cause or permit any Hazardous
Material to be brought upon, kept or used in or about the Premises by Tenant,
its agents, employees, contractors or invitees, except for minimal quantities
of such Hazardous Materials as is necessary for the operation of Tenant's
office equipment.
26.2 Compliance. Any Hazardous Material permitted on the Premises as
provided in Section 26.1, and all containers therefor, shall be used, kept,
stored and disposed of in a manner that complies with all federal, state and
local laws or regulations applicable to any such Hazardous Material.
26.3 No Contamination. Tenant shall not discharge, leak or emit, or
permit to be discharged, leaked or emitted, any material into the atmosphere,
ground, sewer system or any body of water, if such material (as reasonably
determined by the Landlord or any government authority) does or may, pollute
or contaminate the same, or may adversely affect (a) the health, welfare or
safety or persons, whether located on the Premises or elsewhere, or (b) the
condition, use or enjoyment of the Building or any other real or personal
property.
26.4 Disclosure. At the commencement of each Lease Year, Tenant shall
disclose to Landlord the names and approximate amounts of all Hazardous
Material which Tenant intends to store, use or
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dispose of on the Premises in the coming Lease Year. In addition, at the
commencement of each Lease Year, beginning with the second Lease Year, Tenant
shall disclose to Landlord the names and amounts of all Hazardous Materials
which were actually used, stored or disposed of on the Premises if such
materials were not previously identified to Landlord at the commencement of
the previous Lease Year.
26.5 Definition. As used herein, the term "Hazardous Material" means
(a) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act of 1976, as amended from time to time, and regulations
promulgated thereunder; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended from time to time, and regulations promulgated thereunder; (c) any
"oil, petroleum products, and their byproducts; and (d) any substance which
is or becomes regulated by any federal, state or local governmental authority.
26.6 Indemnity. Tenant hereby agrees that it shall be fully liable for
all costs and expenses related to the use, storage and disposal of Hazardous
Material kept on the Premises by the Tenant, and the Tenant shall give
immediate notice to the Landlord of any violation or potential violation of
the provisions of this Article 26. Tenant shall defend, indemnify and hold
harmless Landlord and its Agents, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs, or expenses
(including without limitation, attorney and consultant fees, court costs and
litigation expenses) of whatever kind or nature, known or unknown, contingent
or otherwise, arising out of nature, known or unknown, contingent or
otherwise, arising out of or in any way related to (a) the presence,
disposal, release, or threatened release of any such Hazardous Material which
is on, from, or affecting the soil, water, vegetation, buildings, personal
property, persons, animals, or otherwise; (b) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or
related to such Hazardous Material; (c) any lawsuit brought or threatened,
settlement reached or government order relating to such Hazardous Material;
and/or (d) any violation of any laws applicable thereto. The provisions of
this Section 26.6 shall be in addition to any other obligations and
liabilities Tenant may have to Landlord at law or equity and shall survive
the transactions contemplated herein and shall survive the termination of
this Lease.
ARTICLE 27: MISCELLANEOUS
27.1 No Representations by Landlord. Tenant acknowledges that neither
Landlord or its Agents nor any broker has made any representation or promise
with respect to the Premises, the Building, the Land or the Common Area,
except as herein expressly set forth, and no rights, privileges, easements or
licenses are acquired by Tenant except as herein expressly set forth. Tenant,
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by taking possession of the Premises shall accept the Premises and the
Building in their condition existing on the date of possession, and such
taking of possession shall be conclusive evidence that the Premises and the
Building are in good and satisfactory condition at the time of such taking of
possession.
27.2 No Partnership. Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture of or between Landlord and
Tenant, or to create any other relationship between Landlord and Tenant other
than that of landlord and tenant.
27.3 Brokers. Landlord recognizes Broker(s) as the sole broker(s)
procuring this Lease and shall pay Broker(s) a commission therefor pursuant
to a separate agreement between Broker(s) and Landlord. Tenant represents and
warrants to Landlord that it has not employed any broker, agent or finder
other than Broker(s) relating to this Lease. Tenant shall indemnify and hold
Landlord harmless, from and against any claim for brokerage or other
commission arising from or out of any breach of Tenant's representation and
warranty.
27.4 Estoppel Certificate. Tenant shall, without charge, at any time and
from time to time, within five (5) days after request therefor by Landlord,
Mortgagee, any purchaser of the Land or the Building or any other interested
person, execute, acknowledge and deliver to such requesting party a written
estoppel certificate certifying, as of the date of such estoppel certificate,
the following: (i) that this Lease is unmodified and in full force and effect
for if modified, that the Lease is in full force and effect as modified and
setting forth such modifications); (ii) that the Term has commenced (and
setting forth the Commencement Date and Expiration Date); (iii) that Tenant
is presently occupying the Premises; (iv) the amounts of Base Rent and
Additional Rent currently due and payable by Tenant; (v) that any Alterations
required by the Lease to have been made by Landlord have been made to the
satisfaction of Tenant; (vi) that there are no existing set-offs, charges,
liens, claims or defenses against the enforcement of any right hereunder,
including, without limitation, Base Rent or Additional Rent (or, if alleged,
specifying the same in detail); (vii) that no Base Rent (except the first
installment thereof) has been paid more than thirty (30) days in advance of
its due date; (viii) that Tenant has no knowledge of any then uncured default
by Landlord of its obligations under this Lease (or, if Tenant has such
knowledge, specifying the same in detail); (ix) that Tenant is not in
default; (x) that the address to which notices to Tenant should be sent is as
set forth in the Lease (or, of not, specifying the correct address); and (xi)
any other certifications requested by Landlord. In addition, within five (5)
days after request by Landlord, Tenant shall deliver to Landlord audited
financial statements of Tenant for its most
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recently ended fiscal year and interim unaudited financial statements for its
most recently ended quarter.
27.5 Waiver of Jury Trial. Tenant hereby waives trial by jury in any
action, proceeding or counterclaim brought by Landlord against Tenant with
respect to any matter whatsoever arising out of or in any way connected with
this Lease, the relationship of Landlord and Tenant hereunder or Tenant's use
or occupancy of the Premises. In the event Landlord commences any proceedings
for nonpayment of Rent, Tenant shall not interpose any counterclaims. This
shall not, however, be construed as a waiver of Tenant's right to assert such
claims in any separate action brought by Tenant.
27.6 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed duly given if delivered in person or by Federal
Express or other reputable overnight delivery service, or upon the earlier of
receipt, if mailed by certified or registered mail, or three (3) days after
certified or registered mailing, return receipt requested, postage prepaid,
addressed and sent, if to Landlord to Landlord's Address specified in
Section 1.15 or if to Tenant to Tenant's Address specified in Section 1.16.
Landlord and Tenant may from time to time by written notice to the other
designate another address for receipt of future notices. Notices from
Landlord's managing agent shall be deemed notices from Landlord.
27.7 Invalidity of Particular Provisions. If any provisions of this
Lease or the application thereof to any person or circumstances shall to any
extent be invalid or unenforceable, the remainder of this Lease, or the
application of such provision to persons or circumstances other than
those to which it is invalid or unenforceable, shall not be affected thereby,
and each provision of this Lease shall be valid and be enforced to the full
extent permitted by law.
27.8 Gender and Number. All terms and words used in this Lease,
regardless of the number or gender in which they are used, shall be deemed to
include any other number or gender as the context may require.
27.9 Benefit and Burden. Subject to the provisions of Article 11 and
except as otherwise expressly provided, the provisions of this Lease shall be
binding upon, and shall inure to the benefit of, the parties hereto and each
of their respective representatives, heirs, successors and assigns. Landlord
may freely and fully assign its interest hereunder, and following any such
assignment shall be fully released from any and all liabilities and
obligations under this Lease thereafter accruing.
27.10 Entire Agreement. This Lease (which includes the Exhibits and
Riders, if any, attached hereto) contains and embodies the entire agreement
of the parties hereto, and no representations,
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inducements or agreements, oral or otherwise, between the parties not
contained in this Lease shall be of any force or effect. This Lease (other
than the Rules and Regulations, which may be changed from time to time as
provided herein) may not be modified, changed or terminated in whole or in
part in any manner other than by an agreement in writing duly signed by
Landlord and Tenant.
27.11 Authority.
(i) If Tenant signs as a corporation, the person executing this
Lease on behalf of Tenant hereby represents and warrants that Tenant is a
duly formed and validly existing corporation, in good standing, qualified to do
business in the Commonwealth of Virginia, that the corporation has full power
and authority to enter into this Lease and that he or she is authorized to
execute this Lease on behalf of the corporation.
(ii) If Tenant signs as a partnership, the person executing this
Lease on behalf of Tenant hereby represents and warrants that Tenant is a
duly formed, validly existing partnership qualified to do business in the
Commonwealth of Virginia, that the partnership has full power and authority to
enter into this Lease, and that he or she is authorized to execute this Lease
on behalf of the partnership.
27.12 Attorneys' Fees. If, as a result of any default of Landlord or
Tenant in its performance of any of the provisions of this Lease, the other
party uses the services of an attorney in order to secure compliance with
such provisions or recover damages therefor, or to terminate this Lease or
evict Tenant, the non-prevailing party shall reimburse the prevailing party
upon demand for any and all attorneys' fees and expenses so incurred by the
prevailing party.
27.13 Interpretation. This Lease is governed by the laws of the
Commonwealth of Virginia.
27.14 No Personal Liability; Sale. Neither Landlord nor its Agents,
whether disclosed or undisclosed, shall have any personal liability under any
provision of this Lease. In the event of a judgment in favor of Tenant which
remains unpaid, Tenant's right to redress, execution and levy shall be
limited to Landlord's equity in the Building as described in Article 1
hereof. In the event that the original Landlord hereunder, or any successor
owner of the Building, shall sell or convey the Building, all liabilities and
obligations on the part of the original Landlord, or such successor owner,
under this Lease occurring thereafter shall terminate as of the day of such
sale, and thereupon all such liabilities and obligations shall be binding on
the new owner. Tenant agrees to attorn to such new owner. Any successor to
Landlord's interest shall not be bound by (i) any payment of Base Rent for
more than one (1) month in advance, except for the payment of the first
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installment of Base Rent or (ii) as to any Mortgagee or any purchaser at
foreclosure, any amendment or modification of this Lease made without the
consent of such Mortgagee.
27.15 Time of the Essence. Time is of the essence as to Tenant's
obligations contained in this Lease.
27.16 Force Majeure. Except for Tenant's obligations to pay Rent under
this Lease, neither Landlord nor Tenant shall be required to perform any of
its obligations under this Lease, nor shall such party be liable for loss or
damage for failure to do so, nor shall the other party thereby be released
from any of its obligations under this Lease, where such failure by the
non-performing party arises from or through acts of God, strikes, lockouts,
labor difficulties, explosions, sabotage, accidents, riots, civil commotions,
acts of war, results of any warfare or warlike conditions in this or any
foreign country, fire or casualty, legal requirements, energy shortage or
other causes beyond the reasonable control of the non-performing party,
unless such loss or damage results from the will full misconduct or gross
negligence of the non-prevailing party.
27.17 Headings. Captions and headings are for convenience or reference
only.
27.18 Memorandum of Lease. Tenant shall, at the request of Landlord,
execute and deliver a memorandum of lease in recordable form. Tenant shall
not record this Lease or any such memorandum of this Lease.
27.19 Landlord's Relocation Option. At any time during the Term,
provided at such time Tenant's Premises consist of 5,000 rentable square feet
or less, Landlord shall have the option to relocate Tenant, at no direct cost
of Tenant, to space comparable to the Premises elsewhere in the Building,
provided Landlord gives Tenant three (3) months' written notice. Upon
relocation, such new space shall be deemed to be the "Premises" hereunder,
and Tenant's Proportionate Share shall be recalculated by Landlord to equal
that fraction, the numerator of which is the rentable square footage of the
Premises and the denominator of which is the rentable square footage of the
Building (as reasonably determined by Landlord).
27.20 Attorney-in-Fact. If Tenant fails or refuses to execute and
deliver any instrument or certificate required to be delivered by Tenant
hereunder (including, without limitations, any instrument or certificate
required under Article 23 or Section 27.4 hereof) within the time periods
required herein, then Tenant hereby appoints Landlord as its attorney-in-fact
with full power and authority to execute and deliver such instrument or
certificate for and in the name of Tenant.
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27.21 Effectiveness. The execution of this Lease by Tenant and delivery of
the same and of any Trust or Security Deposit to Landlord or its Agent does
not constitute a reservation of or option for the Premises or an agreement
to enter into a lease, and this Lease shall become effective only if and when
Landlord executes and delivers the same to Tenant; provided, however, that
execution and delivery of this Lease to Landlord or its Agent by Tenant shall
constitute an irrevocable offer by Tenant to lease the Premises on the terms
and conditions herein contained, which offer may not be withdrawn or revoked
for thirty (30) days after such execution and delivery.
27.22 Tenant's Right to Use Conference Room Facility. Throughout the Term
of this Lease, during normal business hours (8:00 a.m. - 6:00 p.m., Monday
through Friday, and 9:00 a.m. - 1:00 p.m. on Saturday), Tenant shall have the
right to use, on a first-come, first-serve basis along with other tenants in
the Building, without charge, the conference room facility located on the
second floor of the Building. If Tenant uses the conference room facility
other than during normal business hours, Tenant shall be responsible for
paying to Landlord any costs directly attributable to Tenant's use of such
facility.
27.23 Right of First Refusal on Adjacent Space. Provided Tenant is not
then in default hereunder, Landlord covenants and agrees that if Landlord
intends to lease the space located in the Building and immediately adjacent
to the Premises to a third-party and if Wilder & Gregory elects not to lease
such space from Landlord, Landlord shall give Tenant written notice of the
terms and conditions pursuant to which Landlord will agree to lease such
space to the third party. Tenant shall have ten (10) days following receipt
of such notice from Landlord in which to notify Landlord of its intent to
lease such space from Landlord pursuant to the terms and conditions contained
in Landlord's notice to Tenant. If Tenant fails to notify Landlord of its
intent to lease such space within such ten (10) day period or thereafter
fails to enter into a lease for such space within thirty (30) days after the
date Tenant notifies Landlord of its intent to lease such space, time being
of the essence in both instances, Tenant shall be deemed to have waived its
right of first refusal as to such third-party offer, and Landlord shall be
permitted to enter into a lease for such space with such third-party upon
substantially the same terms and conditions as contained in Landlord's notice
to Tenant.
27.24 Option on Adjacent Space. Provided Tenant is not then in default
hereunder, Tenant shall have the option, at any time during the Term of this
Lease, upon thirty (30) days advance written notice to Landlord, to lease the
space located in the Building and immediately adjacent to the Premises from
Landlord upon the same terms and conditions as set forth herein, including,
without limitation, the rental rate set forth herein and applicable to the
Premises. Notwithstanding the foregoing, if , after
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receiving Tenant's notice of its intent to exercise its option to lease the
space located in the Building and immediately adjacent to the Premises,
Landlord receives notice from Wilder & Gregory that it has elected to lease
such space from Landlord, Tenant's option to lease such space shall terminate
and be of no further force and effect.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the Date of Lease.
ATTEST/WITNESS: LANDLORD:
E & M REALTY HOLDING COMPANY
James M Walsh By: David Chen [SEAL]
- ------------------- -----------
Name: James M Walsh David Chen
-------------- Vice President
December 30, 1997
ATTEST/WITNESS: TENANT:
IMTEK
A Ray Brady By: Michael L Laws [SEAL]
- ------------------ ---------------------
Name: A. Ray Brady Name: Michael Laws
------------- -------------
<PAGE>
EXHIBIT A
(Plan Showing Premises)
31
<PAGE>
EXHIBIT B
WORK AGREEMENT
[INTENTIONALLY DELETED]
<PAGE>
EXHIBIT C
PARKING
During the Term of this Lease, Tenant shall have the right to enter into
one (1) automobile parking contract for parking in that portion of the
Parking Facilities consisting of the underground garage located in the
Building provided by Landlord's Parking Manager (which is currently Virginia
Parking Service, Inc., and which term shall refer to the person or entity
which during the Term of the Lease leases the Parking Facilities from
Landlord and operates the Parking Facilities) at such monthly rates as are
being customarily charged by the Parking Manager for similar covered parking
in the City of Richmond, Virginia, for use by Tenant and its employees, and
subject to the rules and regulations established by Landlord or the Parking
Manager from time to time. Tenant acknowledges and agrees that the automobile
parking contract will provide only a license to park one (1) automobile
within the particular Parking Facility on an unreserved, first-come,
first-served basis, and that Landlord or Parking Manager shall have the right
to alter or adjust the size, location, elevation, and/or nature of the
parking areas within the Parking Facilities, and shall have the right to
designate certain spaces within the Parking Facilities as "reserved" for
specific users. In addition to the foregoing, if requested by Tenant,
Landlord covenants and agrees to assist Tenant in obtaining from the Parking
Manager additional parking for Tenant and its employees in other Parking
Facilities within a two (2) block radius of the Building. Such additional
spaces will be provided by the Parking Manager at such monthly rates as are
being customarily charged by the Parking Manager for similar parking in the
City of Richmond, Virginia.
Landlord reserves the right, at any time and from time to time, to close
temporarily all or any portions of the Parking Facilities when in Landlord's
or Parking Manager's reasonable judgment any such closing is necessary or
desirable (a) to make repairs or changes to effect construction, (b) to
prevent the acquisition of public rights in such area, (c) to discourage
unauthorized parking, or (d) to protect or preserve natural persons or
property. Landlord or Parking Manager may do such other acts in and to the
Parking Facilities as may be desirable to improve or maintain same. Temporary
unavailability of parking spaces within the Parking Facilities shall not
constitute an eviction or give rise to any claim in favor of Tenant for loss
or damage under this Lease. If at any time during the Term of the Lease, an
insufficient number of parking spaces in that portion of the Parking
Facilities consisting of the underground garage located in the Building are
available for use by all tenants of the Building, Landlord and Parking
Manager shall have the right to terminate the automobile parking contract and
provide a replacement parking contract for parking by Tenant within a
two-block radius of the Building, at such rates as are customarily charged
for such replacement parking facilities in the City of Richmond, Virginia.
<PAGE>
Tenant agrees that it, any subtenant or licensee and its respective
officers, employees, contractors and agents will park their automobiles and
other vehicles only where and as permitted by Landlord or Parking Manager.
Tenant will, if and when so requested by Landlord or Parking Manager, furnish
the requesting party with the license numbers and any vehicles of Tenant, any
subtenant or licensee and its respective officers, employees, contractors and
agents. Landlord or Parking Manager may remove, at Tenant's expense, any
vehicles which are parking or abandoned in violation of the rules and
regulations established by Landlord or Parking Manager from time to time.
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
The Following rules and regulations have been formulated for the safety
and well-being of all the tenants of the Building and become effective upon
occupancy. Strict adherence to these rules and regulations is necessary to
guarantee that each and every tenant will enjoy a safe and unannoyed
occupancy in the Building. Any repeated or continuing violation of these
rules and regulations by Tenant after notice from Landlord, shall be
sufficient cause for termination of this Lease at the option of the Landlord.
Landlord may, upon request by any tenant, waive the compliance by such
tenant of any of the foregoing rules and regulations provided that (i) no
waiver shall be effective unless signed by Landlord or Landlord's authorized
agent; (ii) any such waiver shall not relieve such tenant from the obligation
to comply with such rule or regulation in the future unless expressly
consented to by Landlord, and (iii) no waiver granted to any tenant shall
relieve any other tenant from the obligation of complying with the foregoing
rules and regulations unless such other tenant has received a similar waiver
in writing from Landlord.
1. The sidewalks, walks, plaza entries, corridors, concourses, ramps,
staircases, escalators, and elevators of the Project shall not be
obstructed or used by Tenant, or the employees, agents, servants,
visitors or licensees of Tenant 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
prior written 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 upon having
been scheduled in advance. Any hand trucks, carryalls, or similar
equipment 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 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
the Tenant. The time, routing, and manner of moving of safes or other
heavy equipment shall be subject to prior approval by Landlord.
<PAGE>
4. Only persons authorized by Landlord will be permitted to furnish
newspaper, ice, drinking water, towels, barbering, shoe shining,
janitorial services, floor polishing, and other similar services and
concessions to Tenant, and only at hours and under regulations fixed
by Landlord. Tenant shall use no other method of heating or cooling
than that supplied by Landlord.
5. Tenant, or the employees, agents, servants, visitors or licensees of
Tenant shall not at any time or 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 by Tenant
which, in Landlord's opinion, tends to impair the reputation of the
Building of its desirability for offices, and upon written notice
from Landlord, Tenant will refrain from or discontinue such
advertising.
7. Tenant shall not place or cause or allow to be placed, any sign,
placard, picture, advertisement, notice or lettering whatsoever, in,
about or on the exterior of the Premises or the Building except in and
at such places as may be designated by Landlord and consented to by
Landlord in writing. Any such sign, placard, advertisement, picture,
notice or lettering so placed may be removed by Landlord without
notice to and at the expense of Tenant. All lettering and graphics on
corridor doors shall conform to the building standard prescribed by
Landlord. No trademark shall be displayed in any event.
8. Canvassing, soliciting or peddling in the Building is prohibited and
Tenant shall cooperate to prevent same.
9. Landlord shall have the right to exclude any person from the Building
other than during the customary business hours as set forth in the
Lease, and any person in the Building will be subject to
identification by employees and agents of Landlord. All persons in or
entering the Building shall be required to comply with the security
policies of the Building. 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. Tenant shall keep doors to
unattended areas locked and shall otherwise exercise reasonable
precautions to protect property from theft, loss or damage of any
property or for any error with
2
<PAGE>
regard to the exclusion from or admission to the Building of any
person. In the case of invasion, mob, riot or public excitement, the
Landlord reserves the right to prevent access to the Building during
the continuance of same by closing the doors or taking other measures
for the safety of the tenants and protection of the Building and
property of persons therein.
10. Only workmen employed, designated or approved by Landlord may be
employed for repairs, installations, alterations, painting, material
moving, and other similar work that may be done in or on the Premises.
11. Tenant shall not do any cooking or conduct any restaurant,
luncheonette, automat or cafeteria for the sale or service of food or
beverage on the Premises, except by such persons delivering the same
as shall be approved by Landlord and only under regulations fixed by
Landlord. Tenant may, however, operate a coffee bar by and for its
employees.
12. Tenant shall not bring or permit to be brought or kept in or on the
Premises or the Building any inflammable, combustible, corrosive,
caustic, poisonous or explosive substance, or cause or permit any
odors to permeate in or emanate from the Premises, or permit or
suffer the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by
reason of light, radiation, magnetism, noise, odors and/or
vibrations, or interfere in any way with other tenants or those
having business in the Building.
13. Tenant shall not mark, paint, drill into, or in any way deface any
part of the Building or the Premises. No boring, driving of nails or
screws, cutting or stringing or wires shall be permitted, except with
the prior written consent of Landlord, and as Landlord may direct.
Tenant shall not install any resilient tile or similar floor covering
in the Premises except with the prior approval of Landlord. The use
of cement or other similar adhesive material is expressly prohibited.
14. No additional locks or bolts of any kind shall be place on any door
in the project or the Premises and no lock on any door therein shall
be changed or altered in any respect. Landlord shall furnish two keys
for each lock on exterior floors to the Premises and shall, on
Tenant's request and at Tenant's expense, provide additional
duplicate keys. Tenant shall not duplicate keys. All keys shall be
returned to Landlord the explanations of the combinations of all
safes, vaults, and combination locks remaining with the Premises.
Landlord may at all times
3
<PAGE>
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 theft,
unauthorized solicitation or accident in the Premises or in the
Building or of defects therein or in any fixtures or equipment, or of
known emergency in the Building.
16. Tenant shall not use the Premises or permit the Premises to be used
for photographic, multilith or multigraph reproductions, except in
connection with its own business and not as a service for others
without Landlord's prior permission.
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 labor union office, 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 such laborers at a location in the Premises.
19. The requirements of Tenant will be attended to only upon application
at the office of Landlord in the Building or at such other address as
may be designated by Landlord in the Lease. Employees of Landlord
shall not perform any work or do anything outside of their regular
duties, unless under special instructions from the office of Landlord.
20. 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
and electrical equipment belonging to Tenant which cause noise,
vibrations, electrical or magnetic interference, or any other
nuisance that may be transmitted to the structure or other portion
portions of the Building or to the Premises to such a degree as to be
objectionable 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, spring type or other
vibration eliminators sufficient to eliminate noise or vibration.
4
<PAGE>
21. No awnings, draperies, shutters or other interior or exterior window
coverings that are visible from the exterior of the Building or from
the exterior of the Premises within the Building may be installed by
Tenant.
22. 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.
23. 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.
24. Tenant shall at all times keep the Premises neat and orderly.
25. All request for overtime air conditioning or heating must be
submitted to the Management office by no later than 2:00 p.m. on the
last prior business day.
26. The toilet rooms, urinals, wash bowls, and other apparatus shall not
be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be
thrown therein and the expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the
Tenant who or whose employees or invitees shall have caused it.
27. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act
in violation of any of the Rules and Regulation of the Building.
28. No tenant parking is allowed in the visitors parking area. This area
is strictly monitored by building personnel and violators will be
towed at owners expense.
5
<PAGE>
EXHIBIT E
DECLARATION OF COMMENCEMENT DATE
THIS DECLARATION is hereby attached to and made a part of the Lease
dated the ______ day of _____________________, 19___, entered into by and
between _______________________________________________________________, as
Landlord, and __________________________________________, as Tenant. All
terms used in this Declaration have the same meaning as they have in the
Lease.
(i) Landlord and Tenant do hereby declare that possession of the
Premises was accepted by Tenant on the __________ day of _______________,
19____;
(ii) As of the date hereof, the Lease is in full force and effect, and
Landlord has fulfilled all of its obligations under the Lease required to be
fulfilled by Landlord on or prior to said date;
(iii) The Commencement Date is hereby established to be
________________; and
(iv) The Expiration Date is hereby established to be
______________________, unless the Lease is sooner terminated pursuant to any
provision thereof.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Exhibit as of
the ______________ day of _____________________________, 19_____.
ATTEST/WITNESS: LANDLORD:
_________________________
__________________________________ By:________________________________[SEAL]
ATTEST/WITNESS: TENANT:
___________________________________
___________________________________
__________________________________ By:________________________________[SEAL]
Name:____________________________________
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (this "First Amendment") dated as of June 15,
1998, is made and entered into by and between E&M REALTY HOLDING COMPANY,
a Delaware corporation ("Lessor") and IMTEK, a Maryland corporation
("Lessee").
RECITALS
A. By Lease dated as of December 30, 1997 (the "Lease"), Lessor leased
to Lessee and Lessee leased from Lessor certain office space located on the
10th floor of the Building (as hereinafter defined), consisting of
approximately 1,801 square feet of rentable area and known as Suite 1050 (the
"Original Premises"), and being located in the City of Richmond, Virginia, in
the building known as the Eighth and Main Building (the "Building"), with an
address of 707 East Main Street, Richmond, Virginia 23219.
B. Lessor and Lessee have agreed that Lessor shall lease to Lessee and
Lessee shall let from Lessor an additional 1,235 square feet of rentable area
located adjacent to the Original Premises (the "Additional Space") upon the
terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lessor and Lessee agree as follows:
1. Capitalized terms used herein, which are not otherwise defined
herein, shall have the same meanings attributed to them in the Lease.
2. Commencing on June 15, 1998 (the "Effective Date"), Lessor shall
lease to Lessee and Lessee shall let from Lessor the Additional Space upon
the terms and conditions hereinafter set forth. For purposes of this First
Amendment and Lease, from and after the Effective Date, the term "Premises"
shall mean the Original Premises and the Additional Space.
3. Lessor and Lessee acknowledge and agree that the Additional Space is
being leased to Lessee in its present "AS IS" condition, and Lessor and
Lessee further acknowledge and agree that Lessor shall have no obligations to
make any improvements to the Additional Space.
4. Commencing on July 1, 1998, monthly installments of Base Rent
payable under the Lease for the Premises shall be $3,795.00. For the period
June 15, 1998 through June 30, 1998, Lessee shall pay to Lessor, in addition
to the Base Rent previously paid for the Original Premises, an additional
$823.33.
5. Lessor and Lessee acknowledge and agree that Lessee shall have no
right to extend the Term of this Lease beyond the Expiration Date. <PAGE>
6. Except as expressly amended herein, the provisions of the Lease are
hereby ratified and reconfirmed and shall remain in full force and effect in
all respects.
7. This First Amendment shall be construed and governed by the
applicable laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, Lessor and Lessee have caused this First Amendment
to Lease to be executed as of the day and year first above written.
LESSOR:
E&M REALTY HOLDING COMPANY
By: David Chen
-----------
David Chen
Title: Vice President
--------------
Lessee:
IMTEK
By: Michael L. Lowe
----------------
Michael L. Lowe
Title: President
----------
<PAGE>
SUBLEASE
1. PARTIES - This Sublease dated December 15, 1997 is made between Legal
America of Virginia, Ltd., ("Sublessor"), and Imtek Corporation,
("Sublessee").
2. MASTER LEASE - Sublessor is the Tenant under a written lease dated June
30, 1997 wherein ("Landlord") leases to Sublessor the real property located
in the city of Richmond, Virginia described as 20 North Eighth Street,
Richmond, Virginia ("Premises"). Said lease has been amended by the following
amendments:
N/A
---
said lease and amendments are herein collectively referred to as the "master
Lease" and are attached hereto as Exhibit "A" which is the lease.
3. PREMISES - Sublessor hereby subleases to Sublessee on the terms and
conditions set forth in this Sublease the Premises.
4. WARRANTY BY SUBLESSOR - Sublessor warrants and represents to Sublessee
that the Master Lease has not been amended or modified except as expressly
set forth herein, that Sublessor is not now, and as of the commencement of
the Term will not be, in default or breach of any of the provisions of the
Master Lease, and that the Sublessor has no knowledge of any claim by
Landlord that Sublessor is in default or breach of any of the provisions of
the Master Lease.
5. TERM - The Term of this Sublease shall commence as of December 1, 1997
("Commencement Date"), or when Landlord consents to this Sublease (if such
consent is required under the Master Lease), whichever shall last occur, and
end on July 31, 2000 ("Termination Date"), unless otherwise sooner terminated
in accordance with the provisions of this Sublease. In the event the Term
commences on a date other than the Commencement Date, Sublessee shall execute
a non-recordable memorandum setting forth the actual date of commencement of
the Term. Possession of the Premises ("Possession") shall be delivered to
Sublessee on the commencement of the Term. If for any reason Sublessor does
not deliver Possession to Sublessee on the commencement of the Term,
Sublessor shall not be subject to any liability for such failure, the
Termination Date shall not be extended by the delay, and the validity of this
Sublease shall not be impaired but rent shall abate until delivery of
Possession. Notwithstanding the foregoing, if Sublessor has not delivered
Possession to Sublessee within thirty (30) days after the Commencement Date,
then at any time thereafter and before delivery of Possession, Sublessee may
give written notice to Sublessor of Sublessee's intention to cancel this
Sublease. Said notice shall set forth an effective date for such cancellation
which shall be at least ten (10) days after delivery of said notice to
Sublessor. If Sublessor delivers Possession to Sublessee on or before such
effective date, this Sublease shall remain in full force and effect. If
Sublessor fails to deliver Possession to Sublessee on or before such
effective date, this Sublease shall be cancelled, in which case all
consideration previously paid by Sublessee to Sublessor on account of this
Sublease shall be returned to Sublessee, this Sublease shall thereafter be of
no further force or effect, and Sublessor shall have no further liability to
Sublessee on account of such delay or cancellation. If Sublessor permits
Sublessee to take Possession prior to the commencement of the Term, such
early Possession shall not advance the Termination Date and shall be subject
to the provisions of this Sublease, including without limitation the payment
of rent.
6. RENT - 6.1 Minimum Rent. Sublessee shall pay to Sublessor as minimum rent,
without deduction, setoff, notice or demand at 1044 Main Street, Kansas City,
Missouri 64105 or at such other place Sublessor shall designate from time to
time by notice to Sublessee, the sum of (**) per month starting on December
1, 1997 in advance on the first day of each month of the term. Sublessee
shall pay to Sublessor upon execution of this Sublease the sum of $0 as a
security deposit. If the term begins or ends on a day of a month, the rent
for the partial months shall be prorated on a per diem basis.
**Months 5-12 $2,750.00; Months 13-24 $2,975.00; Months 25-36 $3,237.50
<PAGE>
7. USE OF PREMISES - The Premises shall be used and occupied only for general
office use and for no other use or purpose.
8. ASSIGNMENT AND SUBLETTING - Sublessee shall not assign the Sublease or
further sublet all or any part of the Premises without the prior written
consent of Sublessor (and the consent of Landlord, if such is required under
the terms of the Master Lease).
9. OTHER PROVISIONS OF SUBLEASE - All applicable terms and conditions of the
Master Lease are incorporated into and made a part of this Sublease as if
Sublessor were the Landlord thereunder, and the Sublessee the Tenant
thereunder, and the Premises the Master Premises. Sublessee, assumes and
agrees to perform the Tenant's obligations under the Master Lease during the
Term to the extent that such obligations are applicable to the Premises,
except that the obligation to pay rent to the Landlord under the Master Lease
shall be considered performed by Sublessee to the extent and in the amount of
rent as paid to Sublessor in accordance with Section 6 of this Sublease.
Sublessee shall not commit or suffer any act or omission that will violate
any of the provisions of the Master Lease. Sublessor shall exercise due
diligence in attempting to cause Landlord to perform its obligations under the
Master Lease for the benefit of the Sublessee. If the Master Lease
terminates, this Sublease shall terminate and the parties shall be relieved
of any further liability or obligation under this Sublease, provided however,
that if the Master Lease terminates as a result of a default or breach by
Sublessor or sublessee under this Sublease and/or the Master Lease, then the
defaulting party shall be liable to the non-defaulting party for the damages,
costs and expenses, including attorney's fees, suffered as a result of such
termination. Notwithstanding the foregoing, if the Master Lease gives
Sublessor any right to terminate the Master Lease in the event of the partial
or total damage, destruction, or condemnation of the Master Premises or the
building or project of which the Master Premises are a part, the exercise of
such right by Sublessor shall not constitute a default of breach hereunder.
10. ATTORNEY'S FEES - If Sublessor, Sublessee, shall commence an action
against the other arising out of or in connection with this Sublease, the
prevailing party shall be entitled to recover its costs of suit and
reasonable attorney's fees.
11. NOTICES - All notices and demands which may or are to be required or
permitted to be given by either party on the other hereunder shall be in
writing. All notices and demands by the Sublessor and Sublessee shall be sent
through the United STates Mail, postage prepaid, addressed to the Sublessee at
the Premises, and to the address hereinbelow, or to such other place as
Sublessee may from time to time designate in a notice to Sublessor. All
notices and demands by the Sublessee to Sublessor shall be sent by United
States Mail, postage prepaid, addressed to Sublessor at the address set forth
herein, and to such other person or place as the Sublessor may from time to
time designate in a notice to the Sublessee.
To Sublessor: Legal America of Virginia, Ltd., 1044 Main Street, Suite 800,
Kansas City, Missouri 64105
To Sublessee: Imtek Corporation, 20 N. Eighth Street, Richmond, Virginia 23219
12. CONSENT BY LESSON - THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT
UNLESS CONSENTED TO BY LANDLORD WITHIN 10 DAYS AFTER EXECUTION HEREOF, IF
SUCH CONSENT IS REQUIRED UNDER THE TERMS OF THE MASTER LEASE.
Date: 12/16/97 Date: 12/19/97
----------------- -------------------
Sublessor: Legal America of VA, Ltd. Sublesee: Imtek Corporation
By: /s/ Mark Curry, CEO By: /s/ Michael L. Lowe
------------------------------- ----------------------------
By: Mark Curry By: Michael L. Lowe
Title: CEO Title: President, CEO
<PAGE>
LESSOR'S CONSENT TO SUBLEASE
The undersigned ("Landlord") landlord under the Master Lease, hereby consents
to the foregoing Sublease without waiver of any restriction in the Master
Lease concerning further assignment or subletting. Landlord certifies that,
as of the date of Landlord's execution hereof Sublessor is not in default of
any of the provisions of the Master Lease, and that the Master Lease has not
been amended or modified except as expressly set forth in the foregoing
Sublease.
Date:
-----------------------
Pied Ventures, LLC
By:
-------------------------
Title:
<PAGE>
Exhibit 10.6.8
OFFICE
Lease Agreement
COMMONWEALTH OF VIRGINIA
CITY OF RICHMOND
THIS LEASE AGREEMENT is made and entered into this 30th day of June, 1997,
by and between the Lessor and Lessee hereinafter named.
Definitions The following definitions and basic provisions shall be
and Basic construed in conjunction with and limited by the references
Provisions thereto in other provisions of this Lease:
(a) "Lessor": PIED VENTURES, LLC
(b) "Lessee": LEGAL AMERICA OF VIRGINIA, LTD
(c) "Demised Premises": approximately 4,200 rentable
square feet on Floor 1ST AND 2ND, in the building located
at 20 NORTH 8TH STREET, RICHMOND, VIRGINIA such premises
being shown and outlined on the plan attached hereto as
Exhibit "A".
(d) "Lease Term": a period of 36 months commencing on
AUGUST 1, 1997 and ending on JULY 31, 2000.
(e) "Basic Rental": See attached Rider No. One (1)
attached hereto and made a part hereof. Rental payments
are due in advance, on the first day of each calendar
month of the Lease year, during the Lease Term. All rental
payments shall be paid to the order of SPOTTS AND CARNEAL,
INC. (Agent of Lessor) without notice, offset, reduction
or abatement subject to adjustment as set forth in this
Lease.
If the term shall commence upon a day other than the first day of a calendar
month, then Lessee shall pay, upon the commencement day of the term, the
fixed monthly rent described in the foregoing clause(e). At the commencement
of the second month of the term, Lessee shall pay the fixed monthly rent
described in the aforementioned clause (e) prorated on a per diem basis with
respect to the preceding fractional calendar month. All rental payments
thereafter will be for a full calendar month and will be in the amount as
specified in clause (e) above.
(f) "Prepaid Rental": $2,750.00 first month of the Lease
Term.
(g) This article has been intentionally omitted.
(h) "Permitted Use": For the general office use of
LEGAL AMERICA OF VIRGINIA, LTD.
(i) Rider(s) consisting of ONE (1) page(s) attached hereto
and made a part hereof.
Granting In consideration of the obligation of Lessee to pay rent
Clause as herein provided and in consideration of the other
terms, covenants and conditions hereof. Lessor hereby
demises and leases to Lessee, and Lessee hereby takes from
Lessor, the Demised Premises to have and to hold the same
for the Lease Term specified herein, unless sooner
terminated pursuant to any provision herein, all upon the
terms and conditions set forth in this Lease.
Improvements Lessor agrees, at its sole cost and expense, to furnish and
by Lessor install all the work as is listed on Exhibit "C", attached
hereto and made a part hereof, said work being known as
"Building Standard Work".
The Demised Premises shall be deemed "ready for occupancy"
when Lessor's construction is substantially completed. In
the event of any dispute as to when Lessor's construction
has been substantially completed as a aforesaid, the
determination of Lessor's architect shall be final and
binding upon the parties. Lessor will give Lessee ten (10)
days advance written notice of when Lessor expects the
Demised Premises to be ready for occupancy, and the Lease
Term and the Lessee's liability for the payment of rent
shall commence upon the date specified, in such written
notice, or upon the date Lessee takes possession and
occupies the Demised Premises, whichever occurs earlier.
It is understood and agreed that Lessee may require work
(hereinafter referred to as "Building Non-Standard Work")
in addition to the Building Standard Work. In such event,
it is specifically understood that the Lessee shall bear
the expense of constructing the "Building Non-Standard
Work", said work to be done only by Lessor or Lessor's
contractor in accordance with the plans to be agreed upon
by Lessor and Lessee and to be attached hereto and made a
part hereof. Any such work to be paid for by Lessee shall
be paid one-half upon approval of plans for said work,
with the balance to be paid prior to occupancy by Lessee.
This Lease is conditioned upon faithful performance by
Lessee of the following agreements, covenants, rules and
regulations, herein set out and agreed to by Lessee.
Payments 1. (A) To pay all rents and sums provided to be paid by
Lessee hereunder at the times and in the manner herein
provided. The obligation of Lessee to pay Basic Rental
is an independent covenant, and no act or circumstance
whether constituting breach of covenant by Lessor or
not, shall release Lessee of the obligation to pay rent.
(B) Any amount due from Lessee to Lessor hereunder
which is not paid when due shall bear interest at the
rate of twelve (12%) percent per annum from the due
date until paid, unless otherwise specifically
provided herein, but the payment of such interest
shall not excuse or cure any default by Lessee under
this Lease. In addition to such interest, if the
monthly rental provided herein is not paid
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within ten (10) days after the same is due, a late
charge equal to ten percent (10%) of the amount
overdue or Two Hundred Dollars ($200.00), whichever
is greater, which late charge Lessee hereby agrees is
a reasonable estimate of the damages. Lessor shall
suffer as a result of Lessee's late payment, which
damages include Lessor's additional administrative
and other costs associated with such late payment and
the parties agree that it would be impracticable or
extremely difficult to fix Lessor's actual damage in
such event. Such interest and late payment penalties
are separate and cumulative and are in addition to
and shall not be diminish or represent a substitute
for any or all of Lessor's rights or remedies under
any other provision of this Lease.
Repairs 2. Lessee will, at Lessee's own cost and expense, keep the
Demised Premises and all other improvements by Lessee to
the extent covered by this Lease in sound condition and
good repair, and shall repair or replace any damage or
injury done to the building or any part thereof by Lessee
or Lessee's agents, employees, invitees and visitors, and
if Lessee fails to make such repair or replacements
promptly, or within fifteen (15) days of occurrence, and
to the satisfaction of Lessor, Lessor may at its option
make such repair or replacement, and Lessee shall repay
the cost thereof to Lessor on demand. Lessee waives all
right to make repairs at the expense of Lessor, or to
deduct the cost thereof from the rent. Lessee will not
commit or allow any waste or damage to be committed to any
portion of the Demised Premises, and shall at the
termination of this Lease by lapse of time or otherwise,
deliver up said premises to Lessor in as good condition as
at date of possession, ordinary wear and tear expected,
and upon such termination of this Lease, Lessor shall have
the right to re-enter and resume possession of the Demised
Premises.
Assignment 3. Lessee will not sell, mortgage, transfer, or assign
this Lease, or allow same to be assigned by operation of
law or otherwise, or sublet the Demised Premises, or any
part thereof, or use or permit same to be used for any
other purpose that stated in the use clause hereof without
the written consent of Lessor, which such consent will not
be unreasonably withheld. Notwithstanding the foregoing,
in the event the Lessee desires to assign or sublet the
Demised Premises, Lessee shall provide Lessor with not
less than one hundred twenty (120) days written notice of
Lessee's request, specifying in detail any and all terms
of such assignment or sublease. Lessor reserves the right
to cancel and terminate the Lease within thirty (30) days
upon receipt of such notice from Lessee of its request to
assign or sublet the Demised Premises. In the event Lessor
consents to an assignment or sublease of the Demised
Premises, which assignment or sublease results in rental
payments in excess of the monthly payments due and owing
under the terms of this Lease Agreement, such excess
rental payments shall be deemed to be rental payments due
and owing Lessor. Any sale, hypothecation, transfer,
assignment or subletting which is not in compliance with
the provisions of this Article shall be voidable by Lessor
and shall, at the option of the Lessor, constitute a
default under this Lease. Lessor's acceptance of rent
directly from any subtenant, assignee or other transferee
shall not be construed as Lessor's approval or consent
thereto nor Lessor's agreement to accept the attornment of
any subtenant in the even of any termination of this
Lease. In no event shall Lessor's consent to an assignment
or subletting be construed as (i) relieving Lessee from
the obligation to obtain Lessor's express written consent
to any further assignment or subletting or (ii) releasing
Lessee from any liability or obligation hereunder whether
or not then accrued, and Lessee shall continue to be
fully, jointly and severally liable hereunder. As a
further condition to Lessor's consent to any subleasing,
assignment or other transfer of part or all of Lessee's
interest in the Premises (i) Lessee shall be required to
pay Lessor's attorney's fees and other costs incurred in
connection with the review and execution thereof, (ii) any
sublessee of part or all of Lessee's interest in the
Premises shall agree that in the event Lessor gives such
sublessee notice that Lessee is in default under this
Lease, such sublessee shall thereafter make all sublease
or other payments directly to Lessor, which payments will
be received by Lessor without any liability whether to
honor the sublease or otherwise (except to credit such
payments against sums due under this Lease), and such
sublessee shall agree to attorn to Lessor, or its
successors and assigns, at its request should this Lease
be terminated for any reason, except that in no event
shall Lessor or its successors or assigns be obligated to
accept such attornment; and (iii) Lessor may require that
Lessee not then be in default under this Lease in any
respect. In the event that Lessee files any type of
petition in bankruptcy or has same filed against it and
Lessor does not elect to terminate this Lease or is deemed
to have waived its rights to terminate this Lease, and in
the event that the trustee or receiver appointed by the
bankruptcy court attempts to assume this Lease and
thereupon assign it to a third party, then Lessor shall
have the right to terminate this Lease within thirty (30)
days upon gaining knowledge of such attempted assumption
and assignment, or upon being given written notice of same
by Lessee, whichever is later.
Alterations 4. Lessee will not make or allow to be made any
alternations, additions and improvements including but not
limited to painting in or to the Demised Premises without
written consent of Lessor before performance; such consent
will not be unreasonably withheld, but Lessor may impose,
as a condition of such consent, such requirements as
Lessor in its sole discretion may deem reasonable or
desirable, including, without limiting the generality of
the foregoing, requirements as to the manner in which, the
time or times at which, and the contractor by whom such
work shall be done as well as requiring Lessee to provide
a completion bond. Such alterations, additions, or
improvements when made to the Demised Premises by Lessee
shall be surrendered to Lessor and become the property of
Lessor upon termination in any manner of this Lease, but
this clause shall not apply to movable non-attached
fixtures of Lessee, provided, however, if prior to
termination of this Lease, or within fifteen (15) days
thereafter, Lessor so directs by written notice to
Lessee. Lessee shall promptly remove such alterations,
additions, or improvements, which were placed in or on the
Demised Premises by Lessee and which are designated in
said notice and shall repair any damage occasioned by
such removal and in default thereof lessor may effect said
removals and repairs at Lessee's expense. All work with
respect to alterations, additions, and improvements must
be done in a good and workmanlike manner and diligently
prosecuted to completion to the end that the improvements
on the Demised Premises shall at all times be a complete
unit except during the period of work. Any such
alterations, additions and improvements shall be performed
and done strictly in accordance with the laws and
ordinances relating thereto, and with the requirements of
all carriers of insurance on the Demised Premises and the
Board of Underwriters, Fire Rating Bureau, or similar
organization. Lessee shall obtain at its sole cost and
expense all required licenses and permits. In performing
the work of any such alterations, additions or
improvements, Lessee shall have the work in such a manner
so as not to obstruct the access to the Building of any
other tenant. Before commencing any such work or
construction in or about the Demised Premises, Lessee
shall notify Lessor in writing of the expected date of
commencement thereof. Lessor shall have the right to any
time and from time to time post and maintain on the
Demised Premises such notices as Lessor deems necessary to
protect the Demised Premises and Lessor from the liens of
mechanic.
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laborers, materialmen, suppliers, or vendors. If any
mechanics lien is filed against the Demised Premises or
the real estate of which the Demised Premises form a part
which lien concerns the Lessee and/or the Demised Premises.
Lessee shall cause same to be discharged within ten (10)
days after the lien is filed by the Lessee paying or
bonding over said lien.
(a) The Lessee has no authority to and shall create any
liens for labor on or against the Office Building or any
interest therein. The Lessee agrees to notify any
materialman, supplier, contractor, mechanic, or laborer
involved with work on the Demised Premises at the Lessee's
request that he must look only to the Lessee or the
Lessee's other property interests. All materialmen,
suppliers, contractors, mechanics and laborers may be put
on notice of this Section by the recordation at the
Lessor's option of a memorandum of this Office Lease in
the City of Richmond Public Record and the Lessee shall
promptly execute and acknowledge such a memorandum if
requested to do so by the Lessor. The Lessee shall require
from any and all materialmen, suppliers, contractors,
mechanics, laborers and subcontractors that they deliver
to it duly executed waivers of lien with respect to the
Lessor's interest prior to the commencement of any work
thereon in the Demised Premises.
(b) Notwithstanding the foregoing, if by reason of any
construction, alteration repair, labor performed, or
materials furnished to the Demised Premises for or on
behalf of the Lessee, any mechanic's or other lien shall
be filed, claimed, perfected or otherwise established or
as provided by laws against the Property, the Lessee shall
discharge or remove the lien by bonding or otherwise
within fifteen (15) days after the Lessee receives notice
of the filing of same. Nothing contained herein shall
authorize the Lessee to create any liens for labor or
materials on or about the Lessor's interest in the Office
Building, the Demised Premises or any portion thereof.
Legal Uses 5. Lessee will not occupy or use, not permit any portion
and Violations of the Demised Premises to be occupied or used for any
of Insurance business or purposes which is unlawful in part or in whole
Coverage or deemed to be disreputable in any manner, or extra
hazardous on account of fire, obstruct or interfere with
the rights of other tenants or occupants of the Building
or injure or annoy them, or permit anything to be done
which will in any way increase the rate of fire insurance
or liability insurance on the building or contents, and in
the event that, by reason of acts of Lessee, there shall be
any increase in rate of such insurance on the building or
contents created by Lessee's acts or conduct of business,
then Lessee hereby agrees to pay such increase.
Business machines and mechanical equipment belonging to
Lessee which cause noise or vibration that may be
transmitted to the structure of the building or any space
therein to such a degree as to be objectionable to Lessor
or any tenant in the building shall be installed and
maintained by Lessee, at Lessee's expense, on vibration
eliminators or other devices sufficient to eliminate such
noise and vibration.
Lessee shall not install any equipment or lights which
generate undue amounts of heat or any high-power usage
equipment without the written consent of Lessor. If Lessor
has given its written consent Lessee shall advance on the
first day of each month during the Term, the reasonable
amount estimated by Lessor as the cost of furnishing
electricity for the operation of any such heat generating or
high-power usage equipment so installed and the costs
(including costs of installation, operation and
maintenance) of any supplementary air conditioning
necessitated thereby. Further, Lessor may install and
operate, at Lessee's cost, a monitoring/metering system in
the Premises to measure the added demands on electricity,
heating, ventilation, and air conditioning system
resulting from Lessee's heat generating and high-power
equipment usage and after-hours service requirements.
The Lessee shall use the Demised Premises solely for the
purpose specified in the Basic Lease Information. In
addition, the Lessee shall conduct business in and from
the Demised premises solely under the trade name specified
in the Basic Lease Information. The Lessee shall, at its
expenses, procure any and all governmental licenses and
permits, including without limitation sign permits,
required for the conduct of the Lessee's business on the
Demised Premises and shall, at all times comply with the
requirements of each such license and permit. The Lessor
is not required, and does not represent or warrant that it
will obtain or endeavor to obtain for the Lessee (or the
Lessee will be able to obtain) any license or permit. The
Lessee covenants and agrees that from and after the date
when the Lessee opens the Demised Premises for business
to the public, the Lessee shall continuously operates its
business within the Demised Premises in accordance with
the terms and conditions of this Office Lease, including
without limitation the provision of this Article 5, and
will keep the Demised Premises open for business to the
public as the Lessor may uniformly with other tenants
require from time to time.
Lessee acknowledge and understands that the proper tenant
mix of the Office building is essential to the successful
operation of the Office Building and that the restriction
against the unauthorized use of the premises is not
intended to act as a restraint of trade but to protect and
insure the correct tenant mix.
Laws and 6. Lessee will maintain the Demised Premises in a clean
Regulations and helpful condition and comply with all laws, ordinance,
orders, rules, and regulations (state, federal, municipal,
and other agencies or bodies having an jurisdiction
thereof with references to conditions or occupancy of the
Demised Premises.
Hazardous Waste. The term "Hazardous Substances," as used
in this lease shall mean pollutants, contaminants, toxic
or hazardous wastes, or any other substances, the removal
of which is required in the use of which restricted,
prohibited or penalized by any "Environmental Law," which
term shall mean any federal, state, local law or ordinance
relating to pollution or protection of the environment.
Lessee hereby agrees that (1) No activity will be
conducted on the premises that will produce any Hazardous
Substances, except for such activities that are part of the
ordinary course of Lessee's business activities (the
"Permitted Activities"), provided said Permitted
Activities are conducted in accordance with all
Environment Laws and Lessor has been notified in advance
in writing by Lessee: (ii) the premises will not be used
in any manner for the storage of any Hazardous Substances
except for the temporary storage of such materials that
are used in the ordinary course of Lessor's business (the
"Permitted Materials") provided such Permitted Materials
are properly stored in a manner and location meeting all
Environmental Laws and approved in advance in writing by
Lessor: (iii) no portion of the premises will be used as a
landfill or a dump: (iv) Lessee will not install any
underground tanks of any type: (v) Lessee will not allow
any surface of subsurface conditions to exist or come into
existence that constitute the
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constitute, or with the passage of time may constitute a
public or private nuisance; (vi) Lessee will not permit
any Hazardous Substances to be brought onto the premises,
except for the Permitted Materials described above, and if
so brought or found located thereon, the same shall be
immediately removed, with proper disposal, and all
required cleanup procedures shall be diligently undertaken
pursuant to all Environmental Laws. If at any time during
or after the term of the lease, the premises are found to
be so contaminated or subject to said conditions. Lessee
agrees to indemnify and hold Lessor harmless from all
claims, demands, actions, liabilities, costs, expenses
damages and obligations of any nature arising from or as a
result of the use of the premises by Lessee. The foregoing
indemnification shall survive the termination or
expiration of this Lease.
Indemnity. 7. By moving into the Demised Premises or taking
Liability and possession thereof, lease accepts the Demised Premises as
Loss or Damages suitable for the purpose for which the same are leased
and accepts the building an each and every appurtenance
thereof, and Lessee by said acts waives any and all
defects therein. Lessor shall be not liable to Lessee or
Lessee's agents, employees, guests, invitees or to any
person claiming by, through or under Lessee for any injury
to person, lost or damage to property damage arising from
or out of any occurrence in, upon, at or from the Demised
Premises or the occupancy or use by Lessee of the Demised
Premises or any part thereof, if occasioned wholly or in
part by any action or omission of Lessee, its agents,
contractors, employees, servants, invitees, or licenses.
If any action shall be commenced by or against Lessee, the
Lessee shall protect and hold Lessor harmless and shall
pay all costs, expenses, and attorney's fees.
Building 8. Lessee and Lessee's agents, employees, and invitees
Rules and will comply fully with all requirements of the Building
Regulations Rules and Regulations which are attached as Exhibit "B"
and made a part hereof as though fully set out herein.
Lessor shall at all times have the right to change such
Rules and Regulations or to amend them in such reasonable
manner as may be deemed advisable for the safety, care and
cleanliness of the premises and for the preservation of
good order therein, all of which Rules an Regulations,
changes and amendments will be forwarded to Lessee in
writing and shall be carried out and observed by Lessee.
Entry for 9. Lessee will permit Lessor or owner, or their officers,
Repairs and agents, and representatives, the right to enter into and
Inspection upon all parts of the Demised premises, at all reasonable
hours to inspect same or clean or make repairs or
alterations or additions as Lessor may deem necessary, and
Lessee shall not be entitled to any abatement or reduction
of rent by reason thereof and Lessor shall not be liable
to Lessee for inconveniences to lessee's business when
effecting repairs. In the event of an emergency, Lessee
hereby grants the Lessor the right to enter the Demised
Premises at any time. In addition, Lessee shall permit
Lessor's agent and any other person authorized by the same
to enter the Demised Premises during the last twelve (12)
months of the Lease Term for the purpose of exhibiting the
Demised Premises to prospective lessees.
Nuisance 10. Lessee will conduct its business, and control its
agents, employees, invitees and visitors in such a manner
as not to create any nuisance, interface with, annoy, or
disturb other tenants or Lessor in the management of the
building.
Eminent 11. (A) If the whole of the Demised Premises shall be
Domain taken or condemned either permanently or temporarily
for any public or quasi-public use or purpose by any
competent authority in appropriation proceedings or
by any right of eminent domain or by agreement or
conveyance in lieu thereof (each being hereinafter
referred to as "condemnation"), this Office Lease
shall terminate as of the day possession shall be
taken such authority, and the Lessee shall pay Base
Rent, Overhead Rent and Additional Rent: perform all
of its other obligations under this Office Lease up
to date with a proportionate refund by the Lessor of
any Rent and Additional rent as shall have been paid
in advance for a period subsequent to the date of the
taking.
If less than all of the Demised Premises is taken by
condemnation, the Lessor and the Lessee shall each
have the right to terminate this Office lease upon
notice in writing to the other party within ninety
(90) days after possession is taken by such
condemnation. If this Office Lease is so terminated,
it shall terminate as of the day possession shall be
taken by such authority, and the Lessee shall pay
Rent and Additional rent up to that subsequent to the
date of the taking and, thereafter, the Rent and
Additional Rent shall be reduce in direct proportion
to the amount of Net Rentable Area of the Demised
Premises taken and the Lessor agrees, at the Lessor's
cost and expense, as soon as reasonable possible to
restore the Demised Premises on the land remaining to
a complete unit of similar quality and character as
existed prior to such appropriation or taking (to the
extent feasible); provided that the Lessor shall not
be required to expend more on such restoration than
an amount equal to the condemnation award received by
the Landlord (less all expenses, costs, legal fees
and court costs incurred by the Lessor in connection
with such award) multiplied by the Lessee's
Percentage Share as determined as of immediately
prior to the condemnation.
If any part of the Office Building is taken by
condemnation so as to render, in the Lessor's
judgement, the remainder unsuitable for use as an
office building, the Lessor shall have the right to
terminate this Office Lease upon notice in writin 
