UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No.0-27720
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY KNOWN AS EUROMED, INC.)
(Exact name of registrant as specified in its charter)
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Nevada 88-031770
(State or other jurisdiction IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
5910 North Central Expressway, Suite 1480
Dallas, TX 75206
(Address of principal executive offices)
214-237-3223
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-KSB. [x]
State issuer's revenue for its most recent fiscal year: $9,709,826
The number shares outstanding of the registrant's
common stock as of May 8, 2000 was:
2,289,000 shares of common stock, par value $.01 per share.
1
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The aggregate market value of the voting stock held by non-affiliates of the
registrant as computed by reference to the average of the closing bid and asked
prices of such stock, as reported by the Bulletin Board, on May 8, 2000 ($1.00
per share) is $1,127,500. Shares of voting stock held by each officer and
director and by each person who owns 10% or more of the Company's outstanding
voting stock have been excluded in that such persons bay be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
2
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY KNOWN AS EUROMED, INC.)
For the Year Ended December 31, 1999
Table of Contents
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Page
Part I
Item 1: Business...............................................................................................4
Item 2: Properties.............................................................................................9
Item 3: Legal Proceedings......................................................................................9
Item 4: Submission of Matters to a Vote of Security Holders....................................................9
Part II
Item 5: Market for the Registrant's Common Equity and Related Stockholder Matters.............................10
Item 6: Management's Discussion and Analysis of Financial Condition and Results of Operations.................11
Item 7: Financial Statements and Supplementary Data...........................................................14
Item 8: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................15
Part III
Item 9: Directors and Executive Officers of Institutional Equity Holdings, Inc................................15
Item 10: Executive Compensation................................................................................16
Item 11: Security Ownership of Certain Beneficial Owners and Management........................................18
Item 12: Certain Relationships and Related Transactions........................................................19
Part IV
Item 13: Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................20
</TABLE>
3
PART I
Item 1. Business
Swiss Nassau Corporation was incorporated on May 17, 1994 in the State of
Nevada, with 1,000 shares of authorized common stock with no par value. On June
15,1994, all authorized shares of common stock of Swiss Nassau Corporation were
issued. On October 20, 1995, Swiss Nassau Corporation changed its name into
EuroMed, Inc. and increased its authorized shares to 20,000,000 shares of common
stock with a new par value of $0.01 per share, and 5,000,000 preferred shares
with a par value of $0.01 per share. On October 20, 1995, EuroMed, Inc. effected
a 150 for 1 stock split of its common stock. On April 23, 1999, EuroMed, Inc.
changed its name to Institutional Equity Holdings, Inc. (the "Company" or
"IEH").
In November 1995, the Company began acquiring pharmaceutical companies operating
exclusively in Europe. The Company completed the acquisitions using the net
proceeds from the sale of 1,150,000 shares of its common stock (issue price was
$6.50 per share) in March 1996 and the issuance of 2,700,000 shares of its
common stock. Subsequent to the acquisitions, laws relating to the pricing of
pharmaceuticals in Europe were changed and as a result the operations of the
pharmaceutical companies owned by the Company were severely impacted, resulting
in significant operating losses. The Company realized approximately $1,146,000
in cash and cancelled 2,700,000 shares of its common stock upon sale of its
European subsidiaries in 1997.
The Company had no business activities in the calendar year of 1998, except that
on November 6, 1998 the Company's Board of Directors approved and executed the
"Agreement and Plan of Reorganization" by and among the Company, Institutional
Equity Corporation ("IEC", a wholly owned subsidiary of the Company and formerly
known as Redstone Acquisition Corp.) and Redstone Securities, Inc. ("Redstone"),
a licensed broker and dealer of securities.
Effective February 16, 1999, Redstone was merged into the newly organized
subsidiary IEC. The Company issued 600,000 shares of its common stock to the
three principals of Redstone, Thomas Laundrie, Gary Prucell, and Richard Belz
(collectively referred to as the "Redstone Shareholders") and was obligated to
issue an additional 500,000 shares of its common stock (the "Restricted Shares")
upon the market price of the Company's common stock reaching certain price
levels or IEC reporting certain levels of net income. Notwithstanding the price
levels of the common stock or net income performance levels, the Restricted
Shares fully vest on February 16, 2002. Redstone has been a registered broker
dealer since 1988.
The Redstone Shareholders agreed to terminate their relationship with the
Company in February 2000 subject to certain compensation payments, to forgo the
collection of the Company's subordinate notes due the Redstone Shareholders, to
assume an investment in a certain security at its book value and to modify the
number of shares of the Company's common stock from 1,100,000 to 500,000 shares
of fully vested common stock. The Company has a right to repurchase these shares
of its common stock at a price of $2.00 per share as follows:
Number of Redemption
Shares Period
100,000 Calendar year 2000
100,000 Calendar year 2001
300,000 On or before February 16, 2002
IEH is a holding company whose only operating subsidiary is IEC a full service
brokerage firm engaged in the purchase and sale of securities from and to the
public and for its own account and investment banking activities. The Company
operates in one industry segment, the financial services industry. At December
31, 1999, IEC employed 124 brokers registered with the National Association of
Securities Dealers, Inc. ("NASD"). IEH also employed a support staff of 30
persons in its headquarters in Dallas, TX and in its branch offices. At December
31, 1999, IEH had 4 branch offices throughout the United States. The Company's
headquarters are located at 5910 North Central Expressway, Suite 1480, Dallas,
TX 75206. Its telephone number is (214) 237-3223.
4
Principal Products, Services and Markets
Virtually all of IEH's business is carried on through IEC. IEC is involved in
the purchase and sale of most investment securities but is not involved in
commodities or futures. Three broad categories of securities activities
contribute to revenues of IEC: general securities (or retail), trading and
market making (or wholesale) and corporate finance/investment banking. IEC also
receives revenues from gains and losses in investment accounts, from the
exercise of underwriter warrants received in connection with its corporate
finance activities, and from other sources.
The following table indicates the approximate percentage of revenues that were
accounted for by each of these categories and from investment income (including
underwriter warrants) in the last five fiscal years:
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1999 1998 1997 1996 1995
Commissions 89% 70% 46% 38% 29%
Gain (Loss) on Firm Securities
Accounts (3) 20 46 49 57
Underwriting and syndicate income 12 5 1 8 11
Other 2 5 7 5 3
100% 100% 100% 100% 100%
</TABLE>
In this table, "Trading" includes only the net profit or loss from IEC's trading
activities. See "Trading and Market Making."
General Securities
As a securities broker, IEC acts as agent for its customers in the purchase and
sale of common and preferred stocks, options and debt securities traded on
securities exchanges or in the over-the-counter ("OTC") market. A major portion
of its revenues is derived from commissions from customers on these
transactions. In the OTC market, transactions with customers in securities not
listed on an exchange may be effected as principal, rather than agent, primarily
where IEC is a market maker in that security. Customer transactions in
securities are effected either on a cash or margin basis.
IEC enters into dealer agreements with mutual fund management companies and
publicly registered limited partnerships. Commissions on the sale of these
securities are derived from the standard dealers discounts, which range from
approximately one percent (1%) to eight and one-half percent (8.5%) of the
purchase price of the securities, depending on the terms of the dealer agreement
and the amount of the purchase. IEC does not generally sell interests in limited
partnerships which are not publicly registered.
Pursuant to an agreement between IEC, First Southwest Company ("FSW") and Fiserv
(FIS), FSW and FIS carry all of IEC's customer securities accounts and performs
the following services: (1) preparation and mailing of monthly statements to IEC
customers; (2) settlement of contracts and transactions in securities between
IEC and other broker-dealers and between IEC and its customers; (3) custody and
safe-keeping of securities and cash, the handling of margin accounts, dividends,
exchanges, rights offerings and tender offers; and (4) the execution of customer
orders placed on an exchange. IEC determines the amount of commission to be
charged to its customers on agency transactions and the price of securities
purchased or sold in principal transactions. FSW and FIS receives compensation
based on the size of the transaction, subject to certain minimum and maximum
amounts. The agreements between IEC and FSW and IEC and FIS may be canceled by
either party upon 60 days written notice, which period may be reduced in certain
events. In the event of a liability arising from a bad debt from a customer, IEC
is required to indemnify FSW or FIS against any loss. This potential liability
is uninsured.
5
In addition to providing clearing services for IEC, FSW and FIS loan money to
IEC in the ordinary course of IEC's business, pursuant to an arrangement under
which FSW and FIS agrees to finance IEC's trading accounts. At December 31, 1999
no loans were outstanding pursuant to this arrangement. See "Item 6 -
Management's Discussion and Analysis or Plan of Operation."
Trading and Market Making
In addition to executing trades as an agent, IEC regularly acts as a principal
in executing trades in equity securities, corporate debt securities and
municipal bonds. The amount of trading by IEC in the high yield bond market has
not been material. At December 31, 1999, IEC made a market in approximately 55
securities of 54 issuers. Of these, two (2) were corporations for which IEC has
acted as managing or co-managing underwriter of public financings. In addition,
at December 31, 1999, IEC held securities of 24 companies in its investment
account. In 1999, the value of securities held in the trading accounts and
investment account ranged between $464,034 and $1,385,456. The level of
positions carried in IEC's trading and investment accounts fluctuates
significantly. The size of the securities positions at any date may not be
representative of IEC's exposure on any other date, because the security
positions vary substantially depending upon economic and market conditions, the
allocation of capital among types of inventories, underwriting commitments,
customer demands and trading volume. The aggregate value of inventories that IEC
may carry is limited by certain requirements under the SEC's net capital rules.
See "Net Capital Requirements."
IEC's market making activities are conducted both with other dealers in the
"wholesale market" and with IEC's customers. Transactions with customers are
effected as principal at a net price equal to the current interdealer price plus
or minus the approximate equivalent of a brokerage commission. Securities are
purchased primarily to provide an inventory for customers who wish to buy, and
short sales are likewise made primarily to serve customers. IEC's transactions
as principal expose IEC to risk because securities positions are subject to
fluctuations in market value and liquidity. Profits or losses on trading and
investment positions depend upon the skills of the employees in IEC's trading
department and employees responsible for taking investment positions. The
trading department is headquartered in IEC's Plainview, New York office.
Corporate Finance
IEC raises capital through public offerings of securities for corporations that
are engaged in a variety of businesses. IEC participates in underwritings of
corporate securities as managing underwriter and as a syndicate member.
Management of an underwriting account is generally more profitable that
participation as a member of an underwriting syndicate. Revenues generated by
syndicate participations have not been material.
IEC generally underwrites public offerings of securities in the range of $1.5
million to $10 million on a "firm commitment" basis, which means that it agrees
to purchase a specific amount of securities from the issuer at a discount after
the registration statement for the offering is declared effective by the
Securities and Exchange Commission (the SEC") and resells the securities to the
public at a specified price. The underwriting involves risk of loss if IEC is
unable to resell at a profit the securities it is committed to purchase. This
risk is usually reduced by accepting other stock brokerage firms as a part of an
underwriting syndicate in which each member commits to purchase a specified
amount of the offering. IEC and other underwriters may also sell a portion of
their commitment through a "Selling Group" of other stock brokerage firms that
participate in selling the offering but are not subject to an underwriter's
commitment. As an underwriter, IEC is also subject to potential liability under
federal and state securities laws and other laws if the registration statement
or prospectus contains a material misstatement or omission. IEC's potential
liability as an underwriter is uninsured.
The commitment of capital by IEC between the time a firm commitment underwriting
agreement becomes effective and the time IEC resells the securities constitutes
a charge against its net capital. Accordingly, IEC's participation in or
initiation of underwritings maybe limited by the financial requirements of the
Sec and NASD. See "Net Capital Requirements."
Between January 1, 1999 and December 31, 1999 IEC acted as the managing
underwriter or co-managing underwriter
6
for four (4) securities offerings, raising approximately $21,027,500 million for
corporate finance clients. Of these, two (2) were initial public offerings. IEC
typically receives two (2) to three (3) percent of the aggregate amount of money
raised in an offering to cover non-accountable expenses and between seven (7)
and ten (10) percent as compensation to underwriters, selling group members and
registered representatives, although these percentages may be lower for larger
transactions. Typically IEC also receives warrants to purchase securities, equal
to ten (10) percent of the securities sold in the offering, for a period of five
years at a price equal to one hundred twenty percent (120) percent of the public
offering price, although a portion of these warrants are typically transferred
as compensation to persons associated with IEC and, in certain cases, to other
major underwriters in the public offering. See "Item 6 - Management's Discussion
and Analysis or Plan of Operation Liquidity and Capital Resources."
Branch Offices
IEC personnel run IEC branch offices and IEC assumes liability for all the
operating expenses of the branch. Persons in these branches are registered with
IEC, and IEC assumes the compliance and regulatory obligations for these
employees. As of December 31, 1999, IEC had 4 branch offices in Florida (1), New
Jersey (1) and New York (2).
Research
IEC does not presently employ anyone to perform research. In 1999, two persons
were employed to gather and analyze information that would be intended to
provide IEC with an adequate basis for performing its investment banking
activities and to provide customers with a regular flow of information on the
companies for which IEC has in the past provided investment banking services.
Regulation
IEC is registered with the SEC as a broker-dealer under the Securities Exchange
Act of 1934. It is also registered as a broker-dealer under laws of 48 states
and Washington, D.C. IEC is a member of the NASD.
The securities business is subject to extensive regulation under federal and
state laws. The principal purpose of regulation and discipline of broker-dealers
is the protection of customers and the securities markets rather than protection
of creditors and stockholders of broker-dealers. The SEC is the federal agency
charged with administration of the federal securities laws. Much of the
regulation of broker-dealers, however, has been delegated to self-regulatory
organizations, principally the NASD. These self-regulatory organizations adopt
rules (subject to approval by the SEC), which govern the industry and conduct
periodic examinations of member broker-dealers. Securities firms are also
subject to regulation and examination by state securities commissions in the
states in which they are registered.
The regulations to which broker-dealers are subject cover all aspects of the
securities business, including sales methods, trading practices among
broker-dealers, capital structure of securities firms, record keeping and the
conduct of directors, officers and employees. Additional legislation, changes in
rules promulgated by the SEC and by self-regulatory bodies or changes in the
interpretation or enforcement of existing laws and rules often affect directly
the method of operation and profitability of broker-dealers. The SEC, NASD and
state regulatory authorities may conduct administrative proceedings, which can
result in censure, fine, suspension or expulsion of a broker-dealer, its
officers or employees.
Net Capital Requirements
IEC is required to maintain minimum "net capital" under the SEC's net capital
rule of not less than 6.67 percent of its aggregate indebtedness. As of December
31, 1999, IEC had net capital of $559,737, which exceeded its minimum
requirement of $100,000 by $156,638. The ratio of aggregate indebtedness of
$677,577 to net capital of $256,638 on December 31, 1999 was approximately .93
to 1. In a public offering in which IEC acts as an underwriter, IEC must
7
have sufficient net capital to cover the amount of securities underwritten,
applying applicable formulas mandated by the SEC, during the period between
effectiveness and the closing of the transaction (usually about one week). This
results in a significant temporary increase in IEC's required net capital. In
many cases, the amount of securities underwritten by IEC has been limited by its
net capital. Any significant reduction in IEC's net capital, even if IEC were
still in compliance with the SEC's net capital rule for its retail and trading
activities, could have a material adverse impact on IEC's ability to continue
its investment banking activities.
Competition
All aspects of IEC's business are highly competitive. In its general brokerage
activities, IEC competes directly with numerous other broker-dealers, many of
which are large well known firms with substantially greater financial and
personnel resources than IEC. Many of IEC's competitors employ extensive
advertising and actively solicit potential clients in order to increase
business. In addition, brokerage firms compete by furnishing investment research
publications to existing clients, the quality and breadth of which are
considered important in the development of new business and the retention of
existing clients. IEC also competes with a number of smaller regional brokerage
firms.
Some commercial banks and thrift institutions offer securities brokerage
services. Many commercial banks offer a variety of investment banking services.
Competition among financial services firms also exists for investment
representatives and other personnel.
The securities industry has become considerably more concentrated and more
competitive over the last decade, as numerous securities firms have either
ceased operations or have been acquired by or merged into other firms. This
trend has been particularly pronounced among firms similar in size and business
mix to IEC. In addition, companies not engaged primarily in the securities
business, but with substantial financial resources, have acquired leading
securities firms. These developments have increased competition from firms with
greater capital resources than those of the Company. Various legislative and
regulatory developments have tended to increase competition within the industry
or reduced profits for the industry. In particular, various recent developments
have tended to increase competition from commercial banks.
The securities industry has experienced substantial commission discounting by
broker-dealers competing for brokerage business. In addition, an increasing
number of specialized firms now offer "discount" services to individual
customers. These firms generally effect transactions for their customers on an
"execution only" basis without offering other services such as portfolio
valuation, investment recommendations and research. A growing number of discount
brokerage firms offer their services over the internet, further decreasing
offered commission rates and increasing ease of use for customers. The
continuation of such discounting and an increase in the number of new and
existing firms offering discounts could adversely affect the Company. In
addition, rapid growth in the mutual fund industry is presenting potential
customers of IEC with an increasing number of alternatives to traditional stock
brokerage accounts.
In its investment banking activities, IEC competes with other brokerage firms,
venture capital firms, banks and all other sources of capital for small, growing
companies. Since IEC generally manages offerings smaller than $10 million, it
does not typically compete with the investment banking departments of large,
well-known national brokerage firms. Nevertheless, IEC may occasionally manage
larger offerings. In addition, large national and regional investment banking
firms occasionally manage offerings of a size that is competitive with IEC,
typically for fees and compensation less than that charged by IEC. When the
market for initial public offerings is active, many small regional firms that do
not typically engage in investment banking activities also begin to compete with
IEC.
Employees
At December 31, 1999, the Company had 154 employees, of whom 30 were executives
and support staff and 124 were involved in brokerage activities and compensated
on a commission and/or salary basis.
8
ITEM 2. DESCRIPTION OF PROPERTY
The following summarizes the properties leased by the Company as of December 31,
1999:
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LEASE
SQUARE MONTHLY EXPIRATION
OFFICE ADDRESS FOOTAGE RENTAL DATE
Plainview 101 Fairchild Ave. 5,566 $ 7,145 May 2003
Plainview, New York
Lynbrook 300 Merrick Road, Suite 307 3,800 $ 7,217 September 2004
Lynbrook, New York
Newark 550 Broad Street 5,083 $ 7,201 July 2004
Newark, New Jersey
Boca Raton 100 East Linton Blvd., 800 $ 1,343 October 2000
Suite 3013,
Delray Beach, Florida
Dallas 5910 N. Central Expressway 7,059 $12,353 October 2004
Dallas, Texas
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
From December 31, 1999, and to May 8, 2000, the Company was involved in no
litigation. The Company is a party to numerous NASD arbitrations and it is
management's opinion that settlements, if any, would not have a material effect
on the accompanying consolidated financial statements for the year ended
December 31, 1999.
In compliance with an Injunction and Civil Contempt Order of January 6,1999,
Gregory Alan Gaylor, a Shareholder of the Company, signed an irrevocable proxy
dated January 21, 1999, appointing Institutional Equity Holdings, Inc., as his
sole proxy with respect to 125,000 shares of Institutional Equity Holdings, Inc.
common stock.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIY HOLDERS
No matters were submitted to a vote of security holders during the year ended
December 31, 1999.
9
PART II
Item 5: Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock trades in the over-the-counter market. The Company's
stock has not been actively traded. The Company's stock is quoted on the Nasdaq
SmallCap Market under the symbol "IEQC" ("EMED" until the Company's name change
in April 2000). Before this time, March 19, 1996 to December 30, 1996, the stock
was traded on the Nasdaq National market under the symbol "EMED."
The following table sets forth the high and low sales prices on the Nasdaq for
the Common Stock for fiscal year 1999 and 1998.
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1999 1998
<S> <C> <C> <C> <C>
Quarter High Low High Low
First Quarter $2.25 $0.31 $0.53 $0.23
Second Quarter 1.87 1.00 0.97 0.53
Third Quarter 2.25 1.08 1.58 0.64
Fourth Quarter 1.62 0.75 0.81 0.41
</TABLE>
On May 8, 2000, the Company had 54 stockholders of record of its common stock
and 2,289,000 shares outstanding.
The high and low closing prices for the first quarter of 2000 through May 8,
2000 were $3.63 and $1.00, respectively.
Dividend Policy
The Company has never paid a dividend on its common stock. Regulatory net
capital requirements may limit the ability of IEC to pay dividends to IEH. IEH
anticipates that, for the foreseeable future, earnings will be retained for use
in its business and does not anticipate the payment of dividends.
Sales of Unregistered Securities
In November 1998, the Company agreed to issue 35,000 shares of its Common Stock
in settlement of professional fees related to the sale of the Company's
subsidiary in 1997. As of December 31, 1999, these shares of its common stock
had not been issued.
In February 1999, the Company as part of its acquisition of Redstone Securities,
Inc. issued 600,000 shares of its common stock and agreed to issue an additional
500,000 shares of its common stock subject to certain future stock price levels
and the income levels. In February 2000, the agreement with the Redstone
Shareholders was modified so that they ultimately receive 500,000 shares of
fully vested common stock.
In April 1999, the Company sold 97,000 shares of its common stock for $1.00 per
share. As of December 31, 1999, 36,000 of the shares sold in April 1999 had not
been issued.
In December 1999, the Company sold 250,000 shares of its common stock at a price
of $1.00 per share. As of December 31, 1999, these shares of common stock had
not been issued.
10 In 1999, the Company authorized the issuance of preferred stock and in
private placements sold the following shares of its preferred stock:
<TABLE>
<S> <C> <C> <C>
Preferred Stock Number of Price Per Total
Series Shares Sold Share Value
Series A 1,060,000 $2.00 $2,120,000
Series B 37,500 $2.00 $75,000
</TABLE>
Subsequent to December 31, 1999, the Company sold an additional 37,500 shares of
it's Series B Preferred Stock at $2.00 per share.
ITEM 6: Management's Discussion Analysis of Financial Condition and Results of
Operation
Selected Financial Data
The following selected consolidated financial data for each of the five years in
the period ended December 31, 1999, have been derived from the audited
consolidated financial statements of the Company. The selected consolidated
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and notes thereto included elsewhere in
this report.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
<S> <C> <C> <C> <C> <C>
1995* 1996* 1997* 1998 1999
Statement of Operations Data:
Revenues $8,323,483 $7,254,208 $5,535,951 $4,497,780 $9,709,826
Total Expenses 7,458,128 7,203,035 5,428,074 5,126,041 12,952,709
Net Income (Loss) 865,355 51,153 107,877 (631,261) (3,330,827)
Weighted Average Number of Common
Shares Outstanding 1,930,000 1,930,000 1,942,000 1,942,000 2,028,000
Income (Loss) Per Share $0.45 $0.03 $0.05 $(0.32) $(1.64)
Balance Sheet Data at Year End:
Total Current Assets 2,652,483 2,713,563 1,643,806 1,357,182 1,889,438
Total Assets 2,791,718 2,915,808 1,808,585 1,480,508 3,835,075
Current Liabilities 1,490,043 2,677,980 1,461,880 608,056 1,786,780
Stockholders' Equity 771,675 237,820 346,705 357,452 349,252
*Amounts reflected are applicable to Redstone Securities, Inc. operations, only.
</TABLE>
<PAGE>
Results of Operations
Year ended December 31, 1999 Compared to Year ended December 31, 1998
Revenues for the year ended December 31, 1999, increased 116% to $9,709,826
compared to $4,494,780 for the year ended December 31, 1998. In 1998, the
Company had two (2) offices in New York and one (1) office in Florida. In 1999,
the Company added two (2) offices in Texas and one in New Jersey; however,
subsequent to their opening, offices were closed in Texas (Austin) and New
Jersey (West Patterson). The new offices were the source of increased commission
revenue. In 1998, the Company did not act as managing underwriter on any public
or private security offerings, while in 1999, the Company was the managing
underwriter for four (4) securities offerings, raising approximately
$21,027,500. These underwriting activities resulted in the 413% increase in
underwriting revenue.
11
Expenses for the year ended December 31, 1999, increased 153% to $12,952,709
compared to $5,126,041 for the year ended December 31, 1998. The following
summarizes the changes in expenses:
<TABLE>
<CAPTION>
1999
Percentage
Increase In
Percentage of Total Expenses Expenses
1998 1999
<S> <C> <C> <C>
Employee Compensation 58% 66% 190%
Commissions Paid to
Other Broker Dealers 10 8 108
Underwriting and
Syndicate Expenses - 2 1,031
General And
Administrative Expenses 22 10 15
Rent, Telephone and
Quotation Expense 8 8 150
Interest Expense 2 6 639
Total Expenses 100% 100% 153
Total Expenses as a Per-
Centage of Revenues 114% 133%
</TABLE>
Overall expenses increased 153% in 1999, as compared to 1998. The most
significant increase in expenses was the 190% increase in salaries to $8,619,955
for the year ended December 31, 1999, compared to $2,970,207 for the year ended
December 31, 1998. The employee compensation increase is attributable to the
increased number of brokers and other support staff in the new offices and the
increased compensation related to the underwriting activity. The brokers and
officers generally received approximately sixty percent (60%) of the revenues
derived from the underwritings plus an allocation of the underwriter's warrants.
Included in employee compensation expense was $657,390 of expense associated
with warrants, in client companies, earned by brokers participating in 1999
underwritings. The increase in commissions paid to other broker dealers and
underwriting and syndicate expenses was the result of the 1999 underwritings.
In March 1999, the Company entered into an agreement with an individual for
delivery to the Company of a stock certificate representing 66,250 shares of
common stock of Westower Corporation (which has subsequently converted into
119,912 shares of Spectrasite Holdings, Inc.). The agreement included a
provision that the individual was to receive compensation equal to five percent
(5%) of the average daily closing sales price of the common stock ($59,500 for
1999) and warrants to purchase 414,062 shares of the Company's common stock at
an exercise price of $2.00 per share (estimated fair value of the warrants at
date of issue was $571,406). The $630,906 of compensation to the individual was
included in interest expense for the year ended December 31, 1999.
For the year ended December 31, 1999, the Company reported a net loss of
$3,330,827 compared to a loss of $631,261 for the year ended December 31, 1998.
The increase in the loss was the result of the growth in employee and
non-employee compensation, which could not be off set by increased revenues.
12
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations was $2,434,855 for the year ended December 31, 1999,
compared with cash used in operations of $361,029 for the year ended December
31, 1998. This significant increase in cash used was attributable to increases
in employee and operating costs associated with the new offices. The Company is
currently reassessing its staffing levels and need for branch offices. With
changes being considered by management, the Company expects that it can achieve
profitable operations by June 2000.
In December 1999, the Company initiated its Series B Preferred Stock offering
which makes provision for the sale of 750,000 shares of the Company's Series B
Preferred Stock for $2.00 per share. As of May 8, 2000, the company has sold
75,000 shares of Series B Preferred Stock. The expected profits from operations
in 2000, together with the proceeds from the Series B Preferred Stock offering
are expected to provide adequate financial resources to finance the Company's
operations in 2000.
For the year ended December 31, 1999, the Company expended $308,041 for the
purchase of furniture and equipment.
In February 2000, the Company sold 40,000 shares of Spectrasite Holdings, Inc.
for an aggregate value of approximately $830,000. The proceeds, from the sale of
shares, were used to repay a $407,170 loan from a brokerage firm and to finance
current operations. The shares of Spectrasite Holdings, Inc. were owned by an
individual and were loaned to the Company. The Company must return these shares
to the individual; therefore, the Company will be required to purchase 40,000
shares of Spectrasite Holdings, Inc. in the public market. The trading price of
these shares has ranged from a high of $28.31 (March 31, 2000) to a low of
$11.06 (January 3, 2000) with a trading price of $21.25 on May 8, 2000.
Year 2000 Efforts
In 1998 and 1999, the Company took various steps to address the issue of
computer programs and embedded computer chips being unable to distinguish
between the year 1900 and the year 2000 (the "Y2K" issue). The Company has no
proprietary operating system or applications software, nor do any of its
operations use main frame or mini-computer systems. Therefore, the company's
focus with respect to the Y2K issue was: (1) its PC hardware and software
purchased from third parties; and (2) external suppliers and service providers.
While there is no assurance that associated problems may not arise in the
future, to date the Company has not experienced any material problems relating
to the Y2K issue.
Inflation
Because the Company's assets are primarily liquid, they are not significantly
affected by inflation. The rate of inflation affects the Company's expenses,
such as employee compensation, office leasing and communications costs. These
costs may not readily be recoverable in the price of services offered by the
Company. To the extent inflation results in rising interest rates and has other
adverse effects in the securities markets and the value of securities held in
inventory or IEC's investment account, it may adversely affect the Company's
financial position and results of operations.
13
ITEM 7: FINANCIAL STATEMENTS
(a) Financial Statements
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets as of December 31, 1998 and 1999 F-2
Consolidated Statements of Operations for the years ended December 31, 1998 and 1999 F-4
Consolidated Statements of Shareholder's Equity
for the years ended December 31, 1998 and 1999 F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1998 and 1999 F-6
Notes to the Consolidated Financial Statements F-8
</TABLE>
14
<PAGE>
Killman, Murrell & Company, P.C.
Certified Public Accountants
<TABLE>
<S> <C> <C>
505 N. Big Spring, Suite 603 1931 E. 37th, Suite 7 14810 Le Grande Drive
Midland, Texas 79701 Odessa, Texas 79762 Addison, Texas 75001
(915) 686-9381 (915) 363-0067/550-4910 (972) 991-9324
Fax (915) 684-6722 Fax (915) 363-0376 Fax (972) 991-9323
</TABLE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Institutional Equity Holdings, Inc.
Dallas, Texas
We have audited the accompanying consolidated balance sheets of Institutional
Equity Holdings, Inc. as of December 31, 1998 and 1999, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of 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 consolidated financial position of
Institutional Equity Holdings, Inc. as of December 31, 1998 and 1999, and the
consolidated results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles.
KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
April 13, 2000
F-1
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
ASSETS
<TABLE>
<S> <C> <C>
1998 1999
Current Assets
Cash $ 118,130 $ 315,904
Trading Securities, at market 466,097 548,736
Receivables
Commissions 479,931 516,762
Good Faith Deposits 100,000 150,000
Other 156,555 56,623
Prepaid Expenses 30,469 301,413
Total Current Assets 1,351,182 1,889,438
Furniture and Equipment, net
of accumulated depreciation of $288,675
and $333,543, respectively 119,231 382,409
Restricted Investment, at market - 1,304,043
Other Assets 10,095 259,185
Total Assets $1,480,508 $3,835,075
</TABLE>
The accompanying notes are an
integral part of these consolidated financial statements
F-2
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
1998 1999
Current Liabilities
Cash Overdraft $ 137,533 $ 31,649
Loans Payable - 527,170
Due to Broker 86,586 96,594
Securities Sold, not yet purchased 11,667 25,034
Accounts Payable and Accrued Liabilities 372,270 1,106,333
Total Current Liabilities 608,056 1,786,780
Loans Subordinated to Claims of
General Creditors
Officers 245,000 -
Others 270,000 150,000
Restricted Investment Loan - 1,304,043
Due to Related Party - 245,000
Total Liabilities 1,123,056 3,485,823
Stockholders' Equity
Undesignated Preferred Stock, par value
$.01 per share; 3,190,000 shares
authorized, none outstanding - -
10%Designated Series A Preferred Stock,
par value $.01 per share; 1,060,000
shares authorized, issued and
outstanding in 1999 - 10,600
10% Designated Series B Preferred Stock,
par value $.01 per share; 750,000
shares authorized; 37,500 shares
issued and outstanding in 1999 - 375
Common Stock, par value
$.01 per share; 20,000,000 shares
authorized; 1,965,000 and
2,312,000 issued and outstanding, respectively 19,650 23,120
Additional paid-in capital 470,052 3,778,234
Retained (deficit) - (3,330,827)
489,702 481,502
Less Treasury Shares, at cost (132,250) (132,250)
Total Shareholders' Equity 357,452 349,252
Total Liabilities and
Shareholders' Equity $1,480,508 $3,835,075
</TABLE>
The accompanying notes are an
integral part of these consolidated financial statements
F-3
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<S> <C> <C>
1998 1999
Revenues:
Commission $3,194,876 $ 8,573,690
Gain (Loss) on Firm Securities Accounts 883,780 (290,682)
Underwriting and Syndicate Income 225,264 1,155,840
Other Income 181,890 256,119
Interest Income 8,970 14,859
Total Revenue 4,494,780 9,709,826
Expenses:
Employee Compensation 2,970,207 8,619,955
Commissions Paid to Other Broker-Dealers 493,754 1,024,590
Underwriting and Syndicate Expenses 18,448 208,671
General and Administrative Expenses 1,124,057 1,293,751
Rents, Telephone and Quotation Expenses 415,477 1,036,220
Interest Expense 104,098 769,522
Total Expenses 5,126,041 12,952,709
(Loss) Before Federal Income Tax (631,261) (3,242,883)
Federal Income Tax Expense - -
Preferred Stock Dividends - (87,944)
Net (Loss) $(631,261) $(3,330,827)
Weighted Average Number of Common
Shares Outstanding 1,942,000 2,028,000
Net (Loss) Per Common Share $ (.33) $ (1.64)
</TABLE>
The accompanying notes are an
integral part of these consolidated financial statements
F-4
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
Preferred Stock Preferred Stock
Series A Series B Common Stock Additional Retained Treasury Total
Number of Number of Number of Paid-in Earnings Share Shareholders'
Shares Par Value Shares Par Value Shares Par Value Capital (Deficit) Purchase Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of
December 31, 1997 - $ - - $ - 105 $ 1 $71,029 $299,675 $(24,000) $346,705
Net (loss)1998 - - - - - - - (631,261) - (631,261)
Balances as of December 31, 1998,
as previously reported - - - - 105 1 71,029 (331,586) (21,000) (284,556)
Termination of Subchapter
Selection January 1, 1999 - - - - - - (331,586) 331,586 - -
Merger with EuroMed, Inc. - - - 1,964,895 19,649 730,609 - (108,250) 642,008
Balance as of
December 31, 1998,
as restated - - - - 1,965,000 19,650 470,052 - (132,250) 357,452
Sale of Series A Preferred
Stock, net of $216,000
issuance expenses 1,060,000 10,600 - - - - 1,893,400 - - 1,904,000
Sale of Series B Preferred
Stock, net of
$37,500 of issuance
expenses - - 37,500 375 - - 37,125 - - 37,500
Sale of Common Stock - - - - 347,000 3,470 343,530 - - 347,000
Value of Warrants and Options
assigned to Brokers - - - - - - 56,220 - - 56,220
Value of Warrants Issued
to Debtholder - - - - - - 571,406 - - 571,406
Officers' Subordinated
Debt Contribution, net of
trading security assumed - - - - - - 125,000 - - 125,000
Accrued Compensation
contributed to capital - - - - - - 281,501 - - 281,501
Net (loss) 1999 - - - - - - - (3,330,827) - (3,330,827)
Balance as of
December 31, 1999 1,060,000 $10,600 37,500 $375 2,312,000 $23,120 $3,778,234 $(3,330,827) $(132,250)$349,252
</TABLE>
The accompanying notes are an
integral part of these consolidated financial statements
F-5
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1999
<TABLE>
<S> <C> <C>
1998 1999
Cash Flows from Operating Activities:
Net (Loss) $ (631,261) $(3,330,827)
Adjustments to Reconcile Net (Loss) to Cash
Flow from Operations:
Depreciation and Amortization 34,321 110,981
Capital Contributed by
Shareholder/Employee/Officer - 281,501
Interest Expense - 571,406
Broker Compensation - 56,220
Changes in Operating Assets and Liabilities:
Trading Securities 604,214 (202,644)
Accounts Receivables (159,195) 13,101
Prepaid Expenses (2,847) (270,944)
Other Assets 1,132 (315,203)
Cash Overdraft 137,533 (105,884)
Due to Brokers (204,318) 10,008
Securities Sold, Not Yet Purchased 11,667 13,367
Accounts Payable and Accrued Liabilities (152,275) 734,063
Net Cash (Used In) Operating Activities (361,029) (2,434,855)
Cash Flows from Investing Activities:
Purchase of Furniture and Equipment - (308,041)
Net Cash (Used In) Investing Activities - (308,041)
Cash Flows from Financing Activities:
Proceeds from Borrowings - 458,170
Payments on Borrowings (165,807) (51,000)
Borrowings from Related Party - 245,000
Sale of Stock - 2,288,500
Contributed Capital - Merger with
EuroMed, Inc. 750,258 -
Net Assets Acquired in Merger (123,507) -
Purchase of Treasury Shares (108,250) -
Net Cash Provided by Financing Activities 352,694 2,940,670
Net Increase (Decrease) in Cash and Cash Equivalents (8,335) 197,774
Cash and Cash Equivalents at the Beginning of the Year 126,465 118,130
Cash and Cash Equivalents at the End of the Year $ 118,130 $ 315,904
</TABLE>
(Continued)
The accompanying notes are and
integral part of these consolidated financial statements
F-6
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1999
1998 1999
Cash Paid During the Year:
Interest $ 104,098 $ 170,066
Income Taxes $ - $ -
Supplemental Schedule of Noncash Investing
and Financing Activities:
Increase in Restricted Investments $ - $ (1,304,043)
Increase in Restricted Loans - 1,304,043
Decrease in Trading Securities - 120,000
Loans Subordinated to Claims of
General Creditors-Officers - (245,000)
Additional Paid-in-Capital - 125,000
$ - $ -
F-7
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Swiss Nassau Corporation was incorporated on May 17, 1994 in the state of
Nevada, United States of America, with authorized and issued share capital of
1,000 shares of common stock with no par value (the "Common Stock") and on June
15,1994, all authorized shares of Swiss Nassau Corporation were issued. On
October 20, 1995, Swiss Nassau Corporation changed its name into EuroMed, Inc.
and increased its authorized shares to 20,000,000 shares of Common Stock with a
new par value of $0.01 per share, and 5,000,000 preferred shares with a par
value of $0.01 per share. On October 20, 1995, EuroMed, Inc. effected a 150 for
1 stock split of its Common Stock. On April 23, 1999, EuroMed, Inc. changed its
name to Institutional Equity Holdings, Inc. (the "Company" or "IEH").
In November 1995, the Company began acquiring pharmaceutical companies operating
exclusively in Europe. The Company completed the acquisitions using the net
proceeds from the sale of 1,150,000 shares of its common stock (issue price was
$6.50 per share) in March 1996 and the issuance of 2,700,000 shares of its
common stock. Subsequent to the acquisitions, laws relating to the pricing of
pharmaceuticals in Europe were changed and as a result the operations of the
pharmaceutical companies owned by the Company were severely impacted, resulting
in significant operating losses. The Company realized approximately $1,146,000
in cash and cancelled 2,700,000 shares of its common stock upon sale of its
European subsidiaries in 1997.
The Company had no business activities in the calendar year of 1998, except that
on November 6, 1998, the Company's Board of Directors approved and executed the
"Agreement and Plan of Reorganization" by and among the Company, Institutional
Equity Corporation ("IEC", a wholly owned subsidiary of the Company and formerly
known as Redstone Acquisition Corp.) and Redstone Securities, Inc. ("Redstone"),
a licensed broker and dealer of securities.
Effective February 16, 1999, Redstone was merged into the newly organized
subsidiary IEC. The Company issued 600,000 shares of its Common Stock to the
three principals of Redstone, Thomas Laundrie, Gary Prucell, and Richard Belz
(collectively referred to as the "Redstone Shareholders") and was obligated to
issue an additional 500,000 shares (the "Restricted Shares") upon the market
price of the Company's Common Stock reaching certain price levels or IEC
reporting certain levels of net income. Notwithstanding the price levels of the
Common Stock or net income performance levels, the Restricted Shares fully vest
on February 16, 2002. Redstone has been a registered broker dealer since 1988.
The Redstone Shareholders agreed to terminate their relationship with the
Company in February 2000 subject to certain compensation payments, to forgo the
collections of the Company's subordinate notes due the Redstone Shareholders, to
assume an investment in a certain security at its book value and to modify the
number of shares of the Company's common stock from 1,100,000 to 500,000 shares
of fully vested common stock. The Company has a right to repurchase these shares
of its common stock at a price of $2.00 per share as follows:
Number of Redemption
Shares Period
100,000 Calendar year 2000
100,000 Calendar year 2001
300,000 On or before February 16, 2002
(Continued)
F-8
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business (Continued)
The termination of the relationship with the Redstone Shareholders is reflected
in the consolidated financial statement for the year ended December 31, 1999.
IEH is a holding company whose only operating subsidiary is IEC a full service
brokerage firm engaged in the purchase and sale of securities from and to the
public and for its own account and investment banking activities. The Company
operates in one industry segment, the financial services industry. At December
31, 1999, IEC employed 124 brokers registered with the National Association of
Securities Dealers, Inc. ("NASD").
Principles of Consolidation
IEH is a holding company whose wholly-owned subsidiary, IEC, is a registered
broker-dealer in securities under the Securities and Exchange Act of 1934, as
amended. IEC renders broker-dealer services in securities on both an agency and
principal basis to its customers who are fully introduced to Fiserve
Correspondent Services, Inc. and First Southwest Company. IEC also acts as lead
or participating underwriter for over-the-counter securities offerings. IEC
conducts business throughout the United States. IEC is exempt from the reserve
requirements under SEC Rule 15c8-3(k) (2) (ii), since it does not handle or
carry customer securities and cash. The Company operates in one industry
segment, the financial services industry. All significant intercompany balances
and transactions have been eliminated in the consolidation.
Revenue Recognition
Securities transactions and related revenue are recorded on a trade date basis.
Manager's fees, underwriter's fees, and other underwriting revenues are
recognized at the time the underwriting is completed. Tax shelter revenue is
recognized at the time individual tax shelter units are sold.
Fair Value of Financial Instruments
The carrying amounts reflected in the balance sheet for cash, cash equivalents,
notes and other receivables and payables approximate their respective fair
values due to the short maturities of these instruments. The fair values of
trading and investing securities owned and securities sold, not yet purchased
are recorded primarily at quoted prices for those or similar instruments.
Changes in the market value of these securities are reflected currently in the
results of operations.
Furniture and Equipment
Depreciation of furniture and equipment is computed generally by the
straight-line method over their estimated useful lives of five (5) to ten (10)
years. Leasehold improvements are amortized over the lives of their respective
leases of five (5) years.
(Continued)
F-9
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounting for Long-Lived Assets
The Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting For The Impairment of Long-Lived Assets and For Long-Lived Assets To
Be Disposed Of". The Company reviews long-lived assets, certain identifiable
assets and any goodwill related to those assets for impairment whenever
circumstances and situations change such that there is an indication that the
carrying amounts may not be recoverable. At December 31, 1999, the Company
believes that there has been no impairment of its long-lived assets.
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.
Taxation
Income taxes are accounted for in accordance with the provisions of Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes." Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recognized or settled. The effect on tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment
date.
The Company has recognized significant losses from its disposal of subsidiaries
and general corporate expenses incurred in the United States. Realization of any
portion of the deferred tax asset resulting from the net operating loss
carryforward is not considered more likely than not. No deferred tax asset or
valuation allowance has been estimated due to the change in ownership, which
severely restricts the use of the net operating loss carryforward. At December
31, 1999, the Company has approximately $8,600,000 of net operating loss
carryforwards for federal income tax purposes, which will begin to expire in
2011.
Pension and Other Post-Retirement and Post-Employment Plans
In 1999, the Company adopted a deferred contribution profit sharing plan (401(k)
Plan). This plan allows both the Company and the employees to contribute to the
plan. The Company made no contributions to the plan in 1999.
Redstone at the time of its acquisition had a deferred contribution profit
sharing plan (401(k) Plan). The Company made no contributions to the plan in
1998 or 1999.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs for the year ended
December 31, 1998 and 1999, were $34,023 and $22,218, respectively.
(Continued) F-10
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash Equivalents
All highly liquid investments purchased with original maturities of
approximately three months or less are considered to be cash equivalents.
(Loss) Per Share
Basic (loss) per common share has been calculated using the weighted average
number of shares of common stock outstanding during the year. Diluted (loss) per
common share is not disclosed because the effect of the exercise of the common
stock warrants and options would be anti-dilutive.
Concentration of Credit Risk
The Company deposits its cash with high credit quality financial institutions.
At times such deposits may be in excess of FDIC insurance limits. At December
31, 1999, the cash deposits exceeding FDIC insurance limits were $261,000.
Accounts Receivable and Amount Due Broker
IEC introduces all customer transactions in securities traded on U.S. securities
markets to Fiserve Correspondent Service, Inc. and First Southwest Company on a
fully-disclosed basis. The agreement between IEC and its clearing brokers
provide that IEC is obligated to assume any exposure related to nonperformance
by customers or counterparties. IEC monitors clearance and settlement of all
customer transactions on a daily basis.
The exposure to credit risk associated with the nonperformance of customers and
counterparties in fulfilling their contractual obligations pursuant to these
securities transactions can be directly impacted by volatile trading markets
which may impair the customer's or counterparty's ability to satisfy their
obligations to IEC. In the event of nonperformance, IEC may be required to
purchase or sell financial instruments at unfavorable market prices resulting in
a loss. Management does not anticipate nonperformance by customers and
counterparties in the above situations.
NOTE 2: RESTRICTED INVESTMENT
On March 18,1999, the Company entered into an agreement with an individual for
the delivery to the Company of a stock certificate representing 66,250 shares of
common stock of Westower Corporation (which was subsequently converted into
119,912 shares of Spectrasite Holdings, Inc.). The agreement included the
following terms:
The individual will receive compensation equal to five percent (5%) of the
average daily closing sales price of the common stock on the American Stock
Exchange, calculated for each fiscal quarter. During 1999, the Company incurred
$59,500 in interest expense under the terms of the agreement.
The Company agrees not to transfer or assign the shares without the individual's
prior written consent during the term of the agreement.
(Continued)
F-11
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 2: RESTRICTED INVESTMENT (CONTINUED)
Accounts Receivable and Amount Due Broker
The Company will issue to the individual a five year stock purchase warrant for
414,062 shares of common stock of the Company at an exercise price of $2.00
per share. The Company has the right to call the warrant if the trading
price of the Company's common stock has equaled or exceeded $4.00 per share
for ten consecutive days. See Note 13
Agreement can be terminated upon sixty (60) days' notice by either party.
At December 31, 1999 the restricted investment has been pledged by the Company
as security for a $407,170 loan from a brokerage firm.
In February 2000, the Company sold 40,000 shares of the Spectrasite Holdings,
Inc. stock for an aggregate value of approximately $830,000. The proceeds, from
the sale of shares, were used to repay the $407,170 loan from a brokerage firm
and to finance current operations. These shares will have to be returned to
their owner by the Company, which will necessitate their purchase in the public
market. The trading price of these shares at the date of repurchase will
determine if a trading gain or loss is recognized. The trading price of the
shares has ranged from a high of $28.31 (March 31, 2000) to a low of $11.06
(January 3,2000). The trading price at April 13, 2000 was $22.00.
NOTE 3: STOCK OPTION PLANS
Long-Term Incentive Plan
The Company adopted its 1995 Long-Term Incentive Plan ("Plan") as of November
18, 1995. An aggregate of 300,000 shares of common stock has been authorized and
reserved for issuance under the plan pursuant to the exercise of options or the
grant of restricted stock awards. The Plan provides for the grant of incentive
stock options, non-qualified stock options, restricted stock awards and stock
appreciation rights. All of the Company's and its subsidiary's employees,
independent directors and advisors are eligible to receive awards under the
plan, but only employees of the Company and its subsidiaries are eligible to
receive incentive stock options. The exercise price for incentive stock options
granted under the Plan may be no less than the fair market value of the common
stock on the day of the grant. As of December 31, 1998 and 1999, no grants have
been awarded under this plan.
Brokers Stock Option Plan
The Company adopted its 1999 Brokers Stock Option Plan as of December 1, 1999.
An aggregate of 1,000,000 shares of common stock has been reserved for issuance
under the plan pursuant to the exercise of options or the grant of restricted
stock awards. All brokers who have been employed by the firm prior to January 1,
2000, shall be entitled to earn options to purchase a number of shares of common
stock of the Company equal to 20% of their annual gross production in
commissions from the sale of securities. The exercise price of the options so
earned shall be 5% over the closing bid price of the Company's common stock on
the date of each broker's employment. Each option shall be exercisable for a
period of three years beginning one year from the date of vesting. Options shall
vest on January 1 of the year following the date of employment, and are not
transferable. At December 31, 1999, 1,254,333 options were earned under this
agreement.
F-12
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 4: RELATED PARTY TRANSACTIONS
In December 1997, the Board of Directors authorized the issuance of 100,000
warrants to purchase common stock of the Company to each of the three (3)
Directors of the Company at a price of $.30. The fair value of the common shares
was $.20 (Bid Price) at the date the warrants were authorized; therefore, no
expense was recognized in connection with the warrant issue. As of December 31,
1999, none of these warrants had been exercised.
For the year ended December 31, 1998, the three (3) Directors of the Company
were paid $200,562 for services rendered to the Company.
The Chief Executive Officer and other executive officers of the Company have
oral agreements regarding employment, tenure and compensation, including bonuses
and stock option issuance. For the year ended December 31, 1999, the Company
recognized compensation expense applicable to these executive officers
aggregating $1,649,917 and they were issued options to purchase 410,000 shares
of the Company's common stock at prices varying from $.50 to $1.00.
Included in the officers' compensation is $281,501 earned by the Chief Executive
Officer, in connection with underwritings. The Chief Executive Officer agreed to
forgive the $281,501 and such amount is reflected as a contribution to the
Company's stockholders' equity in the accompanying consolidated financial
statements for the year ended December 31, 1999.
In 1999 the Chief Executive Officer loaned the Company $100,000 and was repaid.
NOTE 5: LEASES
Future minimum payments, by year and in the aggregate, required under
non-cancelable operating leases with initial or remaining terms of one year or
more consist of the following:
Year Ended
December 31,
2000 $ 599,671
2001 590,476
2002 594,053
2003 483,835
2004 299,273
Thereafter 61,760
$2,622,068
Certain of these leases provide for the payment of taxes and other expenses by
the Company. Rental expense for the years ended December 31, 1998 and 1999,
approximated $250,000 and $695,4970, respectively.
F-13
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 6: WARRANTS OWNED
As provided in certain underwriting agreements, the Company obtains warrants to
purchase equity instruments from client companies. During the restriction
periods on these warrants, the Company recognizes no value. When the
restrictions expire and the underlying securities become exercisable, the
Company marks the warrants to estimated fair value.
In estimating fair value of the warrants, management considers the trading
volume and quoted prices of the underlying securities, the number of such
securities held by the public, the remaining warrant exercise period and other
factors that they believe might effect the value of the warrants.
The following is information with respect to these warrants:
<TABLE>
<S> <C> <C> <C> <C> <C>
Fair Value
Granted to of Retained
Company Unrelated Granted to Warrants
Name Received Parties Employees Retained December 31, 1999
Rampart Capital
Group, Inc 40,000 5,000 22,000 13,000 $ -
Streamedia
Communications
Inc. 120,000 45,000 35,000 40,000 $ -
McGlen Internet
Group, Inc. 500,000 153,000 220,000 127,000 $ -
</TABLE>
No value has been placed on the warrants retained by the Company. However, the
Company recognized $206,390 as compensation expense and fee income related to
the warrants granted to employees. Such compensation expense was calculated
using the Black-Scholes option-pricing model with the following assumptions: no
dividends; expected volatility of 67.5% for Rampart, 82.5% for Streamedia, 88%
for Glen; risk free interest rate of 6.0% and expected life of 5 years.
NOTE 7: NET CAPITAL REQUIREMENT
IEC is subject to the net capital rule (Rule 15c3-1) of the Securities and
Exchange Commission. This rule prohibits IEC from engaging in any securities
transaction at a time when its "aggregate indebtedness" exceeds fifteen times
its "net capital" as those terms are defined by the rule. At December 31, 1999,
IEC's net capital and required net capital were $256,638 and $100,000,
respectively, and its ratio of aggregate indebtedness to net capital was 1.21 to
1. The Subsidiariy's absolute minimum net capital is $100,000.
F-14
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 8: TRADING AND INVESMENT SECURITIES
Trading securities and securities sold, not yet purchased, represent the market
value of securities held long and short by the Company's subsidiary.
The categories of trading securities and their related market values follow:
<TABLE>
<CAPTION>
1998 1999
Long Short Long Short
<S> <C> <C> <C> <C>
Common Stock $446,097 $11,667 $548,736 $25,034
Corporate Bonds - - 28,100 -
U.S. Government Bonds - - 2,932 -
Municipal Bonds - - 2,683 -
$466,097 $11,667 $548,736 $25,034
</TABLE>
As a securities broker-dealer, IEC is engaged in various securities trading and
brokerage activities as principal. In the normal course of business, IEC has
sold securities that it does not currently own and will therefore be obligated
to purchase such securities at a future date. This obligation is recorded in the
financial statements at the market value of the related securities. A trading
loss will occur on the securities if the market price increases and a trading
gain will occur if the market price decreases.
Investment securities held by IEC which are readily marketable are stated at
market value.
NOTE 9: LOANS PAYABLE
The following summarizes the loans payable at December 31, 1999:
Amount
8.8% loan from brokers, secured
by restricted investment, due
on demand $407,170
10% Note payable to an individual,
unsecured, due November 30,
1999, plus accrued interest 120,000
$527,170
F-15
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 10: PREFERRED STOCK
The Company has been authorized to issue up to 5,000,000 shares of $0.01 par
value preferred stock and the Board of Directors is empowered to designate the
series, dividend rate and if dividends are to be cumulative, voting rights (in
addition to those provided by law) and convertibility into shares of common
stock. In 1999, the Board of Directors of the Company authorized the sales of
the following series of preferred stock:
Series A
Designated 1,060,000 shares of preferred stock as Series A
10% cumulative dividend rate, payable quarterly
Sale price was $2.00 per share in minimum purchase units of 12,500
shares.
Convertible into common stock on a one for one basis
Callable at the option of the Company after April 22, 2000 into
common stock at a price of $4.00 per per share
Each share of preferred stock has ten votes on matters submitted
to shareholders for voting.
Series B
Designated 750,000 shares of preferred stock as Series B, of which
37,500 shares have been sold as of December 31, 1999 [37,500
shares sold subsequent to December 31, 1999]
10% cumulative dividend rate, payable quarterly
Sales price was $2.00 per share in minimum units of 12,500 shares
Convertible in to common stock on a one for one basis
Callable at the option of the Company after December 1, 2000 into
common stock at a price of $4.00 per share
Each share of preferred stock has one vote on matters submitted to
shareholders for voting
F-16
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 11: SUBORDINATED LOAN
10% subordinated loan, payable to E.M.H. Enterprises, control number
10-F-SLA-10396, due April 30, 2000, in the amount of $150,000, unsecured and
subordinated to claims of general creditors. The loan is subjected to terms and
conditions set forth in the subordinative agreement approved by the National
Association of Securities Dealers, Inc.
NOTE 12: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following at December
31, 1998 and 1999:
<TABLE>
<S> <C> <C>
1998 1999
Accrued Compensation $275,744 $400,000
Accounts Payable 84,526 186,632
Accrued 401(k) - 39,401
Accrued Syndicate and Underwriting Costs - 246,875
Accrued Interest 12,000 28,049
Accrued Preferred Stock Dividends - 87,944
Other - 117,432
$372,270 $1,106,333
</TABLE>
NOTE 13: STOCK OPTIONS AND WARRANTS
During 1999, the Company executed various employment agreements with brokers
which gives the brokers the right to purchase shares of the Company's common
stock in the form of stock options. The brokers have the right to acquire the
number of shares of the Company's common stock that 20% of the brokerage fees
generated by the broker divided by the strike price will purchase. The strike
price of such options is the market value of the Company's common stock on the
date the broker signed the employment agreement.
During 1999, the Company granted two employees the right to acquire 600,000
shares of the Company's common stock at the exercise of $1.03 per share, the
market value of the Company's common stock on the date of the grant.
During 1999, the Company granted various brokers the right to acquire 77,250
shares of the Company's common stock at the exercise price of $2.00 per share in
connection with the sale of the Series A Preferred Stock.
(Continued)
F-17
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 13: STOCK OPTIONS AND WARRANTS (CONTINUED)
In connection with the delivery of the Westower Corporation (these shares were
subsequently exchanged for Spectrasite Holdings, Inc. shares) common stock
described in Note 2, the Company issued a stock purchase warrant that allows the
holder the right to acquire 414,062 shares of the Company's common stock at an
exercise price of $2.00 per share. The Company has recognized $571,406 in
interest expense with a corresponding credit to paid-in capital, which
represents the fair market value of the warrants as of March 18, 1999. The
warrants were valued using the Black-Scholes options-pricing model with the
following assumption: no dividends, expected volatility of 82%, risk free
interest rate of 6.0% and expected life of 5years.
The number of shares of the Company's common stock available under the terms of
the above mentioned agreements is as follows:
<TABLE>
<CAPTION>
Number of
Securities
Underlying
Year Options and
of Warrants Exercise Expiration
Grantee Grant Granted Price Date
<S> <C> <C> <C> <C>
Robert A. Shuey, III Officer 1997 100,000 $0.30 December 29, 2002
Joseph C. Crouch Officer 1999 200,000 $0.50-$1.00 June 24, 2003
Elbert G. Tindell Officer 1997 100,000 $0.30 December 29, 2002
Anthony Vaccaro Officer 1999 100,000 $1.00 January 15, 2004
William M. Mosley Officer 1999 60,000 $0.50-$1.00 January 1, 2004
Jesse Shelmire Ex Director 1997 100,000 $0.30 December 29, 2002
Various Brokers based on
commissioned sales 1999 1,234,333 $1.05-$1.85 None
Mike Colaiacovo, Broker 1999 300,000 $1.03 None
Manuel Bello, Broker 1999 300,000 $1.03 None
Todd Cornelius, Officer 1999 50,000 $1.00 January 1, 2004
Various Brokers in connection with
sale of Series A Preferred stock 1999 77,500 $2.00 None
S. Roy Jeffrey Warrant Issued 1999 414,062 $2.00 March 17, 2004
3,035,895
</TABLE>
(Continued)
F-18
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 13: STOCK OPTIONS AND WARRANTS (CONTINUED)
The following table summarizes the activity in stock options and warrants for
the years ending December 31, 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
<S> <C> <C> <C> <C>
Weighted Weighted
Average Average
Underlying Exercise Underlying Exercise
Shares Price Shares Price
Outstanding beginning
of year 300,000 $0.30 300,000 $0.30
Granted - - 2,735,895 1.32
Outstanding end of
year 300,000 $0.30 3,035,895 $1.22
</TABLE>
The Company has elected to follow APB Opinion No. 25 "Accounting for Stock
Issued to Employees" and related interpretations in accounting for its plans.
Accordingly, $56,220 in compensation expense was recognized in 1999 for options
which were granted to employees on which the option price was less than fair
market value on the date of grant. No compensation expense is recognized upon
the grant of options where the option price exceeds the fair market value at the
date of grant. Had compensation expense for the Company's stock options been
determined based on the fair value of the options at the grant dates consistent
with the methodology prescribed by FAS No. 123, "Accounting for stock based
Compensation," the Company's net loss and loss per share would have been
increased to the pro forma amounts indicated below:
Net loss as reported $(3,330,827)
Pro forma net loss (4,770,583)
Loss per share as reported $(1.64)
Pro forma net loss $(2.35)
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes options-pricing model with the following assumptions: no
dividends, expected volatility of 109%, risk free interest rate of 6% and
expected life of 36 to 60 months.
The stock based compensation for the year ended December 31, 1999, reflected in
the above pro forma may not be indicative of such compensation in future periods
as it only reflects options granted in the year December 31, 1999.
F-19
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(Formerly Known As EuroMed, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE 14: LEGAL PROCEEDINGS
Many aspects of the Company's business involve substantial risks of liability,
including exposure under federal and state securities laws in connection with
the underwriting and distribution of securities. The Company does not presently
maintain an errors and omissions insurance policy insuring it against these
risks. In recent years, there has been an increasing incidence of litigation
involving the securities industry, including class actions, which generally seek
rescission and substantial damages. The Company requires its brokerage customers
to agree to arbitration in the event of a dispute between the customer and a
broker. The Company is currently a party to arbitrations and it is the opinion
of management that the outcome of the arbitration will not have a material
adverse effect on the Company's operating results.
In compliance with an Injunction and Civil Contempt Order of January 6, 1999,
Gregory Alan Gaylor, a shareholder of the Company, signed an irrevocable proxy
dated January 21, 1999 appointing Institutional Equity Holdings, Inc., as his
sole proxy with respect to 125,000 shares of Institutional Equity Holdings,
Inc.'s Common Stock.
NOTE 15: QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Income (Loss) Before
Income Taxes and
Preferred Stock Net Income Earnings
Revenues Dividends (Loss) Per Share
<S> <C> <C> <C> <C>
1998
December $1,173,602 $(194,044) $(194,044) $ (.10)
September 375,289 (660,561) (660,561) (.34)
June 1,411,990 138,931 138,931 .07
March 1,533,899 84,413 84,413 .04
1999
December $ 3,778,825 (649,841) (1,210,885) (.59)
September 1,628,350 (1,189,961) (1,189,961) (.59)
June 2,628,706 (172,634) (172,634) (.09)
March 1,843,945 (757,347) (757,347) (.37)
</TABLE>
F-20
<PAGE>
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There has been no Form 8k filed within 24 months prior to the date of the most
recent consolidated financial statements reporting a change of accountants
and/or reporting disagreements on any matter of accounting principle or
financial statement disclosure.
PART III
ITEM 9. Directors and Executive Officers of Institutional Equity Holdings, Inc.
<TABLE>
<S> <C> <C>
Name Age Position
Elbert G. Tindell 52 Chairman of the Board
Robert A. Shuey, III (1 43 Chief Executive Officer and Director
Joseph C. Crouch 55 Executive Vice President
Anthony F. Vaccaro 28 Director
William J. Rapaglia 52 Director
Todd M. Cornelius 28 Vice President
W. Michael Mosley 28 Vice President
Michael Vinez 47 Chief Financial Officer
</TABLE>
Elbert G. Tindell, has served as Chairman of the Board of the Company since
October 15, 1997. Mr. Tindell is involved in the management and direction of
public and private Companies in the United States, Asia Pacific, and Europe,
specializing in the re-engineering of corporate environments through
implementing capital restructuring and planning strategies. Prior to graduating
from the University of North Texas, Mr. Tindell served in the United States
Marine Corps from January 1967 to December 1970.
Robert A. Shuey, III, is a director, CEO and a Managing Director, Investment
Banking, the Company. He also serves as a member of the Board of Directors of
Autobond Corporation and Transnational Financial Corporation. Mr. Shuey has been
associated with the Company since January 1, 1999. Prior thereto, he was Chief
Executive Officer of Tejas Securities Group, Inc. since September 1997. He has
been in the investment banking business for more than the past five years, with
National Securities Corporation from September 1996, until August 1997; with La
Jolla Securities Corporation from April 1995, until August 1996: with Dillion
Gage Securities Corporation from January 1994, until April 1995 and Dickinson &
Co. from March 1993, Mr. Shuey is a graduate of Babson with a degree in
Economics and Finance.
Joseph C. Crouch, is Executive Vice President of IEC and President of
Institutional Equity Corporation. He is a thirty-year veteran of the securities
industry with the last twenty-four years in management positions. Mr. Couch
joined "IEH" and Institutional Equity Corporation on January 1, 1999. Prior
thereto, he was managing director and compliance officer for Tejas Securities
Group, Inc. Prior positions include President of both RAS Securities and
Dickinson & Company. Mr. Crouch also has been Senior Vice President at E. F.
Hutton, Rotan Mosley and Rauscher Pierce. Mr. Couch attended the University of
Oklahoma.
15
<PAGE>
Anthony F. Vaccaro, Jr., has been a director of the Company since February of
1999. He is also a Vice President of investment banking at IEC. Mr. Vaccaro
joined the Company in January of 1999. Prior thereto, Mr. Vaccaro was an
investment banking generalist specializing in mergers and acquisitions and
initial public offerings for Salomon Smith Barney in New York City. Prior to his
association with Salomon Smith Barney, Mr. Vaccaro was employed by a private
equity group to specialize in bridge and mezzanine financing, private
placements, mergers and acquisitions, and initial public offerings in a variety
of industries. Mr. Vaccaro is a graduate of Texas A&M University with a degree
in Finance.
William J. Rapaglia has been a director of Institutional Equity Holdings, Inc.
since June of 1999. Mr. Rapaglia has over 20 years experience in real estate
acquisitions, construction and development. His experience has ranged from
construction management, financing, syndication's, marketing, and promotion of
projects. Mr. Rapaglia is chairman and CEO of a private management company where
their focus is on corporate finance, corporate financial planning, private
placements, marketing and promotion of public and private companies. Mr.
Rapaglia served in the United States Marine Corps from 1965 to 1969 and attended
Arizona State University and the University of Tubingen in West Germany.
Todd M. Cornelius is a Vice President, Investment Banking, of the Company. Mr.
Cornelius joined the Company in April of 1999. Prior thereto, Mr. Cornelius was
a Financial Consultant with Akzo Nobel specializing in small business
expansions, mergers and general consulting. Prior to his work with Akzo Nobel,
Mr. Cornelius performed underwriting and risk analysis in the energy arena for
American International Group. Mr. Cornelius is a graduate of Texas A&M
University with a degree in Chemical Engineering. Mr. Cornelius is currently
matriculating on a Masters of Business Administration, with a concentration in
Financing and Accounting, at Southern Methodist University.
William M. Mosley is a Vice President, Investment Banking, of the Company. Mr.
Mosley has been associated with the Company since January 1, 1999. Prior
thereto, he was a Vice President of Tejas Securities Group, Inc. since January
1998. During this time he was responsible for supervising syndicate activities
and all aspects of the underwriting process. Previously, Mr. Mosley was employed
by Stone Media Corporation as a Senior Analyst from November 1996 to January
1998. Mr. Mosley is a graduate of Southern Methodist University with a degree in
Finance.
Michael E. Vinez joined the company in February 2000, as Chief Financial Officer
(CFO"). Mr. Vinez previous work experience includes over twelve (12) years
public accounting experience and eleven (11) years in the commercial real estate
industry. He has served as CFO for two real estate development firms and as
controller for a real estate management company. Mr. Vinez graduated from the
University of Texas at Arlington with a BBA. He is a Texas Certified Public
Accountant and holds a Texas real estate brokers license.
Meetings and Committees of the Board of Directors
The business of the Company is under the direction of the board of directors.
The board of directors' meets on matters requiring approval of the board of
directors. It also holds special meetings when an important matter requires
action by the board of directors between scheduled meetings. The board of
directors held no formal meetings and acted by unanimous written consent eight
(8) times during 1999.
ITEM 10. EXECUTIVE COMPENSATION.
Summary of Cash and Certain Other Compensation
The following table sets forth, for the fiscal years ending December 31, 1999
and 1998, certain information regarding the compensation earned by the Company's
Chief Executive Officer and each of the Company's most highly compensated
executive officers whose aggregate annual salary and bonus for fiscal 1999
exceeded $100,000, with respect to services rendered by such persons to the
Company. The following table also includes individuals who have resigned or
terminated employment during the fiscal year 1999 who would otherwise have been
included in such table on the basis of salary and bonus for the fiscal year:
16
<PAGE>
Management Compensation and Transactions
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Annual Compensation Award
Securities
Underlying All
Bonus and Other Options/ Other (3)
Name/Title Year Salary Commissions Compensation (2) SARs(#) Compensation
<S> <C> <C> <C> <C> <C> <C>
Robert A. Shuey, III 1999 - $318,500 $36,548 96,167 $243,882
President and 1998 46,350 - - - -
Chief Executive
Officer (4)
Anthony F. Vaccaro 1999 74,359 40,000 5,218 48,083 121,940
Director and Secretary 1998 - - - - -
Richard Belz (1) 1999 159,143 - - - -
Director 1998 86,467 - - - -
Joseph C. Crouch 1999 109,077 - 5,302 - -
Vice President 1998 - - - - -
</TABLE>
(1) Mr. Belz resigned as a director effective February 28, 2000.
(2) This represents non accountable expense reimbursements of $30,000 for Mr.
Shuey and payments made for group medical and life insurance in the amount of
$6,548 for Mr. Shuey , $5,302 to Mr. Crouch, and $5,218 for Mr. Vaccaro in 1999.
(3) The Company obtains warrants to purchase equity instruments from client
companies. These amounts represent the fair value of the warrants to purchase
equity instruments in client companies that the Company relinquished to these
executives. The fair value was calculated using the Black-Scholes option-pricing
model.
(4) This table does not include $281,501 of compensation earned by Mr. Shuey,
which he agreed to forgive.
Section 16 Requirements
Section 16(a) of the Exchange Act, requires the Company's officers and directors
and persons who own more than 10% of a registered class of the Company's equity
securities, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "SEC"). Such persons
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1999, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
officers, directors and persons who own more that 10% of a registered class of
the Company's equity securities have been complied with.
17
<PAGE>
ITEM 11. Security Ownership of Certain Beneficial Owners and Management.
Principal Stockholders and Management Ownership.
<TABLE>
<CAPTION>
Amount and
Nature Percent
of Beneficial of
Name of Beneficial Owner Ownership Class
<S> <C> <C> <C>
Robert A. Shuey, III
5910 North Central Expressway, Suite 1480
Dallas, Texas 75206 450,000 (1) 8.45%
S. Roy Jeffery
17886-55th Avenue
Surrey, B.C., V3S6C8 414,062 (2) 7.78%
Thomas Laundrie
101 Fairchild Avenue
Plainview, New York 11803 196,334 (3) 3.69%
Gary Purcell
101 Fairchild Avenue
Plainview, New York 11803 196,334 (3) 3.69%
Richard Belz
101 Fairchild Avenue
Plainview, New York 11803 116,333 (3) 2.18%
Joseph C. Crouch
101 Fairchild Avenue
Plainview, New York 11803 200,000 (4) 3.76%
Elbert G. Tindell
806 S. St. Paul
Dallas, Texas 75202 175,000 (1) 3.29%
Anthony F. Vaccaro
5910 North Central Expressway, Suite 1480
Dallas, Texas 75206 100,000 (5) 1.88%
William Rapaglia
5910 North Central Expressway, Suite 1480
Dallas, Texas 75206 58,000 1.09%
William M. Mosley
5910 North Central Expressway, Suite 1480
Dallas, Texas 75206 .67,000 (6) 1.26%
Todd M. Cornelius
5910 North Central Expressway, Suite 1480
Dallas, Texas 75206 52,500 .99%
All officers and directors as a
group (7 persons) (7)(8) 1,611,501 30.26%
</TABLE>
18
<PAGE>
(1) Includes warrants to purchase 100,000 shares of common stock granted on
December 29, 1997 exercisable immediately at $0.30.
(2) Represents options to purchase 414,062 shares at $2.00 per share until March
of 2004.
(3) Company has option to purchase these shares for $2.00 per share.
(4) Represents options to purchase 100,000 shares of Common Stock at an exercise
price of $0.50 per share granted on June 28, 1999. Mr. Crouch was granted
options to purchase an additional 100,000 shares of Common Stock at an exercise
price of $1.00 per share on July 24, 1998. Over a period of three years 33,333
options vest on June 26, and 33,333 options vest on July 24, with the condition
that he is still employed by IEH. As of December 31, 1999, 33,333 options have
vested with a purchase price of $0.05 per share, and 33,333 options have vested
with an exercise price $1.00 per share.
(5) Includes options to purchase 100,000 shares of Common Stock granted on
January 15, 1999, exercisable immediately at $1.00 per share.
(6) Includes options to purchase 50,000 shares of Common Stock granted on
January 1, 1999, exercisable immediately at $0.50 per share.
(7) This does not accurately represent the voting rights of management.
(8) Does not include the right to vote 125,000 shares (2.07% of shares
outstanding) granted to the Board of Directors by a federal judge. See "Legal
Matters."
Limitations on Directors' Liability
The Company's Restated Articles of Incorporation provide that, to the fullest
extent permitted by Nevada law, no director shall be liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director. By virtue of these provisions, a director of the Company is not
personally liable for monetary damages for a breach of such director's fiduciary
duty except for liability for (i) breach of the duty of loyalty to the Company
or to its stockholders, (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) dividends or stock
repurchases or redemption's that are unlawful under the Nevada General
Corporation Law ("NGCL") and (iv) any transaction from which such director
receives an improper personal benefit. In addition, the Company's Restated
Articles of Incorporation provide that if the NGCL is amended to authorize the
further elimination of limitation of the liability of a director, then the
liability of the directors will be eliminated or limited to the fullest extent
permitted by the NGCL, as amended.
ITEM 12. Certain Relationships and Related Transactions
During 1999, the Company formed Micro Capital Group, L.L.C. (MICRO) a limited
liability company. MICRO was formed to engage in opportunistic investment
situations. MICRO is governed under the terms of an operating agreement and is
managed by a Board of Managers, consisting of Robert A. Shuey III and Anthony
Vaccaro who are executive officers of the Company. During 1999, MICRO loaned the
Company $245,000 which balance was outstanding at December 31, 1999.
Mr. Robert A. Shuey III, the Chief Executive Officer of the Company has an
agreement with the Company, whereby, Mr. Shuey is entitled to receive as
compensation 60% of the net underwriting fees generated by the Company. During
1999, Mr. Shuey was entitled to receive $540,000 under the terms of this
agreement in addition to his regular salary and other compensation. However, Mr.
Shuey forgave his right to receive $281,501 under this agreement. Such amount
has been shown as compensation expense in the accompanying consolidated
financial statements with a corresponding credit to additional paid-in capital.
19
<PAGE>
PART IV
ITEM 13. Exhibits, Financial Statements Schedules, and Reports on Form 8-K
a. Financial Statements:
See table of Contents to Financial Statements. Page F-1 filed herewith.
b. Reports on Form 8-K
c. Exhibit 5
<TABLE>
<S> <C>
Number Description of Exhibit
2.1 Agreement and Plan of Reorganization dated November 6, 1998 by and among EuroMed, Inc., Redstone
Acquisition Corp. And Securities, Inc.*
3.1 Articles of Incorporation (1)
3.2 By laws of the Company (1)
3.3 Certificate of name change**
4.1 Specimen of Series A Common Stock Certificate (1)
10.1 Consulting, Management and Noncompetition Agreement, dated as of July 5, 1996, by and between
Purchaser and Docts (3)
10.2 Consulting, Management and Noncompetition Agreement, dated as of July 5, 1996, by and between
Purchaser and Roozekrans (3)
10.3 Consulting, Management and Noncompetition Agreement, dated as of July 5, 1996, by and between
Purchaser and Hinnen (3)
10.4 Plainview Lease rider**
10.5 Lynbrook Lease**
10.6 Newark Lease**
10.7 Dallas Lease**
16.1 Letter of the Change of Certified Accountants (2)
21.1 Subsidiaries of the Registrant as revised*
23.1 Consent of Killman Murrell & Company, P.C., Certified Public Accountants*
27.1 Financial Data Schedule *
</TABLE>
* Previously filed
** filed herein
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 signs on its
behalf by the undersigned, thereunto duly authorized.
Institutional Equity Holdings, Inc.
Dated: May 19, 2000 By: /s/Robert A. Shuey, III
Chief Executive Officer
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<S> <C> <C>
/s/ Elbert G. Tindell May 9, 2000
Elbert G. Tindell Chairman of the Board
/s/ Robert A. Shuey, III Chief Executive Officer, May 9, 2000
Robert A. Shuey, III and Director
/s/Michael E.Vinez Chief Financial Officer May 9, 2000
Michael E.Vinez
</TABLE>
20
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation of our report dated April 13, 2000, which
is incorporated in this Annual Report on Form 10-K.
Killman, Murrell and Company, P.C.
Dallas, Texas
May 9, 2000
Certificate of Amendment to Articles of Incorporation
For Profit Nevada Corporation
(Pursuant to NRS 78.385 and 78.390 After Issuance of Stock)
I. Name of corporation: EuroMed, Inc.
2. The Articles have been amended as follows (provide article numbers, if
available):
Article First is hereby amended to change the name of the corporation from
EuroMed, Inc. to Institutional Equity Holdings,
Inc., as follows:
"FIRST The name of the corporation is Instiututional Equity Holdings,
Inc."
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the vo*ing power, or
such greater proportion of the voting power as may be required in the
case of a vote by classes or series, or as may be required by the
provisions of the Articles of Incorporation have voted in favor of tbe
Amendment is: 1,305,400 shares out of 2,007,000 shares outstanding (65%)
voted in favor of this Amendment to the Articles of Incorporation
4. Signatures:
-
987 2091 Apr-26-99 3:06PM; Page 3/3
CEO/PresIdent
(Acknowledgement required)
<PAGE>
STATE OF NEVADA
Secretary of State
hereby certify that this is a true and complete cccy at the document as tiled hi
this office.
APR 27 99
DEAN HELLER
Secretary of State
RIDER TO LEASE, DATED JANUARY 29 1993, BETWEEN G.A.J. ASSOCIATES, AS LANDLORD.
AND REDSTONE SECURITIES, INC. AS TENANT
- -----------------------------------------------------------------
37. Tenant covenants and agrees to pay to Landlord as annual base
rent the following sums in equal monthly installments in advance on
the first day of each month during said term payable during each of
said years as follows:
(1) April 1, 1993 through May 31, 1994--$63,767.76 in monthly installments of
$4,554.84
(ii) June 1, 1994 through May 31, 1995--$56,844.36 in monthly installments of
$4,737.03
(iii) June 1, 1995 through May 31, 1996--$59,118.24 in monthly installments of
$4,926.52
(iv) June 1, 1996 through May 31, 1997 --$61,482.96 in
monthly installments of $5,123.58 (v) June 1, 1997
through May 31, 1998 -- $63,942.24 in monthly
installments of $5,328.52
at the office of the Landlord (101 Fairchild Avenue, Plainview, New York, 11803)
or such other place as Landlord may designate in writing without offset or
deduction whatsoever.
38. USE OF PREMISES
---------------
Tenant shall use the premises as an office to engage in the business of
securities investment banking arid financial consulting, other purpose.
Notwithstanding the foregoing, the Tenant shall never permit the use, storage,
sale, transfer, etc. of the following products and/or substances. foods, food
oils, oils, soaps, chemical liquids or powders, gase medical equipment or
medical supplies of any kind, waste materials of any kind, gasoline or petroleum
products of any kind, heavy equipment, toxic or hazardous materials (as defined
by OSHA) and/or waste of any kind, products or materials which shall cause any
kind of odor and/or malodor to penetrate the air, fertilizers or-similar
products, paints or inks of any kind, perfumes or fragrances of any kind,
lotions or other liquids or powders used in barber shops and/or beauty shops,
foods, flowers, raw materials, photographic developing materials and/or any
other product or material which shall create a nuisance or require the Landlord
to take affirmative action to make the premises suitable for said use.
Tenant covenants and agrees to indemnify and save harmless, Landlord and any fee
owner and any mortgagee and any lessor under any ground or underlying lease, and
their respective contractors, agents and employees, licensees and invitees, from
and against any and all liability (statutory or otherwise), claims, suits,
demands, damages, clean--up costs, judgments, costs, interests and expenses
termination of the lease of real property by reason of
destruction or untenantability of the premises demised
thereunder caused by fire or other casualty and agrees that the
provisions of this paragraph 40 shall govern and control in
lieu of any such provisions of law.
41. SECURITY AGREEMENTS
-------------------
A. Tenant covenants and agrees thatno security agreement,
whether by way of conditional bill of sale, chattel mortgage or
instrument of similar import, shall be placed upon any
improvement made by Tenant which is affixed to the realty.
B. In the event that any of the machinery, fixtures, furniture
and equipment installed by Tenant in the demised premises are
purchased or acquired by Tenant subject to a chattel
conditional sale agreement or other title retention or security
agreement, Tenant undertakes and agrees: (I) that no such
chattel mortgage, conditional sale agreement or other title
retention or security agreement or Uniform Commercial Code
filing statement shall be permitted to be filed as a lien
against the building and real property, of which the demised
premises for a part, and (ii) to cause to be inserted in any of
the above--entitled title retention, chattel mortgage or
security agreements the following provision:
Notwithstanding anything to the contrary
herein, this chattel mortgage, conditional
sale agree-- ment, title retention agreement
or security agreement shall not create or. be
filed as a lien against the land, building and
improvements compromising the real property in
which the good, machinery, equipment,
appliance or other personal property covered
hereby are to be located or installed.
C. If any such lien or UCC filing statement, based on an
agreement as above-described, is filed the building and
improvements, of which the demised premises form a part, Tenant
will, upon ten (10) days prior written notice thereof from
Landlord, cause such lien or notice to be removed or discharged
at Tenant's cost and expense and Tenant's failure to do so
shall constitute a breach of a material provision of this
lease.
42. INTENTIONALLY LEFT BLANK
43. INSURANCE
Tenant shall maintain commercial general liability insurance
for not less than One Million ($1,000,000.00) Dollars per
occurrence and One Million ($1,000,000.00) Dollars general
aggregate, combined single limits of bodily injury and property
damage. These limits
<PAGE>
which may create or be the foundation for any lien upon the
reversion of Landlord, the premises herein demised are
Landlord's building and improvements; it being agreed that
should Tenant cause any alterations, changes, additions,
improvements or repairs to be made to the demised premises, or
a material furnished or labor performed therein or thereon,
neither Landlord nor the demised premises shall, under any
circumstances be liable for the payment of any material
furnished to the demised premises or any part thereof; but all
such alterations, changes, additions, improvements and repairs
and materials and labor shall be at Tenant's expense, and
Tenant shall be solely and wholly responsible to contractors,
laborers and materialmen furnishing labor and material to said
premises and building, Or any part thereof for or on behalf of
Tenant.
B. Tenant shall not suffer or permit any mechanic's liens to be
filed against the fee ownership of the demised premises nor
against Tenant's leasehold interest in said premises by reason
of work, labor, services and materials supplied or claimed to
have been supplied to Tenant or to any occupant of the demised
premises. If any such mechanic's lien shall at any time be
filed against the demised premises or the building or
improvements thereon, Tenant shall, at its own cost and
expense, cause the same to be canceled and discharged of record
by surety bond or appropriate cash deposit within ten (10) days
after the date of filing the same and notice thereof to Tenant,
and Tenant shall indemnify and save harmless Landlord from and
against any and all costs, expenses, claims, losses or damages
resulting therefrom or by reason thereof, including but not
limited to, the cost of reasonable attorneys fees.
C. Tenant shall also defend on behalf of Landlord, at Tenant's
sole cost and expense, any action, suit or proceedings which
may be brought thereon or for the enforcement of such liens or
orders, and Tenant shall pay any damages and satisfy and
discharge any judgment entered thereon and save harmless
Landlord from any claim or damage resulting therefrom,
including reasonable attorney's fees.
D. If Tenant shall fail to discharge such mechanic's liens
within such period, then, in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to
discharge the same either by paying the amount of claim to be
due or by procuring the discharge of such lien by deposit in
court or bonding and, in any such event, Landlord shall be
entitled, if Landlord so elects, to compel the prosecution of
an action for the foreclosure of such mechanic's liens by the
lienor and to pay the amount of the judgment, if any, in favor
of the lienor, with interest, costs and allowances.
E. Any amount paid by Landlord for any of the aforesaid charges and all
reasonable legal and other expenses of Landlord, including
<PAGE>
reasonable counsel fees, in defending any such action, or in or about procuring
the discharge of said lien, with all necessary disbursements in connection
therewith, with interest thereon at the rate of 9% per annum from the date of
payment, shall be repaid within a period of ten (10) days after written demand
theref or by Landlord to Tenant and may be treated as additional rent payable
within the next installments of annual basic rent.
F. Prior to the commencement of any work in the demised premises by the general
contractor employed by Tenant or by any subcontractors employed by such general
contractor, Tenant shall: (i) furnish Landlord with Tenant's written statement
setting forth the name and business address of Tenant's general contractors; and
(ii) obtain and furnish to Landlord a written list of all sub--contractors
employed or to be employed by Tenant's general contractor and certified by the
general contractor.
45. RIGHT TO ENTRY
A. Tenant shall permit Landlord to erect, use and maintain or repair pipes,
cables, conduits, plumbing, vents and wiring, in, to and through the demised
premises as to the extent that the Landlord may now or hereafter deem to be
reasonably necessary or appropriate for the proper operation or maintenance of
the building of which the demised premises are a part. All such work shall be
done so far as practicable, in such manner as to avoid disruption of Tenant's
use of the demised premises. Landlord shall give prior notice to Tenant of such
entry, except under circumstances constituting an emergency. Tenant shall not be
responsible to restore the premises on account of Landlord's work.
B. Landlord, or its agents or designees, shall have the right to enter the
demised premises during business hours f or the purpose of making such repairs
or alterations as Landlord shall be required or shall have the right to make by
the provisions of this lease. Landlord shall be allowed to take all materials
into and upon the demised premises that may be required or for repairs or
alterations, without constituting an eviction of Tenant in whole or in part.
Landlord shall also have the right to enter the demised premises at such time as
such entry may be required by circumstances of emergency effecting the demised
premises of the building containing the same.
In addition, Landlord, or its agents or designees, shall have the right to enter
the demised premises during the business hours for the purpose of inspecting the
general conditions and state of repair of the premises and the showing of the
premises to any prospective purchaser or tenant.
C. The rights granted to Landlord by the terms of this paragraph shall be deemed
supplemental to the provisions set forth in this lease
D. The foregoing shall not be deemed to impose upon Landlord any
obligation for the furnishing of any service, maintenance repair,
or other obligation other than as specifically set forth in this
lease.
46. SUSPENSION OF SERVICES
----------------------
Anything to this lease to the contrary notwithstanding, Landlord
reserves the right to suspend the services of any utilities, when
necessary, by reason of accident, or repairs, alterations or
improvements, necessary to be made in the demised premises, until
such repairs, alterations or improvements shall have been
completed, and Landlord shall have no responsibility or liability
for such suspension of services provided.Landlord proceeds with
diligence and continuity to complete such repairs, alterations or
improvements and uses its best efforts to restore such services
and soon as practicable. The foregoing shall not be deemed to
impose upon Landlord any obligation for the furnishing of any
service, maintenance or repair other than as specifically set
forth in this lease.
47. CLEANING. REFUSE AND DELIVERIES
-------------------------------
A. The demised premises shall be kept clean by Tenant at its own
cost and expense and Tenant shall comply with the requirements of
all governmental authorities having jurisdiction therein,
including but not limited to pests control.
B. Tenant, at its own cost and expense shall arrange for the
removal of Tenant's refuse and rubbish, which shall be kept in
covered containers, from the demised premises and shall comply
with all reasonable rules and regulations of Landlord with
respect thereto. Landlord shall not be required to furnish any
services or equipment for the removal of such refuse and rubbish.
C. Tenant, at its own cost and expense, shall maintain exterminating and pest
control services in the demised premises to prevent the occurrence of any vermin
of any kind or description in or about the demised premises.
48. SIGNS Tenant shall not place any sign(s) on the outside of
the building or in the windows of the demised premises which may
be seen from the outside of the building. Interior signs,
including but not limited to door signs, shall be affixed in
accordance with Landlord's written specifications. Landlord shall
have the option of supplying such sign at tentant's cost and
expense.
49. ADJUSTMENT OF RENT FOR INCREASES IN REAL ESTATE TAXES
-----------------------------------------------------
For the purposes of this lease, it is understood and agreed that
the term "real estate taxes" shall Include but not be limited to
the following taxes: city, school, county, water meter chargesand
sewer charges, town, village and any other taxes by whatever name
given by a governmental or municipal entity, upon the land,
building and improvements.
B. Prorated from the time Tenant takes occupancy under the lease,
Tenant agrees to pay to Landlord as additional rent during each
lease year and during any renewal period of such lease (if
applicable) Tenant's proportionate share (as defined in paragraph
85, infra) of all increases in real estate taxes (as defined in
paragraph A above) on the land, building and improvements (of
which the demised premises are a part) over and above the base
rent as set forth in paragraph 37 of this rider to lease, whether
such increase in real estate taxes shall be oOcasioned by an
increase in assessed evaluation or an increase in tax rate, or
both or for any other reason.
Such additional rent shall be payable by Tenant] to Landlord
during the real estate tax year in which the first installment of
such increased real estate taxes becomes due and payable to such
governmental authority, notwithstanding that the real estate tax
year may be a fiscal year which does not coincide with the
calendar lease year in which such taxes shall first become
available. The taxes shall be due and payable within five (5)
days after written demand theref or by Landlord. If available, a
tax bill of the appropriate governmental agency or body (which
will be exhibited on request) shall be sufficient evidence of the
amount of the taxes and for determination of the amount to be
paid by Tenant.
C. Landlord's basic real estate tax liability for purposes of
determining an increase in any such taxes, shall be a sum equal
to the real estate taxes fixed by the aforementioned taxing
authorities and applicable to the realty during the tax year:
school taxes 1992/93, town taxes 1993, and other taxes 1993 and
any increases in taxes shall refer to such tax years which are
increases over and above the such taxes for said years.
D. If the term of this lease shall end or terminate on a date
other than the last day of the real estate tax or fiscal year,
the additional rent, if any, payable by Tenant pursuant to the
provisions of this lease, shall be apportioned as of said date of
termination of this lease. Tenant's obligation to make such
payment and Landlord's obligation to refund any overpayment shall
survive the termination of this lease.
50. INTENTIONALLY LEFT BLANK.
51. REPAIRS
A. Throughout the term of this Lease, Tenant shall take good care
of the demised premises and fixtures and appurtenances therein,
all at Tenantts sole cost and expense and shall make all
non--structural repairs thereto, as and when needed to preserve
the premises ingood condition, reasonable wear and tear and damage
by fire or other casualty accepted (see also, paragraph 53,
infra).
B. Throughout the term of this Lease, Landlord shall make all
structural repairs to the roof, exterior walls and foundation and
structural components of the building of which the demised
premises form a part, unless the repairs are made necessary by
reason of some act or omission to act of the Tenant, its agent,
servants, employees, or invitees, in which event, the Landlord
would make such repairs and bill Tenant as additional rent for the
cost thereof.
52. INTENTIONALLY LEFT BLANK
53. INSTALLATION AND MAINTENANCE OF HVAC UNIT
-----------------------------------------
Tenant shall maintain and service the HVAC unit servicing Tenant's
premises throughout the term of this lease, at its sole cost and
expense. Tenant shall pay directly to the company providing the
service and maintenance the cost of same. Provided Tenant has a
written service contract for the service and maintenance of HVAC
for the term of this lease (or a renewable contract, providing
evidence of renewal to the Landlord), Landlord shall be
responsible for replacement of the HVAC unit when its useable life
has been exhausted and maintenance and service of same is no
longer practical. If, however, Tenant shall fail to obtain a
service contract and to maintain the HVAC unit properly, Tenant
shall be responsible for the replacement of said unit as provided
herein.
54. ASSIGNMENT OR SUBLETTING
------------------------
Without the prior written consent of the Landlord, this lease may
not be assigned nor may the premises be sublet in whole or in
part. Landlord agrees that it will not unreasonably withhold or
delay its consent to an assignment or sublease but in determining
reasonableness, there shall be taken into account: (a) the
character and reputation of the proposed assignee or subtenant;
(b) the specific nature of the proposed assignee or subtenant's
business; (c) the financial standing of the proposed assignee or
subtenant; (d) the impact of all of the foregoing upon the other
tenants of the Landlord in this Building and any adjoining
building and the impact of all of the foregoing upon the integrity
of the building as a whole.
A. In the event of any assignment where the Tenant shall receive a fee or
other compensation for same, Landlord shall receive fifty (50%) percent
of such fee or compensation. In the event of any subletting where the
Basic Annual Rental and Additional Rental reserved in the sublease
shall exceed the Basic Annual Rent and Additional Rent payable
hereunder, Tenant shall pay to the Landlord fifty (50%) percent of the
difference between the Basic Annual Rental and Additional Rental
reserved in this lease. The said sums
prospective lessees of the Premises, (b) to conduct such
activities as are necessary or desirable for the operation and
maintenance of, and to make repairs, alterations and
improvements in, the Premises and/or the Building and their
respective systems, facilities and equipment, (c) to remove
any violation of Law noted or issued against the Building, the
Premises or any part thereof, and (d) to read and maintain
utility meters located therein. Any entry by Landlord shall be
made on reasonable advance oral or written notice, except in
emergency situations. Landlord shall have a pass key (or
similar entry device) to the Premises and shall be allowed to
bring materials and equipment into the Premises as required in
connection with maintenance, repairs and alterations of the
Premises and/or Building without any liability to Tenant and
without any reduction of Tenant's obligations. If, during the
last month of the Term, Tenant has removed all or.
substantially all of Tenant's Property from the Premises,
Landlord, without notice to Tenant, may immediately enter the
Premises and alter, renovate and decorate the same, without
liability to Tenant and without reducing or otherwise
affecting Tenant's obligations hereunder. In exercising its
rights under this Section 12.6, Landlord shall use reasonable
efforts to avoid unreasonable interference with the normal
conduct of Tenant's business in the Premises.
ARTICLE XIII
SUBORDINATION
SECTION 13.1 Subordination. This Lease, and all
rights of Tenant under it, are subordinate and subject to all
present and future ground, master or operating leases of the
Building and/or the Premises, and any and all present and
future mortgages, security interests or other security
documents upon or affecting the Building and/or the Premises,
and to all advances thereunder and all renewals,
replacements, modifications, amendments, consolidations and
extensions thereof (all of the foregoing, collectively, the
"Senior Interests," and holders of Senior Interests shall be
referred to as "Senior Interest Holders"), unless any Senior
Interest Holder elects, by written notice to Tenant, that
this Lease shall be superior to its lease or mortgage. This
Section 13.1 shall be self-operative and no further
instrument of subordination shall be required. In
confirmation of such subordination, Tenant shall within 20
days of demand therefor execute, acknowledge and deliver any
instrument that Landlord, any Senior Interest Holder or any
of their respective successors in interest may (in the form
required by the Senior Interest Holder requesting the same)
request to evidence such subordination. Landlord represents
and warrants that as of the date hereof there are no Senior
Interests affecting the Building.
SECTION 13.2 Attornment. Any Senior Interest Holder who
----------
succeeds to the rights of Landlord under this Lease, whether1999, between
TREMONT CAPITAL CORP., a Texas corporation, having an office c/o Fairfield
Financial Group, 8 Greenway Plaza, Suite 1100, Houston, Texas 77046, hereinafter
called "Landlord," and REDSTONE SECURITIES, INC., a having an office at 101
Fairchild Avenue, Plainview, New York 11803, hereinafter called
"Tenant."1/4
BASIC LEASE PROVISIONS:
The following provisions shall be referred to in this Lease as
the Basic Lease Provisions. In the event of any conflict between any Basic Lease
Provision and the balance of the Lease, the latter shall control.
1. Location of Premises:
A portion of the Seventh Floor depicted on Exhibit "A"
2. Rentable Area of
Premises: 5,083 rentable square feet
3. Percentage Share: 1.80%
4. Term: Five (5) years
5. Renewal Option: One five (5) year renewal option.
6. Basic Annual Rent:
Year 1: $86,411.00 per annum ($17.00 per square foot), payable in equal monthly
installments of $7,200.92
Year 2: $86,411.00 per annum ($17.00 per square foot), payable in equal monthly
installments of $7,200.92
Year 3: $87,681.75 per annum (17.25 per square foot), payable in equal monthly
installments of $7,306.82
Year 4: $88,952.50 per annum ($17.50 per square foot), payable in equal monthly
installments of $7,412.71
Year 5: $90,223.25 per annum ($17.75 per square foot), payable in equal
through exercise of remedies or by operation of law, is
sometimes referred to herein as a "Successor Landlord". Upon a
Successor Landlord's succession to the rights of Landlord
under this Lease, at the option of the Successor Landlord,
Tenant shall attorn to and recognize the Successor Landlord as
Tenant's landlord under this Lease and shall promptly execute
and deliver any additional instrument that such Successor
Landlord may reasonably request to evidence the attornment.
Upon attornment, this Lease shall continue in full force and
effect and as a direct lease between the Successor Landlord
and Tenant upon all of the terms, conditions and covenants as
are set forth in. this Lease, except however, such Successor
Landlord shall not be (a) liable for any previous act or
omission or negligence of Landlord under this Lease; (b)
subject to any counterclaim, defense or offset, which
theretofore shall have accrued to Tenant against Landlord; (c)
bound by any previous modification or amendment of this Lease
or by any previous prepayment of more than one month's rent,
unless such modification or prepayment shall have been
approved in writing by the Senior Interest Holders through or
by reason of which the Successor Landlord shall have succeeded
to the rights of Landlord under this Lease; (d) liable for any
security deposited pursuant to this Lease unless such security
has actually been delivered to successor Landlord; (e)
obligated to repair the Premises or the Building or any part
thereof, in the event of total or substantial total damage
beyond such repair as can reasonably be.accomplished from the
net proceeds of insurance actually made available to Successor
Landlord; or (f) obligated to repair the Premises or the
Building or any part thereof, in the event of partial
condeirination beyond such repair as can reasonably be
accomplished from the net proceeds of any award actually made
available to Successor Landlord, as consequential damages
allocable to the part of the Premises or the Building not
taken. Nothing contained in this Section 13.2 shall be
construed to impair any right or remedy otherwise exercisable
by any such owner, holder or lessee.
SECTION 13.3 Estoppel Statements. Tenant shall, within 10 days
following receipt of Landlord's request to do so, execute,
acknowledge and deliver to Landlord a statement in writing
certifying to those facts for which such certification has
been requested by Landlord or any current purchaser or Senior
Interest Holder, including without limitation, that (a) this
Lease is unmodified and in full force and effect (or if there
have been modifications, that the same is in full force and
effect as modified and describing all such modifications), (b)
the dates to which Rent, Additional Rent and other charges
payable hereunder have been paid, if any, and Cc) whether or
not to the best knowledge of Tenant, Landlord is in default in
the performance of any covenant, agreement, obligation or
condition contained in this Lease and, if so, specifying in
reasonable detail each such default of which Tenant may have
knowledge. Any statement delivered by Tenant pursuant to this
Section may be relied upon by any current or prospective
purchaser of the Building, any Senior Interest Holder and any
assignees thereof.
SECTION 13.4 Attorney-In-Fact. Tenant hereby
constitutes and appoints Landlord attorney-in-fact for Tenant
to execute any deliver any instruments and/or documents for or
on behalf of Tenant which are provided under this Article XIII
or otherwise in this Lease, such appointment being coupled
with an interest.
ARTICLE XIV
ASSIGNMENTS AND SUBLEASES
SECTION 14.1 Prohibition. Tenant shall not mortgage,
pledge, encumber or otherwise hypothecate this Lease or the
Premises or any part thereof in any manner whatsoever without
complying with the provisions of this Article XIV. Tenant
shall not, whether voluntarily, involuntarily, by operation of
law or otherwise: (a) assign or otherwise transfer this Lease,
or (b) sublet the Premises or any part thereof or permit the
Premises to be used or occupied by one (1) or more Persons
other than Tenant, without in each instance strictly complying
with the requirements of this Article XIV.
SECTION 14.2 Corporate and Partnership Transactions. If Tenant
is a corporation, a dissolution of the corporation or a
transfer (by one or more transactions) of a majority of the
voting stock of Tenant by one or more Persons deemed insiders
within the meaning of the Securities Exchange Act of 1934, as
amended (other than any institutional investor holding less
than 15% of the voting stock of Tenant that exercises no
control over the operations or management of Tenant), shall be
deemed an assignment of this Lease subject to this Article
XIV, except that notwithstanding the foregoing, the merger or
consolidation of Tenant with or into another corporation, more
transactions, or whether one or more Persons hold the
controlling interest prior to the transfer or afterwards.
SECTION 14.3 Landlord's Recapture Rights. Whenever
Tenant desires to sublease all or any part of the Premises for
any period of time, or to assign this Lease, Tenant shall give
notice othereof to Landlord, which notice shall comply with
the provisions of Section 14.4 and shall contain a statement
of the proposed commencement date of such sublease or
assignment (the "Target Date"). The notice shall constitute an
offer from Tenant (the "Offer") to Landlord, at Landlord's
option, exercisable in Landlord's sole discretion, to
terminate this Lease as to all of the Premises or such part
thereof which Tenant desires to sublease. Landlord may
exercise this option by notice to Tenant at any time within 30
Business Days after receipt of the Offer, and during this 30
Business Day period, Tenant shall not sublet the Premises or
assign the Lease to any Person. The Target Date shall be not
earlier than 90 days and not later than 365 days after the
date of the Offer. If Landlord exercises its option to
terminate this Lease, then this Lease shall terminate on the
Target Date set forth in such Offer. The Rents shall .be
prorated and paid through the termination date. If Landlord
does not exercise its option to terminate this Lease, Tenant
may sublease the Premises or assign the Lease; provided,
however, that (a) Tenant must obtain Landlord's consent
pursuant to Section 14.4, (b) the commencement date of such
sublease or assignment shall not be earlier than the Target
Date set forth in such Offer and
(c) Tenant must comply with the applicable provisions of this Article XIV.
SECTION 14.4 Consent by Landlord. Tenant may not enter
into any sublease or assignment without the prior written
consent of Landlord, which consent shall not be unreasonably
withheld, delayed or conditioned. Whenever Tenant seeks
Landlord's consent under this Section 14.4, Tenant shall
request the consent of Landlord in writing; and such request
shall be accompanied by, in addition to those items required
by Section 14.3, (a) an executed copy of the proposed
sublease or assig-nment as to which Landlord's consent is
sought and, in the case of an assignment, an executed copy of
the assumption agreement required by Section 14.5, (b) a
statement setting forth in reasonable detail the identity of
the proposed sublessee or assignee, as the case may be, and
the nature of its business, (c) financial statements or other
evidence, reasonably satisfactory to Landlord, of the
financial condition of the proposed sublessee or assignee and
all other current financial information with respect to the
proposed sublessee or assignee in Tenant's possession, and
(d) any other information reasonably requested by Landlord.
SECTION 14.5 Miscellaneous. No assignment of this Lease shall
be valid or binding on Landlord unless and until (i) the
assignee executes arid delivers to Landlord an agreement in
form and substance satisfactory to Landlord, whereby the
assignee assumes and agrees to be bound by all of the
provisions of this Lease and to perform all of the obligations
of Tenant hereunder and (ii) Tenant pays to Landlord a
commission equal to the standard Long Island brokerage fee for
a similar transaction. Notwithstanding any assignment or
sublease to any other Person, Tenant shall remain fully liable
for the payment of Rents and for the performance of all the
other obligations of Tenant contained in this Lease. Any act
or omission of an assignee or subtenant or any Person claiming
under or through any of them that violates this Lease shall be
deemed a violation of this Lease by Tenant.. The consent by
Landlord to any assignment or sublease shall not relieve
Tenant or any Person claiming through or under Tenant of the
obligation to obtain the consent of Landlord, pursuant to the
provisions of this Article XIV, to any future assignment or
sublease. If Landlord declines to give its consent to any
proposed assignment or sublease under circumstances where
Landlord is entitled to do so under this Lease, or if Landlord
exercises any of its options under Section 14.3. Tenant shall
indemnify, defend (with counsel reasonably satisfactory to
Landlord) and hold Landlord harmless against and from any and
all loss, liability, damages, costs and expenses (including
reasonable attorneys' fees and disbursements) resulting from
any claims that may be made against Landlord by any Person
that claims it was damaged by Landlord's actions, including
any proposed assignee or sublessee, or any broker or other
Person claiming a commission or similar compensation in
connection with the proposed assignment-or sublease.
SECTION 14.6 Additional Charges. If Landlord shall
consent to any assignment or subletting of this Lease, Tenant
shall, in consideration theref or, pay to. Landlord, as
Additional Rent, an amount equal to 100% of the net profits of
such transaction which amount shall be paid to Landlord within
10 days of Tenant's receipt thereof.
ARTICLE XV
DEFAULT
SECTION 15.1 Events of Default. The following shall be
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deemed events of default ("Events of Default"):
(a) If Tenant shall fail to pay any portion of Base
Rent or Additional Rent when due and such failure shall
continue for 5 days;
(b) If Tenant shall fail to observe and perform any provision
of this Lease (other than those specifically mentioned in this
Section 15.1) to be observed or performed by Tenant and such
failure continues for 15 days after notice thereof by Landlord
to Tenant, unless, if the nature of such failure is such that
it cannot reasonably be cured within such 15 day period, (i)
within that aforesaid 15 day period Tenant notifies Landlord
that it intends to cure such failure and actually commences to
cure such failure, and (ii) Tenant thereafter diligently
proceeds to complete such cure within a reasonable time not to
exceed 90 days;
(c) If, in violation of Article XIV, this Lease shall
be hypothecated or assigned or if the Premises shall be
sublet, or if there shall be attempts at such actions;
(d) If Tenant shall fail to execute, acknowledge and
deliver to Landlord any statements documents or instruments
required under Article XIII within the time periods specified
therein;
(e) If, in the event Tenant's obligations hereunder
have been guaranteed, any guarantor shall breach any of its
material obligations, representations, warranties, covenants
or agreements under any such guaranty of this Lease, or if any
case, proceeding or other action shall be commenced by or
against such guarantor or Tenant under any Law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors;
(f) If the Premises.shall become deserted or
abandoned for a period of 10 consecutive days or if Tenant
fails .to take occupancy of the Premises within 30 days of the
Commencement Date, it being agreed that the fact that any of
Tenant's Property remains in the Premises shall not be
evidence that Tenant has not deserted or abandoned the
Premises.
SECTION 15.2 Remedies and Damages.
15.2.1 Termination. If any of such Events of Default
shall have occurred, Landlord may, at any time thereafter,
give notice to Tenant stating that this Lease and the Term
shall automatically expire and terminate on the date specified
in such notice, which date shall be 2 days after the giving of
such notice, and upon the expiration of such 2 day period,
this Lease and the Term and all rights of Tenant under this
Lease shall automatically expire and terminate as if the date
on which such 2 day period expires were the Expiration Date
herein definitely fixed, and Tenant immediately shall quit and
surrender the Premises to Landlord.
15.2.2 Surrender and Re-Entry. If (a) Tenant shall fail to pay
Base Rent or Additional Rent when due and such failure shall
continue for 5 days after notice thereof from Landlord to
Tenant, or (b) this Lease shall expire and terminate as
provided in Section 15.1, then, in either such case, Tenant
shall immediately quit and peacefully surrender the Premises
to Landlord, and Landlord and its agents may immediately, or
at any time thereafter, without further notice, reenter the
Premises, either by summary proceedings or by any other
applicable action or proceeding or otherwise, and remove all
Persons and property from the Premises. The terms "reenter,"
"re-entry" or "re-entered" as used in this Lease shall not be
deemed to be restricted to their technical legal meanings.
If (a) Landlord shall have re-entered the Premises
as provided in this Section 15.2.2, or (b) this Lease shall
have terminated and expired as provided in Section 1 5. 1,
then, in either such case, Landlord may relet the Premises
from time to time, .either in the name of Landlord or
otherwise, to such tenant or tenants, for such term or terms
ending before, on or after the then next succeeding
Expiration Date, at such rental or rentals and upon such
other conditions (that may include concessions and free rent
periods) as Landlord may determine in its sole and absolute
discretion; provided, however, that Landlord shall not be
liable for refusal or failure to relet the Premises, or, in
the event of any such relenting or refusal or failure to
collect any rent due upon any such reletting, and no such
refusal or failure shall operate to relieve Tenant of any
liability under this Lease or otherwise affect any such
liability. Landlord may make such repairs, replacements,
alterations, additions, improvements, decorations and, other
physical changes in and to the Premises as Landlord, in its
sole discretion, considers advisable or necessary in
connection with any such reletting or proposed reletting.,
without relieving Tenant of any liability under this Lease
or otherwise affecting any such liability.
15.2.3 Waiver of Notice and Redemption. Tenant
hereby waives (a) the service of any notice of intention to
reenter; and (b) all rights of Tenant to redeem the Premises
or to restore the operation of this Lease after Tenant shall
have been dispossessed or ejected there from by process of
law or under the terms of this Lease or after any expiration
or termination of this Lease, whether such dispossess,
ejection, expiration or termination shall be by operation of
law or pursuant to the provisions of this Lease.
15.2.4 Damages. If this Lease and the Term shall
terminate as provided in Section 15.2, or if Landlord shall
re-enter the Premises as provided in Section 15.2.2 hereof,
then, in either such event:
o (a) Tenant shall pay to Landlord all Base Rent and
Additional Rent to the date upon which this Lease and the
Term shall have expired or to the date of re-entry upon the
Premises by Landlord, as the case may be;
(b) Tenant also shall pay to Landlord,
as damages, any deficiency
("Deficiency") between the Rents
for the period that otherwise would
have constituted the unexpired
portion of the'
Term and the net amount, if any, of rents collected under any
reletting effected pursuant to the provisions of Section
15.2.2 for any part of such period (first deducting from the
rents collected under any such reletting all of Landlord's
expenses in connection with the termination of this Lease,
Landlord's re-entry upon the Premises and such reletting
including all repossession costs,. brokerage commissions,
attorneys' fees and disbursements, alteration costs and other
expenses of preparing the Premises for such reletting); any
such Deficiency shall be paid in monthly installments by
Tenant on the days specified in this Lease for payment of.
installments of Base Rent, and Landlord shall be. entitled to
recover from Tenant each monthly Deficiency as the same shall
arise, and no suit to collect the amount of the Deficiency for
any month shall prejudice Landlord's right to collect the
Deficiency for any subsequent month by a similar proceeding;
and
(c) whether or not Landlord shall have collected any
monthly Deficiency as aforesaid, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord on
demand in lieu of any further Deficiency as and for liquidated
damages, a sum equal to the amount by.which the Rents for the
period that otherwise would have constituted the unexpired
portion of the Term exceeds the then.fair market rental value
of the Premises for' the" same period (first deducting from
such fair market rental
o value all of Landlord's expenses in connection with the `termination of this
Lease, Landlord's re-entry upon the. Premises and reletting costs, if any,
including all repossession costs, brokerage commissions, attorney's fees and
disbursements, alteration costs and other expenses of preparing the Premises for
reletting, but only to the extent such expenses have not already been paid to
Landlord through prior court proceedings or otherwise), both discounted to
present value at the rate of 6% per annum, less the aggregate amount of
Deficiencies theretofore collected by Landlord for the same period; provided,
however, that if, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the Premises, or any part thereof, shall have
been relet by Landlord for the period that otherwise would have constituted the
unexpired portion of the Term, or any part thereof, the amount of rent reserved
upon. such reletting shall be deemed, prima facie, to be the fair market rental
value for the part of the Premises so relet during the term of the reletting.
C Monies Received. Any monies received by Landlord
from or on behalf of Tenant during the pendency of
any proceedings between Landlord and Tenant shall be
deemed paid as compensation for the use and
occupation of the Premises, and the acceptance of
any such compensation by Landlord shall not be
deemed an acceptance of Rents or a waiver on the
part of Landlord of any rights hereunder.
SECTION 15.3 Waiver of Trial by Jury and
Counterclaims. Landlord and Tenant each waive trial by jury in
any action, proceeding or counterclaim brought by either of
them against the other on any matters arising out of or in any
way connected with this Lease, the relationship of Landlord
and Tenant or Tenant's use or occupancy of the Premises or the
operation, maintenance or control of the Building. Tenant
shall not interpose any counterclaim it may otherwise assert
in any summary proceeding whether such summary proceeding is
based on nonpayment of Rents or on Tenant's holding over after
expiration of the Term or on any other basis pursuant to
Article 7 of the Real Property Actions and Proceedings Law of
the State of New York, unless by not interposing such
counterclaim Tenant would be barred from asserting such
counterclaim in a separate' action or. proceeding.
SECTION 15.4 Partial Payment; No Waiver. No payment by
Tenant or receipt or acceptance by Landlord of a lesser
amount than the full Rents due hereunder shall be deemed to
be other than a payment on account, nor shall any endorsement
or statement on any check or any letter accompanying any
check or payment be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice
to Landlord's right' to recover the balance, treat such
partial payment as a default or pursue any other remedy
provided in this Lease or at law or in equity. If at any time
Tenant shall pay Landlord less than the full amount of Rents
then due, Landlord shall have the right to apply such payment
to any item or items of Rents that Landlord, in its
discretion, deems appropriate. No consent or waiver, express
or implied, by Tenant or Landlord of any breach of any
obligation of the other party shall be construed as a consent
or waiver to or of any other breach of the same or any other
obligation. The failure of Landlord or Tenant at any time to
insist upon the strict performance of any obligation of the
other or to exercise any right or remedy herein contained
(including the right to make any demand upon Tenant for
payment of any Additional Rent due hereunder) shall not be
construed as a waiver or relinquishment of the performance of
such obligation or of the right to exercise any right or
remedy in the future. The receipt or acceptance by Landlord
of Rents or the payment by Tenant of Rents with knowledge of
a breach by the other party of any term of this Lease shall
not be deemed a waiver of such breach. The rights and
remedies of either party provided in this Lease for a breach
by the other are cumulative and not exclusive, and the
exercise by either party of any other right or remedy it may
have shall not preclude the concurrent or subsequent exercise
of any other right or remedy it may have pursuant to this
Lease, at law or in equity.
SECTION 15.5 Right to Cure. Landlord may, but shall
not be obligated to, cure any default by Tenant
under this Lease at any time after notice and the
lapse of any cure period included within the
conditional limitation to which such default
relates,
without giving further notice. Whenever Landlord so elects,
all costs and expenses incurred by Landlord in curing any such
default, including attorneys' fees and disbursements,
together' with interest at the Interest Rate on the amount of
costs and expenses so incurred commencing on the day such
costs are paid by Landlord, shall be paid by Tenant to
Landlord as Additional Rent within 20 days of demand.
SECTION 15.6 Effect of Re-Entry. The mere re-entry or
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taking possession of the Premises by Landlord shall not be
construed as an election to terminate this Lease.
SECTION 15.7 Payment of Landlord's Expenses All
costs and expenses, including attorneys' fees (whether or
not legal proceedings are instituted), involved in
collecting Rents or enforcing the obligations of Tenant
under this Lease, including the cost and expense of
instituting and prosecuting legal proceedings or recovering
possession of the Premises after breach by Tenant or upon
expiration or earlier termination of this Lease, to the
extent such costs and expenses have not already been paid as
a Deficiency or as liquidated damages under Section 15.2.4
shall be due and payable by Tenant as Additional Rent within
20 days of demand.
ARTICLE XVI
MISCELLANEOUS
SECTION 16.1 Ouiet Enjoyment So long as Tenant
timely pays all the Rents and performs all of Tenant's other
obligations hereunder within the time periods required under
this Lease, Tenant shall peaceably and quietly hold and
enjoy the Premises during the Term without hindrance or
ejection by Landlord or any person lawfully claiming through
or under Landlord, subject, nevertheless, to the provisions
of this Lease. This covenant is a covenant running with the
land and is subject to Article XII.
SECTION 16.2 Broker. Each of Landlord and Tenant
represents to the other that it has dealt with no broker in
connection with this Lease other than Real Estate
Strategie.s and DNC Capital Corp. (collectively, "Broker").
Each of Landlord and Tenant agrees to indemnify, defend and
hold harmless the other from and against any claims, based
or alleged to be based upon the acts or omissions of the
indemnifying, party, for any brokerage commission or
finder's fee with respect to this Lease by persons other
than Broker and for all costs, expenses and liabilities
incurred in connection with such claims, including
attorneys' fees and disbursements arising out of a breach of
the foregoing representation.
SECTION 16.3 No Recording. Tenant shall not record
this Lease or any memorandum thereof.
SECTION 16.4 Entire Agreement. This Lease (including
the Exhibits attached hereto, whether executed or not)
contain all of the agreements and understandings between the
parties related to the leasing of the Premises and the
respective obligations of Landlord and Tenant in connection
therewith. All prior agreements and understandings between
the parties have merged into this Lease and such other
documents referred to in this Section 16.4.
SECTION 16.5 Amendments. No agreement shall be
effective to amend, change, modify, waive, release,
discharge, terminate or effect an abandonment of this Lease,
. in. whole or in.part, unless such `agreement is in
writing, refers expressly to this Lease,' and is signed by.
Landlord and Tenant.
SECTION 16.6 Successors. Except as otherwise
expressly provided herein, the obligations of this Lease
shall bind and benefit the successors and assigns of the
parties hereto; provided, however, that no assignment,
sublease or other transfer in violation of the provisions of
Article XIV shall operate to vest any rights in any putative
assignee, sublessee or transferee of Tenant.
SECTION 16.7 Force Maieure. Landlord shall have no liability whatsoever to
Tenant on account of the inability
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of Landlord to
timely fulfill any of Landlord's obligations under this Lease (other
than those relatingto the payment of money) by reason of any strike, lockout or
other labor trouble; inability to obtain labor, materials, coal, oil, or other
suitable fuel or reasonable substitutes therefor or the failure of the supply of
any thereof; acts of God, fire or other casualty; governmental preemption of
priorities or other controls in connection with a public emergency; governmental
restrictions or requirements of Laws; enemy or hostile governmental action;
civil commotion; or any other cause, whether similar or dissimilar to the above,
beyond Landlord's reasonable control (the foregoing events are collectively
referred to as "Force Majeure"). If this Lease specifies a `time period for
performance of an obligation of Landlord, that time period shall be extended by
the period of any delay in Landlord's performance caused by any of the events of
Force Majeure.
SECTION 16.8 Post-Termination Obligations. Upon the'
expiration or earlier termination of this Lease,
neither party shall have any obligation or liability
to the other in respect of any period after such
expiration or termination (except as otherwise
expressly provided in this Section 16.8 or elsewhere
in this Lease), but all obligations and liabilities
under this Lease in respect of any period prior to
such expiration or termination shall survive such
termination or expiration. Notwithstanding the
foregoing, (a) in case of any termination or
expiration under Article XV, Tenant shall remain
liable as provided therein, and
(b) Tenant's or Landlord's accrued liability or obligations,
as the case may be, under this Lease shall in all events
survive the expiration or earlier termination of the Term.
SECTION 16.9 Interpretation.
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16.9.1 Governing Law. (a) This Lease shall be
governed by, and be construed in accordance with, the laws
of the State of New York without regard to the principles of
conflicts of laws. To the fullest extent permitted by law,
Tenant hereby unconditionally and irrevocably waives any
claims to assert that the law of any other jurisdiction
governs this Lease and agrees that this Lease shall be
governed by and construed in accordance with the laws of the
State of New York pursuant to 5-1401 of the New York General
Obligations Law.
(b) Any legal suit, action or proceeding against
Tenant or Landlord arising out of or relating to this Lease
may be instituted in any federal or state court in Nassau
County, New York, pursuant to 5-1402 of the New York General
Obligations Law, and Tenant hereby waives any objection
which it may now or hereafter have to the laying of venue of
any such suit, action or .proceeding including, without
limitation, any claim of forum non convenient pursuant to
any rule of common law and/or any applicable federal or
state statute, law or provision, and Tenant hereby
irrevocably, submits to the jurisdiction of any such court
in any suit; action or proceeding.
16.9.2 Invalidity. If any provision of this Lease or
the application thereof to any Person or circumstance shall
be invalid or unenforceable, the remainder of this Lease and
the application of that provision to other Persons or
circumstances shall not be affected but rather shall be
enforced to the fullest extent permitted by law.
16.9.3 Covenants. Each provision of this Lease on
Tenant's part to be performed shall be deemed and construed
as a separate and independent covenant of Tenant, not
dependent on any other provision or covenant.
16.9.4 Number and Gender. All words used or defined
in this Lease or the Exhibits hereto, regardless of the
number or gender in which they are used, shall be deemed to
include any other number and any other gender as the context
may require.
16.9.5 Exhibits. All exhibits, schedules and riders
appended to this Lease are incorporated herein and
by this reference made a part hereof. References to
"Exhibits" or "Schedules" shall be to Exhibits and
Schedules attached to this Lease except where the
context requires otherwise.
SECTION 16.10 Submission of Lease. The submission of
this Lease to Tenant or its broker, agent or attorney for
review or signature does not constitute an offer to Tenant
to lease the Premises or the granting of an option to do so.
This instrument shall have no binding force or effect until
its execution and unconditional delivery by both Landlord
and Tenant.
SECTION 16.11 Notices. Consents andApprovals. In
order to be effective, any notice, demand, consent or
approval ("Notice") hereunder shall be in writing (except as
otherwise expressly stated herein) and signed by the party
giving such Notice. Any Notice in writing shall be
personally delivered, sent by a nationally recognized
courier service, or.mailed by registered or certified mail,
return receipt requested, addressed, (a) if to Tenant, at
the Address of Tenant or Such other address as Tenant shall
have last designated by notice as provided in this Section
16.1 1 to Landlord, and (b) if to Landlord, to the Address
of Landlord, or at such other address as Landlord shall have
last designated by Notice as provided in this Section 16.11
to Tenant, in any case, with a copy to Rubin Baum Levin
Constant & Friedman, 30 Rockefeller Plaza, New York, N.Y.
10112, Attn.: David A. Mandel, P.C., and with a. copy to
Landlord's Agent or to such `other address as such party
shall have last designated by notice in writing to the
party. giving the notice. Notices in writing shall be deemed
given when personally delivered or.upon receipt (or refusal
of receipt) if mailed or sentby a courier service.
SECTION 16.12 Directory Listings. Landlord, at
Tenant's request, shall maintain Tenant's name on the
directory board located in the lobby of the Building.
SECTION 16.13 Sicinage. Tenant shall have the right
to install appropriate sig-nage identifying Tenant or any
subtenant permitted under Article XIV, in keeping with the
nature of the Building, on the doors to the Premises.
SECTION 16.14 Security Deposit. Tenant shall deposit
the Security DepoSit with Landlord on the signing of
this Lease as security for the faithful performance
and observance by Tenant of the provisions of this
Lease. If Tenant defaults, after the giving of any
required notice and the expiration of any required
grace period, in any of its obligations under this
Lease, Landlord may apply or retain the whole or any
part of the Security Deposit to the extent required
for the payment of any Rents as to which Tenant is
in default or for any sum that Landlord may expend
or may be required to expend by reason of Tenant's
default under this Lease. If Tenant shall comply
wjth all of its obligations under this Lease, the
Security Deposit shall be returned to Tenant without
interest and less any expenses incu.rred but not
paid by Tenant in accordance with this Lease, within
60 days after the expiration of the Term and after
delivery of possession of the entire Premises to
Landlord. Upon a sale or transfer of the Building or
any other transaction set forth in Section 12.2.
Landlord shall have the right to transfer the
Security Deposit to the vendee, lessee or transferee
and Landlord shall thereupon be released by tenant
from all liability for the return of the Security
Deposit; and Tenant shall look solely to the new
landlord for the return of the Security Deposit. The
provisions hereof shall apply to every transfer or
assignment made of the Security Deposit to a new
landlord. Tenant shall not assign or encumber or
attempt to assign or encumber the Security Deposit,
and neither Landlord nor its successors or assigns
shall ,be bound by any such assignment. encumbrance,
attempted assignment or attempted encumbrance.
16.14.1 Restoration/Reduction of Security. It is understood and agreed
that the amount of Tenant's Security Deposit throughout the term of this Lease
shall at all times be equal to 2 monthly installments of Base Rent, as the same
shall increase each Lease Year of the Term. If Landlord is required to apply or
draw upon all or any part of the Security Deposit to cure any default by Tenant
under this Lease, Tenant shall, within 10 days of notice or demand by Landlord,
reStore such Security Deposit to an amount equal to 2 monthly installments of
Base Rent then due under this Lease.
SECTION 16.15 Building Security. Landlord shall be the sole determinant
of the type and amount of security services to be provided in the Building. In
all events and notwithstanding any provision of this Lease to the contrary,
Landlord and the Landlord Parties shall not be liable to Tenant and Tenant
hereby waives any claim against Landlord, for (a) any unauthorized or criminal
entry of third parties into the Premises or the Building, or (b) any damage to
persons or property in or about the Premises or the Building by' or from any
unauthorized or criminal acts of third parties, regardless of any action,
inaction, failure, breakdown, malfunction of the security services provided or
any negligence on the part of Landlord or any Landlord Party.
SECTION 16.16 Relocation. Landlord expressly
reserves the right at Landlord's sole cost and
expense to remove Tenant from the Premises and to
relocate Tenant in. some other space of Landlord's
choosing of approximately the same dimensions and
size within the Building, which other space shall be
improved and decorated by Landlord at Landlord's
expense Landlord shall have the right, in Landlord's
sole discretion, to use such decorations and
materials from the existing Premises, or other
materials so that the space in which Tenant is
relocated shall be comparable in its interior design
and decoration to the Premises from which Tenant is
removed. Nothing herein contained shall be construed
to relieve Tenant or imply that Tenant is relieved
of the liability for or obligation to pay any
Additional Rent due by reason of the provisions of
Section 2.3 of this Lease, the
provisions of which paragraph shall be
applied to the space in which Tenant is relocated on the same
basis as said provisions were applied to the Premises from
which Tenant is removed. Tenant agrees that Landlord's
exercise of its election to remove and relocate Tenant shall
not terminate this Lease or release Tenant, in whole or in
part, from Tenant's obligations to pay any Rents and perform
the covenants and agreements hereunder for the full Term IN
WITNESS WHEREOF, Landlord and Tenant have hereunto executed
this Lease by their respective duly authorized
representatives as of the day and year first above written.
LANDLORD:
Lighthouse 300 Limited Partnership
By:
By:
TENANT:
Redstone Securities, Inc.
<PAGE>
EXHIBIT B
Definitions
Whenever used in this Lease. The following terms shall have
the indicated meanings:
Address of Landlord: As defined in Section 1.1.
-------------------
Address of Tenant: As defined in Section 1.1.
-----------------
Additional Rent: As defined in Section 3.2.
---------------
Alteration: The installation, relocation or removal of any
Improvement. An Alteration may include (a) repair work
performed by Tenant pursuant to Article VIII or (b)
compliance work performed by Tenant pursuant to Section if
such work involves the installation, relocation or removal
of any Improvement.
Base Rent: As defined in Section 1.1.
---------
Building: The office building, other improvements and underlying land known as
300 Merrick Road, LyniDrook, New York. --------
Building Service Systems: All mechanical, electrical,
plumbing, gas, telecommunication, sanitary, sprinkler, HVAC,
security, life safety, elevator and other systems or
facilities that service the Building up to the point of
localized distribution to the Premises (if and to the extent
any such systems or facilities service the Premises) and
excluding any systems or facilities located in the Premises
or extending beyond such point of localized distribution.
Building Standards: Such standards as Landlord may adopt and generally enforce
uniformly from time to time to govern ------------------ the technical aspects
of alterations to the Premises.
Business Days: Monday through Friday, other than Federal or New York State or
union legal holidays. -------------
Business Hours: As defined in Section 6.2.
--------------
Commencement Date: As defined in Section 1.1.
-----------------
Common Areas: As defined in Section 8.3.
------------
Deficiency: As defined in Section 15.2.4.
----------
Electric Inclusion Amount: As defined in Section
Eminent Domain: As defined in Section 10.1.
- --------------
Force Majeure As defined in Section 16.7.
-------------
GAAP: Generally accepted accounting principles,
consistently applied.
----
Hazardous Materials: Any element, compound, chemical mixture, contaminant,
pollutant, material, waste or other
-------------------
substance which is defined, determined or identified as a "hazardous substance",
hazardous waste or hazardous material under any federal, state or local statute,
regulation or ordinance applicable to the Premises, as well as any amendments
and successors to such statutes and regulations, as may be enacted and
promulgated from time to time, including, without limitation, the following: (i)
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(codified in scattered sections of 26 u.s.c., 33 U.S.C., 42 U.S.C. and 42
U.S.C.ss.9601 et seq.); (ii) the Resource Conservation and Recovery Act of 1976
(42 U.S.C.ss.6901 et seq.); (iii) the Hazardous Materials Transportation Act (49
U.S.C.ss.1801 et seq.); (iv) the Toxic Substances Control Act (15 U.S.C.ss.2601
et seq); (v) the Clean Water Act (33 U.S.C.ss.1251 et seq.); (vi) the Clean Air
Act (42 U.S.C.ss.7401 et seq); (vii) the Safe Drinking Water Act (21
U.S.C.ss.349; 42 U.S.C.ss.201 andss.300f et seq); (viii) the National
Environmental Policy Act of 1969 (42 U.S.C.ss. 3421); (ix) the Superfund
Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10
U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (x) Title III of the Superfund
Amendment and Reauthorization Act (40 U.S.C.ss.1101 et seq.) and (xi) the
Environmental Conservation Law of the State of New York (modified in section 17
1/2 of McKinney's 1984).
HVAC: Heating, ventilation and air conditioning.
----
Improvement: Any fixed improvement in, to or upon the Premises made by or for
any tenant or occupant.
-----------
Insurance Requirements: As defined in Exhibit D.
----------------------
Interest Rate: As defined in Section 3.5.
-------------
Land: The real property upon which the Building is situated.
----
Landlord: As defined in the introductory paragraph
of this Lease.
--------
Landlord Parties: Landlord, any Senior Interest Holder, Landlord' s Agent, the
managing agent for the Building, and any partner, principal, director, officer,
agent or employee of any of the foregoing.
Landlord's Agent: Lighthouse Real Estate Management LLC, c/o
Sheinker. Wasserstein Realty Services, Inc., 581 Sixth Avenue, 4th
Floor, New York, New York 10011
Landlord's Electrical Consultant: As defined in Section 6.1. Landlord's Work As
defined in Exhibit E. -------------------------------- ---------------
Law(s): The terms "law," "laws, "provisions of law,"
"requirements of law," and words of similar import shall mean
present and future laws, statutes (including the Americans
with Disabilities Act, 42 U.S.C. ss. 12,101 et seq.),
ordinances, codes (including building and fire codes), rules
(including the rules and requirements of the Occupational
Safety and Health Administration relating to indoor air
quality codified at 29 CFR parts 1910, 1915, 1926 and 1928),
regulations, requirements, decrees, orders and directives of
any or all of the federal, state, county and city governments
and all agencies, authorities, bureaus, courts, departments,
subdivisions, or offices thereof, and of any other
governmental, public or quasi-public authorities (including
the board of fire underwriters or other insurance body)
having jurisdiction over the Building or the Premises, and
the direction of any public officer pursuant to law, whether
now or hereafter in force. References to :specific statutes
include (a) successor statutes of similar purpose and import,
and (b) all rules, regulations and orders made thereunder.
Lease Year: Any calendar year all or any part of which falls
within the Term.
----------
Measurement Standards: The measurement standards applicable
to any particular space set forth in the Recommended Method
of Floor Measurement For Office Buildings and Stores
published by the Real Estate Board of New York and effective
January 1, 1987.
Mechanics Lien: Any mechanics or other lien or encumbrance
filed, claimed or asserted in connection with any Alteration
or any other work, labor, services or materials done for or
supplied to Tenant or any Person claiming through or under
Tenant.
Notice: As defined in Section 16.11.
------
Objection Notice: As defined in Section 4.5.
----------------
Offer: As defined in Section 14.3.
-----
Person: A natural person, firm, corporation, partnership,
joint venture, trust (including any
------
beneficiary thereof, association, unincorporated association
or other form of business or legal entity, as the case may
be.
Premises: As defined in Section 1.1.
- --------
Prohibited Use: Any use or occupancy of the Premises (other
than a Permitted Use) that, in the sole opinion of Landlord,
as the case may be, (1) violates any certificate of occupancy
in force for the Premises or the Building; (2) causes or is
likely to cause damage to the Building, the Premises or any
equipment, facilities or other systems therein; (3) impairs
the character, reputation, image or appearance of the
Building; (4) interferes with the proper, efficient and
economic maintenance, operation and repair of the Building or
its equipment, facilities or systems, including without
limitation, the Building Service Systems; (5) constitutes a
nuisance, annoyance or inconvenience to other tenants or
occupants of the Building or interferes with or disrupts the
use or occupancy of any area of the Building (other than the
Premises) by other tenants or occupants; (6) results in
demonstrations, bomb threats or other events that require
evacuation of or increased security for the Building or
otherwise disrupts the use, occupancy or quiet enjoyment of
the Building by other tenants and occupants; (7) interferes
with the transmission or reception of microwave, television,
radio or other communication signals by antennae located on
the roof of, or elsewhere in, the Building: (8) violates any
provision of any financing documents from time to time
encumbering the Building, all covenants, conditions and
restrictions affecting the building or any modifications,
amendments, substitutions, replacements, Supplements or
additions to any of the foregoing; or (9) violates any
requirement or condition of any insurance policy maintained
by Landlord in connection with the Building or of the
standard fire insurance policy issued for office buildings in
the County of Nassau or the rules and regulations of the New
York Board of Fire Underwriters or Insurance Services Office
(or similar bodies). In addition to the foregoing, a
Prohibited Use also includes the use of any part of the
Premises for: (i) a restaurant or bar; (ii) the preparation,
consumption, storage, manufacture or sale of food, beverages,
liquor, tobacco or drugs (excluding the sale, storage and
consumption of food or beverages from or in connection with
vending machines installed for use by Tenant's employees);
(iii) the business of photocopying, multiplying or offset
printing (but Tenant may use part of the Premises for
photocopying in connection with its own business); (iv) a
typing or stenography business; (v) a school or classroom;
(vi) cooking, lodging or sleeping; (vii) the operation of
retail facilities of a savings and loan association or retail
facilities of any financial, lending, securities brokerage or
investment activity; (viii) medical or dental offices or
laboratories; (ix) a barber, beauty or manicure shop; (x) an
employment agency, executive search firm or similar
enterprise; (xi) a consulate; (xii) the manufacture, retail
sale, storage of merchandise or auction of merchandise, goods
or property of any kind; or (xiii) any immoral or illegal
purposes.
Rents: As defined in Section 3 3.
- -----
Rules and Regulations: As defined in Section 5 3.
---------------------
Security Deposit: As defined in Section 1.1.
----------------
Senior Interest Holders: As defined in Section 13.1.
-----------------------
Senior Interests: As defined in Section 13.1.
----------------
Substantially Completed: Such completion as (excluding any
alterations or work to be performed by Tenant) which would
enable Tenant to reasonably and conveniently use and occupy
the Premises for the conduct of its ordinary business, even
though minor details, decorations, and/or mechanical
adjustments may remain to be completed by Landlord to
Landlord's Work.
Target Date: As defined in Section 14.3.
-----------
Taxable Property: As defined in Section 4.1.5.
----------------
Tax Statement: As defined in Section 4.1.4.
-------------
Tax Year: As defined in Section 4.1.1.
--------
Taxes: As defined in Section 4.1.3.
-----
Tenant: As defined in the introductory paragraph of
this Lease.
------
Tenant's Improvements: Improvements made to the Premises
by Tenant.
---------------------
Tenant's Property: As defined in Section 8.2.
-----------------
Tenant's Share: As defined in Section 1.1.
--------------
Tenant's Tax Payment: As defined in Section 4.2.
--------------------
Term: As defined in Section 1.1.
- ----
EXHIBIT C
Rules and Requlations
1. The sidewalks, areas, entrances, vestibules,
passages, corridors, halls, elevators and stairways shall
not be encumbered nor obstructed by any of the tenants,
their agents, clerks, servants or visitors, or be used by
them for any other purpose than for ingress and egress to
and from their respective premises. Landlord reserves the
right to restrict and regulate the use of aforementioned
public areas of the Building by the tenants, their
employees, guests, contractors and customers and by persons
making deliveries to tenants, including but not limited to
the right to allocate certain elevators for delivery
service, and the right to designate which Building entrances
shall be used by persons making deliveries in the Building.
2. The doors, skylights, and windows that reflect or
admit light into passageways or into any place in the
Building shall not be covered or obstructed by any tenant.
3. The water-closets, wash-closets, urinals and
other water apparatus shall not be used for any purposes
other than those for which they were constructed and no
sweepings, rubbish, rags, ashes, chemicals, refuse from
electric batteries, or other substances shall be thrown
therein. No tenant shall lay linoleum or other similar floor
covering so that the same shall come in direct contact with
the floor covering of the Premises, and if linoleum or other
similar floor covering is desired to be used, an interlining
of builder's deadening felt shall be first affixed to the
floor by a paste, or other material, which may easily be
removed with water, the use of cement or other similar
adhesive material being expressly prohibited
4. No tenant shall mark, paint, drill into, drive
nails into, or in any way damage, mutilate or deface any
walls, ceilings, partitions, floors, wood, stone or iron
work of the Building, except in connection with Alterations.
5. No sign, advertisement or notice shall be inscribed, painted, affixed or
displayed on any of the windows or doors or on any other part of the outside or
the inside of the Building No awnings or other projections shall be attached to
the outside walls or windows of the Building without the prior consent of
Landlord. No curtains, blinds, shades, or screens shall be attached to or hung
in, or used in connection with, any window or door of the premises demised to
any tenant or occupant, without the prior consent of Landlord. Such awnings,
projections, curtains, blinds, shades, screens or other fixtures must be of a
quality, type, design and color, and attached in a manner approved by Landlord.
No sign, advertisement, object, notice or
other lettering shall be exhibited, inscribed, painted or affixed on any part of
the outside or inside of the premises demised to any tenant or occupant or of
the Building without the prior consent of Landlord. Interior signs on door and
directory tablets, if any, shall be of a size, color and style approved by
Landlord.
6. No tenant shall do anything or permit anything to be done, in its
Premises, or bring or keep anything therein or in the Building, that will in any
way obstruct or interfere with the rights of other tenants, or in any way injure
or annoy them, or those having business with them. Tenants, their agents,
clerks, servants or visitors, shall not make or cause any improper noises in the
Building, or interfere in any way with other tenants, or those having business
with them.
7. No freight, furniture, or bulky matter of any description will be
received into the Building, or carried up or down, except during hours and in
the manner designated by Landlord, which may involve overtime work for
Landlord's employees, agents or contractors. Tenants shall reimburse Landlord
for costs incurred by Landlord, including the cost of such overtime work. The
moving of safes shall occur at such times as Landlord shall designate upon
previous notice to Landlord or Landlord's agent; and the persons employed to
move the safes in and out of the Premises must be acceptable to Landlord in its
sole discretion. No tenant shall use the passenger elevators for the hauling and
removal of materials or debris and the same shall be done only after Business
Hours and only via the designated freight elevator.
8. Tenants shall not install any locks or bolts on any doors nor make
any changes in existing locks unless Tenant promptly provides Landlord with a
key or combination thereto. All keys shall be keyed to the building master. Each
tenant must, upon the termination of the tenancy, restore to Landlord all the
keys (or other similar access devices) of offices, rooms and toilet-rooms which
shall have been furnished to Tenant or that Tenant shall have had made, and in
the event of loss of any keys so furnished shall pay Landlord therefor.
9. Tenant shall not use the Premises for the manufacturing or storage of
merchandise or for lodging.
10. Nothing shall be swept or thrown by the tenants or by
their agents, clerks, servants or visitors into the
corridors, halls, stairways, elevators, or light shafts,
or upon the skylights of the Building, or into or upon
any heating or ventilating registers, or plumbing
apparatus in the Building, or upon adjoining buildings
or upon the street. No awnings or other projections
shall be attached to the outside walls of the Building.
11. No animals (except seeing eye dogs) or birds shall be kept in or about the
Premises.
12. Tenants shall not bring into the Building or keep to use in the Building any
Hazardous Material.
13. No tenant shall cause or permit any odors of cooking or other
processes or any unusual or objectionable odors to emanate from the Premises. No
tenant shall install or permit the installation or use of any machine dispensing
goods for sale, including without limitation foods, beverages, cigarettes or
cigars; or permit the delivery of any food or beverage to the Premises. No food
or beverages shall be carried in the public halls and elevators of the Building
except in closed containers.
14. Tenants shall not obtain any towel supply service or ice service
except from Persons approved by Landlord, nor obtain drinking water for delivery
on the Premises from any source not approved by Landlord. Canvassing, peddling
and soliciting are prohibited in the Building and Tenant shall cooperate to
prevent the same.
15. Telegraph, telephone and other wires and instruments shall not be introduced
by Tenant without previous
notice to Landlord and with its reasonable approval.
16. Landlord reserves the right to exclude from the Building between
the hours of 6:00 o'clock p.m. and 8:00 o'clock a.m. on weekdays, on Saturdays,
Sundays and legal holidays, all Persons who do not present a pass to the
Building signed by Landlord or Landlord's agent. Landlord or its agent will
furnish passes to Persons for whom any tenant requests same in writing. Each
tenant shall be responsible for all Persons for whom he requests such pass and
shall be liable to Landlord for all acts of such Persons. Landlord may require
all such Persons to sign a register on entering and leaving the Building.
17. Landlord shall not be responsible to Tenant for the non-observance or
violation of these rules and regulations by any other tenant or occupant.
18. Landlord may from time to time adopt additional systems and
procedures to improve the security or safety of the Building, any persons
occupying, using or entering the same, or any equipment, finishing or contents
thereof, and Tenant shall comply with Landlord's reasonable requirements
relative thereto.
19. Tenant shall conduct all aspects of its operations so as to preserve labor
harmony and to insure that the security and operations of the Building shall not
be disrupted.
20. Landlord reserves the right to rescind, alter, waive or add, as to one or
more or all tenants, any rule or regulation at any time prescribed for the
Building when, in the judgment of Landlord, Landlord deems it necessary or
desirable for the reputation, safety, character, security, care, appearance or
interests of the Building or the Premises, the preservation of good order
therein, the operation or maintenance of the Building, the equipment thereof, or
the comfort of tenants or others in the Building. No rescission, alteration,
waiver or addition of any rule or regulation in respect of one tenant shall
operate as a rescission, alteration or waiver in respect of any other tenant.
21. Tenant shall not place a load upon any floor of the Premises that
exceeds 50 pounds live load per square foot (except in locations expressly
indicated by Landlord in writing to have been reinforced to bear greater live
loads) . Business machines and mechanical equipment used in the Premises that
cause vibrations or noise that may be transmitted to any other space in the
Building to such a degree as to be reasonably objectionable to Landlord or to
any tenants or occupants of the Building shall be placed and maintained by
Tenant, at its expense, in settings of cork, rubber or spring-type vibration
eliminators sufficient, in Landlord's judgment, to eliminate such vibrations or
noise.
22. Tenant shall neither contract for, nor employ, any labor in
connection with the maintenance or cleaning of, or providing of any other
services to, the Premises (but excluding Tenant's Property) without the prior
consent of Landlord in its sole discretion (Landlord may withhold any such
consent on the ground that use of such service provider would disturb labor
harmony in the Building.)
23. All removals from the Building, or the carrying in or out of the
Building or the premises demised to any tenant, of any safes, freights,
furniture or bulky matter of any description must take place at such time and in
such manner as Landlord or its agents may determine, from time to time. Landlord
reserves the right to inspect all freight to be brought into the Building and to
exclude from the Building all freight which violates any of the Building Rules
or the provisions of such tenant's lease.
24. No tenant or occupant shall engage or pay any employees in the
Building, except those actually working for such tenant or occupant in the
Building, nor advertise for laborers giving an address at the Building.
25. Each tenant, before closing and leaving the premises demised
to such tenant at any time, shall see that all entrance
doors are locked, all windows are closed and all lights are
turned off.
26. The requirements of tenants will be attended to only upon application at the
office of Landlord. Building employees shall not be required to perform, and
shall not be requested by any tenant or occupant to perform, any work outside cf
their regular duties, unless under specific instructions from the office of
Landlord.
26. There shall not be used in the Building, either by any
tenant or occupant or by their agents or contractors, in the
delivery or receipt of merchandise, freight or other matter,
any hand trucks or other means of conveyance except those
equipped with rubber tires, rubber side guards and such
other safeguards as Landlord may require.
The following requirements (collectively, the `Insurance Requirements") shall be
complied with by Tenant at all times during the Term:
1. Insurance to be Maintained by Tenant. At all times during the Tern, Tenant
shall maintain, at Tenant's
expense., the following insurance coverage:
(a) fire and extended coverage property insurance covering all physical
loss to the Improvements, Alterations and Tenant's Property in the Premises for
their full replacement value;
(b) broad form commercial general liability insurance (including
protective liability coverage on operations of independent contractors engaged
in construction and blanket contractual liability insurance), written on A per
occurrence basis with an aggregate limit of not less than $5,000,000, a per
occurrence limit of not less than $1,000,000, and with other limits reasonably
satisfactory to Landlord;
(c) business interruption insurance covering risk of loss due to the
occurrence of any of the hazards covered by the insurance to be maintained by
Tenant described in Paragraph 1(a) with coverage in a face amount of not less
than the aggregate amount, for a period of 12 months following the
insured-against peril, of 100% of all Rents to be paid by Tenant under this
Lease;
(d) worker's compensation insurance and employer's liability coverage
in statutory limits, and New York State disability insurance as required by Law,
covering all employees; and
(e) such other coverage as Landlord may reasonably require with respect
to the Premises, its use and occupancy and the. conduct or operation of business
therein. Landlord may, from time to time, but not more frequently than once
every year, adjust the minimum limits set forth above.
2. Insurer and Policy Requirements. All insurance policies to be
maintained under Paragraph I (a) shall be issued by companies of recognized
responsibility, licensed to do business in the State of New York, reasonably
acceptable to Landlord, and maintaining a. rating of A-/VI or better in Best's
Insurance Reports-Property-Casualty (or an equivalent rating in any successor
index adopted by Best's or its successor), o(b) shall provide that they may not
be cancelled or modified unless Landlord and all additional insureds and loss
payees thereunder are given at least 30 days prior written notice of such
cancellation or modification, (c) shall name, as additional insureds, Landlord,
Landlord's Agent and any Senior Interest Holder whose name and address shall
have been furnished to Tenant, and (d) shall be primary and non-contributory in
all respects. All policies providing fire and extended coverage property
insurance coverage pursuant to Paragraph 1(a) shall name, as loss payees,
Landlord, each Senior Interest Holder and Tenant, as their interests may appear.
3. Evidence of Coverage; Renewals. Prior to the Commencement Date or,
in the case of insurance required during the performance of Alterations, prior
to the commencement of the Alterations, Tenant shall deliver to Landlord
certificates of insurance for the insurance coverage required by Paragraph I
and, if required by Landlord, copies of the policies theref or, in each case, in
form and providing for deductibles reasonably satisfactory to Landlord. Tenant
shall procure and pay for renewals of such insurance from time to time before
the expiration thereof, and Tenant shall deliver to Landlord certificates of
renewal at least 30 days before the expiration of any existing policy. If Tenant
fails to procure or maintain any insurance required by this Lease and to pay all
premiums and charges theref or, Landlord may (but shall not be obligated to) pay
the same, and Tenant shall reimburse Landlord, within 20 days after demand, for
all such sums paid by Landlord. Any such payment shall not cure or waive any
default by Tenant in the performance of its obligations hereunder, nor shall the
foregoing right of Landlord to make such payment in any way limit, reduce,
diminish or impair the rights of Landlord under the terms of this Lease or at
Law or in equity arising as a result of any such default.
4. Additional Insurance; Blanket Insurance. Tenant shall
not carry separate or additional insurance, concurrent
in form or contributing in the event of any loss or
damage with any insurance required to be obtained by
Tenant under this Lease unless the parties required by
Paragraph 2 to be named as additional insureds or loss
payees thereunder are so named.. Tenant may carry any
insurance coverage required of it hereunder pursuant to
blanket policies of insurance so long as the coverage
afforded Landlord and the other additional insureds or
loss payees, as the case may be hereunder shall not be
less than the coverage that would be provided by direct
policies.
BASIC LEASE PROVISIONS:
The following provisions shall be referred to in this Lease as
the Basic Lease Provisions. In the event of any conflict between any Basic Lease
Provision and the balance of the Lease, the latter shall control.
1. Location of Premises: A portion of the Seventh Floor
depicted on Exhibit "A"
2. Rentable Area of
Premises: 5,083 rentable square feet
3. Percentage Share: 1.80%
4. Term: Five (5) years
5. Renewal Option: One five (5) year renewal option.
6. Basic Annual Rent:Year 1: $86,411.00 per annum
($17.00 per square foot), payable in equal
monthly installments of $7,200.92
Year 2: $86,411.00 per annum ($17.00 per square foot), payable in equal monthly
installments of $7,200.92
Year 3: $87,681.75 per annum ($17.25 per square foot), payable in equal
monthly installments of $7,306.82
Year 4: $88,952.50 per annum ($17.50 per square foot), payable in equal monthly
installments of $7,412.71
Year 5: $90,223.25 per annum $17.75 per square foot), payable in equal
<PAGE>
Group
1100
TENANT:
14. All payments under this Lease shall be payable and delivered to: Alexander
Summer, LLC, as Agent for Tremont Capital Corporation, c/a Tremont Capital
Corporation, East 80 Route 4, Paramus, New Jersey 07652, or such other payee or
address as Landlord may designate from time to time.
<PAGE>
(A) Landlord hereby leases to Tenant, and
Tenant hereby hires from Landlord, subject to all of the terms
and conditions hereinafter set forth, those certain premises
(the "Premises") as set forth in Item 1 of the Basic Lease
Provisions and as shown in the drawing(s) attached hereto as
Exhibit "A"; said Premises being located on the floor(s)
indicated in that certain office building o (the "Building")
situated on certain land, which said land together with the
Building are collectively hereinafter referred to as the
"Property," being located at 550 Broad Street, in the City of
Newark, County of Essex, State of New Jersey.
(B) The term of this Lease shall be as shown
in Item 4 of the Basic Lease Provisions. The Lease shall
commence on the Commencement Date as shown in Item 7 of the
Basic Lease Provisions, or upon such earlier date as Tenant
takes possession or commences use of the Premises for any
purpose, other than as set forth in Paragraph 6 below. Such
date of commencement, hereinafter the "Commencement Date," and
the date of expiration, hereinafter the "Expiration Date,"
shall be confirmed by Landlord by means of a "Commencement
Date Memorandum" in form substantially similar to Exhibit "C."
(C) Landlord hereby grants Tenant the right
to extend the term of this Lease for one (1) five (5) year
period. To exercise such right, Tenant shall send to Landlord
a renewal notice on or before the 180th day preceding the
Expiration Date. Tenant's renewal notice shall be null and
void if (i) as of either the date of the delivery of the
renewal notice or as of the commencement of the renewal term,
Tenant is in default of any of its obligations under this
Lease beyond any applicable notice and grace period, or
(ii) Tenant has assigned its interest under this Lease or has sublet more than
50% of the rentable area of the Premises. All terms and conditions of this Lease
shall apply to the renewal period, except that the annual fixed rental shall be
equal to the then fair market rental value of the Premises as determined below.
<PAGE>
Tenant shall deliver to Landlord the name of an arbitrator
appointed by Tenant. Within ten (10) days after receipt of
Tenant's notice, Landlord shall appoint a second person as an
arbitrator on its behalf. If the arbitrators' determination of
the renewal term rental rate for the Premises varies by more
than five percent (5%), then the arbitrators shall appoint a
third person who shall select the Lease is in effect during
such partial month bears to the number of days in that
calendar month, and such Basic Monthly Rental Installment
shall be paid at the commencement of such partial month. The
Basic Annual Rent includes $1.25 for electrical energy for
ordinary business use as described in Paragraph 9.
(B) In addition to the Basic Annual Rent
stipulated herein, Tenant covenants and agrees to pay in U.S.
currency, without deduction, offset, or abatement, to Landlord
a& additional rent, hereinafter "Additional Rent," all other
sums and charges which are to be paid by Tenant pursuant to
the terms of this Lease. Except as otherwise provided in this
Lease, Additional Rent shall be due and payable on the first
day of the month following the date on which Tenant is given
notice that Additional Rent is due.
(C) The Basic Annual Rent plus Additional
Rent are sometimes collectively referred to as "Rent."
PARAGRAPH 3 ADDITIONAL RENT FOR TAXES AND OPERATING EXPENSES,
-------------------------------------------------
ETC.:
----
(A) Commencing with the Commencement Date,
Tenant agrees to pay as items of Additional Rent for the
Premises, Tenant's "Percentage Share" (being the percentage
indicated in Item 3 of Basic Lease -Provisions) of all
increases in "Property Operating Expenses" and "Property
Taxes" (each as hereinafter defined) over the base year set
forth in Item 11 of the Basic Lease Provisions incurred by
Landlord in the operation of the Property. For purposes of
this paragraph, during each year actual occupancy of the
Building is less than ninety--five percent (95%), Landlord
will adjust the costs of all Property Operating Expenses to
assume ninety-five percent (95%) occupancy of the Building.
(B) The items of Additional Rent contemplated
under subparagraph 3(A) shall be determined in accordance with
the following procedures:
(i)Each December during the term
herof or as soon thereafter as
practical, Landlord shall give
Tenant written notice of
Landlord's estimate of any
amounts payable under
subparagraph 3(A) above for the
ensuing calendar year, together
with a copy of any tax bill upon
which Landlord's estimate of
Property Taxes is based. On or
before the first day of each
month during the ensuing calendar
year, Tenant shall pay Landlord
without further notice
one--twelfth (1/12) of such
estimated amounts, provided
that if
such notice is not given
in December, Tenant
shall continue to pay on
the basis of the then
applicable rental until
the month after such
notice is given. If at
any time or times it
appears to Landlord that
the increased amounts
payable under
subparagraph 3 (A) for
the current calendar
year will exceed its,
estimate, Landlord may,
by notice to Tenant,
revise its estimate for
such year
(i) The term "Property Operating Expenses" as used herein shall include all
costs of operation, management, and maintenance of the Property calculated on an
accrual basis for each calendar year as determined by generally accepted
accounting principles consistently applied. Property Operating Expenses shall,
by way of illustration but not limitation, include water and sewer charges;
insurance premiums; license, permit and inspection fees; fuel; heat; light;
power provided any portion of the Property other than those portions leased to
any tenant (including Tenant); janitorial and security services; labor;
salaries; air conditioning; landscaping; maintenance and repair of the Building,
ice and snow removal; supplies; materials; equipment; tools; repair or
replacement of equipment, machinery and other items of Landlord's property; the
reasonable property management fees and costs including, but not limited to,
reasonable office rent for the on--site property management office; and the cost
incurred in contesting- the validity or an assessment of Property Taxes.
Property Operating Expenses shall also include, but not be limited to, the cost
of any capital improvements made to the Property by Landlord that reduce
operating expenses or that are required under any governmental law or regulation
not previously applicable to the Property or not in effect at the time it was
constructed. Such capital cost shall be amortized over the useful life thereof,
as determined in accordance with generally accepted accounting principles,
consistently applied ("GAAP") with a return on capital at the then current prime
interest rate of the largest national bank in New York City plus two percent
(2%) or at such higher rate as may have been paid by Landlord on the funds
borrowed for the purpose of providing such capital improvements. Only the
amortized portion of such capital expenditures for any calendar year shall be
included in Property Operating Expenses for such calendar year. Property
Operating Expenses shall not include (a) depreciation; (b) interest and
amortization on debt; (c) all other capital expenses; (d) costs of correcting
latent defects; (e) costs which are reimbursed by insurance proceeds or eminent
domain awards; (f) costs of any special service to another tenant not furnished
to tenants generally and (g) costs of collecting rent from other tenants and of
enforcing lease rights against other tenants.
(ii) The term "Property Taxes" as used herein shall include all real estate
taxes or personal property taxes and other taxes,
charges and assessments, unforeseen as well as foreseen, which are levied with
respect to the Property and any improvements, fixtures and equipment and other
property of Landlord, real or personal, located in the Building or on the
Property and used in connection with the operation of the Property for each
calendar year and shall include any tax, surcharge or assessment which shall be
levied in addition to or in lieu of real estate or personal property taxes,
other than taxes covered in Paragraph 11, and shall also include any rental,
excise, sales, transaction, privilege, or other tax or levy, however
denominated, imposed upon or measured by the rental reserved hereunder or on
Landlord's business of leasing the Premises and Property, excepting only net
income taxes. Property Taxes shall be based upon the actual assessed value of
the Building, based upon Landlord's tax bill for the Building. In the event tax
assessment is not detailed, sufficiently or, in the event either party shall
dispute the tax assessor's determination of full assessment value, then Landlord
and Tenant shall look to the following two alternatives in the order given to
determine assessed value: (i) notes and records of tax assessor and (ii) any
reasonable method upon which the parties may agree.
(D) Unless Tenant takes written exception to any item in the statement referred
to in subparagraph 3(B) (ii) within ninety (90) days after the furnishing of the
statement, such statement shall be considered as final and accepted by Tenant.
Any amount due Landlord as shown on any such statement shall be paid by Tenant
within thirty (30) days after it is furnished to Tenant of any original letter
of credit delivered by Tenant to Landlopd with respect to this Lease, or the
expiration of any replace~6nt letter of credit, Tenant shall deliver to Landlord
either ~ an extension of such original or replacement letter of creditXrom the
issuing bank so long as such bank has a rating of A o~/~etter by -Moody or any
successor thereto or iii) -a replaceme_ letter of credit issued by a commercial
bank having an of _e within New Jersey (which bank shall have a rating of A or
b~ter ~ Moody or (B) -any successor thereto) containing the same ter~%as snch
- -letter of credit, except that the face amount of such Jitter of credit shall be
in the amount set forth in subparagraph,~) below. In addition, if Moody (or any
successor) lowers the p~ting of the issuing bank of the letter of credit~ then
held by ;4fldlord below A, then Tenant shall deliver to Landlord, within, thirty
(30) days after the lowering of the rating, a replace the letter of credit
issued by a commercial bank having an off)4~ within New Jersey (which bank shall
have a rating of A oy' better by Moody or any successor thereto) containing the
sag~ terms and for the face amount then required under subparagraph (D) . In the
event Tenant fails to deliver said extension~ replacement letter of credit on or
before the date set forth _ove, Landlord shall have the right to draw down the
entire a~6unt of the letter of credit. To exercise such right, (i) Landlord
shall present the letter of credit to the issuing bank at the office in New
Jersey set forth on the letter of credit and,'(ii) Landlord shall deliver to the
issuing bank a statement Landlord stating that Landlord is entitled to draw down
~ letter of credit pursuant to the provisions of Landlord, Tenant shall obtain
either (i) a new letter o redit from the issuing bank containing the same terms
an r the same face amount as the letter of credit then hel Landlord which names
the new Landlord as the benefici or (ii) the written consent of the issuing bank
to the gnment of the then existing letter of credit from the exis Landlord to
the new landlord in form and substance reason satisfactory to the new landlord.
If Tenant obtains a new ter of credit, Landlord shall surrender the existing
letter credit to Tenant simultaneously with its receipt of the ne etter of
credit; the parties agree to coordinate such deli y and surrender so that it is
done on the effective date of
sole cost and expense of Tenant. Tenant will pay for any
repairs to the Building or the Property made necessary by any
negligence or willful acts or omissions of Tenant or its
assignees, subtenants, employees or their respective agents or
other persons permitted in the Building or on the Property by
Tenant, or any of them. Tenant will also maintain the Premises
in good order and repair, and, upon termination of this Lease,
Will leaVe the Premises in -accordance with the provisions of
Paragraph 26 hereof.
PARAGRAPH 6 IMPROVEMENTS AND ALTERATIONS:
----------------------------
(A) Landlord shall construct improvements to
the Premises in preparation for Tenant's occupancy (the
"Initial Improvements") in accordance with those plans and
specifications attached hereto as Exhibit "B", which have been
reviewed and approved by Landlord and Tenant, as same may be
amended from time to time, as hereinafter provided (the
"Construction Documents")
(C) Landlord shall pay all costs in connection with constructing the Intitial
Improvements.
(C) Landlord covenants to complete
the Initial Improvements in a good and workman like
manner and shall use
reasonable speed and diligence in completing
the work, subject to Tenant Delays (as defined below) and
force majeure (as set forth in Paragraph 40)
(D)The Premises shall be conclusively deemedavailable for
Tenant's occupancy on the date that the following conditions have been met:
(a) a certificate of occupancy (whether or not subject to conditions),
permitting occupancy of the Premises has been issued by the applicable
governmental authority; and
(b) the Initial Improvements have been substantially completed in accordance
with the Construction Documents (excluding any details of construction,
decoration or mechanical adjustment which do not materially interfere with
Tenant's use of the Premises)
(E) If there occurs a Tenant Delay (as defined
below), the Commencement Date shall be the date which the
conditions set forth in subparagraph (D) would have otherwise
been satisfied but -for such Tenant Delay. The term "Tenant
Delay" shall mean any delay
in the completion of the Initial Improvements or in the satisfaction of any
conditions set forth in subparagraph (D) above which is due to any act or
omission of Tenant, its agents, employees or contractors, including, without
limitation any work performed by Tenant within the Premises prior to the
Commencement Date
of the Initial Improvements or any other work being performed
by Landlord in the Building, (b) that Tenant shall comply
promptly with all reasonable procedures and regulations
prescribed by Landlord from time to time for coordinating such
work and activities with any other activity or work in the
Premises or the Building, (c) that, prior to such access,
Tenant shall deliver to Landlord policies of insurance
required by Landlord,.- (d) that Tenant shall indemnify and
hold harmless Landlord from and against any and all claims
arising from any negligence, acts or omissions of Tenant or
its architects, engineers, contractors, decorators, servants,
agents or employees for any reason whatsoever arising out of
Tenant's access to or being in the Building or in connection
with any work to be performed for Tenant by anyone other than
Landlord, and (e) comply with all the provisions of the Lease,
other than its obligation to pay Base Annual Rent or
Additional Rent.
(I) Landlord shall have the right at any time
to change the arrangement and/or location of entrances or
passageways, doors and doorways, and corridors, (provided that
such changes do not unreasonably impair Tenant's access to the
Premises) elevators, stairs, toilets, or other public parts of
the Building or Property, and, upon giving Tenant reasonable
notice thereof, to change the name, number or designation by
which the Building or the Property is commonly known.
(J) If there is no default by Tenant under
this Lease, Tenant may, subject to subparagraph 6(K), upon
prior notice to Landlord and submission of plans and
specifications to Landlord, but without Landlord's prior
consent, make interior non--structural additions or
improvements to or alterations to the Premises having an
aggregate cost not to exceed $15,000.00 so long as the same do
not affect, alter, interfere with or disrupt any of the
electrical, mechanical, plumbing, heating, air-- conditioning,
ventilating or other systems of the Demised Premises and/or
the Building, nor affect the outside appearance or roof or any
structural element of the Building. Each such addition,
improvement or alteration (a) must not, individually or in the
aggregate, lessen the fair market renal value (as defined in
Paragraph 44) of the Premises and/or the Building, (b) shall
be completed expeditiously in a good and workmanlike manner,
and in compliance with all applicable legal and insurance
requirements and (c) shall be cothpleted free and clear of all
liens.
(K) Tenant shall not make any addition, improvement or
alteration of the Premises having an aggregate- cost in excess
of $15,000, or affecting, altering, interfering with or
disrupting any of the electrical, mechanical, plumbing or
other system of the Premises and/or the Building or affecting
the outside appearance or roof or any structural element of
the Premises and/or the Building ("Major Work") unless Tenant
submits to Landlord- detailed plans and specifications
therefor and Landlord approves such plans and specifications
in writing (which approval, shall be at Landlord's sole
discretion, except that, in the case of alterations that do
not affect any of the electrical, mechanical, plumbing or
other systefa of the Premises -and/or the Building or
affecting the outside appearance or roof o-r any structural
element of the Premises and/or the Building such consent shall
not be unreasonably withheld)
(L) All additions, improvements and
alterations of the Premises shall, upon installation, become
the property of Landlord and shall be deemed part of, and
shall be surrendered with, the Premises, unless, with respect
to improvements other than the Initial Improvements Landlord,
by notice given to Tenant at the time that it consents to such
improvements (or, if no such consent is required, within
thirty (30) days after receipt of plans therefor), elects to
relinquish Landlord's right thereto. If Landlord elects to
relinquish Landlord's right to any such addition, improvement
or alteration, Tenant shall remove said addition, improvement
or alteration, shall promptly repair any damage to the
Premises caused by said removal and shall restore the Premises
to the condition existing prior to the installation of said
addition, improvement or alteration; all such work shall be
done prior to the Expiration Date.
(M) Tenant may install or place or reinstall
or replace and remove from the Premises any trade equipment,
machinery and personal property belonging to Tenant, provided,
that (a) Tenant shall repair all damage caused by such removal
and (b) Tenant shall not install any equipment, machinery or
other items upon the roof or the exterior of the Building or
make any openings on or about the roof or the exterior of the
Building. Such trade equipment, machinery and personal
property shall not become the property of Landlord.
(N) Any work performed by Tenant, whether
prior, on or subsequent to the Commencement Date, shall be in
harmony with any other work in the Building and shall not
result in work stoppages or picketing at the Building; and
Tenant, at its own expense, shall immediately take whatever
steps are necessary to avoid such work stoppage or picketing.
(0) Tenant shall comply with all of the obligations of Tenant set forth in
"Exhibit D" in performing any addition improvement or --------- alteration in
the Premises. in this paragraph hereinafter referred to as "lien" or "liens")
arising out of any work performed, materials furnished, or obligations incurred
by or for Tenant. In the event that Tenant shall not, within ten (10) days
following the imposition of any such lien, cause the same to be released of
record by payment or posting of a proper .bond, Landlord shall have, in addition
to all other remedies provided herein or by law, the right, but- not the
obligation, to cause the same to be released by such means as it shall deem
proper, including payment of or defense against the claim giving rise to such
lien. All sums paid by Landlord and all expenses (including, without limitation,
reasonable attorneys' fees) incurred by it in connection therewith, shall create
automatically an obli9ation of Tenant to pay to Landlord an equivalent amount as
Additional Rent, which Additional Rent shall be payable by Tenant upon
Landlord's demand, with interest at the maximum rate per annum permitted by law,
until paid. To the extent permitted by law, Tenant shall require all Tenant's
contractors and materialmen to waive any and all rights they may have to file
any liens.
PARAGRAPH 8 USE OF THE PREMISES:
-------------------
(A) Tenant shall use the Premises only as set forth in Item 10 of the Basic
Lease Provisions and shall not use or permit the Premises to be used for any
other purpose without the prior written consent of Landlord. Tenant shall comply
with all laws, and shall not use or occupy the Premises in violation of law or
of the certificate of occupancy issued for the Building, and shall immediately
discontinue any use of the Premises which is declared by Landlord or any
governmental authority having jurisdiction to be a violation of law or of said
certificate of occupancy. Tenant shall comply with any direction of any
governmental authority having jurisdiction which shall, by reason of the nature
of Tenant's use or occupancy of the Premises, impose any duty upon Tenant or
Landlord with respect to the Premises or with respect to the use or occupancy
thereof. Tenant shall not do or permit to be done anything which will invalidate
or increase the cost of any fire, extended coverage or any other insurance
policy covering the Building, the Property and/or property located therein and
shall comply with all rules, orders, regulations and requirements of the
appropriate fire rating bureau or any other organization performing a similar
function. Tenant shall upon demand reimburse Landlord for the full amount of any
additional premium charged for such policy, by reason of Tenant's failure to
comply with the provisions of this paragraph. Such reimbursement shall not be
Landlord's exclusive remedy. In addition, Tenant shall not use, or suffer or
permit the Premises or any part thereof to be used in a manner which would (i)
overload the electrical, mechanical or other systems of the Building, (ii)
exceed the floor load per square foot which the floor was designed to carry,
(iii) in any way impair or (B) interfere with the proper and economic heating
and air conditioning of the Building, and (iv) impair or exceed the design
criteria, the structural integrity, character or appearance of the Building or
any system or component thereof.
of the Initial Improvements or any other work being performed
by Landlord in the Building, (b) that Tenant shall comply
promptly with all reasonable procedures and regulations
prescribed by Landlord from time to time for coordinating such
work and activities with any other activity or work in the
Premises or the Building, (c) that, prior to such access,
Tenant shall deliver to Landlord policies of insurance
reqiiiired by Landlord, (d) that Tenant shall indemnify and
hold harmless Landlord from and against any and all claims
arising from any negligence, acts or omissions of Tenant or
its architects, engineers, contractors, decorators, servants,
agents or employees for any reason whatsoever arising out of
Tenant's access to or being in the Building or in connection
with any work to be performed for Tenant by anyone other than
Landlord, and (e) comply with all the provisions of the Lease,
other than its obligation to pay Base Annual Rent or
Additional Rent.
(I) Landlord shall have the right at any time
to change the arrangement and/or location of entrances or
passageways, doors and doorways, and corridors, (provided that
such changes do not unreasonably impair Tenant's access to the
Premises) elevators, stairs, toilets, or other public parts of
the Building or Property, and, upon giving Tenant reasonable
notice thereof, to change the name, number or designation by
which the Building or the Property is commonly known.
(J) If there is no default by Tenant under
this Lease, Tenant may, subject to subparagraph 6(K), upon
prior notice to Landlord and submission of plans and
specifications to Landlord, but without Landlord's prior
consent, make interior non--structural additions or
improvements to or alterations to the Premises having an
aggregate cost not to exceed $15,000.00 so long as the same do
not affect, alter, interfere with or disrupt any of the
electrical, mechanical, plumbing, heating, air-- conditioning,
ventilating or other systems of the Demised Premises and/or
the Building, nor affect the outside appearance or roof or any
structural element of the Building. Each such addition;
improvement or alteration (a) must not, individually or in the
aggregate, lessen the fair market renal value (as defined in
Paragraph 44) of the Premises and/or the Building, (b) shall
be completed expeditiously in a good and workmanlike manner,
and in compliance with all applicable legal and insurance
requirements and (c) shall be cothpleted free and clear of all
liens.
(K) Tenant shall not make any addition, improvement or
alteration of the Premises having an aggregate cost in excess
of $15,000, or affecting, altering, interfering with or
disrupting any of the electrical, mechanical, plumbing or
other system of the Premises and/or the Building or affecting
the outside appearance or roof or any structural element of
the Premises and/or the Building ("Major Work") unless Tenant
submits to Landlord detailed plans and specifications therefor
arid Landlord approves such plans and specifications in
writing (which approval, shall be at Landlord's sole
discretion, except that, in the case of alterations that do
not affect any of the electrical, mechanical, plumbing or
other systefa of the Premises and/or the Building or affecting
the outside appearance or roof or any structural element of
the Premises and/or the Building, such consent shall not be
unreasonably withheld) . -
(L) All additions, improvements and
alterations of the Premises shall, upon installation, become
the property of Landlord and shall be deemed part of, and
shall be surrendered with, the Premises, unless, with respect
to improvements other than the Initial Improvements Landlord,
by notice given to Tenant at the time that, it consents to
such improvements (or, if no such consent is required, within
thirty (30) days after receipt of plans therefor), elects to
relinquish Landlord's right thereto. If Landlord elects to
relinquish Landlord's right to any such addition, improvement
or alteration, Tenant shall remove said addition, improvement
or alteration, shall promptly repair any damage to the
Premises caused by said removal and shall restore the Premises
to the condition existing prior to the installation of said
addition, improvement or alteration; all such work shall be
done prior to the Expiration Date.
CM) Tenant may install or place or reinstall
or replace and remove from the Premises any trade equipment,
machinery and personal property belonging to Tenant, provided,
that (a) Tenant shall repair all damage caused by such removal
and (b) Tenant shall not install any equipment, machinery or
other items upon the roof or the exterior of the Building or
make any openings on or about the roof or the exterior of the
Building. Such trade equipment, machinery and personal
property shall not become the property of Landlord.
(N) Any work performed by Tenant, whether
prior, on or subsequent to the Commencement Date, shall be in
harmony with any other work in the Building and shall not
result in work stoppages or picketing at the Building; and
Tenant, at its own expense, shall immediately take whatever
steps are necessary to avoid such work stoppage or picketing.
(0) Tenant shall comply with all of the
obligations of Tenant set forth in "Exhibit D" in performing
any addition, improvement or alteration in the Premises.
PARAGRAPH 7 LIENS: Tenant shall keep the Premises free from
any mechanics notices of intention, liens or encumbrances
(collectively in this paragraph hereinafter referred to as
"lien" or "liens") arising out of any work performed,
materials furnished, or obligations incurred by or for Tenant.
In the event that Tenant shall not, within ten (10) days
following the imposition of any such lien, cause the same to
be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other remedies
provided herein or by law, the right, but' not the obligation,
to cause the same to be released by such means as it shall
deem proper, including payment of or defense against the claim
giving rise to such lien. All sums paid by Landlord and all
expenses (including, without limitation, reasonable attorneys'
fees) incurred by it in connection therewith, shall create
automatically an obli9ation of Tenant to pay to Landlord an
equivalent amount as Additional Rent, which Additional Rent
shall be payable by Tenant upon Landlord's demand, with
interest at the maximum rate per annum permitted by law, until
paid. To the extent permitted by law,, Tenant shall require
all Tenant's contractors and materialmen to waive any and all
rights they may have to file any liens.
PARAGRAPH 8 USE OF THE PREMISES:
-------------------
(A) Tenant shall use the Premises only as set forth in Item 10
of the Basic Lease Provisions and shall not use or permit the
Premises to be used for any other purpose without the prior
written consent of Landlord. Tenant shall Comply with all
laws, and shall not use or occupy the Premises in violation of
law or of the Certificate of occupancy issued for the
Building, and shall immediately discontinue any use of the
Premises which is declared by Landlord or any governmental
authority having jurisdiction to be a violation of law or of
said certificate of occupancy. Tenant shall comply with any
direction of any governmental authority having jurisdiction
which shall, by reason of the nature of Tenant's use or
occupancy of the Premises, impose any duty upon Tenant or
Landlord with respect to the Premises or with respect to the
use or occupancy thereof. Tenant shall not do or permit to be
done anything which will invalidate or increase the cost of
any fire, extended coverage or any other insurance policy
covering the Building, the Property and/or property located
therein and shall comply with all rules, orders, regulations
and requirements of the appropriate fire rating bureau or any
other organization performing a similar function. Tenant shall
upon demand reimburse Landlord for the full amount of any
additional premium charged for such policy, by reason of
Tenant's failure to comply with the provisions of this
paragraph. Such reimbursement shall not be Landlord's
exclusive remedy. In addition, Tenant shall not use, or suffer
or permit the Premises or any part thereof to be used in a
manner which would (i) overload the electrical, mechanical or
other systems of the Building, (ii) exceed the floor load per
square foot which the floor was designed to carry, (iii) in
any way impair or interfere with the proper and economic
heating and air conditioning of the Building, and (iv) impair
or exceed the design criteria, the structural integrity,
character or appearance of the Building or any system or
component thereof.
(B) With respect to Tenant's use and occupancy
of the Premises, Tenant shall not store, use, or'dispose of
any. hazardous materials, in, on, under or about the Premises
or the Property. Tenant shall, at Tenant's own expense, comply
with the Environmental Cleanup Responsibility Act, N.J.S.A.
l3:lk--6 et seq., and all other applicable federal, state, and
local laws, promulgated with respect to hazardous substances
and the regulations promulgated thereunder (the "Hazardous
Substances Laws") . Tenant shall, at Tenant's own expense,
make all submissions to, provide all information to, and
comply with all requirements of, the New Jersey Department of
Environmental Protection or its replacement and any similar
federal, state or local department, agency, bureau or division
which is charged with the enforcement of laws regulating
hazardous wastes (the "Hazardous Substances Agencies") and
promptly comply with Landlord's requirements in connection
therewith. Should any Hazardous Substance Agency determine
that a Cleanup Plan be prepared and that a cleanup be
undertaken because of any spills or discharges of hazardous
substances or wastes at the Building or land in or on which
the Premises is located which were caused by Tenant or its
officers, employees, agents, contractors or invitees, then
Tenant shall, at Tenant's own expense, prepare and execute a
Cleanup Plan which shall be approved by such Hazardous
Substance Agency and complete the cleanup. Tenant shall
defend, indemnify and hold harmless Landlord from and against
all claims, costs, and liabilities, including attorneys' fees,
arising out of or in connection with Tenant's breach of its
obligations under this Paragraph 8. Tenant's obligations under
this paragraph 8 shall survive the expiration or earlier
termination of this Lease.
PARAGRAPH 9 UTILITIES AND SERVICES:
----------------------
(`A) Provided that Tenant is not in default
hereunder, Landlord agrees to furnish or cause to be furnished
to the Premises the following utilities and services, subject
to the conditions and standards set forth below and elsewhere
herein:
(i) Landlord shall provide automatic elevator facilities from 8:00 a.m. to 6:00
p.m., Monday through Friday (legal holidays listed in Exhibit "E" "Legal
Holidays" excepted), and shall have at least one elevator available for use at
all other times.
From 8:00 a.m. to 6:00 p.m., Monday through Friday (Legal Holidays excepted),
Landlord shall, subject to interruptions beyond Landlord's control and subject
to subparagraph 3(E), furnish heat or air--conditioning subject to any
governmental `requirements change the electric provider to the Building at any
time. Landlord may, upon sixty (60) days notice to Tenant, discontinue
furnishing electricity to the Premises, but only if Landlord discontinues
furnishing such electricity, to substantially all `of the tenants in the
Building, whereupon Tenant shall have no further obligation to pay Tenant's
Electric Charge as set forth in Paragraph 3(E) above. If Landlord so
discontinues furnishing electricity to the Premises, Tenant shall arrange to
obtain same from the public utility serving the Building and for that purpose
utilize the then existing electrical systems, feeders, risers and wiring. All
meters and additional panel boards, feeders, risers and wiring and other
conductors and equipment which may be required for Tenant to obtain electrical
energy directly from public Utility, shall be installed by Landlord at Tenant's
expense.
(iv) Landlord shall, subject to interruptions beyond Landlord's control and
other provisions hereunder, furnish the Building with water for
air--conditioning, drinking and lavatory purposes only.
(v) Landlord shall provide janitorial services to the Building and Premises, in
accordance with Exhibit "F" provided that the Premises are kept in good order by
Tenant. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish to the extent that the same exceeds the refuse and rubbish
usually attendant upon the use of the Premises as offices.
(vi) Landlord shall replace, as necessary, the fluorescent tubes in the standard
lighting fixtures installed by Landlord. Tenant agrees to reimburse Landlord
upon demand for the reasonable and competitive cost of such fluorescent tubes
,and the labor and overhead for their installation.
(B) Landlord may impose a reasonable charge, which Tenant
hereby agrees to pay upon demand, for any utilities and
services provided by Landlord by reason of any use of the
Premises at any time other than the hours of 8:00 a.m. to 6:00
p.m. Monday through Friday (excluding Legal Holidays), or any
use beyond that which Landlord agrees to furnish as described
above, or special electrical, cooling and ventilating needs
created in certain areas by telephone equipment, computers and
other similar equipment or uses. To the extent Tenant"s
electrical `usage design e,xceeds the electrical current
design capacity of the Building, then Tenant will pay all
costs of providing additional required electrical service.
(C) Tenant agrees to cooperate fully at all
times with Landlord and to abide by all regulations and
requirements which Landlord may prescribe for the use of the
above utilities and services. Any failure to pay any costs as
described above shall constitute a breach of the obligation to
pay Rent under this Lease and shall entitle Landlord to the
rights herein granted for such breach.
(D) Landlord shall not be liable for, and
Tenant shall not be entitled to, any abatement or reduction of
Rent by reason of Landlord's failure to furnish any of the
foregoing services, nor shall any such failure, stoppage or
interruption of any such service be construed either as an
eviction of Tenant, or relieve Tenant from the obligation to
perform any covenant or agreement. However, in the event of
any failure, stoppage or interruption thereof, Landlord shall
use reasonable diligence to have service resumed promptly.
(E) Notwithstanding anything herein to the
contrary, Landlord reserves the right from time to time to
make reasonable modifications to the above provisions for
utilities and services; provided, such modifications do not
diminish the level or quality of service below that level or
quality which is consistent with a first class office
building.
PARAGRAPH 10 RULES AND REGULATIONS: Tenant agrees to abide by
all rules and `regulations of the Building and Property Rules
and Regulations") imposed by Landlord as set forth in Exhibit
"G" attached hereto, and as the same may be changed from time
to time upon reasonable notice to Tenant. Landlord shall not
enforce these Rules and Regulations arbitrarily among tenants.
Landlord shall not be liable for the failure of any tenant,
its agents or employees to conform to the Rules and
Regulations.
PARAGRAPH 11 TAXES ON TENANT'S PROPERTY:
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(A) Tenant shall be liable for and shall pay not later than
ten (10) days before delinquency, all taxes, levies and
assessments levied against any personal property or trade
fixtures placed by Tenant in or about the Premises. If any
such taxes, levies and assessments on Tenant's personal
property or trade fixtures are levied against Landlord or
Landlord's property or if the assessed value of the Building
or the Property is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of
Tenant and if Landlord pays the taxes, levies and assessments
based upon such' increased -assessment, Tenant shall, within
five days after demand therefore, repay to Landlord the taxes,
levies and assessments so levied against Landlord, or the
proportion of such taxes, levies and assessments resul-ting
from such increase in the assessment, together with interest
thereon at the default rate determined in accordance with
paragraph 36 of this Lease.
(B) If the Tenant Improvements, whether
installed and/or paid for by Landlord or Tenant and whether or
not affixed to the real property so as to become a part
thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which tenant
improvements conforming to building standard (as determined by
Landlord) are assessed, then the real property taxes and
assessments levied against Landlord or the Property by reason
of such excess assessed valuation shall be deemed to be taxes
levied against personal property of Tenant and shall be
governed by the provisions of subparagraph 11(A). If the
records of the tax assessor are available and sufficiently
detailed to serve as a basis for determining whether said
Tenant Improvements are assessed at a higher valuation than
building standard, such records shall be binding on both
Landlord and Tenant; otherwise, the actual cost of construction
shall be the basis for such determination.
PARAGRAPH 12 INTENTIONALLY OMITTED.
PARAGRAPH 13 FIRE OR CASUALTY:
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(A) In the event that the Property (regardless
of whether the Premises or access thereto is affected) is so
damaged or destroyed to the extent of more than one--third
(1/3) of its replacement- cost, or to any substantial extent by
a casuality not covered by Landlord's insurance or during the
last two years of this Lease, Landlord, upon giving thirty (30)
days notice to Tenant, may elect to terminate this Lease.
(B) In the event the Premises are completely
destroyed or so badly damagedthat, in Landlord's reasonable
opinion, repairs to the Premises cannot be completed within two
hundred seventy (270) days from the date of damage or
destruction, Landlord will so notify Tenant, in which event
this Lease may be terminated by either Landlord or Tenant by
giving thirty (30) days advance written notice, said notice to
be given within 15 days following receipt of Landlord's notice.
In the event Tenant shall fail to
terminate this Lease as provided in this subparagraph (B)
then, Tenant shall thereafter have no further right to so
terminate based upon the provisions of this subparagraph (B).
(C) If this Lease is not terminated as
provided in Subparagraph 13 (A) and 13 (B) , or if the damage
or destruction `is other than as provided in Subsection 13 (a)
and 13(b)., then Landlord shall commence within ninety (90)
days after such damage or destruction to rebuild, repair or
restore the Premises and access thereto to substantially the
same condition as when the-same were delivered to Tenant,
excluding any improvements owned by Tenant, and the Lease
shall continue in full force and effect.
(D) If this Lease is terminated as provided above, Tenant's
obligation to pay Rent hereunder shall cease as of the date of damage or
destruction if Premises are rendered untenantable. (E) Landlord shall in no
event be obligated to make any repairs or replacement of any fixtures,
furniture, equipment or other property (real or personal) owned by Tenant. If
the lease is not terminated but the Premises are rendered totally untenantable,
Rent shall abate during the period of such untenantability. Tenant acknowledges
(1) that Landlord shall not obtain insurance of any kind on Tenant Improvements,
alterations, additions and improvements to the Premises owned by Tenant or on
Tenant's furniture, fixtures, equipment and other personal property, (ii) that
it is Tenant's obligation to obtain such insurance at Tenant's sole cost and
expense, and (iii) that Landlord shall not be obligated to repair any damage
thereto or replace the same. The provisions of this Paragraph 13 shall be
considered an express agreement governing any case of damage or destruction of
the Premises by fire or other casualty, and any law of the State of New Jersey,
providing for such a contingency in the absence of an express agreement, and any
other law of like import, now or hereafter in force, shall have no application
in such case.
PARAGRAPH 14 EMINENT DOMAIN: In case the whole
of the premises, or such part thereof as shall substantially
interfere with Tenant's use and occupancy thereof, shall be
taken by any lawful power or authority by exercise of the
power of eminent domain, this Lease shall terminate effective
as of the date possession is required to be surrendered to
said authority. In the event of any taking (in whole or part)
of the Property whether or not the Premises or access thereto
are affected thereby, which taking in Landlord's judgment will
render continued operation of the Property economically
unfeasible, Landlord shall have the right to terminate this
Lease. Except as provided herein, Tenant shall not, because of
any taking, assert any claim against Landlord or the taking
authority for any compensation because of such taking, and
Landlord shall be entitled to receive the entire amount of any
award without deduction for any estate or interest of Tenant.
In the event the amount of property or the type of estate
taken shall not substantially interfere with Tenant's use of
the Premises, and Landlord does not terminate this Lease,
Landlord shall proceed to restore the Premises (to the extent
permitted by the taking) to substantially their condition
prior to such partial taking, and a proportionate allowance
shall be made to Tenant (D) At any time within thirty (30)
days after Landlord's receipt of the information specified in
subparagraph (C) above, Landlord may by written notice to
Tenant, elect (I) to take from Tenant a sublease of the
Premises or the portion thereof proposed to be subleased by
Tenant, or to take an assignment of Tenant's leasehold estate
hereunder, or such part thereof as shall be specified in said
notice, upon the same terms as those offered to the proposed
subtenant or assignee, as the case may be; (ii) to give Tenant
written consent to the proposed assignment or sublease,
provided that the Rent payable monthly by the Tenant to the
Landlord under the terms of this Lease shall be increased by a
sum equal to all rental and other considerations received by
Tenant from its subtenant or assignee in excess of the Rent
payable by Tenant under the terms of this Lease, net of
Tenant's reasonable and customary costs incurred in connection
with procuring such assignment or sublease; (iii) to terminate
this Lease as to the portion (including all) of the Premises
proposed to be subleased or assigned, with a proportionate
abatement in the Rent payable hereunder; or (iv) to deny
consent, in writing, to Tenant's proposed sublet or
assignment.
(E) Landlord shall not unreasonably exercise
its rights under subparagraph (D) (iv) above, provided, all
the following conditions are present: (j) Tenant shall send
notice to Landlord, in writing, including all the information
specified in subparagraph (C) above; (ii) the subtenant or
assignee is of high quality, character and financial stability
consistent with the high standards of the Building as
determined by Landlord in Landlord's reasonable business
judgment; (iii) the proposed subtenant or assignee is not a
party then occupying space in the Building or party who has
negotiated with Landlord for comparable space in the Building
for a comparable term as the term hereof, within the six (6)
month period preceding the date of Tenant's notice pursuant to
this subparagraph (E); (iv) Tenant shall not have publicly
advertised the availability for assignment, sublease or
occupancy of all or any part of the Premises at a rental rate
lower than the rate at which Landlord is then offering to
lease similar space in the Building, (v) the proposed assignee
or subtenant is not a governmental agency or body, or school,
(vi) the assignee or subtenant does not engage in the business
of leasing or subleasing executive suites, and (vii) in the
case of a sublease, the space to be subleased is more than 50%
of the Premises. (F) If `Tenant is a corporation, an
unincorporated association or partnership, the transfer,
assignment or hypothecation of any stock or interest in such
corporation, association or partnership, in the aggregate in
excess of twenty--five (25%) percent, shall be deemed an
assignment within the meaning and provisions of this Paragraph
15, except that Tenant shall have the ri'ght to assign this
Lease or sublease the Premises, without Landlord's consent, to
any entity that is controlled by, under common control with,
or controls Tenant. As used herein, the term "control" shall
mean the power to direct the' affairs of such entity or the
power to vote a majority of the equity interests of such
entity.
(G) Tenant shall not be entitled to make, nor
shall Tenant make, any claim, and Tenant hereby waives any
claims, for money damages (nor shall Tenant claim any money
damages by way of set-off, counterclaim, or defense) based
upon any claim or assertion by Tenant that Landlord' has
unreasonably delayed its consent or approval to a proposed
assignment or subletting as provided for in this paragraph.
Tenant's sole remedy shall be an action or proceeding to
enforce any such provision, or for Specific performance,
injunction, or declaratory judgment.
PARAGRAPH 16 LANDLORD'S ACCESS TO PREMISES: Landlord reserves
and shall at any and all reasonable times and upon advance
notice to Tenant (except in the case of an emergency) have the
right to enter the Premises to inspect the same, to supply
janitor service and any other service to be provided by
Landlord to Tenant hereunder, to show said Premises to
prospective purchasers, mortgagees, or tenants, to alter or
repair the Premises or any portion of the Building or
Property, all without being deemed guilty of an eviction of
Tenant and without abatement of Rent, and may for that purpose
erect scaffolding and other necessary structures where
reasonably required by the character of the work to be
performed, provided that Landlord shall take reasonable steps
to minimize interference with Tenant's business.
Notwithstanding anything to the contrary contained in the
immediately preceding sentence, Landlord `--shall not be
required to incur any additional expense, or employ after
hours labor to satisfy Landlord's obligations under this
Paragraph 16. Tenant hereby waives any claim for damages or
any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby. For each of
the aforesaid purposes, Landlord shall at all times have and
retain a key with which to unlock all of the doors in, upon
and about the Premises, excluding Tenant's vaults and safes,
and Landlord shall have the right to use any and all means
which Landlord may deem proper tO open said doors in an
emergency in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord by any of said
means shall not under any circumstances be construed or deemed
to be a forcible or unlawful entry into, or a detainer of the
Premises, or any eviction of Tenant from the Premises or any
portion thereof. No provision of this Lease shall be construed
as obligating Landlord to perform any repairs, alterations or
decoration except as otherwise expressly agreed to be
performed by Landlord.
PARAGRAPH 17 SUBORDINATION, ATTORNMENT, ESTOPPEL CERTIFICATES:
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(A) This Lease is junior, subject, and
subordinate to all ground leases, mortgages, deeds of trust,
and other security instruments of any kind now covering the
Property or any portion thereof. Landlord reserves the right
to place liens or encumbrances on the Property or any part
thereof or interest therein superior in lien and effect to
this Lease. This Lease, at the option of Landlord, shall be
subject and subordinate to any and all such liens or
encumbrances now or hereafter imposed by Landlord without the
necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such
subordination. Notwithstanding the foregoing, Tenant covenants
and agrees to execute and deliver upon request such further
instruments evidencing such subordination of this Lease as may
be requested by Landlord.
(B) Tenant shall at any time and from time to
time upon not less than ten (10) days prior notice by
Landlord, execute, acknowledge and deliver to Landlord a
statement in writing and in form and substance satisfactory to
Landlord certifying that this Lease is unmodified and in full
force and effect (or if there have been modifications, that
the same is in full force and effect as modified and stating
the modifications), and the dates to which the Basic Annual
Rent, Additional Rent and other charges have been paid in
advance, if any, and stating whether or not to the best
knowledge of Tenant, Landlord is in default in the performance
of any covenant, agreement or condition contained in this
Lease and, if so, specifying each such default of which Tenant
may have knowledge and such other matters as may be reasonably
requested by Landlord or any lender or purchaser of the
Property. Any such statement delivered pursuant to this
Paragraph 17 may be relied upon by any prospective purchaser
of the fee of the Building or the Property or any mortgagee,
ground lessor or other encuxnbrancer thereof or any assignee
of any such person. Tenant shall also, at any time, and from
time to time, upon not less than ten (10) days prior notice by
Landlord execute and deliver to Landlord forms and documents
as may be necessary for compliance with any applicable law,
statute, ordinance, rule or regulation.
(C) Tenant agrees that in the event that any holder of any
ground or underlying lease, mortgage, deed of trust, or other
encumbrance encumbering any part of the Property succeeds to
Landlord's interest in the Premises, Tenant shall pay to such
holder,all rents subsequently payable under this Lease and
shall, upon request of any such person or party succeeding to
Landlord's interest, automatically become the Tenant of and
attorn to such successor in interest without change in the
terms or provisions of this Lease. Such successor in interest
shall not be bound by (i) any payment of Basic Monthly Rental
Installments for more t,han one month in advance,' or (ii) any
amendment modification of this Lease made without the written
consent of such successor in interest. Upon request by such
successor in interest and without cost to Landlord or such
successor in interest, Tenant shall execute, acknowledge, and
deliver an instrument or instruments confirming the attornment
PARAGRAPH 18 SALE BY LANDLORD: In the event of a sale or
conveyance by Landlord of the Property or any part thereof,
subject to the provisions of Paragraph 4 above, the same shall
operate to release Landlord from any and all liability under
this Lease accruing after the date of such conveyance of title.
PARAGRAPH 19 INDEMNIFICATION AND INSURANCE:
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(A) Tenant shall indemnify, hold Landlord
harmless from and defend Landlord against any and all claims,
losses, costs, damages, expenses or liabilities, including
without limitation reasonable attorneys' fees, for any injury
or damages to any person or property whatsoever, arising out
of or in connection with (I) any act, neglect, fault, or
omission of Tenant, its agents, servants, employees or
invitees, (ii) any act or occurrence within the Premises, or
(iii) any default by Tenant under the provisions of this
Lease. This indemnity shall not require any payment by
Landlord as a condition precedent to recovery. In addition, if
any person not a party to this Lease shall institute any other
type of action against Tenant in which Landlord shall be made
a party defendant, Tenant shall indemnify, hold Landlord
harmless from and defend Landlord from all liabilities and
costs by reason thereof. For the purposes of this subparagraph
19(A), the term "Landlord" shall also include as indemnitees,
as the case may be, Landlord's servants employees, officers,
agents, and/or contract managers.
(B)Tenant hereby agrees to maintain in full force and effect at all times during
the term of this Lease, at its own expense, for the protection of Tenant and
Landlord as their interests may appear, policies of insurance issued by a
responsible carrier or carriers acceptable to Landlord (with deductible amounts
acceptable to Landlord) which afford the following coverages: (ii) Comprehensive
General ---Not Less than $5,000,000
Liability Insurance combined single limit for Including Blanket bodily injury,
property Contractual Liability, Broad damage and fire damage Form Property
Damage, Personal Injury, Fire Damage
(iii) Automobile liability for ----Not less than $1,000 000, 000 owned,
non--owned, or hired combined single limit for vehicles operated on the bodily
injury and property Property damage
Landlord, and any other person or entity reasonably designated
by Landlord, shall be named as an additional insured on all
policies listed under (ii) and (iii)
(iv) All Risk Property Coverage in an
amount sufficient to cover the full
cost of replacement of all
improvements and betterments to the
Premises owned by Tenant and all of
Tenant's fixtures and other personal
property.
(C) Tenant shall deliver to Landlord at least thirty
(30) days prior to the time such insurance is first required
to be carried by Tenant, and thereafter at least thirty (30)
days prior to expiration of each such policy, certificates of
insurance evidencing the above coverage with limits not less
than those specified above. Such certificate, with the
exception of Worker's Compensation, shall expressly provide
that the interest of Landlord therein shall not be affected by
any breach by Tenant of any provision of any such policy.
Further, all certificates shall expressly provide that no less
than thirty (30) days prior written notice shall be given
Landlord in the event of material alterations to or
cancellation of the coverages evidenced by such certificates.
(D) Upon demand, Tenant shall provide
Landlord, at Tenant's expense, with such increased amount of
existing insurance, and such other insurance in such limits as
Landlord may reasonably require and such other hazard insurance
as the nature and condition of the Premises may require in the
judgment of Landlord, to afford Landlord adequate protection
for said risks.
(D) If on account of the failure of
Tenant to comply with the provisions
of this Paragraph 19, Landlord is
adjudged a co-insurer by its
insurance carrier, then any loss or
damage Landlord shall sustain by
reason thereof shall be borne by
Tenant and shall be immediately paid
by Tenant upon receipt of a bill
therefor and evidence of such loss.
(F) Landlord makes no representation that the limits of liability specified to
be carried by Tenant under the terms of this Lease are adequate to protect
Tenant against Tenant's undertaking under this Paragraph 19. In the event Tenant
believes that any such insurance coverage called for under this Lease is
insufficient, Tenant shall provide, at its own expense, such additional
insurance as Tenant deems adequate.
PARAGRAPH 20 WAIVER OF SUBROGATION: Tenant and Landlord each agree that the
respective insurance carried by it against loss or damage by fire or other
casualty shall contain a clause whereby the insurer waives its right of
subrogation against the other party. Pursuant to the foregoing, Landlord and
Tenant hereby waive all claims for recovery from the other party for any loss or
damage to any of its property insured under valid and collectible insurance
policies to the extent of any recovery collectible under such insurance.
PARAGRAPH 2]. NO WAIVER: No failure by Landlord to insist upon the strict
performance of any covenant, agreement, term or condition of this Lease, or to
exercise any right or remedy consequent upon a breach thereof, and no acceptance
of full or partial Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement, term or
condition. Landlord's waiver, if any, shall only be as expressly stated in
writing and signed by Landlord. No consent or waiver by Landlord to or of any
breach of any covenant, condition or duty of Tenant shall be construed as a'
consent or waiver to or of any other breach of the same ,or any other covenant,
condition or duty, unless expressly stated otherwise in writing and signed by
Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the Rent and additional charges payable hereunder shall be deemed to be other
than a payment on account of the earliest stipulated Rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment for Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance o'f such Rent or pursue any other remedy provided herein or by law.
PARAGRAPH 22 DEFAULT:
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(A) The occurrence of any of the following shall constitute a material default
and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay the Rent or to make any other payment required
to be
made by Tenant hereunder;
(ii) The abandonment of the Premises by Tenant; (iii) Any failure by Tenant to
observe and perform any of its other obligations under this Lease, where such
failure continues for ten (10) days (except where a different period of time is
specified in this, Lease) after federal, state or other law for the relief of
debtors;
(vii) Tenant fails to obtain the dismissal, within thirty (30) days after the
commencement thereof of any ` bankruptcy, reorganization or insolvency
proQeeding, or other proceeding under any law for the relief of debtors,
instituted against it by one or more third parties, or fails caused directly or
indirectly by Tenant's failure to perform its obligations under this Lease
including, but not limited to, reasonable attorneys' fees and costs; plus
(iv) , ` at Landlord's election, such other amounts if any,
shall be held by Landlord and applied in payment of future
Rent as the same may become due and payable hereunder. Should
any such reletting result in the payment of rentals less than
the Rent payable by Tenant hereunder, then Tenant shall pay
such deficiency to Landlord immediately upon demand therefor
by Landlord. Tenant shall also pay Landlord as soon as
ascertained, any costs and expenses incurred-by Landlord in
such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
(A) On the expiration or the sooner
termination hereof, Tenant shall peaceably surrender the
Premises broom clean, in good order, condition and repair. On
or before the last day of the Lease term or the sooner
termination herof, Tenant shall at its expense remove its trade
fixtures, signs and other personal property from the Premises.
Any property not removed shall be deemed abandoned and may
either be retained by Landlord as its property, or disposed of,
without accountability and at Tenant's expense, in such manner
as Landlord may determine. If the Premises are not surrendered
at the end of the Lease term or the sooner termination Tenant
shall indemnify Landlord against loss or liability resulting
from delay by Tenant in so surrendering the Premises,
including, without limitation, claims made by any succeeding
tenants founded on such delay. Tenant shall promptly surrender
all keys for the Premises and Building restrooms to Landlord at
the place then fixed for payments of Rent. Tenant's covenants
hereunder shall survive the expiration or termination of this
Lease.
(B) If Tenant holds over after the expiration
or sooner termination hereof without the express written
consent of Landlord, Tenant shall become a Tenant at sufferance
only at two times the greater of (i) the Rent due hereunder or
(ii) the then prevailing market rate rent, as determined by
Landlord in its sole and absolute discretion, plus all items of
Additional Rent provided herein, and otherwise upon the terms,
covenants and conditions herein specified, so far as
applicable. Acceptance by Landlord of Rent after such
expiration or earlier termination shall not constitute a
consent to a holdover hereunder or result in a renewal. The
foregoing provisions of this paragraph are in addition to and
do not affect Landlord's rights of reentry or any other rights
of Landlord hereunder or as otherwise provided by law.
PARAGRAPH 27 CONDITION OF PREMISES: Landlord's responsibility
with respect to the condition of the Premises is set forth in
Landlord's Work Letter. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation
or warranty with respect to the Premises, the Building or the
Property or with respect to the suitability of any part of the
Property for the conduct of Tenant's business. The taking of
possession of the Premises by Tenant shall conclusively
establish that the Building and the Premises were at such time
in good order and repair.
PARAGRAPH 28 QUIET POSSESSION: Upon Tenant's paying the rent
reserved hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant's part to be
observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject
to all of the provisions `of this Lease. This covenant shall
be binding upon any landlord hereunder only during its
respective ownership of the Premises.
PARAGRAPH 29 LIMITATION OF LANDLORD'S LIABILITY:
----------------------------------
(A) Landlord'and its employees' and-agents
shall not be liable for any damage to Tenant's property
entrusted to employees of Landlord or its agents, nor for any
loss or interruption of Tenant's possession, nor for loss of or
damage to any property by theft or otherwise, nor for any
injury or damage to property resulting from fire, explosion
falling plaster, steam, gas, electricity, water or rain which
may leak from any part of the Building or from the pipes,
appliances or plumbing works therein or from the roof, street
or sub-surface or from any other place or resulting from
dampness or any other cause whatsoever in the Building or the
Property. Landlord and its employees and agents shall not be
liable for any property loss resulting from any latent defect
in the Premises or in the Building. Tenant shall give prompt
notice to Landlord in case of fire, accidents or defects in the
Premises or in the Building.
(B) Tenant shall look solely to Landlord's
estate and property in the Property (or the proceeds thereof)
for th,e satisfaction of Tenant's remedies for the collection
of a judgment (or other judicial process) requiring the payment
of money by Landlord in the event of any default by Landlord
hereunder, and no other property or assets of Landlord or
Landlord's partners or members shall be subject to levy,
execution or other enforcement procedure for the satisfaction
of Tenant's remedies under or with respect to either this
Lease, the relationship of Landlord and Tenant hereunder, or
Tenant's use and occupancy of the Premises.
PARAGRAPH 30 GOVERNING LAW: This Lease shall be governed by. and construed
pursuant to the law of the State of New
--------------
Jersey.
PARAGRAPH 31 COMMON FACILITIES: Tenant shall have the
non-exclusive right in common with others, to the use or
"common entrances, lobbies, elevators, stairs and other common
facilities in and adjacent to the Building or Property, as may
be provided by Landlord from time to time for general use,
subject to such rules and regulations as may be adopted by the
Landlord including, but not limited to, the right to close
from time to time all or any portion of said common facilities
to such extent as may be legally sufficient, in Landlord's
sole opinion, to prevent a dedication thereof or the accrual
of rights to any person or to the public, therein.
PARAGRAPH 32 SUCCESSORS AND ASSIGNS: Except as otherwise
provided in this Lease, all of the covenants, conditions and
provisions of this Lease shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns.
However, the obligations of Landlord under this Lease shall
not be binding upon Landlord. herein named with respect to any
period subsequent to the transfer of its interest in the
Property as owner or lessee thereof, and in the event of sudh
transfer said obligations shall thereafter be binding upon
each transferee of the interest of Landlprd herein named as
such owner or lessee of the `Property, but only with respect
to the period commencing with its respective transfer in and
ending with a subsequent transfer out, and such transferee, by
accepting such interest, shall be deemed to have assumed such
obligations except only as may be expressly otherwise provided
in this Lease. Any lease of all or substantially all of
Landlord's interest in the Property as owner or lessee thereof
shall be deemed a transfer, to the tenant under such lease,
within the meaning of Paragraph 32.
PARAGRAPH 33 BROKERS:
-------
(A) Tenant represents and agrees that it has
not directly or indirectly dealt with any real estate
broker(s) other than the firm(s) specified in Item 9 of the
Basic Lease Provisions in connection with this transaction.
Tenant agrees to defend, indemnify and hold Landlord harmless
from and against any claims for brokerage commission or
finder's fee arising out of or based on any alleged actions of
Tenant with' any other broker or brokers.
(C) Landlord represents and agrees that it has not directly or
indirectly dealt with any real estate broker(s) other than
the firm(s) specified in Item 9 of the Basic Lease
Provisions in connection with this transaction. Landlord
agrees to defend, indemnify and hold Tenant harmless from
and against any claims for brokerage commission or
finder's fee arising out of or based on any alleged
actions of Landlord with any other broker or brokers.
Landlord agrees to pay any commissions or fees payable to
the real estate broker specified in Item 9 of the Basic
Lease Provisions pursuant `to- the terms of a separate
(A) On the expiration or the sooner
termination hereof, Tenant shall peaceably surrender the
Premises broom clean, in good order, condition and repair. On
or before the last day of th.e Lease term or the sooner
termination hereof, Tenant shall at its expense remove its
trade fixtures, signs and other personal property from the
Premises. Any property not removed shall be deemed abandoned
and may either be retained by Landlord as its property, or
disposed of, without accountability and at Tenant's expense,
in such manner as Landlord may determine. If the Premises are
not surrendered at the end of the Lease term or the sooner
termination Tenant shall indemnify Landlord against loss or
liability resulting from delay by Tenant in so surrendering
the Premises, including, without limitation, claims made by
any succeeding tenants founded on such delay. Tenant shall
promptly surrender all keys for the Premises and Building
restrooms to Landlord at the place then fixed for payments of
Rent. Tenant's covenants hereunder shall survive the
expiration or termination of this Lease.
(B) If Tenant holds over after the expiration
or sooner termination hereof without the express written
consent of Landlord, Tenant shall become a Tenant at
sufferance only at two times the greater of (i) the Rent due
hereunder or (ii) the then prevailing market rate rent, as
determined by Landlord in its sole and absolute discretion,
plus all items of Additional Rent provided herein, and
otherwise upon the ternis, covenants and conditions herein
specified, so far as applicable. Acceptance by Landlord of
Rent after such expiration or earlier termination shall not
constitute a consent to a holdover hereunder or result in a
renewal. The foregoing provisions of this paragraph are in
addition to and do not affect Landlord's rights of reentry or
any other rights of Landlord hereunder or as otherwise
provided by law.
PARAGRAPH 27 CONDITION OF PREMISES: Landlord's responsibility
with respect to the condition of the Premises is set forth in
Landlord's Work Letter. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation
or warranty with respect to the Premises, the Building or the
Property or with respect to the suitability of any part of the
Property for the conduct of Tenant's business. The taking of
possession of the Premises by Tenant shall conclusively
establish that the Building and the Premises were at such time
in good order and repair.
PARAGRAPH 28 QUIET POSSESSION Upon Tenant's paying the rent
reserved hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant's part to be
observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject
to all of the provisions of this Lease. This covenant shall be
binding upon any landlord hereunder only during its respective
ownership of the Premises.
PARAGRAPH 29 LIMITATION OF LANDLORD'S LIABILITY:
----------------------------------
(A) Landlordand its employees andagents shall
not be liable for any damage to Tenant's property entrusted to
employees of Landlord or its agents, nor for any loss or
interruption of Tenant's possession, nor for loss of or damage
to any property by theft or otherwise, nor for any injury or
damage to property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak
from any part of the Building or from the pipes, appliances or
plumbing works therein or from the roof, street or sub-surface
or from any other place or resulting from dampness or any
other cause whatsoever in the Building or the Property.
Landlord and its employees and agents shall not be liable for
any property loss resulting from any latent defect in the
Premises or in the Building. Tenant shall give prompt notice
to Landlord in case of fire, accidents or defects in the
Premises or in the Building.
(B) Tenant shall look solely to Landlord's
estate and property in the Property (or the proceeds thereof)
for the satisfaction of Tenant's remedies for the collection
of a judgment (or other judicial process) requiring the
payment of money by Landlord in the event of any default by
Landlord hereunder, and no other property or assets of
Landlord or Landlord's partners or members shall be subject to
levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to
either this Lease, the relationship of Landlord and Tenant
hereunder, or Tenant's use and occupancy of the Premises.
PARAGRAPH 30 GOVERNING LAW: This Lease shall be governed by and construed
pursuant to the law of the State of New Jersey.
-------------
PARAGRAPH 31 COMMON FACILITIES: Tenant shall have the
non-exclusive right in common with others, to the use or
common entrances, lobbies, elevators, stairs and other common
facilities in and adjacent to the Building or Property, as may
be provided by Landlord from time to time for general use,
subject to such rules and regulations as may be adopted by the
Landlord including, but not limited to, the right to close
from time to time all or any portion of said common facilities
to such extent as may be legally sufficient, in Landlord's
sole opinion, to prevent a dedication thereof or the accrual
of rights to any person or to the public therein.
PARAGRAPH 32 SUCCESSORS AND ASSIGNS: Except as otherwise
provided in this Lease, all of the covenants, conditions and
provisions of this Lease shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns.
However, the obligations of Landlord under this Lease shall
not be binding upon Landlord. herein named with respect to any
period subsequent to the transfer of its interest in the
Property as owner or lessee thereof, and in the event of sudh
transfer osaid obligations shall thereafter be binding upon
each transferee of the interest of Landlprd herein named as
such owner or lessee of the Property, but only with respect to
the period commencing with its respective transfer in and
ending with a subsequent transfer out, and such transferee, by
accepting such interest, shall be deemed to have assumed such
obligations except only as may be expressly otherwise provided
in this Lease. Any lease of all or substantially all of
Landlord's interest in the Property as owner or lessee thereof
shall be deemed a transfer, to the tenant under such lease,
within the meaning of Paragraph 32.
PARAGRAPH 33 BROKERS:
-------
(A) Tenant represents and agrees that it has
not directly or indirectly dealt with any real estate
broker(s) other than the firm(s) specified in Item 9 of the
Basic Lease Provisions in connection with this transaction.
Tenant agrees to defend, indemnify and hold Landlord harmless
from and against any claims for brokerage commission or
finder's fee arising out of or based on any alleged actions of
Tenant with any other broker or brokers.
(B) Landlord represents and agrees that it has not directly or indirectly dealt
with any real estate broker(s) other than the firm(s) specified in Item 9 of the
Basic Lease Provisions in connection with this transaction. Landlord agrees to
defend, indemnify and hold Tenant harmless from and against any claims for
brokerage commission or finder's fee arising out of or based on any alleged
actions of Landlord with any other broker or brokers. Landlord agrees to pay any
commissions or fees payable to the real estate broker specified in Item 9 of the
Basic Lease Provisions pursuant to the terms of a separate agreement.
(C) If, after the date hereof, either Landlord or Tenant shall
employ, retain or consult with any real estate broker or brokers other than the
firms specified in Item 9 of the Basic Lease Provisions in connection with any
matters pertaining to this Lease, the Premises or the Property, the employing
party hereby agrees to pay the broker or brokers and the employing party hereby
agrees to defend, indemnify and to hold harmless the other party hereto from and
against any claims for brokerage commission or finder's fee arising out of or
based on any alleged actions of the employing party with respect to said broker
or brokers not specified in Item 9.
(A) Tenant shall not, without the written consent of Landlord, use the name of
the Building or the Property for any purpose other than as the address of the
business to be conducted by Tenant in the Premises, and in no event shall Tenant
acquire any rights in or to such names. Landlord reserves the right, to change
the name and/or address of the Building or Property at. any time and from time
to time, and agrees to give reasonable notice of same to Tenant.
(B) It is understood and agreed that the architectural design,
aesthetic appeal and use of the Building and the Property are and shall remain
always in the sole control of Landlord. Therefore, notwithstanding anything to
the contrary contained herein, Landlord does hereby reserve the right from time
to time and at any timeto make changes and additions, without restriction, to
the Building and the Property, improvements or other areas, including without
limitation, eliminating land, adding other lands, decreasing or changing the
Building and the Property, which are deemed desirable by Landlord, and the
making of such changes or additions shall not invalidate or affect this Lease or
any rights hereunder nor constitute an eviction of Tenant or a breach of this
Lease, nor give rise to any claim for damages. Notwithstanding the foregoing
provisions, Landlord represents and confirms that no such changes will
unreasonably and substantially interfere with Tenant's use and occupancy of the
Premises or Tenant's access to the Building.
PARAGRAPH 35 EXAMINATION OF LEASE: Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Landlord and Tenant.
PARAGRAPH 36 ADDITIONAL CHARGES: Unless prohibited by law, if any amount
due hereunder is not paid by Tenant when due, Landlord may impose a late
charge of four (4%) percent of the amount past due, and a charge for
reasonable legal fees and costs. In addition to the foregoing, any amount
due from Tenant to Landlord which is not paid within thirty (30) days after
due, in addition to other remedies available to Landlord shall, at
Landlord's Option, bear interest which shall be at the lesser of (i)
eighteen (18%) percent per annum or (ii) the maximum lawful rate per annum,
from the date such payment is due until the date actually paid, but the
payment of such interest shall not excuse or cure the default. PARAGRAPH 37
DEFINED TERMS AND ADDITIONAL HEADINGS: The words "Landlord" and "Tenant" as
used herein shall, as the case may be, include the plural as well as the
singular. If more than one person or entity is named as Tenant the
obligations of such persons or entities are joint and several. The marginal
headings and titles to the Paragraphs of this Lease are not a part of this
Lease and shall have no effect upon. the construction or interpretation of
any part hereof. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party causing
this Lease to be drafted.
because Landlord is unable to fulfill any of its obligations
under this Lease, if Landlord is prevented or delayed from so
doing by reason of any cause beyond Landlord's reasonable
control including, but not limited to, Acts of God, strikes,
labor troubles, shortage of materials, governmental preemption
in connection with a national emergency or by reason of any
rule, order or regulations of any governmental agency or by
reason of war, hostilities or similar emergency; provided that
Landlord shall in each instance exercise reasonable diligence
to effect performance as soon as possible. It is agreed that
Landlord shall not be required to incur any overtime or
additional expenses in Landlord's reasonable diligence to
effect the performance of any of Landlord's obligations
hereunder.
PARAGRAPH 41 NO LIGHT AIR OR VIEW EASEMENT: Any diminution or
shutting off of light, air or view by any structure which may
be erected on lands adjacent to the Building shall in no way
affect this Lease or impose any liability on Landlord.
PARAGRAPH 42 AUTHORITY AND SIGNATORIES: If Tenant executes
this Lease in other than individual capacity, each of the
persons executing this Lease on behalf of Tenant does hereby
personally covenant and warrant that Tenant is a duly
authorized and existing entity as herein represented, that
Tenant was and is qualified to do business in the State of New
Jersey, that the Tenant has full right and authority to enter
into this Lease, and that each person signing on behalf of the
Tenant is authorized to do so. Upon Landlord's request, the
Tenant's signatories hereto will furnish satisfactory evidence
of Tenant's authorization, and their personal authority on
behalf of Tenant, to execute this Lease.
PARAGRAPH 43 MISCELLANEOUS:
-------------
(A) If Landlord is unable to deliver
possession of the Premises to Tenant as of the Commencement
Date as a result of the existing tenant holding over or for
any other reason, such failure shall, not affect the validity
of this Lease and Landlord shall not be liable for any damages
which Tenant may incur as a result of the delay in -the
Commencement Date. In such event, the Commencement Date shall
occur on the date Landlord is able to deliver possession of
the Premises to Tenant.
(B) Landlord represents that the elevators, HVAC system and other building
systems are Year 2000 compliant.
(C) Tenant shall be entitled to 5 unassigned parking spaces in
the parking lot located at McCarter Highway, across from the
Building, provided, that (i) Tenant is not in default under
this Lease, and (ii) Tenant pays to the parking lot operator
Landlord's cost for such spaces, which is currently $55.00 per
car per month. Tenant recognizes that Landlord's agreement
with the parking lot operator is an annual agreement, and may
be . canceled pursuant to the terms thereof upon 120 days'
notice. The provisions of this section shall automatically be
terminated and of no further force and effect if such
agreement is canceled or terminated for any reason. Any
default by Tenant under such agreement shall be a default
under this Lease.
(D) Landlord agrees to install within the
Building, at Landlord's sole cost and expense, a satellite
dish serving the Premises, providing Direct TV or comparable
service. Tenant shall be responsible for contracting with the
satellite TV provider for the actual TV service, and shall pay
all charges in connection therewith. Landlord reserves the
right to replace the satellite TV provider with another
satellite TV or cable provider in connection with providing
such service to the Building generally.
IN WITNESS WHEREOF, the parties hereto have
executed this Lease, consisting of the foregoing and
Paragraphs 1 through 45 which follow, together with Exhibits
"A" through "H", inclusive, incorporated herein by this
reference as of the date first above written.
LANDLORD:
TREMONT CAPITAL CORP.
By:__
Name:
COMMENCEMENT DATE MEMORANDUM
THIS AGREEMENT made as of of _______ between
TREMONT CAPITAL CORP., a Texas corporation, having an office
c/o Fairfield Financial Group, 8 Greenway Plaza, Suite 1100,
Houston, Texas 77046, ("Landlord"), and REDSTONE SECURITIES,
INC., a ________________ corporation, having an office at 101
Fairchild Avenue, Plainview, New York 11803 ("Tenant")
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a
Lease dated August ____, 1999 ("Lease") setting forth the
terms of occupancy by Tenant for the a portion of the Seventh
floor at 550 Broad Street, Newark, New Jersey; and
WHEREAS, the Lease is for an initial term of 5 years with the "Commencement
Date" of the term being defined in Basic Lease Provisions; and
WHEREAS, it has been determined in accordance with these
provisions that __________ , 1999 is the Commencement Date of the initial term
of the Lease.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter set forth, it is agreed:
1. The Commencement Date of the initial term of the Lease is ___________--, 1999
and the Expiration
Date thereof is
, 2004.
2. This agreement is executed by the parties for purposes of providing a record
of the commencement and termination
RULES AND REGULATIONS
1. The sidewalks, and public portions, of the
Building, such as entrances, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be
obstructed or encumbered by any tenant or used for any purpose
other than ingress and egress to and from the demised premises
("demised premises" in this Exhibit D shall mean the
"Premises" as set forth in the Lease)
2. No awniiigs or other projections shall be
attached to the outside walls of the Building. No curtains,
blinds, shades, louvered openings or screens shall be attached
to or hung in, or used in connection with, any window or door
of the demised premises, without the prior written consent of
Landlord, unless installed by Landlord.
3. No sign, advertisement, notice or other
lettering shall be exhibited, inscribed, painted or affixed by
any tenant on any part of the outside of the demised premises
or Building or on corridor walls. Signs on entrance door or
doors shall conform to building standard signs, samples of
which are available on request. Signs on doors shall, at the
tenant's expense, be inscribed, painted or affixed for each
tenant by sign makers approved by Landlord. In the event of
the violation of the foregoing by any tenant, Landlord may
remove same without any liability, and may charge the expense
incurred by such removal to the tenant or tenants violating
this rule. Landlord shall provide for Tenant's use, Tenant's
percentage share of the space within any building directory.
4. The sashes, sash doors, skylights, windows,
heating, ventilating and air conditioning vents and door that
reflect or adniit light and air into the halls, passageways or
other public places in the Building shall not be covered or
obstructed by any tenant, nor shall any bottles, parcels, or
other articles be placed outside of the demised premises.
5. No show cases or other articles shall be
put in front of or affixed to any part of the exterior of the
Building, nor placed in the public halls, corridors or
vestibules without the prior written consent of Landlord.
6. The water and wash closets and other
plumbing fixtures shall not be used for any purposes other
than those for which they were constructed, and no sweepings,
rubbish, rags, or other substances shall be thrown therein.
All damages resulting from any misuse of the fixtures shall be
borne by the tenant who, or whose servants, employees, agents,
visitors or licensees, shall have caused the same.
7. No tenant shall in any way deface any part
of the demised premises or the Building. No tenant shall lay
linoleum, or other similar floor covering,' so that the same
shall come in direct contact with the floor of the demised
Premises, and, if linoleum or other similar floor covering is
desired to be used, an interlining of builder's deadening felt
shall be first affixed to the-floor, by a paste or other
material, soluble in water, the use of cement or other similar
adhesive material being expressly prohibited.
8. No bicycles, vehicles or animals of any kind (except seeing eye dogs) shall
be brought into or kept in or about the Premises.
9. No cooking shall be done or permitted by Tenant in the
Premises except in conformity to law and then only in the cafeteria kitchen. No
tenant shall cause or permit any unusual or objectionable odors to be produced
upon or permeate from the Premises.
10. No space in the Building shall be used for manufacturing
or distribution or for the storage of merchandise, or for the sale at auction or
otherwise of merchandise, goods or property of any kind.
11. No tenant shall make, or permit to be made, any unseemly
or disturbing noises or disturb or interfere with occupants of the Building or
neighboring buildings or premises or those having business with them whether by
the use of any musical instrument, radio, or in any other way.
12. No tenant, nor any of the tenant's servants, employees,
agents, visitors or licensees, shall at any time bring or keep upon the premises
any inflammable, combustible or explosive fluid, or chemical substance, other
than reasonable amounts of cleaning fluids and solvents required in the normal
operation of tenant's business offices.
13. No additional locks or bolts of any kind shall be placed
upon any of the doors or windows by any tenant, nor shall
any changes be made in existing locks or the mechanism
thereof, without the prior written approval of the
Landlord and unless and until a duplicate key is delivered
to Landlord. Each tenant must,. upon the termination of
his tenancy, restore to the Landlord all keys of offices
and toilet rooms, either furnished to, or otherwise
procured by, such tenant, and in the event of the loss of
any keys, so furnished, such tenant shall pay to Landlord
the cost thereof.
14. All removals, or the carrying in or out of
any safes, freight, furniture or bulky matter of any
description must take place during the hours which Landlord or
its agent may determine from time to time. Landlord reserves
the right to inspect all freight to be brought into the
Building and to exclude from the Building `all freight which
violates any of these Rules and Regulations or the Lease of
which these Rules and Regulations are a part.
15. No tenant shall occupy or permit any portion of the premises demised to it
to be occupied as, by or for a public stenographer or typist, barber shop,
bootblacking, beauty shop or manicuring, beauty parlor, telephone or telegraph
agency, employment agency, public restaurant or bar, commercial document
reproduction or offset printing service, public vending machines, retail,
wholesale or discount shop for sale of merchandise, retail service shop, labor
union, school or classroom, governmental or quasi--governmental bureau,
department or agency, including an autonomous governmental corporation, a firm
the principal business of which is real estate brokerage, or a company engaged
in the business of renting office or desk space; or for a public finance
(personal loan) business, or for manufacturing. No tenant shall engage or pay
any employees on the demised premises, except those actually working for such
tenant on said premises, nor advertise for laborers giving an address at said
Premises. Nothing herein shall be interpreted to prevent Tenant from making up
at the Premises payroll and payroll checks for employees at other location.
16. Landlord shall have the right to prohibit any advertising
by any tenant mentioning the Building which, in Landlord's reasonable opinion,
tends to impair the reputation of the Building or its desirability as a building
for offices, and upon written notice from Landlord, tenant shall refrain from
and discontinue such advertising.
17. In order that the Building can and will maintain a. uniform
appearance from the outside, each Tenant in building perimeter areas shall (a)
use only building standard lighting, as defined in Work Letter, in areas where
lighting is visible from outside of the Building and (b) use only four inch (4")
horizontal blinds in window areas which are visible from the outside of the
Building.
18. Landlord reserves the right to exclude from the Building between the hours
of 6:00 p.m. and 8:00 a.m. and at all hours on non--business days all persons
who do not present a pass to the Building signed by a tenant. Each tenant shall
be responsible for all persons for whom such pass is issued and shall be liable
to Landlord for all acts of such persons.
19. The premises shall not be used for
lodging or sleeping or for any immoral or illegal purpose.
20. AL' Landlord's" option, tenants shall purchase from
Landlord or its designee all lighting tubes, lamps, bulbs and ballasts used in
the demised premises and tenants' shall pay Landlord's actual competitive and
reasonable costs including reasonable overhead and profit for providing and
installing same, on demand.
21. Canvassing, soliciting and peddling in the Building are prohibited and each
tenant shall cooperate to prevent the same.
22. There shall not be used in any space, or in the public
halls of any building, either by any tenant or by jobbers or others, in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and side guards. No hand trucks shall be used in passenger
elevators.
23. Tenants, in order to obtain maximum effectiveness of the
cooling system, shall lower and/or close venetian or vertical blinds or drapes
when sun's rays fall directly on windows of demised Premises.
24. Replacement of ceiling tiles if removed by Tenant or its
contractors in both the demised premises and the public corridors, will be
charged to Tenant on a per tile basis. Landlord's charge will be actual
competitive costs plus reasonable overhea'd and profit.
25. All paneling, grounds or other wood products which are
incorporated in construction of fire rated assembly shall be of fire retardant
materials. Before installation of any such materials, certification of the
materials' fire retardant characteristics shall be submitted to Landlord, or its
agents, in a manner satisfactory to the Landlord.
26. Tenant shall not in any way obstruct or interfere with
the' rights of other tenants or occupants of the Building or the Property or
injure or annoy them, or use or allow the Premises to be used for any unlawful
or objectionable purpose, nor shall Tenant cause, maintain, or permit any
nuisance in, on, or about the Premises. Tenant shall not commit or suffer to be
committed any, waste in or upon the Premises.
27. It is understood and agreed that Tenant shall not place a load on any floor
of the premises exceeding the floor load
<PAGE>
5
<PAGE>
per square foot area which such floor was designed to carry
and which is allowed by law. Landlord reserves the right to
prescribe the weight and position of all safes, vaults, and
other equipment which must be placed so as to distribute the
weight. Business machines and mechanical equipment shall be
placed and maintained by the Tenant, at Tenant's expense, in
settings sufficient in the Landlord's judgment to absorb and
preverit vibrations, noise and annoyance.
19. Whenever and to the extent that the above rules conflict with any of the
rights or obligations of Tenant pursuant to the provisions of the Paragraphs of
the Lease, the provisions of the Paragraphs shall govern
The Cleaning Services will be made to the entire Building as indicated including
office space, entrance lobby, public corridors, elevator cabs, staifways and.
lavatories
NIGHTLY SERVICES:
- ----------------
1. Dust, sweep floors.
2. Sweep all stairways.
3. Wipe drinking fountains.
4. Empty wastebaskets of normal general office
wastepaper.
5. Clean cigarette urns and ash trays.
6. Remove normal general office wastepaper and waste materials to a designated
area in the premises..
7. Vacuum carpeted areas and rugs.
8. Damp mop floors.
9. Clean elevator cab.
WEEKLY SERVICES:
- ---------------
1. Dust furniture, fixtures, desk equipment, telephones and window sills.
2. Dust baseboards, chair rails, trim, doors, etc., within reach.
3. Clean entrance door glass.
B I-WEEKLY SERVICES:
- - -----------------
1. Clear stairways, office and utility doors.
MONTHLY SERVICES:
- ----------------
1. Wash partitions, tile walls and enamel surfaces.
OCCASIONAL SERVICES:
- -------------------
1. Dust pictures, frames, charts and similar wall hangings not reached in
nightly cleaning. 2. Dust exterior of lighting fixtures. 3. Dust venetian
blinds. 4. Dust vertical surfaces such as partitions, ventilating louvers, etc.,
not reached in nightly2. Wash and polish mirrors, powder shelves, bright work,
etc. 3. Clean and sanitize commodes, toilet seats, wash basins and urinals. 4.
Dust partitions, tile walls, dispensers, doors and receptacles. 5. Empty and
clean towel and sanitary disposal receptacles. 6. Remove wastepaper and refuse
to a designated area in the premises. 7. Fill toilet tissue, soap and towel
dispensers with supplies.
OCCASIONAL SERVICE - RESTROOM AREA:
- ----------------------------------
1. High dust walls and ceilings.
2. Dust exterior of lighting fixtures.
ENTRANCE LOBBIES & PUBLIC AREAS, AS REQUIRED:
- --------------------------------------------
1. Sweep and wash flooring and vacuum carpeting.. 2. Clean cigarette urns. 3.
Dust and clean electric fixtures and any other' fittings in public corridors. 4.
Exterior windows and glass and interior glass doors and partition glass will be
washed inside and outside as required, but not more than three (3) times per
year.
OUTSIDE SERVICE, AS REQUIRED:
----------------------------
1. Sweep driveways and curbs.
2. Sweep and clean sidewalks.
3. Remove snow from driveways, sidewalks, steps and
parking areas.
PREMPLACE LIMITED PARTNERSHIP,
AS LANDLORD, AND
INSTITUTIONAL EQUITY HOLDINGS, INC.,
AS TENANT
DATED AUGUST 18, 1999
PREMIER PLACE
DALLAS, TEXAS
<PAGE>
BASIC LEASE INFORMATION
Lease Date: August 18, 1999
Landlord: PREM1LACE LIMITED PARTNERSHIP, a Delaware limited partnership Tenant:
INSTITUTIONAL EQUITY HOLDINGS, INC., a Nevada corporation Premises: Suite No.
1480, containing 7,059 rentable square feet, in the office building commonly
known as Premier Place (the "Buildin2"), and whose street address is 5910 North
Central Expressway, Dallas, Texas 75206. The Premises are outlined on the plan
attached to the Lease as Exhibit A. The land on --------- which the Building is
located (the "Land") is described on Exhibit B. The term "Building" includes the
- --------- related land, driveways, parking facilities, and similar improvements.
Term: Approximately 62 months, commencing on the Commencement Date and ending at
5:00 pm. local time on the last day of the 62nd full calendar month following
the Commencement Date, subject to adjustment and earlier termination as provided
in the Lease.
Commencement Date: The earliest of(a) the date on which Tenant occupies any
portion of the Premises and begins conducting business therein, (b) the date on
which the Work (as defined in Exhibit D hereto) in the Premises is Substantially
Completed (as defined in Exhibit D hereto), or (c) the date on which the Work in
the Premises would have been Substantially Completed but for the occurrence of
any Tenant Delay Days (as defmed in
Exhibit D hereto).
------- -
Subject to the abatement of Basic Rent as provided in Exhibit I hereto, Basic
Rent shall be the following amounts for the following periods of time
<PAGE>
As used herein, the term "Lease Month" shall mean each calendar month during the
Term (and if the Commencement Date does not occur on the first day of a calendar
month, the period from the Commencement Date to the first day of the next
calendar month shall be included in the first Lease Month for purposes of
determining the duration of the Term and the monthly Basic Rent rate applicable
for such partial
month).
Security Deposit: $112,353.25.
Basic Rent, Tenant's Proportionate Share of Taxes and Electrical Costs, Tenant's
share of Additional Rent, and all other sums that Tenant may owe to Landlord or
otherwise be required to pay under the Lease.
THIS LEASE AGREEMENT (this "Lease") is entered into as
of August 18, 1999, between PREMPLACE LIMITED PARTNERSHIP,
a Delaware limited partnership ("Landlord"), and INSTITUTIONAL EQUITY HOLDINGS,
INC., a Nevada corporation ("Tenant").
1. Definitions and Basic Provisions. The definitions and basic
provisions set forth in the Basic Lease Information (the "Basic Lease
Information") executed by Landlord and Tenant contemporaneously herewith are
incorporated herein by reference for all purposes. Additionally, the following
terms shall have the following meanings when used in this Lease: "Affiliate"
means any person or entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
party in question; "Buildin2's Structure" means the Building's exterior walls,
roof, elevator shafts, footings, foundations, structural portions of
load-bearing walls, structural floors and subfloors, and structural columns and
beams; "Building's Systems" means the Building's HYAC, life-safety, plumbing,
electrical, and mechanical systems; "including" means including, without
limitation; "Laws" means all federal, state, and local laws, rules and
regulations, all court orders, governmental directives, and governmental orders,
and all restrictive covenants affecting the Building, and "Law" shall mean any
of the foregoing; and "Tenant Party" means any of the following persons: Tenant;
any assignees claiming by, through, or under Tenant; any subtenants claiming by,
through, or under Tenant; and any of their respective agents, contractors,
employees, and invitees.
2. Lease Grant. Subject to the terms of this Lease, Landlord leases to Tenant,
and Tenant leases from ------------
Landlord, the Premises.
3. Tender of Possession. Landlord and Tenant presently anticipate that
possession of the Premises will be tendered to Tenant (with the Work to be
performed by Landlord therein, if any, Substantially Completed) on or about
September 15, 1999 (the "Estimated Delivery Date"). If Landlord is unable to
tender possession of the Premises in such condition to Tenant by the Estimated
Delivery Date, then (a) Landlord shall not be in default hereunder or be liable
for damages therefor, and (b) Tenant shall accept possession of the Premises
when Landlord tenders possession thereof to Tenant. By occupying the Premises,
Tenant shall be deemed to have accepted the Premises in their condition as of
the date of such occupancy, subject to the performance of punch-list items that
remain to be performed by Landlord, if any. Tenant shall execute and deliver to
Landlord, within ten days after Landlord has requested the same, a letter
substantially in the form of Exhibit E hereto confirming (1) the Commencement
Date and the expiration date of the initial Term, (2) that Tenant has accepted
the Premises, and (3) that Landlord has performed all of its obligations with
respect to the Premises (except for punch-list items specified in such letter).
Occupancy of the Premises by Tenant prior to the Commencement Date shall be
subject to all of the provisions of this Lease excepting only those requiring
the payment of Basic Rent, Additional Rent, Taxes and Electrical Costs (each as
defmed herein).
4. Rent.
(a) Payment. Tenant shall timely pay to Landlord Rent, without notice,
demand, deduction or set off (except as otherwise expressly
provided herein), at Landlord's address provided for in this Lease
or as otherwise specified by Landlord and shall be accompanied by
all applicable state and local sales or use taxes. Basic Rent,
adjusted as herein provided, shall be payable monthly in advance.
The first monthly installment of Basic Rent shall be payable
contemporaneously with the execution of this Lease; thereafter
Basic Rent shall be payable on the first day of each month beginning on the
first day of the second full calendar month of the Term. The monthly Basic Rent
for any partial month at the beginning of the Term shall equal the product of
1/365 of the annual Basic Rent in effect during the partial month and the number
of days in the partial month from and after the Commencement Date, and shall be
due on the Commencement Date.
(b) Operating Costs: Taxes: Electrical Costs.
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(1) Tenant shall pay to Landlord the amount (per each rentable
square foot in the Premises) ("Additional Rent") by which the annual Operating
Costs (defined below) per rentable square foot in the Building exceed the
Expense Stop (per rentable square foot in the Building). Landlord may make a
good faith estimate of the Additional Rent to be due by Tenant for any calendar
year or part thereof during the Term. During each calendar year or partial
calendar year of the Term (after the base year, if the Expense Stop is
calculated on a base year basis), Tenant shall pay to Landlord, in advance
concurrently with each monthly installment of Basic Rent, an amount equal to the
estimated Additional Rent for such calendar year or part thereof divided by the
number of months therein. From time to time, Landlord may estimate and
re-estimate the Additional Rent to be due by Tenant and deliver a copy of the
estimate or re-estimate to Tenant. Thereafter, the monthly installments of
Additional Rent payable by Tenant shall be appropriately adjusted in accordance
with the estimations so that, by the end of the calendar year in question,
Tenant shall have paid all of the Additional Rent as estimated by Landlord. Any
amounts paid based on such an estimate shall be subject to adjustment as herein
provided when actual Operating Costs are available for each calendar year.
(b) (2) The term Operating Costs" shall mean all expenses and disbursements
(subject to the l imitations set forth below) that
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Landlord incurs in connection with the ownership, operation, and maintenance of
the Building, determined in accordance with sound accounting principles
consistently applied, including the following costs: (A) wages and salaries
(including management fees) of all on-site employees at or below the grade of
senior building manager engaged in the operation, maintenance or security of the
Building (together with Landlord's reasonable allocation of expenses of off-site
employees at or below the grade of senior building manager who perform a portion
of their services in connection with the operation, maintenance or security of
the Building), including taxes, insurance and benefits relating thereto; (B) all
supplies and materials used in the operation, maintenance, repair, replacement,
and security of the Building; (C) costs for improvements made to the Building
which, although capital in nature, are expected to reduce the normal operating
costs (including all utility Costs) of the Building, as amortized using a
commercially reasonable interest rate over the time period reasonably estimated
by Landlord to recover the costs thereof taking into consideration the
anticipated cost savings, as determined by Landlord using its good faith,
commercially reasonable judgment, as well as capital improvements made in order
to comply with any Law hereafter promulgated by any governmental authority or
any interpretation hereafter rendered with respect to any existing Law, as
amortized using a commercially reasonable interest rate over the useful economic
life of such improvements as determined by Landlord in its reasonable
discretion; (D) cost of all utilities, except Electrical Costs and the cost of
other utilities reimbursable to Landlord by the Building's tenants other than
pursuant to a provision similar to this Section 4(b); (E) insurance expenses;
(F) repairs, replacements, and general maintenance of the Building; and (G)
service or maintenance contracts with independent contractors for the operation,
maintenance, repair, replacement, or security of the Building (including alarm
service, window cleaning, and elevator maintenance).
Operating Costs shall not include costs for (i) capital improvements made to the
Building, other than capital improvements described in Section 4.(b)(2)(C) and
except for items which are generally considered maintenance and repair items,
such as painting of common areas, replacement of carpet in elevator lobbies, and
the like; (ii) repair, replacements and general maintenance paid by proceeds of
insurance or by Tenant or other third parties; (iii) interest, amortization or
other payments on loans to Landlord; (iv) depreciation; (v) leasing commissions;
(vi) legal expenses for services, other than those that benefit the Building
tenants generally (e.g., tax disputes); (vii) renovating or otherwise improving
space for occupants of the Building or vacant space in the Building; (viii)
Taxes; and (ix) federal income taxes imposed on or measured by the income of
Landlord from the operation of the Building. If the Expense Stop is calculated
on a base year basis, Operating Costs for the base year only shall not include
market-wide labor-rate increases due to extraordinary circumstances, including
boycotts and strikes; utility rate increases due to extraordinary circumstances,
including conservation surcharges. boycotts, embargos or other shortages; or
amortized costs relating to capital improvements.
(3) Tenant shall also pay its Proportionate Share of any
increase in Taxes for each year and partial year falling within the Term over
the Taxes for the Base Tax Year. Tenant shall pay its Proportionate Share of
Taxes in the same manner as provided above for Additional Rent with regard to
Operating Costs. "Taxes" shall mean taxes, assessments, and governmental charges
or fees whether federal, state, county or municipal, and whether they be by
taxing districts or authorities presently taxing or by others, subsequently
created or otherwise, and any other taxes and assessments (including
non-governmental assessments for common charges under a restrictive covenant or
other private agreement that are not treated as part of Operating Costs) now or
hereafter attributable to the Building (or its operation), excluding, however,
penalties and interest thereon and federal and state taxes on income (if the
present method of taxation changes so that in lieu of the whole or any part of
any Taxes, there is levied on Landlord a capital tax directly on the rents
received therefrom or a franchise tax, assessment, or charge based, in whole or
in part, upon such rents for the Building, then all such taxes, assessments, or
charges, or the part thereof so based, shall be deemed to be included within the
term "Taxes" for purposes hereof). Taxes shall include the costs of consultants
retained in an effort to lower taxes and all costs incurred in disputing any
taxes or in seeking to lower the tax valuation of the Building. For property tax
purposes, Tenant waives all rights to protest or appeal the appraised value of
the Premises, as well as the Building, and all rights to receive notices of
reappraisement as set forth in Sections 41.413 and 42.015 of the Texas Tax Code.
(4) Tenant shall also pay to Landlord Tenant's Proportionate
Share of the cost of all electricity used by the Building ("Electrical Costs").
Such amount shall be payable in monthly installments on the Commencement Date
and on the first day of each calendar month thereafter. Each installment shall
be based on Landlord's estimate of the amount due for each month. From time to
time during any calendar year, Landlord may estimate or re-estimate the
Electrical Costs to be due by Tenant for that calendar year and deliver a copy
of the estimate or re-estimate to Tenant. Thereafter, the monthly installments
of Electrical Costs payable by Tenant shall be appropriately adjusted in
accordance with the estimations.
(5) By April 1 of each calendar year, or as soon thereafter as
practicable, Landlord shall furnish to Tenant a statement of Operating Costs and
Electrical Costs for the previous year, in each case adjusted as provided in
Section 4(b)(6), and of the Taxes for the previous year (the "Operating Costs
and Tax Statement"). If the Operating Costs and Tax Statement reveals that
Tenant paid more for Operating Costs or Electrical Costs than the actual amount
for the year for which such statement was prepared, or more than its actual
share of Taxes for such year, then Landlord shall common with other tenants,
provided that Landlord may reasonably limit the number of operating elevators
during non-business hours and holidays; and(S) electrical current during normal
business hours for equipment that does not require more than 110 volts and whose
electrical energy consumption does not exceed normal office usage. Landlord
shall maintain the common areas of the Building in reasonably good order and
condition, except for damage caused by a Tenant Party. If Tenant desires any of
the services specified in Section 7.(a)(2): (A) at any time other than between
7:00 a.m. and 6:00 p.m. on weekdays and between 8:00 a.m. and 1:00 p.m. on
Saturday (in each case other than holidays), or (B) on Sunday or holidays, then
such services shall be supplied to Tenant upon the written request of Tenant
delivered to Landlord before 3:00 p.m. on the business day preceding such extra
usage, and Tenant shall pay to Landlord the cost of such services within 30 days
after Landlord has delivered to Tenant an invoice therefor. The costs incurred
by Landlord in providing after-hour HVAC service to Tenant shall include costs
for electricity, water, sewage, water treatment, labor, metering, filtering, and
maintenance reasonably allocated by Landlord to providing such service.
(b) Excess Utility Use. Landlord shall not be required to
furnish electrical current for equipment that requires more than 110 volts or
other equipment whose electrical energy consumption exceeds normal office usage.
If Tenant's requirements for or consumption of electricity exceed the
electricity to be provided by Landlord as described in Section 7(a), Landlord
shall, at Tenant's expense, make reasonable efforts to supply such service
through the then-existing feeders and risers serving the Building and the
Premises, and Tenant shall pay to Landlord the cost of such service within 30
days after Landlord has delivered to Tenant an invoice therefor. Landlord may
determine the amount of such additional consumption and potential consumption by
any verifiable method, including installation of a separate meter in the
Premises installed, maintained, and read by Landlord, at Tenant's expense.
Tenant shall not install any electrical equipment requiring special wiring or
requiring voltage in excess of 110 volts or otherwise exceeding Building
capacity unless approved in advance by Landlord. The use of electricity in the
Premises shall not exceed the capacity of existing feeders and risers to or
wiring in the Premises. Any risers or wiring required to meet Tenant's excess
electrical requirements shall, upon Tenant's written request, be installed by
Landlord, at Tenant's cost, if, in Landlord's judgment, the same are necessary
and shall not cause permanent damage to the Building or the Premises, cause or
create a dangerous or hazardous condition, entail excessive or unreasonable
alterations, repairs, or expenses, or interfere with or disturb other tenants of
the Building. If Tenant uses machines or equipment in the Premises which affect
the temperature otherwise maintained by the air conditioning system or otherwise
overload any utility, Landlord may install supplemental air conditioning units
or other supplemental equipment in the Premises, and the cost thereof, including
the cost of installation, operation, use, and maintenance, shall be paid by
Tenant to Landlord within 30 days after Landlord has delivered to Tenant an
invoice therefor.
(c) Restoration of Services; Abatement. Landlord shall use reasonable
efforts to restore any service required of it that becomes
unavailable; however, such unavailability shall not render
Landlord liable for any damages caused thereby, be a constructive
eviction of Tenant, constitute a breach of any implied warranty,
or, except as provided in the next sentence, entitle Tenant to any
abatement of Tenant's obligations hereunder. If, however, Tenant
is prevented from using the Premises for more than five
consecutive business days because of the unavailability of any
such service and such unavailability was not caused by a Tenant
Party, then Tenant shall, as its exclusive remedy be entitled to a
reasonable abatement of Rent for each consecutive day (after such
five-day period) that Tenant is so prevented from using the
Premises.
(a) Improvements Alterations. Improvements to the Premises shall be installed at
Tenant's expense
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only in accordance with plans and specifications which have been previously
submitted to and approved in writing by Landlord, which approval shall be
governed by standards in the following sentence. No alterations or physical
additions in or to the Premises may be made without Landlord's prior written
consent, which shall not be unreasonably withheld or delayed; however, Landlord
may withhold its consent to any alteration or addition that would adversely
affect (in the reasonable discretion of Landlord) (1) the Building's Structure
or the Building's Systems (including the Building's restrooms or mechanical
rooms), (2) the exterior appearance of the Building, or (3) the appearance of
the Building's common areas or elevator lobby areas. Tenant shall not paint or
install lighting or decorations, signs, window or door lettering, or advertising
media of any type on or about the Premises without the prior written consent of
Landlord, which shall not be unreasonably withheld or delayed; however, Landlord
may withhold its consent to any such painting or installation which would affect
the appearance of the exterior of the Building or of any common areas of the
Building. All alterations, additions, and improvements shall be constructed,
maintained, and used by Tenant, at its risk and expense, in accordance with all
Laws; Landlord's consent to or approval of any alterations, additions or
improvements (or the plans therefor) shall not constitute a representation or
warranty by Landlord, nor Landlord's acceptance, that the same comply with sound
architectural and/or engineering practices or with all applicable Laws, and
Tenant shall be solely responsible for ensuring all such compliance.
(b) Repairs Maintenance. Tenant shall maintain the Premises in a
clean, safe, and operable condition, and shall not permit or allow to remain any
waste or damage to any portion of the Premises. Tenant shall repair or replace,
subject to Landlord's direction and supervision, any damage to the Building
caused by a Tenant Party. If Tenant fails to make such repairs or replacements
within 15 days after the occurrence of such damage, then Landlord may make the
same at Tenant's cost. If any such damage occurs outside of the Premises, then
Landlord may elect to repair such damage at Tenant's expense, rather than having
Tenant repair such damage. The cost of all repair or replacement work performed
by Landlord under this Section S shall be paid by Tenant to Landlord within 30
days after Landlord has invoiced Tenant therefor.
(c) Performance of Work. All work described in this Section 8
shall be performed only by Landlord or by contractors and subcontractors
approved in writing by Landlord. Tenant shall cause all contractors and
subcontractors to procure and maintain insurance coverage naming Landlord as an
additional insured against such risks, in such amounts, and with such companies
as Landlord may reasonably require. All such work shall be performed in
accordance with all Laws and in a good and workmanlike manner so as not to
damage the Building (including the Premises, the Building's Structure and the
Building's Systems). All such work which may affect the Building's Structure or
the Building's Systems must be approved by the Building's engineer of record, at
Tenant's expense and, at Landlord's election, must be performed by Landlord's
usual contractor for such work.
(d) Mechanic's Liens. Tenant shall not permit any mechanic's
liens to be filed against the Premises or the Building for any work performed,
materials furnished, or obligation incurred by or at the request of Tenant. If
such a lien is filed, then Tenant shall, within ten days after Landlord has
delivered notice of the filing thereof to Tenant (or such earlier time period as
may be necessary to prevent the forfeiture of the Building or any interest of
Landlord therein or the imposition of a civil or criminal fine with respect
thereto), either (1) pay the amount of the lien and cause the lien to be
released of record, or (2) diligently contest such lien and deliver to Landlord
a bond or other security reasonably satisfactory to Landlord. If Tenant fails to
timely take either such action, then Landlord may pay the lien claim, and any
amounts so paid, including expenses and interest, shall be paid by Tenant to
Landlord within ten days after Landlord has invoiced Tenant
therefor. All materialmen, contractors, artisans, mechanics, laborers and any
other persons now or hereafter contracting with Tenant or any contractor or
subcontractor of Tenant for the furnishing of any labor, services, materials,
supplies or equipment with respect to any portion
of the Premises, at any time from the date hereof until the end
of the Term, are hereby charged with notice that they look
exclusively to Tenant to obtain payment for same. Nothing
herein shall be deemed a consent by Landlord to any liens being
placed upon the Building or Landlord's interest therein due to
any work performed by or for Tenant.
9. . Tenant shall continuously occupy and use the Premises only for the
Permitted Use and shall comply with all Laws relating to the use, condition,
access to, and occupancy of the Premises. The population density within the
Premises as a whole shall at no time exceed one person for each 300 rentable
square feet in the Premises. Tenant shall not conduct second or third shift
operations within the Premises; however, Tenant may use the Premises after
normal business hours, so long as Tenant is not generally conducting business
from the Premises after normal business hours. The Premises shall not be used
for any use which is disreputable, creates extraordinary fire hazards, or
results in an increased rate of insurance on the Building or its contents, or
for the storage of any Hazardous Materials (other than typical office supplies
photocopier toner] and then only in compliance with all Laws). Tenant shall not
use any substantial portion of the Premises for a "call center," any other
telemarketing use, or any credit processing use. If, because of a Tenant Party's
acts, the rate of insurance on the Building or its contents increases, then such
acts shall be an Event of Default, Tenant shall pay to Landlord the amount of
such increase on demand, and acceptance of such payment shall not waive any of
Landlord's other rights. Tenant shall conduct its business and control each
other Tenant Party so as not to create any nuisance or unreasonably interfere
with other tenants or Landlord in its management of the Building.
10. Assignment and SubIetting
(a) Transfers. Except as provided in Section 10(g), Tenant shall
not, without the prior written consent of Landlord, (1) assign, transfer, or
encumber this Lease or any estate or interest herein, whether directly or by
operation of law, (2) permit any other entity to become Tenant hereunder by
merger, consolidation, or other reorganization, (3) if Tenant is an entity other
than a corporation whose stock is publicly traded, permit the transfer of an
ownership interest in Tenant so as to result in a change in the current control
of Tenant, (4) sublet anyportion ofthe Premises, (5) grant any license,
concession, or otherright of occupancy of any portion of the Premises, or 6
permit the use of the Premises by any parties other than Tenant (any of the
events listed in Section I0(a)(l) through lO.(a)(6) being a "Transfer").
(b) Consent Standards. Landlord shall not unreasonably withhold
its consent to any assignment or subletting of the Premises, provided that the
proposed transferee (A) is creditworthy, (B) has a good reputation in the
business community, (C) will use the Premises for the Permitted Use (thus,
excluding, without limitation, uses for credit processing and telemarketing) and
will not use the Premises in any manner that would conflict with any exclusive
use agreement or other similar agreement entered into by Landlord with any other
tenant of the Building, (D) is not a governmental entity, or subdivision or
agency thereof, and (E) is not another occupant of the Building or person or
entity with whom Landlord is negotiating to lease space in the Building;
otherwise, Landlord may withhold its consent in its sole discretion.
(c) Request for Consent. If Tenant requests Landlord's consent
to a Transfer, then, at least 15 business days prior to the effective date of
the proposed Transfer, Tenant shall provide Landlord with a written description
of all terms and conditions of the proposed Transfer, copies of the proposed
documentation, and the following information about the proposed transferee: name
and address; reasonably satisfactory information about its business and business
history; its proposed use of the Premises; banking,
financial, and other credit information; and general references sufficient to
enable Landlord to determine the proposed transferee's creditworthiness and
character. Concurrently with Tenant's notice of any request for consent to a
Transfer, Tenant shall pay to Landlord a fee of $1,000 to defray Landlord's
expenses in reviewing such request, and Tenant shall also reimburse Landlord
immediately upon request
for its reasonable attorneys' fees incurred in connection with
considering any request for consent to a Transfer.
(d) Conditions to Consent. If Landlord consents to a proposed Transfer, then the
proposed transferee --------------------- shall deliver to Landlord a written
agreement whereby it expressly assumes Tenant's obligations hereunder; however,
any transferee of less than all of the space in the Premises shall be liable
only for obligations under this Lease that are properly allocable to the space
subject to the Transfer for the period of the Transfer. No Transfer shall
release Tenant from its obligations under this Lease, but rather Tenant and its
transferee shall be jointly and severally liable therefor. Landlord's consent to
any Transfer shall not waive Landlord's rights as to any subsequent Transfers.
If an Event of Default occurs while the Premises or any part thereof are subject
to a Transfer, then Landlord, in addition to its other remedies, may collect
directly from such transferee all rents becoming due to Tenant and apply such
rents against Rent. Tenant authorizes its transferees to make payments of rent
directly to Landlord upon receipt of notice from Landlord to do so following the
occurrence of an Event of Default hereunder. Tenant shall pay for the cost of
any demising walls or other improvements necessitated by a proposed subletting
or assignment.
(e) Cancellation. Landlord may, within 30 days after submission
of Tenant's written request for Landlord's consent to an assignment or
subletting, cancel this Lease as to the portion of the Premises proposed to be
sublet or assigned as of the date the proposed Transfer is to be effective. If
Landlord cancels this Lease as to any portion of the Premises, then this Lease
shall cease for such portion of the Premises and Tenant shall pay to Landlord
all Rent accrued through the cancellation date relating to the portion of the
Premises covered by the proposed Transfer. Thereafter, Landlord may lease such
portion of the Premises to the prospective transferee (or to any other person)
without liability to Tenant.
(t) Additional Compensation. Tenant shall pay to Landlord,
immediately upon receipt thereof, the excess of (1) all compensation received by
Tenant for a Transfer less the costs reasonably incurred by Tenant with
unaffiliated third parties in connection with such Transfer (i.e., brokerage
commissions, tenant finish work, and the like) over (2) the Rent allocable to
the portion of the Premises covered thereby.
(g) Perirntted Transfers. Notwithstanding Section 10(a), Tenant
may Transfer all or part of its interest in this Lease or all or part of the
Premises (a "Permitted Transfer") to the following types of entities (a
`Permitted Transferee") without the written consent of Landlord:
(1) an Affiliate of Tenant;
(2) any corporation, limited partnership, limited liability
partnership, limited liability company or other business entity in which or with
which Tenant, or its corporate successors or assigns, is merged or consolidated,
in accordance with applicable statutory provisions governing merger and
consolidation of business entities, so long as (A) Tenant's obligations
hereunder are assumed by the entity surviving such merger or created by such
consolidation; and (B) the Tangible Net Worth of the surviving or created entity
is not less than the Tangible Net Worth of Tenant as of the date hereof; or
(3) any corporation, limited partnership, limited liability
partnership, limited liability company or other business entity acquiring all or
substantially all of Tenant's assets if such
entity's Tangible Net Worth after such acquisition is
not less than the Tangible Net Worth of Tenant as of
the date hereof.
Tenant shall promptly notify Landlord of any such Permitted
Transfer. Tenant shall remain liable for the performance of all
of the obligations of Tenant hereunder, or if Tenant no longer
exists because of a merger, consolidation, or acquisition, the
surviving or acquiring entity shall expressly assume in writing
the obligations of Tenant hereunder. Additionally, the
Permitted Transferee shall comply with all of the terms and
conditions of this Lease, including the Permitted Use, and the
use of the Premises by the Permitted Transferee may not violate
any other agreements affecting the Premises, the Building,
Landlord or other tenants of the Building. At least 30 days
after the effective date of any Permitted Transfer, Tenant
agrees to furnish Landlord with copies of the instrument
effecting any of the foregoing Transfers and documentation
establishing Tenant's satisfaction of the requirements set
forth above applicable to any such Transfer. The occurrence of
a Permitted Transfer shall not waive Landlord's rights as to
any subsequent Transfers. Tangible Net Worth" means the excess
of total assets over total liabilities, in each case as
determined in accordance with generally accepted accounting
principles consistently applied ("GAAP"), excluding, however,
from the determination of total assets all assets which would
be classified as intangible assets under GAAP including
goodwill, licenses, patents, trademarks, trade names,
copyrights, and franchises. Any subsequent Transfer by a
Permitted Transferee shall be subject to the terms of this
Section 10.
11. Insurance Waivers: Subrogation: Indemnity.
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(a) Tenant's Insurance. Tenant shall maintain
throughout the Term the following insurance policies: (1)
commercial general liability insurance in amounts of $3,000,000
per occurrence or, following the expiration of the initial
Term, such other amounts as Landlord may from time to time
reasonably require, insuring Tenant, Landlord, Landlord's
agents and their respective Affiliates against all liability
for injury to or death of a person or persons or damage to
property arising from the use and occupancy of the Premises,
(2) insurance covering the full value of Tenant's property and
improvements, and other property (including property of others)
in the Premises, (3) contractual liability insurance sufficient
to cover Tenant's indemnity obligations hereunder (but only if
such contractual liability insurance is not already included in
Tenant's commercial general liability insurance policy), (4)
worker's compensation insurance, and(S) business interruption
insurance. Tenant's insurance shall provide primary coverage to
Landlord when any policy issued to Landlord provides duplicate
or similar coverage, and in such circumstance Landlord's policy
will be excess over Tenant's policy. Tenant shall furnish to
Landlord certificates of such insurance and such other evidence
satisfactory to Landlord of the maintenance of all insurance
coverages required hereunder, and Tenant shall obtain a written
obligation on the part of each insurance company to notify
Landlord at least 30 days before cancellation or a material
change of any such insurance policies. All such insurance
policies shall be in form, and issued by companies, reasonably
satisfactory to Landlord.
(b) Landlord's Insurance. Throughout the Term
of this Lease, Landlord shall maintain, as a minimum, the
following insurance policies: (1) fire and extended risk
insurance for the Building's replacement value and (2)
commercial general liability insurance in an amount of not less
than $3,000,000. The cost of all insurance carried by Landlord
with respect to the Building shall be included in Operating
Costs.
(c) No Subrogation. Landlord and Tenant each
waives any claim it might have against the other for any injury
to or death of any person or persons or damage to or theft,
destruction, loss, or loss of use of any property (a Loss to
the extent the same is insured against under any insurance
policy that covers the Building, the Premises, Landlord's or
Tenant's fixtures, personal property, leasehold improvements,
or business, or, in the case of Tenant's waiver, is required to
be insured against under the terms hereof, regardless of
whether the negligence of the other party caused such Loss.
Each party shall cause its insurance carrier to endorse all
applicable policies waiving the carrier's rights of recovery
under subrogation or otherwise against the other party.
(d) Indemnity. Subject to Section 1 ]~.(c.),
Tenant shall defend, indemnify, and hold harmless Landlord and
its representatives and agents from and against all claims,
demands, liabilities, causes of action, suits,judgments,
damages, and expenses (including attorneys' fees) arising from
(1) any Loss arising from any occurrence on the Premises or (2)
Tenant's failure to perform its obligations under this Lease,
even though caused or alleged to be caused by the negligence or
fault of Landlord or its agents (other than a Loss arising from
the sole or gross negligence of Landlord or its agents), and
even though any such claim, cause of action, or suit is based
upon or alleged to be based upon the strict liability of
Landlord or its agents. This indemnity is intended to indemnify
Landlord and its agents against the consequences of their own
negligence or fault as provided above when Landlord or its
agents are jointly, comparatively, contributively, or
concurrently negligent with Tenant. Subject to Section 11 (c),
Landlord shall defend, indenmify, and hold harmless Tenant and
its agents from and against all claims, demands, liabilities,
causes of action, suits, judgments, and expenses (including
attorneys' fees) for any Loss arising from any occurrence in
the Building's common areas, even though caused or alleged to
be caused by the negligence or fault of Tenant or its agents
(other than a Loss arising from the sole or gross negligence of
Tenant or its agents), and even though any such claim, cause of
action, or suit is based upon or alleged to be based upon the
strict liability of Tenant or its agents. This indemnity is
intended to indemnify Tenant and its agents against the
consequences of their own negligence or fault as provided above
when Tenant or its agents are jointly, comparatively,
contributively, or concurrently negligent with Landlord. The
indemnities set forth in this Section 11 .(d) shall survive
termination or expiration of this Lease and shall not terminate
or be waived, diminished or affected in any manner by any
abatement or apportionment of Rent under any provision of this
Lease. If any proceeding is filed for which indemnity is
required hereunder, the indemnifying party agrees, upon request
therefor, to defend the indemnified party in such proceeding at
its sole cost utilizing counsel satisfactory to the indemnified
party.
12. Subordination: Attornment Notice to Landlord's Mortgagee
(a) Subordination. This Lease shall be
subordinate to any deed of trust, mortgage, or other security
instrument (each, a Mortgage or any ground lease, master lease,
or primary lease (each, a "Primary Lease"), that now or
hereafter covers all or any part of the Premises (the mortgagee
under any such Mortgage or the lessor under any such Primary
Lease is referred to herein as a "Landlord's Mortgagee Landlord
shall use reasonable efforts to obtain a subordination,
non-disturbance and attomment agreement from the current
Landlord's Mortgagee, in the form of Exhibit J hereto or
another form reasonably acceptable to Tenant and Landlord's
Mortgagee, within 30 days from the date hereof; however,
Landlord's failure to deliver such agreement shall not
constitute a default by Landlord hereunder nor affect the
subordination of the Lease as provided in this Section; and
further provided that any costs associated with obtaining such
subordination, non-disturbance and attomment agreement shall be
paid by Tenant within 15 days after Landlord's written request
therefor. Any Landlord's Mortgagee may elect, at any time,
unilaterally, to make this Lease superior to its Mortgage,
Primary Lease, or other interest in the Premises by so
notifying Tenant in writing. The provisions of this Section
shall be self-operative and no further instrument of
subordination shall be required; however, in confirmation of
such subordination, Tenant shall execute and return to Landlord
(or such other party designated by Landlord) within ten days
after written request therefor such documentation, in
recordable form if required, as a Landlord's Mortgagee may
reasonably request to evidence the subordination of this Lease
to such Landlord's Mortgagee's Mortgage or Primary Lease
(including a
subordination, non-disturbance and attornment agreement) or, if
the Landlord's Mortgagee so elects, the subordination of such
Landlord's Mortgagee's Mortgage or Primary Lease to this Lease.
(b) Attornment. Tenant shall attorn to any
party succeeding to Landlord's interest in the Premises,
whether by purchase, foreclosure, deed in lieu of foreclosure,
power of sale, termination of lease, or otherwise, upon such
party's request, and shall execute such agreements confirming
such attornment as such party may reasonably request.
(c) Notice to Landlord's Mortgagee Tenant
shall not seek to enforce any remedy it may have for any
default on the part of Landlord without first giving written
notice by certified mail, return receipt requested, specifying
the default in reasonable detail, to any Landlord's Mortgagee
whose address has been given to Tenant, and affording such
Landlord's Mortgagee a reasonable opportunity to perform
Landlord's obligations hereunder.
(d) Landlord's Mortgagee's Protection
Provisions. If Landlord's Mortgagee shall succeed to the
interest of Landlord under this Lease, Landlord's Mortgagee
shall not be: (1) liable for any act or omission of any prior
lessor (including Landlord); (2) bound by any rent or
additional rent or advance rent which Tenant might have paid
for more than the current month to any prior lessor (including
Landlord), and all such rent shall remain due and owing,
notwithstanding such advance payment; (3) bound by any security
or advance rental deposit made by Tenant which is not delivered
or paid over to Landlord's Mortgagee and with respect to which
Tenant shall look solely to Landlord for refund or
reimbursement; (4) bound by any termination, amendment or
modification of this Lease made without Landlord's Mortgagee's
consent and written approval, except for those terminations,
amendments and modifications permitted to be made by Landlord
without Landlord's Mortgagee's consent pursuant to the terms of
the loan documents between Landlord and Landlord's Mortgagee;
(5) subject to the defenses which Tenant might have against any
prior lessor (including Landlord), and (6) subject to the
offsets which Tenant might have against any prior lessor
(including Landlord) except for those offset rights which (A)
are expressly provided in this Lease, (B) relate to periods of
time following the acquisition of the Building by Landlord's
Mortgagee, and (C) Tenant has provided written notice to
Landlord's Mortgagee and provided Landlord's Mortgagee a
reasonable opportunity to cure the event giving rise to such
offset event. Landlord's Mortgagee shall have no liability or
responsibility under or pursuant to the terms of this Lease or
otherwise after it ceases to own an interest in the Building.
Nothing in this Lease shall be construed to require Landlord's
Mortgagee to see to the application of the proceeds of any
loan, and Tenant's agreements set forth herein shall not be
impaired on account of any modification of the documents
evidencing and securing any loan.
13. Rules and Regulations Tenant shall comply with the
rules and regulations of the Building which are attached hereto
as Exhibit C. Landlord may, from time to time, change such
rules and regulations for the safety, care, or cleanliness of
the Building and related facilities, provided that such changes
are applicable to all tenants of the Building, will not
unreasonably interfere with Tenant's use of the Premises and
are enforced by Landlord in a non-discriminatory manner. Tenant
shall be responsible for the compliance with such rules and
regulations by each Tenant Party.
14. Condemnation.
------------
(a) Total Taking. If the entire Building or Premises are taken by right of
eminent domain or conveyed in lieu thereof (a "Taking"), ------------ this Lease
shall terminate as of the date of the Taking.
subordination, non-disturbance and attomment agreement) or, if
the Landlord's Mortgagee so elects, the subordination of such
Landlord's Mortgagee's Mortgage or Primary Lease to this Lease.
(b) Attornment. Tenant shall attorn to any
party succeeding to Landlord's interest in the Premises,
whether by purchase, foreclosure, deed in lieu of foreclosure,
power of sale, termination of lease, or otherwise, upon such
party's request, and shall execute such agreements confirming
such attornment as such party may reasonably request.
(c) Notice to Landlord's Mortgagee Tenant
shall not seek to enforce any remedy it may have for any
default on the part of Landlord without first giving written
notice by certified mail, return receipt requested, specifying
the default in reasonable detail, to any Landlord's Mortgagee
whose address has been given to Tenant, and affording such
Landlord's Mortgagee a reasonable opportunity to perform
Landlord's obligations hereunder.
(d) Landlord's Mortgagee's Protection
Provisions. If Landlord's Mortgagee shall succeed to the
interest of Landlord under this Lease, Landlord's Mortgagee
shall not be: (1) liable for any act or omission of any prior
lessor (including Landlord); (2) bound by any rent or
additional rent or advance rent which Tenant might have paid
for more than the current month to any prior lessor (including
Landlord), and all such rent shall remain due and owing,
notwithstanding such advance payment; (3) bound by any security
or advance rental deposit made by Tenant which is not delivered
or paid over to Landlord's Mortgagee and with respect to which
Tenant shall look solely to Landlord for refund or
reimbursement; (4) bound by any termination, amendment or
modification of this Lease made without Landlord's Mortgagee's
consent and written approval, except for those terminations,
amendments and modifications permitted to be made by Landlord
without Landlord's Mortgagee's consent pursuant to the terms of
the loan documents between Landlord and Landlord's Mortgagee;
(5) subject to the defenses which Tenant might have against any
prior lessor (including Landlord), and (6) subject to the
offsets which Tenant might have against any prior lessor
(including Landlord) except for those offset rights which (A)
are expressly provided in this Lease, (B) relate to periods of
time following the acquisition of the Building by Landlord's
Mortgagee, and (C) Tenant has provided written notice to
Landlord's Mortgagee and provided Landlord's Mortgagee a
reasonable opportunity to cure the event giving rise to such
offset event. Landlord's Mortgagee shall have no liability or
responsibility under or pursuant to the terms of this Lease or
otherwise after it ceases to own an interest in the Building.
Nothing in this Lease shall be construed to require Landlord's
Mortgagee to see to the application of the proceeds of any
loan, and Tenant's agreements set forth herein shall not be
impaired on account of any modification of the documents
evidencing and securing any loan.
13. Rules and Regulations Tenant shall comply with the
rules and regulations of the Building which are attached hereto
as Exhibit C. Landlord may, from time to time, change such
rules and regulations for the safety, care, or cleanliness of
the Building and related facilities, provided that such changes
are applicable to all tenants of the Building, will not
unreasonably interfere with Tenant's use of the Premises and
are enforced by Landlord in a non-discriminatory manner. Tenant
shall be responsible for the compliance with such rules and
regulations by each Tenant Party.
14. Condemnation.
------------
(a) Total Taking. If the entire Building or Premises are taken by right of
eminent domain or conveyed in lieu thereof (a "Taking"),
------------
this Lease shall terminate as of the date of the Taking.
(b) Partial TakinQ - Tenant's Rights. If any
part of the Building becomes subject to a Taking and such
Taking will prevent Tenant from conducting its business in the
Premises in a manner reasonably comparable to that conducted
immediately before such Taking for a period of more than 180
days, then Tenant may terminate this Lease as of the date of
such Taking by giving written notice to Landlord within 30 days
after the Taking, and Basic Rent and Additional Rent shall be
apportioned as of the date of such Taking. If Tenant does not
terminate this Lease, then Rent shall be abated on a reasonable
basis as to that portion of the Premises rendered untenantable
by the Taking.
(c) Partial Taking - Landlord's Rights. If any
material portion, but less than all, of the Building becomes
subject to a Taking, or if Landlord is required to pay any of
the proceeds arising from a Taking to a Landlord's Mortgagee,
then Landlord may terminate this Lease by delivering written
notice thereof to Tenant within 30 days after such Taking, and
Basic Rent and Additional Rent shall be apportioned as of the
date of such Taking. If Landlord does not so terminate this
Lease, then this Lease will continue, but if any portion of the
Premises has been taken, Rent shall abate as provided in the
last sentence of Section 14(b).
(d) Award. If any Taking occurs, then Landlord
shall receive the entire award or other compensation for the
Land, the Building, and other improvements taken; however,
Tenant may separately pursue a claim (to the extent it will not
reduce Landlord's award) against the condemnor for the value of
Tenant's personal property which Tenant is entitled to remove
under this Lease, moving costs, loss of business, and other
claims it may have.
15. Fire or Other Casualty.
----------------------
(a) Repair Estimate. If the Premises or the
Building are damaged by fire or other casualty (a "Casualty"),
Landlord shall, within 90 days after such Casualty, deliver to
Tenant a good faith estimate (the "Damage Notice") of the time
needed to repair the damage caused by such Casualty.
(b) Tenant's Rights. If a material portion of
the Premises is damaged by Casualty such that Tenant is
prevented from conducting its business in the Premises in a
maimer reasonably comparable to that conducted irmnediately
before such Casualty and Landlord estimates that the damage
caused thereby cannot be repaired within 210 days after the
Casualty (the "Repair Period"), then Tenant may terminate this
Lease by delivering written notice to Landlord of its election
to terminate within 30 days after the Damage Notice has been
delivered to Tenant.
(c) Landlord's Rights. If a Casualty damages
the Premises or a material portion of the Building and (1)
Landlord estimates that the damage to the Premises cannot be
repaired within the Repair Period, (2) the damage to the
Premises exceeds 50% of the replacement cost thereof (excluding
foundations and footings), as estimated by Landlord, and such
damage occurs during the last two years of the Term, (3)
regardless of the extent of damage to the Premises, Landlord
makes a good faith determination that restoring the Building
would be uneconomical, or (4) Landlord is required to pay any
insurance proceeds arising out of the Casualty to a Landlord's
Mortgagee, then Landlord may terminate this Lease by giving
written notice of its election to terminate within 30 days
after the Damage Notice has been delivered to Tenant.
(d) Repair Obligation If neither party elects to terminate this Lease
following a Casualty, then Landlord shall, within a reasonable
time after such Casualty, begin to repair the Premises and shall
proceed with reasonable diligence to restore the Premises to
substantially the same condition as they existed immediately
before such Casualty; however, Landlord shall only be required to
reconstruct the Premises to the extent of any improvements
existing therein on the date of the damage that were installed by
Landlord as part of Landlord's Work (if any) described in
Exhibit D ("Landlord's Contribution"), and Landlord's
obligation to repair or restore the Premises shall be limited
to the extent of the insurance proceeds actually received by
Landlord for the Casualty in question. Tenant shall be
responsible for repairing or replacing its furniture,
equipment, fixtures, alterations and other improvements which
Landlord is not obligated to restore, and shall use the
proceeds of its insurance for such purpose. Tenant shall pay
the difference betweenthetotal cost ofreconstructingthe
Premises and Landlord's Contribution ("Tenant's Contribution").
Prior to Landlord's commencement of reconstruction, Tenant
shall place Landlord's estimate of Tenant's Contribution in
escrow with Landlord (or furnish Landlord other commercially
reasonable assurances of payment thereof).
(e) Abatement of Rent. If the Premises are
damaged by Casualty, Rent for the portion of the Premises
rendered untenantable by the damage shall be abated on a
reasonable basis from the date of damage until the completion
of Landlord's repairs (or until the date of termination of this
Lease by Landlord or Tenant as provided above, as the case may
be), unless a Tenant Party caused such damage, in which case,
Tenant shall continue to pay Rent without abatement.
16. Personal Property Taxes. Tenant shall be liable for
all taxes levied or assessed against personal property,
furniture, or fixtures placed by Tenant in the Premises. If any
taxes for which Tenant is liable are levied or assessed against
Landlord or Landlord's property and Landlord elects to pay the
same, or if the assessed value of Landlord's property is
increased by inclusion of such personal property, furniture or
fixtures and Landlord elects to pay the taxes based on such
increase, then Tenant shall pay to Landlord, within 30 days
following written request, the part of such taxes for which
Tenant is primarily liable hereunder; however, Landlord shall
not pay such amount if Tenant notifies Landlord that it will
contest the validity or amount of such taxes before Landlord
makes such payment, and thereafter diligently proceeds with
such contest in accordance with Law and if the non-payment
thereof does not pose a threat of loss or seizure of the
Building or interest of Landlord therein or impose any fee or
penalty against Landlord.
17. Events of Default. Each of the following occurrences shall be an "Event of
Default": --------- ------- -------- --------
(a) Payment Default. Tenant's failure to pay
Rent within five days after Landlord has delivered written
notice to Tenant that the same is due; however, an Event of
Default shall occur hereunder without any obligation of
Landlord to give any notice if Tenant fails to pay Rent when
due and, during the 12 month interval preceding such failure,
Landlord has given Tenant written notice of failure to pay Rent
on one or more occasions;
(b) Abandonment. Tenant (1) abandons or vacates the Premises or any substantial
portion thereof or ----------- (2) fails to continuously operate its business in
the Premises;
(c) Estoppel. Tenant fails to provide any
estoppel certificate after Landlord's written request
thereforpursuant to Section 25 (c) and such failure shall
continue for five days after Landlord's second written notice
thereof to Tenant;
(d) Other Defaults. Tenant's failure to perform, comply with, or observe any
other agreement or --------------- obligation of Tenant under this Lease and the
continuance of such failure for a period of more than 30 days after Landlord has
delivered to Tenant written notice thereof; and
(e) Insolvency. The filing of a petition by or against Tenant (the term "Tenant"
shall include, for the purpose of this Section 1.7. ---------- ------ (e), any
guarantor of Tenant's obligations hereunder) (I) in any
bankruptcy or other insolvency proceeding; (2) seeking any
relief under any state or federal debtor relief law; (3) for
the appointment of a liquidator or receiver for all or
substantially all of Tenant's property or for Tenant's interest
in this Lease; or (4) for the reorganization or modification of
Tenant's capital structure; however, if such a petition is
filed against Tenant, then such filing shall not be an Event of
Default unless Tenant fails to have the proceedings initiated
by such petition dismissed within 90 days after the filing
thereof.
18. Remedies. Upon any Event of Default, Landlord may, in addition to all other
rights and remedies afforded -------- Landlord hereunder or by law or equity,
take any one or more of the following actions:
(a) Termination of Lease. Terminate this Lease
by giving Tenant written notice thereof, in which event Tenant
shall pay to Landlord the sum of(l) all Rent accrued hereunder
through the date of termination, (2) all amounts due under
Section would have been required to pay for the remainder of
the Term discounted to present value at a per annum rate equal
to the "Prime Rate" as published on the date this Lease is
terminated by The Wall Street Journal, Southwest Edition, in
its listing of' `Money Rates" minus one percent, minus (B) the
then present fair rental value of the Premises for such period,
similarly discounted;
(b) Termination of Possession. Terminate
Tenant's right to possess the Premises without terminating this
Lease by giving written notice thereof to Tenant, in which
event Tenant shall pay to Landlord (1) all Rent and other
amounts accrued hereunder to the date of termination of
possession, (2) all amounts due from time to time under Section
19(a), and (3) all Rent and other net sums required hereunder
to be paid by Tenant during the remainder of the Term,
diminished by any net sums thereafter received by Landlord
through reletting the Premises during such period, after
deducting all costs incurred by Landlord in reletting the
Premises. Landlord shall use reasonable efforts to relet the
Premises on such terms as Landlord in its sole discretion may
determine (including a term different from the Term, rental
concessions, and alterations to, and improvement of, the
Premises); however, Landlord shall not be obligated to relet
the Premises before leasing other portions of the Building.
Landlord shall not be liable for, nor shall Tenant's
obligations hereunder be diminished because of, Landlord's
failure to relet the Premises or to collect rent due for such
reletting. Tenant shall not be entitled to the excess of any
consideration obtained by reletting over the Rent due
hereunder. Reentry by Landlord in the Premises shall not affect
Tenant's obligations hereunder for the unexpired Term; rather,
Landlord may, from time to time, bring an action against Tenant
to collect amounts due by Tenant, without the necessity of
Landlord's waiting until the expiration of the Term. Unless
Landlord delivers written notice to Tenant expressly stating
that it has elected to terminate this Lease, all actions taken
by Landlord to dispossess or exclude Tenant from the Premises
shall be deemed to be taken under this Section 18(b). If
Landlord elects to proceed under this Section 18(b), it may at
any time elect to terminate this Lease under Section 1 8(a); or
(c) Alteration of Locks. Additionally, with or
without notice, and to the extent permitted by Law, Landlord
may alter locks or other security devices at the Premises to
deprive Tenant of access thereto, and Landlord shall not be
required to provide a new key or right of access to Tenant.
19. Payment by Tenant: Non-Waiver Cumulative Remedies.
------- -------------------------------- --------
(a) Payment by Tenant. Upon any Event of
Default, Tenant shall pay to Landlord all costs incurred by
Landlord (including court costs and reasonable attorneys' fees
and expenses) in (1) obtaining possession of the Premises, (2)
removing and storing Tenant's or any other occupant's property,
(3) repairing, restoring, altering, remodeling, or otherwise
putting the Premises into condition acceptable to a new tenant,
(4) if Tenant is dispossessed of the Premises and this Lease is
not terminated, reletting all or any part of the Premises
(including brokerage commissions, cost of tenant fmish work,
and other costs incidental to such reletting), (5) performing
Tenant's obligations which Tenant failed to perform, and (6)
enforcing, or advising Landlord of, its rights, remedies, and
recourses arising out of the Event of Default. To the full
extent permitted by law, Landlord and Tenant agree the federal
and state courts of the state in which the Premises are located
shall have exclusive jurisdiction over any matter relating to
or arising from this Lease and the parties' rights and
obligations under this Lease.
(b) No Waiver. Landlord's acceptance of Rent
following an Event of Default shall not waive Landlord's rights
regarding such Event of Default. No waiver by Landlord of any
violation or breach of any of the terms contained herein shall
waive Landlord's rights regarding any future violation of such
term. Landlord's acceptance of any partial payment of Rent
shall not waive Landlord's rights with regard to the remaining
portion of the Rent that is due, regardless of any endorsement
or other statement on any instrument delivered in payment of
Rent or any writing delivered in connection therewith;
accordingly, Landlord's acceptance of a partial payment of Rent
shall not constitute an accord and satisfaction of the full
amount of the Rent that is due.
(c) Cumulative Remedies. Any and all remedies
set forth in this Lease: (1) shall be in addition to any and
all other remedies Landlord may have at law or in equity, (2)
shall be cumulative, and (3) may be pursued successively or
concurrently as Landlord may elect. The exercise of any remedy
by Landlord shall not be deemed an election of remedies or
preclude Landlord from exercising any other remedies in the
future.
20. Landlord's Lien. In addition to any statutory
landlord's lien, now or hereafter enacted, Tenant grants to
Landlord, to secure performance of Tenant's obligations
hereunder, a security interest in all goods (including
equipment and inventory), fixtures, and other personal property
of Tenant situated on the Premises, and all proceeds thereof
(the "Collateral"), and the Collateral shall not be removed
from the Premises without the prior written consent of Landlord
(other than in Tenant's ordinary course of business) until all
obligations of Tenant have been fully performed. Upon the
occurrence of an Event of Default, Landlord may, in addition to
all other remedies, without notice or demand except as provided
below, exercise the rights afforded to a secured party under
the Uniform Commercial Code of the state in which the Premises
are located (the "UCC"). To the extent the UCC requires
Landlord to give to Tenant notice of any act or event and such
notice cannot be validly waived before a default occurs, then
five-days' prior written notice thereof shall be reasonable
notice of the act or event. Tenant grants to Landlord a power
of attorney to execute and file any financing statement or
other instrument necessary to perfect Landlord's security
interest under this Section 20, which power is coupled with an
interest and is irrevocable during the Term. Landlord may also
file a copy of this Lease as a financing statement to perfect
its security interest in the Collateral. Within ten days
following written request therefor, Tenant shall execute
fmancing statements to be filed of record to perfect Landlord's
security interest in the Collateral.
21. Surrender of Premises. No act by Landlord shall be
deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid
unless it is in writing and signed by Landlord. At the
expiration or termination of this Lease, Tenant shall deliver
to Landlord the Premises with all improvements located therein
in good repair and condition, free of Hazardous Materials
placed on the Premises during the Term, broom-clean, reasonable
wear and tear (and condemnation and Casualty damage not caused
by Tenant, as to which Sections 14 and 15 shall control)
excepted, and shall deliver to Landlord all keys to the
Premises. Provided that Tenant has performed all of its
obligations hereunder, Tenant may remove all unattached trade
fixtures, furniture, and personal property placed in the
Premises or elsewhere in the Building by Tenant (but Tenant may
not remove any such item which was paid for, in whole or in
part, by Landlord or any wiring or cabling unless Landlord
requires such removal). Additionally, at Landlord's option,
Tenant shall remove such alterations, additions, improvements,
trade fixtures, personal property, equipment, wiring, cabling,
and furniture as Landlord may request; however, Tenant shall
not be required to remove any addition or improvement to the
Premises if Landlord has specifically agreed in writing that
the improvement or addition in question need not be removed.
Tenant shall repair all damage caused by such removal. All
items not so removed shall, at Landlord's option, be deemed to
have been abandoned by Tenant and may be appropriated, sold,
stored, destroyed, or otherwise disposed of by Landlord without
notice to Tenant and without any obligation to account for such
items; any such disposition shall not be considered a strict
foreclosure or other exercise of Landlord's rights in respect
of the security interest granted under Section 20. The
provisions of this Section 21 shall survive the end of the
Term.
22. Holding Over, if Tenant fails to vacate the
Premises at the end of the Term, then Tenant shall be a tenant
at sufferance and, in addition to all other damages and
remedies to which Landlord may be entitled for such holding
over, (a) Tenant shall pay, in addition to the other Rent,
Basic Rent equal to the greater of (1) 150% of the Basic Rent
payable during the last month of the Term, or (2) 125% of the
prevailing rental rate in the Building for similar space, and
(b) Tenant shall otherwise continue to be subject to all of
Tenant's obligations under this Lease. The provisions of this
Section 22 shall not be deemed to limit or constitute a waiver
of any other rights or remedies of Landlord provided herein or
at law, If Tenant fails to surrender the Premises upon the
termination or expiration of this Lease, in addition to any
other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all
loss, costs (including reasonable attorneys' fees) and
liability resulting from such failure, including any claims
made by any succeeding tenant founded upon such failure to
surrender, and any lost profits to Landlord resulting
therefrom.
23. Certain Rights Reserved by Landlord. Provided that the exercise of such
rights does not unreasonably ---------------------------- --------
interfere with Tenant's occupancy of the Premises, Landlord shall have the
following rights:
(a) Building Operations To decorate and to
make inspections, repairs, alterations, additions, changes, or
improvements, whether structural or otherwise, in and about the
Building, or any part thereof; to enter upon the Premises
(after giving Tenant reasonable notice thereof, which may be
oral notice, except in cases of real or apparent emergency, in
which case no notice shall be required) and, during the
continuance of any such work, to temporarily close doors,
entryways, public space, and corridors in the Building; to
interrupt or temporarily suspend Building services and
facilities; to change the name of the Building; and to change
the arrangement and location of entrances or passageways,
doors, and doorways, corridors, elevators, stairs, restrooms,
or other public parts of the Building;
(b) Security. To take such reasonable measures
as Landlord deems advisable for the security of the Building
and its occupants; evacuating the Building for cause, suspected
cause, or for drill purposes; temporarily denying access to the
Building; and closing the Building after normal business hours
and on Sundays and holidays, subject, however, to Tenant's
right to enter when the Building is closed after normal
business hours under such reasonable regulations as Landlord
may prescribe from time to time;
(c) Prospective Purchasers and Lenders. To enter the Premises at all reasonable
hours to show the ----------- --------------- -------
Premises to prospective purchasers or lenders; and
(d) Prosnective Tenants. At any time during
the last 12 months of the Term (or earlier if Tenant has
notified Landlord in writing that it does not desire to renew
the Term) or at any time following (f) Notices. All notices and
other communications given pursuant to this Lease shall be in
writing and shall be (1) mailed by first class, United States
Mail, postage prepaid, certified, with return receipt
requested, and addressed to the parties hereto at the address
specified in the Basic Lease Information, (2) hand delivered to
the intended address, (3) sent by a nationally recognized
overnight courier service, or (4) sent by facsimile
transmission during normal business hours followed by a
confirmatory letter sent in another manner permitted hereunder.
All notices shall be effective upon delivery to the address of
the addressee. The parties hereto may change their addresses by
giving notice thereof to the other in conformity with this
provision.
(g) Separability. If any clause or provision
of this Lease is illegal, invalid, or unenforceable under
present or future laws, then the remainder of this Lease shall
not be affected thereby and in lieu of such clause or
provision, there shall be added as a part of this Lease a
clause or provision as similar in terms to such illegal,
invalid, or unenforceable clause or provision as may be
possible and be legal, valid, and enforceable.
(h) Amendments: and Binding Effect. This Lease
may not be amended except by instrument in writing signed by
Landlord and Tenant. No provision of this Lease shall be deemed
to have been waived by Landlord unless such waiver is in
writing signed by Landlord, and no custom or practice which may
evolve between the parties in the administration of the terms
hereof shall waive or diminish the right of Landlord to insist
upon the performance by Tenant in strict accordance with the
terms hereof. The terms and conditions contained in this Lease
shall inure to the benefit of and be binding upon the parties
hereto, and upon their respective successors in interest and
legal representatives, except as otherwise herein expressly
provided. This Lease is for the sole benefit of Landlord and
Tenant, and, other than Landlord's Mortgagee, no third party
shall be deemed a third party beneficiary hereof.
(i) quiet Enjoyment Provided Tenant has
performed all of its obligations hereunder, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term,
without hindrance from Landlord or any party claiming by,
through, or under Landlord, but not otherwise, subject to the
terms and conditions of this Lease.
(j) No Merger. There shall be no merger of the
leasehold estate hereby created with the fee estate in the
Premises or any part thereof if the same person acquires or
holds, directly or indirectly, this Lease or any interest in
this Lease and the fee estate in the leasehold Premises or any
interest in such fee estate.
(k) No Offer. The submission of this Lease to
Tenant shall not be construed as an offer, and Tenant shall not
have any rights under this Lease unless Landlord executes a
copy of this Lease and delivers it to Tenant.
(1) Entire A2reement. This Lease constitutes
the entire agreement between Landlord and Tenant regarding the
subject matter hereof and supersedes all oral statements and
prior writings relating thereto. Except for those set forth in
this Lease, no representations, warranties, or agreements have
been made by Landlord or Tenant to the other with respect to
this Lease or the obligations of Landlord or Tenant in
connection therewith. The normal rule of construction that any
ambiguities be resolved against the drafting party shall not
apply to the interpretation of this Lease or any exhibits or
amendments hereto.
(m) Waiver of Jury Trial. To the maximum extent permitted by law, Landlord and
Tenant each waive right to trial by jury in any
--------- ----------
litigation arising out of or with respect to this Lease.
(n) Governing Law. This Lease shall be governed by and construed in accordance
with the laws of the --------- --- state in which the Premises are located.
(n) Recording. Tenant shall not record this Lease without the prior written
consent of Landlord, which consent
---------
(p) Joint and Several Liability. If Tenant is comprised of more
than one party, each such party shall be jointly and severally liable for
Tenant's obligations under this Lease. All unperformed obligations of Tenant at
the end of the Term shall survive.
(q) Financial Reports. Within 15 days after Landlord's request,
Tenant will furnish Tenant's most recent audited financial statements (including
any notes to them) to Landlord, or, if no such audited statements have been
prepared, such other financial statements (and notes to them) as may have been
prepared by an independent certified public accountant or, failing those,
Tenant's internally prepared financial statements. If Tenant is a publicly
traded corporation, Tenant may satisfy its obligations hereunder by providing to
Landlord Tenant's most recent annual and quarterly reports. Tenant will discuss
its financial statements with Landlord and, following the occurrence of an Event
of Default hereunder, will give Landlord access to Tenant's books and records in
order to enable Landlord to verify the financial statements. Landlord will not
disclose any aspect of Tenant's financial statements that Tenant designates to
Landlord as confidential except (1) to Landlord's Mortgagee or prospective
mortgagees or purchasers of the Building, (2) in litigation between Landlord and
Tenant, and (3) if required by court order. Tenant shall not be required to
deliver the financial statements required under this Section 25(q) more than
once in any 12-month period unless requested by Landlord's Mortgagee or a
prospective buyer or lender of the Building or an Event of Default occurs.
(r) Landlord's Fees. Whenever Tenant requests Landlord to take
any action not required of it hereunder or give any consent required or
permitted under this Lease, Tenant will reimburse Landlord for Landlord's
reasonable, out-of-pocket costs payable to third parties and incurred by
Landlord in reviewing the proposed action or consent, including reasonable
attorneys', engineers' or architects' fees, within 30 days after Landlord's
delivery to Tenant of a statement of such costs. Tenant will be obligated to
make such reimbursement without regard to whether Landlord consents to any such
proposed action.
(s) Telecommunications. Tenant and its telecommunications
companies, including local exchange telecommunications companies and alternative
access vendor services companies, shall have no right of access to and within
the Building, for the installation and operation of telecommunications systems,
including voice, video, data, Internet, and any other services provided over
wire, fiber optic, microwave, wireless, and any other transmission systems
("Telecommunications Services"), for part or all of Tenant's telecommunications
within the Building and from the Building to any other location without
Landlord's prior written consent. All providers of Telecommunications Services
shall be required to comply with the rules and regulations of the Building,
applicable Laws and Landlord's policies and practices for the Building. Tenant
acknowledges that Landlord shall not be required to provide or arrange for any
Telecommunications Services and that Landlord shall have no liability to any
Tenant Party in connection with the installation, operation or maintenance of
Telecommunications Services or any equipment or facilities relating thereto.
Tenant, at its cost and for its own account, shall be solely responsible for
obtaining all Telecommunications Services.
(t) Confidentiality. Tenant acknowledges that the terms and conditions of this
Lease are to remain confidential for Landlord's
---------------
benefit, and may not be disclosed by Tenant to anyone, by any manner or means,
directly or indirectly, without Landlord's prior
written consent. The consent by Landlord
to any disclosures shall not be deemed to be a waiver on the
part of Landlord of any prohibition against any future
disclosure.
(u) Authority. Tenant (if a corporation, partnership or other
business entity) hereby represents and warrants to Landlord that Tenant is a
duly formed and existing entity qualified to do business in the state in which
the Premises are located, that Tenant has full right and authority to execute
and deliver this Lease, and that each person signing on behalf of Tenant is
authorized to do so. Landlord hereby represents and warrants to Tenant that
Landlord is a duly formed and existing entity qualified to do business in the
state in which the Premises are located, that Landlord has full right and
authority to execute and deliver this Lease, and that each person signing on
behalf of Landlord is authorized to do so.
(v) Hazardous Materials. The term "Hazardous Materials" means
any substance, material, or waste which is now or hereafter classified or
considered to be hazardous, toxic, or dangerous under any Law relating to
pollution or the protection or regulation of human health, natural resources or
the environment, or poses or threatens to pose a hazard to the health or safety
of persons on the Premises or in the Building. Tenant shall not use, generate,
store, or dispose of, or permit the use, generation, storage or disposal of
Hazardous Materials on or about the Premises or the Building except in a manner
and quantity necessary for the ordinary performance of Tenant's business, and
then in compliance with all Laws. If Tenant breaches its obligations under this
Section 25(v), Landlord may immediately take any and all action reasonably
appropriate to remedy the same, including taking all appropriate action to clean
up or remediate any contamination resulting from Tenant's use, generation,
storage or disposal of Hazardous Materials. Tenant shall defend, indemnify, and
hold harmless Landlord and its representatives and agents from and against any
and all claims, demands, liabilities, causes of action, suits, judgments,
damages and expenses (including reasonable attorneys' fees and cost of clean up
and remediation) arising from Tenant's failure to comply with the provisions of
this Section 25(v). This indemnity provision shall survive termination or
expiration of this Lease.
(w) List of Exhibits. All exhibits and attachments attached hereto are
incorporated herein by this ---- -- -------- reference.
Exhibit A - Outline of Premises
Exhibit B - Description of the Land Exhibit C - Building Rules and Regulations
Exhibit D - Tenant Finish-Work Exhibit B - Form of Confirmation of Commencement
Date Letter Exhibit F - Form of Tenant Estoppel Certificate Exhibit G - Parking
Exhibit H - Renewal Option Exhibit I - Rent Abatement Provisions
Exhibit J - Form of Subordination, Non-Disturbance and Attomment Agreement
26. Other Provisions.
----------------
(a) Temporary Occupancy Licenses. Notwithstanding Section 10 of the Lease to the
contrary, Tenant may grant temporary occupancy licenses to companies and
individuals with whom Tenant conducts business with to occupy up to 10% of the
Premises (based upon the number of rentable square feet existing therein as of
the date hereof). Tenant shall remain primarily liable for all of the
obligations of the "Tenant" under the Lease and Tenant shall insure that all
such parties comply with all of the terms and conditions of the Lease. If such
parties unreasonably interfere with Landlord or other tenants of the Building,
as determined in Landlord's reasonable discretion, Landlord may at any time
terminate the right granted to Tenant under this Section 26(a) upon 10 days
prior written notice thereof.
OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE
PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND,
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, TENANT SHALL CONTINUE TO PAY THE
RENT, WITHOUT ABATEMENT, DEMAND, SETOFF OR DEDUCTION, NOTWITHSTANDING ANY BREACH
BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.
Dated as of the date first above written
its general partner
vice
INSTITUTUIONAL EQUITY HOLDINGS, INC.,
a Nevada corporation
<PAGE>
BEING a tract or parcel of land situated in the City of Dallas, Dallas County,
Texas; and being part of Block 5185 of the City of Dallas and being that same
tract of land conveyed to Trailwood Land Company dated December 21, 1972; and
being more particularly described as follows:
BEGINNING at an iron rod for corner at the intersection of the southwesterly
line of Twin Sixties Drive (60 feet wide) and the southeasterly line of North
Central Expressway (U. S. 75: 220 feet wide);
THENCE South 6601500 East along the southwest line of said Twin Sixties Drive
and along its projected line in all a distance of 730.84 feet to an iron rod for
corner in the northwesterly line of a 60 foot Texas Nebraska and Oklahoma R.R.
ROW.;
THENCE is a southwesterly direction along said Railroad R.O.W. and along a curve
to the right whose tangent bears South 41 25~34" West having a radius of 1115.92
feet, a central angle of 5 O4~56" and an arc length of 110.67 feet to an iron
rod and the end of said curve;
THENCE South 47(degree)06'30' West continuing along the northwesterly line of
said Railroad R.O.W. a distance of 12.80 feet to an iron rod for corner and the
beginning to a curve to the left;
THENCE conthuing in a southwesterly direction along the northwesterly line of
said R.R. R.O.W. and along said curve to the left whose tangent bears South
53(degree)25'53 West and having a radius of 2914.93 feet, a central angle of
1(degree)53'50 and an arc length of 96.53 feet to the end of said curve and an
iron rod for corner;
THENCE North 66(degree) 15'00" West a distance of 640.59 feet to an iron rod for
corner in the southeasterly line of said North Central Expressway;
THENCE North 23(degree)45' East along the southeasterly line of North Central
Expressway a distance of 200.00 feet to the POINT OF BEGINNING and containing
3.1697 acres, more or less.
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply to the
Premises, the Building, the parking garage associated
therewith, and the appurtenances thereto:
1. Sidewalks, doorways, vestibules, halls, stairways,
and other similar areas shall not be obstructed by tenants or
used by any tenant for purposes other than ingress and egress
to and from their respective leased premises and for going from
one to another part of the Building.
2. Plumbing, fixtuzes and appliances shall be used only
for the purposes for which designed, and no sweepings, rubbish,
rags or other unsuitable material shall be thrown or deposited
therein. Damage resulting to any such fixtures or appliances
from misuse by a tenant or its agents, employees or invitees,
shall be paid by such tenant.
3. No signs, advertisements or notices shall be painted
or affixed on or to any windows or doors or other part of the
Building without the prior written consent of Landlord. No
nails, hooks or screws (other than those which are necessary to
hang paintings, prints, pictures, or other similar items on the
Premises' interior walls) shall be driven or inserted in any
part of the Building except by Building maintenance personnel.
No curtains or other window treatments shall be placed between
the glass and the Building standard window treatments.
4. Landlord shall provide and maintain an alphabetical directory for all tenants
in the main lobby of the
Building.
5. Landlord shall provide all door locks in each
tenant's leased premises, at the cost of such tenant, and no
tenant shall place any additional door locks in its leased
premises without Landlord's prior written consent. Landlord
shall furnish to each tenant a reasonable number of keys to
such tenant's leased premises, at such tenant's cost, and no
tenant shall make a duplicate thereof.
6. Movement in or out of the Building of furniture or
office equipment, or dispatch or receipt by tenants of any
bulky material, merchandise or materials which require use of
elevators or stairways, or movement through the Building
entrances or lobby shall be conducted under Landlord's
supervision at such times and in such a maimer as Landlord may
reasonably require. Each tenant assumes all risks of and shall
be liable for all damage to articles moved and injury to
persons or public engaged or not engaged in such movement,
including equipment, property and personnel of Landlord if
damaged or injured as a result of acts in connection with
carrying out this service for such tenant.
7. Landlord may prescribe weight limitations and
determine the locations for safes and other heavy equipment or
items, which shall in all cases be placed in the Building so as
to distribute weight in a manner acceptable to Landlord which
may include the use of such supporting devices as Landlord may
require. ALL damages to the Building caused by the installation
or removal of any property of a tenant, or done by a tenant's
property while in the Building, shall be repaired at the
expense of such tenant.
8. Corridor doors, when not in use, shall be kept closed. Nothing shall be swept
or thrown into the corridors, halls, elevator shafts or stairways. No birds or
animals (other than seeing-eye dogs) shall be brought into or kept in, on or
about any tenant's leased premises. No portion of any tenant's leased premises
shall at any time be used or occupied as sleeping or lodging quarters.
9. Tenant shall cooperate with Landlord's employees in
keeping its leased premises neat and clean, Tenants shall not
employ any person forthe purpose of such cleaning other than
the Building's cleaning and maintenance personnel.
10. To ensure orderly operation of the Building, no ice, mineral or other water,
towels, newspapers, etc. shall be delivered to any leased area except by persons
approved by Landlord.
11. Tenant shall not make or permit any vibration or improper,
objectionable or unpleasant noises or odors in the Building or otherwise
interfere in any way with other tenants or persons having business with them.
12. No machinery of any kind (other than normal office equipment) shall
be operated by any tenant on its leased area without Landlord's prior written
consent, nor shall any tenant use or keep in the Building any flammable or
explosive fluid or substance (other than typical office supplies toner] used in
compliance with all Laws).
13. Landlord will not be responsible for lost or stolen personal
property, money or j ewehy from tenant's leased premises or public or common
areas regardless of whether such loss occurs when the area is locked against
entry or not.
14. No vending or dispensing machines of any kind may be maintained in any
leased premises without the prior written permission of Landlord.
15. Tenant shall not conduct any activity on or about the Premises or Building
which will draw pickets, demonstrators, or the like.
16. All vehicles are to be currently licensed, in good operating
condition, parked for business purposes having to do with Tenant's business
operated in the Premises, parked within designated parking spaces, one vehicle
to each space. No vehicle shall be parked as a "billboard" vehicle in the
parking lot. Any vehicle parked improperly may be towed away. Tenant, Tenant's
agents, employees, vendors and customers who do not operate or park their
vehicles as required shall subject the vehicle to being towed at the expense of
the owner or driver. Landlord may place a "boot" on the vehicle to immobilize it
and may levy a charge of $50.00 to remove the "boot." Tenant shall indemnify,
hold and save harmless Landlord of any liability arising from the towing or
booting of any vehicles belonging to a Tenant Party.
17. No tenant may enter into phone rooms, electrical rooms, mechanical
rooms, or other service areas of the Building unless accompanied by Landlord or
the Building manager.
TENANT FINISH-WORK: ALLOWANCE
(Landlord Performs the Work)
1. Acceptance of Premises. Except as set forth in this Exhibit, Tenant accepts
the Premises in their "AS-IS" ------------- -------- ----- condition on the date
that this Lease is entered into.
2. Space Plans.
(a) Preparation and Delivery. On or before August 5, 1999,
Landlord shall deliver to Tenant a space plan prepared by Business Interiors or
another design consultant selected by Landlord (the "Architect") depicting
improvements to be installed in the Premises (the "Space Plans").
(b) Approval Process. Tenant shall notify Landlord whether it
approves of the submitted Space Plans within three business days after
Landlord's submission thereof If Tenant disapproves of such Space Plans, then
Tenant shall notify Landlord thereof specifying in reasonable detail the reasons
for such disapproval, in which case Landlord shall, within three business days
after such notice, revise such Space Plans in accordance with Tenant's
objections and submit to Tenant for its review and approval. Tenant shall notify
Landlord in writing whether it approves of the resubmitted Space Plans within
one business day after its receipt thereof This process shall be repeated until
the Space Plans have been fmally approved by Tenant and Landlord. If Tenant
fails to notify Landlord that it disapproves of the initial Space Plans within
three business days (or, in the case of resubmitted Space Plans, within one
business day) after the submission thereof, then Tenant shall be deemed to have
approved the Space Plans in question.
3. Working Drawings.
------- --------
(a) Preparation and Delivery. On or before August 16, 1999,
Landlord shall deliver final working drawings of all improvements to be
installed in the Premises and deliver the same to Tenant for its review and
approval (which approval shall not be unreasonably withheld, delayed or
conditioned). Such working drawings shall be prepared by Interprise, the Design
Group, or another design consultant selected by Landlord (whose fee shall be
included in the Total Construction Costs ).
(b) Approval Process. Tenant shall notify Landlord whether it
approves of the submitted working drawings within three
business days after Landlord's submission thereof If Tenant
disapproves of such working drawings, then Tenant shall notify
Landlord thereof specifying in reasonable detail the reasons
for such disapproval, in which case Landlord shall, within
three business days after such notice, revise such working
drawings in accordance with Tenant's objections and submit the
revised working drawings to Tenant for its review and approval.
Tenant shall notify Landlord in writing whether it approves of
the resubmitted working drawings within one business day after
its receipt thereof This process shall be repeated until the
working drawings have been finally approved by Landlord and
Tenant. If Tenant fails to notify Land]ord that it disapproves
of the initial working drawings within three business days (or,
in the case of resubmitted working drawings, within one
business day) after the submission thereof, then Tenant shall
be deemed to have approved the working drawings in question.
Any delay caused by Tenant's unreasonable withholding of its
consent or delay in giving its written approval as to such
working drawings shall constitute a Tenant Delay Day (defmed
below). If the working drawings are not fully approved (or
deemed approved) by both Landlord and Tenant by the tenth
business day after the delivery of the initial draft thereof to
Tenant, then each day after such time period that such working
drawings are not fully approved (or deemed approved) by both
Landlord and Tenant shall constitute a Tenant Delay Day.
(c) Landlord's Approval: Performance of Work. If any of Tenant's proposed
construction work will
-------------------------------------------
affect the Building's Structure or the Building's Systems, then the working
drawings pertaining thereto must be approved by the Building's engineer of
record. Landlord's approval of such working drawings shall not be unreasonably
withheld, provided that (1) they comply with all Laws, (2) the improvements
depicted thereon do not adversely affect (in the reasonable discretion of
Landlord) the Building's Structure or the Building's Systems (including the
Building's restrooms or mechanical rooms), the exterior appearance of the
Building, or the appearance of the Building's common areas or elevator lobby
areas, (3) such working drawings are sufficiently detailed to allow construction
of the improvements in a good and workmanlike manner, and (4) the improvements
depicted thereon conform to the rules and regulations promulgated from time to
time by Landlord for the construction of tenant improvements (a copy of which
has been delivered to Tenant). As used herein, "Working Drawijws" shall mean the
final working drawings approved by Landlord, as amended from time to time by any
approved changes thereto, and "Work" shall mean all improvements to be
constructed in accordance with and as indicated on the Working Drawings,
together with any work required by governmental authorities to be made to other
areas of the Building as a result of the improvements indicated by the Working
Drawings. Landlord's approval of the Working Drawings shall not be a
representation or warranty of Landlord that such drawings are adequate for any
use or comply with any Law, but shall merely be the consent of Landlord thereto.
Tenant shall, at Landlord's request, sign the Working Drawings to evidence its
review and approval thereof After the Working Drawings have been approved,
Landlord shall cause the Work to be performed in substantial accordance with the
Working Drawings.
4. Bidding of Work. Prior to commencing the Work, Landlord shall
competitively bid the Work to three contractors approved by Landlord. If the
estimated Total Construction Costs are expected to exceed the Construction
Allowance, Tenant shall be allowed to review the submitted bids from such
contractors to value engineer any of Tenant's requested alterations. In such
case, Tenant shall notify Landlord of any items in the Working Drawings that
Tenant desires to change within two business days after Landlord's submission
thereof to Tenant. If Tenant fails to notify Landlord of its election within
such two business day period, Tenant shall be deemed to have approved the bids.
Within five business days following Landlord's submission to Tenant of the
initial construction bids to Tenant under the foregoing provisions (if
applicable), Tenant shall have completed all of the following items: (a)
finalized with Landlord's representative and the proposed contractor, the
pricing of any requested revisions to the bids for the Work, and (b) approved in
writing any overage in the Total Construction Costs in excess of the
Construction Allowance, failing which each day after such five business day
period shall constitute a Tenant Delay Day.
5. Change Orders. Tenant may initiate changes in the Work. Each such
change must receive the prior written approval of Landlord, such approval not to
be unreasonably withheld or delayed; however, (a) if such requested change would
adversely affect (in the reasonable discretion of Landlord) (1) the Building's
Structure or the Building's Systems (including the Building's restrooms or
mechanical rooms), (2) the exterior appearance of the Building, or (3) the
appearance of the Building's common areas or elevator lobby areas, or (b) if any
such requested change might delay the Commencement Date, Landlord may withhold
its consent in its sole and absolute discretion. Tenant shall, upon completion
of the Work, furnish Landlord with an accurate architectural "as-built" plan of
the Work as constructed, which plan shall be incorporated into this Exhibit D by
this reference for all purposes. If Tenant requests any changes to the Work
described in Tenant's Space Plans or the Working Drawings, then such increased
costs and any additional design costs
incurred in connection therewith as the result of any such
change shall be added to the Total Construction Costs.
6. Definitions. As used herein, a "Tenant Delay Day"
shall mean each day of delay in the performance of the Work
that occurs (a) because of Tenant's failure to timely deliver
or approve any required documentation such as the Space Plans
or Working Drawings, (b) because of any change by Tenant to the
Space Plans or Working Drawings, (c) because of any
specification by Tenant of materials or installations in
addition to or other than Landlord's standard finish-out
materials, or (d) because a Tenant Party otherwise delays
completion of the Work. As used herein "Substantial
Completion," "Substantially Completed," and any derivations
thereof mean the Work in the Premises is substantially
completed (as reasonably determined by Landlord) in substantial
accordance with the Working Drawings. Substantial Completion
shall have occurred even though minor details of construction,
decoration, landscaping and mechanical adjustments remain to be
completed by Landlord.
7. Walk-Through: Punchlist. When Landlord considers the
Work in the Premises to be Substantially Completed, Landlord
will notify Tenant and within three business days thereafter,
Landlord's representative and Tenant's representative shall
conduct a walk-through of the Premises and identify any
necessary touch-up work, repairs and minor completion items
that are necessary for final completion of the Work. Neither
Landlord's representative nor Tenant's representative shall
unreasonably withhold his or her agreement on punchlist items.
Landlord shall use reasonable efforts to cause the contractor
performing the Work to complete all punchlist items within 30
days after agreement thereon; however, Landlord shall not be
obligated to engage overtime labor in order to complete such
items.
8. Excess Costs. The entire cost of performing the Work
(including design of the Work and preparation of the Working
Drawings, costs of construction labor and materials, electrical
usage during construction, additional janitorial services,
general tenant signage, related taxes and insurance costs, and
the construction supervision fee referenced in Section 10 of
this Exhibit, all of which costs are herein collectively called
the "Total Construction Costs") in excess of the Construction
Allowance (hereinafter defined) shall be paid by Tenant. Upon
approval of the Working Drawings and selection of a contractor,
Tenant shall promptly (a) execute a work order agreement
prepared by Landlord which identifies such drawings and
itemizes the Total Construction Costs and sets forth the
Construction Allowance, and (b) pay to Landlord 50% of the
amount by which Total Construction Costs exceed the
Construction Allowance. Upon Substantial Completion of the Work
and before Tenant occupies the Premises to conduct business
therein, Tenant shall pay to Landlord an amount equal to the
Total Construction Costs (as adjusted for any approved changes
to the Work), less (1) the amount of the advance payment
already made by Tenant, and (2) the amount of the Construction
Allowance. In the event of default of payment of such excess
costs, Landlord (in addition to all other remedies) shall have
the same rights as for an Event of Default under the Lease.
9. Construction Allowance. Landlord shall provide to
Tenant a construction allowance not to exceed $14.00 per
rentable square foot in the Premises (the "Construction
Allowance") to be applied toward the Total Construction Costs,
as adjusted for any changes to the Work. The Construction
Allowance shall not be disbursed to Tenant in cash, but shall
be applied by Landlord to the payment of the Total Construction
Costs, if, as, and when the cost of the Work is actually
incurred and paid by Landlord. The Construction Allowance must
be used within six months following the Commencement Date or
shall be deemed forfeited with no further obligation by
Landlord with respect thereto.
10. Construction Management. Landlord or its Affiliate or agent shall
supervise the Work, make disbursements required to be made to the contractor,
and act as a liaison between the contractor and Tenant and coordinate the
relationship between the Work, the Building and the Building's Systems. In
consideration for Landlord's construction supervision services, Tenant shall pay
to Landlord a construction supervision fee equal to three percent of the Total
11. Construction Renresentatives. Landlord's and Tenant's representatives for
coordination of construction and approval of change orders will be as follows,
provided that either party may change its representative upon written notice to
the other: -
Jones Lang LaSalle
C/O Lisa Donovan
5910 N. Central Expressway, Suite 1130
Dallas, Texas 75206
Telephone:
Telecopy:
<PAGE>
Tenant's Renresentative:
- -----------------------
Institutional Equity Holdings, Inc.
do Mike Mosley
8214 Weschester, Suite 500
Dallas, Texas 75225
Telephone:
Telecopy:
<PAGE>
12. Miscellaneous. To the extentnot inconsistent with this Exhibit, Section
S.(a) and Section 21 of this Lease shall govern -------------
the performance of the Work and Landlord's and Tenant's respective rights and
obligations regarding the improvements installed pursuant
thereto.
Tenant and coordinate the relationship between the Work, the Building and
the Building's Systems. In consideration for Landlord's construction
supervision services, Tenant shall pay to Landlord a construction
supervision fee equal to three percent of the Total Construction Costs.
11. Construction Renresentatives. Landlord's and Tenant's representatives for
coordination of construction and approval of change ----------------------------
orders will be as follows, provided that either party may change its
representative upon written notice to the other:
Institutional Equity Holdings, Inc.
5910 N. Central Expressway, Suite 1480
Dallas, Texas 75206
Re: Lease Agreement (the "Lease") dated August 18, 1999, between PremPlace
Limited Partnership, a Delaware limited partnership ("Landlord"), and
Institutional Equity Holdings, Inc., a Nevada corporation ("Tenant").
Capitalized terms used herein but not defined shall be given the meanings
assigned to them in the Lease.
Ladies and Gentlemen:
Landlord and Tenant agree as follows:
1. Condition of Premises. Tenant has accepted
possession of the Premises pursuant to the Lease. Any
improvements required by the tenns of the Lease to be made by
Landlord have been completed to the full and complete
satisfaction of Tenant in all respects except for the punchlist
items described on Exhibit A hereto (the "Punchlist Items"),
and except for such Punchlist Items, Landlord has fulfilled all
of its duties under the Lease with respect to such initial
tenant improvements. Furthermore, Tenant acknowledges that the
Premises are suitable for the Permitted Use.
2. Commencement Date, The Commencement Date of the Lease is
-----------------
3. Exniration Date. The Term is scheduled to expire on the last day of the month
of the Term, which date ---------- ---- 6. Binding Effect: Governing Law. Except
as modified hereby, the Lease shall remain in full effect and this -------
- ------------------ --- letter shall be binding upon Landlord and Tenant and
their respective successors and assigns. If any inconsistency exists or arises
between the terms of this letter and the terms of the Lease, the terms of this
letter shall prevail. This letter shall be governed by the laws of the state in
which the Premises are located.
Please indicate your agreement to the above matters by signing this
letter in the space indicated below and returning an executed original to us.
Agreed and accepted:
Sincerely,
JONES LANG LASALLE
By:
Name:
Title:
INSTITUTIONAL EQUITY HOLDINGS, INC.,
a Nevada corporation
By :
Robert A. Shuey, III,
4. Chief Executive Officer
<PAGE>
FORM OF TENANT ESTOPPEL CERTIFICATE
The undersigned is the Tenant under the Lease (defined
below) between_______________________ a ____________________,
as Landlord, and the undersigned as Tenant, for the Premises on
the ___________ floor(s) of the office building located at
____________________, __________ and commonly known as
___________________________ and hereby certifies as follows:
1. The Lease consists of the original Lease Agreement
dated as of ___________, 199 between Tenant and Landlord
predecessor-in-interest] and the following amendments or
modifications thereto (if none, please state "none"):
The documents listed above are herein collectively referred to
as the "Lease" and represent the entire agreement between the
parties with respect to the Premises. All capitalized terms
used herein but not defined shall be given the meaning assigned
to them in the Lease.
2. The Lease is in full force and effect and has not been modified, supplemented
or amended in any way except as provided in Section 1 above.
3. The Term commenced on __________________, 199 and
the Term expires, excluding any renewal options, on
_____________________, 200, and Tenant has no option to
purchase all or any part of the Premises or the Building or,
except as expressly set forth in the Lease, any option to
terminate or cancel the Lease.
4. Tenant currently occupies the Premises described in
the Lease and Tenant has not transferred, assigned, or sublet
any portion of the Premises nor entered into any license or
concession agreements with respect thereto except as follows
(if none, please state "none"):
5. All monthly installments of Basic Rent, all
Additional Rent and all monthly installments of estimated
Additional Rent have been paid when due through _________. The
current monthly installment of Basic Rent is $
6. All conditions of the Lease to be performed by
Landlord necessary to the enforceability of the Lease have been
satisfied and Landlord is not in default thereunder. In
addition, Tenant has not delivered any notice to Landlord
regarding a default by Landlord thereunder.
7. As of the date hereof, there are no existing defenses or offsets, or, to the
undersigned's knowledge, claims or any basis for a claim, that the undersigned
has against Landlord and no event has
<PAGE>
occurred and no condition exists, which, with the giving of
notice or the passage of time, or both, will constitute a
default under the Lease.
8. No rental has been paid more than 30 days in advance and no security
deposit has been delivered to Landlord except as provided in the Lease.
9. If Tenant is a corporation, partnership or other business entity,
each individual executing this Estoppel Certificate on behalf of Tenant hereby
represents and warrants that Tenant is a duly formed and existing entity
qualified to do business in the state in which the Premises are located and that
Tenant has full right and authority to execute and deliver this Estoppel
Certificate and that each person signing on behalf of Tenant is authorized to do
so.
10. There are no actions pending against Tenant under any bankruptcy or similar
laws of the United States or any state.
11. Other than in compliance with all applicable laws and incidental to
the ordinary course of the use of the Premises, the undersigned has not used or
stored any hazardous substances in the Premises.
12. All tenant improvement work to be performed by Landlord under the
Lease has been completed in accordance with the Lease and has been accepted by
the undersigned and all reimbursements and allowances due to the undersigned
under the Lease in connection with any tenant improvement work have been paid in
full.
Tenant acknowledges that this Estoppel Certificate may be delivered to
Landlord, Landlord's Mortgagee or to a prospective mortgagee or prospective
purchaser, and their respective successors and assigns, and acknowledges that
Landlord, Landlord's Mortgagee and/or such prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in disbursing
loan advances or making a new loan or acquiring the property of which the
Premises are a part and that receipt by it of this certificate is a condition of
disbursing loan advances or making such loan or acquiring such property.
Executed as of , 199.
----------------------------
TENANT:
a
By:
Name:.
Title:
<PAGE>
PARKING
Tenant shall use two reserved designated parking spaces and 19 undesignated
parking spaces in the parking garage/area associated with the Building (the
"Parking Area during the initial Term subject to such terms, conditions and
regulations as are from time to time applicable to patrons of the Parking Area
at no additional cost to Tenant. Tenant may, by delivering written notice of its
election to do so, convert up to ten of the undesignated parking spaces in the
Parking Area to reserved parking spaces in the Parking Area during the initial
Term subject to such terms, conditions and regulations as are from time to time
applicable to patrons of the Parking Area at a rate equal to $50.00 per reserved
vehicular parldng space month (plus all applicable taxes). Subject to
availability, Tenant may, by delivering written notice of its election to do so,
convert additional undesignated parking spaces in the Parking Area to reserved
parking spaces in the Parking Area during the initial Term at a rate equal to
$50.00 per reserved vehicular parking space per month. If, for any reason,
Landlord is unable to provide all or any portion of the parking spaces to which
Tenant is entitled hereunder, then Tenant's obligation to pay for such spaces
shall be abated for so long as Tenant does not have the use thereof; this
abatement shall be in full settlement of all claims that Tenant might otherwise
have against Landlord because of Landlord's failure or inability to provide
Tenant with such parking spaces
<PAGE>
RENEWAL OPTION
Provided no Event of Default exists and Tenant is
occupying the entire Premises at the time of such election,
Tenant may renew this Lease for one additional period of five
years, by delivering written notice of the exercise thereof to
Landlord not earlier than 12 months nor later than nine months
before the expiration of the Term. On or before the
commencement date of the extended Term, Landlord and Tenant
shall execute an amendment to this Lease extending the Term on
the same terms provided in this Lease, except as follows:
(a) Basic Rent shall be adjusted to $24.00
per rentable square foot in the Premises;
(b) Landlord shall provide a construction
allowance of $4.00 per rentable square foot in the
Premises to be applied toward tenant improvements, and
Landlord shall not provide to Tenant any other
allowances (e.g., moving allowance, construction
allowance, and the like) or other tenant inducements;
(c) Tenant shall have no further renewal
option unless expressly granted by Landlord in writing; and
(d) Tenant shall pay for the parking spaces
which it is entitled to use at the rates from time to
time charged to patrons of the Parking Area and/or any
other parking area associated with the Building during
the extended Term (plus all applicable taxes).
Tenant's rights under this Exhibit shall terminate
if(l) this Lease or Tenant's right to possession of the
Premises is terminated, (2) Tenant assigns any of its interest
in this Lease or sublets any portion of the Premises, (3)
Tenant fails to timely exercise its option under this Exhibit,
time being of the essence with respect to Tenant's exercise
thereof, or (4) Landlord determines, in its sole but reasonable
discretion, that Tenant's financial condition or
creditworthiness has materially deteriorated since the date of
this Lease Basic Rent shall be conditionally abated during the
first 60 days of the Term. Commencing with the 61st day of the
Term, Tenant shall make Basic Rent payments as otherwise
provided in the Lease. Notwithstanding such abatement of Basic
Rent (a) all other sums due under the Lease, including
Additional Rent and Tenant's share of Taxes shall be payable as
provided in the Lease, and (b) any increases in Basic Rent set
forth in the Lease shall occur on the dates scheduled therefor.
The abatement ofEasic Rent provided for in this Exhibit is conditioned
upon Tenant's full and timely performance of all of its obligations under the
Lease. If at any time during the Term an Event of Default by Tenant occurs, then
the abatement of Basic Rent provided for in this Exhibit shall immediately
become void, and Tenant shall promptly pay to Landlord, in addition to all other
amounts due to Landlord under this Lease, the full amount of all Basic Rent
herein abated.
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attomment
Agreement (this "AQreement"), is entered into as of August 18,
1999, by and between INSTITUTIONAL EQUITY HOLDINGS, INC., a
Nevada corporation ("Tenant"), having an office at 5910 N.
Central Expressway, Suite 1480, Dallas, Texas 75206, and
BANKERS TRUST COMPANY (successor-in-interest to Bankers Trust
Company of California, N.A. and together with its successors
and assigns, "Lender"), as Trustee under that certain Trust and
Servicing Agreement dated as of November 1, 1994, for Kidder
Peabody Mortgage Acceptance Corp. I, Mortgage Pass-Through
Certificates, Series 1994-C3, by and through GMAC Commercial
Mortgage Corporation, its Master Servicer under said Pooling
and Servicing Agreement, having an office at 650 Dresher Road,
Horsham, Pennsylvania 19044.
WITNIESSETH:
Lender is now the owner and holder of a deed of trust
or mortgage (the "Mort~a~e"), covering, among other things, the
real property commonly known and described as Premier Place,
and further described on Exhibit A attached hereto and made a
part hereof for all purposes, and the building and improvements
thereon (collectively, the "Mort~a~ed Pronerty"), securing the
payment of a loan (the "Loan") made by Lender to Landlord; and
Tenant is the owner of the lessee's or tenant's
interest under that certain Lease Agreement dated August 18,
1999 (the "Lease"), by and between Tenant and PRIEMIPLACE
LIMITED PARTNERSHIP, a Delaware limited partnership
("Landlord"), as landlord, covering 7,059 square feet of
rentable area (the "Premises") in the improvements constituting
a part of the Mortgaged Property; and
Tenant and Lender desire to enter into the following
agreements with respect to the priority of the Lease and
Mortgage; and
NOW, THEREFORE, for and in consideration of the
premises and mutual covenants hereinafter set forth, Lender and
Tenant hereby agree as follows:
1. Defined Terms. Capitalized terms used herein but
not defmed herein shall have the meanings given to such terms
------- -----
in the Lease.
2. Subordination. Tenant covenants and agrees with
Lender that, except as hereinafter set forth, all of Tenant's
rights, title and interest in and to the Mortgaged Property,
the Premises, the Lease and the leasehold estate created
thereunder are and shall be subject, subordinate and inferior
to the lien and security interests of the Mortgage and to any
and all increases, renewals, modifications, extensions and
substitutions thereof.
3. Non-disturbance. In the event of any foreclosure under the
Mortgage, or if conveyance or transfer of the Mortgaged
Property shall be made in lieu of foreclosure (any such
foreclosure or conveyance or transfer in lieu of foreclosure
being herein collectively referred to as "Foreclosure"), then
the Lease shall not be terminated as a result of such
Foreclosure, but rather shall continue in full force and effect
in accordance with the provisions thereof, and the rights of
Tenant under the Lease shall not be interfered with or
disturbed by any party owning the Mortgaged Properly or an
interest therein as a result of such Foreclosure, or by such
party's successors and assigns (any such party and its
successors and assigns being herein called "Such Owner");
provided, that Such Owner shall not be (a) liable for any act
or omission of, or subject to any rights or setoff, claims or
defenses otherwise assertable by Tenant against, any prior
owner of the Mortgaged Property (including, without limitation,
Landlord), (b) obligated to complete the construction of any
improvements under the Lease, (c) bound by any rents paid more
than one month in advance to any prior owner, (d) liable for
any security deposit not paid over to Such Owner by Landlord,
or (e) bound by any modification, amendment, extension or
cancellation of the Lease not consented to in writing by
Lender; and further provided, that nothing herein shall negate
the right of Such Owner to exercise the rights and remedies,
including termination of the Lease, of Landlord under the Lease
upon the occurrence of an Event of Default by Tenant under the
Lease and in accordance therewith and as to any Event of
Default by Tenant under the Lease existing at the time of
Foreclosure, such Foreclosure shall not operate to waive or
abate any action initiated by Landlord under the Lease to
terminate the same on account of such Event of Default.
4. Attorument. Tenant agrees that in the event of
Foreclosure, Tenant will attorn to Such Owner, and Tenant
affirms its obligations under the Lease to Such Owner and
agrees to pay all rentals and charges then due, or to become
due, under the Lease to Such Owner, all without change in the
terms or provisions of the Lease. Upon request by Such Owner or
Tenant, Such Owner and Tenant shall execute and deliver an
instrument or instruments confirming the non-disturbance and
attomment herein provided for. Tenant agrees that,
notwithstanding any contrary provisions of the Lease, the
liability of Such Owner and any successor or assign of Such
Owner shall be limited to his or its interest in the Mortgaged
Property, and no other assets of Such Owner other than his or
its interest in the Mortgaged Properly, shall be affected by
reason of any liability which Such Owner or his or its
successor in interest may have under the Lease.
5. Notices.
-------
(a) Tenant covenants and agrees with Lender
that Tenant shall send to Lender at the address set forth below
a copy of any notice of default, notice of intention to
terminate or notice of termination given by Tenant to Landlord
under the Lease, and, in the case of a notice of default,
Lender shall have the right to cure any such default on the
part of Landlord within the same period granted to Landlord
under the Lease. Tenant agrees to accept any such cure by
Lender to the same extent as if such cure had been tendered or
performed by Landlord.
(b) All notices, demands, requests, consents
and approvals which may or are required to be given by either
party to the owner under this Agreement shall be in writing and
shall be deemed given, delivered and received either (1) when
hand delivered (including by a recognized delivery service
providing a receipt therefor) or when received pursuant to any
delivery by telex, telefax, telecopier, telegram or overnight
mail service, or (2) the next business day following the date
deposited in the United States mail, certified or registered
mail, postage prepaid, addressed in either case as follows:
If to Lender: Bankers Trust Company
c/o GMAC Commercial Mortgage Corporation 650 Dresher Road
Horsham, Pennsylvania 19044
Attention: Executive Vice President - Servicing Administration
If to Tenant: Prior to the Term Commencement Date:
-----------------------------------
Institutional Equity Holdings, Inc.
8214 Weschester, Suite 500
Dallas, Texas 75225
Attention: Mike Mosley or Robert Shuey, III
Telephone: _________________________ Telecopy: __________________________
After the Term Commencement Date:
- ----- --------------------- ----
Institutional Equity Holdings, Inc.
5910 N. Central Expressway, Suite 1480
Dallas, Texas 75206
Attention: Mike Mosley or Robert Shuey, Ill
Telephone: ____________________________ Telecopy: ___________________________
Each party may designate such other parties or addresses to which such notices
may be sent by providing notice of the same in writing to the other party,
effective 15 days from the date of such party or address change notice is given
in accordance with this paragraph.
6. Payment of Rents. If the Lender notifies the Tenant of a default
under the Mortgage and demand is made that Tenant pay its rent and all other
sums due under the Lease to Lender, Tenant shall honor such demand and pay its
rent and all other sums due under the Lease directly to Lender or such other
person as it is directed pursuant to such notice. In connection therewith, the
Landlord, by its execution of this Agreement hereby acknowledges and agrees that
in the event of a default under the Mortgage, the Tenant may pay all rents and
all of the sums due under the Lease directly to the Lender or such other person
upon such notice from the Lender that the Landlord is in default. If the Tenant
shall make payments to the Lender or such other person following receipt of
notice that the Landlord is in default, the Landlord hereby waives any claims
against the Tenant for the amount of such payments made by the Tenant to the
Lender or such other person.
7. Landlord's Consent. Landlord is joining herein solely for the
purpose of consenting hereto and agreeing that Tenant may rely upon any and all
notices from Lender or Such Owner relating to the rights of Lender or Such Owner
hereunder or under the Mortgage or any related assignment of leases in favor of
Lender.
8. Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. Upon request by Such Owner or Tenant, Such Owner and Tenant shall
execute and deliver an instrument or instruments further confirming the
nondisturbance and attornment provided for in this Agreement.
9. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the state
--------- ---
in which the Mortgaged Property is located.
IN WITNESS WHEREOF, the parties day and year firm above written.
TENANT:
hereto have caused this Agreement to be duly executed the
INSTITUTIONAL EQUITY HOLDINGS, INC.,
a Nevada corporation
By:
Name:
Title:
<PAGE>
Address: 5910 N. Central Expwy., Suite 1480 Dallas, Texas 75206
BANKERS TRUST COMPANY, as Trustee
By: GMAC COMMERCIAL MORTGAGE CORP., as
Master Servicer
By:.
Name:
Title:
118 Welsh Road
Horsham, PA 19044
Attention: KPAC 1994 - C3 (QRP)
<PAGE>
The foregoing Paragraph 7 thereof.
LANDLORD:
Agreement is hereby consented and agreed to by the undersigned as set forth in
PREMPLACE LIMITED PARTNERSHIP
By: New Premplace Corp., its general partner
By:
Name:
Title:
<PAGE>
COMMONWEALTH OF PENNSYLVANIA ss.
ss.
COUNTY OF MONTGOMERY ss.
Notary Public in and for the State of. My Commission Expires:
<PAGE>
This instrument was acknowledged before me on ______________, 1999, by
_____________________ ___________ Vice President of GMAC Commercial Mortgage
Corporation, a California corporation, in its capacity as Master Servicer for
________________________, on behalf of said corporation.
Notary Public in and for the
Commonwealth of Pennsylvania
My Commission Expires:
<PAGE>
March 3. 2000
Mr. Michael Vinez
Institutional Equity Corporation
5910 North Central Expressway
Suite 1480
Dallas, Texas 75206
Dear Michael:
Enclosed please find one (1) copy of the final Tenant Improvement Tracking Sheet
for the Iiistitutional Equity project that itemizes the cost for Construction,
Space Plans, Engineering, and Management Fees. As shown, the remaining balance
is $17,145.60.
Upon review and approval please forward a check to BT-PREMIPLACE at 5910 N.
Central Expressway, Suite 1130, Dallas, Texas 75206 by March 10 2000.
In addition, I have not received the Acceptance of Premises or the Estoppel
Certificate that was delivered to your office in January. Please forward this
pertinent information with the construction check to may attention for the
Landlord file. After both Exhibits have been fully executed 1 will return one to
you for your records.
Should you have any questions please contact me at 214-891-6863.
Very trul yours,
Lori Sexton
Assistant General Manager
Leasing and Management
Jones Lang LaSalle Americas, Inc.
<PAGE>
[GRAPHIC OMITTED][GRAPHIC OMITTED]
<PAGE>
------------------------------------------------------------------
ARCHON GROUP, L.P.
------------------------------------------------
-----------------------------------------------------------------
ITenant Improvements - Payment Requests Tracking Sheet
-----------------------------------------------------------------
Portfolio: ARCHON GROUP, L.P. Tenant Name: INSTITUTIONAL EQUITY
----------------------------------------------------------------
-----------------------------------------------------------------
Asset Number: Suite Number: 1480
------------------------------------------------------------------
------------------------------------------------------------------
Property Name: PREMIER PLACE Request Date: 03-Mar-DO
-----------------------------------------------------------------
-----------------------------------------------------------------
Property Manager: LORI SEXTON General Dennehy & Associates
------------------------------------------------------------------
------------------------------------------------------------------
Asset Manager:
-----------------------------------------------------------------
----------------------------------------------------------------
CommentsCheck Request Attached? YES
1.1. ALLOWANCE 7,509 rsf x $14.00=
Invoice Copies Attached? YES $ 105,126.OO
Lein Waivers Attached? NO
----------------------------------------------------------------- -
----------------------------------------------------------------- -
W-9 Attached? NO (Old Vendor)
---------------------------------------------------
-------------------------------------------------------------
Description Invoice Amount Tenant Balance Remaining
Overage
<TABLE>
<S> <C> <C> <C> <C>
-------------------------------------------------------------
$ 105,126.00
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Interprise 40443 09/03/$9 75.00 $ 105,051,00
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Interprise 41391 11/03/$9 5,729.76 $ 99,321.24
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Schmidt&Stacy 15903dt 11/0$/99 2,134.69 $ 97,156.55
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Interprise 41699 11/29/$9 289.20 $ 96,897.35
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Dennehy 4188 11/29/$9 102,830.00 $ (5,932.65)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Dennehy 5009 12/28/$9 1219.00 $ (7,151.65)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Dennehy 5017 01/06/$000 11,561.00 $ (18,712.65)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Interprise 42172 01/06$2000 1,260.66 $ (19,973.31)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
B.J. Glass 43 01/18 $ 291.33 $ (20,264.64)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Credit for abandoned cable $ $ (19,014.64)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Change order - Dennehy Add Bun Warmer $ 766.00 $ (19,780.64)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Change order - Dennehy Misc Electrical $ 337.00 $ $ (20,117.64)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Management Fees $ 6,262.18 $ (26,379.82)
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Less Check Paid $ 9,234.22
----------------------------------------------------------
----------------------------------------------------------
Balance amount Payable $ (17,145.60)
-------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000852447
<NAME> EUROMED INC
<MULTIPLIER> 1
<CURRENCY> $US
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 315,904
<SECURITIES> 548,736
<RECEIVABLES> 723,385
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,889,438
<PP&E> 715,952
<DEPRECIATION> (333,543)
<TOTAL-ASSETS> 3,835,075
<CURRENT-LIABILITIES> 1,786,780
<BONDS> 0
0
10,975
<COMMON> 23,120
<OTHER-SE> 315,157
<TOTAL-LIABILITY-AND-EQUITY> 3,835,075
<SALES> 9,709,826
<TOTAL-REVENUES> 9,709,826
<CGS> 0
<TOTAL-COSTS> 12,183,187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 769,522
<INCOME-PRETAX> (3,330,827)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,330,827)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,330,827)
<EPS-BASIC> (1.64)
<EPS-DILUTED> (1.64)
</TABLE>
