FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 1, 1995
-----------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- --------------------
Commission File Number 0-17840
----------------------------------------------------
HANDEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2941704
- - -------------------------------- -----------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
500 Campus Drive, Morganville, New Jersey 07751
(Address of principal executive offices)
(Zip Code)
(908) 536-8500
(Registrant's telephone number, including area code)
----------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of shares of common stock outstanding at April 30, 1995 6,865,212
-----------
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 1, 1995 and December 31, 1994
April 1, December 31,
1995 1994
------- ------
Assets (unaudited)
--------
Current assets:
Cash and cash equivalents $ 742,492 2,895,478
Marketable securities 5,200,000 3,940,000
Accounts receivable, net 26,521,915 26,854,906
Inventories 420,615 298,326
Refundable income tax 340,473 388,682
Deferred income tax assets 600,066 609,668
Prepaid expenses and other 782,207 609,146
current assets ------------ ------------
Total current assets 34,607,768 35,596,206
Property, plant and equipment, net 9,222,608 8,736,608
Other non-current assets 1,533,658 1,665,793
Intangible assets 16,018,761 15,921,530
------------ -------------
$61,382,795 61,920,137
============ =============
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 1, 1995 and December 31, 1994
April 1, December 31,
1995 1994
------- -------
Liabilities and Stockholders' Equity (unaudited)
Current liabilities:
Current installments of long-term
obligations $ 245,489 579,991
Accounts payable 3,554,001 4,523,848
Accrued expenses 6,351,624 5,826,066
------------ ------------
Total current liabilities 10,151,114 10,929,905
Long-term obligations, excluding
current installments 431,640 464,357
Deferred income tax liability 888,810 888,516
Stockholders' equity:
Preferred stock, without par value,
2,000,000 shares authorized, no
shares issued -- --
Common stock, $.01 par value,
15,000,000 shares authorized;
issued 7,050,212 shares in
1995 and 1994 70,502 70,502
Additional paid-in capital 24,365,566 24,365,566
Retained earnings 26,773,288 26,499,416
Treasury stock at cost - 185,000
shares in 1995 and 1994 (1,298,125) (1,298,125)
------------- ------------
Total stockholders' equity 49,911,231 49,637,359
-------------- -------------
$ 61,382,795 61,920,137
=============== =============
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
Three Months ended April 1, 1995 and April 2, 1994
(Unaudited)
April 1, 1995 April 2,1994
------------ ------------
Total operating revenues $20,384,713 11,941,678
Subcontractor costs 3,383,874 2,135,625
----------- ------------
Net operating revenues 17,000,839 9,806,053
Cost of net operating revenues 10,780,296 6,576,337
------------- -----------
Gross profit 6,220,543 3,229,716
Selling, general and administrative expenses 5,705,083 3,325,404
------------- ------------
Operating income (loss) 515,460 (95,688)
Other income (expense):
Interest expense (22,972) (12)
Interest income 162,307 222,481
Other (192,570) (43,263)
------------- -------------
(53,235) 179,206
------------- -------------
Income before income taxes 462,225 83,518
Provision for income taxes 188,353 23,270
------------- ------------
Net income $ 273,872 60,248
============= =============
Net income per share $ .01 .04
============= ============
Weighted average number of shares outstanding 6,865,212 6,856,641
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three Months ended April 1, 1995 and April 2, 1994
(Unaudited)
1995 1994
----- ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 273,872 60,248
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 806,423 578,810
Gain on sale of equipment 117 (35,841)
Deferred income taxes 9,896 42,640
Cash provided (used) from the
change in:
Accounts receivable 332,991 (960,446)
Inventories (122,289) 24,266
Prepaid expenses and other
current assets (173,061) (225,122)
Refundable income tax 48,209 85,170
Other assets 130,213 (16,892)
Accounts payable (969,847) 203,463
Accrued expenses 525,558 (311,668)
------------ ------------
Net cash provided (used) by
operating activities 862,082 (555,372)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (3,000,000) (5,280,000)
Redemption of marketable securities 1,740,000 5,790,000
Additions to property, plant and
equipment (1,187,581) (572,398)
Excess of cost over net assets of
acquired company (200,268) --
------------- ------------
Net cash used in investing
activities (2,647,849) (62,398)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock -- 65,000
Proceeds from debt obligations 64,863 --
Principal payments on debt obligations (432,082) --
------------- ------------
Net cash (used) provided by
financing activities (367,219) 65,000
------------- ------------
Net decrease in cash and cash equivalents (2,152,986) (552,770)
Cash and cash equivalents at beginning
of period 2,895,478 882,823
------------- -----------
Cash and cash equivalents at end of
period $ 742,492 330,053
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash was paid for:
Interest $ 22,972 12
============= =============
Income taxes $ 130,248 165,823
============= =============
See accompanying notes to condensed consolidated financial statements.
HANDEX CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
For the Three Months Ended April 1, 1995 and April 2, 1994
Note 1 In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and
recurring in nature), necessary to present fairly the financial position
of the Company at April 1, 1995 and the results of operations for the
three month periods ended April 1, 1995 and April 2, 1994. The
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's annual report for the year
ended December 31, 1994.
Note 2 Certain items on the 1994 financial statements have been reclassified to
conform to the 1995 presentation.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
On August 15, 1994, a newly organized subsidiary of Handex Corporation
("Company"), New Horizons Education Corporation, acquired all of the issued and
outstanding shares of New Horizons Franchising, Inc. Simultaneously, a newly
organized subsidiary of New Horizons Education Corporation, acquired
substantially all of the assets of New Horizons Computer Learning Center, Inc.
As a result of these acquisitions, the Company now conducts two distinct lines
of business and will report its results in two segments, environmental and
educational. The acquisitions mark the Company's first step towards
diversification outside its core environmental business.
The discussion that follows, highlights the business conditions and certain
financial information specific to each of the two business segments.
ENVIRONMENTAL BUSINESS SEGMENT
Net operating revenues include fees for services provided directly by
Handex Environmental, Inc. ("Handex Environmental") and fees for arranging for
subcontractors' services, as well as proceeds from the rental and sale of
equipment. Handex Environmental, in the course of providing its services,
routinely subcontracts for outside services such as soil cartage, laboratory
testing and other specialized services. These costs are generally passed
through to clients and, in accordance with industry practice, are included in
total operating revenues. Because subcontractor services can change
significantly from project to project, changes in total operating revenues may
not be truly indicative of business trends. Accordingly, Handex Environmental
views net operating revenues, which is total operating revenues less the cost of
subcontractor services, as its primary measure of revenue growth.
Cost of net operating revenues includes professional salaries, other direct
labor, material purchases and certain direct and indirect overhead costs.
Selling, general and administrative expenses include management salaries, sales
and marketing salaries and expenses, and clerical and administrative overhead.
During 1994 and the first quarter of 1995, several trends continued to
develop which Handex Environmental believes will have a direct impact on its
future results of operations. Handex Environmental believes that expenses for
administration, computerization, marketing and engineering will continue to
increase as a result of the increasing desire of Handex Environmental's
customers for more detailed information concerning the status of their
environmental projects. Handex Environmental's marketing costs will continue to
increase due to the effects of increased competition in the environmental
industry and Handex Environmental's strategy to diversify its client base.
Handex Environmental's customers have become increasingly cost conscious
during recent periods in part due to their own financial constraints. To date,
this cost consciousness on the part of customers has manifested itself primarily
in three areas: (i) the manner in which Handex Environmental obtains its
business and charges for its services; (ii) the use of other contractors to
provide certain services traditionally provided by Handex Environmental; and
(iii) an increasing preference to purchase, rather than lease, remediation
equipment.
Over the last three years, Handex Environmental has experienced a
significant increase in customer demand for competitive bidding and/or fixed
price contracts. During 1994 and the first quarter of 1995, a majority of
Handex Environmental's work was performed under fixed price contracts and unit
prices. However, management believes that, over the long term, the quality and
cost effectiveness of its services will continue to be an important competitive
advantage. Accordingly, in responding to price competition, Handex
Environmental will attempt to maintain a high level of technical quality in its
services.
A majority of Handex Environmental's major customers now purchase directly
from other contractors equipment and certain services, such as laboratory
analyses, which were formerly provided by or through Handex Environmental as
part of its full service approach. Management believes that this trend will
continue.
Handex Environmental's quarterly results may fluctuate from period to
period. Among the principal factors influencing quarterly variations are
weather, which may limit the amount of time Handex Environmental's professional
and technical personnel have in the field; the addition of new professionals who
require training and initially bill a lower percentage of their time; the timing
of receipt of discharge and other permits necessary to install dewatering and
recovery systems, and the opening of new offices, which initially have higher
expenses relative to revenues than established offices.
In recent years, Handex Environmental's business has been helped
considerably by the cost reimbursement program maintained by the State of
Florida through the Florida Inland Protection Trust Fund. The Florida Inland
Protection Trust Fund has recently been revised by the Florida legislature to
require site prioritization and prior approval of costs by the Florida
Department of Environmental Protection for reimbursement of cleanup
expenditures. These revisions of the fund are intended to assure its economic
integrity. The Company's Florida operations accounted for over 22% and 24% of
total environmental revenues in fiscal years 1994 and 1993 and in the first
quarter of 1995 respectively. In the light of the size of the Company's
environmental operations in Florida, it is likely that such revisions will have
a material adverse effect on the Company's operating results in future periods.
EDUCATIONAL BUSINESS SEGMENT
The Company, through its newly organized subsidiary, New Horizons Education
Corporation ("New Horizons"), operates the educational segment of its business.
The education segment is comprised of two distinct businesses, one, which
operates wholly-owned training centers, and the other which, supplies systems of
instruction, and sales and management concepts concerning computer training to
independent franchisees.
Revenues for the training centers which are wholly-owned by New Horizons
consist primarily of training fees and fees derived from sales of courseware
materials. Cost of sales consists primarily of instructors' salaries and
benefits, facilities costs such as rent, utilities and classroom equipment,
courseware, and computer hardware, software and peripherals. Selling, general
and administrative expenses consist primarily of costs associated with technical
support personnel, facilities support personnel, scheduling personnel, training
personnel, accounting and finance support and sales executives.
Revenues for the franchising operation consist primarily of initial
franchise fees associated with the sale of a franchise, royalty and advertising
fees based on a percentage of franchisee gross training revenues, and percentage
royalties received on the gross sales of courseware. Cost of sales consists
primarily of costs associated with franchise support personnel who provide
system guidelines and advice on daily operating issues including sales,
marketing, instructor training and general business problems. Selling, general
and administrative expenses consist primarily of technical support, courseware
development, accounting and finance support, national account sales support, and
advertising expenses.
RESULTS OF OPERATIONS
NET OPERATING REVENUES
The Company's net operating revenues increased $7,195,000 or 73.4% for the first
quarter of 1995 compared to the same period in 1994. Net operating revenues of
$17,001,000 in the 1995 quarter included net operating revenues of $5,136,000
from New Horizons operations. New Horizons' operating revenues represent 30.2%
of the Company's net operating revenues and 52.4% of the percentage increase
over last year's net operating revenues. Handex Environmental's net operating
revenues of $11,865,000 reflect a continuation of increased demand for
environmental services that began in the second quarter of 1994, combined with
the Company's strategic and focused efforts in geographical expansion, expanded
market targets and personnel training. Handex Environmental's net operating
revenues increased $2,058,000 or 21.0% over last year's comparable period.
Handex Environmental's subsidiaries which were in operation prior to 1994
reported an aggregate revenue growth of 12.4% in the first quarter of 1995
compared to the 1994 quarter.
New Horizons, combined with Handex Environmental's subsidiaries which began
operations in 1995 and 1994, accounted for over 35% of the Company's net
operating revenues in the quarter.
The improvement in Handex Environmental's net operating revenues was achieved
despite customer deferrals of environmental work into future quarters.
COST OF NET OPERATING REVENUES
The Company's cost of net operating revenues in the 1995 quarter increased
$4,204,000 or 63.9% compared to the 1994 quarter. As a percentage of net
operating revenues, the Company's cost of net operating revenues declined to
63.4% in 1995 from 67.1% in 1994. New Horizons' cost of operating revenues for
the 1995 quarter amounted to $2,785,000 or 54.2% of its net operating revenues
and accounted for 42.4% of the percentage increase over 1994. Handex
Environmental's cost of net operating revenues, as a percentage of net operating
revenues increased slightly to 67.4% from 67.1% in 1994. The increase in Handex
Environmental's cost of net operating revenues, both in absolute dollars and as
a percentage of net operating revenues, was due mainly to the hiring of
additional employees and increases in the cost of materials and supplies
relative to a higher level of business.
GROSS PROFIT
The Company's gross profit in the 1995 quarter increased $2,991,000 or 92.6%
compared to the 1994 quarter. As a percentage of net operating revenues, the
Company's gross profit increased to 36.6% in 1995 from 32.9% in 1994. Gross
profit from New Horizons amounted to $2,351,000 or 45.8% of its net operating
revenues and accounted for 72.8% of the percentage increase over 1994. Handex
Environmental's gross profit, as a percentage of net operating revenues,
decreased slightly to 32.6% in 1995 from 32.9% in 1994. The decrease in Handex
Environmental's gross profit as a percentage of net operating revenues was due
primarily to the increased costs from the hiring of additional employees and
from purchases of materials and supplies consistent with the higher level of
revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company's selling, general and administrative expenses increased $2,380,000
or 71.6% in 1995 compared to 1994. As a percentage of net operating revenues,
selling, general, and administrative expenses decreased slightly to 33.6% in
1995 from 33.9% in 1994. New Horizons selling, general and administrative
expenses amounted to $1,988,000 or 38.7% of its net operating revenues and
accounted for 60% of the percentage increase over 1994. Handex Environmental's
selling, general and administrative expenses, as a
percentage of net operating revenues, decreased to 31.3% in 1995 from 33.9% in
1994. The decrease in Handex Environmental's selling, general and administrative
expenses, as a percentage of net operating revenues was due mainly to the higher
level of net operating revenues.
OTHER INCOME/EXPENSE
Interest expense for 1995 increased to $23,000 from $0 in 1994. The increase was
primarily due to interest expense on New Horizons' loan obligations. As a
percentage of net operating revenues, interest expense rose to .1% in 1995 from
0% in 1994.
Interest income for 1995 declined to $162,000 from $224,000 in 1994. As a
percentage of net operating revenues, interest income decreased to 1.0% in 1995
from 2.3% in 1994. The decline in interest income in absolute dollars and as a
percentage of net operating revenues, was due mainly to the lower tax-free
interest income earned as a result of using cash reserves to acquire New
Horizons in August 1994.
Other expenses in 1995 increased to $193,000 from $43,000 in 1994. As a
percentage of net operating revenues, other expenses increased to 1.1% in 1995
from .4% in 1994. Other expenses in the quarter included amortization of certain
expenses related to the acquisition of New Horizons. As a percentage of net
operating revenues, Handex Environmental's other expenses increased to .8% in
1995 from .4% in 1994. The increase was due to a lower amount of gain realized
on the sale of excess assets.
INCOME TAXES
The provision for income taxes as a percentage of income before taxes rose to
40.7% in 1995 from 27.9% in 1994. The increase in the provision for income taxes
was primarily due to the reduction in the Company's tax-free interest income.
NET INCOME
Net income in 1995 increased $214,000 or 254.6% from the same period in 1994. As
a percentage of net operating revenues, net income increased to 1.6% in 1995
from .6% in 1994. Net income from New Horizons included in the 1995 results
amounted to $141,000 or 2.8% of its net operating revenues and accounted for
134.7% of the percentage increase over last year. Excluding New Horizons'
revenues and net income, Handex Environmental's net income in 1995 increased
$72,000 or 119.8%, and as percentage of net operating revenues, increased to
1.1% from .6% in 1994. The increase was due principally to a higher level of net
operating revenues.
LIQUIDITY AND CAPITAL RESOURCES
As of April 1, 1995, the Company's working capital was $24,457,000, and its
cash, cash equivalents and short-term investments totaled $5,942,000. Working
capital as of April 1, 1995 reflected a decrease of $209,000 from $24,666,000 as
of December 31, 1994. The Company's cash flow from operating activities
reflected an improvement over last year's primarily due to improved net income,
higher non-cash depreciation and amortization expenses, reduction in other
assets and working capital components. The Company also has available a
$5,500,000 unsecured facility with a commercial bank. This facility bears
interest at either the bank's prime rate (8.5% as of April 1, 1995), or the
bank's short-term money market rate, whichever the Company elects. The Company
has not used this facility since June 1991.
The full service approach to Handex Environmental's hydrocarbon recovery
business in certain markets and its continuing geographic expansion require
Handex Environmental to make capital expenditures for machinery and equipment
and to incur costs associated with the establishment of new office locations.
During the 1995 quarter, Handex Environmental spent approximately $522,000 on
capital equipment and anticipates spending up to $3,750,000 during 1995.
On August 15, 1994, the Company, through New Horizons, acquired the assets of
New Horizons Computer Learning Center, Inc. and all the stock of New Horizons
Franchising, Inc. for a combined cash price of $14,000,000. Cash expenses
related to the transaction were approximately $600,000 and non-cash expenses
were approximately $179,000. The acquisition included certain debt obligations.
The nature of its business requires New Horizons to make capital expenditures
for computer equipment, software and facilities. During the 1995 quarter, New
Horizons spent approximately $848,000 on capital equipment and anticipates
spending up to $1,500,000 during 1995.
Management believes that current cash and cash equivalents, together with cash
generated by operations, and its funds available under its revolving credit
facility will provide the liquidity necessary to support its current and
anticipated capital expenditures through the end of 1995.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's annual stockholders' meeting which was held on May 9, 1995, the
following matters were submitted to and voted upon by the stockholders:
1. The election of the following directors whose term of office will expire at
the 1998 annual stockholders' meeting:
"FOR" "WITHHELD"
---------- -----------
David A. Goldfinger 6,088,139 11,223
Richard L. Osborne 6,087,639 11,723
2. An amendment to the Company's Certificate of Incorporation changing the
Company's name from Handex Environmental Recovery, Inc. to Handex
Corporation. Voting results are: "FOR" - 6,089,837; "AGAINST" - 5,775;
"ABSTAINED" - 3,750.
3. The selection of KPMG Peat Marwick LLP as the Company's independent
auditors for 1995; "FOR" - 6,087,712; "AGAINST" 6,500; "ABSTAINED" 5,150.
FORM 10Q - PART II: OTHER INFORMATION
Item 6. Exhibits and other reports on Form 8-K
(a) Exhibit Index
Exhibit
Number Description of Documents
- - ------------ --------------------------
4.1 Specimen Certificate for Shares of Common Stock, $.01 par value,
of the Registrant(1)
4.2 Unsecured Revolving Loan Agreement(4)
4.3 First Amendment to Unsecured Revolving Loan Agreement(7)
10.1 Key Employees Stock Option Plan of the Registrant(1)
10.2 Amendment No. 1 to Key Employees Stock Option Plan of the
Registrant(7)
10.3 Form of Stock Option Agreement executed by recipients of options
under Key Employees Stock Option Plan(6)
10.4 Stock Option Agreement dated August 6, 1992, between the
Registrant and Thomas J. Bresnan(7)
10.5 Outside Directors Stock Option Plan of the Registrant(1)
10.6 Amendment No. 1 to the Outside Directors Stock Option Plan of the
Registrant(7)
10.7 Form of Stock Option Agreement executed by recipients of options
under the Outside Directors Stock Option Plan(7)
10.8 Amended and Restated 401(k) Profit Sharing Trust and Plan of the
Registrant(1)
10.9 Amendment No. 1 to the Registrant's Amended and Restated 401(k)
Profit Sharing Trust Plan(2)
10.10 Amendment No. 2 to the Registrant's Amended and Restated 401(K)
Profit Sharing Trust and Plan(3)
10.11 Amendment No. 3 to the Registrant's Amended and Restated 401(k)
Profit Sharing Trust and Plan(6)
10.12 Form of Indemnity Agreement with Directors and Officers of the
Registrant(6)
10.13 Employment Agreement dated August 3, 1992, between the Registrant
and Thomas J. Bresnan(7)
10.14 Lease Agreement dated April 26, 1988, between Jocama Construction
Inc. and the Registrant(1)
10.15 Addenda to the Lease Agreement dated April 6, 1988 between Jocama
Construction and the Registrant(8)
EXHIBIT INDEX (CONTINUED)
10.16 Indenture of Lease dated June 17, 1987, between Xednah
Investments and Handex of Florida, as amended(1)
10.17 Lease Agreement dated March 25,1991, between Handex of New
England, Inc. and Metro Park Marlboro Realty Trust, as amended(6)
10.18 Lease Agreement dated January 20, 1992, between Handex of
Maryland, Inc. and Winmeyer Commons II Limited Partnership(6)
10.19 Lease Agreement dated March 1, 1995 between New Horizons Learning
Center of Metropolitan New York, Inc. and Mid-City Associates,
guaranteed by Registrant(11)
10.20 Lease Agreement dated February 24, 1995, between New Horizons
Learning Centers of Cleveland, Ltd., and Realty One Property
Management, guaranteed by the Registrant(11)
10.21 Consulting Agreement between the Registrant and The Nassau Group,
Inc. dated December 17, 1993(9)
10.22 Warrants for the purchase of 25,000 shares of Common Stock $.01
par value per share of the Registrant issued to The Nassau Group,
Inc. on December 17, 1993(9)
10.23 Warrants for the purchase of 40,000 shares of common stock $.01
par value per share of the Registrant issued to The Nassau Group,
Inc. on August 15, 1994(11)
10.24 Asset Purchase Agreement dated as of August 15, 1994 by and among
New Horizons Computer Learning Centers, Inc. a Delaware
Corporation, New Horizons Learning Center, Inc., a California
Corporation and Michael A. Brinda(10)
10.25 Stock Purchase Agreement dated as of August 15, 1994 by and among
New Horizons Education Corporation, a Delaware Corporation and
Michael A. Brinda(10)
10.26 Lease Agreement dated April 5, 1995 between New Horizons Computer
Learning Center of Chicago, Inc. and The Equitable Life Assurance
Society of the United States*
15.0 Letter from Independent Certified Public Accountants*
99.1 Certificate of Amendment to Certificate of Incorporation*
- - --------------------------------------------------------------
(1) Incorporated herein by reference to the appropriate exhibits to the
Registrant's Registration Statement on
Form S-1 (File No. 33-28798).
(2) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1989.
(3) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Quarterly Report on Form 10-Q for the period ended March 31,
1990.
(4) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Quarterly Report or Form 10-Q for the period ended June 30,
1990.
EXHIBIT INDEX (CONTINUED)
(5) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1990.
(6) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1991.
(7) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December
31,1992.
(8) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Quarterly Report on Form 10-Q for the period ended July 3,
1993.
(9) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended January 1, 1994.
(10) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Form 8-K dated August 15, 1994.
(11) Incorporated herein by reference to the appropriate exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1994.
* Filed herewith.
(b) Reports on Form 8-K
On April 13, 1995, the Registrant filed a current report on Form 8-K in
connection with its announcement on the expected adverse impact of the
amendment to the Florida State's reimbursement program signed into law by
Governor Lawton Chiles. The Company also announced lower than anticipated
revenues for the first quarter, primarily as a result of client's deferral
of scheduled environmental remediation projects. This deferral may also
adversely affect anticipated second quarter results. The filling included
a copy of the announcement released to the public.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
HANDEX CORPORATION
(Registrant)
Date: May 15, 1995 By: /s/ John T. St. James
----------------------- -------------------------------
John T. St. James
(Duly authorized officer and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 742,492
<SECURITIES> 5,200,000
<RECEIVABLES> 27,502,242
<ALLOWANCES> (980,327)
<INVENTORY> 420,615
<CURRENT-ASSETS> 34,607,768
<PP&E> 23,892,291
<DEPRECIATION> 14,669,683
<TOTAL-ASSETS> 61,382,795
<CURRENT-LIABILITIES> 10,151,114
<BONDS> 0
<COMMON> 70,502
0
0
<OTHER-SE> 49,840,729
<TOTAL-LIABILITY-AND-EQUITY> 61,382,795
<SALES> 17,000,839
<TOTAL-REVENUES> 17,000,839
<CGS> 10,780,296
<TOTAL-COSTS> 16,485,379
<OTHER-EXPENSES> (30,263)
<LOSS-PROVISION> 50,000
<INTEREST-EXPENSE> (22,972)
<INCOME-PRETAX> 462,225
<INCOME-TAX> 188,353
<INCOME-CONTINUING> 273,872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 273,872
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
FORM 10-Q
Item 5
Exhibit 15.0
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors
Handex Environmental Recovery, Inc.
and Subsidiaries
We have reviewed the condensed consolidated balance sheet of Handex
Environmental Recovery, Inc. and subsidiaries as of April 1, 1995, and the
related condensed consolidated statements of income and cash flows for the
three-month periods ended April 1, 1995 and April 2, 1994. These condensed
consolidated financial statements are the responsibility of the company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope that an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Handex Environmental Recovery, Inc.
and subsidiaries as of December 31, 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 17, 1995, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of Decenber 31, 1994, is fairly presented, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
KPMG Peat Marwick LLP
Cleveland, Ohio
April 28, 1995
OFFICE LEASE
TWO NORTH LASALLE STREET BUILDING
CHICAGO, ILLINOIS
TENANT: NEW HORIZONS COMPUTER LEARNING CENTER
OF CHICAGO, INC.
DATE: , 1995
---------------
TABLE OF CONTENTS
OFFICE LEASE
TWO NORTH LASALLE STREET BUILDING
CHICAGO, ILLINOIS
TENANT: NEW HORIZONS COMPUTER LEARNING CENTER OF CHICAGO, INC., a Delaware
corporation
1. Demised Premises; Term 1
2. Base Rent 1
3. Rent Adjustments 2
4. Use 5
5. Services 7
6. Possession 8
7. Condition of Premises 9
8. Repairs 9
9. Alterations 10
10. Covenant Against Liens 12
11. Damage or Destruction by Fire or Casualty 12
12. Insurance 14
13. Liability Insurance 15
14. Condemnation 15
15. Waiver of Claims and Indemnity 15
16. Nonwaiver 16
17. Waiver of Notice 17
18. Landlord's Remedies 17
19. Surrender of Possession 18
20. Holding Over 19
21. Costs, Expenses and Attorneys' Fees 20
22. Compliance with Laws 20
23. Certain Rights Reserved By Landlord 20
24. Estoppel 22
25. Rules and Regulations 22
26. Intentionally Omitted 23
27. Assignment and Subletting 23
28. Notice 24
29. Default Under Other Lease 25
30. Conveyance by Landlord 25
31. Subordination of Lease 26
32. Brokers 26
33. Intentionally Omitted 26
34. Miscellaneous 26
35. Exculpation 28
36. Renewal Options 29
EXHIBITS
EXHIBIT A PLAN OF PREMISES
EXHIBIT B BUILDING RULES AND REGULATIONS
EXHIBIT C WORK LETTER AGREEMENT
LEASE
THIS LEASE, made as of , 1995, between THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES, a New York corporation (the "Landlord"),
and NEW HORIZONS COMPUTER LEARNING CENTER OF CHICAGO, INC., a Delaware
corporation (the "Tenant").
W I T N E S S E T H:
Article 1
Demised Premises; Term
The Landlord does hereby demise and lease to Tenant, and Tenant hereby
accepts, that certain space as shown hatched on the plan attached hereto and
made a part hereof as Exhibit A, located on a portion of the mezzanine level
containing approximately 23,000 rentable square feet (the "Premises") in the
building known as Two North LaSalle Street (the "Building"), situated on certain
property (including all easements appurtenant thereto) in Chicago, Illinois (the
"Property") for a term commencing on the 15th day of May, 1995 and ending on the
30th day of April, 1998 (the "Term"), unless sooner terminated or extended as
provided herein, subject to the terms, covenants, and agreements herein
contained.
Article 2
Base Rent
Tenant shall pay to Landlord or Landlord's agent at the office of Landlord
or at such other place as Landlord may from time to time designate, annual Base
Rent for each of the following periods during the Term:
Monthly
Annual Base Installment
Period Rent of Base Rent
------- ------ ------------
May 15, 1995-April 30, 1996 $207,000.00 $17,250.00
May 1, 1996-April 30, 1997 212,750.00 17,729.17
May 1, 1997-April 30, 1998 218,500.00 18,208.33
Base Rent shall be payable in equal monthly installments, in advance, on the
first day of each and every calendar month during the Term, except for the first
month's rent which is due and payable on execution. If the Term commences on a
day other than the first day of a calendar month, or ends on a day other than
the last day of a calendar month, then the Base Rent for such fractional month
shall be prorated on the basis of 1/365th of the annual Base Rent for each day
of such fractional month. Base Rent shall be payable without any prior demand
therefor and without any deductions or set-offs whatsoever.
Article 3
Rent Adjustments
Landlord and Tenant agree that the following rent adjustments shall be made
with respect to each calendar year of the Term, or portion thereof, including
the calendar year in which the Lease terminates:
(A) Tenant shall pay to Landlord as additional rent an amount equal to
Tenant's Proportionate Share of the amount, if any, by which the Ownership Taxes
for each calendar year of the Term exceeds the Ownership Taxes for the calendar
year 1995. Tenant's Proportionate Share of such Ownership Taxes is agreed to be
3.526%.
Ownership Taxes shall mean all taxes and assessments of every kind and
nature which Landlord shall become obligated to pay with respect to each
calendar year of the Term or portion thereof because of or in any way connected
with the ownership, leasing, and operation of the Building and the Property
subject to the following:
(i) the amount of ad valorem real and personal property taxes against
Landlord's real and personal property to be included in Ownership Taxes
shall be the amount assessed for any calendar year, notwithstanding that
such taxes are billed and payable in a subsequent calendar year. The
amount of any tax refunds received by Landlord during the Term of this
Lease shall be deducted from Ownership Taxes for the calendar year to which
such refunds are attributable;
(ii) the amount of special taxes and special assessments to be
included shall be limited to the amount of the installments (plus any
interest other than interest due to late payment, payable thereon) of such
special tax or special assessment payable for the calendar year in respect
of which Ownership Taxes are being determined;
(iii) the amount of any tax or excise levied by the State of Illinois
or the City of Chicago, any political subdivision of either, or any other
taxing body, on rents from the Property (or the value of the leases
thereon) to be included shall not be greater than the amount which would
have been payable on account of such tax or excise by Landlord during the
calendar year in respect of which Ownership Taxes are being determined had
the income received by Landlord from the Building (excluding amounts
payable under this subparagraph (iii)) been the sole taxable income of
Landlord for such calendar year;
(iv) there shall be excluded from Ownership Taxes all income taxes
(except those which may be included pursuant to subparagraph (iii) above),
excess profits taxes, franchise, capital stock, and inheritance or estate
taxes;
(v) Ownership Taxes shall also include Landlord's reasonable costs
and expenses (including reasonable attorneys' fees) in contesting or
attempting to reduce any Ownership Taxes for any calendar year.
(B) Tenant shall pay to Landlord as additional rent an amount equal to
Tenant's Proportionate Share of the amount, if any, by which the Operating
Expenses for each calendar year of the Term exceeds the Operating Expenses for
the calendar year 1995. Tenant's Proportionate Share of such Operating Expenses
is agreed to be 3.526%.
Operating Expenses shall mean all expenses, costs and disbursements (other
than Ownership Taxes) of every kind and nature which Landlord shall pay, incur
or become obligated to pay in respect of a calendar year because of or in any
way connected with the ownership, management, maintenance, repair and operation
of the Building and the Property except the following:
(i) costs of alterations of tenant spaces;
(ii) costs of capital improvements, except for such costs including
interest thereon, as reasonably amortized and determined by Landlord, where
one of the purposes of such capital improvements was to reduce Operating
Expenses or where such capital improvements are made in compliance with the
requirements of any federal, state or local law or regulation; and
(iii) depreciation, interest and principal payments on mortgages, and
other debt costs, if any;
(iv) real estate leasing commissions; and
(v) any amount paid to any person or entity controlled by or
affiliated with Landlord for service, labor or materials, to the extent
such amount exceeds the amount which would have been paid for said
services, labor or materials had such services, labor or materials been
provided on a competitive basis.
If less than all of the Building's rentable area shall have been occupied by
tenants at any time during any calendar year of the Term, the variable Operating
Expenses for such year shall be equitably adjusted to reflect the Operating
Expenses as though the Building had been fully occupied throughout such year.
(C) In order to provide for current payments on account of Ownership Taxes
and Operating Expenses payable for each calendar year during the Term of this
Lease, commencing with the calendar year 1996 Tenant agrees, at Landlord's
request, to pay, as additional rent, Tenant's Proportionate Share due for any
calendar year, as estimated by Landlord from time to time, in twelve (12)
monthly installments, each in an amount equal to 1/12th of Tenant's Propor
tionate Share so estimated by Landlord commencing on the first day of the month
following the month in which Landlord notifies Tenant of the amount of such
estimated Tenant's Proportionate Share. The installment of estimated rent
adjustment payable for each month of the current calendar year prior to the date
of the receipt of Landlord's estimate shall be due and payable within thirty
(30) days after receipt of such estimate. If, as finally determined (whether in
the succeeding calendar year at the time of delivery of the annual report
provided for in subparagraph (D) hereof, or in the current calendar year when
the final amount of any portion of Ownership Taxes for the prior calendar year
becomes known to Landlord), Tenant's Proportionate Share of Operating Expenses
or Ownership Taxes shall be greater than or be less than the aggregate of all
installments so paid on account to the Landlord (and which are applicable to
such calendar year) prior to receipt of an invoice from Landlord, then Tenant
upon receipt of such invoice shall pay to Landlord the amount of such underpay
ment, or the Landlord shall credit Tenant for the amount of such overpayment, as
the case may be. It is the intention hereunder to estimate the amount of
Ownership Taxes and Operating Expenses from time to time for each year and then
to adjust such estimate from time to time based on actual Ownership Taxes and
Operating Expenses for such calendar year.
(D) Landlord agrees to keep books and records showing the Operating
Expenses in accordance with a system of accounts and accounting practices
consistently maintained on a year-to-year basis in compliance with such
provisions of this Lease as may affect such accounts.
Landlord shall deliver to Tenant within a reasonable period of time after
the close of each calendar year (commencing with the calendar year 1996)
including the calendar year in which this Lease terminates, a reasonably
detailed statement containing the following:
(i) the amount of the Operating Expenses for such calendar year and the
calendar year 1995;
(ii) the amount of the Ownership Taxes for such calendar year and the
calendar year 1995; and
(iii) the estimate of Tenant's Proportionate Share of Ownership Taxes and
Operating Expenses for the current calendar year.
In the event that any rent adjustment results in a net increase in the rent due
Landlord, Tenant shall and hereby agrees to pay to Landlord within thirty (30)
days following Tenant's receipt of an invoice from time to time from Landlord an
amount equal to such rent adjustment for such prior calendar year, or portion
thereof. In the event the amounts paid by Tenant pursuant to Subparagraph (C)
above exceed the rent adjustment payable by Tenant, such overpayment shall be
credited to the amount of the next accruing monthly installments referred to in
Subparagraph (C) above or refunded (within thirty (30) days after the expiration
of the Term) to Tenant if the Term has expired for reasons other than default of
Tenant. Failure or delay in delivering any such statement or invoice, or
failure or delay in computing the rent adjustments pursuant to this Article 3,
shall not be deemed a waiver by Landlord of its right to deliver such items nor
shall any such failure or delay be deemed a release of Tenant's obligations with
respect to any such statement or invoice, or constitute a default hereunder.
All rent adjustments payable hereunder shall be made without any deductions or
set-offs whatsoever.
(E) The obligation of the Tenant with respect to the payment of Base Rent
and rent adjustments due hereunder shall survive the expiration or termination
of this Lease. Any payment, refund, or credit made pursuant to this Article
shall be made without prejudice to any right of the Tenant to dispute, or of the
Landlord to correct, any items as billed pursuant to the provisions hereof. In
the event that this Lease shall have been in effect for less than the full
calendar year immediately preceding Tenant's receipt of the invoices provided
for in subparagraphs (D) and (E) hereof, the rent adjustment shall be pro rata.
In no event shall any rent adjustment result in a decrease in the Base Rent
payable hereunder.
(F) Tenant or its representative (excluding any independent real estate
consulting or management company) shall have the right to examine copies of
Landlord's books and records relative to Operating Expenses and Ownership Taxes
during normal business hours at any time, upon reasonable prior notice, within
thirty (30) days following the furnishing by Landlord to Tenant of the statement
pursuant to subparagraph (D) above. Unless Tenant shall, by notice to Landlord,
take exception to any item in such statement within thirty (30) days after the
furnishing of such statement, such statement shall be conclusively binding upon
Tenant and shall not be contestable by Tenant (absent fraud by Landlord). Any
amount shown by such statement to be due to Landlord, whether or not written
exception is taken to such statement, shall be paid by Tenant as provided in
subparagraph (D) above, without prejudice to any such written exception. If
Tenant timely gives notice of such exception, any charges disclosed by such
statement that Landlord agrees are irregular or improper shall be promptly
corrected by Landlord and Tenant shall receive a credit against the next
accruing monthly installment of rent adjustment for any overpayments made by
Tenant as a result of such irregularities or improper charges. To the extent
Landlord and Tenant fail to agree on any item of Operating Expenses or Ownership
Taxes, a statement as to the proper amount of Tenant's Proportionate Share of
Operating Expenses and Tenant's Proportionate Share of Ownership Taxes shall as
promptly as reasonably possible be given by an independent "Big 6" (or the then
equivalent thereof) public accounting firm or other independent accounting firm
that is mutually and reasonably satisfactory to Landlord and Tenant. Tenant
agrees to pay the fees and charges of such third party in connection with the
furnishing of such statement.
Article 4
Use
(A) Tenant shall use and occupy the Premises for general office and
classroom training consistent with Tenant's business of computer software and
network training and related ancillary purposes and for no other purpose whatso
ever. Tenant shall not use or permit upon the Premises anything that will
invalidate any policies of insurance now or hereafter carried on the Building or
that will increase the rate of insurance on the Premises or on the Building. In
the event Tenant's use causes an increase in Landlord's premiums, Tenant will
pay all extra insurance premiums which may be caused by the use which Tenant
shall make of the Premises. Tenant will not use or permit upon the Premises
anything that may be dangerous to life or limb. Tenant will not in any manner
deface or injure the Building or any part thereof or overload the floors of the
Premises. Tenant will not do anything or permit anything to be done upon the
Premises in any way tending to create a nuisance, or tending to disturb any
other tenant in the Building or the occupants of neighboring property or tending
to injure the reputation of the Building. Tenant will promptly and fully comply
with all governmental, health and police requirements and regulations respecting
the Premises. Tenant will not use the Premises for lodging or sleeping purposes
or for any immoral or illegal purposes. Tenant shall not conduct nor permit to
be conducted on the Premises any business which is contrary to any of the laws
of the United States of America or of the State of Illinois or which is contrary
to the ordinances of the City of Chicago. Tenant shall not at any time
manufacture, sell, or give away, and shall not at any time permit the
manufacture, sale, or gift of any spirituous, fermented, intoxicating or
alcoholic liquors or controlled substances on the Premises, except that the
foregoing shall not be deemed to prohibit the occasional use of alcoholic
beverages for entertainment purposes, so long as Tenant has in full force and
effect (and delivered to Landlord a certificate of insurance therefor) a policy
of host liquor liability or dram-shop insurance in form and amounts at all times
satisfactory to Landlord. Except for vending machines located on the Premises
for Tenant's employees' and invitees' use, Tenant shall not at any time sell,
purchase or give away, or permit the sale, purchase or gift of, food in any form
on the Premises to the general public.
(B) Tenant agrees that it will not use, handle, generate, treat, store or
dispose of, or permit the handling, generation, treatment, storage or disposal
of any Hazardous Materials in, on, under, around or above the Premises now or at
any future time and will indemnify, defend and save Landlord harmless from any
and all actions, proceedings, claims, costs, expenses and losses of any kind,
including, but not limited to, those arising from injury to any person,
including death, damage to or loss of use or value of real or personal property,
and costs of investigation and cleanup of Hazardous Materials which were placed,
or permitted to be placed, on the Premises during the Term hereof by Tenant or
any of its employees, contractors agents, servants or invitees. The term
"Hazardous Materials", when used herein, shall include, but shall not be limited
to, any substances, materials or wastes to the extent quantities thereof are
regulated by the City of Chicago or any other local governmental authority, the
State of Illinois, or the United States of America because of toxic, flammable,
explosive, corrosive, reactive, radioactive or other properties that may be
hazardous to human health or the environment, including asbestos and including
any materials or substances that are listed in the United States Department of
Transportation Hazardous Materials Table, as amended, 49 C.F.R. 172.101, or in
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. subsections 9601 et seq., or the Resources Conservation and
Recovery Act, as amended, 42 U.S.C. subsections 6901 et seq., or any other
applicable governmental regulation imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous substances, waste or material, now
or hereafter in effect. Tenant does hereby indemnify, defend and hold harmless
the Landlord and its agents and their respective officers, directors,
beneficiaries, shareholders, partners, agents and employees from all fines,
suits, procedures, claims and actions of every kind, and all costs associated
therewith (including attorneys' and consultants' fees) arising by, through or
under Tenant, its agents, employees, contractors, servants and invitees and out
of or in any way connected with any deposit, spill discharge or other release of
Hazardous Materials that occurs during the Term of this Lease, at or from the
Premises, or which arises at any time from Tenant's 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 applicable governmental
authorities. Tenant's obligations and liabilities under this paragraph shall
survive the expiration of the Term of this Lease.
Article 5
Services
Landlord shall provide, at Landlord's expense, except as otherwise provided
and subject to applicable government codes, rules, regulations, and guidelines
applicable thereto, whether mandatory or voluntary, the following services:
(A) Air-cooling and heat to provide a temperature condition consistent
with first class office buildings in the downtown Chicago area, daily from 8:00
A.M. to 7:30 P.M. (Saturdays to 1:00 P.M.), Sundays and holidays excepted.
Whenever heat-generating machines or equipment installed by Tenant affect the
temperature otherwise maintained by Landlord in the Premises, Landlord shall be
relieved of responsibility for maintaining the air conditioning standards
applicable to the Building, and in such event Landlord reserves the right at its
option to (1) require Tenant to discontinue use of such heat-generating
machines or equipment, or (2) install supplementary air conditioning units in
the Premises, the cost, installation, operation and maintenance of which shall
be paid by Tenant to Landlord at such rates as Landlord charges from time to
time in the Building. Tenant agrees that at all times it will cooperate with
Landlord and abide by all regulations and requirements which Landlord may
prescribe for the proper functioning of the ventilating and air conditioning
systems. In the event Tenant has separately controlled HVAC equipment for the
Premises, Tenant shall be permitted to operate same as Tenant may require for
its operations in the Premises without additional charge by Landlord and, not
subject to the hours of operation set forth hereinabove. Landlord understands
and agrees that Tenant's business includes the use and operation of computer
terminals and same shall not be considered heat generating machines for purposes
of this subparagraph A.
(B) Water from City of Chicago mains for drinking, lavatory and toilet
purposes drawn through fixtures installed by the Landlord, or by Tenant with
Landlord's written consent, from regular Building supply at the prevailing
temperature. Tenant shall pay Landlord at rates fixed by Landlord for water
furnished for any other purpose. Tenant shall not waste or permit the waste of
water.
(C) Janitor service in and about the Premises, Saturdays, Sundays and
holidays excepted. Tenant shall not provide any janitor services without
Landlord's written consent and then only subject to supervision of Landlord and
at Tenant's sole responsibility and by a janitor, contractor or employees at all
times satisfactory to Landlord, but not as agent or servant of Landlord.
(D) Adequate operatorless passenger elevator service at all times and
freight elevator service subject to scheduling by Landlord.
(E) Electricity for the Premises shall not be furnished by Landlord but
shall be furnished by the electric utility company serving the Building. Tenant
shall make all necessary arrangements with the utility company for metering and
paying for electric current furnished by it to the Tenant and Tenant shall pay
for all charges for electric current consumed on the Premises during the Term of
this Lease. Tenant agrees to purchase from Landlord, or its agent, all lamps,
bulbs, ballasts and starters used in the Premises, the cost of which shall be
reasonably competitive with the cost of such items charged by landlords of other
comparable office buildings in the downtown Chicago areas (provided that Tenant
may at its sole cost and expense engage directly a licensed union electrician to
change lamps and bulbs used in the Premises).
(F) Such additional services on such terms and conditions as may be
mutually agreed upon by Landlord and Tenant.
All charges for any additional services shall be deemed rent reserved under
this Lease and shall be due and payable at the same time as the installment of
rent with which they are billed, or, if billed separately, shall be due and
payable within thirty (30) days after such billing. In the event Tenant shall
fail to make payment for such additional services Landlord may, in addition to
all other remedies which Landlord may have for the non-payment of rent and
without notice to Tenant, discontinue any or all such additional services, and
such discontinuance shall not be held or pleaded as an eviction or as a
disturbance in any manner whatsoever of Tenant's possession, or relieve Tenant
from the payment of rent when due, or vary or change any other provision of this
Lease or render Landlord liable for damages of any kind whatsoever.
Tenant agrees that neither Landlord nor any company, firm, or individual
operating, maintaining, repairing, managing or supervising the plant or
facilities furnishing any of the above services, nor any of their respective
agents or employees shall be liable to Tenant, or any of Tenant's employees,
agents, customers or invitees or anyone claiming through, by or under Tenant,
for any damages, injuries, losses, expenses, claims or causes of action, because
of any interruption, diminution, delay or discontinuance at any time for any
reason in the furnishing of any of the above services; nor shall any such
interruption, diminution, delay or discontinuance be deemed an eviction or
disturbance of Tenant's use or possession of the Premises or any part thereof;
nor shall any such interruption, diminution, delay or discontinuance relieve
Tenant from full performance of Tenant's obligations under this Lease.
Notwithstanding anything contained herein to the contrary, if: (i) such
interruption of services continues for a period in excess of ten (10) business
days after written notice to Landlord; (ii) such interruption of services is not
caused from damage and destruction covered under Article 12 of this Lease or
from a default by Tenant; (iii) Tenant cannot reasonably use the Premises or any
portion thereof, for their intended purpose, and (iv) on account thereof, Tenant
ceases doing business in the Premises or such portion thereof, Tenant shall have
the right to abate Base Rent and rent adjustments for the portion of the
Premises so affected retroactively to the date that any such service was first
interrupted until such service is restored or Tenant is able to conduct business
in such portion of the Premises.
Article 6
Possession
In the event the Premises shall not be completed and ready for occupancy on
the date above fixed for the commencement of the Term of this Lease, this Lease
shall nevertheless continue in full force and effect, and no liability shall
arise against Landlord out of any such delay, except that rent shall abate if
Landlord has unreasonably withheld required approvals as set forth in the work
letter agreement signed by Landlord and Tenant ("the Workletter" attached hereto
and made a part hereof as Exhibit C), or improperly taken action which
interferred with the completion of the Premises. If Tenant shall enter
possession of all or any part of the Premises prior to the date fixed above for
the first day of the Term, all of the covenants and conditions of this Lease
shall be binding upon the parties hereto in respect of such possession the same
as if the first day of the Term had been fixed as of the date when Tenant
entered such possession and Tenant shall pay to Landlord as rent for the period
prior to the first day of the Term of this Lease a proportionate amount of the
rent set forth in Article 2.
Article 7
Condition of Premises
Tenant's taking possession of any portion of the Premises shall be con
clusive evidence as against Tenant that such portion of the Premises were in
good order and satisfactory condition when the Tenant took possession, except as
to punchlist items and latent defects (which exception shall be effective for a
one (1) year period following the date the Premises are ready for occupancy,
excluding items of damage caused by Tenant, its agents, contractors and
suppliers). No promise of the Landlord to alter, remodel, repair or improve the
Premises or the Building and no representations respecting the condition of the
Premises or the Building have been made by Landlord to Tenant, other than as may
be contained herein or in the Work Letter, if any.
Article 8
Repairs
Except as otherwise provided in Article 11 of this Lease, and subject to
the provisions of Article 9 of this Lease, Tenant shall, at its sole cost and
expense, keep the Premises in good order, repair and tenantable condition
(normal wear and tear excepted) at all times during the Term, and Tenant shall
promptly arrange with Landlord at Tenant's sole cost and expense for the repair
of all damages to the Premises and for the replacement or repair of all damaged
or broken glass, fixtures and appurtenances within any reasonable period of time
specified by Landlord, provided, however, that Tenant shall not be required to
repair or replace broken or damaged exterior window glass unless such
replacement or repair is necessitated by the act, failure to act, or neglect of
Tenant, its servants, employees, agents, invitees or guests. If Tenant does not
promptly make such arrangements, Landlord may, but need not, make such repairs
and replacements and the costs paid or incurred by Landlord for such repairs and
replacements (including Landlord's overhead and profit, and the cost of general
conditions) shall be deemed additional rent reserved under this Lease due and
payable forthwith. Landlord may, but shall not be required so to do, enter the
Premises at all reasonable times to make any repairs, alterations, improvements
or additions, including, but not limited to, ducts and all other facilities for
heating and air conditioning service, as Landlord shall desire or deem necessary
for the safety, maintenance, repair, preservation or improvement of the
Building, or as Landlord may be required or requested to do by the City of
Chicago or by the order or decree of any court or by any other proper authority.
In the event Landlord or its agents or contractors shall elect or be
required to make repairs, alterations, improvements or additions to the Premises
or the Building, Landlord shall be allowed, upon reasonable prior notice to
Tenant, to take into and upon the Premises all material that may be reasonably
required to make such repairs, alterations, improvements or additions and,
during the continuance of any of said work, to temporarily close doors,
entryways, public space and corridors in the Building and to interrupt or
temporarily suspend any services and facilities without being deemed or held
guilty of an eviction of Tenant or for damages to Tenant's property, business or
person, and the rent reserved herein shall in no way abate while said repairs,
alterations, improvements or additions are being made, and Tenant shall not be
entitled to maintain any set-off or counterclaim for damages of any kind against
Landlord by reason thereof. Landlord may, at its option, make all such repairs,
alterations, improvements or additions in and about the Building and the
Premises during ordinary business hours, but if Tenant desires to have the same
done at any other time, Tenant shall pay for all overtime and additional
expenses resulting therefrom. In making any such repairs, Landlord shall use
reasonable efforts to minimize interference with Tenant's use of the Premises.
Article 9
Alterations
Except for work performed pursuant to the Work Letter, Tenant shall not,
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld in the case of any work not involving the structure or
systems of the Building (and, in the case of any work affecting any structural
components or members of the Building (including, without limiting the
foregoing, any work involving floor loading and floor coring), without the prior
written approval of the structural engineer designated by Landlord for the
Building) in each instance obtained, make any repairs, replacements,
alterations, improvements or additions to the Premises. In the event Tenant
desires to make any alterations, improvements or additions pursuant to this
Article 9, or any repairs or replacements pursuant to Article 8 of this Lease,
Tenant shall prior to commencing any such work:
(a) Submit to Landlord for review by it and its engineers plans and
specifications showing such work in reasonable detail and obtain Landlord's
prior written approval (Tenant shall pay to Landlord all costs incurred by
Landlord in connection with such review of such plans and specifications);
(b) Furnish Landlord with the names and addresses of all contractors
and copies of all contracts with such contractors and obtain Landlord's
prior written approval;
(c) Provide Landlord, at Tenant's sole cost and expense, with such
security as Landlord may reasonably require, as well as all necessary
permits evidencing compliance with all ordinances and regulations of the
City of Chicago or any department or agency thereof, and with the
requirements of all statutes and regulations of the State of Illinois or
any department or agency thereof;
(d) Provide Landlord with certificates of insurance in forms and
amounts satisfactory to Landlord naming Landlord as an additional insured
where required by Landlord; and
(e) Comply, at Tenant's sole cost and expense, with such other
requests as Landlord may reasonably make in connection with such work.
All such work shall, at Landlord's election, be subject to the supervision
by Landlord, and Tenant shall promptly pay to Landlord a supervision fee equal
to ten percent (10%) of the cost of such work.
Tenant hereby agrees to protect, defend, indemnify and hold Landlord, the
Building and the Property harmless from and against any and all liabilities of
every kind and description which may arise out of or in connection with such
repairs, replacements, alterations, improvements or additions constructed by
Tenant.
Upon completing any of such repairs, replacements, alterations,
improvements or additions, Tenant shall furnish Landlord with contractors' affi
davits, sworn statements and full and final waivers of lien and receipted bills
covering all labor and material expended and used. All repairs, replacements,
alterations, improvements and additions shall comply with all Landlord disclosed
insurance requirements and with all applicable ordinances and regulations of the
City of Chicago or any department or agency thereof and with the requirements of
all valid statutes and regulations of the State of Illinois or of any department
or agency thereof. All repairs, replacements, alterations, improvements and
additions shall be constructed in a good and workmanlike manner using
commercially acceptable grades of material shall be used.
All alterations, improvements, additions, repairs, or replacements, whether
temporary or permanent in character, including, without limitation, wall
coverings, carpeting and other floor coverings, special lighting installations,
built-in or attached shelving, cabinetry, and mirrors, made by Landlord or
Tenant in or upon the Premises shall become Landlord's property and shall remain
upon the Premises at the termination of this Lease by lapse of time or otherwise
without compensation to Tenant (excepting only Tenant's movable office
furniture, trade fixtures, and office equipment); provided, however, that
Landlord shall have the right to require Tenant to remove such alterations,
improvements, additions, repairs or replacements (other than the Improvements,
except that Tenant shall be required to remove the computer wiring and cabling
in the Premises) at Tenant's sole cost and expense in accordance with the
provisions of Article 19 of this Lease.
Tenant may request that Landlord determines at the time of Tenant's request
to make such installation, alteration or addition whether Landlord will require
Tenant to remove the same at the time of expiration of the Lease. In the event
that Tenant makes such request, such decision by Landlord shall be binding on
Landlord.
Article 10
Covenant Against Liens
Nothing contained in this Lease shall authorize or empower Tenant to do any
act which shall in any way encumber Landlord's title to the Building, Property
or Premises, nor in any way subject Landlord's title to any claims by way of
lien or encumbrance whether claimed by operation of law or by virtue of any
expressed or implied contract of Tenant, and any claim to a lien upon the
Building, Property or Premises arising from any act or omission of Tenant shall
attach only against Tenant's interest and shall in all respects be subordinate
to Landlord's title to the Building, Property and Premises. If Tenant has not
removed any such lien or encumbrance within fifteen (15) days after written
notice to Tenant by Landlord, Landlord may, but shall not be obligated to, pay
the amount necessary to remove such lien or encumbrance, without being
responsible for making any investigation as to the validity or accuracy thereof,
and the amount so paid, together with all costs and expenses (including
reasonable attorneys' fees) incurred by Landlord in connection therewith, shall
be deemed additional rent reserved under this Lease due and payable forthwith.
Article 11
Damage or Destruction by Fire or Casualty
(A) If the Premises or any part of the Building shall be damaged by fire
or other casualty and if such damage does not render all or a substantial
portion of the Premises or the Building untenantable, then Landlord shall
proceed to repair and restore the same to its prior existing condition with
reasonable promptness, subject to reasonable delays for insurance adjustments
and delays caused by matters beyond Landlord's control. If any such damage
renders all or a substantial portion of the Premises or the Building
untenantable, Landlord shall, with reasonable promptness (not to exceed sixty
(60) days from the date the damage occurred) after the occurrence of such damage
and in good faith, estimate the length of time that will be required to
substantially complete the repair and restoration of such damage and shall by
notice advise Tenant of such estimate. If it is so estimated that the amount
of time required to substantially complete such repair and restoration will
exceed two hundred seventy (270) days from the date such damage occurred, then
either Landlord or Tenant shall have the right to terminate this Lease as of the
date of such damage upon giving notice to the other at any time within twenty
(20) days after Landlord gives Tenant the notice containing said estimate (it
being understood that Landlord may, if it elects to do so, also give such notice
of termination together with the notice containing said estimate). Unless this
Lease is terminated as provided in the preceding sentence, Landlord shall
proceed with reasonable promptness and all due diligence to repair and restore
the Premises, subject to reasonable delays for insurance adjustments and delays
caused by matters beyond Landlord's control, and also subject to zoning laws and
building codes then in effect. Landlord shall have no liability to Tenant, and
Tenant shall not be entitled to terminate this Lease (except as hereinafter
provided) if such repairs and restoration are not in fact completed within the
time period estimated by Landlord, as aforesaid, or within said two hundred
seventy (270) days, so long as Landlord shall proceed with reasonable promptness
and due diligence. Notwithstanding anything to the contrary herein set forth:
(i) if any such damage rendering all or a substantial portion of the Premises or
Building untenantable shall occur during the last year of the Term, then
Landlord shall have the option to terminate this Lease by written notice to
Tenant within thirty (30) days after the date such damage occurred, and if such
option is so exercised, this Lease shall terminate as of the date of such
damage; (ii) Landlord shall have no duty pursuant to this Article 11 to repair
or restore any portion of alterations, additions or improvements made by or on
behalf of Tenant in the Premises; (iii) Landlord shall not be obligated (but
may, at its option, so elect) to repair or restore the Premises or Building if
any mortgagee applies proceeds of insurance to reduce its loan balance, and the
remaining proceeds, if any, available to Landlord are not sufficient to pay for
such repair or restoration; and (iv) Tenant shall not have the right to
terminate this Lease pursuant to this Article 11 if the damage or destruction
was caused by the intentional or negligent act of Tenant, its agents or
employees.
Notwithstanding the foregoing, in the event Landlord commences the
restoration and, within one (1) year after the fire or casualty (which date
shall be extended for any period of time during which Landlord is unable to
complete restoration due to a matter beyond Landlord's reasonable control), the
Premises have not been substantially restored by Landlord, Tenant may terminate
this lease by written notice to Landlord given within thirty (30) days after the
end of one (1) year period. If Tenant shall give notice of termination pursuant
to this Article 11, such notice shall specify a date for the expiration of this
Lease, which date shall not be more than thirty (30) days after the giving of
such notice and the Term of this Lease shall expire on such date as fully and
completely as if such date were the date set forth above for the termination of
this Lease unless Landlord shall have substantially completed restoration of and
delivered the Premises to Tenant for occupancy, prior to such date. Upon
termination of the Lease, Tenant shall forthwith quit, surrender and vacate the
Premises without prejudice, however, to the rights and remedies of either party
against the other under the Lease provisions in effect prior to such fire or
other casualty, and any Base Rent, rent adjustments or additional rent owing
shall be paid up to the date of such fire or other casualty and Tenant shall be
relieved of its obligations hereunder to pay rent accruing from and after the
date of such fire or other casualty and any payment of rent made by Tenant which
was on account of any period subsequent to such date shall be returned to
Tenant.
(B) In the event any such fire or casualty damage not caused by the
intentional or negligent act of Tenant, its agents or employees, renders the
Premises substantially untenantable and Tenant is not occupying the Premises and
if this Lease shall not be terminated pursuant to the foregoing provisions of
this Article 11 by reason of such damage, then rent shall abate during the
period beginning with the date of such damage and ending with the date when
Landlord substantially completes its repair and restoration work. Such
abatement shall be in an amount bearing the same ratio to the total amount of
rent (including taxes, expenses and other additional rent) for such period as
the portion of the Premises being repaired and restored by Landlord and not
heretofore delivered to Tenant from time to time bears to the entire Premises.
In the event of termination of this Lease pursuant to this Article 11, rent
shall be apportioned on a per diem basis and be paid to the date of such fire or
other casualty.
(C) In the event of any such fire or other casualty, and if this Lease is
not terminated pursuant to the foregoing provisions of this Lease, Tenant shall
repair and restore any portion of alterations, additions or improvements made by
or on behalf of Tenant in the Premises, and during any such period of Tenant's
repair and restoration following substantial completion of Landlord's repair and
restoration work, rent shall be payable as if said fire or other casualty had
not occurred. Notwithstanding the foregoing in the event all or a substantial
portion of the Premises has been damaged by such fire or other casualty, rent
shall abate during the period, not to exceed sixty (60) days after Landlord
substantially completes its repair and restoration work, that Tenant repairs and
restores such alterations, additions or improvements. Such abatement shall end
on the first to occur of (i) the date that Tenant substantially completes such
work, and (ii) the date which is sixty (60) days after Landlord substantially
completes its repair and restoration work.
Article 12
Insurance
In consideration of the leasing of the Premises at the rental stated in
Article 2, Landlord and Tenant agree to provide insurance and allocate the risk
of loss as follows:
Tenant, at its sole cost and expense but for the mutual benefit of Landlord
and Tenant (when used in this Article the term "Landlord" shall include Landlord
and its officers, agents, servants and employees and the term "Tenant" shall
include Tenant's agents, servants and employees), shall purchase and keep and
maintain in force and effect during the Term hereof, insurance under policies
issued by insurers of recognized responsibility on its fixtures and tenant
improvements including, but not limited to, special wall and floor coverings,
special lighting fixtures, built-in cabinets and bookshelves and on its
merchandise, inventory, contents, furniture, equipment or other personal
property located in the Premises protecting Landlord and Tenant from damage or
other loss caused by fire or other casualty including, but not limited to,
vandalism and malicious mischief, perils covered by all risk and extended
coverage, theft, sprinkler leakage, water damage (however caused), explosion,
malfunction or failure of heating and cooling or other apparatus, and other
similar risks in amounts not less than the full insurable replacement value of
such property. Such insurance shall provide that it is specific and not contrib
utory and shall name the Landlord as an additional insured and shall contain a
replacement cost endorsement and a clause pursuant to which the insurance
carriers waive all rights of subrogation against the Landlord with respect to
losses payable under such policies. At Landlord's request, Tenant shall deliver
certificates of insurance evidencing such coverage upon execution hereof and
thereafter not less than fifteen (15) days prior to the expiration date of any
such policy.
Landlord agrees to purchase and keep in force and effect insurance on the
Building against fire and such other risks as may be included in extended
coverage insurance from time-to-time available in an amount not less than the
greater of 80% of the full insurable value of the Building or the amount
sufficient to prevent Landlord from becoming a co-insurer under the terms of the
applicable policies. Such policies shall contain a replacement cost endorsement
and a clause pursuant to which the insurance carriers waive all rights of
subrogation against the Tenant with respect to losses payable under such
policies.
Notwithstanding anything to the contrary contained herein, by this section,
Landlord and Tenant intend that the risk of loss or damage as described above be
borne by responsible insurance carriers to the extent above provided, and
Landlord and Tenant hereby release each other and agree to look solely to, and
to seek recovery only from, their respective insurance carriers in the event of
a loss of a type described above to the extent that such coverage is agreed to
be provided hereunder. For this purpose, any applicable deductible amount shall
be treated as though it were recoverable under such policies. Landlord and
Tenant agree that applicable portions of all monies collected from such
insurance shall be used toward the full compliance of the obligations of
Landlord and Tenant under this Lease in connection with damage resulting from
fire or other casualty.
Article 13
Liability Insurance
Tenant shall, at Tenant's expense, maintain during the Term comprehensive
public liability insurance, contractual liability insurance, property damage
insurance, and -- to the extent applicable -- host liquor or dram-shop liability
insurance, under policies issued by insurers of recognized responsibility, with
limits of not less than $3,000,000 for personal injury, bodily injury, sickness,
disease or death and $1,000,000 for damage or injury to or destruction of
property (including the loss of use thereof) for any one occurrence. Tenant's
policies shall name Landlord, its respective officers, agents, servants and
employees as additional insureds. At Landlord's request, Tenant shall deliver
certificates of insurance evidencing such coverage upon execution hereof and
thereafter not less than fifteen (15) days prior to the expiration date of any
such policy.
Landlord shall maintain during the Term comprehensive liability insurance
with limits as reasonably determined by Landlord.
Article 14
Condemnation
If the whole or any part of the Premises, Building or Property shall be
taken or condemned by any competent authority for any public or quasi-public use
or purpose or if any adjacent property or street shall be condemned or improved
in such manner as to require the use of any part of the Premises or of the
Building, the Term, at the option of Landlord, shall end upon the date when the
possession of the part so taken shall be required for such use or purpose and
Landlord shall be entitled to receive the entire award without any payment to
Tenant, the Tenant hereby
assigning to the Landlord the Tenant's interest therein, if any. Current rent
shall be apportioned as of the date of such termination.
Article 15
Waiver of Claims and Indemnity
Tenant agrees that, to the extent not expressly prohibited by law, Landlord
and its officers agents, servants and employees shall not be liable for (nor
shall rent abate as a result of) any direct or consequential damage (including
damage claimed for actual or constructive eviction) either to person or property
sustained by Tenant, its servants, employees, agents, invitees or guests due to
the Building or any part thereof or any appurtenances thereof becoming out of
repair, or due to the happening of any accident in or about said Building, or
due to any act or neglect of any tenant or occupant of said Building or of any
other person. This provision shall apply particularly (but not exclusively) to
damage caused by water, snow, frost, steam, sewage, gas, electricity, sewer gas
or odors or by the bursting, leaking or dripping of pipes, faucets and plumbing
fixtures and windows, and shall apply without distinction as to the person whose
act or neglect was responsible for the damage and whether the damage was due to
any of the causes specifically enumerated above or to some other cause of an en
tirely different kind. Tenant further agrees that all of Tenant's personal
property in the Premises or the Building shall be at the risk of Tenant only
and that Landlord shall not be liable for any loss or damage thereto or theft
thereof. Tenant shall protect, defend, indemnify and save Landlord and its
officers, agents, servants and employees harmless from and against any and all
obligations liabilities, costs, damages, claims and expenses of whatever nature
arising from injury to persons or damage to property on the Premises or in or
about the Building arising out of or in connection with Tenant's use or
occupancy of the Premises or Tenant's activities in the Building, or arising
from any act or negligence of Tenant, or its agents, contractors, servants,
employees, or invitees, but only to the extent that all such obligations,
liabilities, costs, damages, claims and expenses are not covered by the
insurance required to be maintained by Landlord and Tenant pursuant to Articles
12 and 13 hereof.
Landlord shall protect, defend indemnify and save Tenant and its officers,
agents and servants and employees harmless from and against any and all
obligations, liabilities, costs, damages, claims and expenses of whatever nature
arising from injury to persons or damage to property on the Premises or in or
about the Building arising out of or in connection with Landlord's ownership and
operation of the Building or Landlord's or its agents', employees' or
contractors' activities in the Building, or arising from any act or negligence
of Landlord, or its agents, contractors, servants, employees or invitees, but
only to the extent that all such obligations, liabilities, costs, damages,
claims and expenses are not covered by the insurance required to be maintained
by Landlord and Tenant pursuant to Articles 12 and 13 hereof.
Article 16
Nonwaiver
No waiver of any condition expressed in this Lease shall be implied by any
neglect of Landlord to enforce any remedy on account of the violation of such
condition if such violation be continued or repeated subsequently, and no
express waiver shall affect any condition other than the one specified in such
waiver and that one only for the time and in the manner specifically stated. No
receipt of moneys by Landlord from Tenant after the termination in any way of
the Term or of Tenant's right of possession hereunder or after the giving of any
notice shall reinstate, continue or extend the Term or affect any notice given
to Tenant prior to the receipt of such moneys, it being agreed that after the
service of notice or the commencement of a suit or after final judgment for
possession of the Premises Landlord may receive and collect any rent or other
sums due, and such payment shall not waive or affect said notice, suit or
judgment.
Article 17
Waiver of Notice
Except as provided in Article 18 hereof, Tenant hereby expressly waives the
service of any notice of intention to terminate this Lease or to re-enter the
Premises and waives the service of any demand for payment of rent or for
possession and waives the service of any other notice or demand prescribed by
any statute or other law.
Article 18
Landlord's Remedies
If (a) default shall be made in the payment of the rent or any installment
thereof or in the payment of any other sum required to be paid by Tenant under
this Lease, or under the terms of any other agreement between Landlord and
Tenant, and (with respect to the first two of such defaults in any twelve-month
period) such default shall continue for ten (10) days after written notice to
Tenant, or (b) if default shall be made in the full and prompt performance of
any of the other covenants or conditions which Tenant is required to observe and
perform and such default shall continue for thirty (30) days after written
notice to Tenant (or if such default involves a hazardous condition and is not
cured by Tenant immediately upon written notice to Tenant), or (c) if the
interest of Tenant in this Lease shall be levied on under execution or other
legal process, or (d) if any petition shall be filed by or against Tenant to
declare Tenant a bankrupt or to delay, reduce or modify Tenant's debts or
obligations, or (e) if any petition shall be filed or other action taken to
reorganize or modify Tenant's capital structure, if Tenant be a corporation or
other entity, or (f) if Tenant be declared insolvent according to law or if any
assignment of Tenant's property shall be made for the benefit of creditors, or
(g) if a receiver or trustee is appointed for Tenant or its property, or (h) if
Tenant shall abandon or vacate the Premises during the Term of this Lease, then
Landlord may treat the occurrence of any one or more of the foregoing events as
a breach of this Lease, and thereupon at its option may, without notice or
demand of any kind to Tenant or any other person, have any one or more of the
following described remedies in addition to all other rights and remedies
provided at law or in equity:
(i) Landlord may terminate this Lease and the Term created hereby, in
which event Landlord may forthwith repossess the Premises and be entitled
to recover forthwith as damages a sum of money equal to the value of the
Base Rent and rent adjustments provided to be paid by Tenant for the
balance of the stated Term of the Lease, less the fair rental value of the
Premises for said period, and any other sum of money and damages owed by
Tenant to Landlord.
(ii) Landlord may terminate Tenant's right of possession and may
repossess the Premises by forcible entry or detainer suit or otherwise,
without demand or notice of any kind to Tenant and without terminating this
Lease, in which event Landlord may, but shall not be obligated to, relet
all or any part of the Premises, for such rent and upon such terms as shall
be satisfactory to Landlord (including the right to relet the Premises for
a term greater or lesser than that remaining under the Term of this Lease
and the right to relet the Premises as a part of a larger area and the
right to change the character or use made of the Premises). For the
purpose of such reletting, Landlord is authorized to decorate or to make
any repairs, changes, alterations or additions in or to the Premises that
may be necessary or convenient, and if Landlord shall fail or refuse to
relet the Premises or if the Premises are relet and a sufficient sum shall
not be realized from such reletting after paying all of the costs and
expenses of such decorations, repairs, changes, alterations and additions
and the expenses of such reletting and of the collection of the rent
accruing therefrom to satisfy the rent provided for in this Lease to be
paid, then Tenant shall pay to Landlord as damages a sum equal to the
amount of the Base Rent and rent adjustments reserved in this Lease for
such period or periods, or, if the Premises have been relet, Tenant shall
satisfy and pay any such deficiency upon demand therefor from time to time,
and Tenant agrees that Landlord may file suit to recover any sums falling
due under the terms of this paragraph and any other sums due under this
Lease from time to time and that no suit or recovery of any portion due
Landlord hereunder shall be any defense to any subsequent action brought
for any amount not theretofore reduced to judgment in favor of Landlord.
Article 19
Surrender of Possession
(A) On or before the date this Lease and the Term hereby created
terminates, or on or before the date Tenant's right of possession terminates,
whether by lapse of time or at the option of Landlord, Tenant shall:
(i) restore the Premises to the same condition as they were in at the
beginning of the Term, normal wear and tear excepted (except as otherwise
provided in Article 11 of this Lease) and remove those alterations,
improvements or additions installed for or during Tenant's occupancy,
whether installed by Landlord or Tenant, or acquired by Tenant from former
tenants (other than the Improvements, except that Tenant shall be required
to remove the computer wiring and cabling in the Premises), which Landlord
shall request Tenant to remove;
(ii) remove from the Premises and the Building all of Tenant's
personal property; and
(iii) surrender possession of the Premises to Landlord in a clean
condition free of all rubbish and debris.
(B) If Tenant shall fail or refuse to restore the Premises to the
above-described condition on or before the above-specified date, Landlord may
enter into and upon the Premises and put the Premises in such condition and
recover from Tenant Landlord's cost of so doing. Without limiting the generality
of the foregoing, Tenant agrees to pay Landlord, upon demand, the cost of
restoring the walls, ceilings and floors of the Premises to the same condition
that existed prior to the date of the commencement of any alterations,
improvements, or additions made by or for Tenant's occupancy (or a prior
tenant's occupancy if such alterations, improvements or additions were acquired
by Tenant from a former tenant) of the Premises. If Tenant shall fail or refuse
to comply with Tenant's duty to remove all personal property from the Premises
and the Building on or before the above-specified date, the parties hereto agree
and stipulate that Landlord may enter into and upon the Premises and may, at its
election:
(i) treat such failure or refusal as an offer by Tenant to transfer
title to such personal property to Landlord, in which event title thereto
shall thereupon pass under this Lease as a bill of sale to and vest in
Landlord absolutely without any cost either by set-off, credit allowance or
otherwise, and Landlord may retain, remove, sell, donate, destroy, store,
discard, or otherwise dispose of all or any part of said personal property
in any manner that Landlord shall choose;
(ii) treat such failure or refusal as conclusive evidence, on which
Landlord or any third party shall be entitled absolutely to rely and act,
that Tenant has forever abandoned such personal property, and without
accepting title thereto, Landlord may, at Tenant's expense, remove, store,
destroy, discard or otherwise dispose of all or any part thereof in any
manner that Landlord shall choose without incurring liability to Tenant or
to any other person. In no event shall Landlord ever become or accept or
be charged with the duties of a bailee (either voluntary or involuntary) of
any personal property, and the failure of Tenant to remove all personal
property from the Premises and the Building shall forever bar Tenant from
bringing any action or from asserting any liability against Landlord with
respect to any such property which Tenant fails to remove. If Tenant shall
fail or refuse to surrender possession of the Premises to Landlord on or
before the above-specified date, Landlord may forthwith re-enter the
Premises and repossess itself thereof as of its former estate and remove
all persons and effects therefrom, using such force as may be necessary,
without being guilty of any manner of trespass or forcible entry or
detainer.
Article 20
Holding Over
Tenant shall pay to Landlord 150% of the Base Rent plus 150% of the rent
adjustments then applicable for each month or portion thereof Tenant shall
retain possession of the Premises or any part thereof after the termination of
this Lease, whether by lapse of time or otherwise, and also shall pay all
damages sustained by Landlord, whether direct or consequential, on account
thereof. The provisions of this Article shall not operate as a waiver by
Landlord of any right of re-entry hereinbefore provided.
Article 21
Costs, Expenses and Attorneys' Fees
In case Landlord shall, without fault on its part, be made a party to any
litigation commenced by or against Tenant, then Tenant shall pay all costs,
expenses and reasonable attorneys' fees incurred or paid by Landlord in
connection with such litigation. Tenant shall also pay all costs, expenses and
reasonable attorneys' fees that may be incurred or paid by Landlord in enforcing
any of Tenant's covenants and agreements in this Lease.
Article 22
Compliance with Laws
Tenant and Landlord shall operate the Premises and Building respectively in
compliance with all applicable federal, state, and municipal laws, ordinances
and regulations and shall not knowingly, directly or indirectly, make any use of
the Premises or Building which is prohibited by any such laws, ordinances or
regulations.
Article 23
Certain Rights Reserved By Landlord
Landlord shall have the following rights, exercisable without notice and
without liability to Tenant for damage or injury to property, person or business
and without effecting an eviction, constructive or actual, or disturbance of
Tenant's use or possession or giving rise to any claim for set-off or abatement
of rent:
(a) To name the Building and to change the Building's name or street
address.
(b) To install, affix and maintain any and all signs on the exterior
and interior of the Building.
(c) To designate and approve, prior to installation, all types of
window shades, blinds, drapes, and other similar equipment, and to control
all internal lighting that may be visible from the exterior of the
Building.
(d) To designate, restrict and control all sources from which Tenant
may obtain ice, drinking water, towels, toilet supplies, shoe shining,
catering, food and beverages, or like or other services on the Premises,
and, in general, to reserve to Landlord the exclusive right to designate,
limit, restrict and control any business and any service in or to the
Building and its tenants.
(e) On reasonable prior notice to Tenant, to show the Premises to
prospective tenants at reasonable hours during the last twelve (12) months
of the Term and, if vacated during such period to decorate, remodel, repair
or otherwise prepare the Premises for re-occupancy without affecting
Tenant's obligation to pay rent.
(f) To retain at all times, and to use in appropriate instances, keys
to all doors within and into the Premises. No locks shall be changed
without the prior written consent of Landlord.
(g) To decorate or to make repairs, alterations, additions, or
improvements, whether structural or otherwise, in and about the Building,
or any part thereof, and for such purposes to enter upon the Premises upon
prior notice (except in the case of an emergency), and, during the
continuance of any of said work, to temporarily close doors, entryways,
public space and corridors in the Building and to interrupt or temporarily
suspend Building services and facilities, all without abatement of rent or
affecting any of Tenant's obligations hereunder, so long as the Premises
are reasonably accessible. In making any such repairs, alterations,
additions or improvements, Landlord shall use reasonable efforts to
minimize interference with Tenant's use of the Premises.
(h) To have and retain a paramount title to the Premises free and
clear of any act of Tenant purporting to burden or encumber it.
(i) To grant to anyone the exclusive right to conduct any business or
render any service in or to the Building, provided such exclusive right
shall not operate to exclude Tenant from the use expressly permitted
herein.
(j) To approve the weight, size and location of safes and other heavy
equipment and bulky articles in and about the Premises and the Building (so
as not to overload the floors of the Premises), and to require all such
items and furniture and similar items to be moved into and out of the
Building and Premises only at such times and in such manner as Landlord
shall direct in writing. Any damages done to the Building or Premises or
to other tenants in the Building by taking in or putting out safes,
furniture and other items, or from overloading the floor in any way, shall
be paid by Tenant. Furniture, boxes, merchandise or other bulky articles
shall be transported within the Building only upon or by vehicles equipped
with rubber tires and shall be carried only in the freight elevators and at
such times as the management of the Building shall require. Movements of
Tenant's property into or out of the Building and within the Building are
entirely at the risk and responsibility of Tenant, and Landlord reserves
the right to require permits before allowing any such property to be moved
into or out of the Building.
(k) To prohibit the placing of vending or dispensing machines of any
kind in or about the Premises without the prior written permission of
Landlord.
(l) To have access for the Landlord and other tenants of the Building
to any mail chutes located on the Premises according to the rules of the
United States Post Office.
(m) To change the arrangement or location of entrances, passageways,
doors and doorways, corridors, stairs, toilets and other public service
portions of the Building not contained within the Premises or any part
thereof.
(n) To close the Building after regular working hours and on
Saturdays, Sundays and legal holidays subject, however, to Tenant's right
to admittance, under such reasonable regulations as Landlord may prescribe
from time to time, which may include by way of example but not of limi
tation, that persons entering or leaving the Building identify themselves
to Building personnel by registration or otherwise and that said persons
establish their right to enter or leave the Building.
Landlord may enter upon the Premises and may exercise any or all of the
foregoing rights hereby reserved without being deemed guilty of an eviction or
disturbance of Tenant's use or possession and without being liable in any manner
to Tenant.
Article 24
Estoppel
Tenant agrees that from time to time upon not less than ten (10) days'
prior request by Landlord, Tenant or Tenant's duly authorized representative
having knowledge of the following facts shall deliver to Landlord a statement in
writing certifying (a) that this Lease is unmodified and in full force and
effect (or if there have been modifications that the Lease as modified is in
full force and effect); (b) the dates to which the rent and other charges have
been paid; (c) that neither Landlord nor Tenant is in default under any
provision of this Lease, or, if in default, the nature thereof in detail; and
(d) that there are no offsets or defenses to the payment of Base Rent,
additional rent or any other sums payable under this Lease or, if there are any
such offsets or defenses, specifying such in detail.
Article 25
Rules and Regulations
Tenant agrees to observe the reservations to Landlord in Article 23 hereof
and agrees, for itself, its employees, agents, servants, clients, customers,
invitees, licensees and guests to observe and comply at all times with the rules
and regulations set forth in Exhibit B attached hereto and made a part hereof,
and with such reasonable modifications thereof and additions thereto as Landlord
may from time-to-time make for the Building, and that failure to observe and
comply with such reservations, rules and regulations shall constitute a default
under this Lease.
Landlord reserves the right to make such other and further reasonable rules
and regulations as in Landlord's judgment may from time to time be needful for
the safety, care and cleanliness of the Building and Premises and for the
preservation of good order therein. Nothing in this Lease contained shall be
construed to impose upon Landlord any duty or obligation to enforce any such
rules and regulations, or the terms, covenants and conditions of any other lease
against any other tenant or any other persons, and Landlord shall not be liable
to Tenant for violation of any such rules and regulations, or terms, covenants
and conditions by any other tenant, its employees, agents, invitees, or by any
other person.
Article 26
Intentionally Omitted
Article 27
Assignment and Subletting
Tenant shall not, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed, (i) assign, convey,
mortgage, pledge or otherwise transfer this Lease, or any part thereof, or any
interest hereunder; (ii) permit any assignment of this Lease, or any part
thereof, by operation of law; (iii) sublet the Premises or any part thereof; or
(iv) permit the use of the Premises, or any part thereof, by any parties other
than Tenant, its agents and employees. Tenant shall, by notice in writing,
advise Landlord of its intention from, on and after a stated date (which shall
not be less than thirty (30) days after date of Tenant's notice), to assign this
Lease, or any part thereof, or to sublet any part or all of the Premises for the
balance or any part of the Term. Tenant's notice shall include all of the terms
of the proposed assignment or sublease (whether contained in such assignment or
sublease or in separate agreements) and shall state the consideration therefor.
In such event, Landlord shall have the right to be exercised by giving written
notice to Tenant within ten (10) business days after receipt of Tenant's
notice, to recapture the space described in Tenant's notice and such recapture
notice shall, if given, cancel and terminate this Lease with respect to the
space therein described as of the date stated in Tenant's notice. Tenant's
notice shall state the name and address of the proposed assignee or subtenant
and a true and complete and fully-executed copy of the proposed assignment or
sublease and any and all other agreements relating thereto shall be delivered to
Landlord with Tenant's notice. If Tenant's notice shall cover all of the
Premises, and Landlord shall have exercised its foregoing recapture right, the
Term of this Lease shall expire and end on the date stated in Tenant's notice as
fully and completely as if that date had been herein definitely fixed for the
expiration of the Term. If, however, this Lease be cancelled with respect to
less than the entire Premises, Base Rent and rent adjustments reserved herein
shall be adjusted on the basis of the number of square feet retained by Tenant
in proportion to the number of square feet contained in the Premises, as
described in this Lease, and this Lease as so amended shall continue thereafter
in full force and effect.
If Landlord, upon receiving Tenant's notice with respect to any such space,
shall not exercise its right to recapture as aforesaid, and if Tenant is not in
default under the terms of this Lease, Landlord will not unreasonably withhold
its consent to Tenant's assignment of the Lease or subletting such space to the
party identified in Tenant's notice, provided, however, that in the event
Landlord consents to any such assignment or subletting, and as a condition
thereto, Tenant shall pay to Landlord ninety per cent (90%) of all profit
derived by Tenant from such assignment or subletting. For purposes of the
foregoing, profit shall be deemed to include, but shall not be limited to, the
amount paid or payable to Tenant to effect or to induce Tenant to enter into any
such transaction, and the amount of all rent and other consideration of whatever
nature payable by such assignee or sublessee in excess of the Base Rent, and
rent adjustments, payable by Tenant under this Lease. If a part of the
consideration for such assignment or subletting shall be payable other than in
cash, the payment to Landlord of its share of such non-cash consideration shall
be in such form as is satisfactory to Landlord.
Tenant shall and hereby agrees that it will furnish to Landlord upon
request from Landlord a complete statement, certified by an independent
certified public accountant, setting forth in detail the computation of all
profit derived and to be derived from such assignment or subletting, such
computation to be made in accordance with generally accepted accounting prin
ciples. Tenant agrees that Landlord or its authorized representatives shall be
given access at all reasonable times to the books, records and papers of Tenant
relating to any such assignment or subletting, and Landlord shall have the right
to make copies thereof. The percentage of Tenant's profit due Landlord
hereunder shall be paid to Landlord within two (2) days of receipt by Tenant of
all payments made from time to time by such assignee or sublessee to Tenant.
For purposes of the foregoing, any change in the partners of Tenant, if
Tenant is a partnership, or, if Tenant is a corporation, any transfer of any or
all of the shares of stock of Tenant by sale, assignment, operation of law or
otherwise resulting in a change in the present control of such corporation by
the person or persons owning a majority of such shares as of the date of this
Lease, shall be deemed to be an assignment within the meaning of this Article
27.
Any subletting or assignment hereunder shall not release or discharge
Tenant of or from any liability, whether past, present or future, under this
Lease, and Tenant shall continue fully liable thereunder. Any subtenant or
assignee shall agree in a form satisfactory to Landlord to comply with and be
bound by all of the terms, covenants, conditions, provisions and agreements of
this Lease to the extent of the space sublet or assigned, and Tenant shall
deliver to Landlord promptly after execution, an executed copy of each such
sublease or assignment and an agreement of compliance by each such subtenant or
assignee. Tenant agrees to pay to Landlord, on demand, all reasonable costs
incurred by Landlord (including fees paid to attorneys) in connection with any
request by Tenant for Landlord to consent to any assignment or subletting by
Tenant. Any sale, assignment, mortgage, transfer, or subletting of this Lease
which is not in compliance with the provisions of this Article shall be of no
effect and void.
Article 28
Notice
All notices, demands, approvals and consents which may or are required to
be given by one party to the other under this Lease shall be in writing and
shall be delivered personally or by a nationally-recognized air courier service
or mailed by United States certified or registered mail, postage prepaid, (a) if
for the Tenant, addressed to the Tenant at the Premises with a copy to Tenant's
General Counsel at 500 Campus Drive, Morganville, New Jersey 07751, or at such
other place as Tenant may from time to time designate by notice to Landlord, or
(b) if for the Landlord, addressed to:
The Equitable Life Assurance
Society of the United States
c/o Equitable Real Estate Investment
Management, Inc.
Suite 3200
455 Cityfront Plaza Drive
Chicago, Illinois 60611
Attention: Regional Vice President -
Asset Management
With a copy to:
Equitable Real Estate Investment
Management, Inc.
3414 Peachtree Road, N.E.
Atlanta, Georgia 30326
and to:
COMPASS Management and Leasing, Inc.
Two North LaSalle Street, Suite 1705
Chicago, Illinois 60602
Attention: Building Manager
or at such other place as Landlord may from time to time designate by notice to
Tenant. Mailed notices shall be deemed given the date such notice is delivered
or on the date such delivery was refused.
Article 29
Default Under Other Lease
If the term of any other lease made by Tenant for any premises in the
Building shall be terminated after the making of this Lease because of any
default by Tenant under such other lease, Landlord, at its option, may terminate
this Lease by written notice to Tenant.
Article 30
Conveyance by Landlord
In case Landlord or any successor owner of the Property or the Building
shall convey or otherwise dispose of any portion thereof to another person, such
other person shall in its own name thereupon be and become Landlord hereunder
and shall assume fully in writing and be liable upon all liabilities and
obligations of this Lease to be performed by Landlord which first arise after
the date of conveyance, and such original Landlord or successor owner shall,
from and after the date of conveyance, be free of all liabilities and
obligations not then incurred.
Article 31
Subordination of Lease
The rights of the Tenant under this Lease shall be and are subject and
subordinate at all times to all ground leases and underlying leases, if any, now
or hereafter in force against the Property, and to the lien of any mortgages or
deeds of trust now or hereafter in force against such leases, the Property or
the Building, or all of them, and to all advances made or hereafter to be made
upon the security thereof, and to all renewals, modifications, amendments,
consolidations, replacements and extensions thereof. This Article is
self-operative and no further instrument of subordination shall be required.
Any mortgagee or beneficiary under a deed of trust may, however, elect to have
this Lease be superior to its mortgage or deed of trust. At Landlord's request,
Tenant shall execute a document in recordable form confirming that this Lease is
subordinate (or at the mortgagee's or beneficiary's election, superior) to any
mortgage or deed of trust. Tenant, at the option of any mortgagee or
beneficiary under a deed of trust, agrees to attorn to such mortgagee or
beneficiary in the event of a foreclosure sale or deed in lieu thereof.
Article 32
Brokers
Tenant represents and warrants to Landlord that neither it nor its officers
or agents nor anyone acting on its behalf has dealt with any real estate broker
other than Equity Resources and COMPASS Management and Leasing in the
negotiation or making of this Lease, and Tenant agrees to indemnify and hold
harmless Landlord from the claim or claims of any other broker or brokers
claiming to have interested Tenant in the Building or Premises or claiming to
have caused Tenant to enter into this Lease.
Article 33
Intentionally Omitted
Article 34
Miscellaneous
Landlord and Tenant further covenant with each other that:
(a) All rights and remedies of Landlord and Tenant under this Lease
shall be cumulative and none shall exclude any other rights and remedies
allowed by law.
(b) All payments becoming due under this Lease or under any work
order or other agreement relating to the Premises shall be considered as
rent, and if unpaid when due shall bear interest from such date until paid
at the rate of two percent (2%) per annum in excess of the corporate base
rate in effect from time to time at The First National Bank of Chicago
(unless a lesser rate shall then be the maximum rate permissible by law
with respect thereto, in which event such lesser rate shall be charged).
(c) The word "Tenant" wherever used herein shall be construed to mean
Tenants in all cases where there is more than one Tenant, and the necessary
grammatical changes required to make the provisions hereof apply either to
corporations or individuals, men or women, shall in all cases be assumed as
though in each case fully expressed.
(d) Each of the provisions of this Lease shall extend to and shall,
as the case may require, bind or inure to the benefit, not only of Landlord
and of Tenant, but also of their respective heirs, legal representatives,
successors and assigns, provided this clause shall not permit any
assignment contrary to the provisions of Article 27 hereof.
(e) All of the representations and obligations of Landlord are
contained herein, and no modification, waiver or amendment of this Lease or
of any of its conditions or provisions shall be binding upon the Landlord
unless in writing signed by Landlord or by a duly authorized agent of
Landlord empowered by a written authority signed by Landlord.
(f) Submission of this instrument for examination shall not bind
Landlord in any manner, and no lease or obligation on Landlord shall arise
until this instrument is signed and delivered by Landlord and Tenant.
(g) No rights to light or air over any property, whether belonging to
Landlord or any other person, are granted to Tenant by this Lease.
(h) Sectional headings in this Lease are solely for convenience of
reference and shall not in any way limit or amplify the terms and
provisions hereof.
(i) The laws of the State of Illinois shall govern the validity,
performance and enforcement of this Lease. The invalidity or
unenforceability of any provision of this Lease shall not offset or impair
any other provision. If any provision of this Lease is capable of two
constructions,
one of which would render the provision invalid and the other of which
would make the provision valid, then the provision shall have the meaning
which renders it valid.
(j) Landlord's title is and always shall be paramount to the title of
Tenant. Nothing herein contained shall empower Tenant to commit or engage
in any act which can, shall or may encumber the title of Landlord.
(k) 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
Landlord's election.
(l) Nothing contained in this Lease shall be deemed or construed by
the parties hereto or by any third party to create the relationship of
principal and agent, partnership, joint venture or any association between
Landlord and Tenant, it being expressly understood and agreed that neither
the method of computation of rent nor any act of the parties hereto shall
be deemed to create any relationship between Landlord and Tenant other than
the relationship of landlord and tenant.
(m) Landlord shall have the right to apply payments received from
Tenant pursuant to this Lease (regardless of Tenant's designation of such
payments) to satisfy any obligations of Tenant hereunder, in such order and
amounts, as Landlord in its sole discretion, may elect. Notwithstanding
the foregoing, Landlord shall use reasonable efforts to provide Tenant
notice in the event Tenant designates the application of payment and
Landlord applies such payment to any other obligation of Tenant. The
failure of Landlord to provide such notice to Tenant shall not be deemed a
breach of Landlord's obligations hereunder.
(n) All indemnities, covenants and agreements of Tenant contained
herein which inure to the benefit of Landlord shall be construed to also
inure to the benefit of Landlord's partners, officers, agents and
employees.
(o) Upon Landlord's reasonable request, Tenant shall deliver to
Landlord the annual financial statements covering Tenant for such fiscal
year.
(p) Tenant shall have the right, at Tenant's expense, to install and
maintain the signage identifying Tenant on the exterior signage strip above
the revolving door in the lobby of the Building leading to the stairway to
the Premises, which signage shall be subject to Landlord's prior approval.
Upon the termination of the Term, Tenant, at Tenant's expense, shall remove
said signage and repair any damage to the Building arising from such
installation or removal.
Article 35
Exculpation
Any obligation of Landlord, or its agent, under or with respect to this
Lease or the Building shall be enforceable only against and payable out of
Landlord's interest in the Building and Property, and Tenant hereby agrees that
neither Tenant nor any other person shall have or may assert any right, recourse
or remedy to or against Landlord or its agent or any assets of Landlord, except
to the extent (if any) of their respective interests in the Building and the
Property; and no officer, shareholder, director, employee, partner, trustee or
beneficiary of Landlord or its agent assumes or shall have any personal
liability of any kind whatsoever hereunder.
Article 36
Renewal Options
(A) First Renewal Option
Provided that no uncured default is existing under the Lease at the time
the option to renew described below is exercised or at the commencement of the
First Renewal Term (as hereinafter defined), subject to the existing rights of
Globe Glass & Mirror Co. ("Globe") to lease the Premises, Tenant shall have the
right to extend the Term for one (1) additional four (4) year period (the "First
Renewal Term"). The option to extend for the First Renewal Term shall be
exercised, if at all, by written notice from Tenant to Landlord ("Tenant's
Renewal Notice") given not later than August 31, 1997. In the event Tenant
fails strictly to comply with the procedure for exercise of the First Renewal
Term or Globe exercises its right to lease the Premises, Tenant shall have no
further right to extend the Term. Landlord shall promptly notify Tenant in the
event Globe exercises its rights to lease the Premises. The lease of the
Premises during the First Renewal Term shall be upon the same terms and
conditions as are contained in the Lease, except as hereinafter provided:
(i) The annual Base Rent for the First Renewal Term shall be as set forth
below:
Monthly
Annual Base Installment
Period Rent of Base Rent
------ ------ ------------
May 1, 1998-April 30, 1999 $23,000.00 $1,916.67
May 1, 1999-April 30, 2000 28,750.00 2,395.83
May 1, 2000-April 30, 2001 34,500.00 2,875.00
May 1, 2001-April 30, 2002 40,250.00 3,354.17
(ii) The rent adjustment payable by Tenant with respect to each calendar
year of the First Renewal Term, or portion thereof, shall be equal to Tenant's
Proportionate Share of the amount of the Ownership Taxes and Operating Expenses
for each such calendar year of the First Renewal Term, or portion thereof.
(iii) Landlord shall have no obligation to make improvements,
decorations, repairs, alterations, or additions to the Premises as a condition
to Tenant's obligation to pay Base Rent for the First Renewal Term.
(iv) Within thirty (30) days of request of Landlord, Landlord and Tenant
shall execute an amendment to Lease, which shall have been prepared by Landlord
and shall be in form and substance reasonably satisfactory to Landlord and
Tenant confirming the extension of the Term.
(B) Second Renewal Option
Provided that no uncured default is existing under the Lease at the time
the option to renew described below is exercised or at the commencement of the
Second Renewal Term (as hereinafter defined), Tenant shall have the right to
extend the Term, if and only if Tenant has extended the Term for the First
Renewal Term, for an additional five (5) year period (the "Second Renewal
Term"). The option to extend for the Second Renewal Term shall be exercised, if
at all, by written notice from Tenant to Landlord ("Tenant's Renewal Notice")
given not later than twelve (12) months prior to the expiration of the First
Renewal Term. In the event Tenant fails strictly to comply with the procedure
for exercise of the Second Renewal Term, Tenant shall have no further right to
extend the Term. The lease of the Premises during the Second Renewal Term shall
be upon the same terms and conditions as are contained in the Lease, except as
hereinafter provided:
(i) The annual Base Rent per rentable square foot of the Premises for the
Second Renewal Term shall be 95% of the then current Market Rentable Rate for a
term equal to the Second Renewal Term and commencing at approximately the
commencement date of the Second Renewal Term.
(ii) Landlord shall give Tenant notice ("Landlord"s Renewal Notice") of
Landlord's good faith determination of the annual Base Rent for the Second
Renewal Term not later than ten (10) business days after Landlord's receipt of
Tenant's Renewal Notice. In the event that Tenant disagrees with Landlord's
determination of the annual Base Rent, Tenant agrees to notify Landlord in
writing within ten (10) business days after receipt of Landlord's Renewal Notice
and thereafter Landlord and Tenant agree to negotiate such annual Base Rent in
good faith. In the event that Landlord and Tenant fail to agree upon the
determination of annual Base Rent for the Second Renewal Term by the date which
is forty-five (45) days after the date of Landlord's Renewal Notice, Tenant
shall have the right, exercisable by written notice to Landlord given within
forty-five (45) days of Landlord's Renewal Notice, to nullify its exercise of
the option to extend the Term, in which event Tenant's exercise of such option
to extend shall be null and void and neither Landlord nor Tenant shall have any
further rights or liabilities with respect thereto. Tenant's failure to give
any notice of nullification within forty-five (45) days of Landlord's Renewal
Notice shall constitute Tenant's acceptance of, and Tenant's agreement to pay,
the annual Base Rent specified in Landlord's Renewal Notice for the Second
Renewal Term.
(iii) The rent adjustment payable by Tenant with respect to each
calendar year of the Second Renewal Term, or portion thereof, shall be equal to
Tenant's Proportionate Share of the amount of the Ownership Taxes and Operating
Expenses for each such calendar year of the Second Renewal Term, or portion
thereof.
(iv) Landlord shall have no obligation to make improvements, decorations,
repairs, alterations, or additions to the Premises as a condition to Tenant's
obligation to pay Base Rent for the Second Renewal Term, except to the extent
the tenant improvement allowance is included as a part of the Market Rental Rate
for the Second Renewal Term.
(v) Within thirty (30) days of request of Landlord, Landlord and Tenant
shall execute an amendment to Lease, which shall have been prepared by Landlord
and shall be in form and substance reasonably satisfactory to Landlord and
Tenant confirming the extension of the Term.
LANDLORD:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES, a New York corporation
By: /s/ Michael Lunder
--------------------------
Michael Lunder
--------------------------
PRINT NAME
Its: Investment Officer
TENANT:
By: NEW HORIZONS COMPUTER LEARNING CENTER OF
CHICAGO, INC., a Delaware corporation
/s/ John T. St. James
--------------------------------
PRINT NAME
John T. St. James
Treasurer
--------------------------------
(Title)
CERTIFICATE
I, Gary T. Gann , Secretary of NEW HORIZONS COMPUTER LEARNING CENTER OF
CHICAGO, INC., a Delaware corporation, Tenant, hereby certify that the officer
executing the foregoing Lease on behalf of Tenant was duly authorized to act in
his capacity as Treasurer, and his action is the action of Tenant.
(Corporate Seal)
/s/ Gary T. Gann
----------------------
Secretary
EXHIBIT B
RULES AND REGULATIONS
To the extent that there is any inconsistency between the provisions of the
Lease and these Rules and Regulations, the provisions of the Lease shall
control.
(1) The sidewalks, halls, passages, exits, entrances, elevators and
stairways of the Building shall not be obstructed by any of the tenants or used
by them for any purpose other than for ingress to and egress from their
respective premises. The halls, passages, exits, entrances, elevators and
stairways are not for the general public, and Landlord shall in all cases retain
the right to control and prevent access thereto of all persons whose presence in
the judgement of Landlord would be prejudicial to the safety, character,
reputation and interests of the Building and its Tenants. No Tenant and no
employee or invitee of any Tenant shall go upon the roof of the Building without
the prior written consent of Landlord.
(2) No sign, placard, picture, name, advertisement or notice, visible from
the exterior of any Tenant's premises shall be inscribed, painted, affixed or
otherwise displayed by any Tenant on any part of the Building without the prior
written consent of Landlord, which consent will not be unreasonably withheld.
Landlord will adopt and furnish to Tenant general guidelines relating to signs
inside the Building on the office floors. Tenant agrees to conform to such
guidelines, but may request approval of Landlord for modifications, which
approval will not be unreasonably withheld. All approved signs or lettering on
doors shall be printed, painted, affixed or inscribed at the expense of the
Tenant by a person approved by Landlord, which approval will not be unreasonably
withheld. Material visible from outside the Building will not be permitted.
(3) Tenant shall not allow a fire or bankruptcy sale or any auction to be
held on the premises or allow the premises to be used for the storage of
merchandise held for sale to the general public.
(4) No Tenant shall allow the premises to be used for lodging, nor shall
cooking be done or permitted by any Tenant on the premises, except the use by
the Tenant of Underwriters' Laboratory approved equipment for brewing coffee,
tea, hot chocolate and similar beverages and vending machines shall be
permitted, provided that such use is in accordance with all applicable federal,
state and city laws, codes, ordinances, rules and regulations.
(5) No Tenant shall employ any person or persons other than the janitor of
Landlord for the purpose of cleaning the premises, unless otherwise agreed to by
Landlord in writing. Except with the written consent of Landlord, no person or
persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the same. No Tenant shall cause any
unnecessary labor by reason of such Tenant's carelessness or indifference in the
preservation of good order and cleanliness. Janitor services will not be
furnished on nights when rooms are occupied after 9:30 p.m. unless, by agreement
in writing, service is extended to a later hour for specifically designated
rooms.
(6) Landlord will furnish each Tenant free of charge with two keys to each
door lock in the premises. Landlord may make a reasonable charge for any
additional keys. No Tenant shall have any keys made. No Tenant shall alter any
lock or install a new or additional lock or any bolt on any door of its premises
without the prior written consent of Landlord. Tenant shall in each case
furnish Landlord with a key for any such lock. Each Tenant, upon the
termination of its tenancy, shall deliver to Landlord all keys to doors in the
Building which shall have been furnished to Tenant. All doors to the Premises
shall be rekeyed prior to Tenant's acceptance and possession of the Premises.
(7) Landlord shall designate how all office equipment, furniture,
appliances and other large objects or property ("Equipment") shall be moved in
and/or out of the Building. Landlord shall have the right to prescribe the
weight, size and position of all Equipment brought into the Building. Heavy
objects shall, if requested by Landlord, stand on wood strips of such thickness
as is necessary to properly distribute the weight. Landlord will not be
responsible for loss of or damage to any such Equipment from any cause, and all
damage done to the Building by moving or maintaining such Equipment shall be
repaired at the expense of Tenant. Notwithstanding the foregoing, Tenant may
move in and/or out of the Building on the passenger elevators portable computers
in an amount not to exceed the number of such portable computers that may be
reasonably stacked on a handcart.
T
Tenant shall use or keep or permit to be used or kept any foul obnoxious gas or
substances in the premises, or permit or suffer the premises to be occupied or
used in a manner offensive or objectionable to Landlord or to other occupants of
the Building by reason of noise, odors, or vibrations, or interfere in any way
with other tenants or those having business therein.
(9) Landlord shall have the right, exercisable with 30 day advance written
notice and without liability to any Tenant, to change the name and street
address of the Building.
(10) Landlord reserves the right to exclude from the Building between the
hours of 6:00 p.m. and 7:00 a.m. and all hours on Sundays, legal holidays and on
Saturdays any person who, in Landlord's sole opinion, has no legitimate business
in the Building. Landlord shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person.
In the case of invasion, mob, riot, public excitement or other circumstances
rendering such action advisable in Landlord's opinion, Landlord reserves the
right to prevent access to the Building during the continuance of the same by
such action as Landlord may deem appropriate, including closing doors. Landlord
recognizes that due to the public interest aspect of Tenant's business, Tenant
may require entry by emergency crews at off hours.
(11) The directory of the Building will be provided for the display of the
name and location of Tenants. Any additional name which Tenant shall desire to
place upon said bulletin board must first be approved by Landlord in writing,
and, if so approved, a charge will be made therefore.
(12) No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with any window of the Building without the prior written
consent of Landlord, and such items shall be installed as instructed by
Landlord.
(13) Except for vending machines permitted on the Premises and for food
brought by Tenant's employees for personal consumption on the Premises, no
Tenant shall obtain for use in the premises, ice, drinking water, food,
beverage, towel or other similar services, except at such reasonable regulations
as may be fixed by Landlord.
(14) Each Tenant shall see that the doors of its premises are closed and
locked and that all water faucets, water apparatus and utilities are shut off
before Tenant or Tenant's employees leave the premises, so as to prevent waste
or damage, and for any default or carelessness in this regard Tenant shall made
good all injuries sustained by other tenants or occupants of the Building or
Landlord. All Tenants shall keep the doors to the Building corridors closed at
all times except for ingress and egress.
(15) The toilet rooms, toilets, urinals, wash basins and other apparatus
shall not be used for any purpose other than that for which they were
constructed, 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.
Ten
Tenant be used for manufacturing of any kind, or any business or activity other
than that specifically provided for in such Tenant's lease.
(17) No Tenant shall install any radio or television antenna, loudspeaker,
or other device on the roof or exterior walls of the Building, without
Landlord's prior written consent.
(18) Hand trucks shall not be used in any space or public halls of the
Building, either by any Tenant or others, except those equipped with rubber
tires and side guards or such other material-handling equipment as Landlord may
approve. No other vehicles of any kind shall be brought by any Tenant into the
Building or kept in or about the premises.
(19) Except as provide in paragraph (7) of the Rules and Regulations,
Tenant agrees to coordinate all moving activity of office equipment and
furniture in and out of the Building with Landlord or Landlord's agent, and to
use the services of an insured professional moving company. Tenant acknowledges
that any attempt to bring in or take out any office equipment or furniture from
the Building without prior written approval of Landlord or Landlord's agent will
be prevented by the on-site security guard, except for the portable computers
described in paragraph (7) of the Rules and Regulations.
(20) Each Tenant shall store all its trash and garbage within its premises.
No material shall be placed on the trash boxes, receptacles or common areas if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of trash and garbage in the
Chicago area, without being in violation of any law or ordinance governing such
disposal. All garbage and refuse disposal shall be made only through entryways
and elevators provided for such purposes and at such times as Landlord shall
designate.
(21) Canvassing, soliciting, distribution of handbills, or any other
written material peddling in the Building are prohibited, and each Tenant shall
cooperate to prevent the same.
(22) Tenant agrees to abide by all governmental rules and regulations
pertaining to thermostatic control of the temperature on the Premises. Air
conditioning services shall be provided per the Lease.
(23) Tenant agrees not to allow or keep any animals or pets of any kind on
the premises, except those seeing-eye dogs which are for the direct purpose of
aiding and assisting the visually impaired.
(24) The requirements of the Tenants will be attended to only upon
application by telephone or in person at the office of Landlord.
(25) Landlord may waive any one or more of these Rules and Regulations for
the benefit of any particular Tenant or Tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other Tenant or Tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the Tenants of the Building.
(26) These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the Building.
or
order therein.
EXHIBIT C
WORK LETTER AGREEMENT
TWO NORTH LASALLE STREET
CHICAGO, ILLINOIS
, 1995
------- ----
New Horizons Computer
Learning Center of Chicago, Inc.
2 North LaSalle Street
Chicago, Illinois 60602
Re: Work Letter Agreement
Ladies and Gentlemen:
You (hereinafter called "Tenant") and we (hereinafter called
"Landlord"), are executing simultaneously with this Work Letter Agreement an
Office Lease (the "Lease") covering certain premises (the "Premises") more
particularly described in the Lease, in the building located at 2 North LaSalle
Street, Chicago, Illinois. The Lease is hereby incorporated by reference to the
extent that its provisions may apply to this Work Letter Agreement. In
consideration of the mutual covenants hereinafter contained, and in
consideration of the execution of the Lease by Landlord and Tenant, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant agree as follows:
SECTION 1. Scope of Work. Tenant shall complete all the
improvements necessary to prepare the Premises for Tenant's use and occupancy
(the "Improvements"), pursuant to plans and specifications prepared by Tenant
which are reasonably acceptable to and approved by Landlord as hereinafter
provided.
SECTION 2. Timetable for Creating and Approving Plans and
Specifications. Immediately upon the execution of this Work Letter Agreement,
Tenant shall provide to DePalma (the "Tenant Architect") Tenant's requirements
for the Premises in sufficient detail to enable the Tenant Architect to prepare
the preliminary space plan necessary for the construction of the Improvements to
the Premises on or before April 1, 1995. The parties further agree that:
(a) within ten (10) business days after the delivery of said
preliminary space plan to Landlord, Landlord shall have approved said space plan
or shall have delivered to Tenant its written objections to said preliminary
space plan in accordance with Section 3;
(b) on or before April 7, 1995, Tenant shall cause the Tenant
Architect to prepare the necessary architectural construction drawings for the
Improvements (the "Architectural Drawings") and Landlord shall cause ESD
("Landlord's Engineer") to prepare the necessary mechanical, electrical and
plumbing construction drawings for the Improvements (the "Engineering Drawings")
(the Architectural Drawings and the Engineering Drawings are hereinafter
together referred to as the "Plans and Specifications") in substantial
conformity with the preliminary space plan approved by Landlord. The initial
Architectural Drawings must include partition drawings, telephone and electric
drawings and reflected ceiling drawings, and shall be suitable in all respects
for submission to the City of Chicago in order to obtain a building permit and
to allow for the preparation of accurate and complete cost estimates. The
Architectural Drawings are expressly subject to Landlord's written approval; and
(c) within ten (10) business days after the delivery of the
Architectural Drawings Landlord shall have approved the Architectural Drawings
or shall have delivered to Tenant its written objections to the Architectural
Drawings in accordance with Section 3.
SECTION 3. Landlord's Approval.
(a) If the Architectural Drawings submitted by the Tenant Architect
are in substantial conformity with the preliminary space plan, Landlord agrees
that it will not unreasonably withhold its approval. If either is disapproved,
Landlord shall notify Tenant in writing, detailing, with appropriate specificity
that portion or element of the item disapproved and the reasons for such
disapproval. Upon Landlord's disapproval, Tenant shall undertake to have such
disapproved element or component modified and shall promptly resubmit same to
Landlord within five (5) business days. Thereafter, in each instance (if more
than one) of further resubmission of a disapproved component, Tenant shall have
five (5) business days to revise and resubmit to Landlord such component. In
each instance of resubmitted components, Landlord shall have five (5) business
days within which to approve or disapprove as aforesaid each such resubmittal.
Said five (5) business day sequence of resubmission and approval or disapproval
as aforesaid shall continue until such time as all of the components composing
the Plans and Specifications have been approved by Landlord.
(b) Tenant agrees that Landlord shall not have unreasonably
disapproved the Architectural Drawings and shall not have unreasonably requested
modifications and changes to the Architectural Drawings if: (i) the
Improvements adversely affect any of the mechanical, electrical, HVAC or other
systems in the Building; (ii) the Improvements adversely affect the structure of
the Building; (iii) the Improvements increase Landlord's costs of operating and
maintaining the Building (unless Tenant agrees to pay such costs); or (iv) the
Improvements violate the terms of any applicable zoning and building laws or
ordinances. The foregoing shall not constitute an exhaustive list of the
reasons for Landlord's disapproval or request for changes and modifications,
provided, however, that Landlord shall at all times act in a reasonable manner
in approving the Architectural Drawings submitted by Tenant as aforesaid.
(c) The Plans and Specifications shall comply with all applicable
statutes, ordinances, regulations, laws and codes and with the requirements of
Landlord's fire insurance underwriters disclosed to Tenant. Neither review nor
approval by Landlord of the Plans and Specifications shall constitute a
representation or warranty by Landlord that such Plans and Specifications either
(i) are complete or suitable for their intended purpose, or (ii) comply with
applicable laws, ordinances, codes and regulations, it being expressly agreed by
Tenant that Landlord assumes no responsibility or liability whatsoever to Tenant
or to any other person or entity for such completeness, suitability or
compliance. Tenant shall not make any changes in the Plans and Specifications
without Landlord's prior written approval.
(d) When the Plans and Specifications have been ultimately approved
by Landlord, Tenant and Landlord shall each affix their respective signatures or
initials to each page of each, and same shall be deemed to become a part of this
Work Letter Agreement as Schedule 1.
SECTION 4. Cost of the Work. Within ten (10) business days after
Landlord's approval of the Plans and Specifications, Tenant shall provide
Landlord with a reasonably detailed and complete budget indicating the total
cost of the Improvements. Within five (5) business days after Landlord's
receipt of Tenant's budget for the Improvements, Landlord shall approve same,
and the aggregate of all items contained in such approved budget is herein
referred to as the "Contract Sum."
Notwithstanding the times set forth above for the approval of the
budget and Contract Sum, Tenant, in order to keep the construction of the
Improvements on schedule, may require that a portion of a budget be approved in
advance of the completion of the final budget, to enable Tenant to pre-order
materials and supplies. If Tenant so requests advance approval of a budget line
item or category, Landlord agrees to use its reasonable efforts to approve same
within three (3) business days of Tenant's request for same, provided that
Landlord has been provided such information about the budget line item or
category as Landlord may reasonably request.
SECTION 5. Landlord's Allowance. Landlord agrees to pay a sum
("Landlord's Allowance") equal to $115,000.00 toward the cost of the
Improvements and the cost of the Plans and Specifications. Tenant shall pay and
be responsible for all costs of demolition, the Improvements and the
Architectural Drawings in excess of Landlord's Allowance, which amount shall be
paid for such costs on a pro rata basis together with Landlord's pro rata share
of Landlord's Allowance. Tenant shall advise Landlord of the cost of the
Improvements on the basis of a construction contract or contracts executed by
Tenant for the Improvements. Landlord shall pay the Landlord's Allowance not
more often than monthly within thirty (30) days after receipt of the draw
documentation as hereinafter described. In the event the cost of the
Improvements shall be adjusted downward and the total amount of Landlord's
Allowance paid out on a pro rata basis shall be less than $115,000.00, Landlord
shall pay to Tenant the balance of Landlord's Allowance within thirty (30) days
after completion of all of the Improvements.
SECTION 6. Construction of and Payment for Improvements.
(a) The Improvements shall be constructed by a general contractor
chosen by Tenant and approved by Landlord, which approval shall not be
unreasonably withheld or delayed. Tenant shall submit to Landlord a list of
subcontractors which Tenant or its general contractor proposes to use for
Landlord's approval, which shall not be unreasonably withheld or delayed, and
Tenant shall not permit or cause the general contractor to utilize any
subcontractor not so approved by Landlord. Tenant shall deliver to Landlord a
copy of the contract proposed to be executed by Tenant for the Improvements,
which shall require the contractor to comply with the requirements of this
Section 6. Prior to the commencement of construction of the Improvements,
Tenant shall obtain, and deliver to Landlord copies of, all required building
permits and other governmental approvals required for construction of the
Improvements.
(b) As a condition to the payment by Landlord of any portion of the
Landlord's Allowance, the Landlord shall receive (i) a certification from the
contractor and the Tenant Architect at the time of each payment that the
Improvements have been constructed in accordance with the Plans and
Specifications, and (ii) receipts, bills, invoices, original lien waivers from
all contractors, subcontractors, materialmen and suppliers who performed work on
or furnished materials in connection with the Improvements who are to be paid in
accordance with the applicable request for payment and such other supporting
documentation as Landlord may reasonably require to evidence the amount payable
for the Improvements and for all items installed by Tenant in the Premises as of
the date of such requested disbursement. In addition, as a condition to the
payment by Landlord of the final disbursement of Landlord's Allowance for the
Improvements, Landlord shall receive (x) a certificate from the contractor and
the Tenant architect that the Improvements have been finally completed; (y) such
receipts, bills, invoices, lien waivers and other supporting documentation as
Landlord may reasonably require to evidence the final amount payable for the
Improvements and all items installed by Tenant in the Premises; and (z) a
certificate of occupancy for the Premises, if available. Until completion of
the Improvements and satisfaction by Tenant of the provisions of Section 6(d)
below, the portion of Landlord's Allowance disbursed for Improvements shall at
no time exceed 90% of the proportion of the Contract Sum represented by work
then in place.
(c) Tenant shall coordinate, and cause its contractors to coordinate,
with Landlord, the Landlord's architect and Landlord's agents and employees in
relation to the scheduling of construction, the use of Building loading docks,
the delivery of materials and labor for the Premises and the elimination of
rubbish and construction debris. Landlord shall not charge Tenant for freight
elevator service, electricity and HVAC provided by Landlord during normal
business hours during the period of construction of the Improvements and prior
to the Commencement Date. Landlord shall have the right to supervise and
inspect the construction of the Improvements and to coordinate construction of
the Improvements with other activities in the Building. Tenant shall pay to
Landlord all direct out-of-pocket costs (not to exceed $10,000.00) incurred by
Landlord in connection with the review of the Plans and Specifications and the
supervision of the construction of the Improvements, which costs shall be paid
from the Landlord's Allowance.
(d) Tenant shall, within twenty (20) business days after completion
of the Improvements, deliver to Landlord the following:
(i) The Tenant Architect's certificate, in form and substance
reasonably satisfactory to Landlord, certifying that the Improvements are in
place and have been performed substantially in accordance with the Plans and
Specifications;
(ii) A detailed breakdown, in form and substance reasonably
satisfactory to Landlord, of the final and total costs of the Improvements,
prepared by Tenant and its contractor, together with receipted invoices showing
payment thereof;
(iii) Original waivers of lien and contractors' affidavits in such
form as may be reasonably required by Landlord, from all parties performing
labor or supplying materials in connection with the Improvements and sworn
statements and long form affidavits and waivers from the Tenant Architect and
Tenant's engineer and contractors and any other party with whom Tenant
contracted directly for labor or materials furnished Tenant in or for the
Premises;
(iv) Copies of all warranties for workmanship, materials and
equipment received by Tenant from manufacturers and/or installers in connection
with the Improvements;
(v) "As-built" plans and specifications, certified by the Tenant
Architect and Landlord's Engineer, and information regarding any special
requirements for cleaning the improvements completed on behalf of Tenant. The
"as-built" plans and specifications shall consist of reproducible copies of the
Plans and Specifications marked to accurately show all changes from the Plans
and Specifications made in the actual construction of the Premises; and
(vi) Information with regard to any special security systems
installed by Tenant in order that Building management and security may
coordinate and assist in security efforts.
(e) As a condition to the payment by Landlord of any portion of the
Landlord's Allowance for the cost of the Plans and Specifications, Landlord
shall receive receipts, bills, invoices, and other supporting documentation as
Landlord may reasonably require with respect to the Plans and Specifications for
which payment by Landlord is requested.
SECTION 7. Changes in the Improvements. Tenant shall deliver to
Landlord for approval (which approval shall be given, or withheld, within the
same times as provided for approval or disapproval of Plans and Specifications
as provided in Section 2), such material changes in the Plans and Specifications
as are made by Tenant and the Tenant Architect from time to time and shall
advise Landlord of any changes in the Contract Sum or any amendments to the
contracts entered into by Tenant for the construction of the Improvements which
increase the Contract Sum.
SECTION 8. Access by Tenant. Inasmuch as Tenant is constructing the
Improvements hereunder, Landlord hereby agrees to permit Tenant and Tenant's
agents, suppliers, contractors and workmen to take possession of and enter the
Premises prior to the commencement of the Term to enable Tenant to commence,
construct and complete the Improvements. Base Rent and rent adjustment shall
not commence for the Premises except as provided in the Lease. The contractors,
suppliers and workmen of Tenant shall not unreasonably interfere with other
tenants in the Building and shall comply with reasonable rules and regulations
instituted by Landlord for the protection of other occupants of the Building.
Tenant shall indemnify, defend and hold Landlord, its beneficiaries, agents and
employees harmless from all loss, costs, claims, damage, liability, fees and
expenses arising out of or connected with the activities of Tenant or its
agents, contractors, suppliers or workmen in or about the Premises or the
Building. In addition, prior to the initial entry to the Building or the
Premises by Tenant and by each contractor or subcontractor for Tenant, Tenant
shall furnish Landlord with policies of insurance covering Landlord and such
additional parties as Landlord may reasonably designate as additional insured
parties, with such coverages and in such amounts as Landlord may then reasonably
require (which coverages shall not exceed coverages normally carried by
contractors for construction work of this nature) in order to insure Landlord
against liability for injury or death or damage to property of Landlord or its
tenants by reason of such entry or any activity or work carried on, in, on or
about the Project, the Building, or the Premises by or on behalf of Tenant.
SECTION 9. No Other Agreements. Except as set forth in the Lease,
Landlord has no other agreement with Tenant and has no other obligation to do
any other work with respect to the Premises. Any other work in the Premises
which may be permitted by Landlord pursuant to the terms and conditions of the
Lease shall be done at Tenant's sole cost and expense, and in strict compliance
with said terms and conditions.
SECTION 10. Miscellaneous.
(a) With respect to any amounts owed by Tenant or Landlord hereunder
and not paid when due, Landlord or Tenant, as the case may be, shall have all
rights and remedies at law or in equity or under the Lease to enforce the
obligation to pay amounts required hereunder.
(b) Tenant shall have reasonable access to loading docks and freight
elevators in connection with the construction of the Improvements and to other
portions of the Building as required to perform its work under the Lease and
this Work Letter Agreement.
(c) This Work Letter Agreement shall not be deemed applicable to any
additional space added to the Premises at any time or from time to time, whether
by any options under the Lease or otherwise, or to any portion of the Premises
or any additions thereto in the event of a renewal or extension of the initial
term of the Lease, whether by any options under the Lease or otherwise, unless
expressly so provided in the Lease or any amendment or supplement thereto.
If the foregoing correctly sets forth our understanding, kindly sign as
indicated below.
LANDLORD:
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES, a New York
corporation
By: /s/ Michael Lunder
--------------------------
Name: Michael Lunder
--------------------------
Its: Investment Officer
--------------------------
ACCEPTED AND AGREED:
TENANT:
NEW HORIZONS COMPUTER LEARNING
CENTER OF CHICAGO, INC.,
a Delaware corporation
By: /s/ John T. St. James
-------------------------------
Name: John T. St. James
-------------------------------
Title: Treasurer
-------------------------------
GUARANTY
The undersigned ("Guarantor"), the of New Horizons
Education Corporation, a Delaware corporation ("Tenant"), in consideration of
the leasing of the Premises described in the attached Lease to Tenant therein
mentioned, does hereby absolutely, unconditionally and irrevocably guarantee to
The Equitable Life Assurance Society of the United States ("Landlord") the full
and complete performance of all of Tenant's covenants and obligations under such
Lease and the full payment by Tenant of all Base Rent, rent adjustments and
other charges and amounts required to be paid thereunder, and all attorneys'
fees, costs, and expenses of collection incurred by Landlord in enforcing the
Lease.
GUARANTOR AGREES THAT:
1. Without affecting, diminishing, or otherwise impairing the liability
of Guarantor hereunder and without notice or consent of Guarantor, Landlord may
from time to time grant extensions, indulgences, releases, and discharges to
Tenant or any other Guarantor, and may take security for performance of Tenant's
covenants and obligations under the Lease and may release any or all security or
refrain from perfecting any interest in any security granted by Tenant or any
other Guarantor.
2. Landlord may amend or modify the Lease and otherwise may deal with
Tenant, without notice to or consent of Guarantor, and without affecting,
diminishing, or otherwise impairing the liability of Guarantor hereunder.
3. Guarantor shall not be subrogated to Landlord in respect of any action
taken or permitted by Landlord against Tenant or any other guarantor, until
Landlord has received payment in full of all Base Rent, rent adjustments and
other charges and amounts required to be paid under the Lease, together with
interest thereon and together with all costs, attorneys' fees and other expenses
incurred by Landlord in enforcing such obligations or in enforcing performance
and observation of any other obligation hereby guaranteed.
4. Landlord may from time to time consent to any action or non-action of
Tenant or any other guarantor, which, in the absence of such consent, violates
or may violate any provisions of the Lease, and such consent may be granted by
Landlord, without in any manner affecting, diminishing, or impairing the
liability of Guarantor hereunder.
5. This Guaranty shall continue to be effective, or be reinstated (as the
case may be) if at any time payment by Tenant or any other Guarantor of all or
any part of any sum payable pursuant to the lease or any other guaranty, as the
case may be, is rescinded or otherwise must be returned by Landlord upon the
insolvency, bankruptcy, or reorganization of the payor all as though such
payment to Landlord had not been made.
6. No change in the name, purposes, capitalization, or organization of
Tenant shall in any way affect, diminish, or otherwise impair the liability of
Guarantor, and Landlord shall not be obligated to inquire into the powers of
Tenant notwithstanding the fact that any actions taken by Tenant shall be in
excess of such powers.
7. Landlord shall not be obligated to exhaust its recourse against
Tenant, or any other guarantor or person, or any security it may have for
performance of the Lease before being entitled to payment from Guarantor or
performance of each and every one of the obligations hereby guaranteed.
8. Notwithstanding the provisions of the laws of any state relating to
the rate of interest payable by Tenant, this Guaranty shall remain in full force
and effect whatever the rate of interest received or demanded by Landlord upon
the occurrence of a default under the Lease, and no invalidity, irregularity, or
unenforceability (by reason of any bankruptcy or similar law, any other law or
any order of any government or agency thereof purporting to reduce, amend, or
otherwise affect any indebtedness or liability of Tenant or of any security
therefor) and no release or discharge of Tenant in any receivership, bankruptcy,
winding-up, or other creditor proceedings shall affect, diminish, or otherwise
impair or otherwise be a defense to this Guaranty.
9. This Guaranty has been delivered free of any conditions and no
representations have been made to Guarantor affecting or limiting the liability
of Guarantor under this Guaranty. This Guaranty is in addition to and not in
substitution for any other guarantees held or which may hereafter be held by
Landlord.
10. No action or proceeding brought or instituted under this Guaranty and
no recovery in pursuance thereof shall be a bar or defense to any further action
or proceeding which may be brought under this Guaranty by reason of any further
default or defaults hereunder or in the performance and observance of the terms,
covenants, conditions, and provisions of the Lease.
11. No waiver, modification, extension, forbearance, or delay on the part
of Landlord with respect to the Lease and no act or thing which might, but for
this provision of this Guaranty, be deemed a legal or equitable discharge of a
surety, shall operate to release the obligations of Guarantor under this
Guaranty, and no delay on the part of Landlord in exercising any of its options,
powers, or rights hereunder, or a partial or single exercise thereof, shall
constitute a waiver of any other rights hereunder.
12. Guarantor hereby waives presentment, protest, notice, demand, or
action on delinquency in respect to the Lease or any obligation hereby
guaranteed. Guarantor waives acceptance of this Guaranty.
13. This Guaranty shall be governed and construed under the laws of the
State of Illinois. This Guaranty shall be construed as an absolute, continuing
and unlimited Guaranty of all of Tenant's obligations under the Lease, without
regard to regularity, validity or enforceability of any liability or obligation
of Tenant hereby guaranteed, and the undersigned shall be bound on this Guaranty
to Landlord as if Tenant's obligations under the Lease were the primary
obligation of the undersigned.
14. This Guaranty shall inure to the benefit of Landlord, its successors
and assigns, and shall be binding upon Guarantor and its heirs, personal
representatives, successors and assigns, as the case may be.
15. Guarantor hereby agrees that all actions and proceedings arising
directly or indirectly hereunder may, at the option of Landlord, be litigated in
courts having situs within the State of Illinois and Guarantor hereby expressly
consents to the jurisdiction of any local, state or federal court located within
the State of Illinois and consents that any service of process in such action or
proceeding may be made by personal service upon Guarantor wherever Guarantor may
then be located or by certified or registered mail to Guarantor at the Premises.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
5th day of April, 1995.
GUARANTOR:
NEW HORIZONS EDUCATION CORPORATION
By: /s/ John T. St. James
-------------------------------
Its: John T. St. James, Treasurer
-------------------------------
STATE OF New Jersey )
) SS.
COUNTY OF Monmouth )
I, the undersigned, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that John T. St. James, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that he/she signed,
sealed and delivered the said instrument as his/her free and voluntary act, for
the uses and purposes herein set forth.
Given under my hand and official seal this 5 day of April, 1995.
/s/ Linda L. Kelly
-------------------------------
Notary Public
LINDA L. KELLY
NOTARY PUBLIC OF NEW JERSEY
My Commission Expired May 7, 1996
_DOCUMENT #: CHGO01 (27263-00085-6) 128965.5;DATE:04/25/95/
TIME:16:38_
Exhibit 99.1
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
HANDEX ENVIRONMENTAL RECOVERY, INC.
---------------------------------------------------
Pursuant to Section 242 of the
Delaware General Corporation Law
--------------------------------------------------
The undersigned, Curtis Lee Smith, Jr., being the Chairman of the Board of
Directors, and Gary T. Gann, being the Assistant Secretary of Handex
Environmental Recovery, Inc., a Delaware corporation (the "Corporation"), hereby
certify as follows:
1. The name of the Corporation is Handex Environmental Recovery, Inc.
2. The amendment of the Certificate of Incorporation as hereinafter set
forth has been duly adopted in accordance with Section 242 of the Delaware
General Corporation Law.
3. The Certificate of Incorporation of the Corporation is hereby amended
by deleting in its entirety the current Article I and replacing it with the
following:
"The name of the Corporation is Handex Corporation"
IN WITNESS WHEREOF, the undersigned, being the duly elected and acting
Chairman of the Board of Directors and Assistant Secretary, respectively, have
hereunto subscribed their names to this Certificate of Amendment and affirm that
the facts stated herein are true under penalties of perjury, this 9th day
of May, 1995.
/s/ Curtis Lee Smith, Jr.
-----------------------------
Curtis Lee Smith, Jr.
Chairman
/s/ Gary T. Gann
-----------------------------
Gary T. Gann
Assistant Secretary
