SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 017833
GREENLAND CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 87-0439051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7084 Miramar Road, Fourth Floor
SAN DIEGO, CALIFORNIA 92121
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 566-9604
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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. [[root]] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
As of March 14, 1997, the aggregate market value of the voting stock (15,914,460
shares) held by non-affiliates of the registrant was 5,900,862, based on $.34
per share trading price for that day.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
$.001 PAR VALUE CLASS A COMMON STOCK 19,167,091
- ------------------------------------ --------------------------
Class Outstanding as of March 14, 1997
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Part III of this Form 10-KSB is included by
reference to the Company's difinitive proxy statement filed in accordance with
rule 14a-101, Schedule 14A.
Traditional Small Business Disclosure Format (check one): [X] Yes [ ] No
<PAGE>
PART I
Item 1.
Business
Greenland is a corporation formed on July 17, 1986 as Zebu, Inc. On
September 11, 1994, the shareholders approved changing the name of the company
to Greenland Corporation. In September of 1994, the Company acquired GAM
Properties, Inc. ("GAM") and has subsequently acquired additional real estate
properties in San Diego, California and Tucson, Arizona. The principal place of
business and general offices of the Company are located at 7480 Miramar Road,
4th Floor, San Diego, California 92121, Phone (619) 566-9604, (800) 234- 4226.
In December 1995, the Company acquired the assets of Integrated
Communications Access Network, Inc. ("ICAN"). These assets included certain
interactive television licenses granted by the Federal Communications Commission
("FCC") identified as IVDS. In August 1996, the Company filed, on Form 8-K, a
disclosure that it had discovered certain information related to these licenses.
Management has determined that there may be irregularities related to the proper
transfer of ownership of the licenses, including irregularities on the transfer
of the licenses from the original licensees to Integrated. In March 1997, the
Company entered into a settlement agreement whereby it rescinded the purchase of
the IVDS licenses through the cancellation of the common stock paid for said
licenses. (See "Legal Proceedings.")
The principal business of the Company is the development and marketing
of advanced communications technology known as automate meter reading ("AMR"),
which will enable utilities to automated meter reading functions via the
Company's AirLink(TM) system. The technology was developed initially by Ariel
Systems, Inc. ("Ariel"), which was an 80%-owned subsidiary company of ICAN. This
ownership was acquired by Greenland in the December 1995 acquisition of assets.
As reported on Form 8-K, Greenland and Ariel entered into a new
Exchange Agreement, dated May 1, 1996, executed on June 4, 1996, which provided
for the transfer of the AMR technology to Greenland, including the assignment of
associated patents applied for by Ariel engineers to Greenland. In exchange for
the technology, Greenland returned 75% of Ariel equity to Ariel shareholders.
Additionally, the Company entered into a consulting agreement with Ariel for a
period of three (3) years, under which Greenland will pay certain monthly fees
for engineering services and facilities and equipment use. However, key
engineering personnel originally employed by Ariel were hired by Greenland.
The Company, through its wholly-owned GAM subsidiary, has acquired
ownership and operates a number of residential and commercial real estate rental
properties. Most units are rented on a month-to-month basis. GAM acquired the
real estate properties on the basis that the San Diego real estate market will
become a stronger market for rentals and resales in the future. GAM advertises
in the San Diego area and the Company has maintained high levels of occupancy.
GAM's operations are largely dependent upon its ability to manage and
rent real estate properties on a positive cash flow basis to service its debt
(principally real estate mortgages). There is strong competition in the rental
market. Many of these competitive companies have greater financial resources
than GAM, and therefore, GAM may be at a disadvantage in effecting such
transactions. Management is currently reviewing its real estate operations
related to restructuring and/or sale of the GAM portfolio.
<PAGE>
AIRLINK(TM) AUTOMATED METER READING
In 1991, engineers employed by the Company began research and
development on a device that could read utility meters and transmit the data for
use by utility companies in customer billing and load/resource management.
Greenland's strategy is grounded in bringing a new class of information
gathering and communications systems to the utility industry. Our products
provide significant added value to utility service through cost savings,
resource management, security, and management intelligence.
The Company provides products that can easily be adapted to address a
number of different utilities while simultaneously providing for individual
customer requirements. The Company's principal target market consists of utility
providers in the U.S. and abroad. The 1990 U.S. Census reports approximately
3,100 counties in the U.S. encompassing over 101 million homes and approximately
238 million meters. There are several competitors in the automated meter reading
("AMR") industry, and there is increasing industry demand for meter reading
automation.
The technology used in the AirLink system (the Company has applied for
two patents; it is preparing a third application) is a combination of digital
hardware, radio transmission, and software, that, when attached to a standard
water, electric, gas, or other traditional utility meter, will "read" the meter,
store the data, and transmit it back to a computer for use by the utility
company. The device requires virtually no maintenance. The need for personnel to
physically read these meters is eliminated. Additionally, the AirLink system
will enable utilities to monitor resource usage by consumers and to institute
differential billing based upon use of the resource and the time of use.
The Market
Like telecommunications companies, utilities are going through a period
of rapid change. While the real race may be to develop unique products and
services to capture the customer, the bottom line is the urgency for utilities
to capitalize on the interactive services that technology is making possible.
Energy utilities, like telecommunications service providers, face
massive regulatory change that is reshaping the business landscape. There are
many parallels to be drawn between the two industries as they make the
transformation from monopoly utility to competitive service-oriented businesses.
For the power industry, the Energy Policy Act of 1992 began the process
of creating wholesale competition. As with telecommunication reform, however,
the exact shape and timing of that competition is largely being crafted by state
regulators.
<PAGE>
With competition comes a two-headed monster: Utility companies must
learn to drive cost out of their operations while improving service quality and
adding new features.
Meters, which measure the flow of resources (electricity, natural gas,
water) are a utility's lifeline. It is also an expensive process that is
labor-intensive and error-prone. Furthermore, this process is generally limited
to daylight hours. It results in only a single data point of the total resource
consumed. This method provides practically no statistical management
information.
Automated meter reading of electric, gas, and water meters has the
near-term potential of significantly reducing utility company costs. Additional
benefits include utility load control management, theft and tamper detection,
service interruption detection, and automation of some parts of the distribution
system. A "smart" network can be developed that will enable utilities to manage
costs and service quality most efficiently and effectively.
Greenland has developed such a network - Airlink, a completely wireless
system designed as a communications link between a utility and every individual
user of resources in its service area.
The major issues facing the utility metering process are: (1) access to
the meter (which may be in the basement of the home, or in a remote location);
(2) having enough qualified personnel to handle the work load; (3) assurance of
the accuracy of the information (hand writing the information in the field and
then transferring it to billing computers breeds inaccuracy); (4) costs
(including salaries, fringe benefits, insurance, fleet maintenance, etc.); (5)
cash flow (some utilities can send bills to its customers only once every 2
months; automation can decrease the length of the billing cycle because meters
can be read more frequently); and (6) resource management (utilities need
information at the point of use in order to get better information as to
resource usage, including time, amount of use and, in some cases, power
interruption status).
Most AMR solutions rely on either a hard-wired solution or a wireless
solution that requires the collection device to be in relatively close proximity
to the meter. Other wireless systems require meter reading personnel to be
deployed in the field to accomplish data collection. Advanced wireless
technology is a major differentiating characteristic of the AirLink system. The
system enables a utility to read meters, regardless of location, without the
need to use hard-wired connections or to send reading personnel near the
location. The system is an entirely remote-controlled network, with collector
stations strategically placed in the general area of the meters. A single
collection station can accommodate thousands of meters, polling each many times
daily. Data is collected in real-time, without the need for field personnel.
Additionally, the system automatically informs the main office of power
interruption at the meter site - power failure or tampering with the system is
immediately detected.
As one would expect, the United States represents the most sizable
market for delivery of essential utility services such as water, electricity,
and natural gas. Accordingly, the U.S. represents the largest single market for
meter systems and services - over 100 million homes comprising over 300 million
meters.
<PAGE>
Market surveys show that automated meter-reading devices can be grouped
into three basic types with increasing levels of sophistication: (1) hand-held,
(2) hard-wired, and (3) radio telemetry.
Hand held devices are used by meter reading personnel that replace
hand-written data through key entry. The individual meter reader keys the meter
reading into a hand-held recorder that places the data onto recording media,
such as tape, for later loading into a computer program. This tool eliminates
one or more steps in the transcription process, but does nothing to improve
meter reading productivity. This technology is currently being employed by
water, gas, and electric utility companies. Meter reading personnel must be able
either to see the meter face and transfer the reading into a recorder, or to
touch its face or a special plate with a wand or other reading device. The
primary benefit of hand held devices is that they eliminate the hand-written
recording of meter data and subsequent manual data entry into the utility's
billing computer. Wand-type devices, however, require a special meter that
contains electronic circuitry for the system to function. While this may be
viable for new housing developments, it is not practical for existing
communities due to the high cost associated with replacement of existing meters.
Hard-wired devices include automated meter-reading devices that are
interfaced to existing telephone circuits (or other wired connections). This
method represents a relatively high capital investment and the need for a
telephone or other hard-wired connection. Devices currently in use have been
implemented with telephone circuits to transmit data directly to a utility. One
device uses a dial-in technique whereby the meter dials the telephone number of
a computer system and transmits the reading. An alternative system employs a
dial-out method whereby the utility's host computer dials the telephone number
of the meter in order to acquire the meter data. In both systems, telephone line
charges apply. Another system currently in use implements a hard-wired system
for metering electric usage. The system uses a distributed network of
microcomputers to collect data from a group of instrumented meters. Existing
power lines are used for data communications until the line reaches a
transformer. There are physical limitations associated with the amount of data
that can be passed through power lines. However, the system will allow remote
reading and control functions for an electric utility. These systems are very
capital intensive and require a significant level of technical support related
to installation and maintenance. Nevertheless, hard-wired systems have
advantages over hand-held devices since they are automated and can be accessed
at any time to obtain meter readings in support of load management activities.
It is potentially very costly for a utility to install these systems due to the
complex communications, networking, and interface electronics required for meter
sensing. In addition to the high capital costs, these systems are somewhat
limited by the inherent physical constraints of the telephone system (or other
hard-wired connection) band width. Timing becomes critical in an environment
with a large population of meters. The time required to dial, establish
communications, transmit data, and close communications is critical to the
effectiveness of these devices. Although they provide a potentially long service
life, they are inherently limited due to the time required to complete a reading
cycle.
Radio telemetry devices, until recently, have been limited to
collection of data by a mobile platform to collect the data from meter sensing
devices via radio telemetry. The basic requirements of these systems to be
successful are that (1) the system must provide more than a single data point;
(2) the system must be non-intrusive and capable of retrofitting to the
installed base of meters; (3) the operator interface must be designed so that it
can be easily used by existing meter reading personnel; (4) the system must be
reliable, inexpensive, and capable of operating in harsh environments; and (5)
the meter reading unit must be capable of being mounted to the meter in such a
way as to allow
<PAGE>
for the manual reading of the meter in case of system failure. Unfortunately,
such systems have not met such requirements in total. A major disadvantage is
that meter reading personnel must still be used for the data collection process.
Notwithstanding the reduction in personnel requirements, staff must be retrained
and re-deployed to serve the system from vehicles designed to interact with the
communication of data from each meter to the collection point(s). A second major
disadvantage is that these systems have not been designed to adequately function
in all conditions (i.e. in sunlight, or harsh weather conditions). Additional
technical challenges have yet to be solved to a reasonable degree to insure
total system reliability. These include transmission inconsistencies, route
coordination, etc.
It is important to note that traditional meter reading methodology does
not provide utilities the ability to implement incremental billing to enable
differential charges for usage based upon usage patterns that impact resource
management.
In an increasingly automated age, utility companies must adapt to
technologies that have the potential to increase their productivity and level of
customer service. Automating meter reading is one of the principle methods by
which utilities can positively transform their operations.
The following table illustrates the market potential for the AirLink
system in the U.S. Over the next few years, the Company's objective is to
achieve at least 5% market penetration, based upon these statistics (U.S.
Census, 1990).
<TABLE>
<CAPTION>
Units Total Sales Value County Sales Value
<S> <C> <C> <C> <C>
Water 85,548,158 27,659 6,843,852,629 2,212,691
Natural Gas 51,651,942 16,700 4,132,155,335 1,335,970
Electric 100,628,493 32,534 8,050,279,406 2,602,741
Total 237,828,593 76,893 19,026,287,370 6,151,402
- ---------------- -------------- ------------------- -------------------- ----------------------
</TABLE>
AirLink Technology and Product
The discussion of Greenland's AirLink network is best introduced by
asking the reader to ignore some pre-conceived notions related to wireless
communications and networking. The key to the AirLink network is Greenland's
patent-pending radio frequency (RF) technology.
The AirLink wireless meter reading network is made up of essentially
two parts: (1) the meter reading device that is installed on the utility meter
itself, and collection computers, which are located at intervals throughout the
service area. The system takes a "picture" (electronically or optically) of the
meter's output, creates a digital "packet" of the actual meter reading, and
transmits the data to the collection computer. The data is then available to the
utility company to incorporate into their existing computer systems for billing
and statistical analysis. (A database software interface is provided for
virtually any system.) The meter reading device is easy to install and to
maintain. Most installations are estimated at 10 minutes in duration. Greenland
recommends a project management change-out approach, which calls for a meter
shop "bench" retrofit installation.
<PAGE>
Meter Reading Device.
AirLink meter reading devices are available for any kind of utility
meter. Circuitry is provided to capture data from the meter and to translate it
for digital transmission. The major components include a transmitter with a
specialized, horizontally polarized antenna; receiver; power supply with
supercapacitor (battery); an internal computer to translate data; and memory for
storage of data. One version of the device also includes optics and associated
circuitry to take a digital picture of the meter face for transmission.
Electric and gas meters are read via sensors, which detect the rotation
of moving parts inside the meter or the register of the meter (depending upon
the type of meter to be automated). The most common AirLink application for
electric meters includes a sensor circuit that includes a photo-transistor,
which consists of an optical detector and a light emitting diode (LED). The
emitter is mounted above the meter disk, and the detector below. The output
voltage decreases in the absence of light, and increases in the presence of
light, caused by the alignment hole in the meter disk passing in front of the
sensor. Output is fed into an automatic level control (ALC). This circuit offers
automatic adjustment of its trigger level to accommodate various light sources,
changes in ambient light, or optical sensor misalignment. When a hole passes in
front of the sensor, an abrupt change in voltage occurs, which triggers a
"read". If the ambient light slowly changes (sun coming up, going down, cloud
passing over, etc., the detector's input will change with it, without triggering
the output. A system of measurement established by the International System of
Units is the basis by which the AirLink device is calibrated.
The AirLink meter reading device is designed to last for many years
without the need for repair or replacement. It is powered by line voltage and a
supercapacitor. Water meter reading devices use power derived from inductance
through the water pipes upon which a home's electricity is grounded. The device
uses its own battery (recharged by the inductive loop) to power signal
transmission. Natural gas meters are powered with a long-life lithium battery
that must be changed every three to five years.
The meter reading device has its own computer circuitry, including
memory, in order to save data for up to 42 days to provide redundancy of data,
and to insure against data loss due to vandalism, power outage, etc.
Communications.
The AirLink system addresses two main technological issues related to
automating the process of meter reading: (1) meter reading accuracy and (2)
communications integrity.
Greenland's patent-pending communications protocol and antenna
technology will enable utilities to receive data from millions of meters in
short periods of time. Issues related to data compression and signal integrity
have been solved. At present, the following communications parameters are
provided with the AirLink transmitter located at each meter: The Company's
patent applications relate to the modulation and filtering of digital signals,
more particularly binary data signals. AirLink is a 2-way system.
The AirLink system provides for communications both to each meter and
from each meter back to its local collection station. The system
<PAGE>
polls each meter and each meter scans for a clear, open channel prior to
transmission of data to collection units. AirLink's proprietary communications
protocol enables the system to function efficiently and effectively, even in
high density RF traffic.
There are a number of additional benefits to this 2-way solution.
Value-added enhancements can be added to the AirLink system as it communicates
bi-directionally. These might include the ability to remotely activate or
deactivate nodes on the system, reading multiple meters at each location, etc.
A data signal consists of elements whose amplitudes are not suitable
for transmission via a radio channel. This is the reason why, in common
practice, "modems" are used to transform these data signals for transmission on
a modulated carrier wave and demodulated after reception. While it is possible
to transmit this data via radio with standard modulation techniques, a large
amount of bandwidth is required. For example, FSK technique requires 1 megahertz
of bandwidth to send 500 kilobytes per second of digital data.
The AirLink system provides for digital transmission over a radio
channel that will NOT require a modem and requires only ONE TENTH the bandwidth
over other well-known modulation techniques. Furthermore, AirLink provides a
digital modulation system where none existed before at a cost considerably below
other techniques.
Cell Site Data Collection/Transmission.
Collection computers are arrayed strategically as "cell sites" in order
to receive data from each meter and to transmit the data to the central computer
at the utility's billing office.
Each stop in the data network has its own requirements in order to
provide accurate, redundant information on resource usage. Utilities will find
the system useful in saving reading costs and in the increased management
reporting capabilities provided by an AirLink network.
A data accumulator is built-in to the system to enable the collection
of load management information. The system can provide separate daily usage
levels for each of up to 5 previous days and stores data related to highest and
peak demand data. The system allows utilities to incorporate time-differential
billing by segregating data into hourly (or sub-hourly) periods.
The AirLink device at the meter also includes circuitry that detects
power interruption. In the event of a power failure or tampering at the meter
site, the system will immediately transmit such status within seconds of an
event. A number of safeguards and security features are incorporated to enhance
performance, reliability, and maintenance. Internal diagnostic circuitry will
detect low power and communications errors. Each receiver cell site may be
linked to transfer the collected data to the main billing office, or collected
data may be transferred by other methods such as telephone link, memory card
swap, or mobile RF links, as illustrated: Water and Gas.
Greenland's AirLink system can be deployed for use in water and gas
meter applications. The technology is designed to meet the special technological
and environmental challenges that are faced by water and gas utilities. Water
meters, in particular, are generally located below ground, in dark, inhospitable
conditions, without readily available power or communications links. This
presents unique difficulties in automating data transfer. Gas meters do not
provide an accessible power source; battery power is the only available option,
which requires the use of advanced technology to eliminate the need for frequent
change out of batteries.
The AirLink solution for water and gas is, at present, incomplete;
several options are available and under study. The Company is also exploring
joint ventures with meter companies in order to marry AirLink technology with
existing industrial solutions to metering of water and gas utilities.
Greenland's AirLink system can be deployed for use in water meter
applications. The technology is designed to meet the special technological and
environmental challenges that are faced by water utilities.
Competition
The AirLink wireless meter reading network will significantly increase
a utility's ability to manage its resource consumption by providing information
that is not readily available through existing metering technology. AirLink
technology provides improved resource management, time-of-use (TOU) information,
better peak-demand monitoring, and security. Its ability to provide differential
billing, and providing real-time usage information for public (PUC) reporting,
has the potential of further reducing overall costs for the utility.
<PAGE>
The competitive matrix below is provided to measure AirLink against its
most significant competition.
<TABLE>
<CAPTION>
AIRLINK ITRON CELLNET
<S> <C> <C> <C>
Fixed network RF system YES YES YES
Price per data point (estimated) $60 $80+ N/A
Terms of sale Sale Sale Per Read Only
2-way communications to end-point [meter] YES NO NO
Integration of electric, gas, water YES YES PARTIAL
Maximum signal distance - point to point 18 MILE 1/2 MILE 1/2 MILE
Data throughput (maximum) 100,000 bps 9,600 bps 9,600 bps
FCC Part 15 (low power) YES YES NO
FCC Part 90 (high power - licensed) YES NO NO
FCC licensed frequency (utility-owned) AVAILABLE NO YES
Retrofit of "existing" installed meters YES NO NO
Reading accuracy Min. 99% UNKNOWN UNKNOWN
Wide area network compatibility YES UNKNOWN YES
Database software requirements OPEN SYSTEM PROPRIETARY PROPRIETARY
Network management software requirements INCLUDED EXTRA INCLUDED
Distribution automation (SCADA) ADD ON NO UNKNOWN
Remote connect disconnect PLANNED NO NO
kWh metering YES NO YES
Time-of-use metering YES YES YES
Remote reconfiguration YES UNKNOWN UNKNOWN
Demand metering YES YES YES
Real-time tamper detection YES NO UNKNOWN
Outage detection YES YES YES
Reactive kVARh YES UNKNOWN UNKNOWN
1[phi] and 3[phi] meters YES UNKNOWN UNKNOWN
- ----------------------------------------- ------------------ ------------------ ------------------
</TABLE>
Fixed Network RF System - Each of the systems listed in the Competitive Matrix
are fixed wireless networks. Comparisons are made between AirLink and the two
most widely discussed competitors, Itron and CellNet.
Price Per Data Point -
AirLink pricing, at this time, is $60 per meter in order to retrofit each
electric meter with AirLink electronic circuitry. Itron sells units for $80 and
above, most requiring a new meter to be installed to accommodate Itron
electronic components. CellNet does not quote pricing for sale as the system is
available only to utilities under long-term (10-15 years) contracts under which
CellNet bills the utility for each "read" of a meter in the system.
Terms of Sale -
AirLink is made available for sale to utilities. Greenland charges
additional fees for ongoing technical and operations support. Itron systems are
also available for sale to utilities. CellNet is available only under a
pay-per-read billing structure.
Integration of Electric, Gas, and Water Meters -
The AirLink system will enable the integration of all utility meters, as well as
other sensing devices, in an integrated 2-way system. Generally, gas and water
meters, which require battery power for AirLink, can be configured to report
over short distances to the electric meter. In competitive systems, all meters
can be integrated; but these systems require direct transmission from the water
and gas meter to a central collection point, requiring more power consumption
and less efficiency.
<PAGE>
Signal Distance - Meter to Collection Station -
AirLink is installed using the FCC Part 90 communications specification.
Frequencies under Part 90 are licensed by the FCC. These licenses are granted by
Regional Coordinators and only a small filing fee is required to secure the
license in any particular service territory. AirLink is unique in that the
network can be "tuned" to most available frequencies. Itron functions under FCC
Part 15 - a low power solution that is prone to severe signal interference. At
Itron's data rate, there are severe limitations as to the number of data points
(meters) that can be served under this scheme. CellNet, alternatively, deploys
their system under a licensed frequency. However, the link between field
collection stations and the meters is FCC Part 15. AirLink, under Part 90, using
5 watts of power, is estimated to provide coverage of up to 18 miles radius from
data point to collection point. Competitive systems are limited to approximately
1/2 mile. In situations in which AirLink is deployed under Part 15 (due to
unavailability of a licensed frequency under Part 90), AirLink will provide up
to 3 miles of coverage. The high data rates (throughput) of the AirLink system
enables the system to accommodate large numbers of meters.
Data Throughput -
The AirLink system sends data packets at a maximum rate of 100,000 bits per
second as compared to 9,600 bits per second for competition. The speed of
transmission enables AirLink to accommodate a far greater number of meters in
the system. Under Part 15, this is particularly important since FCC regulations
require that the user of the frequency avoid dominating the airwaves. Under a
Part 15 deployment, AirLink is designed to "read" 6,000 meters in 90 seconds.
Under Part 90, AirLink is designed to read 500 meters per second. The Part 90
system will serve 450,000 meters if charged with reading meters every 15 minutes
(1.8 million if reading once per hour).
FCC Part 15/FCC Part 90 -
FCC Part 15 mandates that devices accept interference from any other device and,
at the same time, avoid interfering with other devices. In order to meet these
requirements, Part 15 devices use very low power levels for data transmission.
Traditional, slow transmission data rates complicate the challenge because only
small amounts of data can be transferred in order to avoid interference.
Additionally, data is often corrupted and the system must be designed to account
for inconsistencies and inaccuracies. Part 15, therefore, presents considerable
<PAGE>
challenges when designing a system that must accurately read meters and then
transmit such data to a central station for use by a utility for billing and
analysis. Part 90 enables the use of higher power, which provides greater
transmission length. But the fundamental benefit of Part 90 over Part 15 is that
a dedicated, licensed frequency is made available to the user, which eliminates
the challenges of interference of data. In a 2-way system such as AirLink, it
allows for the system to poll each data point and to confirm the reception of
information (including reads, status, etc.)
FCC Licensed Frequency -
AirLink is deployed using a licensed frequency under Part 90. These allocations
can be made by Frequency Coordinators from the FCC and are awarded for small
filing fees. CellNet uses alternative licensed frequencies, which are acquired
from the FCC under fee arrangements that can add up to considerable expense.
AirLink is deployed entirely on the allocated frequency as a polled network
(point-to-multipoint, multipoint-to-point, and point-to-point). Other,
competitive AMR systems (such as CellNet) use the licensed frequency as a system
backbone, connecting collection cell sites to the main office. However, in these
deployments, the individual meters are connected to the collection cell sites
via an unlicensed Part 15 signal.
Retrofit of Existing Installed Meters -
The AirLink system is designed to retrofit most existing electric meters.
Solutions are in process for both water and gas meters. The benefit to this is
that the utility's existing investment in meters is protected. Moreover, all of
the standard single phase (residential) meters in the system are transformed
into time-of-use meters (generally limited to industrial use). In competitive
systems, special meters are required in order to provide network connectivity,
which can add substantially to the cost of deploying an AMR network.
Reading Accuracy -
Naturally, reading accuracy is a critical component of an AMR system. AirLink's
delivery specification is to read meters with a minimum of 99% accuracy. (The
industry standard, at this time, is approximately 98%.) Our understanding is
that, today, many AMR systems have problems in providing accurate reads due to
design irregularities which may require re-calibration of meters, which would be
an unacceptable condition to most utilities.
Wide Area Network (WAN) Compatibility -
AirLink is compatible with other systems via RS-232 serial interface (input and
output). In situations where the network must be interconnected with others,
this interface is generally suitable and reliable. Other, competitive systems,
which have proprietary interfaces may not be compatible with other networks,
such as telephone, fiber-optic cable, cellular, etc.)
Database Software Requirements -
AirLink is an "open" system. All data is fed to a flat-file database that is
accessible to other system software (such as billing systems) in use by the
utility. No special software interfaces are required to access the AirLink
database. Alternative systems generally require a custom-designed database
structure. Itron, for example, charges an additional $200,000 for software to
run their network.
<PAGE>
Network Management Software Requirements -
AirLink provides, as part of its overall system, software to enable system
management in conjunction with the database. This software is primarily used to
create and transmit commands (read, status, etc.) to each data point (meter) in
the system. It will also manage the protocol that polls meters and reports
anomalies in meter status (power interruption, etc.) The basis of this protocol
is that there are 10,000 data "slots" per second; 1,000 slots are reserved for
meter reads. Other slots are available for status changes, etc. Competitive
systems charge large fees for software interfaces that may also require special
billing and management report software.
Distribution Automation (SCADA) -
The AirLink system enables utilities to use its components for distribution
automation (SCADA) applications, including monitoring switching stations, load
management, etc. Each AirLink module that is deployed for this purpose becomes
an individual data point in the system and is managed by the network with a
specific protocol and command structure. Competitive systems do not provide this
feature as they are specific to meter reading only.
Other Features -
AirLink provides a number of other features and functions; some of which are
unique and others which are competitive. (See matrix). These include remote
connect/disconnect of meters, remote configuration of data points, demand
metering, tamper and outage detection and advanced metering features for
large-scale industrial users.
GAM Properties
Greenland, through its wholly-owned subsidiary, GAM, has acquired
ownership and operates fifteen real estate properties in the Pacific southwest
part of the U.S. These properties consist of residential and commercial rental
units and undeveloped land. Most of the Company's rental properties are located
in the San Diego, California area, and are rented on a month-to-month or
six-month lease basis. The Company acquired one property in fiscal 1996 ( a
single-family residence in Temecula, California). Other properties outside of
San Diego are a condominium in Mammoth Lakes, California and 102 acres of
undeveloped commercial/industrial land in Tucson, Arizona.
GAM owns and operates the following properties, with average occupancy
of over 90%:
3200 Adams Avenue, San Diego, California. This property is a
professional office building located in the heart of the Normal
Heights commercial district. Anchor tenants include a laundromat on
the ground floor, and a dental office upstairs. Tenants include a
doctor, restaurant, hair salon, food store, and other professionals.
The building has 5,329 square feet of office space and 2,052 square
feet of storefront. The property is over 81% occupied. Most of the
units are leased, with some expirations ranging from April 1997 to
July 1997. Three small units are leased on a month-to-month basis. The
interior of the building was renovated during fiscal 1996.
Mammoth Lakes, California. This property is a resort condominium
located in Mammoth Lakes, located in the high Sierras of California.
The property is a 2-bedroom, 2-bath unit with a den that can also be
used as a third bedroom. Amenities include underground parking and
built-ins. It is located within walking distance of the main ski
village. Mammoth Lakes is a year-round resort destination for skiers,
hikers, backpackers and fishermen. The property is rented at present
on a month-to-month basis.
2715 44th Street, San Diego, California. This property is a single
building with eight (8) rental units, located in East San Diego. These
are all "studio" rentals for singles and couples and are currently
100% occupied.
<PAGE>
4582 Bancroft Avenue, San Diego, California. This property contains
seven apartment units in a single building of approximately 5,600
square feet. It is centrally located near the Mission Valley area of
San Diego. It is 100% occupied at this time.
2536 Third Avenue, San Diego, California [4 properties]. This property
consists of four townhome units in a single 8,200 square foot
building, located in an active area for real estate. It is located
close to downtown San Diego and major shopping areas. It is currently
100% occupied.
2135-39 Grand Avenue, San Diego, California. This property contains
three units in two buildings containing approximately 2,100 square
feet. This is a beach property, with plans for redevelopment into
townhouse units. The property is 100% occupied.
2016-18 Balboa and 2015-17 Hornblend, San Diego, California. This
property consists of four units of approximately 2,200 square feet,
with each unit having its own yard. The property is zoned for
commercial use with a 100 foot frontage on a main traffic artery,
serving the Pacific Beach area of San Diego. The property is 100%
occupied.
4808-10 Lantana Street, San Diego, California. This property contains
two apartment units of approximately 1,300 square feet. The property
can be further developed for an additional four units. At present, the
property is 100% occupied.
565 West Chase, El Cajon, California. This property contains 23
apartment units of two bedrooms, two baths, in five buildings, ranging
from 950 to 1,100 square feet with approximately 25,000 square feet of
rental space. Each unit has a yard and off-street parking. The
property has a swimming pool, laundry facilities, and a children's
playground. The property is 93% occupied. One and one-half (1 1/2)
units are provided, rent-free, in exchange for services of a resident
manager and assistant manager.
4027-31 Hamilton Street, San Diego, California. This property contains
a 3-bedroom, 2-bath house and seven apartment units with a mix of one
and two bedrooms with a view of downtown San Diego, in approximately
5,400 square feet. An exterior renovation was performed in fiscal
1996.
30070 Pechange Drive, Temecula, California. This property is an 1100
square foot single-family residence (3 bedroom, 2 bath) with 2- car
garage. It is located in a park-like setting in a newer,
well-maintained neighborhood. The property is leased; the occupant has
an option to purchase the home for $107,000.
Tucson Land. The Company holds, through a recorded option,
approximately 102 acres of commercial/industrial land outside of
Tucson. At present, management is working on a plan to sell this
property as it has determined that it will not pursue development. The
property is booked in the Company's financial statements at
approximately 45% of the net value of the land as reflected in the
most recent independent appraisal.
<PAGE>
GAM's business is such that it's real estate holdings change from
time-to-time. GAM continues to work on optimizing its portfolio.
Several of its existing properties operate at either break-even or a
small loss depending upon the state of the market in which the
properties are located. While GAM provides an important asset base for
Greenland, there can be no assurance that GAM will provide a positive
income stream in the near future. Management continues to explore its
options as to the future of its real estate holdings.
Employees
Including its officers, the Company presently employs seven full-time
employees, five (5) of whom are primarily engaged in administration and
marketing; two (2) in engineering and AMR product development. The Company uses
independent consultants for a variety of tasks, including shareholder relations,
property management, and engineering.
Item 2.
Description of Property
Greenland and its subsidiaries currently occupy approximately 7,500
square feet of office space comprising the entire fourth floor of 7084 Miramar,
San Diego, California 92121. The Company entered into a three-year lease,
commencing January 1, 1997, with three (3) three-year options to extend its
tenancy. During the first year of the lease, the Company has been granted
reduced rent while it occupies only approximately 5,700 square feet.
<PAGE>
The table below illustrates the value, mortgages, equity, annualized
rental income, and occupancy of each of the GAM properties as of December 31,
1996.
<TABLE>
<CAPTION>
Current Annual
Property Value Mortgage Equity Rental Occupancy
- -------- ----- -------- ------ ------ ---------
<S> <C> <C> <C> <C> <C>
3200 Adams Avenue $ 946,500 $ 742,000 $ 204,500 $ 93,900 81%
Mammoth Lakes 145,000 100,000 45,000 14,600 100%
2714 44th Street 233,000 212,600 20,400 28,400 100%
4582 Bancroft 390,000 280,400 109,600 39,600 100%
3635 Third Avenue 868,200 506,900 361,300 53,300 100%
2135-39 Grand Avenue 355,000 245,500 109,500 24,800 100%
2016-18 Balboa + 2015-17 Hornblend 385,000 278,700 106,300 25,700 100%
4808-10 Lantana 125,000 91,500 33,500 12,600 100%
565 West Chase 1,350,000 853,100 496,900 160,800 93%
4027-31 Hamilton 420,000 304,400 115,600 55,200 100%
30070 Pechanga 107,000 73,000 34,000 9,000 100%
Tucson, Arizona property 2,515,000 500,000 2,015,000 N/A
---------- ---------- ---------- -------- N/A
$ 7,839,700 $ 4,188,100 $ 3,651,600 $ 517,700
========== ========== ========== ========
- ------------------------------------ ---------------- ---------------- -------------- -------------- ----------------
</TABLE>
The values above reflect management estimates of market value without accounting
for depreciation. See financial statements.
- --------------------------------------------------------------------------------
Item 3.
Legal Proceedings
The Company's officers and directors are aware of no threatened or
pending litigation which would have a material, adverse effect on the Company.
(Also see, Notes to Consolidated Financial Statements.)
The Company sued former consultants for fraud and misrepresentation,
among other things, related to the transfer of IVDS licenses to the company; and
settled the suit in March 1997 by which the shares it paid for these assets, and
additional shares for other damages, were cancelled. These consultants had also
filed suit against the company for $77,000 for monies they believe they were
owed. The settlement of the lawsuit did not call for the payment of any monies
by Greenland.
As part of the above lawsuit, the Company also sued Signature Leasing,
LLC ("Signature"), a commercial leasing company, and its management. Greenland
holds a 49% equity interest in Signature. The settlement agreement calls for the
cancellation of all shares issued to Signature management. Greenland continues
to pursue its interests in Signature and to determine the status of Signature
operations and financial condition.
<PAGE>
In February 1997, the company settled a lawsuit filed by a former
consultant related to its abandoned (in 1995) beverage operations. The Company
issued 80,000 shares of its common stock, which had been committed previously;
and paid $6,500 in cash in settlement of all claims.
Item 4.
Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5.
Market for Registrant's Common Equity and Related Stockholder Matters
The Company's common stock is traded in the over-the-counter market,
and quoted on the Electronic Bulletin Board. The Company's common stock has
traded, during the fiscal year ended December 31, 1996 between $0.21 and $5.12
per share. The number of shares of record of common stock, $.001 par value, of
the Company was 15,214,460 at December 31, 1996. The Company has not yet adopted
any policy regarding payment of dividends.
Low High
Quarter ended Mar.31 $ 4.20 $ 5.12
Quarter ended Jun.30 0.38 4.75
Quarter ended Sep.30 0.22 0.50
Quarter ended Dec.31 0.21 0.43
- -------------------------- -------------- ---------------
<PAGE>
Item 6.
Management's Discussion and Analysis or Plan of Operation
The following discussion pertains to the Company's results of
operations and financial condition as of the end of and for each of the years in
the two year period ended December 31, 1996. The Company consolidates the
operations its GAM subsidiary.
Greenland's strategy is grounded in bringing a new class of information
gathering and communications systems to the utility industry. The Company's
products provide significant added value to utility service through cost
savings, resource management, security, and management intelligence. The AirLink
system is a highly sophisticated electronics hardware and software product.
Completion of product development and test has required ongoing investment in
engineering, research and development, market research, and initial sales
efforts.
The Company has invested considerable time and effort in development of
the concept, assembling a development team, analyzing the market (including
field research), planning the business, creating prototype devices, and
contracting for the installation of pilot systems at utilities.
Greenland's marketing strategy is based upon providing products that
can easily be adapted to address a number of different utilities while
simultaneously providing for individual customer requirements. The Company uses
a direct sales approach (as opposed to third-party distribution) in its effort
to place its products in the market. Marketing support is provided through
public relations and participation in selected industry conferences and trade
shows.
Initial sales strategy relies heavily on building relationships with
utilities (especially electric utilities for whom an AirLink solution is readily
available) and providing 100-unit pilot systems. Initial response has been
positive and the Company believes that this promotional strategy will serve to
reduce the time from initial contact to full deployment of systems.
The Company owns a 49% interest in Signature Leasing, LLC, a Nevada
Corporation ("Signature"). Signature is a commercial leasing company The Company
does not consolidate the operations of Signature as it is a minority
shareholder. (Also see Legal Proceedings and Consolidated Financial Statements
and Notes to Financial Statements.)
Results of Operations
AMR Sales
Revenues from pilot projects totaled $40,000 in fiscal 1996. There was
no such revenue in the previous fiscal year as AirLink was still in research and
development.
Rental and Other Income
Rental and other income totaled $502,534 for the year ended December 31,
1996 as compared to $452,315 for the prior fiscal year, an increase of $50,219
or 11%. The increase is attributable to an increase in the occupancy of the
properties and the reconfiguration of its mix of properties during the fiscal
year.
<PAGE>
Expenses
General and administrative expenses for the year ended December 31,
1996 were $790,573 as compared to $300,253 in fiscal 1995, an increase of
$490,320 or 163%. This increase is attributable to increased costs related to
management and operations of the Company, particularly in support of its AirLink
technology and products.
Depreciation expense was $147,878 for fiscal 1996 as compared to
$188,828 in the previous fiscal year, a decrease of $40,950 or 28%, which is
directly attributable to changes in the composition of the Company's real estate
portfolio.
Interest expense increased by $49,800 to $333,938 in fiscal 1996 over
the $284,138 of interest expense in fiscal 1995; an increase of 17.5%, which is
attributable to changes in the Company's real estate operations and the terms of
mortgages payable on its properties.
Property taxes for the year ended December 31, 1996 were $96,639
compared to $23,259 in the previous fiscal year; an increase of $73,380 or 315%.
The increase is directly attributable to the Company's acquisition of real
estate properties, particularly the Tucson land, upon which value the taxes are
assessed.
The Company has bad debts of $59,668 in fiscal 1996 as a result of
determining that Notes Receivable, which were acquired in its December 1995
acquisition of ICAN, were judged as uncollectible.
AirLink Operations
The Company continues, as its main business activity, the ongoing
development and marketing of its AirLink automated meter reading system for
utilities. The Company introduced AirLink, for the first time, in June at the
American Meter Reading Conference ("NMRC") in Sacramento, California. During the
course of fiscal 1996, the Company entered into agreements to install AirLink
pilot systems in Oregon, Utah, and Connecticut. One installation (Oregon) was
completed, using interim technology, to generally positive results. The
technology has since been upgraded and installation is planned for April, 1997
in Utah and Connecticut. Additionally, the Company has subsequently contracted
for a second Oregon test to take place in April or May, 1997. AirLink revenues
are offset by expenses of parts, travel, and administration.
Real Estate Operations
Rental revenues increased moderately over the previous year due
primarily to increased occupancy rates in fiscal 1996. The Company experienced
near break-even cash flow, on a monthly basis, from its rental properties during
fiscal 1996. Notwithstanding management's belief that its gross rental income
will increase in fiscal 1997, the Company continues to reduce its debt on its
properties and looks to continue to restructure its portfolio.
<PAGE>
During fiscal 1996, the Company continued to upgrade and renovate some
of its properties, including Adams Avenue, and Hamilton Street.
In fiscal 1996, the Company acquired one property, a single-family
residence in Temecula, California. The transaction was accomplished with created
notes. At close of escrow, the Company received approximately $68,000 in cash,
which was used for general corporate purposes.
Liquidity and Capital Resources
The Company's total assets decreased by $739,796 or 8.4% to $8,054,316
in the year ended December 31, 1996. This decrease was due primarily to the
rescission of the December 1995 acquisition of IVDS licenses. The Company's
total liabilities decreased $206,084 or 4.6% during fiscal 1996 due primarily to
the transaction related to the IVDS licenses. Stockholders' equity was
$3,766,998 at December 31, 1996, a decrease of $533,712 or 12.4%, also due
primarily to the above IVDS rescission.
The Company had negative working capital of $370,501 at December 31,
1996. The Company, through a private placement of its common stock, raised
approximately $719,481 during fiscal 1996, which was used for operations and
general corporate purposes. The Company continues to pursue additional
capitalization through private placement and other activities in order to raise
funds for ongoing operations. Discussions are ongoing with several companies,
which could provide additional working capital for Greenland. However, there can
be no assurance that the Company will be successful in negotiations to obtain
such assistance.
Item 7.
Financial Statements and Supplementary Data
See index to financial statements included herein.
Item 8.
Change in and Disagreements with Accountants on Accounting and Financial
Disclosure
None.
PART III
Item 9.
Directors, Executive Officers, Promoters and Control Persons, Compliance with
Section 16(a) of the Exchange Act
<PAGE>
Item 9A.
Executive Officers of the Company
<TABLE>
<CAPTION>
Name Age Position Period of Service
- ---- --- -------- -----------------
<S> <C> <C> <C>
Eric W. Gaer 48 President, Chief Executive Officer,
and Director Since December 22, 1995
Kevin Smith 38 Chairman of the Board, Chief
Financial Officer, and Director Since September 30, 1994
Michael deDomenico 52 Vice President, Secretary, and
Director Since September 30, 1994
- ------------------------- -------- ----------------------------------------- ------------------------------
</TABLE>
The biographies of the Directors and Officers are set forth below. All
Directors hold office until the next annual shareholders meeting or until their
death, resignation, retirement or until their successors have been elected and
qualified. Vacancies in the existing Board are filled by a majority vote of the
remaining Directors.
Eric W. Gaer, 48, is President, Chief Executive Officer, and a Director
of Greenland. He additionally serves as a Director of GAM. He has broad
experience in the general development and promotion of high-technology products
and services. Mr. Gaer has more than 25 years of professional experience in
high-technology management and marketing. He has served in executive capacities
for high-technology firms such as Merisel, Inc., Venture Software, Daybreak
Technologies, Inc., and Personal Computer Products, Inc. Prior to joining
Greenland, Mr. Gaer was President and Chief Executive Officer of Integrated. He
earned his Bachelor's degree in Mass Communications from California State
University at Northridge.
Kevin Smith, 38, is Chairman of the Board, Chief Financial Officer, and a
Director of Greenland Corporation. Mr. Smith is the past President of Exten
Industries, a publicly traded company (OTC) in the biomedical industry. In 1992,
Mr. Smith founded National Air and Energy, Inc., which is the marketer and
manufacturer of a patented thermal engine known as the Sunchaser System. Mr.
Smith spends predominantly all of his time with Greenland.
Michael DeDomenico, 52, is Vice President, Secretary and a Director of
Greenland Corporation and President of its GAM subsidiary.
<PAGE>
Mr. DeDomenico has been in the real estate business as a developer since 1977
and is the founder and President of GAM. Mr. DeDomenico is a full-time employee
of the Company. He received his Bachelor's degree from Cal Western University
and his Master of Arts degree from Northern Arizona University.
Item 9B.
Compliance with 16(a) of the Exchange Act
The Securities Exchange Act of 1934 requires all executive officers and
directors to report any changes in the ownership of common stock of the Company
to the Securities and Exchange Commission and the Company. The management review
and representations indicates no reports were required to be filed in 1996.
Item 10.
Executive Compensation
The following table shows the amount of all compensation earned for
services in all capacities to the Company for the last two fiscal years for the
executive officers at December 31, 1996. Eric W. Gaer was appointed President
and Director on December 22, 1995 and did not receive any compensation from the
Company in fiscal 1995. Additional information is included by reference to the
Company's definitive proxy statement filed in accordance with rule 14a-101,
Schedule 14A.
<TABLE>
<CAPTION>
Name and Position Year Salary Other Total
- ----------------- ---- ------ ----- -----
<S> <C> <C> <C> <C>
Eric Gaer, President, and Chief
Executive Officer 1996 - $ 46,950 $ 46,950
Kevin Smith, Chairman, 1996 - $ 39,500 $ 39,500
Chief Financial Officer, and Director 1995 - $ 81,900 $ 81,900
Michael deDomenico, 1996 - $ 43,750 $ 43,750
Chief Financial Officer and Director 1995 - $ 48,000 $ 48,000
- ----------------------------------------- --------- ----------- ------------ ------------
</TABLE>
Item 11.
Security Ownership of Certain Beneficial Owners and Management
At the closed of business on December 31, 1996, the Company had
15,214,460 shares outstanding. To the best of the Company's knowledge, no
persons are beneficial owners of five percent (5%) or more of the Company's
shares. The ownership of the Company's common stock by management is included by
reference to the Company's definitive proxy statement filed in accordance with
rule 14a-101, Schedule 14A.
<PAGE>
Item 12.
Certain Relationships and Related Transactions
Kevin Smith, Chairman and Chief Financial Officer has advanced the Company
working capital.
(Also see Notes to Consolidated Financial Statements.)
Item 13.
Exhibits and Reports on Form 8-K List of documents filed as part of this report.
Financial Statements
Reference is made to the index to Financial Statements under Item 7 in
Part II hereof, where these documents are listed.
Financial Statement Schedules
Reference is made to the Index to Financial Statements under Item 7 in
Part II hereof, where these documents are listed. All schedules not
listed in the Index to Financial Statements under Item 7 in Part II are
inapplicable or the required information is included in the
consolidated financial statements or the notes thereto.
Exhibits
On June 26, 1996, the Company filed Form 8-K (and associated exhibits),
related to acquisition of automated meter reading technology from Ariel
Systems, Inc., the divestiture of Ariel Systems as an 80%-owned subsidiary
of Greenland, and the engagement of Ariel Systems as a consultant to the
Company.
On August 23, 1996, the Company filed Form 8-K related to management's
discovery of certain information related to Interactive Video and Data
Services ("IVDS") telecommunications licenses.
On November 6, 1996, the Company filed Form 8-K containing notice of
certain changes in executive officers of the Company. Effective November 1,
1996, Eric Gaer assumed the duties of chief executive officer and Kevin
Smith assumed the duties of chief financial officer.
<PAGE>
Offer of Settlement in letter to Manos Consulting from the Company counsel,
Craig J. Shaber, dated August 9, 1995. Incorporated by reference to the
Company's Form 10-KSB filed February 7, 1996.
Agreement for Exchange related to the acquisition by the Company of the
property described in this Report as "Adams Avenue", between the Company
and G.M.E. Properties, Inc., dated March 29, 1995. Incorporated by
reference to the Company's Form 10-KSB filed February 7, 1996.
Escrow documents with Mission Valley Escrow for the acquisition by GAM
Properties, Inc. of properties described in this Report as "Third Avenue"
and "Mammoth", between GAM Properties, Inc. and G.M.E. Properties, Inc.,
dated September 1, 1995. Incorporated by reference to the Company's Form
10-KSB filed February 7, 1996.
Option Agreement related to the acquisition by the Company of the property
described in this Report as "Arizona land", between the Company and Loma
Vista Associates, The Cali Group, M.I., Limited, Tucson, B.P, John C.
Federico, and Charlotte A. Bishop, dated December 28, 1995. Incorporated by
reference to the Company's Form 10-KSB filed February 7, 1996.
Settlement Agreement and General Release between the Company and John
Mackay, dated December 29, 1995. Incorporated by reference to the Company's
Form 10-KSB filed February 7, 1996.
Notice of Special Meeting of Shareholders held on December 22, 1995 and
Proxy materials related thereto, dated November 29, 1995. Incorporated by
reference to the Company's Form 10-KSB filed February 7, 1996.
Recission Agreement related to the Company's properties described in this
Report as "Yosemite", Hamilton Avenue", and "Bancroft", between the Company
and certain principals and William R. Bishop and Janet Bishop, dated
December 4, 1995. Incorporated by reference to the Company's Form 10-KSB
filed February 7, 1996.
Agreement for Stock as Compensation for Pledged Note between the Company
and Ronald Zinke and Phyllis Zinke, dated December 4, 1995. Incorporated by
reference to the Company's Form 10-KSB filed February 7, 1996. Letter of
Agreement between the Company and Emerald People's Utility District to
install AirLink automated meter reading system, dated May 23, 1996.
Letter of Agreement between the Company and Springville City Electric to
install AirLink automated meter reading system, dated September 2, 1996.
Letter of Agreement between the Company and Third Taxing District, City of
Norwalk, to install AirLink automated meter reading system, dated September
30, 1996.
Escrow documents (Number 35473-A, Mission Valley Escrow, San Diego,
California) related to the purchase of the Company's Pechanga Drive
property in Temecula, California, dated May 28, 1996.
Standard office lease between Shih Ching Chiang and the Company related to
its principal office facilities on Miramar Road in San Diego, California,
dated December 3, 1996.
Settlement Agreement and Release between Gregory C. Manos and Greenland
Corporation and Kevin G. Smith, signed by the parties on March 4, 1997 and
February 27, 1997, respectively.
Settlement Agreement and Release of All Claims between Charles Browne,
HomeTech, LLC, Superior Interactive Group, Inc., TechnoScape, LLC, Susan
Browne, Jay Shestak, Signature Leasing, LLC and Greenland Corporation, Eric
Gaer, and Kevin Smith, dated March 20, 1997.
(22) List of subsidiaries of the Company
The Company will furnish a copy of any exhibit to a requesting
stockholder upon payment of the Company's reasonable expenses in furnishing such
exhibit.
<PAGE>
EXHIBIT 10i
GREENLAND CORPORATION 4180 La
Jolla Village Drive o Suite 315 o La Jolla, CA 92037
Phone: 619/458-4226 o Fax: 619/458-5947
May 23, 1996
Jeff Shields
General Manager
Emerald People's Utility District
33733 Seavey Loop Road
Eugene, OR 97405
Dear Jeff:
In response to our telephone conversation today, the following will serve to
outline an agreement between Greenland and Emerald PUD for the field testing of
Greenland's AirLink(TM) automated meter reading system in your service area.
Below, I have listed the basic points of agreement, which can serve as
guidelines in developing a more specific protocol for the test.
Greenland will, with the assistance of Emerald staff, install its AirLink system
to include up to 100 residential, single- phase electric meters in the
Emerald PUD, which surrounds the city of Eugene, Oregon.
The geographic boundaries (including actual meter site selection) will be
determined during a site survey to be performed by Greenland and Emerald as
soon as possible. Greenland's preference would be to perform the test in a
limited geographic configuration. However, our main interest is to exercise
the AirLink system so that Emerald can determine if the system can
effectively be used to service its entire district. We understand that the
district consists of approximately 550 square miles, including area that
includes hills and rural terrain as well as flat land.
Greenland's budget for the test is $10,000 without any requirement for payments
to be made by Emerald. We believe that this will be sufficient to build and
install AirLink components and to support staff assigned to manage our
contributions to the project. Should Emerald requirements prove unusual or
exceptional, Greenland will so inform Emerald and Emerald shall have the
option to offset additional expenses or to adjust its requirements to suit
the original budget.
Greenland will assign two (2) senior staff members to the project. Robert Hunt,
Greenland's Director of Product Development will be assigned as manager in
charge; Mike Morgan, Greenland's Director of Engineering will be assigned
to deal with technical matters. They can be reached directly at Ariel
Systems (facilities contracted for by Greenland) at (619) 598-7222; Fax
(619) 598-7227. Eric Gaer will be the principal business contact at
Greenland. We will need a list of personnel to be assigned by Emerald to
the project.
<PAGE>
It is our collective objective is to begin the installation and test of the
system in mid-July of this year. The test should run for a period of 60
days during which meters will be read two (2) times daily (one during peak
usage, one during off-peak usage).
Emerald will provide all the requisite office infrastructure to accomplish
compilation of data provided by the AirLink system. We expect that a single
desktop PC computer will be adequate. Additional support includes, but may
not be limited to, the following:
Roof access at main office for collection antenna Cable access from
roof to desktop computer
Power pole access (subject to site survey) to place collectors and
transponders Staff support to assist in meter installation and ongoing
maintenance (if required) Transportation support during installation
and maintenance Database support so that Greenland can provide data in
"your" format
Emerald will provide certain pre-test support as follows, as soon as possible:
Samples of meters to be retrofitted for the test Maps and proposed
meter and collector sites Suggested management reports using the test
data to be developed Database design information (as required)
Greenland and Emerald understand that the data to be compiled during the test
period will be used in a Utility Forum- sponsored workshop to be held in
May, 1997, at which time Greenland will be presenting its findings.
AirLink system components will be the property of Greenland, but will be made
available to Emerald, at their request, for purchase at Emerald's option.
Naturally, Greenland is interested in selling its AirLink system to Emerald
for a system-wide build-out should the test period prove that the system is
suitable for and desirable to Emerald.
Exhibits - 1
<PAGE>
However, Emerald will be under no obligation to purchase the AirLink system
from Greenland.
Jeff, I hope the above is a satisfactory outline for our test. If so, please
sign this in the space provided below and fax it back to me. We have prepared a
press release for distribution next week announcing the test, which is attached
for your review. Should you have any changes, please make them and return them
by fax as soon as possible.
All of us at Greenland look forward to our start date and beginning the process
to deploy our system in your district. As soon as possible, let's arrange to
have our respective staffs begin talking so that we can begin planning
immediately.
Should you have any questions, please don't hesitate to call me.
Best regards,
ERIC W. GAER
President
EG:yt
Encl.
APPROVED:
[SIGNED]__________________________ May 28, 1996____
Jeff Shields, General Manager Date
EMERALD PUD
Exhibits - 2
<PAGE>
EXHIBIT 10j
GREENLAND CORPORATION 4180 La
Jolla Village Drive - Suite 315 - La Jolla, CA 92037
Phone: 619/458-4226 - Fax: 619/458-5947
September 2, 1996
Guy Chang
Springville City Electric
909 E. 400 S.
Springville, UT 84663
Dear Guy:
The following will serve to outline an agreement between Greenland and
Springville City Electric, for the field testing of Greenland's AirLink(TM)
automated meter reading system in your service area. Below, I have listed the
basic points of agreement, which can serve as guidelines in developing a more
specific protocol for the test. Greenland will, with the assistance of
Springville staff, install its AirLink system to include up to
100 residential, single-phase electric meters in Springville.
The geographic boundaries (including actual meter site selection) will be
determined during a site survey to be performed by Greenland and
Springville as soon as possible. Greenland's preference would be to perform
the test in a limited geographic configuration. However, our main interest
is to exercise the AirLink system so that Springville can determine if the
system can effectively be used to service its entire district.
Greenland's charge to Springville for the test is $10,000, payable in advance.
Generally, we require payment in advance of our first site visit. We
believe that this will be sufficient to build and install AirLink
components and to support staff assigned to manage our contributions to the
project. Should Norwalk requirements prove unusual or exceptional,
Greenland will so inform Norwalk and Norwalk shall have the option to
offset additional expenses or to adjust its requirements to suit the
original charges.
Greenland will assign two (2) senior staff members to the project. Robert Hunt,
Greenland's Director of Product Development will be assigned as manager in
charge; Mike Morgan, Greenland's Director of Engineering will be assigned
to deal with technical matters. They can be reached directly at Ariel
Systems (facilities contracted for by Greenland) at (619) 598-7222; Fax
(619) 598-7227. Eric Gaer will be the principal business contact at
Greenland. We will need a list of personnel to be assigned by Springville
to the project.
It is our objective is to begin the installation and test of the system no
later than September of this year. The test will run for a period of 60
days during which meters will be read a minimum of two (2) times daily (one
during peak usage, one during off-peak usage).
Springville will provide all the requisite office infrastructure to accomplish
compilation of data provided by the AirLink system. We expect that a single
desktop PC computer will be adequate. Additional support includes, but may
not be limited to, the following:
Roof access at main office for collection antenna Cable access from
roof to desktop computer
Power pole access (subject to site survey) to place collectors and
transponders Staff support to assist in meter installation and ongoing
maintenance (if required) Transportation support during installation
and maintenance Database support so that Greenland can provide data in
"your" format
Exhibits - 3
<PAGE>
Springville will provide certain pre-test support as follows, as soon as
possible: Samples of meters to be retrofitted for the test Maps and
proposed meter and collector sites Suggested management reports using
the test data to be developed Database design information (as required)
Springville understands that the data to be compiled during the test period may
be used by Greenland as part of its sales promotion data with the exception
that no proprietary information related to Springville be disclosed.
Greenland will make every effort to insure that Springville is aware of any
information to be used for general dissemination.
AirLink system components will become the property of Springville, which will
include 100 each AirLink 15P meter units, 1 each AirLink RPTR repeater, and
1 each AirLink CC collection computer. Naturally, Greenland is interested
in selling its AirLink system to Norwalk for a system-wide build-out should
the test period prove that the system is suitable for and desirable to
Springville. However, Springville will be under no obligation to purchase
the AirLink system from Greenland.
Guy, I hope the above is a satisfactory outline for our test. If so, please sign
this letter in the space provided below and fax it back to me. We generally
prepare a press release for distribution announcing AirLink tests, which will be
sent to you for your review and approval prior to release. All of us at
Greenland look forward to our start date and beginning the process to deploy our
system in your district. As soon as possible, let's arrange to have our
respective staffs begin talking so that we can begin planning immediately.
Should you have any questions, please don't hesitate to call me.
Best regards,
ERIC W. GAER
President
APPROVED:
[SIGNED]______________________ SEPT. 14, 1996_______
Cal Baxter Date
SPRINGVILLE CITY ELECTRIC
Exhibits - 4
<PAGE>
EXHIBIT 10k
GREENLAND CORPORATION 4180 La
Jolla Village Drive - Suite 315 - La Jolla, CA 92037
Phone: 619/458-4226 - Fax: 619/458-5947
September 30, 1996
Victor Tenore
General Manager & CFO
Third Taxing District
City of Norwalk
Electrical Department
PO Box 451
So. Norwalk, CT 06856
Dear Mr. Tenore:
The following will serve to outline an agreement between Greenland and Third
Taxing District, City of Norwalk ("Norwalk") for the field testing of
Greenland's AirLink(TM) automated meter reading system in your service area.
Below, I have listed the basic points of agreement, which can serve as
guidelines in developing a more specific protocol for the test. Greenland will,
with the assistance of Norwalk staff, install its AirLink system to include up
to 100
residential, single-phase electric meters in Norwalk.
The geographic boundaries (including actual meter site selection) will be
determined during a site survey to be performed by Greenland and Norwalk as
soon as possible. Greenland's preference would be to perform the test in a
limited geographic configuration. However, our main interest is to exercise
the AirLink system so that Norwalk can determine if the system can
effectively be used to service its entire district.
Greenland's charge to Norwalk for the test is $10,000, payable in advance.
Generally, we require payment in advance of our first site visit. We
believe that this will be sufficient to build and install AirLink
components and to support staff assigned to manage our contributions to the
project. Should Norwalk requirements prove unusual or exceptional,
Greenland will so inform Norwalk and Norwalk shall have the option to
offset additional expenses or to adjust its requirements to suit the
original charges.
Norwalk shall also offset travel expenses incurred by Greenland for the
installation and maintenance of the test. These expenses are estimated and
will not exceed $4,000 without the express advance approval of Norwalk.
Greenland will assign two (2) senior staff members to the project. Robert Hunt,
Greenland's Director of Product Development will be assigned as manager in
charge; Mike Morgan, Greenland's Director of Engineering will be assigned
to deal with technical matters. They can be reached directly at Ariel
Systems (facilities contracted for by Greenland) at (619) 598-7222; Fax
(619) 598-7227. Eric Gaer will be the principal business contact at
Greenland. We will need a list of personnel to be assigned by Norwalk to
the project.
It is our objective is to begin the installation and test of the system no
later than the end of October of this year. The test will run for a period
of 60 days during which meters will be read a minimum of two (2) times
daily (one during peak usage, one during off-peak usage).
Norwalk will provide all the requisite office infrastructure to accomplish
compilation of data provided by the AirLink system. We expect that a single
desktop PC computer will be adequate.
Exhibits - 5
<PAGE>
Additional support includes, but may not be limited to, the following: Roof
access at main office for collection antenna Cable access from roof to
desktop computer Power pole access (subject to site survey) to place
collectors and transponders Staff support to assist in meter
installation and ongoing maintenance (if required) Transportation
support during installation and maintenance Database support so that
Greenland can provide data in "your" format
Norwalk will provide certain pre-test support as follows, as soon as possible:
Samples of meters to be retrofitted for the test Maps and proposed
meter and collector sites Suggested management reports using the test
data to be developed Database design information (as required)
Norwalk understands that the data to be compiled during the test period may be
used by Greenland as part of its sales promotion data with the exception
that no proprietary information related to Norwalk be disclosed. Greenland
will make every effort to insure that Norwalk is aware of any information
to be used for general dissemination.
AirLink system components will become the property of Norwalk, which will
include 100 each AirLink 15P meter units, 1 each AirLink RPTR repeater, and
1 each AirLink CC collection computer. Naturally, Greenland is interested
in selling its AirLink system to Norwalk for a system-wide build-out should
the test period prove that the system is suitable for and desirable to
Norwalk. However, Norwalk will be under no obligation to purchase the
AirLink system from Greenland.
Mr. Tenore, I hope the above is a satisfactory outline for our test. If so,
please sign this letter in the space provided below and fax it back to me. We
generally prepare a press release for distribution announcing AirLink tests,
which will be sent to you for your review and approval prior to release. All of
us at Greenland look forward to our start date and beginning the process to
deploy our system in your district. As soon as possible, let's arrange to have
our respective staffs begin talking so that we can begin planning immediately.
Should you have any questions, please don't hesitate to call me.
Best regards,
ERIC W. GAER
President
APPROVED:
[SIGNED]_______________________ OCTOBER 4, 1996_____
Victor Tenore, General Manager Date
THIRD TAXING DISTRICT - NORWALK, CT
Exhibits - 6
<PAGE>
EXHIBIT 10l
MISSION VALLEY ESCROW
2565 Camino Del Rio South
San Diego, California 92108
(619) 295-7400 - FAX: (619) 295-2536
ESCROW NO. 35473-A ESCROW OFFICERS: AUDREE RAPP/MICHELE POPE
DATE: MAY 28, 1996
PRIVATE LENDER - LOAN ESCROW INSTRUCTIONS
I/we, ARTHUR DICKMAN AND MAGDALEN A. DICKMAN, TRUSTEES UDT EXECUTED
2-21-79 ("Lender") will deposit into escrow a cashier's check on a major
California Bank (or wired funds) in the amount of $73,000.00, which you are
authorized to pay to Borrower, when you have for Lender the following:
A Promissory Note in the amount of $73,000.00, executed by GAM
PROPERTIES, INC., ("Borrower") in favor of ARTHUR DICKMAN AND
MAGDELEN A. DICKMAN, TRUSTEES UDT EXECUTED 2-21-79, bearing
interest at the rate of 11.5% commencing from date of receipt of
Lender's deposit of funds and Lender's signed escrow instructions
("Lender's deposit") with Escrow Holder (or Jones Mortgage,
whichever date is the earliest). If interest is to accrue from
date of said deposits with Jones Mortgage, then such deposits into
escrow are to be accompanied by a written statement from Jones
Mortgage certifying the date Lender deposited funds with Jones
Mortgage, and on which statement Escrow Holder and Borrower may
rely. Said Promissory Note shall be payable in monthly
installments of interest only, with the first interest only
monthly payment due 30 days from date of Lender's deposit, and to
so continue interest only monthly thereafter, until 37 months from
date of Lender's deposit, at which time the then unpaid principal
balance plus all unpaid interest thereon, shall become immediately
due and payable. Said Promissory Note shall contain a late charge
of 6% after 10 days. There shall be no acceleration clause. There
shall be no prepayment penalty. Parties hereby approve Jones
Mortgage to insert the final dates in said Promissory Note after
Borrowers sign, according to these terms. Escrow Holder is to be
of no concern with such insertion of dates. The above described
Promissory Note and the Deed of Trust securing same, shall be
prepared by Jones Mortgage. Borrower's signature thereon shall
constitute that Borrower has read and approved all of the terms
and conditions contained therein, and without any further written
instructions required from any of the parties hereto in this
regard.
Deed of trust securing said note to be recorded at close of escrow.
A Standard form loan policy of title insurance insuring said loan
with liability in the amount of $73,000.00 from ORANGE COAST TITLE
COMPANY, with the usual company's exceptions, on the real property
in the County of Riverside State of California, viz:
LOT 16 OF TRACT NO.20319 AS SHOWN BY MAP ON FILE IN
BOOK 181, PAGES 54 TO 58, OF MAPS, RECORDS OF RIVERSIDE
COUNTY, CALIFORNIA
showing title vested in GAM PROPERTIES, INC., a California corporation SUBJECT
TO:
All General and Special real and personal taxes for the fiscal year 1996-97
Exhibits - 7
<PAGE>
Covenants, conditions, reservations, restrictions, easements, rights and right
of way of record
The new FIRST DEED OF TRUST securing said Promissory note in the amount of
$73,000.00
A new SECOND DEED OF TRUST being given as additional collateral to secure a
Promissory Note in the amount of $104,500.00 in favor of JONES MORTGAGE
PROFIT SHARING PLAN, WILLIAM L. O'NEILL AND AIMEE FLORENCE, TRUSTEES
You are to add the Lender herein on the fire insurance as a First Mortgagee
with coverage to be at least $73,000.00 (or policy to contain replacement
cost coverage). Mortgagee endorsement to show Lender's address as : c/o
Action Loan Services, #JM1111, 7817 Ivanhoe Avenue, No.300, La Jolla,
California 92037.
FURTHER INSTRUCTIONS:
The consummation of this escrow is contingent upon the successful concurrent
acquisition of subject Property by GAM PROPERTIES, INC. under Mission Valley
Escrow transaction no. 35399-A (the "acquisition escrow"). This is a "broker
arranged" loan. Borrower and Lender authorizes Escrow Holder to release any
information and certified copies of all documents to Jones Mortgage. Obtain Type
H tax service for three years. Such reports to be mailed to: Action Loan
Services, Account No.JM111, 7817 Ivanhoe Avenue, No.300, La Jolla, California
92037. Escrow Holder is to record documents when the within described Deed of
Trust is in FIRST position, subject only to: Jones Mortgage to review and
approve preliminary title policy. At close of escrow, send to Jones Mortgage:
1 certified copy of the closing statement
4 title company certified copies of the Trust Deed and other recorded
documents 3 copies of the Title Policy
1 copy of the fire policy with mortgage endorsement Disbursement of Funds:
The following fees are to be deducted from Borrower's gross loan proceeds, for
payment of the following:
TO JONES MORTGAGE:
Loan Origination Fee $2,920.00
Processing 150.00
Document preparation 300.00
-----------
TOTAL $3,370.00
Time is of the essence of these instructions. If for any reason other than my
failure to comply with the foregoing instructions, this Escrow cannot be closed
on or before May 31, 1996. Lender may, by written and satisfactory notice to
you, demand the return of money and/or instruments that I have placed herein;
otherwise complete this Escrow as soon as possible. Order title search at once
from the above Title Company, and send a copy of the preliminary title report to
the Beneficiary, upon your receipt thereof.
ADDITIONAL LOAN ESCROW CONDITIONS AND INSTRUCTIONS
Escrow Holder is not to be concerned with and not to be responsible for
compliance by any person
Exhibits - 8
<PAGE>
with the TRUTH IN LENDING ACT or REGULATION "Z" in connection with this
transaction, nor are you to be concerned with or responsible for the necessity,
sufficiency, or correctness of any disclosure statement or Notice under such Act
or Regulation. Should any such disclosure statement or notice be deposited into
this escrow, your sole function shall be to obtain signatures thereon or to
transmit the same as instructed in writing. If Beneficiary offset statements
from prior trust deed holders are waived, escrow holder shall have no
responsibility and/or liability for the balance, terms, or status of such loan.
It is mutually understood and agreed by all parties to this escrow, jointly and
severally, all funds
received in this escrow shall be deposited with a State or Federal bank
with other escrow funds and all disbursements shall be made by your check.
You are hereby authorized to deposit any funds or documents handed you
under these escrow instructions or cause the same to be deposited with any
duly authorized sub-escrow agent, subject to your order at or prior to
close of escrow in the event such deposit shall be necessary or convenient
for the consummation of this escrow.
It is agreed by the parties hereto that so far as your rights and liabilities
are involved, this transaction is an escrow and not any other legal
relation and you are an escrow holder only on the foregoing expressed
terms, and you shall have no responsibility of notifying me or any of the
parties of this escrow of any sale, resale, loan, exchange, or other
transaction involving any property herein described or any profit by any
person, firm or corporation (broker, agent, and parties to this escrow
and/or any other escrow included) in connection therewith, regardless of
the fact that such transaction(s) may be handled by you in this escrow or
in another escrow. You shall not be responsible or liable in any manner
whatsoever for the sufficiency or correctness as to form, manner of
execution or validity of any documents deposited in escrow, nor as to the
identity, authority or rights of any person executing the same, either as
to document of records or those handled in this escrow. Your duties
hereunder shall be limited to the safekeeping of such money and documents
received by you as escrow holder and for the disposition of same in
accordance with the written instructions accepted by you in this escrow.
You shall not be required to take any action in connection with the
collection, maturity or apparent outlaw of any obligations deposited in
this escrow, unless otherwise instructed. You shall not be liable for any
of your acts or omissions done in good faith, nor for any claims, demands,
losses or damages made, claimed or suffered by any party to this escrow,
excepting such as may arise through or be cause by your willful neglect or
gross misconduct.
Borrower guarantees and you shall be fully protected in assuming that as to any
insurance policies handed you, each policy is in force and has not been
hypothecated and that all necessary premiums therefor have been paid. In
the event existing fire insurance is not acceptable to any new lender, or
should Borrower elect to provide new insurance, you are instructed to cause
any existing fire policy, if delivered to escrow, to be returned to
insured.
Deliver assurances of title, if requested, and insurance policies, if any, to
Lender or his order. Mail, unregistered, all documents and funds to the
respective parties. Our signatures on any documents and instructions
pertaining to this escrow indicate our unconditional approval of same.
In the event conditions of this escrow have not been complied with at the
expiration of the time provided for herein, you are instructed,
nevertheless, to complete same at any time thereafter as soon as the
conditions (Except as to time) have been complied with, unless any of us
shall have made written demand upon you for the return of money or
documents deposited by him. We, jointly and severally, agree that in the
event of cancellation we shall pay you a sum sufficient to pay you for any
expense which you have incurred pursuant to the foregoing instructions, and
a reasonable cancellation fee for services rendered by you. Said expenses
and fee to be placed in escrow before cancellation is effective.
All notices, demands and instructions must be in writing. In the event
conflicting demands are made or served upon you, or any controversy arises
between the parties hereto, or with any third person growing out of or
relating to this escrow, you shall have the absolute right to withhold and
stop all further proceedings in and performance of this escrow, until you
receive written notification satisfactory to you of the settlement of the
controversy by agreement of the parties hereto, or by the final judgment of
a court of competent jurisdiction. All of the parties to this
Exhibits - 9
<PAGE>
escrow hereby jointly and severally promise and agree to pay promptly on
demand as well as to indemnify you and to hold you harmless from and
against all litigation and interpleader costs, damages, judgments,
attorney's fees, expenses, obligations and liabilities of every kind which,
in good faith you may incur or suffer in connection with or arising out of
this escrow, whether said litigation, interpleader, obligation, liabilities
or expenses arise during the performance of this escrow or subsequent
thereto, directly or indirectly. In the event of conflicting demands on the
escrow holder, by the principals, this escrow may, at their option, deposit
any and all funds in question with the court that would have jurisdiction
over the matter, and the escrow holder is relieved of any further
responsibility in connection with the escrow.
1. These instructions may be executed in counterparts, each of which shall be
deemed an original regardless of the date of its execution and delivery.
All such counterparts together shall constitute one and the same documents.
You are hereby given a lien upon all the rights, title and interest of each
of the parties hereto in all escrowed documents, funds and other property,
and all monies or property for any and all expenses, attorney's fees,
losses and other liabilities caused you in this escrow in the event of
failure to pay fees or expenses due you hereunder, on demand, I agree to
pay a reasonable fee for any attorney's services which may be required to
collect such fees or expenses.
2. Make all adjustments and prorations on the basis of a 30 day month. "Close
of escrow" is the day instruments are recorded, or as otherwise instructed
herein.
3. Each party to this escrow hereby acknowledges receipt of a copy of these
instructions.
4. The parties to these escrow instructions authorized you to destroy these
instructions, and all other subsequent instructions, regardless of date of
same, and all records of this escrow at any time after five (5) years from
date of these instructions, without liability on you part or of further
notice from us.
5. You are hereby authorized and instructed to transfer any monies due either
of the parties of this escrow to any other escrow you may be holding in
order to complete said escrow, or to pay any charges due you in any other
matter. It is understood that such transfers may take place after
recordation of all documents in said escrows, if such escrow is to record
concurrent herewith.
6. As may be required and/or demanded by lender, you may make monthly payments
to lender at the close of escrow, without further authorization or
instruction, by making proper charges to Borrower's account as applicable.
License disclosure: Mission Valley Escrow is licensed by the Department of
Corporations, State of California.
THE FOREGOING TERMS, CONDITIONS, AND/OR INSTRUCTIONS ARE HEREBY CONCURRED IN,
APPROVED AND ACCEPTED. I will hand you all instruments and money necessary for
me to comply therewith, which you are authorized to deliver, provided you hold
in this escrow for the account of the parties executing said note and
instruments deliverable to me under these instructions. Pay at close of escrow
any encumbrances necessary to place title in the condition called for as
required by lender. Borrower agrees to pay all charges in connection with this
escrow.
BORROWER SIGNATURE:
GAM PROPERTIES, INC.
BY: [SIGNED]______________________________
MICHAEL D. deDOMENICO, PRESIDENT
Address: 4180 La Jolla Village Drive, No.315, La Jolla, California 92037
Phone: 458-4226/Fax 458-9082
The above instructions are hereby approved, and I, Lender herein, will cause to
be handed you the sum of $73,000.00, which you are to use when you have for me
the title insurance set out above and any other documents as may be set out
herein. Lender is to be at no expense hereof.
LENDER SIGNATURE:
Exhibits - 10
<PAGE>
[SIGNED]_________________________ [SIGNED]__________________________
ARTHUR DICKMAN MAGDALEN A. DICKMAN
TRUSTEES UDT EXECUTED 2-21-79
Address: c/o Jones Mortgage, 8580 La Mesa Boulevard, No.105, La Mesa, California
91941
Phone: 460-4644/Fax 460-1783
Exhibits - 11
<PAGE>
JM111 Loan #96-805
JONES MORTGAGE
NOTE SECURED BY DEED OF TRUST
INTEREST ONLY PAYMENTS
$73,000.00 La Mesa, California May 22, 1996
In installments as herein stated, for value received, the undersigned promise to
pay to Arthur Dickman and Magdalen A. Dickman, Trustees UDT executed 2-21-79 or
order, at designated address, the sum of Seventy-Three Thousand Dollars and
00/100, with interest from ___________________ on unpaid principal at the rate
of 11.5% per annum, Interest only, payable monthly on the _____ day of each
consecutive month, beginning on __________ and continuing monthly thereafter
until _____________________, at which time the balance of principal and interest
will be due and payable. Privilege is reserved of making additional payments not
exceeding 20% of the original balance of this Note in any 12 month period
without penalty, and of making payments in excess of 20% upon payment of any
amount equal to Zero month's interest on the amount so prepaid. In any event,
there will be no prepayment fee charged during the last three months of the
loan. Payor agrees that on any installment not paid or tendered within ten days
of its due date, to pay a later charge of 6% of the past due installment, or
$5.00, whichever is greater; no charge imposed more than once for the same late
payment of installment shall be considered to have been made for payment of such
installment. Nothing herein provided shall be construed as a waiver of payee's
right to enforce payment or commence foreclosure upon any default. Each payment
shall be credited first on interest then due and the remainder on principal, and
interest shall thereupon cease upon the principal so credited. Should default be
made in payment of any installment when due, the whole sum of principal and
interest shall become immediately due at the option of the holder of this Note.
Principal and interest is payable in lawful money of the United States. If
action be instituted on this Note, the undersigned promise to pay such sum as
the court may fix as attorney's fees. This Note is secured by Deed of Trust.
This Note is subject to Section 2966 of the Civil Code which provides that the
holder of this Note shall give notice to the Trustor or his successor in
interest of prescribed information at least 90 and not more than 150 days before
any balloon payment is due.
[SIGNED]_________________________
GAM Properties, Inc.
By: Michael H. deDomenico
Exhibits - 12
<PAGE>
EXHIBIT 10m
STANDARD OFFICE LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
Basic Lease Provisions ("Basic Lease Provisions")
1.1. Parties: This Lease, dated, for reference purposes only, December 3rd,
1996, is made by and between Shih Ching Chiang (herein called "Lessor") and
Greenland Corporation, doing business under the name of Greenland
Corporation.
1.2. Premises: Suite Number(s) Fourth Floor, consisting of approximately 7,500
square feet, more or less, as defined in paragraph 2 and shown on Exhibit
"A" hereto (the "Premises").
1.3. Building: Commonly described as being located at 7084 Miramar Road, in the
City of San Diego, County of San Diego, State of California, as more
particularly described in the Exhibits hereto.
1.4. Use: General and administrative offices, subject to paragraph 6.
1.5. Term: Thirty-six (36) months commencing January 1, 1997 ("Commencement
Date") and ending December 31, 1999, as defined in paragraph 3.
1.6. Base Rent: $4,686.00 per month, payable on the 1st day of each month, per
paragraph 4.1 (see Paragraph 50 for base rent increases.
1.7. N/A
1.8. Rent Paid Upon Execution: $4,686.00 for first month's rent.
1.9. Security Deposit: Equal to one (1) month's rent ($4,686.00).
1.10.Lessee's Share of Operating Expense Increase: N/A as defined in paragraph
4.2.
2. Premises, Parking and Common Areas.
2.1. Premises: The Premises are a portion of a building, herein
sometimes referred to as the "Building" identified in paragraph 1.3 of the Basic
Lease Provisions. "Building" shall include adjacent parking structures used in
connection therewith. The Premises, the Building, the Common Areas, the land
upon which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the "Office
Building Project." Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
the real property referred to in the Basic Lease Provisions, paragraph 1.2, as
the "Premises" including rights to the Common Areas as hereinafter specified.
2.2. Vehicle Parking: So long as Lessee is not in default, and subject
to the rules and regulations attached hereto, and as established by Lessor from
time to time, Lessee shall be entitled to rent and use 30 parking spaces in the
Office Building Project at the monthly rate applicable from time to time for
monthly parking as set by Lessor and/or its licensee.
<PAGE>
2.2.1. If Lessee commits, permits or allows any of the prohibited
activities described in the Lease or the rules then in effect, then Lessor shall
have the right, without notice, in addition to such other rights and remedies
that it may have, to remove or tow away the vehicle involved and charge the cost
to lessee, which cost shall be immediately payable upon demand by Lessor.
2.2.2. The monthly parking rate per parking space will be N/A per
month at the commencement of the term of this Lease and is subject to change
upon five (5) days prior written notice to Lessee. Monthly parking fees shall be
payable one month in advance prior to the first day of each calendar month.
2.3. Common Areas - Definition. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior boundary
line of the Office Building Project that are provided and designated by the
Lessor from time to time for the general non-exclusive use of Lessor, Lessee and
of other lessees of the Office Building Project and their respective employees,
suppliers, shippers, customers and invitees, including but not limited to common
entrances, lobbies, corridors, stairways and stairwells, public restrooms,
elevators, escalators, parking areas to the extent not otherwise prohibited by
this Lease, loading and unloading areas, trash areas, roadways, sidewalks,
parkways, ramps, driveways, landscaped areas and decorative walls.
2.4. Common Areas - Rules and Regulations. Lessee agrees to abide by
and conform to the rules and regulations attached hereto as Exhibit B with
respect to the Office Building Project and Common Areas, and to cause its
employees, suppliers, shippers, customers, and invitees to so abide and conform.
Lessor or such other person(s) as Lessor may appoint shall have the exclusive
control and management of the Common Areas and shall have the right, from time
to time, to modify, amend and enforce said rules and regulations. Lessor shall
not be responsible to Lessee for the non-compliance with said rules and
regulations by other lessees, their agents, employees and invitees of the Office
Building Project.
2.5. Common Areas - Changes. Lessor shall have the right, in Lessor's sole
discretion, from time to time:
To make changes to the Building interior and exterior and Common
Areas, including, without limitation, changes in the location, size, shape,
number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Lessor shall at all times provide the parking facilities
required by applicable law;
<PAGE>
To close temporarily any of the Common Areas for maintenance purposes
so long as reasonable access to the Premises remains available;
To designated other land and improvements outside the boundaries of
the Office Building Project to be a part of the Common Areas, provided that such
other land and improvements have a reasonable and functional relationship to the
Office Building Project;
To add additional buildings and improvements to the Common Areas;
To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
portion thereof;
To do and perform such other acts and make such other changes in, to
or with respect to the Common Areas and Office Building Project as Lessor may,
in the exercise of sound business judgment deem to be appropriate.
3. Term.
3.1. Term. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease Provisions.
3.2. Delay in Possession. Notwithstanding said Commencement Date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date and subject to paragraph 3.2.2, Lessor shall not be subject to any
liability, nor shall such failure affect the validity of this Lease or the
obligations of Lessee hereunder or extend the term hereof; but, in such case,
Lessee shall not be obligated to pay rent or perform any other obligation of
Lessee under the terms of this Lease, except as may be otherwise provided in
this Lease, until possession of the Premises is tendered to Lessee, as
hereinafter defined; provided, however, that if Lessor shall not have delivered
possession of the Premises within sixty (60) days following said Commencement
Date, as the same may be extended under the terms of a Work Letter executed by
Lessor by Lessee, Lessee may, at Lessee's option, by notice in writing to Lessor
within ten (10) days thereafter, cancel this Lease, in which event the parties
shall be discharged from all obligations hereunder; provided, however, that, as
to Lessee's obligations, Lessee first reimbursed Lessor for all costs incurred
for Non-Standard Improvements and, as to Lessor's obligations, Lessor shall
return any money previously deposited by Lessee (less any offsets due Lessor for
Non-Standard Improvements); and provided further, that if such written notice by
Lessee is not received by Lessor within said ten (10) day period, Lessee's right
to cancel this Lease hereunder shall terminate and be of no further force or
effect.
3.2.1. Possession Tendered - Defined. Possession of the Premises
shall be deemed tendered to Lessee ("Tender of Possession") when (1) the
improvements to be provided by Lessor under this Lease are substantially
completed, (2) the Building utilities are ready for use in the Premises, (3)
Lessee has reasonable access to the Premises, and (4) ten (10) days shall have
expired following advance written notice to Lessee of the occurrence of the
matters described in (1), (2) and (3), above of this paragraph 3.2.1.
3.2.2. Delays Caused by Lessee. There shall be no abatement of
rent, and the sixty (60) day period following the Commencement Date before which
Lessee's right to cancel this Lease accrues under paragraph 3.2, shall be deemed
extended to the extent of any delays caused by acts or omissions of Lessee,
Lessee's agents, employees and contractors.
3.3. Early Possession. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Lessee shall
pay rent for such occupancy.
3.4. Uncertain Commencement. In the event commencement of the Lease
term is defined as the completion of the improvements, Lessee and Lessor shall
execute an amendment to this Lease establishing the date of Tender of Possession
(as defined in paragraph 3.2.1) or the actual taking of possession by Lessee,
whichever first occurs, as the Commencement Date.
<PAGE>
4. Rent.
4.1. Base Rent. Subject to adjustment as hereinafter provided in
paragraph 4.3, and except as may be otherwise expressly provided in this Lease,
Lessee shall pay to Lessor the Base Rent for the Premises set forth in paragraph
1.6 of the Basic Lease Provisions, without offset or deduction. Lessee shall pay
Lessor upon execution hereof the advance Base Rent described in paragraph 1.8 of
the Basic Lease Provisions. Rent for any period during the term hereof which is
for less than one month shall be prorated based upon the actual number of days
of the calendar month involved. Rent shall be payable in lawful money of the
United States to Lessor at the address stated herein or to such other persons or
at such other places as Lessor may designate in writing.
4.2. Operating Expense Increase. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share, as hereinafter
defined, of the amount by which all Operating Expenses, as hereinafter defined,
for each Comparison Year exceeds the amount of all Operating Expenses for the
Base Year, such excess being hereinafter referred to as the "Operating Expense
Increase," in accordance with the following provisions:
"Lessee's Share" is defined, for purposes of this Lease, as
the percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate square footage of the
Premises by the total approximate square footage of the rentable space contained
in the Office Building Project. It is understood and agreed that the square
footage figures set forth in the Basic Lease Provisions are approximations which
Lessor and Lessee agree are reasonable and shall not be subject to revision
except in connection with an actual change in the size of the Premises or a
change in the space available for lease in the Office Building Project.
"BaseYear" is defined as the calendar year in which the Lease term
commences.
"Comparison Year" is defined as each calendar year during the
term of this Lease subsequent to the Base Year; provided, however, Lessee shall
have no obligation to pay a share of the Operating Expense Increase applicable
to the first twelve (12) months of the Lease Term (other than such as are
mandated by a government authority, as to which government mandated expenses
Lessee shall pay Lessee's Share, notwithstanding they occur during the first
twelve (12) months). Lessee's Share of the Operating Expense Increase for the
first and last Comparison
<PAGE>
Years of the Lease Term shall be prorated according to that portion of such
Comparison Year as to which Lessee is responsible for a share of such increase.
"Operating Expenses" is defined, for purposes of this Lease,
to include all costs, if any, incurred by Lessor in the exercise of its
reasonable discretion, for:
The operation, repair, maintenance, and replacement, in neat, clean, safe,
good order and condition, of the Office Building Project, including but not
limited to, the following:
The Common Areas, including their surfaces, coverings, decorative items,
carpets, drapes and window coverings, and including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, stairways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, building exteriors and roofs, fences and gates;
All heating, air conditioning, plumbing, electrical systems, life safety
equipment, telecommunication and other equipment used in common by, or for the
benefit of, lessees or occupants of the Office Building Project, including
elevators and escalators, tenant directories, fire detection systems including
sprinkler system maintenance and repair.
Trash disposal, janitorial and security services;
Any other service to be provided by Lessor that is elsewhere in this Lease
stated to be an "Operating Expense";
The cost of the premiums for the liability and property insurance policies
to be maintained by Lessor under paragraph 8 hereof;
The amount of the real property taxes to be paid by Lessor under paragraph
10.1 hereof;
The cost of water, sewer, gas, electricity, and other publicly mandated
services to the Office Building Project;
Labor, salaries and applicable fringe benefits and costs, materials,
supplies and tools, used in maintaining and/or cleaning the Office Building
Project and accounting and a management fee attributable to the operation of the
Office Building Project;
Replacing and/or adding improvements mandated by any governmental agency
and any repairs or removals necessitated thereby amortized over its useful life
according to Federal income tax regulations or guidelines for depreciation
thereof (including interest on the unamortized balance as is then reasonable in
the judgment of Lessor's accountants;
Replacements or equipment or improvements that have a useful life for
depreciation purposes according to Federal income tax guidelines of five (5)
years or less, as amortized over such life.
<PAGE>
Operating Expenses shall not include the costs of
replacements of equipment or improvements that have a useful life for Federal
income tax purposes in excess of five (5) years unless it is of the type
described in paragraph 4.2(d)(viii), in which case their cost shall be included
as above provided.
Operating Expenses shall not include any expenses paid by any
lessee directly to third parties, or as to which Lessor is otherwise reimbursed
by any third party, other tenant, or by insurance proceeds.
Lessee's Share of Operating Expense Increase shall be payable
by Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessee's option, however, an
amount may be estimated by Lessor from time to time in advance of Lessee's Share
of Operating Expense Increase for any Comparison Year, and the same shall be
payable monthly or quarterly, as Lessor shall designate, during each Comparison
Year of the Lease term, on the same day as the Base Rent is due hereunder. In
the event that Lessee pays Lessor's estimate of Lessee's Share of Operating
Expense Increase as aforesaid, Lessor shall deliver to Lessee within sixty (60)
days after the expiration of each Comparison Year a reasonably detailed
statement showing Lessee's Share of the actual Operating Expense Increase
incurred during such year. If Lessee's payments under this paragraph 4.2(g)
during said Comparison Year exceed Lessee's Share as indicated on said
statement, Lessee shall be entitled to credit the amount of such overpayment
against Lessee's Share of Operating Expense Increase next falling due. If
Lessee's payment under this paragraph during said Comparison Year were less than
Lessee's Share as indicated on said statement, Lessee shall pay to Lessor the
amount of the deficiency within ten (10) days after delivery by Lessor to Lessee
of said statement. Lessor and Lessee shall forthwith adjust between them by cash
payment any balance determined to exist with respect to that portion of the last
Comparison Year for which Lessee is responsible as to Operating Expense
Increases, notwithstanding that the Lease term may have terminated before the
end of such Comparison Year.
4.3. Rent Increase. [Deleted from original]
5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the security deposit set forth in paragraph 1.9 of the Basic Lease
Provisions as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default for the payment of any sum to which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss or
damage which Lessor may suffer thereby. If Lessor so uses or applies all or any
portion of said deposit, Lessee shall within ten (10) days after written demand
therefor deposit cash with Lessor in an amount sufficient to restore said
deposit to the full amount then required of Lessee. Lessor shall not be required
to keep said security deposit separate from its general accounts. If Lessee
performs all of Lessee's obligations hereunder, said deposit, or so much thereof
as has not heretofore been applied by Lessor, shall be returned, without payment
of interest or other increment for its use, to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest hereunder) at the expiration
of the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created herein between Lessor and Lessee with respect to said
Security Deposit.
<PAGE>
6. Use.
6.1. Use. The Premises shall be used and occupied only for the purpose set
forth in paragraph 1.4 of the Basic Lease Provisions or any other use which is
reasonably comparable to that use and for no other purpose.
6.2. Compliance with Law.
Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, does not violate any covenants or restrictions of record,
or any applicable building code, regulation or ordinance in effect on such Lease
term Commencement Date. In the event it is determined that this warranty has
been violated, then it shall be the obligation of the Lessor, after written
notice from Lessee, to promptly, at Lessor's sole cost and expense, rectify any
such violation.
Except as provided in paragraph 6.2(a) Lessee shall, at
Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record, and
requirements of any fire insurance underwriters or rating bureaus, now in effect
or which may hereafter come into effect, whether or not they reflect a change in
policy from that now existing, during the term or any part of the term hereof,
relating in any manner to the Premises and the occupation and use by Lessee of
the Premises. Lessee shall conduct its business in a lawful manner and shall not
use or permit the use of the Premises or the Common Areas in any manner that
will tend to create waste or a nuisance or shall tend to disturb other occupants
of the Office Building Project.
6.3. Condition of Premises.
Lessor shall deliver the Premises to Lessee in a clean
condition on the Lease Commencement Date (unless Lessee is already in
possession) and Lessor warrants to Lessee that the plumbing, lighting, air
conditioning, and heating system in the Premises shall be in good operating
condition. In the event that it is determined that this warranty has been
violated, then it shall be the obligation of Lessor, after receipt of written
notice from Lessee setting forth with specificity the nature of the violation,
to promptly, at Lessor's sole cost, rectify such violation.
Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises and the Office Building Project in their condition existing
as of the Lease Commencement Date or the date that Lessee takes possession of
the Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and any easements, covenants or restrictions of record, and
accepts this Lease subject thereto and to all matters disclosed thereby and by
any exhibits attached hereto. Lessee acknowledges that it has satisfied itself
by its own independent investigation that the Premises are suitable for its
intended use, and that neither Lessor nor Lessor's agent or agents has made any
representation or warranty as to the present or future suitability of the
Premises, Common Areas, or Office Building Project for the conduct of Lessee's
business.
<PAGE>
7. Maintenance, Repairs, Alterations and Common Area Services.
7.1. Lessor's Obligations. Lessor shall keep the Office Building
Project, including the Premises, interior and exterior walls, roof, and common
areas, and the equipment whether used exclusively for the Premises or in common
with other premises, in good condition and repair; provided, however, Lessor
shall not be obligated to paint, repair or replace wall coverings, or to repair
or replace any improvements that are not ordinarily a part of the Building or
are above then Building standards. Except as provided in paragraph 9.5, there
shall be no abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements,
alterations or repairs made by Lessor to the Office Building Project or any part
thereof. Lessee expressly waives the benefits of any stature now or hereafter in
effect which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this Lease because of Lessor's failure to keep the
Premises in good order, condition and repair.
7.2. Lessee's Obligations.
Notwithstanding Lessor's obligation to keep the Premises in
good condition and repair, Lessee shall be responsible for payment of the cost
thereof to Lessor as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located) that
serves only Lessee or the Premises, to the extent such cost is attributable to
causes beyond normal wear and tear. Lessee shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any
Premises improvements that are not ordinarily a part of the Building or that are
above then Building standards. Lessor may, at its option, upon reasonable
notice, elect to have Lessee perform any particular such maintenance or repairs
the cost of which is otherwise Lessee's responsibility hereunder.
On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as received, ordinary wear and tear excepted, clean and free of debris. Any
damage or deterioration of the Premises shall not be deemed ordinary wear and
tear if the same could have been prevented by good maintenance practices by
Lessee. Lessee shall repair any damage to the Premises occasioned by the
installation or removal of Lessee's trade fixtures, alterations, furnishings and
equipment. Except as otherwise stated in this Lease, Lessee shall leave the air
lines, power panels, electrical distribution systems, lighting fixtures, air
conditioning, window coverings, wall coverings, carpets, wall paneling, ceilings
and plumbing on the Premises and in good operating condition.
7.3. Alterations and Additions.
Lessee shall not, without Lessor's prior written consent make
any alterations, improvements, additions, Utility Installations or repairs in,
on or about the Premises, or the Office Building Project. As used in this
paragraph 7.3 the term "Utility Installation" shall mean carpeting, window and
wall coverings, power panels, electrical distribution systems, lighting
fixtures, air conditioning, plumbing, and telephone and telecommunication wiring
and equipment. At the expiration of the term, Lessor may require the removal of
any or all of said alterations, improvements, additions or
<PAGE>
Utility Installations, and the restoration of the Premises and the Office
Building Project to their prior condition, at Lessee's expense. Should Lessor
permit Lessee to make its own alterations, improvements, additions or Utility
Installations, Lessee shall use only such contractor as has been expressly
approved by Lessor, and Lessor may require Lessee to provide Lessor, at Lessee's
sole cost and expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such improvements, to insure Lessor against
any liability for mechanic's and materialmen's liens and to insure completion of
the work. Should Lessee make any alterations, improvements, additions or Utility
Installations without the prior approval of Lessor, or use a contractor not
expressly approved by Lessor, Lessor may, at any time during the term of this
Lease, require that Lessee remove any part or all of the same.
Any alternations, improvements, additions or Utility
Installations in or about the Premises or the Office Building Project that
Lessee shall desire to make shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent to Lessee's making
such alteration, improvement, addition, or Utility Installation, the consent
shall be deemed conditioned upon Lessee acquiring a permit to do so from the
applicable governmental agencies, furnishing a copy thereof to Lessor prior to
the commencement of the work, and compliance by Lessee with all conditions of
said permit in a prompt and expeditious manner.
Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use in
the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building, or the Office Building
Project, or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work on the Premises by Lessee, and Lessor
shall have the right to post notices of non-responsibility in or on the Premises
or the Building as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises, the Building or the Office Building
Project, upon the condition that if Lessor shall require, Lessee shall furnish
to Lessor a surety bond satisfactory to Lessor in an amount equal to such
contested lien claim or demand indemnifying Lessor against liability for the
same and holding the Premises, the Building and the Office Building Project free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's reasonable attorneys' fees and costs in participating in such
action if Lessor shall decide it is to Lessor's best interest so to do.
(a)All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made to the Premises by Lessee, including but
not limited to, floor coverings, panelings, doors, drapes, built-ins, moldings,
sound attenuation, and lighting and telephone or communication systems, conduit,
wiring and outlets, shall be made and done in a good and workmanlike manner and
of good and sufficient quality and materials and shall be the property of Lessor
and remain upon and be surrendered with the Premises at the expiration of the
Lease term, unless Lessor requires their removal pursuant to paragraph 7.2(a).
Provided Lessee is not in default, notwithstanding the provisions of this
paragraph 7.3(e), Lessee's personal property and equipment, other than that
which is affixed to the Premises so that it cannot be removed without material
damage to the Premises or the Building, and other Utility Installations, shall
remain the property of Lessee and may be removed by Lessee subject to the
provisions of paragraph 7.2.
<PAGE>
(b)Lessee shall provide Lessor with as-built plans and
specifications for any alterations, improvements, additions or Utility
Installations.
7.4. Utility Additions. Lessor reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other lessee of the Office Building project,
including, but not by way of limitation, such utilities as plumbing, electrical
systems, communication systems, and fire protection and detection systems, so
long as such installations do not unreasonably interfere with Lessee's use of
the Premises.
8. Insurance; Indemnity
8.1. Liability Insurance - Lessee. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease a policy of Comprehensive
General Liability Insurance utilizing an Insurance Services Office standard form
with Broad Form general Liability Endorsement (GL0404), or equivalent, in an
amount of not less than $1,000,000 per occurrence of bodily injury and property
damage combined or in a greater amount as reasonably determined by Lessor and
shall insure Lessee with Lessor as an additional insured against liability
arising out of the use, occupancy or maintenance of the Premises. Compliance
with the above requirement shall not, however, limit the liability of the Lessee
hereunder.
8.2. Liability Insurance - Lessor. Lessor shall obtain and keep in
force during the term of this Lease a policy of Combined Single Limit Bodily
Injury and Broad Form Property Damage Insurance, plus coverage against such
other risks Lessor deems advisable from time to time, insuring Lessor, but not
Lessee, against liability arising out of the ownership, use, occupancy or
maintenance of the Office Building Project in an amount not less than $5,000,000
per occurrence.
8.3. Property Insurance - Lessee. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease for the benefit of
Lessee, replacement cost fire and extended coverage insurance, with vandalism
and malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Lessee's
personal property, fixtures, equipment and tenant improvements.
8.4. Property Insurance - Lessor. Lessor shall obtain and keep in
force during the term of this Lease a policy or policies of insurance covering
loss or damage to the Office Building Project improvements, but not Lessee's
personal property, fixtures, equipment or tenant improvements, in the amount of
the full replacement cost thereof, as the same may exist from time to time,
utilizing Insurance Services Office standard form, or equivalent, providing
protection against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, plate glass, and such other
perils as Lessor deems advisable or may be required by a lender having a lien on
the Office
<PAGE>
Building Project. In addition, Lessor shall obtain and keep in force, during the
term of this Lease, a policy of rental value insurance covering a period of one
year, with loss payable to Lessor, which insurance shall also cover all
Operating Expenses for said period. Lessee will not be named in any such
policies carried by Lessor and shall have no right to any proceeds therefrom.
The policies required by these paragraphs 8.2 and 8.4 shall contain such
deductibles as Lessor or the aforesaid lender may determine. In the event that
the Premises shall suffer an insured loss as defined in paragraph 9.1(f) hereof,
the deductible amounts under the applicable insurance policies shall be deemed
an Operating Expense. Lessee shall not do or permit to be done anything which
shall invalidate the insurance policies carried by Lessor. Lessee shall pay the
entirety of any increase in the property insurance premium for the Office
Building Project over what was immediately prior to the commencement of the term
of this Lease if the increase is specified by Lessor's insurance carrier as
being caused by the nature of Lessee's occupancy or any act or omission of
Lessee.
8.5. Insurance Policies. Lessee shall deliver to Lessor copies of
liability insurance policies required under paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance within seven (7) days
after the Commencement Date of this Lease. No such policy shall be cancelable or
subject to reduction of coverage or other modification except after thirty (30)
days prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with renewals thereof.
8.6. Waiver of Subrogation. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other,
for direct or consequential damage arising out of or incident to the perils
covered by property insurance carried by such party, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. If necessary all property insurance policies required under this Lease
shall be endorsed to so provide.
8.7. Indemnity. Lessee shall indemnify and hold harmless Lessor and
its agents, Lessor's master or ground lessor, partners and lenders, from and
against any and all claims for damage to the person or property of anyone or any
entity arising from Lessee's use of the Office Building Project, or from the
conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims,
costs and expenses arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any of Lessee's agents,
contractors, employees, or invitees, and from and against all costs, attorney's
fees, expenses and liabilities incurred reasonably therewith, including but not
limited to the defense or pursuit of any claim or any action or proceeding
involved therein; and in case any action or proceeding be brought against Lessor
by reason of any such matter, Lessee upon notice from lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to property of Lessee
or injury to persons, in, upon or about the Office Building Project arising from
any cause and Lessee hereby waives all claims in respect thereof against Lessor.
<PAGE>
8.8. Exemption of Lessor from Liability. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other person
in or about the Premises or the Office Building Project, nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from theft,
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures, or from any other cause, whether said
damage or injury results from conditions arising upon the Premises or upon other
portions of the Office Building Project, or from other sources or places, or
from new construction or the repair, alteration or improvement of any part of
the Office Building Project, or of the equipment, fixtures or appurtenances
applicable thereto, and regardless of whether the cause of such damage or injury
or the means of repairing the same is inaccessible, Lessor shall not be liable
for any damages arising from any act or neglect of any other lessee, occupant or
user of the Office Building Project, nor from the failure of Lessor to enforce
the provisions of any other lease of any other lessee of the Office Building
Project.
8.9. No Representation of Adequate Coverage. Lessor makes no representation
that the limits or forms of coverage of insurance specified in this paragraph 8
are adequate to cover Lessee's property or obligations under this Lease.
9. Damage or Destruction.
9.1. Definitions.
"Premises Damage" shall mean if the Premises are damaged or destroyed to
any extent.
"Premises Building Partial Damage" shall mean if the Building
of which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is less than fifty percent (50%) of the then Replacement Cost of
the Building.
"Premises Building Total Destruction" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
that the cost to repair is fifty percent (50%) or more of the then Replacement
Cost of the Building.
"Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project Site.
"Office Building Project Buildings Total Destruction" shall
mean if the Office Building Project Buildings are damaged or destroyed to the
extent that the cost of repair is fifty percent (50%) of the then Replacement
Cost of the Office Building Project Buildings.
"Insured Loss" shall mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8. The fact that an Insured Loss has a deductible amount shall not
make the loss an uninsured loss.
<PAGE>
"Replacement Cost" shall mean the amount of money to be spent
in order to repair or rebuild the damaged area to the condition that existed
immediately prior to the damage occurring, excluding all improvements made by
lessees, other than those installed by Lessor at Lessee's expense.
9.2. Premises Damage; Premises Building Partial Damage.
Insured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
Insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Lessor shall, as soon as reasonably
possible and to the extent the required materials and labor are readily
available through usual commercial channels, at Lessor's expense, repair such
damage (but not Lessee's fixtures, equipment or tenant improvements originally
paid for by Lessee) to its condition existing at the time of the damage, and
this Lease shall continue in full force and effect.
Uninsured Loss: Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the term of this lease there is damage which is
not an Insured Loss and which falls within the classification of Premises Damage
or Premises Building Partial Damage, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
which damage prevents Lessee from making any substantial use of the Premises,
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.
9.3. Premises Building Total Destruction; Office Building Project
Total Destruction. Subject to the provisions of paragraphs 9.4 and 9.5, if at
any time during the term of this Lease there is damage, whether or not it is an
Insured Loss, which falls into the classifications of either (i) Premises
Building Total Destruction, or (ii) Office Building Project Total Destruction,
then Lessor may at Lessor's option either (i) repair such damage or destruction
as soon as reasonably possible at Lessor's expense (to the extent the required
materials are readily available through usual commercial channels) to its
condition existing at the time of the damage, but not Lessee's fixtures,
equipment or tenant improvements, and this Lease shall continue in full force
and effect, or (ii) give written notice to Lessee within thirty (30) days after
the date of occurrence of such damage of Lessor's intention to cancel and
terminate this Lease, in which case this Lease shall terminate as of the date of
the occurrence of such damage.
9.4. Damage Near End of Term.
Subject to paragraph 9.4(b), if at any time during the last
twelve (12) months of the term of this Lease there is substantial damage to the
Premises, Lessor may at Lessor's option cancel and terminate this lease as of
the date of occurrence of such damages by giving written notice to the Lessee of
Lessor's election to do so within thirty (30) days after the date of occurrence
of such damage.
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Notwithstanding paragraph 9.4(a), in the event that Lessee
has an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such option,
if it is to be exercised at all, no later than twenty (20) days after the
occurrence of an Insured Loss falling within the classification of Premises
Damage during the last twelve (12) months of the term of this Lease. If Lessee
duly exercises such option during said twenty (20) day period, Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option
during said twenty (20) day period, then Lessor may at Lessor's option terminate
and cancel this Lease as of the expiration of said twenty (20) day period by
giving written notice to Lessee of Lessor's election to do so within ten (10)
days after the expiration of said twenty (20) day period, notwithstanding any
term or provision in the grant of option to the contrary.
9.5. Abatement of Rent; Lessee's Remedies.
In the event Lessor repairs or restores the Building or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Lessee's Share of
Operating Expense Increase) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of negligence of Lessee, and (2) such abatement shall only be to the
extent the operation and profitability of Lessee's business as operated from the
Premises is adversely affected. Except for said abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
(a)If Lessor shall be obligated to repair or restore the
Premises or the Building under the provisions of paragraph 9 and shall not
commence such repair or restoration within ninety (90) days after such
occurrence, or if Lessor shall not complete the restoration and repair within
six (6) months after such occurrence, Lessee may at Lessee's option cancel and
terminate this Lease by giving Lessor written notice of Lessee's election to do
so at any time prior to the commencement or completion, respectively, of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
(b)Lessee agrees to cooperate with Lessor in connection with
any such restoration and repair, including but not limited to the approval
and/or execution of plans and specifications required.
9.6. Termination - Advance Payments. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7. Waiver. Lessor and Lessee waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
<PAGE>
10. Real Property Taxes.
10.1. Payment of Taxes. Lessor shall pay the real property tax, as
defined in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Lessee of Lessee's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.
10.2. Additional Improvements. Lessee shall not be responsible for
paying any increase in real property tax as specified in the tax assessor's
records and work sheets as being caused by additional improvements placed upon
the Office Building Project by other lessees or by Lessor for the exclusive
enjoyment of any other lessee. Lessee shall, however, pay to Lessor at the time
that Operating Expenses are payable under paragraph 4.2[c] the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.
10.3. Definition of "Real Property Tax." As used herein, the term
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Office Building Project or any
portion thereof by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Lessor in the Office
Building Project or in any portion thereof, as against Lessor's right to rent or
other income therefrom, and as against Lessor's business of leasing the Office
Building Project. The term "real property tax" shall also include any tax, fee,
levy, assessment or charge (i) in substitution of, partially or totally, any
tax, fee, levy, assessment or charge hereinabove included within the definition
of "real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax," or (iii) which is imposed for a
service or right not charged prior to June 1, 1978, or, if previously charged,
has been increased since June 1, 1978, or (iv) which is imposed as a result of a
change in ownership, as defined by applicable local statutes for property tax
purposes, of the Office Building Project or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such change of ownership, or (v) which is imposed by reason of this transaction,
any modifications or changes hereto, or any transfers hereof.
10.4. Joint Assessment. If the improvements or property, the taxes for
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
separately assessed, Lessee's portion of that tax shall be equitably determined
by Lessor from the respective valuations assigned in the assessor's work sheets
or such other information (which may include the cost of construction) as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.5. Personal Property Taxes.
Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere.
If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay to Lessor the taxes attributable
to Lessee within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property.
<PAGE>
11. Utilities.
11.1. Service Provided by Lessor. Lessor shall provide heating,
ventilation, air conditioning, and janitorial services as reasonably required,
reasonable amounts of electricity for normal lighting and office machines, water
for reasonable and normal drinking and lavatory use, and replacement light bulbs
and/or fluorescent tubes and ballast for standard overhead fixtures. Janitorial
service two (2) times weekly until added occupancy or second year begins,
whichever occurs first at which time janitorial service would then be five (5)
days per week.
11.2. Services Exclusive to Lessee. Lessee shall pay for all water,
gas, heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon. If any such services are not separately metered
to the Premises, Lessee shall pay at lessor's option, either Lessee's share of a
reasonable proportion to be determined by lessor of all charges jointly metered
with other premises in the Building.
11.3. Hours of Service. Said services and utilities shall be provided
during generally accepted business days and hours or such other days or hours as
may hereafter be set forth. Utilities and services required at other times shall
be subject to advance request and reimbursement by Lessee to Lessor of the cost
thereof.
11.4. Excess Usage by Lessee. Lessee shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water, lighting
or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including but not limited to security services, over
standard office usage for the Office Building Project. Lessor shall require
Lessee to reimburse Lessor for any excess expenses or costs that may arise out
of a breach of this subparagraph by Lessee. Lessor may, in its sole discretion,
install at Lessee's expense supplemental equipment and/or separate metering
applicable to Lessee's excess usage or loading.
11.5. Interruptions. There shall be no abatement of rent and Lessor
shall not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor's
reasonable control or in cooperation with governmental request or directions.
12. Assignment and Subletting.
12.1. Lessor's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Lessor shall respond to Lessee's
<PAGE>
request for consent hereunder in a timely manner and any attempted assignment,
transfer, mortgage, encumbrance or subletting without such consent shall be
void, and shall constitute a material default and breach of this Lease without
the need for notice to Lessee under paragraph 13.1. "Transfer" within the
meaning of this paragraph 12 shall include the transfer or transfers
aggregating: (a) if Lessee is a corporation, more than twenty-five percent (25%)
of the voting stock of such corporation, or (b) if Lessee is a partnership, more
than twenty-five percent (25%) of the profit and loss participation in such
partnership.
12.2. Lessee Affiliate. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, all of which are referred to as :Lessee Affiliate";
provided that before such assignment shall be effective, (a) said assignee shall
assume, in full, the obligations of Lessee under this Lease and (b) Lessor shall
be given written notice of such assignment and assumption. Any such assignment
shall not, in any way, affect or limit the liability of Lessee under the terms
of this Lease even if after such assignment or subletting the terms of this
Lease are materially changed or altered without the consent of Lessee, the
consent of whom shall not be necessary.
12.3. Terms and Conditions Applicable to Assignment and Subletting.
Regardless of Lessor's consent, no assignment or subletting
shall release Lessee of Lessee's obligations hereunder or alter the primary
liability of Lessee to pay the rent and other sums due Lessor hereunder
including Lessee's Share of Operating Expense Increase, and to perform all other
obligations to be performed by Lessee hereunder.
Lessor may accept rent from any person other than Lessee
pending approval or disapproval of such assignment.
Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a waiver
or estoppel of Lessor's right to exercise its remedies for the breach of any of
the terms or conditions of this paragraph 12 or this Lease.
If Lessee's obligations under this Lease have been guaranteed
by third parties, then an assignment or sublease, and Lessor's consent thereto,
shall not be effective unless said guarantors give their written consent to such
sublease and the terms thereof.
The consent by Lessor to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereof without notifying Lessee or
anyone else liable on the Lease or sublease and without obtaining their consent
and such action shall not relieve such persons from liability under this Lease
or said sublease; however, such persons shall not be responsible to the extent
any such amendment or modification enlarges or increases the obligations of the
Lessee or sublessee under this Lease or such sublease.
<PAGE>
In the event of any default under this Lease, Lessor may
proceed directly against Lessee, any guarantors or any one else responsible for
the performance of this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
Lessor's written consent to any assignment or subletting of
the Premises by Lessee shall not constitute an acknowledgment that no default
then exists under this Lease of the obligations to be performed by Lessee nor
shall such consent be deemed a waiver of any then existing default, except as
may be otherwise stated by Lessor at the time.
The discovery of the fact that any financial statement relied
upon by Lessor in giving its consent to an assignment or subletting was
materially false shall, at Lessor's election, render Lessor's said consent null
and void.
12.4. Additional Terms and Conditions Applicable to Subletting.
Regardless of Lessor's consent, the following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly
incorporated therein.
Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease heretofore or
hereafter made by Lessee, and Lessor may collect such rent and income and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a default shall occur in the performance of Lessee's obligations under this
Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease. Lessor shall not, by reason of this or any other assignment of such
sublease to Lessor nor by reason of the collection of the rents from a sublease,
be deemed liable to the sublessee for any failure of Lessees to perform and
comply with any of Lessee's obligations to such sublessee under such sublease.
Lessee hereby irrevocably authorizes and directs any such sublessee, upon
receipt of a written notice from Lessor stating that a default exists in the
performance of Lessee's obligations under this Lease, to pay to Lessor the rents
due and to become due under the sublease. Lessee agrees that such sublessee
shall have the right to rely upon any such statement and request from Lessor,
and that such sublessee shall pay such rents to Lessor without any obligation or
right to inquire as to whether such default exists and notwithstanding any
notice from or claim from Lessee to the contrary. Lessee shall have no right or
claim against said sublessee or Lessor for any such rents so paid by said
sublessee to Lessor.
In the event Lessee subleases said Premises at a base rent that is higher than
Lessee's current Base Rent, all profits shall be split 50/50 between Lessor and
Lessee. Lessee has the right to sublet any time during the course of this Lease.
No sublease entered into by the Lessee shall be effective unless and until
it has been approved in writing by Lessor. In entering into any sublease, Lessee
shall use only such form of sublease as is satisfactory to Lessor, and once
approved by lessor, such sublease shall not be changed or modified without
Lessor's prior written consent. Any
<PAGE>
sublease shall, by reason of entering into a sublease under this Lease, be
deemed, for the benefit of Lessor, to have assumed and agreed to conform and
comply with each and every obligation herein to be performed by Lessee other
than such obligations as are contrary to or inconsistent with provisions
contained in a sublease to which Lessor has expressly consented in writing.
In the event Lessee shall default in the performance of its
obligations under this Lease, Lessor at its option and without any obligation to
do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of Lessee under such sublease from the time of
the exercise of said option to the termination of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to Lessee or for any other prior defaults of Lessee under
such sublease.
No sublease shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
With respect to any subletting to which Lessor has consented,
Lessor agrees to delivery a copy of any notice of default by Lessee to the
sublessee. Such sublessee shall have the right to cure a default of Lessee
within three (3) days after service of said notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset from
and against Lessee for any such defaults cured by the sublessee.
12.5. Lessor's Expenses. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable costs and expenses incurred in
connection therewith, including attorneys', architects', engineers' or other
consultants' fees.
12.6. Conditions to Consent. Lessor reserves the right to condition
any approval to assign or sublet upon Lessor's determination that (a) the
proposed assignee or sublessee shall conduct a business on the Premises of a
quality substantially equal to that of Lessee and consistent with the general
character of the other occupants of the Office Building Project and not in
violation of any exclusives or rights then held by other tenants, and (b) the
proposed assignee or sublessee be at least as financially responsible as Lessee
was expected to be at the time of the execution of this Lease or of such
assignment or subletting, whichever is greater.
13. Default; Remedies.
13.1. Default. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Lessee:
The vacation or abandonment of the Premises by Lessee.
Vacation of the Premises shall include the failure to occupy the Premises for a
continuous period of sixty (60) days or more, whether or not the rent is paid.
The breach by Lessee of any of the covenants, conditions or
provisions of paragraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment or
subletting), 13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f)
(false statement), 16(a) (estoppel certificate), 30(b) (subordination), 33
(auctions), or 41.1 (easements), all of which are hereby deemed to be material,
non-curable defaults without the necessity of any notice by Lessor to Lessee
thereof.
<PAGE>
The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statues such
Notice to Pay Rent of Quit shall also constitute the notice required by this
subparagraph.
The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee other than those referenced in subparagraphs [b] and [c], above, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Lessor to Lessee; provided, however, that if the nature of
Lessee's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given to Lessee under applicable Unlawful Detainer statutes.
(i) The making by Lessee of any general arrangement or
general assignment for the benefit of creditors; (ii) Lessee becoming a "debtor"
as defined in 11 U.S.C. [delta]101 or any successor stature thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within sixty
(60) days; (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within thirty
(30) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. In the event that any provision of this paragraph 13.1(e) is contrary to
any applicable law, such provision shall be of no force or effect.
The discovery by Lessor that any financial statement given to
Lessor by Lessee, or its successor in interest or by any guarantor of Lessee's
obligation hereunder, was materially false.
13.2. Remedies. In the event of any material default or breach of this
Lease by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default:
Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee all damages incurred by
Lessor by reason of Lessee's default including, but not limited to, the cost of
recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and any real estate commission actually paid; the
<PAGE>
worth at the time of award by the court having jurisdiction thereof of the
amount by which the unpaid rent for the balance of the term after the time of
such award exceed the amount of such rental loss for the same period that Lessee
proves could be reasonably avoided; that portion of the leasing commission paid
by Lessor pursuant to paragraph 15 applicable to the unexpired term of this
Lease.
Maintain Lessee's right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have vacated or
abandoned the Premises. In such event Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to recover
the rent as it becomes due hereunder.
Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3. Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently pursues the same to completion.
13.4. Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of Base Rent, Lessee's Share of Operating Expense Increase or
other sums due hereunder will cause Lessor to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Lessor by the terms of any mortgage or
trust deed covering the Office Building Project. Accordingly, if any installment
of Base Rent, Operating Expense Increase, or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to 6% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor in no even constitute a waiver of
Lessee's default with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.
<PAGE>
14. Condemnation. If the Premises or any portion thereof or the Office Building
Project are taken under the power of eminent domain, or sold under the threat of
the exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs; provided that if so
much of the Premises or the Office Building Project are taken by such
condemnation as would substantially and adversely affect the operation and
profitability of Lessee's business conducted from the Premises, Lessee shall
have the option, to be exercised only in writing within thirty (30) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within thirty (30) days after the condemning authority shall
have taken possession), to terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the rent and Lessee's
Share of Operating Expense Increase shall be reduced in the proportion that the
floor area of the Premises taken bears to the total floor area of the Premises.
Common Areas taken shall be excluded from the Common Areas usable by Lessee and
no reduction of rent shall occur with respect thereto or by reason thereof.
Lessor shall have the option in its sole discretion to terminate this Lease as
of the taking of possession by the condemning authority, by giving written
notice to Lessee of such election within thirty (30) days after receipt of
notice of a taking by condemnation of any part of the Premises or the Office
Building Project. Any award for the taking of all or any part of the Premises or
the Office Building Project under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Lessee shall be entitled to any separate award for loss of or
damage to Lessee's trade fixtures, removable personal property and unamortized
tenant improvements that have been paid for by Lessee. For that purpose the cost
of such improvements shall be amortized over the original term of this Lease
excluding any options. In the event that this Lease is not terminated by reason
of such condemnation, Lessor shall to the extent of severance damages received
by Lessor in connection with such condemnation, repair any damage to the
Premises cause by such condemnation except to the extent that lessee has been
reimbursed therefor by the condemning authority. Lessee shall pay any amount in
excess of such severance damages required to complete such repair.
15. Broker's Fee.
The brokers involved in this transaction are Voit Commercial
Brokerage as "listing broker" and GAM Properties, Inc. as "cooperating broker,"
licensed real estate broker(s). A "cooperating broker" is defined as any broker
other than the listing broker entitled to a share of any commission arising
under this Lease. Upon execution of this Lease by both parties, Lessor shall pay
to said broker(s) jointly, or in such separate shares as they may mutually
designate in writing, a fee as set forth in a separate agreement between Lessor
and said broker(s), or in the event there is no separate agreement between
Lessor and said broker(s), the sum of per commission schedule, for brokerage
services rendered by said broker(s) to Lessor in this transaction.
Lessor further agrees that (i) if Lessee exercises any
Option, as defined in paragraph 39.1 of this Lease, which is granted to Lessee
under this Lease, or any subsequently granted option which is substantially
similar to an Option granted to Lessee under this Lease, or (ii) if Lessee
acquires any rights to the Premises or other premises described in this Lease
which are substantially similar to what Lessee would have acquired had an Option
herein granted to Lessee been exercised, or (iii) if said broker(s) are the
procuring cause of any other lease or sale entered into between the parties
pertaining to the Premises and/or any adjacent property in which Lessor has an
interest, or (v) if the Base Rent is increased, whether by agreement or
operation of an escalation clause contained herein, then as to any of said
<PAGE>
transactions or rent increases, Lessor shall pay said broker(s) a fee in
accordance with the schedule of said broker(s) in effect at the time of
execution of this Lease. Said fee shall be paid at the time such increased
rental is determined.
Lessor agrees to pay said fee not only on behalf of Lessor
but also on behalf of any person, corporation, association, or other entity
having an ownership interest in said real property or any part thereof, when
such fee is due hereunder. Any transferee of Lessor's interest in this Lease,
whether such transfer is by agreement or by operation of law, shall be deemed to
have assumed Lessor's obligation under this paragraph 15. Each listing and
cooperating broker shall be a third party beneficiary of the provisions of this
paragraph 15 to the extent of their interest in any commission arising under
this Lease and may enforce that right directly against Lessor; provided,
however, that all brokers having a right to any part of such total commission
shall be a necessary party to any suit with respect thereto.
Lessee and Lessor each represent and warrant to the other
that neither has had any dealings with any person, firm, broker or finder (other
than the person(s), if any, whose names are set forth in paragraph 15(a), above)
in connection with the negotiation of this Lease and/or the consummation of the
transaction contemplated hereby, and no other broker or other person, firm or
entity is entitled to any commission or finder's fee in connection with said
transaction and Lessee and Lessor do each hereby indemnify and hold the other
harmless from and against any costs, expenses, attorneys' fees or liability for
compensation or charges which may be claimed by any such unnamed broker, finder
or other similar party by reason of any dealings or actions of the indemnifying
party.
16. Estoppel Certificate.
Each party (as "responding party") shall at any time upon not
less than ten (10) days prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Office Building Project or
of the business of Lessee.
At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Lessor is the requesting party, not more than one month's rent has been paid
in advance.
<PAGE>
If Lessor desires to finance, refinance, or sell the Office
Building Project, or any part thereof, Lessee hereby agrees to deliver to any
lender or purchaser designated by Lessor such financial statements of Lessee as
may be reasonably required by such lender or purchaser. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be sued only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean only the
owner or owners, at the time in question, of the fee title or a lessee's
interest in a ground lease of the Office Building Project, and except as
expressly provided in paragraph 15, in the event of any transfer of such title
or interest, Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the ten grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to grantee. The
obligations contained in this Lease to be performed by Lessor shall, subject as
aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as determined by
a court of competent jurisdiction shall in no way affect the validity of any
other provision hereof.
19. Interest on Past-Due Obligations. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law or judgments from the date due. Payment of such interest
shall not excuse or cure any default by Lessee under this Lease; provided,
however, that interest shall not be payable on late charges incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence with respect to the obligations to
be performed under this Lease.
21. Additional Rent. All monetary obligations of Lessee to Lessor under the
terms of this lease, including but not limited to Lessee's Share of Operating
Expense Increase and any other expenses payable by Lessee hereunder shall be
deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges that neither the real estate broker
listed in paragraph 15 hereof nor any cooperating broker on this transaction nor
the Lessor or any employee or agents of any of said persons has made any oral or
written warranties or representations to Lessee relative to the condition or use
by Lessee of the Premises or the Office Building Project and Lessee acknowledges
that Lessee assumes all responsibility regarding the Occupational Safety Health
Act, the legal use and adaptability or the Premises and the compliance thereof
with all applicable laws and regulations in effect during the term of this
Lease.
23. Notices. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given if delivered or addressed to Lessee
or to Lessor at the address noted below or adjacent to the signature of the
respective parties, as the case may be. Mailed notices shall be deemed given
upon actual receipt at the address required, or forty-eight hours following
<PAGE>
deposit in the mail, postage prepaid, whichever first occurs. Either party may
by notice to the other specify a different address for notice purposes except
that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice purposes. A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent or
approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. Holding Over. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
lease pertaining to the obligations of Lessee, except that the rent payable
shall be two hundred percent (200%) of the rent payable immediately preceding
the termination date of this Lease, and all Options, if any, granted under the
terms of this lease shall be deemed terminated and be of no further effect
during said month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by Lessee
shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning this
Lease between the parties hereto shall be initiated in the county in which the
Office Building Project is located.
<PAGE>
30. Subordination.
This Lease, and any Option or right of first refusal granted
hereby, at Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed
upon the Office Building Project and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Lessee's right to quiet possession of the Premises shall not be disturbed if
Lessee is not in default and so long as lessee shall pay the rent and observe
and perform all of the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee or ground lessor
shall elect to have this lease and any Options granted hereby prior to the lien
of its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease or such Options are
dated prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.
Lessee agrees to execute any documents required to effectuate
an attornment, a subordination, or to make this Lease or any Option granted
herein prior to the lien of any mortgage, deed of trust or ground lease, as the
case may be. Lessee's failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Lessee hereunder
without further notice to Lessee or, at Lessor's option, Lessor shall execute
such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee does
hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 30(b).
31. Attorneys' Fees.
31.1. If either party or the broker(s) named herein bring an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to his reasonable
attorneys' fees to be paid by the losing party as fixed by the court in the same
or a separate suit, and whether or not such action is pursued to decision or
judgment. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
31.2. The attorneys' fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred in good faith.
31.3. Lessor shall be entitled to reasonable attorneys' fees and all
other costs and expenses incurred in the preparation and service of notice of
default and consultations in connection therewith, whether or not a legal
transaction is subsequently commenced in connection with such default.
32. Lessor's Access.
32.1. Lessor and Lessors' agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same, performing
any services required of Lessor, showing the same to prospective purchasers,
lenders, or lessees, taking such safety measures, erecting such scaffolding or
other necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as Lessor may
reasonably deem necessary or desirable and the erecting, using and maintaining
of facilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of
<PAGE>
the Premises. Lessor may at any time place on or about the Premises or the
Building any ordinary "For Sale" signs and Lessor may at any time during the
last 120 days of the term hereof place on or about the Premises any ordinary
"For Lease" signs.
32.2. All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for the
same.
32.3. Lessor shall have the right to retain keys to the Premises and
to unlock all doors in or upon the Premises other than to files, vaults and
safes, and in the case of emergency to enter the Premises by any reasonably
appropriate means, and any such entry shall not be deemed a forcible or unlawful
entry or detainer of the Premises or an eviction. Lessee waives any charges for
damages or injuries or interference with Lessee's property or business in
connection therewith.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
without first having obtained Lessor's prior written consent. Notwithstanding
anything to the contrary in this lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent. The holding of any auction on the Premises or Common Areas in violation
of this paragraph shall constitute a material default of this Lease.
34. Signs. Lessee shall not place any sign upon the Premises of the Office
Building Project without Lessor's prior written consent. Under no circumstances
shall Lessee place a sign on any roof of the Office Building Project.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. Consents. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in the Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed.
37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. Quiet Possession. Upon Lessee paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Office Building Project.
<PAGE>
39. Options.
39.1. Definition. As used in this paragraph the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option of right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Office Building Project or other
property of Lessor or the right of first offer to lease other space within the
office Building Project or other property of Lessor; (3) the right or option to
purchase the Premises or the Office Building Project, or the right or option to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor or the right of first offer to purchase other property
of Lessor.
39.2. Options Personal. Each Option granted to Lessee in this Lease is
personal to the original Lessee and may be exercised only by the original Lessee
while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than Lessee; provided, however, that an Option may be
exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of
this Lease. The Options, if any, herein granted to Lessee are not assignable
separate and apart from this Lease, nor may any Option be separated from this
lease in any manner, either by reservation or otherwise.
39.3. Multiple Options. In the event that Lessee has any multiple options to
extend or renew this Lease as later option cannot be exercised unless the prior
option to extend or renew this Lease has been so exercised.
39.4. Effect of Default on Options.
Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i) during
the time commencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1[c] or 13.1(d) and continuing until the noncompliance
alleged in said notice of default is cured, or (ii) during the period of time
commencing on the day after a monetary obligation to Lessor is due from Lessee
and unpaid (without any necessity for notice thereof to Lessee) and continuing
until the obligation is paid, or (iii) in the event that Lessor has given to
Lessee three or more notices of default under paragraph 13.1[c], or paragraph
13.1(d), whether or not the defaults are cured, during the 12 month period of
time immediately prior to the time that lessee attempts to exercise the subject
Option, (iv) if Lessee has committed any non-curable breach, including without
limitation those described in paragraph 13.1(b), or is otherwise in default of
any of the terms, covenants or conditions of this Lease.
The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of paragraph 39.4(a).
All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to
<PAGE>
commence to cure a default specified in paragraph 13.1(d) within thirty (30)
days after the date that Lessor gives notice to Lessee of such default and/or
Lessee fails thereafter to diligently prosecute said cure to completion, or
(iii) Lessor gives to lessee three or more notices of default under paragraph
13.1[c], or paragraph 13.1(d), whether or not the defaults are cured, or (iv) if
Lessee has committed any non-curable breach, including without limitation those
described in paragraph 13.1(b), or is otherwise in default of any of the terms,
covenants and conditions of this Lease.
40. Security Measures - Lessor's Reservations.
40.1. Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Noting herein contained shall prevent Lessor, at Lessor's sole option,
from providing security protection for the Office Building Project or any part
thereof, in which event the cost thereof shall be included within the definition
of Operating Expenses, as set forth in paragraph 4.2(b).
40.2. Lessor shall have the following rights:
To change the name, address or title of the Office Building
Project or building in which the Premises are located upon not less than 90 days
prior written notice;
To, at Lessee's expense, provide and install Building
standard graphics on the door of the Premises and such portions of the Common
Areas as Lessor shall reasonably deem appropriate;
To permit any lessee the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights expressly
given herein;
To place signs, notices or displays as Lessor reasonably
deems necessary or advisable upon the roof, exterior of the buildings or the
Office Building Project or on pole signs in the Common Areas.
40.3. Lessee shall not:
Use a representation (photographic or otherwise) of the
Building or the Office Building Project or their name(s) in connection with
Lessee's business;
Suffer or permit anyone, except in emergency, to go upon the
roof of the Building.
41. Easements.
41.1. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
41.2. The obstruction of Lessee's view, air, or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this Lease or impose any liability upon Lessor.
<PAGE>
42. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
this Lease.
43. Authority. If Lessee is a corporation, trust, or general or limited
partnership, Lessee, and each individual executing this Lease on behalf of such
entity represent and warrant that such individual is duly authorized to execute
and deliver this Lease on behalf of said entity. If Lessee is a corporation,
trust or partnership, Lessee shall, within thirty (30) days after execution of
this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
44. Conflict. Any conflict between the printed provisions, Exhibits or Addenda
of this Lease and the typewritten or handwritten provisions, if any, shall be
controlled by the typewritten or handwritten provisions.
45. No Offer. Preparation of this lease by Lessor or Lessor's agent and
submission of same to lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully executed
by both parties.
46. Lender Modification. Lessee agrees to make such reasonable modifications to
this lease as may be reasonably required by an institutional lender in
connection with the obtaining of normal financing or refinancing of the Office
Building Project.
47. Multiple Parties. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein, the
obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee,
respectively.
48. Work Letter. This Lease is supplemented by that certain Work Letter of even
date executed by Lessor and Lessee, attached hereto as Exhibit C, and
incorporated herein by this reference.
49. Attachments. Attached hereto are the following documents which constitute a
part of this Lease:
Exhibit A - Floor Plan
Exhibit B - Rules and Regulations
50. Rent.
$4,686.00 + utilities per month (months 1-12) on 5,680 square feet
<PAGE>
$6,375.00 + utilities per month (months 13-24) on 7,500 square feet
$6,630.00 + utilities per month (months 25-36) on 7,500 square feet
Lessor will abate months 2 and the first two (2) weeks of month 13 is
free of rent
51. Option. Lessee shall be granted three (3) individual three (3) year options
at a rate equal to the previous year's rent, plus an eight percent (8%) increase
per three (3) year term. Lessee shall be granted a first right of refusal to
expand to an additional floor.
52. Early Termination. Lessee shall have the right to terminate this Lease with
three (3) months advance written notice to Lessor no later than then end of the
twenty-first (21st) month of the Lease term (minimum term of twenty-four (24)
months). This is a one time right to cancel and Lessee agrees to pay a Twenty
Thousand and no/100 Dollars ($20,000.00) cancellation fee.
53. Signage. Lessee shall have the signage on the upper level of the South,
East, and West face of the Premises. Lessee shall also be given the top portion
of any existing or future planned monument sign on Miramar Road, subject to the
allowable footage and city specifications pursuant to said property. Signage
shall be mutually agreed upon by Lessor and Lessee.
54. Lessor shall have the right to enter unused portion of space during the
first 12 months of the lease term.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL
ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF
THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.
LESSOR
[SIGNED]_________________________
By: Shih Ching Chiang, Owner
7256 Rock Canyon Drive
San Diego, CA 92126
LESSEE
GREENLAND CORPORATION
[SIGNED]_________________________
By: Eric W. Gaer, President
4180 La Jolla Village Drive, #315
La Jolla, CA 92037
<PAGE>
STANDARD OFFICE LEASE
FLOOR PLAN
Exhibit A
[GRAPHIC OMITTED]
Carpet throughout.
Paint all walls except for lobby where mural exists (touch-up).
Replace all wallpaper except in existing main hallway.
Install electrical outlets, switches and phone jacks as diagrammed.
Minor adjustments may be required per layout.
It is agreed and understood that there may be some minor
adjustments made by either the contractor and/or the Lessee as
to the exact location of all new walls at time of
installation. However, it is agreed that the above floor plan
is generally acceptable to all parties.
<PAGE>
EXHIBIT 10n
SETTLEMENT AGREEMENT AND RELEASE BETWEEN PLAINTIFF,
GREGORY C. MANOS
AND
DEFENDANTS, GREENLAND CORPORATION, A NEVADA CORPORATION AND
KEVIN G. SMITH, AN INDIVIDUAL
WHEREAS, plaintiff, Gregory C. Manos (hereinafter "plaintiff") has
filed a Complaint. (the "Action") which is pending before the Superior Court of
the State of California for the County of San Diego against defendants GREENLAND
CORPORATION, a Nevada Corporation, and KEVIN G. SMITH, and individual
("defendants").
WHEREAS, plaintiff has alleged in his Compliant that defendant
GREENLAND CORPORATION breached a contract, and both defendants committed
fraudulent deceit and negligent misrepresentation in connection with plaintiff's
right to receive common stock in defendant GREENLAND CORPORATION for services
rendered in connection with a beverage product known as "Absolutely American";
and
WHEREAS, the parties agree and acknowledge that on May 18, 1995, the
parties executed a modification to the contract which is the subject of the
Action. This modification gave plaintiff the right to 80,000 shares common stock
in defendant GREENLAND CORPORATION, the resale of which is restricted pursuant
to 17 C.F.R. [delta] 230.144, or "Rule 144" of the Federal Securities Act of
1933.
WHEREAS, defendants, denying wrongdoing of any kind whatsoever, and
without admitting liability, nevertheless have agreed to enter into this
Settlement Agreement and Release ("Agreement") to avoid further expense,
inconvenience and the distraction of burdensome and protracted litigation;
NOW, THEREFORE, it is agreed by and between the undersigned that this
Action be settled and compromised as between plaintiff and defendants and
further:
1. This Agreement and any proceedings taken hereunder shall not in
any event be construed or be deemed to be a concession on the part of defendants
of any fact, liability or wrongdoing whatsoever. Neither this Agreement nor any
of its provisions, or evidence of any negotiations or proceedings leading to the
settlement, shall be offered or received in this Action, or in any other action
or proceeding, as an admission or concession of any fact, liability or
wrongdoing of any nature on the part of defendants or anyone acting on their
behalf.
2. The parties hereto and their counsel agree to undertake their
best efforts and mutually cooperate, including taking all steps and efforts
contemplated by this Agreement and any other lawful steps and efforts which may
become necessary by order of the Court or otherwise, to effectuate this
Agreement and the settlement set forth herein. As soon as practicable after
execution of this Agreement, plaintiff will take all necessary steps to secure a
dismissal of this Action, with prejudice, as to all defendants.
3. In full and complete settlement of all claims which have been, might
have been, are nor or could be asserted in this Action by plaintiff
against defendants, and subject to the remaining provisions hereof,
defendants shall"
a. Within three (3) days of the execution of this Agreement
deliver to plaintiff's attorneys a cashier's check in the amount of six thousand
five hundred dollars ($6,500) and payable to "Kendrick Bonas Hancock & Nutley,
Client Trust Account."
b. Within three (3) days of the execution of this Agreement
deliver to
<PAGE>
plaintiff's attorneys certificates representing 80,000 shares common stock in
defendant GREENLAND CORPORATION, the resale of which is restricted pursuant to
17 C.F.R. [delta] 230.144, or "Rule 144" of the Federal Securities Act of 1933.
c. On or before May 17th, 1997 provide all legal requirement
to effectuate the removal of the restrictive legends appearing on the
certificates referenced in part (b), above, including the provision of, but not
necessarily limited to:
(1) An attorney opinion letter stating that all
Requirements for the removal of the restrictive legend under
Rule 144 have been met; and
(2) A letter from Greenland Corporation approving the
removal of the legends;
(3) A seller's representation letter; and
(4) A broker's representation letter; and
(5) Any required affidavits; and
(6) Copies of any documentation required to be filed
with the Federal Securities and Exchange Commission in order
to effectuate the removal of the restrictive legends.
4. Plaintiff agreement to act in good faith in assisting the
effectuation of part [c] of paragraph 3 above, including, but not limited to,
following any steps required for the delivery of the 80,000 shares restricted
common stock in GREENLAND CORPORATION to a broker-dealer as designated by
defendant GREENLAND CORPORATION, on or about May 17, 1997. Until that time, the
shares shall be maintained at plaintiff's counsel's place of business, and will
not be transferred, sold, hypothecated or conveyed in any way.
5. If, for any reason, the removal of the restrictive legend on
certificates representing 80,000 shares common stock in GREENLAND CORPORATIN
cannot be effectuated, or if, for any reason, by the close of business June 6th,
1997, plaintiff is not in possession of 80,000 shares common stock in GREENLAND
CORPORATION bearing no restrictive legend, defendant GREENLAND CORPORATION
agrees to repurchase all said 80,000 shares restricted common stock in GREENLAND
CORPORATION at the price appearing for common stock in GREENLAND CORPORATION in
the "Local Stocks" Business Section of the San Diego Union-Tribune on Friday,
May 16th, 1997. If, for any reason, no such price appears in the San Diego
Union-Tribune on that day, then GREENLAND CORPORATION agrees to repurchase all
said 80,000 shares restricted common stock in GREENLAND CORPORATION at the
latest price of common stock in GREENLAND CORPORATION appearing prior to May
16th, 1997 in the "Local Stocks" Business Section of the San Diego
Union-Tribune.
6. Plaintiff, in consideration of the forgoing, for himself and as his
respective assigns, representatives, servants, executors, administrators,
descendants, dependents, and heir, hereby fully release and forever discharge
defendants along with all of the predecessors and successors-in-interest and
their respective past and present parents, subsidiaries, joint ventures,
partnerships, related companies, affiliates, unincorporated entities, divisions,
groups, present or former directors, officers, agents and employees, from any
and all injuries, demands, losses, damages, costs, loss of service, expenses,
compensations, claims, suits, causes of action, attorneys' fees, obligations, or
liabilities of any nature, type or description, which plaintiff has, or has ever
had, or may claim to have, whether known, unknown, foreseen, unforeseen, patent
or latent, from the beginning of time to the date hereof by reason of any
dealings or matters relating in any way to plaintiff's claims for common stock
in GREENLAND CORPORATION, including without restricting the foregoing generally,
any and all injuries, demands, losses, damages, costs, loss of service,
expenses, compensations, claims, suits, causes of action, rights, disputes,
differences, controversies, debts, dues, sums of money, accounts, reckonings,
expenses, attorneys' fees, obligations, or liabilities of any
<PAGE>
nature whatsoever, in law or in equity, which plaintiff has, or has ever had, or
will have, or may claim to have against the defendants by reason of any act,
cause, matter or thing whatsoever which is in whole or in part of the subject of
the aforesaid Action or in any way related to this Action.
7. In executing this agreement, the parties hereto, and each of them,
warrant and represent that they do so with full knowledge of any and all rights
that they have and that they do not rely, and have not relied, upon any
representation made by any other party with regard to this mutual release or the
basis thereof. Each party hereby assumes the risk of any mistake of fact on its
part, in connection with the true facts involved herein and with regard to any
facts which are known or unknown to it. In this connection each party hereby
acknowledges that it has read section 1542 of the California Civil Code, that it
has been advised by counsel with regard to its meaning, and that it understands
the same. Said statute provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
The parties hereto and each of them agree to and hereby waive and relinquish all
rights and benefits afforded under the provision of section 1542 as stated
above.
Each party warrants that he, she or it has the full right and
authority to enter into this agreement and make the release and agreements
contained herein, and receive the consideration herein provided. Each party
agrees to indemnify and hold harmless any other party from any liability and
expense incurred, including attorneys' fees and costs, as a result of any breach
of this warranty.
Each party agrees, represents and warrants that it has not heretofore
or concurrently assigned or transferred any claims, rights, or privileges it
has, or may have had with respect to claims released by this agreement, to any
other person or entity and shall not do so in the future. All warranties and
representations contained herein are continuing and survive execution of this
agreement.
Each party shall pay their own attorneys' fees and court costs in
connection with this Action, and neither party shall seek reimbursement of
attorneys' fees and court costs either by way of motion or cost memorandum or
any other manner, in this case.
This Agreement contains the entire agreement among the parties hereto.
All terms of this Agreement are contractual and not mere recitals. The terms are
and shall be binding upon each of the parties hereto, their agents, attorneys,
employees, successors, and assigns, and upon all other persons claiming an
interest in the subject matter hereof.
This Agreement may be pleaded as a full and complete defense to, and
may be used as the basis for an injunction against, any action, suit or other
proceeding which may be instituted, prosecuted or attempted in breach of this
Agreement.
This Agreement shall become effective upon its execution by all of the
undersigned.
The provisions of this Agreement shall be construed in accordance with
the laws of the State of California.
Nothing herein shall be construed as denying or disparaging any
party's right to enforce this Agreement by judicial proceeding. In the event of
litigation arising out of this Agreement, the prevailing party or parties shall
be entitled to its costs of litigation, including its reasonable attorneys' fees
which may be incurred as a result of such litigation.
This Agreement may be amended only by a written modification executed
by all parties.
This Agreement may be executed in counterparts, each of which shall
constitute an original.
<PAGE>
This Agreement has been approved as to form and content by the
parties, through their respective counsel of record in this Action.
Dated: March 4th, 1997 [SIGNED]_____________________
Gregory C. Manos, Plaintiff
Dated: February 27th, 1997 [SIGNED]_____________________
Kevin G. Smith, Defendant
Dated: February 27th, 1997 [SIGNED]_____________________
Greenland Corporation, Defendant
By: Eric W. Gaer, President
<PAGE>
EXHIBIT 10o
SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
This Settlement Agreement and Release of All Claims (hereinafter referred to as
"Release") is entered into this 20th day of March, 1997, in San Diego,
California, by and between CHARLES BROWNE, individually and representing
HOMETECH, LLC, SUPERIOR INTERACTIVE GROUP, INC., and TECHNOSCAPE, LLC; SUSAN
BROWNE, individually, and JAY SHESTAK, individually and representing SIGNATURE
LEASING, LLC, together with ERIC GAER and KEVIN SMITH, individually and
representing GREENLAND CORPORATION, in consideration of the mutual promises
herein contained.
1. Subject Matter
The subject matter of this Release consists of all acts, events, circumstances,
or occurrences relating to a Compliant filed by CHARLES and SUSAN BROWNE as
against GREENLAND CORPORATION, a Nevada corporation, on June 25, 1996, in San
Diego Superior Court; followed by a subsequent Cross-Complaint filed by
GREENLAND CORPORATION, a Nevada Corporation, and individuals KEVIN SMITH and
ERIC GAER, on August 22, 1996, also filed in San Diego Superior Court; with both
actions filed and identified under San Diego Superior Court Case No. 00701318.
The undersigned acknowledge this is a full and complete settlement of any and
all claims as they pertain to the Complaint and/or Cross-Complaint identified
under San Diego Superior Court Case No.
00701318.
The parties agree that a dispute exists with respect to the allegations as
alleged in the Complaint and/or Cross-Complaint, as identified under San Diego
County Superior Court Case No. 00701318; but nonetheless, the parties desire to
compromise said positions and claims.
General Release
All parties on behalf of themselves, and all others bound by this Release hereby
remise, release, and forever discharge each other, and their respective
officers, directors, agents, employees, attorneys, adjusters, successors, heirs,
personal representatives, assigns, and anyone else claiming, by, through, or
under them, from all rights, claims, demands, actions, cause of action, and
liability of any kind and nature whatsoever, whether known or unknown,
contemplated or uncontemplated, present or future, which the parties may have
individually, and/or as a group, may now, or after the signing of this Release,
have arising from, created by, or in any manner related to the subject matter
described above.
All parties hereto, and each of them, acknowledge there is a risk that,
subsequent to the execution of this Agreement, that they may
<PAGE>
discover, incur, or suffer from claims which were unknown or unanticipated at
the time this Agreement was executed, including, without limitation, unknown or
unanticipated claims which arise from, that may be based upon or related to
matters referred to in this Agreement and which, if known by them on the date
this Agreement was executed, may have materially affected their decision to
execute this Agreement. The Parties acknowledge they are assuming the risk of
such unknown and unanticipated claims and agree this Agreement applied thereto.
THE PARTIES EXPRESSLY WAIVE THE BEENFITS OF SECTION 1545 OF THE CALIFORNIA CIVIL
CODE, WHICH READS AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
The Parties have been apprised of the statutory language of Civil Code section
1542 and having been so apprised and fully understand the same, nevertheless
elect to waive and relinquish all rights and benefits which they have or may
have had under Section 1542 of the Civil Code of the State of California or the
law of any other state or jurisdiction to the same or similar fact to the full
extent they may lawfully waive all such rights and benefits pertaining to the
subject matter of this Agreement. The Parties, and each of them, understand if
the facts with respect to which this Agreement is executed are found hereinafter
to be other than or different from the facts now believed by them to be true,
this Agreement shall be and remain effective notwithstanding such material
difference.
Persons Released and Bound
The persons released and bound by the signing of this Release include the
parties hereto, their respective officer, directors, agents, employees,
attorneys, adjusters, successors, heirs, personal representatives, assigns, and
anyone else claiming, by, through, or under them.
No Admission of Liability
In making and effecting this Release, it is acknowledged, understood, and agreed
by the parties hereto that this Settlement Agreement and Release of All Claims,
is intended to be construed only as a resolution of a disputed claim and neither
of the parties hereto, or the persons released and bound by this Agreement,
admit, concede, deny, or otherwise maintain any lack of merit in their
respective assertions, conditions, positions, or those of the others.
Consideration
In consideration for settlement, the parties hereby agree as follows:
<PAGE>
CHARLES BROWNE shall return and relinquish ownership
of 549,599 shares of common stock in GREENLAND CORPORATION issued
to him pursuant to Stock Certificate No. 2260 to GREENLAND
CORPORATION.
SUSAN BROWNE shall return and relinquish ownership
of 549,599 shares of common stock in GREENLAND CORPORATION issued
to her pursuant to Stock Certificate No. 2261 to GREENLAND
CORPORATION.
CHARLES BROWNE, on behalf of HOMETECH, LLC, shall
return and relinquish ownership of 100,000 shares of common stock
in GREENLAND CORPORATION issued to HOMETECH, LLC, pursuant to Stock
Certificate No. 2360 to GREENLAND CORPORATION.
JAY SHESTAK shall return and relinquish ownership of
50.251 and 25,000 shares of common stock in GREENLAND CORPORATION
issued to him pursuant to Stock Certificate Nos. 2493 and 2494,
respectively, to GREENLAND CORPORATION.
The parties relinquishing stock further agree not to
initiate any derivative or other shareholder action against GREENLAND
CORPORATION for any reason, based on any present or future ownership interest in
GREENLAND CORPORATION.
GREENLAND CORPORATION, upon receipt of said Stock
Certificates identified in subsections (a) and (b) above, shall issue to CHARLES
BROWNE and SUSAN BROWNE the aggregate sum of 275,000 shares of common stock in
GREENLAND CORPORATINO with no restrictions other than those statutorily
mandated, including, but not limited to, any provisions under Rule 144 of the
Securities and Exchange Act of 1933, as amended. GREENLAND CORPORATION, KEVIN
SMITH, and ERIC GAER, and all officers, directors, and agents of GREENLAND
CORPORATION, further agree they will not act in any manner whatsoever to
restrict or hinder the sale of the stock referred to herein to any third person
or entity.
6. Representations of the Undersigned
The parties hereto expressly warranted and agree as follows:
That no promise or inducement has been made to obtain
their signatures hereto except as set forth herein;
That this Release is executed without reliance upon
any statement or representation by any party or any of the persons released, or
anyone acting for them, concerning the damages suffered or legal liability
therefore;
That they have relied fully and completely on their
own judgment and the advise of their attorneys in making this
settlement;
That they are of legal age and legally competent to
execute this Release and accept full responsibility therefore;
<PAGE>
That they have carefully read this Release, understood
its terms and have executed it voluntarily and with full knowledge
of its significance.
7. Definitions
The work "undersigned" includes the singular as well as the plural when only one
person has executed the Release. The word "person" includes corporations,
partnerships, and other legal entities, as well as individuals. The word
"Release" means this Settlement Agreement and Release of All Claims.
8. Attorneys' Fees
In the event that any litigation, action, suit, demand, or other proceeding
arising out of the matters referred to in this Release shall be commenced, made,
or pursued against another party hereto by any party, the prevailing party shall
be entitled to reasonable attorney fees, costs, and expenses incurred in
defending and/or contesting each such claim.
9. Counter-Parts
This Settlement Agreement and Release of All Claims may be signed in
counterparts.
10. Mutuality of Drafting
The parties agree that they mutually drafted said document, and that it shall
not be construed against either on the basis that one party drafted said
Agreement.
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement and
Release of All Claims as of the date and year first above written pursuant to
the laws of the State of California.
Dated: March 20, 1997 [SIGNED]_____________________
CHARLES BROWNE, individually
Dated: March 20, 1997 [SIGNED]_____________________
CHARLES BROWNE, representing
HOMETECH, LLC
Dated: March 20, 1997 [SIGNED]_____________________
-----------------------------
CHARLES BROWNE, representing
SUPERIOR INTERACTIVE GROUP, INC.
Dated: March 20, 1997 [SIGNED]___________________
SUSAN BROWNE, individually
Dated: March 20, 1997 [SIGNED]___________________
JAY SHESTAK, individually
Dated: March 20, 1997 [SIGNED]___________________
JAY SHESTAK, representing
<PAGE>
SIGNATURE LEASING, LLC.
Dated: March 20, 1997 [SIGNED]___________________
KEVIN SMITH, individually
Dated: March 20, 1997 [SIGNED]___________________
KEVIN SMITH, acting as agent of
GREENLAND CORPORATION
Dated: March 21, 1997 [SIGNED]___________________
ERIC GAER, individually
Dated: March 21, 1997 [SIGNED]___________________
ERIC GAER, acting as agent of
GREENLAND CORPORATION
APPROVED AS TO FORM:
Dated: March 20, 1997 SHIFFLET WALTERS KANE & KONOSKE
By: [SIGNED]___________________
---------------------------
DOC ANTHONY ANDERSON, III, or
GREGORY P. KONOSKE, attorneys
for CHARLES BROWNE, individually
and representing HOMETECH, LLC,
SUPERIOR INTERACTIVE GROUP,INC.
and TECHNOSCAPE, LLC; SUSAN BROWNE,
individually; and JAY SHESTAK,
individually and representing
SIGNATURE LEASING, LLC.
Dated: March 21, 1997
By: [SIGNED]___________________
CRAIG J. SHABER, and JEFFREY A.
<PAGE>
NICHOLS, attorneys for
GREENLAND CORPORATION, a
Nevada corporation, and
individuals ERIC GAER and
KEVIN SMITH.
<PAGE>
EXHIBIT 22
GREENLAND CORPORATION
LIST OF SUBSIDIARIES
GAM Properties, Inc., a California Corporation
<PAGE>
C O N T E N T S
Page
INDEPENDENT AUDITOR'S REPORT............................................. F-2
CONSOLIDATED BALANCE SHEETS.............................................. F-3
CONSOLIDATED STATEMENTS OF OPERATIONS.................................... F-4
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY............... F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS.................................... F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................... F-7
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS............................F-10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
SUPPLEMENTARY FINANCIAL INFORMATION..................................F-11
SCHEDULE V - RENTAL PROPERTIES............................................F-12
SCHEDULE VI - ACCUMULATED DEPRECIATION
ON RENTAL PROPERTIES.................................................F-13
See Notes to Consolidated Financial Statements.
F-1
<PAGE>
SMITH & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
Members of:
American Institute of 10 West 100 South, Suite #700
Certified Public Accountants Salt Lake City, Utah 84101
Utah Association of Telephone: (801) 575-8297
Certified Public Accountants Facsimile: (801) 575-8306
- -----------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Greenland Corporation
We have audited the accompanying consolidated balance sheets of Greenland
Corporation and subsidiary as of December 31, 1996 and 1995, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended December 31, 1996, 1995, and 1994. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Greenland
Corporation and subsidiary as of December 31, 1996 and 1995, and the results of
their operations, changes in stockholders' equity, and their cash flows for the
years ended December 31, 1996, 1995, and 1994, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company has a working capital deficiency of $(520,501)
at December 31, 1996, and a retained deficit of $(1,843,265). The Company has
suffered losses from operations and has a substantial need for working capital.
This raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 2 to the
consolidated financial statements. The accompanying consolidated financial
statements do not include any adjustments that may result from the outcome of
this uncertainty.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
March 20, 1997
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
12/31/96 12/31/95
-------- --------
ASSETS
Current Assets
<S> <C> <C>
Cash in banks $ 6,909 $ 8,523
Escrow accounts 7,518 1,969
Notes receivable 0 59,668
Accounts receivable - officers (Note 2) 130,398 0
---------------- ----------------
TOTAL CURRENT ASSETS 144,825 70,160
Rental properties, net of depreciation
(Note 1 and schedules V and VI) 5,054,875 5,096,627
Other Assets
Land option (Note 4) 2,515,000 2,515,000
Licenses (Note 5) 0 959,432
Investments (Note 9) 152,893 152,893
Capitalized software costs (Note 1) 186,723 0
---------------- ----------------
$ 8,054,316 $ 8,794,112
================ ================
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 74,550 $ 28,321
Tenant deposits 20,814 21,829
Accrued wages payable 49,800 0
Payroll taxes payable 43,141 0
Property taxes payable 83,782 22,364
Accrued interest payable 24,139 5,365
Notes payable (Note 6) 5,000 50,000
Payable to stockholders (Note 7) 150,000 0
Current portion of long-term debt (Note 6) 214,100 139,644
---------------- ----------------
TOTAL CURRENT LIABILITIES 665,326 267,523
Contingent liabilities (Note 8) 0 0
Payable to stockholders (Note 7) 140,790 300,790
Long-term debt (Note 7) 3,481,202 3,925,089
---------------- ----------------
TOTAL LIABILITIES 4,287,318 4,493,402
STOCKHOLDERS' EQUITY Common Stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 15,214,460
shares (13,190,253 in 1995) 15,214 13,190
Additional paid-in capital 5,595,049 5,298,818
Stock subscription receivable 0 (54,195)
Retained deficit (1,843,265) (957,103)
---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 3,766,998 4,300,710
---------------- ----------------
$ 8,054,316 $ 8,794,112
================ ================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
12/31/96 12/31/95 12/31/94
-------- -------- --------
REVENUES
<S> <C> <C> <C>
AMR Sales $ 40,000 $ 0 $ 0
Rental income 437,519 409,655 83,661
Other income 65,015 42,660 6,545
--------------- ------------- --------------
542,534 452,315 90,206
EXPENSES
General and administrative 790,573 300,253 103,456
Depreciation 147,878 188,828 46,713
Interest 333,938 284,138 55,857
Property taxes and other taxes 96,639 23,259 (5,482)
Bad debts 59,668 0 0
--------------- ------------- --------------
1,428,696 796,478 200,544
--------------- ------------- --------------
LOSS FROM OPERATIONS (886,162) (344,163) (110,338)
OTHER INCOME (LOSS)
Decline in investments (Note 11) 0 (36,250) 0
Gain on sale of properties 0 17,297 0
Loss on foreclosure 0 (199,693) 0
--------------- ------------- --------------
0 (218,646) 0
--------------- ------------- --------------
NET LOSS BEFORE INCOME TAXES (886,162) (562,809) 0
Loss from discontinued operations 0 (24,344) 0
--------------- ------------- --------------
(886,162) (587,153) (110,338)
PROVISION FOR INCOME TAXES 0 0 0
--------------- ------------- --------------
NET LOSS $ (886,162) $ (587,153) $ (110,338)
=============== ============= ===============
Loss before discontinued operations $ (.13) $ (.14) $ (.07)
Loss from discontinued operations 0 (.01) .00
--------------- ------------- --------------
NET LOSS PER WEIGHTED AVERAGE SHARE $ (.13) $ (.15) $ (.07)
=============== ============= ==============
Weighted average number of common shares used to
compute net income (loss) per weighted average share 6,637,617 4,003,478 1,578,037
============= ============= ===============
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
Par Value $0.001 Paid - in Retained
Shares Amount Capital Deficit
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balances at 12/31/93 1,000,000 1,000 1,000 (2,000)
Issuance of common stock (restricted)
at $.033 per share for cash 1,200,000 1,200 38,800
to acquire subsidiary at $3.04 per
share at 10/1/94 100,000 100 303,893 (257,612)
to acquire additional rental properties
at $2.92 per share at 10/1/94 524,147 524 1,529,803
at par 10/21/94 for services rendered 132,000 132
Net loss for year (110,338)
----------- ------------ ------------ ------------
Balances at 12/31/94 2,956,147 2,956 1,873,496 (369,950)
Issuance of common stock (regulation S)
at $.10 per share for stock subscription 1,100,000 1,100 108,900
Issuance of common stock (restricted)
at $4.83 per share to cancel debt 25,544 26 123,294
at $.001 per share for services 209,400 209
at $.09 per share for assets 8,500,000 8,500 710,829
at $2.00 per share for assets 8,400 8 16,800
at $5.00 per share to cancel debt 20,000 20 99,980
at $5.14 per share to cancel debt 5,000 5 25,714
at $6.03 per share for land option 408,512 409 2,464,591
Cancellation of restricted common stock (42,750) (43) (124,786)
Net loss for year (587,153)
----------- ------------ ------------ ------------
Balances at 12/31/95 13,190,253 13,190 5,298,818 (957,103)
Issuance of common stock (restricted)
correction to issue price of shares
previously sold on subscription (14,195)
at $.001 per share for assets 1,270,359 1,270 (1,270)
at $.001 per share for services 118,856 119 (119)
at $.50 per share for cash 242,500 242 121,008
at $.25 per share for cash 1,438,505 1,438 358,188
at $2.00 per share for cash 54,500 55 108,945
at $1.00 per share for cash 600 1 599
at $5.00 per share for cash 200 0 1,000
at $3.00 per share for cash 28,000 28 83,972
at $.82 per share for services 60,000 60 48,940
at $1.07 per share for cash 2,888 3 3,084
at $.76 per share for services 4,500 5 3,396
at $.31 per share for cash 132,000 132 40,786
Cancellation of restricted common stock (1,328,701) (1,329) (458,103)
Net loss for year (886,162)
----------- ------------ ------------ ------------
Balances at 12/31/96 15,214,460 $ 15,214 $ 5,595,049 $ (1,843,265)
============== ============== ============== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
12/31/96 12/31/95 12/31/94
----------------- ---------------- ----------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $ (886,162) $ (587,153) $ (110,338)
Adjustments to reconcile net loss
to cash required by operating activities:
Stock issued for services/debt 0 42,736 132
Depreciation 147,878 188,828 46,713
Unrealized decline in investments 0 36,250 0
Book value of disposed assets 0 200,374 0
Stock issued for services 52,401 0 0
Changes in operating assets and liabilities:
Accounts receivable (70,730) 675 (675)
Escrow accounts (5,549) (1,969) 0
Other assets 0 490 0
Accounts payable 46,229 (23,879) 52,200
Accrued expenses 111,715 5,365 0
Deposits (1,015) (3,553) 25,382
Bank overdraft 0 (16,409) 16,461
Property taxes payable 61,418 (42,016) (48,142)
----------------- ---------------- ----------------
NET CASH REQUIRED BY
OPERATING ACTIVITIES (543,815) (200,261) (18,267)
INVESTING ACTIVITIES
Capitalization of software costs (186,723) 0 0
Purchase of stock 0 0 (55,000)
Purchase of equipment (1,626) (15,932) 0
----------------- ---------------- ----------------
NET CASH USED
BY INVESTING ACTIVITIES (188,349) (15,932) (55,000)
FINANCING ACTIVITIES
Proceeds from sale of stock 719,481 55,805 40,000
Collections of stock subscription 40,000
Cash received from subsidiary 0 23,227 188
Amounts borrowed from (repaid to) stockholders (10,000) 248,290 52,500
Repayment of loans (91,931) (86,197) (35,830)
Proceeds from new loans 73,000 0 0
----------------- ---------------- ----------------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 730,550 241,125 56,858
----------------- ---------------- ----------------
INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS (1,614) 24,932 (16,409)
Cash and cash equivalents at beginning of year 8,523 (16,409) 0
----------------- ---------------- ----------------
CASH AND CASH
EQUIVALENTS AT END OF YEAR $ 6,909 $ 8,523 $ (16,409)
================= ================ ================
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 309,799 $ 278,773 $ 55,857
Assets acquired by assumption of debt and
issuance of stock 104,500 5,033,602 5,795,688
Stock issued to cancel debt 0 249,039 0
Retained deficit acquired by issuance of stock 0 0 257,612
Cancellation of stock previously issued for
assets determined to be worthless (Note 4) 459,432 0 0
----------------- ---------------- ----------------
$ 873,731 $ 5,561,414 $ 6,109,157
================= ================ ================
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Basis of Consolidation
The consolidated financial statements include the accounts of Greenland
Corporation and its wholly owned subsidiary Gam Properties, Inc. All
intercompany transactions and accounts have been eliminated in
consolidation.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided for
using the straight-line method over the estimated useful lives of the
assets (7 years on equipment and leasehold improvements, and 27 1/2 years
on buildings). The cost of assets sold or retired and the related amounts
of accumulated depreciation are removed from the accounts in the year of
disposal. Any resulting gain or loss is reflected in current operations.
Expenditures for maintenance and repairs are charged to operations as
incurred; additions and improvements are capitalized.
Dividend Policy
The Company has not yet adopted any policy regarding payment of dividends.
Capitalized Software
The Company has capitalized expenses incurred to install live test sites
for its AirLink automated meter reading systems. Those costs will be
amortized against revenues from sales of the systems over a period not to
exceed five years.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Fair Market Value of Financial Instruments
The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents and are deemed to approximate
fair value. In management's opinion, the carrying value of long-term debt
also approximates fair value.
Income Taxes
The Company records the income tax effect of transactions in the same year
that the transactions enter into the determination of income, regardless of
when the transactions are recognized for tax purposes. Tax credits are
recorded in the year realized. Since the Company has not yet realized
income as of the date of this report, no provision for income taxes has
been made.
The Company utilizes the liability method of accounting for income taxes as
set forth in Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). Under the liability method,
deferred taxes are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse. An
allowance against deferred tax assets is recorded when it is more likely
than not that such tax benefits will be realized.
At December 31, 1996, a deferred tax asset has not been recorded due to the
Company's lack of operations to provide income to use the net operating
loss carryover which expires as follows:
F-7
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)
Income Taxes (continued)
Greenland Corporation
<TABLE>
<CAPTION>
Year Ended Expires Amount
---------- ------- ------
<S> <C> <C> <C>
December 31, 1986 December 31, 2001 $ 1,950
December 31, 1987 December 31, 2002 10
December 31, 1988 December 31, 2003 10
December 31, 1989 December 31, 2004 10
December 31, 1990 December 31, 2005 10
December 31, 1991 December 31, 2006 10
December 31, 1994 December 31, 2009 39,780
December 31, 1995 December 31, 2010 394,682
December 31, 1996 December 31, 2011 633,077
-------------------------
$ 1,069,539
=========================
</TABLE>
Gam Properties
<TABLE>
<CAPTION>
Expiration Date Amount
--------------- ------
Year of Loss Federal California Federal California
------------ ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
12/31/1991 12/31/2006 12/31/1998* $ 24,312 $ 12,156
12/31/1992 12/31/2007 12/31/1997 18,110 9,055
12/31/1993 12/31/2008 12/31/1998 49,724 24,862
12/31/1994 12/31/2009 12/31/1999 10,978 5,489
---------------- ----------------
$ 103,124 $ 51,562
================ ================
</TABLE>
*California has recently reinstated NOL carryovers and
extended expiration dates for certain years.
NOTE 2: ACCOUNTS RECEIVABLE - OFFICERS
During 1996, the Company advanced $130,395 to officers and employees. The
funds will be repaid in 1997 or withheld from wages.
NOTE 3: GOING CONCERN ITEMS
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The Company
has incurred losses from inception and has a retained deficit of
$1,843,265.
Management believes the Company will be able to continue as a going concern
for the following reasons:
1. The Company is in the process of a private placement offering to sell
1,666,667 shares of restricted common stock to raise $5,000,000.
2. The Company expects to exercise its option to purchase property in
Arizona (see Note 4) and sell the property to generate working
capital.
NOTE 4: LAND OPTION
During 1995 the Company issued 408,512 shares of its restricted common
stock and incurred $50,000 of debt to acquire an option to purchase
approximately 103 acres of unimproved desert land located about 12 miles
northwest of Tucson, Arizona. A recent appraisal shows the land with a
market value of $8,250,000. The Company has the option to purchase the land
by issuing an additional 861,847 shares of its restricted common stock
before January 30, 1998.
F-8
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
NOTE 4: LAND OPTION (continued)
The Company must also assume or retire the First Deed of Trust on the
property. The first Deed of Trust is $435,000 and bears interest at 17% per
annum. The note and accrued interest are due in full in December of 1997.
The liability against the land at December 31, 1995 was approximately
$546,000 including unpaid interest. The option has been recorded at about
32% of the net value of the land, based on the stock issued and debt
incurred prior to December 31, 1995. The Company expects to exercise the
option in 1997.
NOTE 5: LICENSES
In 1995, the Company acquired the rights to three Interactive Video and
Data Systems Licenses ("IVDS") which were issued by the Federal
Communications Commission. The licenses are located within the geographical
areas of Olympia, Washington; Lubbock, Texas; and Knoxville, Tennessee. In
1996, management determined that the licenses were in fact, not
transferable and sued for return of the stock issued in exchange therefore.
The lawsuit was settled March 20, 1997, and the transaction has been
rescinded.
NOTE 6: NOTES PAYABLE
The Company owes $5,000 by April 15, 1997 in connection with the land
option. The note is non-interest bearing.
NOTE 7: LONG-TERM DEBT
Long-term debt as of December 31, 1996 and 1995, consisted of the following
promissory notes secured by real property:
<TABLE>
<CAPTION>
Interest Monthly
Rate Payment 1996 1995
---------------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C>
Home Savings 7.084% $ 5,954 $ 748,562 $ 774,203
Zetty Kratz 12.000 0 0 0
Western Financial 7.500 2,098 280,228 284,491
Amresco 8.250 2,066 264,430 267,062
Home Savings 7.816 666 91,415 92,512
Home Savings 7.983 1,976 278,726 280,745
Action 8.750 due 2001 104,500 0
Action 11.500 due 1999 73,000 0
Home Savings 7.534 1,739 245,540 248,858
Allied Bancorp 11.000 1,238 127,363 128,160
Lomas Mortgage 10.375 1,201 135,952 136,950
Lomas Mortgage 10.375 1,028 116,373 117,237
Pacific Mortgage Exchange 11.000 1,238 127,221 128,161
Cal-Western 9.000 Interest only 45,000 45,000
Home Savings 7.461 1,272 179,642 182,707
GME Corp 9.610 Interest only 741,961 741,961
TCF Mortgage 10.000 948 100,048 101,345
Bob Stewart 8.000 Interest only 35,341 35,341
FCC 7.125 29,937/qtr. 0 500,000
---------------- ----------------
3,695,302 4,064,733
Less current portion 214,100 139,644
---------------- ----------------
Total long-term debt $ 3,481,202 $ 3,925,089
================ ================
</TABLE>
F-9
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
NOTE 7: LONG-TERM DEBT (continued)
Scheduled principal repayments of long-term debt, assuming no changes in
their terms, are as follows:
1997 $ 214,100
1998 80,370
1999 121,585
2000 52,433
2001 161,084
Thereafter 3,065,730
-----------------
$ 3,695,302
=================
On certain properties the prior owners have agreed to remain personally
liable for the debt as an accommodation to the lender.
Payable to stockholders.
At December 31, 1996 the Company owes $290,790 to two stockholders. The
debt bears interest at 8% per year from December 31, 1995. $150,000 is due
during 1997, and the balance is due in 1998. $127,900 of the debt consists
of unpaid management fees which have been converted to a note payable.
NOTE 8: LEGAL MATTERS
The Company had a contract with a consultant that called for payment of
about $10,000 cash (which was paid) and 60,000 shares of the Company's
stock to be registered under Regulation "S-8". The stock was not issued,
but an additional $8,200 cash was paid. The consultant signed a mutual
release and settlement agreement, which the Company felt settled all
obligations, but later he still demanded the 60,000 shares. The Company
settled for 80,000 shares of restricted stock.
During 1996, the Company sued former consultants for fraud and
misrepresentation, amoung other things, related to the transfer of IVDS
licenses to the Company. These consultants also filed suit against the
Company for $77,000. The Company settled the lawsuit in March of 1997,
which settlement resulted in the cancellation of 991,449 shares of the
Company's common stock. All claims of the consultants for money were
dropped. As a result of the settlement the Company has treated the
write-down of licenses (Note 4) as a rescission. As a result of the
rescission, the Company's long-term debt has been reduced by $500,000.
NOTE 9: INVESTMENTS
Investments consist of the following items:
1- 25,000 shares of common stock in a public company. The cost was
$55,000, and the current market value at December 31, 1996 was
$18,750. The $36,250 unrealized loss is shown in the statement of
operations at December 31, 1995.
2- A 49% interest in a limited liability company which is reported at
$134,143 under the equity method.
NOTE 10: SUBSEQUENT EVENT
In January, 1997, the Company entered into a three-year operating lease of
office space. Required lease payments are $51,546 in 1997, $73,313 in 1998,
and $79,560 in 1999.
NOTE 11: PRO FORMA INFORMATION
See the following page for pro forma information which assumes that
Greenland and Gam Properties were consolidated for the period presented.
F-10
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Years ended December 31, 1994
<TABLE>
<CAPTION>
12/31/94
------------------
REVENUE
<S> <C>
Net sales $ 619,722
Cost of sales 538,250
------------------
GROSS PROFIT 81,472
Rental income 401,387
Other income 21,006
------------------
NET REVENUE 503,865
EXPENSES
General and administrative 216,208
Depreciation 125,911
Interest 356,090
Property taxes and other taxes 52,655
------------------
750,864
------------------
INCOME (LOSS) FROM OPERATIONS (246,999)
PROVISION FOR INCOME TAXES 0
------------------
NET INCOME (LOSS) $ (246,999)
==================
Net income (loss) per
weighted average share $ (.15)
==================
Weighted average number
of common shares used to
compute net income (loss)
per weighted average share 1,624,147
==================
</TABLE>
F-11
<PAGE>
SMITH & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
Members of:
American Institute of 10 West 100 South, Suite #700
Certified Public Accountants Salt Lake City, Utah 84101
Utah Association of Telephone: (801) 575-8297
Certified Public Accountants Facsimile: (801) 575-8306
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
SUPPLEMENTARY FINANCIAL INFORMATION
Board of Directors and Shareholders
Greenland Corporation
San Diego, California
Our audit of the basic financial statements presented in the preceding section
of this report was made primarily to form an opinion on such financial
statements taken as a whole. The additional information, contained in the
following pages, is not considered essential for the fair presentation of the
financial position of Greenland Corporation and Subsidiary, the results of their
operations or cash flows in conformity with generally accepted accounting
principles. The following information consisting of Schedule V and Schedule VI
is included to comply with reporting requirements of the Securities and Exchange
Commission. Such data was subjected to the audit procedures applied in the audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
March 20, 1997
F-12
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
SCHEDULE V - RENTAL PROPERTIES
<TABLE>
<CAPTION>
Balance at Balance at
Beginning Additions End of
of Period At Cost Dispositions Period
---------------- ----------------- ---------------- ----------------
Year ended December 31, 1994:
<S> <C> <C> <C> <C>
Land $ 0 $ 1,517,319 $ 0 $ 1,517,319
Buildings 0 3,989,119 0 3,989,119
Fixtures & equipment 0 288,760 0 288,760
---------------- ----------------- ---------------- ----------------
$ 0 $ 5,795,198 $ 0 $ 5,795,198
================ ================= ================ ================
Year ended December 31, 1995:
Land $ 1,517,319 $ 307,125 $ 473,819 $ 1,350,625
Buildings 3,989,119 1,019,375 1,355,119 3,653,375
Fixtures & equipment 288,760 58,791 96,260 251,291
---------------- ----------------- ---------------- ----------------
$ 5,795,198 $ 1,385,291 $ 1,925,198 $ 5,255,291
================ ================= ================ ================
Year ended December 31, 1996:
Land $ 1,350,625 $ 27,170 $ 0 $ 1,377,795
Buildings 3,653,375 77,330 0 3,730,705
Fixtures & equipment 251,291 1,626 0 252,917
---------------- ----------------- ---------------- ----------------
$ 5,255,291 $ 106,126 $ 0 $ 5,361,417
================ ================= ================ ================
</TABLE>
F-13
<PAGE>
GREENLAND CORPORATION AND SUBSIDIARY
SCHEDULE VI - ACCUMULATED DEPRECIATION ON RENTAL PROPERTIES
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and End of
of Period Expenses Dispositions Period
---------------- ----------------- ---------------- ----------------
Year ended December 31, 1994:
<S> <C> <C> <C> <C>
Land $ 0 $ 0 $ 0 $ 0
Buildings 0 51,289 0 51,289
Fixtures & equipment 0 10,313 0 10,313
---------------- ----------------- ---------------- ----------------
$ 0 $ 61,602* $ 0 $ 61,602
================ ================== ================ ================
Year ended December 31, 1995:
Land $ 0 $ 0 $ 0 $ 0
Buildings 51,289 146,554 74,576 123,267
Fixtures & equipment 10,313 42,274 17,190 35,397
---------------- ----------------- ---------------- ----------------
$ 61,602 $ 188,828 $ 91,766 $ 158,664
================ ================= ================ ================
Year ended December 31, 1996:
Land $ 0 $ 132,850 $ 0 $ 0
Buildings 123,267 0 0 256,117
Fixtures & equipment 35,397 15,028 0 50,425
---------------- ----------------- ---------------- ----------------
$ 158,664 $ 147,878 $ 0 $ 306,542
================ ================= ================ ================
</TABLE>
* Includes $14,889 associated with the acquisition of a subsidiary.
F-14
<PAGE>
PART IV
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GREENLAND CORPORATION
By: Signed
--------------------------------
Eric W. Gaer
President and Chief Executive Officer
March 31, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
Signed President and Chief Executive Officer March 31, 1997
- ----------------------
Eric W. Gaer
Signed Chief Financial Officer March 31, 1997
- ----------------------
Kevin G. Smith
Signed Secretary March 31, 1997
- ----------------------
Michael H. deDomenico
1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Greenland Corporation December 31, 1996 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000852127
<NAME> GREENLAND CORPORATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 6,909
<SECURITIES> 152,893
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 144,825
<PP&E> 5,361,417
<DEPRECIATION> 306,542
<TOTAL-ASSETS> 8,054,316
<CURRENT-LIABILITIES> 665,326
<BONDS> 3,695,302
0
0
<COMMON> 15,214
<OTHER-SE> 3,751,784
<TOTAL-LIABILITY-AND-EQUITY> 8,054,316
<SALES> 40,000
<TOTAL-REVENUES> 542,534
<CGS> 0
<TOTAL-COSTS> 1,094,758
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 333,938
<INCOME-PRETAX> (886,162)
<INCOME-TAX> 0
<INCOME-CONTINUING> (886,162)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (886,162)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
