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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission File Number 0-25056
FINANCIAL SERVICES ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-3262958
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two World Trade Center, 84th Floor, New York, NY 10048
- -------------------------------------------------- ------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 748-7000
--------------
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of class)
Redeemable Common Stock Purchase Warrants
(Title of class)
Units consisting of one share of Common Stock and two Warrants
(Title of class)
Series B Redeemable Common Stock Purchase Warrants
(Title of class)
Preferred Stock Purchase Rights
(Title of class)
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-K.
The aggregate market value of the Common Stock held by non-affiliates
of the registrant (assuming directors, executive officers and 5% stockholders
are affiliates), based on the Nasdaq National Market closing sales price of
$3-1/16 on March 26, 1997, was approximately $13,303,800.
As of March 26, 1997, 8,949,656 shares of Common Stock were
outstanding.
Documents Incorporated by Reference: Those portions of registrant's
Proxy Statement for Annual Meeting of Stockholders (which registrant intends to
file pursuant to Regulation 14A on or before April 30, 1997) that contain
information required to be included in Part III of this Form 10-K are
incorporated by reference into Part III hereof as provided therein.
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FINANCIAL SERVICES ACQUISITION CORPORATION
INDEX
PAGE
PART I
Item 1. Business....................................................... 3
Item 2. Properties..................................................... 13
Item 3. Legal Proceedings.............................................. 13
Item 4. Submission of Matters to a Vote of
Security-Holders............................................... 13
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters......................................................... 14
Item 6. Selected Financial Data......................................... 15
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 17
Item 8. Financial Statements and Supplementary Data..................... 25
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 25
PART III
Item 10. Directors and Executive Officers of the Registrant.............. 25
Item 11. Executive Compensation.......................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 26
Item 13. Certain Relationships and Related Transactions.................. 26
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. 26
Signatures....................................................... 27
Consolidated Financial Statements and Notes...................... F-1
Index to Consolidated Financial Statements....................... F-2
Exhibit Index................................................... X-1
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PART I
ITEM 1. BUSINESS
GENERAL
Financial Services Acquisition Corporation (the "Registrant" or "FSAC")
was incorporated in Delaware in August 1994 with the objective of acquiring or
merging with an operating business in the financial services industry. To this
end, FSAC consummated an initial public offering in December 1994 and raised net
proceeds of approximately $20 million.
On March 8, 1996, FSAC entered into a merger agreement to acquire Euro
Brokers Investment Corporation ("EBIC"), a privately-held domestic and
international inter-dealer broker for a broad range of financial instruments.
Pursuant to the merger agreement, a newly-formed, wholly-owned subsidiary of
FSAC merged (the "Merger") with and into EBIC on August 16, 1996, with EBIC
thereby becoming a wholly-owned subsidiary of FSAC. EBIC, together with its
subsidiaries and affiliates, currently comprise substantially all of FSAC's
business and assets and are hereinafter collectively with FSAC referred to as
the "Company."
Pursuant to the Merger, each outstanding share of EBIC common stock was
converted into the right to receive, after giving effect to certain adjustments
and subject to certain escrow arrangements, approximately, (i) 2.70 shares of
the common stock, $.001 par value ("Common Stock"), of FSAC (approximately
4,505,666 shares in the aggregate), (ii) 4.53 of FSAC's Series B redeemable
common stock purchase warrants (approximately 7,566,666 warrants in the
aggregate) and (iii) $13.14 in cash (approximately $22 million in the
aggregate). The intent and general effect of the stock and warrant components of
the Merger consideration was to provide former stockholders of EBIC with an
aggregate 50% post-Merger equity interest in FSAC; consistent with this
objective, the cash component of the Merger consideration was intended generally
to equalize the respective contributions of FSAC stockholders and EBIC
stockholders to the post-Merger consolidated net worth of FSAC by paying to the
former stockholders of EBIC an aggregate amount equal to the pre-Merger
difference between FSAC's and EBIC's respective net worths (each as calculated
in accordance with the merger agreement).
In connection with and immediately following the Merger, FSAC also
consummated an exchange with the holders of its outstanding options, issued in
connection with the 1994 initial public offering, to acquire 333,333 units of
FSAC (each unit consisting of one share of Common Stock and two warrants). In
the exchange, all such unit purchase options were acquired by FSAC for an
aggregate consideration consisting of 225,000 newly issued shares of Common
Stock.
As disclosed at the time of the Merger, FSAC continues to contemplate
making (subject to the advice of its financial advisors) an exchange offer in
1997 to acquire all of its outstanding warrants, on the basis of one share of
Common Stock for a number of warrants to be determined. Pursuant to an agreement
entered into at the time of the Merger, certain officers and 5% stockholders who
currently hold approximately 48% of all outstanding warrants are obligated to
tender into any such exchange offer that occurs prior to November 30, 1997 at
least such portion of the warrants then held by them as is proportionate to the
percentage of warrants tendered by all other warrant holders.
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There can be no assurance, however, that such an exchange offer will be
made or, if made, as to the exchange ratio at which it will occur or the other
terms and conditions thereof.
The Merger has been accounted for as a recapitalization of EBIC, with
the issuance of shares by EBIC for the net assets of FSAC. Accordingly,
financial and other information of the Company presented herein for dates and
periods prior to the Merger, unless otherwise indicated, represent financial and
other information of EBIC (and its subsidiaries and affiliates) for such dates
and periods.
OVERVIEW
The Company, through its subsidiaries and affiliates, is a leading
domestic and international inter-dealer brokerage firm, specializing in emerging
market debt, money market instruments, derivatives, natural gas and electricity,
repurchase agreements and other fixed income securities. The Company conducts
its business through principal offices in New York, London, Tokyo, Toronto,
Sydney and Mexico City and by means of correspondent relationships with other
brokers throughout the world. The Company operates in each of these six
financial centers (other than Tokyo and Sydney) through wholly-owned
subsidiaries. In Tokyo, the Company has a 50% interest in a partnership (the
"Tokyo Partnership") with Yagi Euro Corporation ("Yagi Euro") and a 15% minority
interest in Yagi Euro itself. In Sydney, the Company has a controlling interest
in a joint venture with management and a financial partner.
The Company functions primarily as an intermediary, matching up the
trading needs of its customers, who are primarily well-capitalized banks,
investment banks and broker-dealers. The Company assists its customers in
executing trades by identifying counterparties with reciprocal interests. The
Company provides its services through an international network of brokers who
service direct phone lines to most of the Company's approximately 2,000 clients
and through proprietary screen systems and other delivery systems that provide
customers with historical data and real-time pricing information in the
Company's various products. Customers use the Company's services for several
reasons. First, a customer can benefit from the Company's worldwide broker and
telecommunications network, which communicates with and services most of the
largest banks and securities firms. Second, the Company provides customers with
anonymity, thereby enhancing their flexibility and ability to act without
signaling their intentions to the marketplace. Third, because of its network,
the Company can provide high-quality pricing and market information, as well as
sophisticated analytics and trading and arbitrage opportunities.
The Company's transactions are principally of two types, (i)
transactions whereby the Company acts only as a matching broker and (ii)
transactions whereby the Company acts as a matched riskless principal. Primarily
in transactions involving money market instruments, derivative products and
certain repurchase agreements, the trades are arranged while preserving the
customers' anonymity, but executed at the last instant on a name give-up basis
and settled directly between the counterparties. In these transactions the
Company acts solely as the matching broker and is never a counterparty. In the
second type of transaction, primarily
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securities transactions, the Company acts as a matched riskless principal,
connecting the buyer and seller for the transaction on a fully anonymous basis
by having the Company act as the counterparty for each. This type of transaction
is then promptly settled through one of various clearing institutions with which
the Company has contractual arrangements. Except for limited positions in
connection with its municipal securities business (discussed below), the Company
does not in this or other types of trades it currently brokers seek to take
positions for its own account.
PRODUCTS
The Company's business generally falls into the brokerage of three
broad groups of products: (i) money market instruments, (ii) derivative products
and (iii) securities products.
Money Market Instruments
In general, money market instruments take the form of deposits or other
negotiable instruments placed by one financial institution with another, at an
agreed-upon rate of interest, for a fixed period of time. Money market
instruments primarily include Eurodollar deposits, term and overnight Federal
Fund deposits, Eurocurrency deposits, certificates of deposit, banker's
acceptances and short term commercial paper. The most traditional product in
this category is the Eurodollar deposit, which are U.S. dollar deposits placed
with financial institutions domiciled outside the United States (including
branches of U.S. banks). Eurocurrency deposits are non-dollar deposits placed
outside the country of denomination, such as Euro Swiss Franks, Euro
Deutchemarks and Euro Yen. The Company brokers money market instruments
predominantly to multinational banks.
Derivative Products
A derivative products transaction generally is an agreement entered
into by two parties, in which each commits to a series of payments based upon
the price performance of an underlying financial instrument or commodity for a
specified period of time. This category includes a broad range of sophisticated
financial techniques employed by multinational banks, financial institutions,
securities dealers and corporations. Some of the types of derivatives most
frequently brokered by the Company are interest rate swaps, interest rate
options, forward rate agreements and energy-related derivatives.
In an interest rate swap, two parties agree to exchange interest rate
payment obligations on a notional principal amount over the term of the swap. No
principal is exchanged, and market risk is limited to differences in the
interest payments. Swaps enable institutions that may not be able to obtain low
cost fixed rate funding, but who can borrow lower cost floating rate funds, to
swap those floating rate obligations for fixed rate obligations and obtain a
fixed rate cost of funds that they could not otherwise access. Interest rate
options, which may also be structured as "cap," "floor" or "swaption"
transactions, are transactions in which one party grants the other the right
(but not the obligation) to receive a payment equal to the amount by which an
interest rate either exceeds (for call options) or is less than (for put
options) a specified strike rate.
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Forward rate agreements (`FRAs") are over-the-counter, off-balance
sheet instruments similar to interest rate futures, designed to give the
counterparties protection against a shift in interest rates for time deposits.
The buyer, or borrower, of a FRA agrees to pay the seller, or lender, at some
specified future settlement date, an amount of interest based on a notional
principal at a fixed rate for a specified period of time. The seller agrees to
pay the buyer, on the same future settlement date, an amount of interest based
on the same amount of notional principal and the same period of time, but based
on the then-prevailing market rate for the time period. No actual principal is
exchanged. On the settlement date, the buyer and the seller calculate the
present value of the net interest owed, and one party pays the other
accordingly.
Energy-related derivatives, including options and physical contracts
based on natural gas, electricity and emissions, generally are transactions in
which payments based on fixed and floating commodities indices are exchanged.
The Company also brokers trades in cross currency swaps, in which
interest rate flows denominated in different currencies are exchanged, based on
predetermined notional amounts, in order to convert exposure in one currency to
another. In both the United Kingdom and Tokyo, a large portion of the Company's
derivative products business is non-dollar denominated. The Company brokers
derivative products predominantly to multinational banks and investment banks.
Securities Products
Products brokered by the Company in this category include debt
obligations issued by governments, banks and corporations. The Company brokers
transactions in municipal securities, emerging market debt, U.S Treasury zero
coupon bonds, U.S. domestic convertible bonds, U.S. Treasury options and other
corporate securities. This category also includes repurchase agreements.
Emerging market debt, including Brady bonds, local sovereign issues and
Euro bonds, as well as options and repurchase agreements on the foregoing, in
1996 constituted the fastest growing area within the securities products
category, and is brokered by specialized teams located in New York, London and
Mexico City and through a joint venture in Buenos Aires. The market coverage of
the teams from these locations is worldwide. The Company's brokerage of emerging
market debt utilizes direct communication phone lines and proprietary,
computerized screen systems located directly in customers' offices.
Repurchase agreements are contractual obligations entered into by two
counterparties, first to sell securities and then to repurchase those same
securities (or the reverse in the case of a buyer) at an agreed upon future date
and price. The Company acts as an intermediary primarily for the U.S. Primary
Government Dealer community (banks and dealers licensed to participate in
auctions of U.S. Treasury securities), as well as for a number of U.S. regional
banks and dealers, in the negotiation and execution of U.S. Treasury and
mortgaged-backed repurchase agreements.
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The Company disseminates repurchase agreement market information via its
proprietary, computerized screens and, in Canada, has begun brokering repurchase
agreements on Canadian securities through a proprietary, interactive dealing
system known as Canadian Automated Brokerage Service, in which executions,
instead of being "voice-brokered," are achieved through screens and keypads
located and activated in customers' offices. Based on the results and customer
acceptance of the initial testing of this system, the Company intends in April
1997 to use it to begin brokering Canadian government bills and short-dated
notes, which will involve a more extensive roll-out.
In June 1996, the Company began brokering municipal securities,
generally acting as a matched riskless principal, but also taking limited
proprietary positions. In October 1996, the Company also established a U.S.
convertible bond desk, generally brokering such instruments on a name give-up
basis.
In late 1995, the Company also began a securities lending business,
primarily in U.S. government and agency securities and U.S. corporate bonds, but
also in non-dollar government securities and corporate bonds, in which it
arranges for the lending of such securities from institutional investor
portfolios, in exchange for cash or other collateral, to securities dealers and
other market participants who need them to manage their positions. The Company
also engages in certain structured finance activities, primarily involving the
arranging of investment agreements between municipal bond issuers and financial
investment agreement providers.
The Company brokers securities products predominantly to banks,
investment banks and other financial institutions.
COMMUNICATIONS NETWORK AND INFORMATION SYSTEMS
The Company has a global communications network through which it
conducts its business and a sophisticated computerized information system over
which it receives and transmits current market information. Its teams of
computer and communications specialists provide technological support to the
network. The Company is continually upgrading its technological facilities in
order to access and collate market information and redistribute it virtually
instantaneously throughout its network. Through the continued development and
use of proprietary software, computerized screen displays, digital networks and
interactive capabilities, the Company keeps its communication, technology and
information systems as current as possible.
Due to the need for instantaneous communications, the majority of the
Company's customers are connected to the Company via direct point to point
telephone and data lines around the world. The Company's intranet, with its
sophisticated host computer system and digital facilities, is used to connect
via one network the Company's offices and specific customers who trade in
certain products, including emerging market debt, repurchase agreements,
options, bankers acceptances and certificates of deposit. In this way, all
parties have simultaneous access to market bids and offers.
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Most of the markets in which the Company operates are highly efficient,
offering participants immediate access and enormous liquidity. Some markets are
subject to a high degree of volatility. Even the slightest variation in price
can make the difference between missing or executing a transaction.
Consequently, the Company's business depends heavily on the use of advanced
telephone equipment, computer systems and pricing software. Direct line voice
communication, real-time computerized screen systems and instantaneous trade
execution for its clients are all imperative for the Company's continued success
in the inter-dealer brokerage business. For this reason, the Company intends to
continue to expand and enhance its communication and information system
networks. As discussed above, the Company is also currently developing and
testing an interactive trading system in selected securities in the Canadian
market.
PERSONNEL
As of February 28, 1997, the Company employed 561 brokers, plus an
additional administrative staff, including officers and senior managers, of 164
persons, for a total employee headcount of 725. Of the brokers, 279 were located
in the U.S. and 204 were located in Europe, with the balance distributed among
the Company's other office locations. None of the Company's employees are
covered by a collective bargaining agreement. The Company considers its
relations with employees to be good and regards compensation and employee
benefits to be competitive with those offered by other inter-dealer brokerage
firms.
GEOGRAPHIC DATA
Note 20 of the Notes to the Consolidated Financial Statements contains summary
financial information, for each year of the three-year period ended December 31,
1996, with respect to each of the Company's principal geographic locations.
COMPETITION
The inter-dealer brokerage industry is highly competitive. The success
of a company within this industry is dependent on the experience of and extent
of client networks developed by its personnel, its range of products, its
commission rates and the general quality, speed and reliability of its service.
While there are not many large international inter-dealer brokers and entry into
this industry is costly, the Company encounters intense competition in all
aspects of its business from several companies which are divisions of much
larger financial services conglomerates and therefore have significantly greater
resources than the Company, in addition to access to a wider pool of potential
clients. Moreover, all brokerage firms are subject to the pressures of offering
their services at a lower price. The use of volume discounting has become more
widespread in recent years. As a result, increases in market volumes do not
necessarily result in proportionate increases in brokerage commissions and
revenues.
As global communication advances and new technologies are developed,
the inter-dealer brokerage industry also will become more susceptible to the
possibility of losing clients to
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companies and products that facilitate fully automated dealing, allowing
principals to circumvent the intermediary and obviating the need for the
inter-dealer broker. In particular, Electronic Brokering Systems (a company
owned by a consortium of commercial banks) and Reuters 2000-2 are each
electronic systems that have reduced the need for voice brokering in the spot
foreign exchange market. While these systems so far have proved viable only in
markets involving very standardized products, and the Company believes that more
complex financial vehicles, in particular derivatives, are not amenable to fully
electronic matching, there can be no guarantee that such systems will not be
developed in the future. If developed, such systems could have significant
adverse effects on the Company's business, although, as discussed above, the
Company has spent considerable efforts developing, testing and beginning the
implementation of its interactive trading system in Canada.
The Company is inherently reliant on relationships with clients that
develop over time, and certain of the Company's brokers have established
long-term associations with customers. The Company's success depends to a
significant extent on these connections and on the performance and experience of
a number of key management and sales personnel. The loss of one or more of these
key employees, who are often the target of aggressive recruitment efforts by
competitors within the industry, could have a material adverse effect on the
Company. While the Company has entered into employment agreements with and
granted stock options to many of its key employees, and has no reason to believe
that other key personnel will not remain with the Company, there can be no
assurance that such employment agreements or stock-based compensation will be
effective in retaining such persons' services or that other key personnel will
remain with the Company indefinitely. Nor can there be any guarantee that the
Company will be able to attract and retain qualified, experienced individuals,
whether to replace current personnel or as a result of expansion, because
competition in the brokerage industry for such individuals is intense.
The Company also faces intense competition from other inter-dealer
brokers to achieve revenues from, and the widest dissemination and acceptance
of, the data generated and collected from its brokerage business. Although the
Company currently is seeking to enhance such revenues, there can be no
assurances that the Company will be successful in its efforts.
REGULATION
The Company and its subsidiaries, in the ordinary course of their
business, are subject to extensive regulation at international, federal and
state levels by various regulatory bodies which are charged with safeguarding
the integrity of the securities and other financial markets and protecting the
interests of customers participating in those markets.
Euro Brokers Maxcor Inc. ("EBMI"), a wholly owned subsidiary of the
Company, is registered as a broker-dealer with the Securities and Exchange
Commission ("SEC"), all applicable states, and is a member of the National
Association of Securities Dealers, Inc. ("NASD"). Broker-dealers are subject to
regulations that cover all aspects of the securities business, including initial
licensing requirements, sales and trading practices, safekeeping of
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customers' funds and securities, capital structure, record-keeping and the
conduct of directors, officers and employees. The SEC, other governmental
regulatory authorities, including state securities commissions and
self-regulatory organizations may institute administrative proceedings, which
may result in censure, fine, the issuance of cease-and-desist orders, the
suspension or expulsion of a broker-dealer, its officers or employees or other
similar consequences.
As a futures commission merchant, EBMI is also registered with the
Commodity Futures Trading Commission and is a member of the National Futures
Association and the New York Cotton Exchange and, as such, its activities in the
futures and options-on-futures markets are subject to regulation by these
bodies.
EBMI is also a member of the Government Securities Clearing Corporation
("GSCC") for the purpose of clearing certain U.S. Treasury Repurchase Agreements
and other U.S. Treasury securities. Such membership requires EBMI to maintain a
minimum net capital of $10,000,000, including a minimum deposit with GSCC of
$5,000,000.
Euro Brokers Inc. ("EBI"), a subsidiary of the Company, is an
investment advisor, registered with the SEC, pursuant to its securities lending
activities. As a result, EBI's investment advisory business is subject to
various federal and state laws and regulations that generally grant supervisory
agencies and bodies broad administrative powers, including the power to limit or
restrict EBI from carrying on its investment advisory business in the event that
it fails to comply with such laws and regulations and/or to impose other
censures and fines.
The Company's business is also subject to extensive regulation by
various non-U.S. governments and regulatory bodies, including the Bank of
England, the Securities and Futures Authority (the "SFA") and the Director
General of Fair Trading in the United Kingdom, the Ontario Securities
Commission, the Hong Kong Foreign Exchange and Deposit Brokers' Association, the
Bank of Japan, the Japanese Ministry of Finance and the Australian Securities
Commission. The compliance requirements of these different overseer bodies may
include, but are not limited to, net capital or stockholders' equity
requirements.
Additionally, as part of the harmonization process within the European
Community (the "EC"), member countries are required to adopt European
legislation, including an Investment Services Directive ("ISD") and Capital
Adequacy Directive ("CAD") which are designed to regulate the European market,
with the result that the qualification thresholds and ongoing compliance
requirements affecting the Company have recently undergone change. The SFA in
1996 issued new rules with respect to the ISD and CAD of the EC, and in
particular, regarding consolidated supervision. These rules impose varying
capital thresholds on the Company's U.K. subsidiaries depending upon, among
other things, the activities of such subsidiaries. The application of these
rules to the Company and its subsidiaries could result in the Company and/or its
subsidiaries having to meet more stringent capital adequacy requirements. The
SFA has currently confirmed the categorization of the Company's U.K. subsidiary,
Euro Brokers Financial Services Limited ("EBFSL"), as a "Category D" firm which,
as such, is not subject to
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the consolidated supervision rules. Accordingly, the Company believes that none
of the currently conducted operations of EBFSL or its other U.K. subsidiaries
subject any of them to any capital requirements of the SFA for which they are
not in compliance. It is possible that future activities of such subsidiaries,
including any activities that cause the loss of EBFSL's categorization as a
Category D firm, may require the allocation of additional capital.
Additional legislation and regulations, changes in rules promulgated by
the SEC or other U.S. federal and state governmental regulatory authorities,
self-regulatory organizations or clearing organizations, as well as non-U.S.
governments or governmental regulatory agencies, or changes in the
interpretation or enforcement of laws and rules, may directly affect the manner
of operation and profitability of the Company. In addition, any expansion of the
Company's activities into new areas may subject the Company to additional
regulatory requirements that could similarly affect such operation and
profitability.
CAUTIONARY STATEMENTS
As provided under the Private Securities Reform Act of 1995, the
Company desires to caution investors that the following factors, among others
(including the factors discussed under the "Competition" and "Regulation"
headings above), could affect the Company's results of operations and cause such
results to differ materially from those anticipated in forward-looking
statements made in this report and elsewhere by or on behalf of the Company.
Economic and Market Conditions
The Company's brokerage business and its profitability are affected by
many factors, including the volatility of securities markets, the volume, size
and timing of securities transactions, the level and volatility of interest
rates, legislation affecting the business and financial communities and the
economy in general. Low trading volume may reduce revenues, which would
generally negatively impact profitability because a portion of the Company's
costs are fixed.
Liability for Unsettled Trades
The Company functions as an intermediary, matching the trading needs of
financial institutions by providing specialized services. Some of these
transactions are executed on a name give-up basis, that is, once the specific
economic terms of a proposed transaction are agreed, the names of the individual
counterparties are disclosed, and subject to acceptance of the credit, the
transaction is completed directly by both counterparties. Other transactions are
completed with the Company acting as a matched riskless principal in which the
respective parties to the transaction know the Company as the counterparty. The
transactions are then settled through a clearing institution. In the process of
executing brokerage transactions, from time to time in the fast moving markets
in which the Company operates, miscommunications can arise whereby transactions
are completed with only one counterparty ("out trades"), thereby creating a
potential liability for the Company. These occurrences usually become known to
the Company on the day
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of the trade or, as a result of the settlement process, within a few days of the
trade. Out trades generally increase with increases in the volatility of the
market. In general, the Company does not experience a high incidence of out
trades, but in those situations in which they occur, the Company typically
disposes of the unmatched position within a short time frame. While out trades
have not had a significant adverse affect on the Company to date, there can be
no guarantee that the incidence of such occurrences will not increase in the
future or that they will not have a material adverse effect on the financial
condition or results of operations of the Company at that time.
Clearing Arrangements
Daiwa Securities America Inc. ("Daiwa") acts as EBMI's primary clearing
agent on a fully-disclosed basis. Under the terms of their agreement, Daiwa
clears as principal a significant portion of EBMI's transactions in emerging
market debt and, among other services, prepares and mails confirmations and
monthly statements to customers. All customers are pre-approved by Daiwa and,
accordingly, once Daiwa matches and confirms both sides of a trade, Daiwa
accepts all credit risks associated with any customer non-performance of such
trade. Although the Daiwa/ EBMI relationship has been ongoing for approximately
3 years, the agreement is terminable by either party upon 30 days' prior notice.
In the event of a termination, EBMI believes that a new clearing arrangement
could be established in a timely fashion with another clearing correspondent on
terms acceptable to EBMI. It remains possible, however, that the disruption from
such a change, or the terms of any such new arrangement, could have a material
adverse effect on the Company's results of operations or financial condition.
European Market Unification
The "European Monetary Union" is scheduled to commence on January 1,
1999 when the European Currency Unit will be replaced by the "Euro" at the
conversion rate of 1:1, and those national currencies which are to participate
in the European Monetary Union will ultimately cease to exist as separate
currencies by virtue of being replaced by the Euro. The introduction of a single
currency for the EC could eliminate the European cross-currency market and have
an adverse impact on the Company's business. Moreover, deregulation within the
EC will allow brokers from any EC country to conduct business in any other EC
country without the necessity of complying with the specific local regulations,
and could increase the competitive challenges faced by the Company.
Litigation and Arbitration
Many aspects of the Company's business involve varying risks of
liability. In recent years, there has been an increasing incidence of litigation
and arbitration involving participants in the inter-dealer brokerage industry,
including employee claims alleging discrimination or defamation in connection
with terminations and competitor claims alleging theft of trade secrets, unfair
competition or tortious interference in connection with new employee or new desk
hires. A settlement or judgment related to these or similar types of claims or
activities could have a material adverse effect on the Company's results of
operations or financial condition.
12
<PAGE>
Lack of Diversification
EBIC and its subsidiaries and affiliates currently comprise
substantially all of FSAC's business and assets. Accordingly, the prospects for
FSAC's performance and the market prices for FSAC's securities is highly
dependent upon the performance of EBIC's inter-dealer brokerage business.
Although FSAC is continuously seeking to strengthen and improve EBIC's
inter-dealer brokerage business, it is also currently exploring various options
for diversifying FSAC's businesses and sources of income. These possibilities
include the establishment of an asset management subsidiary, the sale and other
exploitation of data generated and collected in the course of EBIC's business
and/or acquisitions or other business combinations to enhance or complement
EBIC's business. There can be no assurances, however, that FSAC will be
successful in achieving these goals or others related to diversification or, if
achieved, whether they will positively affect the Company's financial condition
and results of operations.
ITEM 2. PROPERTIES
The Company has principal offices in each of the following locations:
New York, New York; London, England; Tokyo, Japan; Toronto, Canada; Greenwich,
Connecticut; Mexico City, Mexico; and Sydney, Australia. The Company leases all
of its office space and has material lease obligations with respect to its New
York and London premises. The Company occupies an aggregate of approximately
49,000 square feet of space in 2 World Trade Center in downtown New York under
leases expiring on various dates from 2004 through 2007 (with a lease break
provision in 2002). The Company occupies approximately 36,000 square feet of
space in downtown London under a lease expiring in 2018 (with a lease break
provision in 2003).
The Company believes that its facilities are suitable and adequate for
its present and anticipated purposes. See Note 15 of Notes to Consolidated
Financial Statements for further information regarding future minimum rental
commitments under the Company's existing leases.
ITEM 3. LEGAL PROCEEDINGS
The Company and/or its subsidiaries are subject to various legal
proceedings, arbitrations and claims that arise in the ordinary course of their
businesses. Although the results of legal proceedings and arbitrations cannot be
predicted with certainty, based on information currently available and
established reserves, management believes that resolving these matters will not
have a material adverse impact on the Company's consolidated financial condition
or results of operations as set forth in the Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of its fiscal year ended December 31, 1996.
13
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Since November 12, 1996, the Company's Common Stock has been traded on
the Nasdaq National Market tier of The Nasdaq Stock Market under the symbol
FSAT. Prior to that time, the Common Stock was quoted on the OTC Bulletin Board,
an NASD sponsored and operated inter-dealer automated quotation system for
equity securities not listed on The Nasdaq Stock Market. Such over-the-counter
market quotations reflect inter-dealer prices, without retail markups, markdowns
or commissions and may not necessarily represent actual transactions.
The following table sets forth (i) the range of high and low sales
prices for the Common Stock, as reported by The Nasdaq Stock Market, for the
period beginning on November 12, 1996 when the Common Stock began trading on the
Nasdaq National Market and (ii) for all other periods, the range of high and low
closing bid prices for the Common Stock on the OTC Bulletin Board, as reported
by the NASD.
COMMON STOCK:
High Low
---- ---
YEAR ENDED DECEMBER 31, 1995
----------------------------
First Quarter............................. $4-3/8 $4-1/4
Second Quarter............................ 4-9/16 4-1/4
Third Quarter............................. 4-5/8 4-1/2
Fourth Quarter............................ 4-5/8 4-3/8
YEAR ENDED DECEMBER 31, 1996
----------------------------
First Quarter............................. $4-7/8 $4-5/8
Second Quarter............................ 5-1/16 4-7/8
Third Quarter............................. 5-3/8 4-13/16
Fourth Quarter (through November 11)...... 5-1/4 3-1/2
Fourth Quarter (from November 12)......... 4 2-5/8
As of March 25, 1997 there were 62 holders of record of the Common
Stock. The Company is aware that certain holders of record hold a substantial
number of shares of Common Stock as nominees for a significant number of
beneficial owners. Based on a broker-dealer inquiry made by the Company's
transfer agent in early March 1997, the Company believes there are approximately
460 beneficial owners of the Common Stock.
The Company has never declared any cash dividends on the Common Stock.
It is the present intention of the Company's Board of Directors to retain all
earnings, if any, for use in the Company's business operations and, accordingly,
the Company does not anticipate declaring any cash dividends on the Common Stock
in the foreseeable future.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations," each included elsewhere in this Form 10-K. Statement of Operations
data presented below includes reclassifications of certain revenue and expense
items which are not directly associated with operations. Such reclassifications
include interest income, interest expenses, foreign exchange effects and other
non-operating items.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
Revenue:
Commission income $ 113,931,938 $ 135,577,625 $ 144,586,661 $ 171,576,327 $ 178,109,899
Other income 424,094 722,838 207,522 518,052 590,959
------------- ------------- ------------- ------------- -------------
114,356,032 136,300,463 144,794,183 172,094,379 178,700,858
------------- ------------- ------------- ------------- -------------
Operating costs:
Payroll and related costs 71,104,552 86,763,854 96,207,365 110,915,257 115,536,731
Communication costs 12,412,982 12,987,800 15,633,010 17,187,573 18,288,441
Travel and entertainment 7,671,840 8,681,483 10,493,903 10,224,384 11,355,183
Depreciation and
amortization 3,857,122 4,192,404 4,248,181 4,568,164 4,734,101
Occupancy costs 2,868,475 4,452,232 5,640,070 5,854,525 6,539,150
Clearing fees 863,445 3,647,556 3,777,710 4,411,515
General and administrative 5,312,106 7,148,335 6,817,988 7,550,059 8,255,316
Write-off of goodwill 12,643,948
------------- ------------- ------------- ------------- -------------
103,227,077 137,733,501 142,688,073 160,077,672 169,120,437
------------- ------------- ------------- ------------- -------------
Operating profit (loss) 11,128,955 ( 1,433,038) 2,106,110 12,016,707 9,580,421
------------- ------------- ------------- ------------- -------------
Other non-operating income (expenses):
Interest expense ( 3,264,992) ( 2,702,759) ( 1,635,547) ( 775,077) ( 693,132)
Other non-operating expenses ( 631,900) ( 2,086,718) ( 520,607) ( 295,344) ( 632,247)
Other non-operating income 1,487,918 490,000
Interest income 1,450,349 1,203,082 1,090,789 1,462,744 1,801,442
Foreign exchange gain (loss) ( 1,581,467) 64,003 ( 17,139) 214,295 ( 8,229)
------------- ------------- ------------- ------------- -------------
( 4,028,010) ( 2,034,474) ( 592,504) 606,618 467,834
------------- ------------- ------------- ------------- -------------
Income (loss) before provision
for income taxes and
minority interest 7,100,945 ( 3,467,512) 1,513,606 12,623,325 10,048,255
Provision for income taxes 6,037,250 4,858,901 3,333,989 7,393,196 6,650,606
------------- ------------- ------------- ------------- -------------
Income (loss) before minority
interest 1,063,695 ( 8,326,413) ( 1,820,383) 5,230,129 3,397,649
Minority interest 371,020 ( 442,673) ( 250,480) ( 1,767,854) 307,311
------------- ------------- ------------- ------------- -------------
Net income (loss) $ 1,434,715 ($ 8,769,086) ($ 2,070,863) $ 3,462,275 $ 3,704,960
============= ============= ============= ============= =============
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets $ 72,163,710 $ 76,631,544 $ 71,914,532 $ 82,078,742 $ 97,172,715
Obligations under capitalized 3,209,983 2,766,961 2,804,836 2,284,806 1,428,764
leases
Notes payable 28,236,068 27,080,598 9,830,284 7,880,032 7,379,762
Total liabilities 52,452,868 65,695,698 43,360,381 50,185,747 64,881,249
Minority interest 1,321,410 548,179 492,154 501,731 ( 159,408)
Stockholders' equity 18,389,432 10,387,667 28,061,997 31,391,264 32,450,874
PRO FORMA PER SHARE INFORMATION(a)
Net income $ 0.38 $ 0.41
Book value $ 3.48 $ 3.60
Pro forma common shares outstanding 9,011,295 9,011,295
</TABLE>
(a) The Merger acquisition of EBIC by FSAC in August 1996 has been
accounted for as a recapitalization of EBIC. For meaningful
year-to-year comparisons, pro forma per share information, including
pro forma common shares outstanding, has been presented as if all
shares to be issued in the Merger had been issued as of January 1, 1995
and all such shares were outstanding for the merged and recapitalized
entity since that date. See Notes 1 and 13 of the Notes to the
Consolidated Financial Statements.
16
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's revenues currently are derived almost exclusively from
commissions. Generally, the Company receives a commission from both
counterparties in a trade, although in trades of certain products only one party
pays a commission. The dollar amount of the average transaction generating a
commission varies significantly by the type of product and the duration of the
transaction. Similarly, the applicable commission will vary according to product
and may also reflect high transaction volume discounts or other customer
rebates.
Other sources of revenues include interest income, derived primarily
from deposits with clearing organizations and interest associated with municipal
securities positions, gains and losses on securities transactions, earnings from
the Company's equity affiliate, Yagi Euro, and foreign exchange gains and
losses.
The largest single component of the Company's expenses is compensation
paid to its brokers. Attracting and retaining qualified brokerage personnel with
strong customer relationships is a prerequisite in the Company's business and in
the brokerage business in general. Brokers are generally compensated by a
combination of fixed salary and incentive payments based on commissions
generated by them or on the net profitability of their particular products. For
this purpose, revenue and direct expenses are regularly tracked by desk (which
may involve one or more products) and often by broker, at each location. Direct
client contact, including entertainment, is also an integral part of the
Company's marketing program and represents another significant component of its
expenses.
The cost of maintaining sophisticated trading room environments and a
worldwide telecommunications network also comprises another significant portion
of the Company's expenses. It is this infrastructure that enables the Company to
support its existing client base and improve and expand its existing product
lines, as well as provide a base for offering brokerage services in newly
developing financial instruments. Expansion also generally leads to an increase
in the number of brokerage personnel since the markets usually require brokers
to specialize in a single product or group of related products, rather than to
function as market generalists.
Reference is made to Item 6 above, "Selected Financial Data," for a
summary table comparison of changes in the major categories of revenues and
expenses over the Company's five most recent fiscal years.
YEAR ENDED DECEMBER 31, 1996
Management believes that the Company's results of operations for 1996
represent reasonable overall performance in view of the difficult market
conditions experienced generally by the inter-dealer brokerage industry during
the year, especially in the latter half when continued
17
<PAGE>
flat yield curves contributed to fairly quiet markets. In addition, many of the
Company's more mature product groups, such as money market instruments and
interest rate derivatives, experienced significant reductions in commission
rates and thus commission income. These reductions, due in part to consolidation
in the banking sector and lower margins being earned by the Company's customers,
were not offset by increased volume. Accordingly, the Company has continually
reviewed and attempted to modify its cost structure, and in particular broker
compensation arrangements, in order to make its costs more variable with changes
in commission income.
At the same time the Company has continued to expand its product range,
most noticeably by commencing the brokerage of municipal securities in June 1996
and the brokerage of U.S. convertible debt in October 1996 and by continuing the
expansion of its international emerging market debt network into Mexico and
South America, with further expansion into the Russian Federation and South
Africa planned for early 1997. Additionally, 1996 saw the Company continue to
expand its energy derivatives group in conjunction with the deregulation of
energy markets in the United States.
The Company is continually investing in information distribution and
technology. In this regard, during 1996 the Company undertook the implementation
of an interactive electronic execution system. The system, known as Canadian
Automated Brokerage Service, was deployed in the Canadian securities market in
late 1996 with an initial roll-out to Canadian repurchase agreements, with
expansion into Canadian government bills and short-dated bonds planned for the
first half of 1997. While it is too early to gauge the system's success,
management believes that the Canadian markets are ready to accept and embrace
such a system at this time.
After completion of the Merger transaction between FSAC and EBIC in
August 1996, the Company's management performed a complete review of the
Company's operations, including each and every trading desk in each of its
offices. In connection therewith, the Company decided to discontinue or combine
certain of its desks that were either performing poorly or were not viewed as an
integral part of its core business. In addition, shortly after the completion of
the Merger, certain senior management members decided to terminate their
employment with the Company. These members have entered into agreements which,
among other things, include their covenants not to compete with the business of
the Company for varying periods of time. Aggregate pre-tax costs of
approximately $2,825,000 associated with the decision to discontinue certain
desks and with these management separations have been fully accrued as of
December 31, 1996.
During 1996, the Company's 51% owned Hong Kong subsidiary, Yagi Euro
(Hong Kong) Limited ("YEHK"), continued to sustain losses and entered into a
joint venture with Martin Brokers (Hong Kong) Limited ("Martins"), which was
experiencing similar difficulties, in the hope of rationalizing costs and
improving operating results. The transaction involved each of YEHK and Martins
contributing their respective businesses and net assets to the joint venture in
exchange for the common stock of the joint venture (57.5% to YEHK and 42.5% to
Martins) and notes. Subsequent to the completion of the joint venture, however,
the performance of the combined Hong Kong operation was not acceptable.
Discussions with the Company's Japanese
18
<PAGE>
partner in YEHK, Yagi Euro, resulted in the joint decision to sell YEHK's
interest in the venture to Martins. The disposition resulted in a loss of
approximately $277,000 and was fully reserved for as of December 31, 1996.
In addition, during 1996, a United Kingdom subsidiary of the Company
formed and acquired a controlling interest in a joint venture in Sydney,
Australia, established primarily for the brokerage of Australian dollar and
Southeast Asian derivative products. The joint venture has incurred both greater
start-up and operating costs than expected, and the Company is currently in
discussions with the joint venture management and its financial partner to
effect a recapitalization that is expected to include an infusion of secured
funds by management and specified cost rationalizations. Although the Company
hopes to maintain the joint venture and improve its profitability, there can be
no assurances that it will be able to do so. Any number of factors, including an
inability to agree on a recapitalization plan or at any time to meet capital
adequacy requirements of Australian regulators or to sustain sufficient cash
flows, could require the liquidation or sale of the joint venture. Accordingly,
the Company has fully reserved for its net capital investment in the joint
venture, in an amount of approximately $150,000, as of December 31, 1996.
In the aggregate, in the last quarter of 1996 the Company incurred
pre-tax charges of approximately $3.3 million related to the desk closings,
management changes, the Hong Kong sale and Australia joint venture reserve
discussed above.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Commission income for the year ended December 31, 1996 increased
$6,533,572 to $178,109,899, compared to $171,576,327 for the year ended December
31, 1995. Commission income for 1996 is primarily reflective of increased
business in emerging market debt, commodity derivatives and repurchase
agreements. Part of the increase is also attributable to new business in 1996,
principally municipal securities and securities lending.
Interest income for 1996 increased $338,698 to $1,801,442, compared to
$1,462,744 for 1995, due to a slight increase in interest bearing assets,
principally deposits with clearing organizations, as well as approximately
$147,000 in interest associated with municipal securities positions held during
1996.
Other income for 1996 decreased by $149,618 to $582,729, from $732,347
in 1995. The decrease was principally due to the net effect for 1996 of reduced
foreign exchange gains of approximately $220,000, reduced earnings from the
Company's equity affiliate, Yagi Euro, of approximately $210,000 and an increase
in income from gains on securities transactions of $333,000.
Payroll and related costs for 1996 increased $4,621,474 to
$115,536,731, compared to $110,915,257 for 1995. These costs increased slightly
to 64.9% of commission income for 1996, as compared to 64.6% of commission
income for 1995. The increase was primarily due to the
19
<PAGE>
inclusion of a provision for severance and related costs of $2,787,000 which was
accrued to fully provide for the costs associated with certain desk closures and
management changes. Absent the provision for severance costs, payroll costs as a
percentage of commission income decreased, reflective of cost reductions
initially implemented in 1995 and management's ongoing efforts to reduce
compensation costs by more closely correlating compensation to commission
income.
Communication costs for 1996 increased $1,100,868 to $18,288,441,
compared to $17,187,573 for 1995. The increase was primarily the result of
expansion of business, principally in emerging market debt.
Travel and entertainment costs for 1996 increased $1,130,799 to
$11,355,183, or 6.4% of commission income, compared to $10,224,384 or 6.0% of
commission income for 1995. The overall increase is reflective of efforts to
expand business as well as gain market share in existing businesses where quiet
markets prevailed.
Occupancy costs represent expenses incurred in connection with various
operating leases in respect of the Company's office premises and include base
rent and related escalations, maintenance, electricity and real estate taxes.
These costs increased $684,625 to $6,539,150 for 1996, compared to $5,854,525
for 1995. The increase is principally attributable to the increase in rent of
$284,000 for premises of the Hong Kong operation pursuant to the joint venture
with Martins, the absence of a rent credit received in 1995 for the U.K.
premises aggregating $250,000, and the costs of other small offices opened in
Connecticut, Pennsylvania and Mexico pursuant to expansion of business.
In 1996, depreciation and amortization expense, which consists
principally of depreciation of communication and computer equipment, automobile
leases and amortization of leasehold improvements, increased $165,937 to
$4,734,101, compared to $4,568,164 for 1995, reflective of continued expansion
of the Company's proprietary screen system principally in emerging market debt
related business.
Clearing fees are fees for transaction settlements and credit
enhancement which are charged by clearing institutions where the Company acts as
riskless principal on a fully matched basis. These expenses increased $633,805
to $4,411,515 for 1996, compared to $3,777,710 for 1995, due principally to the
growth in the volume of transactions in emerging market debt.
General, administrative and other expenses include such operating
expenses as corporate insurance, office supplies and expenses, legal fees, audit
and tax fees, consulting fees, food costs, and dues to various industry
associations. These expenses increased $1,042,159 to $8,887,562 in 1996,
compared to $7,845,403 in 1995. The increase is principally attributable to
costs of approximately $427,000 that were accrued in 1996 relating to the
disposition of the Hong Kong joint venture, reserves for losses at the Australia
joint venture, and non-recurring legal and accounting fees of approximately
$632,000.
20
<PAGE>
Interest expense decreased $81,945 to $693,132 in 1996, compared to
$775,077 in 1995. The net decrease is attributable to the effects of reduced
interest expense associated with a repayment of principal on the Company's
indebtedness incurred in connection with the acquisition of certain EBIC
predecessor companies, partially offset by an increase in interest associated
with financing municipal securities positions.
Provision for income taxes decreased $742,590 to $6,650,606 for 1996,
compared to $7,393,196 for 1995, primarily due to a decrease in income before
tax. The increased effective tax rate reflects the effect of losses in certain
taxing jurisdictions for which no tax benefits have been recorded. The Company
has historically incurred a high effective tax rate due to the non-deductibility
of certain expenses, including entertainment expenses, and amortization of
intangibles. The impact of these adjustments on the effective tax rate is also
affected by the level of pre-tax accounting income.
Minority interest of $307,311 for 1996 represents the total interests
of approximately $1,404,000 of the Company's joint venture partners in the
aggregate losses incurred by the Hong Kong and Australia operations, reduced by
the interest of approximately $1,096,000 of the Company's partner in the Tokyo
Partnership. Minority interest of $1,767,854 for 1995 relates primarily to the
joint venture partner's share of earnings of the Tokyo Partnership.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Commission income for the year ended December 31, 1995 increased
$26,989,666 to $171,576,327, compared to $144,586,661 for the year ended
December 31, 1994. The increase in commission income in 1995 was the result of
the inclusion of a full year of operations for several initiatives undertaken in
1994, primarily the Tokyo Partnership, Yen derivatives, options on government
bonds and equity options. Nonetheless, revenues were adversely impacted by
reductions in commissions from interest rate swaps, energy related commodity
swaps and repurchase agreements in New York.
Interest income for 1995 increased $371,955 to $1,462,744, compared to
$1,090,789 for 1994, due to an increase in the average cash and cash equivalents
balances, accompanied by an increase in the average interest rates earned on
short-term investments.
Other income for 1995 of $732,347 primarily reflects earnings from
equity affiliates, principally Yagi Euro, and other income for 1994 of $697,522
primarily reflects a gain on the sale of exchange memberships.
Payroll and related costs for 1995 increased $14,707,892 to
$110,915,257, compared to $96,207,365 for 1994. These costs, as a percentage of
commission income, remained consistent in 1994 and 1995 and, in general,
increased proportionally with revenues, since competitive pressures continued to
require fixed salary plus incentive arrangements based on an individual or desk
basis. The 1995 results also include the costs incurred in connection with the
consolidation
21
<PAGE>
and elimination of certain products, while the cost reductions associated
therewith will not be fully realized until 1996.
Communication costs for 1995 increased $1,554,563 to $17,187,573,
compared to $15,633,010 for 1994. Increased costs resulted from an expansion in
the communications network in emerging market debt and the addition of certain
new products by the New York, Tokyo, Toronto and Hong Kong offices. Such
increases were partially offset by a reduction of costs in London resulting from
a consolidation of certain desks.
Travel and entertainment costs for 1995 decreased $269,519 to
$10,224,384, or 6.0% of commission income, compared to $10,493,903, or 7.3% of
commission income, for 1994. The reduction was the result of increased efforts
to control such expenses.
Occupancy costs increased $214,455 to $5,854,525 for 1995, compared to
$5,640,070 for 1994. The increase was the net result of expansion of office
space in New York, Connecticut and Hong Kong and the closure of the Company's
Los Angeles office in late 1994.
In 1995, depreciation and amortization expense increased $319,983 to
$4,568,164, compared to $4,248,181 for 1994. This increase was the result of the
continued expansion of certain business in New York and the expansion of the
Company's proprietary screen system in New York and London.
Clearing fees increased $130,154 to $3,777,710, compared to $3,647,556
for 1994, due to an increase in the volume of transactions, offset by only a
slight reduction in the per transaction fee.
General, administrative and other expenses for 1995 increased $489,669
to $7,845,403, compared to $7,355,734 for 1994, partially due to costs
associated with the Tokyo Partnership, which for 1995 reflect a full year of
operations versus only a partial year for 1994 (during which the partnership was
formed).
Interest expense for 1995 decreased $860,470 to $775,077, compared to
$1,635,547 for 1994, due to the reduction of debt outstanding.
Provision for income taxes for 1995 increased $4,059,207 to $7,393,196,
compared to $3,333,989 for 1994. This increase was primarily the result of the
increase in taxable income. The 1995 effective tax rate includes the effect of
the non-deductibility of entertainment expenses, state and city taxes and
foreign income subject to higher income tax rates. The 1994 effective tax rate
includes the effect of these elements and of foreign losses for which no tax
benefit was recognized.
Minority interest in consolidated subsidiary increased $1,517,374 to
$1,767,854 in 1995, from $250,480 in 1994, primarily due to increased
profitability of the Tokyo Partnership.
22
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
A substantial portion of the Company's assets, similar to other
brokerage firms, is liquid, consisting of cash, cash equivalents and assets
readily convertible into cash, such as commissions receivable, receivables from
broker-dealers, customers and clearing firm and securities owned.
Securities owned principally reflect municipal security positions taken
in connection with the Company's brokerage of municipal securities business,
which commenced in June 1996. Positions are generally held for short periods of
time and for the purpose of facilitating anticipated customer needs and are
generally financed by a combination of cash margin and short term borrowings
from the Company's clearing firm. At year-end 1996, as reflected on the
Consolidated Statement of Financial Condition, the Company had net assets
relating to securities transactions of approximately $4.5 million, reflecting
securities owned of approximately $8.7 million, securities sold, not yet
purchased of approximately $1.7 million and a receivable from broker-dealers and
customers of approximately $9.0 million, financed by short-term borrowings of
approximately $9.7 million and a payable to broker-dealers and customers of
approximately $1.8 million.
During August 1996, one the Company's U.S. subsidiaries became a member
of GSCC for the purpose of clearing U.S. Treasury Repurchase Agreements. Such
membership required a minimum net regulatory capital of $10,000,000, including a
pledge of $5,000,000 in U.S. Treasury Securities, which has been reflected as
deposits with clearing organizations on the Consolidated Statement of Financial
Condition.
Notes payable at December 31, 1996 of approximately $7.4 million
includes $6,279,000 that reflects the remaining three equal annual installments
of principal due on November 30 of each of 1997, 1998 and 1999 on notes issued
by the Company in connection with the acquisition of EBIC's predecessor business
in December 1986. In each of 1995 and 1996, the Company repaid approximately $2
million of the notes. The three remaining annual installments, and interest
thereon, are expected to be met from operating activities. The other
approximately $1.1 million included in notes payable reflects notes issued to
minority stockholders in August 1996 by the Company's Hong Kong joint venture,
the accounts of which are included on a consolidated basis in the Consolidated
Financial Statements. In connection with the Company's February 1997 disposition
of its interest in such joint venture, such notes payable are no longer a
liability of the Company or any of its subsidiaries or affiliates.
Net cash used in operations for 1996 was approximately $1.0 million.
The net use of cash is the result of net income of approximately $3.7 million
adjusted to reflect approximately $4.7 of non-cash expenses principally for
depreciation and amortization. These positive cash effects were offset by
decreases in cash attributable to increased deposits with clearing organizations
of $5.1 million (in connection with the Company's GSCC membership described
above) and an increase in net assets associated with securities transactions of
approximately $4.5 million (as described above).
23
<PAGE>
Operating activities in 1995 provided approximately $10.4 million in
cash, resulting from approximately $3.5 million in net income plus approximately
$4.6 million in non-cash items, principally depreciation and amortization, and
the net positive effects of other working capital items.
Operating activities in 1994 reflect cash used of approximately $1.2
million which is attributable to a net loss of approximately $2.1 million
adjusted for the non-cash impact of depreciation and amortization of $4.2
million, less the effect of the timing of compensation payments (that is,
payments made in 1994 for which the accruals were made in 1993).
The Company and its subsidiaries, in the ordinary course of their
business, are subject to extensive regulation at international, federal and
state levels by various regulatory bodies which are charged with safeguarding
the integrity of the securities and other financial markets and protecting the
interest of customers. The compliance requirements of these different regulatory
bodies may include, but are not limited to, net capital or stockholders' equity
requirements. The Company has historically met regulatory net capital or
stockholders' equity requirements and believes it will be able to continue to do
so in the future.
Investing Activities
Investing activities for 1996 and 1995 reflect cash used of
approximately $3.9 million and $2.2 million, respectively, for purchases of
fixed assets. The increase is reflective of the Company's continuing commitment
to upgrade communication and information system technology. Investing activities
for 1994 provided cash of $315,000, which was the net effect of fixed asset
purchases of approximately $4.3 million and sales of short term investments
and exchange memberships aggregating approximately $4.6 million.
Financing Activities
Net cash used in financing activities for 1996 was approximately $4.3
million and is reflective of a net effect of approximately $2.2 million of net
cash used in connection with the deemed recapitalization of EBIC pursuant to the
Merger (as reflected in the Consolidated Statement of Cash Flows included in the
Consolidated Financial Statements), net repayment of notes payable of
approximately $1.0 million (as described above) and decreased obligations under
expired capitalized leases of approximately $1.0 million.
Cash used in financing activities for 1995 was approximately $2.5
million and is primarily attributable to repayment of notes payable of
approximately $2.0 million and decreased obligations under capitalized leases of
approximately $500,000.
In 1994 financing activities provided approximately $1.7 million in
cash, primarily relating to the net impact of the retirement of debt from
proceeds associated with the issuance of new common stock.
24
<PAGE>
EFFECTS OF INFLATION
Because the Company's assets are to a large extent liquid in nature,
they are not significantly affected by inflation. However, increases in certain
Company expenses due to inflation, such as employee compensation, travel and
entertainment and occupancy and communication costs, may not be readily
recoverable in the price of its services. In addition, to the extent inflation
increases or decreases volatility in the securities markets, the Company's
brokerage business is likely to be affected by corresponding increases or
decreases in brokerage transaction volumes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item 8 is included as a separate section of this
Form 10-K. See Item 14 and the F-pages that follow.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The information required by Item 9 is incorporated herein by reference
to the Company's definitive proxy statement for the 1997 Annual Meeting of
Stockholders (the "Proxy Statement"). The Company intends to file the Proxy
Statement with the SEC on or prior to April 30, 1997. The Company has previously
reported such information, which relates to its decision of December 2, 1996 to
change independent accountants from BDO Seidman LLP to Price Waterhouse, LLP, in
Amendment No. 1 to its Current Report on Form 8-K/A, filed with the SEC on
December 13, 1996.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated herein by reference
to the Proxy Statement. The Company intends to file the Proxy Statement with the
SEC on or prior to April 30, 1997.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference
to the Proxy Statement, except that such incorporation by reference shall not be
deemed to specifically incorporate by reference the information referred to in
Item 402(a) of Regulation S-K. The Company intends to file the Proxy Statement
with the SEC on or prior to April 30, 1997.
25
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated herein by reference
to the Proxy Statement. The Company intends to file the Proxy Statement with the
SEC on or prior to April 30, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated herein by reference
to the Proxy Statement. The Company intends to file the Proxy Statement with the
SEC on or prior to April 30, 1997.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
Listed on page F-2 of the Consolidated Financial Statements
included in this Form 10-K.
(a)(2) Financial Statement Schedules
All schedules are omitted because they are not applicable or the
required information is shown in the Consolidated Financial
Statements.
(a)(3) Exhibits
Listed in the Exhibit Index appearing at page X-1 of this Form
10-K.
(b) Reports on Form 8-K
A Current Report on Form 8-K, dated December 2, 1996, was filed
by the Company with the SEC on December 6, 1996, with Amendment
No. 1 thereto filed with the SEC on Form 8-K/A on December 13,
1996. The Reports related to the Company's decision to engage
Price Waterhouse LLP as its independent accountant and to
dismiss BDO Seidman, LLP as such independent accountant.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
FINANCIAL SERVICES ACQUISITION CORPORATION
By: /s/ Gilbert D. Scharf
----------------------------------
Gilbert D.Scharf,
Chairman of the Board, President and Chief
Executive Officer
Dated: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Gilbert D. Scharf Chairman of the Board, President March 27, 1997
- -------------------------- and Chief Executive Officer
Gilbert D. Scharf
/s/ Michael J. Scharf Chief Financial and Principal March 27, 1997
- -------------------------- Accounting Officer, Treasurer,
Michael J. Scharf Secretary and Director
/s/ Larry S. Kopp Director March 27, 1997
- --------------------------
Larry S. Kopp
/s/ Denis Martin Director March 27, 1997
- --------------------------
Denis Martin
/s/ James W. Stevens Director March 27, 1997
- --------------------------
James W. Stevens
/s/ Frederick B. Whittemore Director March 27, 1997
- ---------------------------
Frederick B. Whittemore
/s/ William B. Wigton Director March 27, 1997
- --------------------------
William B. Wigton
27
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995 AND 1996
F-1
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995 AND 1996
CONTENTS PAGE
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS F-3
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Statement of Financial Condition F-4
Consolidated Statement of Operations F-6
Consolidated Statement of Changes in Stockholders' Equity F-7
Consolidated Statement of Cash Flows F-8
Notes to the Consolidated Financial Statements F-10
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors
and Stockholders of
Financial Services Acquisition Corporation
In our opinion, the accompanying consolidated statement of financial
condition and the related consolidated statements of operations,
changes in stockholders' equity and cash flows present fairly, in all
material respects, the financial position of Financial Services
Acquisition Corporation and its subsidiaries at December 31, 1995 and
1996, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
New York, New York
March 6, 1997
F-3
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31, December 31,
1995 1996
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $27,013,350 $18,231,926
Restricted cash (Note 15) 1,785,490 1,968,851
Commissions receivable 18,502,261 18,558,643
Equity in affiliated companies 2,951,864 2,756,741
Receivable from clearing firm 1,592,650 2,200,062
Deposits with clearing organizations 2,076,302 7,181,992
Securities owned 8,751,276
Receivable from broker-dealers and
customers 9,042,613
Prepaid expenses and other assets 6,944,925 6,177,118
Deferred tax asset 5,520,348 6,662,193
Furniture, equipment and leasehold
improvements 13,264,743 13,624,500
Intangible assets 2,426,809 2,016,800
----------- -----------
Total assets $82,078,742 $97,172,715
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(CONTINUED)
<TABLE>
<CAPTION>
December 31, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1996
- ------------------------------------ ------------- ------------
<S> <C> <C>
Liabilities:
Short-term borrowings $ $ 9,688,983
Accounts payable and accrued liabilities 16,001,920 17,336,032
Accrued compensation payable 15,998,721 22,973,060
Income taxes payable 7,328,244 1,804,543
Obligations under capitalized leases 2,284,806 1,428,764
Securities sold, not yet purchased 1,724,531
Payable to broker-dealers and customers 1,826,250
Deferred taxes payable 692,024 719,324
Notes payable 7,880,032 7,379,762
------------- ------------
50,185,747 64,881,249
------------- ------------
Minority interest in consolidated subsidiaries 501,731 ( 159,408)
------------- ------------
Commitments and contingencies
(Notes 15 and 16)
Stockholders' equity (Note 13):
Preferred stock, at December 31, 1995, none
authorized, at December 31, 1996, $.001
par value, 1,000,000 shares authorized,
none outstanding
Common stock, at December 31, 1995, Class A
$.01 par value; 2,000,000 shares authorized,
none outstanding, Class B $.001 par value,
2,000,000 shares authorized, 1,671,290
outstanding; at December 31, 1996, $.001 par
value, 30,000,000 shares authorized,
9,011,295 outstanding 4,258 9,011
Additional paid-in capital 48,193,040 33,533,806
Treasury stock at cost ( 10,177,107)
Accumulated deficit ( 7,251,041) ( 3,546,081)
Notes receivable from stockholders ( 2,243,709)
Foreign translation adjustment 2,865,823 2,454,138
------------- -------------
Total stockholders' equity 31,391,264 32,450,874
------------- -------------
Total liabilities and stockholders' $ 82,078,742 $ 97,172,715
equity ============= =============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
F-5
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
December 31, December 31, December 31,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Revenue:
Commission income $ 144,586,661 $ 171,576,327 $ 178,109,899
Interest income 1,090,789 1,462,744 1,801,442
Other income 697,522 732,347 582,729
------------- ------------- -------------
146,374,972 173,771,418 180,494,070
------------- ------------- -------------
Costs and expenses:
Payroll and related costs 96,207,365 110,915,257 115,536,731
Communication costs 15,633,010 17,187,573 18,288,441
Travel and entertainment 10,493,903 10,224,384 11,355,183
Occupancy costs 5,640,070 5,854,525 6,539,150
Depreciation and
amortization 4,248,181 4,568,164 4,734,101
Clearing fees 3,647,556 3,777,710 4,411,515
General, administrative
and other expenses 7,355,734 7,845,403 8,887,562
Interest expense 1,635,547 775,077 693,132
------------- ------------- -------------
144,861,366 161,148,093 170,445,815
------------- ------------- -------------
Income before provision for income
taxes and minority interest 1,513,606 12,623,325 10,048,255
Provision for income taxes 3,333,989 7,393,196 6,650,606
------------- ------------- -------------
Income (loss) before minority
interest ( 1,820,383) 5,230,129 3,397,649
Minority interest in consolidated
subsidiaries ( 250,480) ( 1,767,854) 307,311
------------- ------------- -------------
Net income (loss) ($ 2,070,863) $ 3,462,275 $ 3,704,960
============= ============= =============
Pro forma common shares outstanding
(Note 1) 9,011,295 9,011,295
Pro forma earnings per share (Note 1) $.38 $.41
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-6
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
Notes
Additional receivable Foreign
Common paid-in Treasury Accumulated EBIC from translation
stock capital stock deficit warrants stockholders adjustment Total
------ ----------- ----------- ----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $3,348 $18,442,515 ($3,623,839) ($8,642,453) $5,141,145 ($3,720,351) $2,787,302 $10,387,667
Retirement of warrants 5,141,145 (5,141,145)
Net loss (2,070,863) (2,070,863)
Acquisition of treasury stock (6,553,268) (6,553,268)
Issuance of common stock, net of
expenses 910 24,616,526 24,617,436
Repayment of stockholder notes 1,436,465 1,436,465
Foreign translation adjustment 244,560 244,560
------ ----------- ----------- ----------- ---------- ----------- ---------- -----------
Balance at December 31, 1994 4,258 48,200,186 (10,177,107) (10,713,316) (2,283,886) 3,031,862 28,061,997
Net income 3,462,275 3,462,275
Expenses relating to acquisition
of common stock (7,146) (7,146)
Repayment of stockholder notes 40,177 40,177
Foreign translation adjustment (166,039) (166,039)
------ ----------- ----------- ----------- ---------- ----------- ---------- -----------
Balance at December 31, 1995 4,258 48,193,040 (10,177,107) (7,251,041) (2,243,709) 2,865,823 31,391,264
Retirement of treasury stock (2,587) (10,174,520) 10,177,107
Net income 3,704,960 3,704,960
Foreign translation adjustment (411,685) (411,685)
Recapitalization in connection
with the Merger (See Note 1)
Retirement of EBIC stock (1,671) 1,671
Issuance of shares to EBIC
shareholders (Note 13) 9,011 18,234,239 18,243,250
Cash consideration paid to
EBIC shareholders (21,955,012) (21,955,012)
Repayment of stockholder
notes 2,243,709 2,243,709
EBIC expenses incurred in
connection with Merger (765,612) (765,612)
------ ----------- ----------- ----------- ---------- ----------- ---------- -----------
Balance at December 31, 1996 $9,011 $33,533,806 $ ($3,546,081) $ $ $2,454,138 $32,450,874
====== =========== =========== =========== ========== =========== ========== ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-7
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the
Year Ended
December 31, December 31, December 31,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 2,070,863) $ 3,462,275 $ 3,704,960
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 4,248,181 4,568,164 4,734,101
Provision for doubtful accounts ( 196,300) ( 48,956) ( 45,361)
Gain on sale of exchange memberships ( 490,000) ( 14,000)
Undistributed earnings of affiliates ( 137,775) ( 537,571) ( 636,148)
Minority interest in consolidated subsidiaries ( 55,416) 9,249 ( 635,630)
Imputed interest expense 120,806 129,358 106,287
Amortization of deferred expenses 12,031 5,269 1,457
Deferred income taxes 1,971,504 ( 4,522,662) ( 1,055,635)
Change in assets and liabilities:
Decrease (increase) in commissions receivable 1,894,546 ( 1,654,378) 644,622
(Decrease) increase in receivable from clearing firm ( 1,155,733) 852,110 ( 607,412)
Increase in deposits with clearing organizations ( 1,877,041) ( 5,092,794)
(Increase) decrease in securities owned ( 967,500) 967,500 ( 8,751,276)
Increase in receivable from broker-dealers and customers ( 9,042,613)
Decrease (increase) in prepaid expenses and other assets 2,398,411 ( 478,684) 1,184,235
Increase in short-term borrowings 9,688,983
Increase (decrease) in accounts payable and accrued
liabilities 1,173,089 ( 243,403) 569,448
(Decrease) increase in accrued compensation payable ( 7,887,478) 5,552,106 6,231,912
Increase (decrease) in securities owned, not yet purchased 1,280,000 ( 1,280,000) 1,724,531
Increase in payable to broker-dealers and customers 1,825,650
(Decrease) increase in income taxes payable ( 1,345,847) 5,494,722 ( 5,555,680)
----------- ----------- -----------
Net cash (used in) provided by operating activities ( 1,208,344) 10,384,058 ( 1,006,363)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of fixed assets ( 4,340,179) ( 2,059,449) ( 4,030,004)
Net sale of short-term investments 2,957,056
Investment in equity affiliates 36,885 ( 93,745) 113,070
Net (purchase) sale of exchange memberships 1,661,000 ( 25,000)
----------- ----------- -----------
Net cash provided by (used in) investing activities 314,762 ( 2,178,194) ( 3,916,934)
----------- ----------- -----------
</TABLE>
F-8
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(continued)
<TABLE>
<CAPTION>
For the Year Ended
December 31, December 31, December31,
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from financing activities:
Repayment of notes payable (2,037,502) (1,027,396)
Repayment of subordinated note payable (17,660,000)
Issuance of common stock, net of expenses 1,617,436 (7,146)
Issuance of secured demand note 23,000,000
Decrease in obligations under capitalized leases (119,010) (507,946) (1,001,529)
Acquisition of treasury stock (5,221,260)
Issuance of shares in connection with Merger 18,243,250
EBIC expenses incurred in connection with Merger (765,612)
Cash merger consideration paid to EBIC shareholders (21,955,012)
Increase in minority shareholders (25,001)
Repayments of notes receivable from stockholders 105,676 40,177 2,243,709
------------ ------------ ------------
Net cash provided by (used in) financing activities 1,722,842 (2,512,417) (4,287,591)
------------ ------------ ------------
Effect of exchange rate changes on cash 233,079 (35,370) 429,464
------------ ------------ ------------
Net increase (decrease)in cash and cash equivalents 1,062,339 5,658,077 (8,781,424)
Cash and cash equivalents at beginning of year 20,292,934 21,355,273 27,013,350
------------ ------------ ------------
Cash and cash equivalents at end of year $ 21,355,273 $ 27,013,350 $ 18,231,926
============ ============ ============
Supplemental disclosures of cash flow information:
Interest paid $ 1,736,028 $ 650,007 $ 616,750
Income taxes paid 2,828,794 881,875 12,070,364
Supplemental disclosure of non-cash activities:
Reduction of notes receivable from stockholders in
connection with acquisition of treasury stock $ 1,330,789
Conversion of secured demand note to equity 23,000,000
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-9
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:
Financial Services Acquisition Corporation (the "Company") was incorporated in
Delaware on August 18, 1994 with the objective of acquiring or merging with an
operating business in the financial services industry. To this end, the Company
consummated an initial public offering in December 1994 and raised net proceeds
of approximately $20 million.
On March 8, 1996, the Company entered into a merger agreement to acquire Euro
Brokers Investment Corporation ("EBIC"), a privately-held international and
domestic inter-dealer broker for a broad range of financial instruments,
pursuant to which a newly-formed, wholly-owned subsidiary of the Company would
merge (the "Merger") with and into EBIC. The Merger was consummated on August
16, 1996. Pursuant thereto, each outstanding share of EBIC common stock was
converted into the right to receive, after giving effect to certain adjustments
and subject to certain escrow arrangements, approximately (i) 2.70 shares of the
common stock, $.001 par value ("Common Stock"), of the Company (approximately
4,505,666 shares in the aggregate), (ii) 4.53 of the Company's Series B
redeemable common stock purchase warrants (approximately 7,566,666 warrants in
the aggregate) and $13.14 in cash (approximately $22 million in the aggregate).
In connection with and immediately following the Merger, the Company also
consummated an exchange with the holders of its outstanding options, issued in
connection with the 1994 initial public offering, to acquire 333,333 units of
the Company (each unit consisting of one share of Common Stock and two
warrants). In the exchange, all such unit purchase options were acquired by the
Company for an aggregate consideration consisting of 225,000 newly issued shares
of Common Stock.
EBIC, incorporated in December 1986, through its subsidiaries and affiliates, is
primarily an inter-dealer broker of money market instruments, derivative
products and selected securities, with offices in major financial centers,
including New York, London and Tokyo, and correspondent relationships with other
brokers throughout the world. EBIC and its affiliates comprise substantially all
of the Company's business and assets.
The Merger has been accounted for as a recapitalization of EBIC, with the
issuance of shares by EBIC for the net assets of the Company. The historical
assets and liabilities of the Company and EBIC have been combined and reflected
in the statement of financial condition at their respective book values. The
consolidated results of operations and financial position of the Company for
periods and dates prior to the Merger are the consolidated historical results of
operations and financial position of EBIC and its subsidiaries and affiliates
for such periods and dates. Pro forma number of shares outstanding and related
pro forma earnings per share information have been presented as if all shares to
be issued in the Merger had been issued as of January 1, 1995 (See Note 13) and
all such shares were outstanding for the merged and recapitalized entity since
that date.
F-10
<PAGE>
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of presentation:
The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries and other entities over which it exercises
control. All significant intercompany balances and transactions have been
eliminated. Investments in unconsolidated affiliates where the Company may
exercise significant influence over operating and financial policies have been
accounted for using the equity method. Earnings from investments accounted for
under the equity method have been reflected as other income in the statement of
operations.
Revenue recognition:
Commission income is recognized on a trade date basis.
Securities transactions:
Securities transactions are recorded on a trade date basis.
Securities owned and securities sold but not yet purchased are carried at market
value with unrealized gains and losses reflected in income.
Gains on securities transactions of approximately $333,000 for the year ended
December 31, 1996 have been included in other income in the Consolidated
Statement of Operations.
Furniture, equipment and leasehold improvements:
Depreciation of furniture and equipment is computed on a straight line basis
using estimated useful lives of 3 to 5 years. Leasehold improvements are
amortized over the terms of the related leases or estimated useful lives of the
improvements, whichever period is shorter.
Exchange memberships:
The Company carries its exchange memberships at cost. At December 31, 1995 and
1996, the market value of these memberships approximated cost.
At December 31, 1995 and 1996, the cost of such memberships aggregated $140,000
and has been included in prepaid expenses and other assets.
Intangible assets:
Intangible assets principally include the values assigned to customer lists and
are being amortized on a straight line basis over their estimated useful lives,
which approximate 15 years. Accumulated amortization of intangible assets
aggregated $6,756,592 and $7,166,596 at December 31, 1995 and 1996,
respectively.
F-11
<PAGE>
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Continued:
The Company has a policy of reviewing the carrying value of intangible assets to
consider whether events or changes in circumstances have occurred - such as the
loss of significant customers, a significant change in the revenues received
from customers or a significant change in the nature of the brokerage business -
which would indicate that the carrying amount of such assets may not be
recoverable, in which case the Company would evaluate the estimated future cash
flows expected to result from the asset. Should the expected future cash flows
be less than the carrying amount of the asset, an impairment loss would be
recognized to the extent that the carrying value exceeds the fair value of the
assets. There have been no impairment losses with respect to intangible assets.
Foreign currency translation:
Assets and liabilities denominated in foreign currencies are translated to U.S.
dollars using exchange rates at the end of the year; revenues and expenses are
translated at average rates for the year.
Gains and losses on foreign currency translation of the financial statements of
operations whose functional currency is other than the U.S. dollar, together
with related hedges and tax effects, are reflected in the foreign translation
adjustment account in stockholders' equity. Foreign currency exchange gains and
losses from transactions and balances denominated in a currency other than the
related operating subsidiary's functional currency are recorded in income.
Fair value of financial instruments:
The Company's securities owned and securities sold, not yet purchased are
carried at market value. Additionally, off-balance sheet financial instruments
are valued at market with unrealized gains and losses recorded in the financial
statements.
Management estimates that the aggregate net fair value of other financial
instruments recognized on the statement of financial condition (including cash
equivalents, commissions and other receivables, and notes payable) approximates
their carrying value, as such financial instruments are short-term in nature,
bear interest at current market rates, or, in the case of notes payable, bear
interest at rates which management believes are comparable to current rates
which could be obtained in similar financings.
Income taxes:
The Company and its subsidiaries account for certain income and expense items in
a period different from that reported for tax purposes. The tax effects of
transactions are generally recognized in the financial statements in the same
period as the related items of income and expense, regardless of when they are
recognized for tax purposes.
F-12
<PAGE>
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Continued:
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3- ACQUISITION AND SALE OF BUSINESS:
During 1996, the Company's 51% owned Hong Kong subsidiary, Yagi Euro (Hong Kong)
Limited ("YEHK") entered into a joint venture with Martin Brokers (Hong Kong)
Limited ("Martins") whereby YEHK contributed its business and substantially all
of its net assets to the joint venture in exchange for 57.5% of the common stock
of the joint venture and a note. Martins also contributed its business and net
assets in exchange for 42.5% of the common stock and notes. The Company's
financial statements include the accounts of the joint venture on a consolidated
basis and, at December 31, 1996, include notes payable aggregating approximately
$1,100,000 that were issued to minority shareholders in connection with the
transaction. As described in Note 19, YEHK sold its interest in the joint
venture to Martins in February 1997.
NOTE 4- CASH AND CASH EQUIVALENTS:
The Company considers all short-term investments with an initial maturity of
three months or less to be cash equivalents.
NOTE 5- COMMISSIONS RECEIVABLE:
Commissions receivable are reflected in the statement of financial condition net
of allowances for doubtful accounts of $471,100 and $434,400 at December 31,
1995, and 1996, respectively.
NOTE 6- RELATED PARTY TRANSACTIONS:
The Company incurred interest expense which was in respect of debt payable to
its then majority shareholder aggregating $789,200 for the year ended
December 31, 1994. All such debt was repaid during 1994.
Prepaid expenses and other assets include loans to employees aggregating
$2,317,500 and $1,526,000 at December 31, 1995 and 1996, respectively. Such
loans generally bear interest at the prime rate and are short term in nature.
F-13
<PAGE>
NOTE 7- EQUITY IN AFFILIATED COMPANIES:
The Company's equity in affiliated companies principally consists of a 15%
equity interest in Yagi Euro Corporation ("Yagi Euro"), which operates the
business of a broker of money market, foreign exchange and derivative products
in Tokyo and is 85% owned by Yagi Tanshi Company, Limited.
In addition, in 1994 the Company entered into a partnership arrangement with
Yagi Euro to broker certain derivative products in Tokyo. The results of such
business are consolidated in the Company's financial statements and Yagi Euro's
approximately 50% interest in the related profit or loss is presented as
minority interest.
The Company's investments in equity affiliates are as follows:
December 31, December 31,
1995 1996
------------ ------------
Yagi Euro $ 2,794,211 $ 2,604,439
Other 157,653 152,302
------------ ------------
$ 2,951,864 $ 2,756,741
============ ============
Summarized financial information for Yagi Euro is as follows:
December 31, December 31,
1995 1996
------------ ------------
Total assets $ 21,740,692 $ 20,729,326
Total liabilities 3,266,547 3,366,396
Revenues 14,310,972 10,169,693
Net income 2,735,871 1,296,149
NOTE 8 - FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS:
Furniture, equipment and leasehold improvements are summarized below:
December 31, December 31,
1995 1996
------------ ------------
Furniture and telephone equipment $ 11,512,903 $ 13,579,847
Leasehold improvements 6,329,807 6,865,342
Computer and related equipment 7,265,569 10,193,793
Automobiles 3,113,004 2,156,887
------------ ------------
28,221,283 32,795,869
Less- Accumulated depreciation
and amortization ( 14,956,540) ( 19,171,369)
------------ ------------
$ 13,264,743 $ 13,624,500
============ ============
F-14
<PAGE>
NOTE 9 - OBLIGATIONS UNDER CAPITALIZED LEASES:
The Company has purchased automobiles and telecommunications equipment under
capitalized leases. The lease terms generally do not exceed three years. The
following is a schedule of future minimum lease payments under capitalized
leases together with the present value of the net minimum lease payments as of
December 31, 1996:
For the Year Ending December 31,
1997 $ 829,638
1998 627,705
1999 162,745
----------
Total net minimum lease payments 1,620,088
Less: amount representing interest 191,324
----------
Present value of net minimum
lease payments $1,428,764
==========
The gross amount of assets under capitalized leases are $3,361,700 and
$2,435,700 at December 31, 1995 and 1996, respectively. Such amounts are
principally automobiles and are included in furniture, equipment and leasehold
improvements on the statement of financial condition.
The charges to income resulting from the amortization of assets recorded under
capitalized leases were approximately $681,200, $644,700 and $520,200 for the
years ended December 31, 1994, 1995 and 1996, respectively.
NOTE 10 - NOTES PAYABLE:
Notes payable at December 31, 1995 and 1996 primarily represent convertible
purchase price notes which were issued in December 1986 in connection with the
acquisition of the predecessor businesses of EBIC and bear interest at a stated
rate of 6-1/8% per annum. The conversion feature expired on November 30, 1993.
The notes are due in equal annual installments each November 30 from 1995
through 1999. The notes have been adjusted for financial reporting purposes to
reflect imputed interest at fair market rates at the time of issuance of 7.71%.
The notes are subordinated to the claims of financial institutions to a maximum
aggregate amount of $10,000,000. Approximately 54% and 57% of the reported
balance of the purchase price notes was denominated in British pounds sterling
at December 31, 1995 and 1996, respectively.
Notes payable at December 31, 1996 also included notes issued by the Company's
Hong Kong joint venture to minority shareholders in connection with the
formation of the joint venture. In February 1997 the Company sold its interest
in the joint venture, (See Note 19) and, accordingly, the notes payable are no
longer a liability of the Company.
F-15
<PAGE>
NOTE 10 - NOTES PAYABLE: Continued:
The change in notes payable is as follows:
For the Year Ended
-------------------------------
December 31, December 31,
1995 1996
------------ ------------
Balance at beginning of year $ 9,830,284 $ 7,880,032
Repayment of principal (2,037,502) (2,128,469)
Exchange rate difference (42,108) 420,839
Imputed interest 129,358 106,287
Issuance of note to Martin Brokers
(Hong Kong) Limited 1,101,073
------------ ------------
Balance at end of year $ 7,880,032 $ 7,379,762
============ ============
NOTE 11- EMPLOYEE BENEFIT PLANS:
The Company maintains a 401(k) defined contribution plan for the Company's U.S.
operations covering substantially all salaried employees. The Company's
contributions to the 401(k) plan are, subject to a maximum limit, based upon a
percentage of employee contributions. Total 401(k) plan expense approximated
$216,000 and $222,000 and $308,000 for the years ended December 31, 1994, 1995
and 1996, respectively.
NOTE 12 - INCOME TAXES:
Income (loss) from continuing operations before provision for income tax and
minority interest was taxed under the following jurisdictions:
For the Year Ended
--------------------------------------------------
December 31, December 31, December 31,
1994 1995 1996
------------ ------------ ------------
Domestic $ 3,089,709 $ 2,645,217 $ 11,570,041
Foreign (1,576,103) 9,978,108 (1,521,786)
------------ ------------ ------------
Total $ 1,513,606 $ 12,623,325 $ 10,048,255
============ ============ ============
F-16
<PAGE>
NOTE 12 - INCOME TAXES: Continued:
The components of the provision for income taxes are as follows:
For the Year Ended
--------------------------------------------------
December 31, December 31, December 31,
1994 1995 1996
------------ ------------ ------------
Current
Federal $ 1,103,197 $ 2,745,733 $ 3,965,812
State and local 706,747 931,547 1,968,578
Foreign (76,684) 8,510,075 2,488,923
------------ ------------ ------------
1,733,260 12,187,355 8,423,313
------------ ------------ ------------
Deferred
Federal 504,938 (1,946,254) (506,338)
State and local 411,633 (164,502) (390,189)
Foreign 684,158 (2,683,403) (876,180)
------------ ------------ ------------
1,600,729 (4,794,159) (1,772,707)
------------ ------------ ------------
Total $ 3,333,989 $ 7,393,196 $ 6,650,606
============ ============ ============
Deferred tax assets (liabilities) are comprised of the following:
December 31, December 31,
1995 1996
------------ ------------
Assets
Bad debt reserve $ 161,000 $ 149,500
Amortization of leasehold
improvements 221,354 294,161
Rent reserve 211,830 254,535
Deferred compensation 4,415,679 5,583,442
Miscellaneous reserve 510,485 380,555
Foreign tax credits 2,675,017 1,990,000
Deferred tax asset valuation
allowance (2,675,017) (1,990,000)
------------ ------------
Gross deferred tax asset, after
valuation allowance $ 5,520,348 $ 6,662,193
============ ============
Liabilities
Depreciation (447,092) (54,164)
Unrealized foreign exchange
(gain) loss (244,932) (665,160)
------------ ------------
Gross deferred tax liabilities $ (692,024) $ (719,324)
============ ============
The valuation allowance for deferred tax assets for the year ended December 31,
1995 was established for foreign tax credit carryforward benefits generated
during 1995, due to the uncertainty regarding their realizability. The foreign
tax credit carryforward will expire in the year ended December 31, 2000.
F-17
<PAGE>
NOTE 12 - INCOME TAXES: Continued:
Not reflected above are the tax effects of foreign currency translation
adjustments related to the hedging of foreign net investments. These tax effects
are recorded directly in stockholders' equity. Such amounts recorded in
stockholders' equity are tax benefit (expense) of ($370,000), $20,600 and
($272,000) in the years ended December 31, 1994, 1995 and 1996, respectively.
The provision for income taxes differs from the amount of income tax determined
by applying the applicable U.S. statutory federal income tax rate to pretax
income from continuing operations as a result of the following differences:
For the Year Ended
--------------------------------------------------
December 31, December 31, December 31,
1994 1995 1996
------------ ------------ ------------
Tax at U.S. statutory rate $ 514,626 $ 4,291,930 $ 3,516,889
Increase (decrease) in tax
resulting from:
Higher effective rates on
earnings of foreign
operations and tax benefit
of foreign losses not
recognized 1,283,444 1,847,061 1,413,660
Nondeductible meals and
entertainment 869,536 868,507 1,018,345
State and local taxes, net 738,131 506,259 1,025,952
Other (71,748) (120,561) (324,240)
------------ ------------ ------------
$ 3,333,989 $ 7,393,196 $ 6,650,606
============ ============ ============
NOTE 13 - STOCKHOLDERS' EQUITY:
Preferred stock:
The Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by its Board of Directors. At December 31, 1996, no shares of
preferred stock were issued or outstanding.
Common stock and warrants:
The Company is authorized to issue 30,000,000 shares of Common Stock. At
December 31, 1996, the Company had outstanding 8,926,547 shares of Common Stock,
7,566,666 redeemable common stock purchase warrants (issued in connection with
the Company's 1994 initial public offering) and 7,408,487 Series B redeemable
common stock purchase warrants (issued in connection with the Merger and
economically identical to the public offering warrants). Once all certificates
formerly representing EBIC common stock (all of which were canceled in the
Merger) are exchanged, the Company expects it will have approximately 9,011,295
shares of Common Stock and an aggregate of approximately 15,133,332 warrants
outstanding. Each of the Company's
F-18
<PAGE>
NOTE 13 - STOCKHOLDERS' EQUITY: Continued:
outstanding warrants (both series) currently entitles the holder thereof to
purchase from the Company one share of Common Stock at an exercise price of
$5.00 per share. The warrants expire on November 20, 2001 and are redeemable at
a price of $.01 per warrant upon 30 day's notice at any time, but only if the
last sale price of the Common Stock has been at least $8.50 per share for 20
consecutive trading days ending on the third day prior to the date on which
notice of redemption is given.
At December 31, 1996, the Company had 15,133,332 shares of Common Stock reserved
for issuance upon exercise of all warrants and an additional 1,800,000 shares
reserved for issuance upon exercise of options that have been and may be granted
pursuant to the Company's 1996 Stock Option Plan (see Note 14).
Notes receivable from stockholders:
Notes receivable from stockholders of $2,243,709 at December 31, 1995, represent
amounts due to the Company for the purchase of common stock of EBIC by certain
of its employees. The notes all matured and were payable on demand. The notes
bore interest at 5% per annum, and were collateralized by the EBIC stock
purchased therewith. The notes have been reflected as a decrease to
stockholders' equity.
In connection with the Merger described in Note 1, such notes have been repaid
through the application of the cash Merger consideration otherwise payable to
such stockholders.
NOTE 14 - STOCK OPTION PLAN:
The FSAC 1996 Stock Option Plan, as amended (the "Plan"), provides for the
granting of stock options, in the form of incentive stock options ("ISOs") and
non-qualified stock options, to directors, executive officers and key employees
of the Company and its subsidiaries, as determined by the compensation committee
of the Company's Board of Directors. Options to purchase a maximum of 1,800,000
shares of Common Stock are available under the Plan. In the case of ISOs, the
duration of the option may not exceed ten years and the exercise price must be
at least equal to the fair market value on the date of grant of a share of
Common Stock. Employee options granted to date generally are ISOs and vest and
become exercisable in equal 20% installments on each of the first five
anniversaries of the date of the grant. Non-employee director options granted to
date are non-qualified stock options and vest in equal 50% installments on the
dates that are respectively six and twelve months following the date of grant.
Under the Plan, unless otherwise determined by the compensation committee,
options may only be exercised during the period of employment or service with
the Company or the 30-day period thereafter (or, in the case of death,
disability or retirement, the one-year period thereafter).
F-19
<PAGE>
NOTE 14 - STOCK OPTION PLAN: Continued:
A summary of the Company's stock option activity follows:
Weighted average
Shares exercise price
--------- ----------------
Outstanding at January 1, 1996 0
Granted 1,260,000 $ 5.07
---------
Outstanding at December 31, 1996 1,260,000
=========
Exercise prices for options outstanding at December 31, 1996 ranged from $5.00
to $5.50. The weighted average fair value of options granted during the year was
$1.93 per share based on the value of the Common Stock at the date of grant.
Because stock options under the Plan have characteristics significantly
different from those of traded options and because changes in subjective
assumptions can materially affect the fair value estimated, the Company used the
Black-Scholes pricing model with the following weighted average assumptions for
options granted during 1996: expected volatility of 30%; risk free interest rate
of 6.56% and an expected option life of five years.
The Company applies APB Opinion 25 in accounting for the Plan and, accordingly,
does not recognize any compensation cost associated with the Plan in the
consolidated financial statements. Had compensation costs for the Plan been
determined based on the fair value at the grant dates for the options under SFAS
No. 123, net income and earnings per share for the year ended December 31, 1996
would approximate the pro forma amounts indicated below:
Net income As reported $ 3,704,960
Pro forma 2,099,972
Earnings per share As reported $ .41
Pro forma .23
NOTE 15 - COMMITMENTS:
The Company is obligated under certain non-cancelable leases for office space
and telecommunication services.
The Company has executed various operating leases in respect of premises, which
contain escalation clauses for base rent, maintenance, electricity and real
estate tax increases.
F-20
<PAGE>
NOTE 15 - COMMITMENTS: Continued:
At December 31, 1996, the Company had the following commitments under long-term
non-cancelable operating leases:
For the Year Ending December 31, 1996 $ 9,445,795
1997 4,832,234
1998 4,047,982
1999 3,946,044
2000 and thereafter 18,032,138
------------
Total minimum lease payments $ 40,304,193
============
The Company has pledged (pound)1,150,500 in cash with a bank in respect of a
guarantee of its London premises lease. This amount has been reflected as
restricted cash in the statement of financial condition.
NOTE 16 - CONTINGENCIES:
The Company and/or its subsidiaries are subject to various legal proceedings,
arbitrations and claims that arise in the ordinary course of their businesses.
Although the results of legal proceedings and arbitrations cannot be predicted
with certainty, based on information currently available and established
reserves, management believes that resolving these matters will not have a
material adverse impact on the Company's consolidated financial condition or
results of operations.
NOTE 17 - CONCENTRATION OF CREDIT RISK:
The Company has a policy of reviewing, on an ongoing basis, the credit standing
of its customers, which are primarily financial institutions, as well as the
credit worthiness of the clearing firm used by the Company.
Financial instruments subject to credit risk are primarily commissions
receivable, which are unsecured and short-term in nature. Receivable from
clearing firm represents a concentration of credit risk, and is related to
securities transactions cleared primarily through one correspondent broker.
NOTE 18 - NET CAPITAL REQUIREMENTS:
The Company's U.S. broker dealer subsidiary Euro Brokers Maxcor Inc.("EBMI") is
subject to the Securities and Exchange Commission's Uniform Net Capital Rule
(rule 15c3-1) which requires the maintenance of minimum net capital. EBMI has
elected to use the alternative method, as permitted by the rule, which requires
that EBMI maintain minimum net capital, as defined, equal to the greater of
$250,000; 2% of aggregate debit items arising from customer transactions, as
defined; or 4% of the funds required to be segregated pursuant to the Commodity
Exchange Act and regulations thereunder. At December 31, 1996, EBMI's net
capital was $11,778,015 and exceeded the minimum requirement of $250,000 by
$11,528,015. In addition, a number of the Company's other subsidiaries
F-21
<PAGE>
NOTE 18 - NET CAPITAL REQUIREMENTS: Continued:
operating in various countries are subject to capital rules and regulations
issued by the designated regulatory authorities to which they are subject.
NOTE 19 - SUBSEQUENT EVENT:
On February 5, 1997 the Company's YEHK subsidiary completed the sale of its
57.5% interest in Euro Yagi Martin Limited, its joint venture in Hong Kong with
Martins. The business was sold to the minority shareholder for $323,000 at a
loss of $277,000, which was fully reserved at December 31, 1996.
Commission income, expenses and net loss before minority interest for Euro Yagi
Martin Limited which have been reflected in the consolidated statement of
operations for the year ended December 31, 1996 were $8,085,000, $9,885,000 and
$1,800,000, respectively.
NOTE 20- GEOGRAPHIC DATA:
The following tables set forth, for each year in the three-year period ended
December 31, 1996, summary financial information for each of the Company's
principal geographic locations. United States amounts principally derive from
the Company's New York office, but include the results of operations of all of
its U.S.-based operations. Tokyo amounts include the consolidation of the
results of operations of the Tokyo Partnership and Hong Kong amounts include the
consolidation of the results of operations of the Company's Hong Kong joint
venture (a 51% interest prior to June 1996 and a controlling, approximately 30%
beneficial interest, during the balance of 1996). The Company's stake in the
Hong Kong joint venture was subsequently sold in February 1997 as described in
Note 19. Results of operations from the Company's Australia joint venture are
consolidated into the results of operations for the United Kingdom.
F-22
<PAGE>
Year Ended December 31,
-------------------------------------------------
1994 1995 1996
-------------- -------------- --------------
Commission income:
United States $ 66,090,388 $ 69,081,547 $ 82,178,265
United Kingdom 61,226,002 65,715,235 64,399,407
Canada 3,091,433 3,452,205 3,375,172
Japan 6,965,106 24,601,532 20,071,821
Hong Kong 7,213,732 8,725,808 8,085,234
-------------- -------------- --------------
Total $ 144,586,661 $ 171,576,327 $ 178,109,899
============== ============== ==============
Income (loss) from operations:
United States $ 4,301,375 $ 3,021,226 $ 5,045,727
United Kingdom (2,960,188) 2,901,237 1,452,943
Canada (249,413) (874,440) (452,261)
Japan 1,140,723 6,985,361 4,919,490
Hong Kong (126,387) (16,677) (1,385,478)
-------------- -------------- --------------
Total $ 2,106,110 $ 12,016,707 $ 9,580,421
============== ============== ==============
F-23
<PAGE>
NOTE 20- GEOGRAPHIC DATA: Continued:
At December 31,
-------------------------------------------------
1994 1995 1996
-------------- -------------- --------------
Identifiable assets:
United States $ 35,347,675 $ 38,962,574 $ 59,489,742
United Kingdom 29,412,600 31,767,594 26,434,750
Canada 1,573,157 1,789,815 1,927,895
Japan 3,823,416 7,656,963 6,704,895
Hong Kong 1,757,684 1,901,796 2,615,433
-------------- -------------- --------------
Total $ 71,914,532 $ 82,078,742 $ 97,172,715
============== ============== ==============
F-24
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of March 8, 1996, as
amended, by and among the Registrant, EBIC Acquisition Corp.
and Euro Brokers Investment Corporation ("EBIC"), without
exhibits and schedules (incorporated herein by reference to
Exhibit 2.1 of the Registrant's Quarterly Report on Form
10-Q, dated May 15, 1996 (the "Form 10-Q")
2.2 Security Transfer Agreement, dated as of March 8, 1996, among
the Registrant, Gilbert Scharf, Michael Scharf, Welsh,
Carson, Anderson & Stowe VI, L.P. ("WCAS") and certain
individuals (incorporated herein by reference to Exhibit 2.2
of the Form 10-Q)
2.3 Majority Stockholders Agreement, dated as of March 8, 1996,
among the Registrant, EBIC Acquisition Corp. and WCAS
(incorporated herein by reference to Exhibit 2.3 of the Form
10-Q)
2.4 Escrow Agreement, dated as of March 8, 1996, among the
Registrant, EBIC Acquisition Corp., EBIC, Donald R.A.
Marshall, WCAS and United States Trust Company of New York,
as escrow agent (incorporated herein by reference to Exhibit
2.4 of the Form 10-Q)
2.5 Registration Rights Agreement, dated as of August 16, 1996,
by and among the Registrant and the persons listed in Annexes
I, II and III thereto (incorporated by reference to Exhibit
2.5 of the Registrant's Current Report on Form 8-K, dated
August 16, 1996)
2.6 UPO Exchange and Custodial Agreement, dated as of June 24,
1996, by and among the Registrant, GKN Securities Corp.,
Barington Capital Group, L.P. and Graubard, Mollen & Miller,
as custodian (incorporated herein by reference to Exhibit 4.5
of the Registrant's Registration Statement on Form S-4 (No.
333-06753) dated June 25, 1996) (the "Form S-4")
3.1 Amended and Restated Certificate of Incorporation of the
Registrant (incorporated herein by reference to Exhibit 3 of
the Registrant's Registration Statement on Form 8-A, dated
October 28, 1996)
3.2 Amended and Restated Bylaws of the Registrant*
4.1 Form of Common Stock Certificate (incorporated herein by
reference to Exhibit 4.1 of Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 (No.
33-85346), dated November 23, 1994 ("Amendment No. 1")
4.2 Form of Redeemable Common Stock Purchase Warrant
(incorporated herein by reference to Exhibit 4.2 of Amendment
No. 1)
X-1
<PAGE>
4.3 Warrant Agreement, dated as of November 30, 1994, by and
between the Registrant and Continental Stock Transfer & Trust
Company (incorporated herein by reference to Exhibit 4.4 of
Amendment No.1)
4.4 Form of Series B Redeemable Common Stock Purchase Warrant
(incorporated herein by reference to Exhibit 4.2 of the Form
S-4)
4.5 Warrant Agreement, dated as of June 5, 1996, by and between
the Registrant and Continental Stock Transfer & Trust Company
(incorporated herein by reference to Exhibit 4.3 of the Form
S-4)
4.6 Rights Agreement, dated as of December 6, 1996, between the
Registrant and Continental Stock Transfer & Trust Company, as
rights agent (incorporated herein by reference to Exhibit 1
to the Registrant's Registration Statement on Form 8-A, dated
December 6, 1996)
4.7 Agreement to furnish Debt Instruments*
10.1 Agreement of Lease, dated September 10, 1992, by and between
Euro Brokers Inc. and The Port Authority of New York and New
Jersey (the "NY Lease")*
10.2 Supplement No. 1 to the NY Lease, dated March 21, 1993*
10.3 Supplement No. 2 to the NY Lease, dated July 1, 1994*
10.4 Underlease of Premises, dated 28 May 1993, between
Chestermount Properties Limited and Euro Brokers Holdings
Limited*
10.5 Letter Agreements, each dated September 9, 1994 ("Letter
Agreements"), among the Registrant, certain stockholders of
the Registrant, GKN Securities Corp. and Barington Capital
Group, L.P. (incorporated herein by reference to Exhibit 10.2
of the Registrant's Registration Statement on Form S-1 (No.
33-85346), dated October 19, 1994)
10.6 Form of Share Escrow Agreement among the Registrant, the
stockholders party to the Letter Agreements and Continental
Stock Transfer & Trust Company of New York (incorporated
herein by reference to Exhibit 10.6 of Amendment No. 1)
10.7+ Financial Services Acquisition Corporation 1996 Stock Option
Plan, as amended and restated*
10.8+ Employment Agreement, dated March 8, 1996, by and between the
Registrant and Gilbert Scharf (incorporated herein by
reference to Exhibit 10.8 of the Form 10-Q)
10.9+ Employment Agreement, dated March 8, 1996, by and between
EBIC and Keith Reihl (incorporated herein by reference to
Exhibit 10.7 to the Form S-4
10.10+ Employment Agreement, dated as of September 11, 1996, by and
between the Registrant and Roger Schwed*
X-2
<PAGE>
10.11+ Employment Agreement, dated 23 May 1994, by and between Euro
Brokers Limited and Michael Morrison*
10.12+ Employment Agreement, dated as of September 1, 1996, by and
between Euro Brokers Inc. and Walter E. Dulski*
10.13+ Agreement, dated as of November 19, 1996, by and among the
Registrant, EBIC and Donald R.A. Marshall*
10.14 Agreement for Securities Clearance Services, dated June 7,
1993, as amended, by and between Daiwa Securities America
Inc. and Euro Brokers Maxcor Inc.*(1)
11 Statement re Computation of Per Share Earnings*
21 Subsidiaries of the Registrant*
27 Financial Data Schedule (filed in electronic form only)
- --------------------------
* Filed herewith
+ Connotes a management contract or compensatory plan or arrangement in
which a director or executive officer of the Registrant participates.
(1) Portions of this exhibit have been redacted and confidential treatment
sought pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
X-3
<PAGE>
Exhibit 3.2
BY-LAWS
OF
FINANCIAL SERVICES ACQUISITION CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election
of directors shall be held in such place, either within or without the State of
Delaware, at such place as may be fixed from time to time by the board of
directors and as shall be designated from time to time by the board of directors
and stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at
such date and time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held,
- ------------
Amended and Restated as of 11/27/96
<PAGE>
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the chairman of the board or the
president and shall be called by the chairman of the board, president or
secretary at the request in writing of a majority of the board of directors, or
at the request in writing of stockholders owning not less than fifty percent in
amount of the entire capital stock of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten nor more than sixty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on or
after three years from its date, unless the proxy provides for a longer period.
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Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the Corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the
whole board shall be one or more, as determined from time to time by resolution
of the board of directors. The directors shall be elected at the annual meeting
of the stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders, residents of Delaware or citizens of the
United States.
Section 2. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
of the total number of the shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the Corporation shall be managed by
or under the direction of its board of directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
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Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be
held upon such notice, or without notice at such time and at such place as shall
from time to time be determined by the board.
Section 7. Special meetings of the full board may be called by
the chairman of the board or the president on 24 hours' notice to each director,
either personally or by mail, facsimile or telegram; special meetings shall be
called by the chairman of the board, president or secretary in like manner and
on like notice on the written request of two directors.
Section 8. Notice of a meeting need not be given to any
director who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors need be
specified in the notice or a waiver of notice of such meeting.
Section 9. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 11. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
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COMMITTEES
Section 12. The board of directors may, by resolution passed
by a majority of the whole board, designate an executive committee and other
committees, each committee to consist of one or more directors of the
Corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the by-laws of the Corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 13. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. Nothing herein shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 15. Unless otherwise restricted by the certificate of
incorporation or by-laws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors at a special meeting of stockholders called
for that purpose.
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ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these by-laws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram, telex or telecopy with
receipt confirmed by telecopy.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. A person entitled to notice of any meeting of the
board of directors or stockholders, as the case may be, waives such notice if he
or she appears in person or, in the case of a stockholder, by proxy at such
meeting, except when the person attends a meeting for the express purposes of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
Section 1. The officers of the Corporation shall be chosen by
the board of directors and shall be a chairman of the board, a president, a vice
president, a secretary and a treasurer. The board of directors may also choose a
controller, one or more vice presidents, one or more assistant secretaries and
assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a chairman of the board, a
president, one or more vice presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other
officers and agents, as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
Corporation shall be fixed by the board of directors.
Section 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the board of directors may be removed at any time with or without cause by
the affirmative vote of a majority of the
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board of directors. Any vacancy occurring in any office of the Corporation shall
be filled by the board of directors.
CHAIRMAN OF THE BOARD
Section 6. The chairman of the board shall be the chief
executive officer of the Corporation and shall have general direction and
supervision over day-to-day matters relating to the business and affairs of the
Corporation, shall implement or supervise the implementation of corporate
policies as established by the board of directors, shall preside at all meetings
of the stockholders and the board of directors and shall be in charge of
stockholder relations. He or she shall have such other powers and perform such
other duties as the board of directors may from time to time prescribe.
Section 7. He or she shall execute bonds, mortgages and other
contracts requiring a seal under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be delegated by the board of
directors to some other officer or agent of the Corporation.
THE PRESIDENT
Section 8. The president shall be the chief operating officer
of the Corporation, shall implement or supervise the implementation of corporate
policies as established by the board of directors, and shall perform such duties
and have such powers as the board of directors may from time to time prescribe.
Section 9. He or she shall, in the absence or disability of
the chairman of the board, preside at meetings of the stockholders and the board
of directors.
Section 10. He or she shall execute bonds, mortgages and other
contracts requiring a seal under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be delegated by the board of
directors to some other officer or agent of the Corporation.
THE VICE PRESIDENTS
Section 11. The vice president or, if there shall be more than
one, the vice presidents in the order determined by the board of directors (or,
in the absence of any designation, then in the order of their election) shall,
in the absence or disability of the president, perform the duties and exercise
the powers of the president and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 12. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He or she shall give, or cause
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to be given, notice of all meetings of the stockholders and special meetings of
the board of directors, and shall perform such other duties as may be prescribed
by the board of directors or person serving as chief executive officer, under
whose supervision he or she shall be. He or she shall have custody of the
corporate seal of the Corporation and he or she, or an assistant secretary,
shall have authority to affix the same to any instrument requiring it and, when
so affixed, it may be attested by his signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing by
his or her signature.
Section 13. The assistant secretary or, if there be more than
one, the assistant secretaries in the order determined by the board of directors
(or, in the absence of any designation, then in the order of their election),
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 14. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the board of
directors.
Section 15. He or she shall disburse the funds of the
Corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements, and shall render to the person serving as chief
executive officer, the president and board of directors at its regular meetings,
or when the board of directors so requires, an account of all his or her
transactions as treasurer and of the financial condition of the Corporation.
Section 16. If required by the board of directors, he or she
shall give the Corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the board of directors for the faithful performance
of the duties of his office and for the restoration to the Corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession or
under his or her control belonging to the Corporation.
Section 17. The assistant treasurer, or, if there shall be
more than one, the assistant treasurers in the order determined by the board of
directors (or, in the absence of any designation, then in the order of their
election), shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the Corporation by
the chairman of the board of directors or the president or a vice-president and
the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the Corporation, certifying the number of shares owned by him or
her in the Corporation.
Section 2. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meetings, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
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provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
INDEMNIFICATION
Section 1. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another Corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding. had reasonable cause to believe that his
conduct was unlawful.
Section 2. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection with the defense or settlement of such action or suit if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interest of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the
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circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 1 or 2 of this
Article VII or in defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
Section 4. Any indemnification under Sections 1 or 2 of this
Article VII (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in Sections 1 or 2
or this Article VII. Such determination shall be made (a) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceedings, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.
Section 5. Expenses (including attorneys' fees) incurred by an
officer or director of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such officer or
director to repay such amount if it shall ultimately be determined that he or
she is not entitled to be indemnified by the Corporation as authorized in this
Article. Such expenses (including attorneys' fees) incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
Section 6. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 7. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation, as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him or her against such liability under the provisions of
this Article.
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Section 8. For purposes of Article VII, references to "other
enterprises" shall include. employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves service by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
Article VII.
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the Corporation
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest of
the Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the Corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the Corporation shall be fixed,
and shall be subject to change, by the Board of Directors.
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SEAL
Section 6. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE IX
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed
or new by-laws may be adopted by the stockholders or by the board of directors,
when such power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
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Exhibit 4.7
FINANCIAL SERVICES ACQUISITION CORPORATION
ROGER E. SCHWED March 26, 1997
Vice President and General Counsel
Direct Dial: (212) 748-8860
Direct Fax: (212) 748-7979
E-Mail: [email protected]
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, D.C. 20549
Dear Sirs or Madams:
This will confirm that Financial Services Acquisition Corporation (the
"Company") will furnish to the Securities and Exchange Commission upon request
copies of the following Notes:
(i) Convertible Note dated 1st December, 1988 issued by Euro Brokers
Holdings, Inc. and Euro Brokers Limited to MAG Investments
Limited;
(ii) Convertible Note dated December 1, 1986 issued by Euro Brokers
Holdings, Inc., First Euro Brokers, Inc., and Euro Brokers (USA)
Inc., to EBH Holding, Inc.
The amount of each of the foregoing Notes does not exceed 10% of the
total assets of the Company and its subsidiaries on a consolidated basis.
Very truly yours,
/s/ Roger E. Schwed
FSAC
Two World Trade Center, 84th floor, New York, New York 10048
Tel. 212-748-7000 Fax. 212-748-7329
<PAGE>
Exhibit 10.1
WTC-OL 92567.1 Lease No. WT-2887-B-84 (985)
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THE PORT AUTHORITY
OF NEW YORK AND NEW JERSEY
WORLD TRADE CENTER
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AGREEMENT OF LEASE
between
THE PORT AUTHORITY OF
NEW YORK AND NEW JERSEY
and
EURO BROKERS INC.
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WTC-OL 92567.4
THIS AGREEMENT, made as of the 10th day of September, 1992 by and
between THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called the
"Port Authority"), a body corporate and politic, created by Compact between the
States of New Jersey and New York, with the consent of the Congress of the
United States of America, and having an office at One World Trade Center, in the
borough of Manhattan, City, County, and State of New York, and EURO BROKERS INC.
(hereinafter called the "Lessee"), a corporation organized and existing under
and by virtue of the laws of the State of New York having an office and place of
business at One World Trade Center, New York, New York 10048,
whose representative is Donald Marshall,
WITNESSETH That:
The Port Authority and the Lessee, for and in consideration of the
rents, covenants and agreements hereinafter contained, mutually covenant and
agree as follows:
Section 1. Letting
The Port Authority hereby lets to the Lessee and the Lessee hereby
hires and takes from the Port Authority, at the World Trade Center (sometimes
hereinafter referred to as the "Facility"), in the Borough of Manhattan, City,
County and State of New York, the space as shown in diagonal hatching on the
sketch annexed hereto, made a part hereof and marked Exhibit A, together with
the fixtures, improvements and other property of the Port Authority located or
to be located therein or thereon, the said space, fixtures, improvements and
other property of the Port Authority being hereinafter collectively referred to
as the "premises". The Port Authority and the Lessee hereby acknowledge that the
aforesaid premises constitute non-residential real property.
Section 2. Term
The term of the letting under this Agreement shall commence at 12:01
o'clock A.M. on September 11, 1992 and shall, unless sooner terminated, or
unless extended, expire at 11:59 o'clock P.M. on September 10, 2007.
Section 3. Rights of User by the Lessee
The Lessee shall use the premises for the following purposes only and
for no other purpose whatsoever: as a clerical and administrative office for the
Lessee's business
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as broker for banks in the purchase and sale of foreign exchange and in
arranging for the exchange (primarily international) of funds for deposit in
foreign and domestic banks, as well as international financing transactions
generally.
Section 4. Basic Rental
(a) The Lessee agrees to pay to the Port Authority a basic rental for
the premises as stated in Section 44.
(b) The basic rental shall be subject to adjustment during the letting
in accordance with the provisions of Schedule A attached to this Agreement and
hereby made a part hereof.
Section 5. Governmental Requirements
(a) The Lessee shall procure all licenses, certificates, permits or
other authorization from all governmental authorities having jurisdiction over
the operations of the Lessee at the premises or at the Facility which may be
necessary for the conduct of its operations.
(b) The Lessee shall pay all taxes, import duties, license,
certification, permit and examination fees, excises and other charges which may
be assessed, levied, exacted or imposed on its property, operations or occupancy
hereunder or any property whatsoever which may be received at the premises or on
the gross receipts or income therefrom and shall make all applications, reports
and returns required in connection therewith. If any bond or other undertaking
shall be required by any governmental authority in connection with any of the
operations of the Lessee or any property received or exhibited by the Lessee at
the premises, the Lessee shall furnish the same and pay all other expenses in
connection therewith.
(c) The Lessee shall promptly observe, comply with and execute the
provisions of any and all present and future governmental laws, rules and
regulations, requirements, orders and directions which may pertain or apply to
the operations of the Lessee on the premises or at the Facility or its occupancy
of the premises, and the Lessee shall, in accordance with and subject to the
provisions of the Section of this Agreement entitled "Construction by the
Lessee", make any and all improvements, alterations or repairs of the premises
that may be required at any time hereafter by any such present or future law,
rule, regulation, requirement, order or direction.
(d) The provisions of this Section are not to be construed as a
submission by the Port Authority to the application to itself of such
requirements, or any of them.
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Section 6. Rules and Regulations
(a) The Lessee covenants and agrees to observe and obey (and to compel
its officers, members, employees, agents, representatives, contractors,
customers, guests, invitees and those doing business with it to observe and
obey) the Rules and Regulations of the Port Authority (a copy of which is
attached hereto, hereby made a part hereof and marked "Exhibit R") for the
government of the conduct and operations of the Lessee, and such further
reasonable rules and regulations (including amendments and supplements thereto)
as may from time to time and throughout the letting be promulgated by the Port
Authority for reasons of safety, health or preservation of property, or for the
maintenance of the good and orderly appearance of the premises and the Facility
or for the safe or efficient operation of the Facility. The Port Authority
agrees that, except in cases of emergency, it will give notice to the Lessee of
every such further rule or regulation adopted by it at least five (5) days
before the Lessee shall be required to comply therewith.
(b) No statement or provision in the said Rules and Regulations shall
be deemed a representation or promise by the Port Authority that any services or
privileges described therein shall be or remain available or that such charges,
prices, rates or fees, if any, as are stated therein shall be or remain in
effect all of the same being subject to change by the Port Authority from time
to time whenever it deems a change advisable.
Section 7. Responsibilities of the Lessee
(a) The Lessee shall conduct its operations in an orderly and proper
manner and so as not to annoy, disturb or be offensive to others at the
Facility, and the Lessee shall control the conduct, demeanor and appearance of
its officers, members, employees, agents, representatives, contractors,
customers, guests, invitees and those doing business with it. Upon objection
from the Port Authority concerning the conduct, demeanor or appearance of any
such the Lessee shall immediately take all steps necessary to remove the cause
of the objection.
(b) The Lessee shall not commit any nuisance on the premises, or do or
permit to be done anything which may result in the creation or commission of a
nuisance on the premises, and the Lessee shall not cause or permit to be caused
or produced upon the premises, to permeate the same or to emanate therefrom, any
unusual, noxious or objectionable smokes, gases, vapors, odors or objectionable
noises.
(c) The Lessee shall not keep, maintain, place or install in the
premises any fixtures or equipment the use of which is not consistent with and
required for the purposes of the letting as set forth in the Section of this
Agreement entitled "Rights of User by the Lessee" and the Lessee shall not use
or connect any equipment or engage in any activity or operation in the premises
which will cause or tend to cause an overloading
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of the capacity of any existing or future utility, mechanical, electrical,
communication or other systems, or portions thereof, serving the premises, nor
shall the Lessee do or permit to be done anything which may interfere with the
effectiveness or accessibility of existing and future utility, mechanical,
electrical, communication or other systems, or portions thereof, serving the
premises, nor shall the Lessee do or permit to be done anything which may
interfere with the effectiveness or accessibility of existing and future
utility, mechanical, electrical, communication or other systems or portions
thereof on the premises or elsewhere at the Facility.
(d) The Lessee shall not overload any floor, roadway, passageway,
pavement or other surface or any wall, partition, column or other supporting
member, or any elevator or other conveyance, in the premises or at the Facility
and without limiting any other provision of this Agreement, the Lessee shall
repair, replace or rebuild any such damaged by overloading.
(e) The Lessee shall not install, maintain or operate or permit the
installation, maintenance or operation on the premises of any vending machine or
service designed to dispense or sell food, beverages, tobacco products or
merchandise of any kind, whether or not included in the above categories, or any
restaurant, cafeteria, kitchen, stand or other establishment for the
preparation, dispensing or sale of food, beverages, tobacco or tobacco products,
or merchandise of any kind or any equipment or device for the furnishing to the
public of a service of any kind, including without limitation thereto any
telephone pay-stations.
(f) The Lessee shall not use or make any reference, by advertising or
otherwise, to the names "World Trade Center" (except to designate the Lessee's
business address and then only in a conventional manner and without emphasis or
display), "Port of New York Authority", "Port Authority" or any simulation or
abbreviation of any such names, or any emblem, picture or reproduction of the
World Trade Center, for any purpose whatsoever. Furthermore, the Lessee shall
not make use of or originate any material intended for publication or visual or
oral presentation which may tend to impair the reputation of the World Trade
Center or its desirability. Upon notice from the Port Authority the Lessee shall
immediately discontinue any such use or reference.
(g) The Lessee shall not do or permit to be done any act or thing upon
the premises or at the Facility which will invalidate or conflict with any
insurance policies covering the premises or any part thereof, or the Facility,
or any part thereof, at which, in the opinion of the Port Authority, may
constitute an extra-hazardous condition, so as to increase the risks normally
attendant upon the operations contemplated by the Section of this Agreement
entitled "Rights of User by the Lessee", and the Lessee shall promptly observe,
comply with and execute the provisions of any and all present and future rules
and regulations, requirements, orders and directions and the National Fire
Protection Association and the New York Fire Insurance Rating Organization, and
of any other
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board or organization exercising or which may exercise similar functions, which
may pertain or apply to the operations of the Lessee on the premises, and the
Lessee shall, subject to and in accordance with the provisions of the Section of
this Agreement entitled "Construction by the Lessee", make any and all
improvements, alterations or repairs of the premises that may be required at any
time hereafter by any such present or future rule, regulation, requirement,
order or direction, and if by reason of any failure on the part of the Lessee to
comply with the provisions of this Agreement any insurance rate on the premises
of any part thereof, or on the Facility or any part thereof, shall at any time
be higher than it otherwise would be, then the Lessee shall pay to the Port
Authority, as an item of additional rental, that part of all insurance premiums
paid by the Port Authority which shall have been charged because of such
violation or failure by the Lessee, but no such payment shall relieve the Lessee
of its other obligations under this paragraph.
(h) The Lessee recognizes that the Port Authority has undertaken the
planning, construction and operation of the Facility as a facility of commerce
pursuant to concurrent legislation of the State of New York, Chapter 209, Laws
of New York, 1962 and the State of New Jersey, Chapter 8, Laws of New Jersey,
1962. The purpose, character and scope of the Lessee's occupancy, operation and
usage of the premises as described in Section 3 of this Agreement are of primary
importance and inducement to the Port Authority in entering into this Agreement
of lease with the Lessee. The Lessee has represented to the Port Authority that
all of its occupancy, operation and usage, thoughout the term of the letting
hereunder, will be in strict accordance with and subject to the provisions and
requirements of Section 3 of this Agreement and the Port Authority has relied on
such representations in entering into this Agreement. Without affecting the
Lessee's liability for any breach of this representation and its obligations
hereunder, in the event that the Lessee has not complied with all the
requirements of this Section and of Section 3 of this Agreement, the Port
Authority may by five (5) days' notice terminate this Agreement and the letting
hereunder and the same shall be and operate as a conditional limitation and have
the same effect as if it were specifically included as a ground for termination
under subdivision (a) of Section 20 of this Agreement.
Section 8. Maintenance and Repair
(a) Except to the extent of such items of cleaning service as may be
supplied by the Port Authority as stated in Section 42, the Lessee shall at all
times keep the premises in a clean and orderly condition and appearance,
together with all fixtures, equipment and personal property of the Lessee
located in or on the premises, including without limitation thereto the interior
surface of windows and both sides of all entrance doors.
(b) The Lessee shall repair, replace, rebuild and paint all or any part
of the premises or of the Facility which may be damaged or destroyed by the acts
or omissions of the Lessee, its officers, members, employees, agents,
representatives, contractors,
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customers, guests, invitees or other persons who are doing business with the
Lessee or who are on or at the premises or the Facility with the consent of the
Lessee.
(c) The Lessee shall take good care of the premises, including therein,
without limitation thereto, walls, partitions, floors, ceilings, doors and
columns, and all parts thereof, and all equipment and fixtures, and shall do all
preventive maintenance and make all necessary non-structural repairs,
replacements, rebuilding and painting necessary to keep the premises in the
condition existing at the commencement date of the letting and to keep any
improvements, additions and fixtures made or installed during the term of the
letting in the condition they were in when made or installed except for
reasonable wear which does not adversely affect the watertight condition or
structural integrity of the building or adversely affect the efficient or proper
utilization or the appearance of any part of the premises.
(d) In the event the Lessee fails to commence so to make or do any
repair, replacements, rebuilding or painting required by this Agreement within a
period of ten (10) days after notice from the Port Authority so to do, or fails
diligently to continue to completion the repair, replacement, rebuilding or
painting of all of the premises required to be repaired, replaced, rebuilt or
painted by the Lessee under the terms of this Agreement, the Port which may, at
its option, and in addition to any other remedies which may be available to it,
repair, replace, rebuild or paint all or any part of the premises included in
the said notice, the Port Authority's cost thereof to be paid by the Lessee on
demand. This option or the exercise thereof shall not be deemed to create or
imply any obligation or duty to the Lessee or others.
(e) The obligation of the Lessee as set forth in paragraphs (b) and (c)
of this Section, in the event of damage or destruction covered by any contract
of insurance under which the Port Authority is the insured, is hereby released
to the extent that the loss is recouped by actual payment to the Port Authority
of the proceeds of such insurance; provided, however, that if at any time
because of this release the insurance carrier of any policy covering the
premises or any part thereof shall increase the premiums, otherwise payable for
fire, extended coverage or rental coverage applicable to the premises, the
Lessees shall pay to the Port Authority an amount equivalent to such increase or
increases on demand; and provided, further, that if at any time this release
shall invalidate any such policy of insurance or reduce, limit or void the
rights of the Port Authority thereunder, or if because of this release, any such
insurance carrier shall cancel any such policy or shall refuse to issue or renew
the same or shall refuse to issue a policy with an endorsement thereof under
which this release is permitted without prejudice to the interest of the insured
or shall cancel such endorsement or refuse to renew the same or shall take any
other action to alter, decrease or diminish the benefits of the Port Authority
under the policy, then the release shall be void and of no effect. Nothing
herein shall be construed to imply an obligation on the Port Authority to carry
any such insurance policy or to obtain or keep in force any such endorsement.
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Section 9. Casualty
(a) In the event that, as a result of a casualty insured against by the
Port Authority under the New York standard form of fire insurance policy carried
by it on the premises, the premises are damaged without the fault of the Lessee,
its officers, members, employees, customers, guests, invitees or other persons
who are doing business with the Lessee or who are on the premises with the
Lessee's consent, so as to render the premises untenantable in whole or part,
then
(1) if the Port Authority finds that the necessary repairs or
rebuilding can be completed within ninety (90) days after the
occurrence of the damage, the Port Authority shall repair or rebuild
with due diligence, and the rental hereunder shall be abated, as
hereinafter provided in the Section of this Agreement entitled
"Abatement of Rental", only for the period from the occurrence of the
damage to the completion of the repairs or rebuilding, whether or not
the work of repair or rebuilding is actually completed within the said
ninety (90) days; or
(2) if the Port Authority finds that such repairs or
rebuilding cannot be completed within ninety (90) days after the
occurrence of the damage, or if the Port Authority concludes that other
than the premises also require rebuilding, then the Port Authority
shall have options: (i) to proceed with due diligence to repair or to
rebuild the premises as necessary; or (ii) to terminate the letting as
to the damaged portion of the premises only, and the rental hereunder
shall be abated as provided in the Section of this Agreement entitled
"Abatement of Rental", from and after the occurrence of the damage, or
(iii) to terminate the lettering as to the entire premises; and in the
case of (i) and (iii), the rental hereunder shall be abated, as
provided in the Section of this Agreement entitled "Abatement of
Rental", either, as the case may require, for the period from the
occurrence of the damage to the completion of repairs and rebuilding of
the premises or for the period from the occurrence of the damage to the
effective date of termination.
(b) The parties do hereby stipulate that neither the provisions of
Section 227 of the Real Property Law of the State of New York nor those of any
other similar statute shall extend or apply to this Agreement.
(c) The Lessee shall give the Port Authority immediate notice in case
of any fire, accident or casualty in the premises or elsewhere in the Facility
if the occurrence elsewhere in the Facility is known to and involves the Lessee,
its officers, members, employees, agents, representatives, contractors, or is
known to any of them and involves customers, guests or invitees of the Lessee.
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(d) In the event of a partial or total destruction of the premises, the
Lessee shall immediately remove any and all of its property and all debris from
the premises or the portion thereto destroyed and if the Lessee does not
promptly so remove, the Port Authority may remove the Lessee's property to a
public warehouse for deposit or retain the same in its own possession and sell
the same at public auction, the proceeds of which shall be applied first to the
expenses of removal, storage and sale, second to any sums owed by the Lessee to
the Port Authority, with any balance remaining to be paid to the Lessee; if the
expenses of such removal, storage and sale shall exceed the proceeds of sale,
the Lessee shall pay such excess to the Port Authority upon demand.
Section 10. Indemnity
(a) The Lessee shall indemnify and hold harmless the Port Authority,
its Commissioners, officers, agents and employees from (and shall reimburse the
Port Authority for the Port Authority's costs or expenses including legal
expenses incurred in connection with the defense of) all claims and demands of
third persons including but not limited to those for death, for personal
injuries, or for property damages, arising out of any default of the Lessee in
performing or observing any term or provision of this Agreement, or out of the
use or occupancy of the premises by the Lessee or by others with its consent, or
out of any of the acts or omissions of the Lessee, its officers, members,
employees, agents, representatives, contractors, customers, guests, invitees and
other persons who are doing business with the Lessee or who are at the premises
with the Lessee's consent where such acts or omissions are on the premises, or
arising out of any acts or omissions of the Lessee, its officers, members,
employees, agents and representatives where such actions or omissions are
elsewhere.
(b) If so directed, the Lessee shall at its own expense defend any suit
based upon any such claim or demand (even if such suit, claim or demand is
groundless, false or fraudulent), and in handling such it shall not, without
obtaining express advance permission from the General Counsel of the Port
Authority, raise any defense involving in any way the jurisdiction of the
tribunal over the person of the Port Authority, the immunity of the Port
Authority, its Commissioners, officers, agents or employees, the governmental
nature of the Port Authority or the provision of any statutes respecting suits
against the Port Authority.
Section 11. Ingress and Egress
The Lessee solely for itself, its officers, employees and such business
invitees as are at the premises in connection with the transaction of the
regular business of the Lessee, shall have the right of ingress and egress
between the premises and the City streets outside the Facility. Such right shall
be exercised by means of such corridors, lobbies, public areas and pedestrian or
vehicular ways, and by means of such elevators, escalators or other facilities
for movement of persons or property, to be used subject to all the provisions of
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this Agreement and in common with others having rights of passage and movement
within the Facility, as may from time to time be designated by the Port
Authority for the use of the public. The use of any such facility, way or other
area shall be subject to the rules and regulations of the Port Authority which
are now in effect or which may hereafter be promulgated for the safe and
efficient operation of the Facility. The Port Authority may, at any time,
temporarily or permanently close, move, change or limit the use of, or consent
to or request the closing, moving, changing or limitation of the use of, any
such facility, way or any other area at or near the Facility presently or
hereafter used as such, so long as a means of ingress and egress as provided
above remains available to the Lessee. The Lessee hereby releases and discharges
the Port Authority, and all municipalities and other governmental authorities,
and their respective successors and assigns, of and from any and all claims,
demands, or causes of action which the Lessee may now or at any time hereafter
have against any of the foregoing, arising or alleged to arise out of the
closing, changing or limitation of the use of any facility, way or other area,
whether within or outside the Facility. The Lessee shall not do or permit
anything to be done which will interfere with the free access and passage of
others to space adjacent to the premises or in any areas, streets, ways,
facilities and walks near the premises.
Section 12. Construction by the Lessee
The Lessee shall not erect any structures, make any modifications,
alternations, additions, improvements, repairs or replacements or do any
construction work on or to the premises, or install any fixtures in or on the
premises (other than trade fixtures, removable without injury to the premises)
without the prior consent of the Port Authority, and in the event any
construction, improvement, alternation, modification, addition, repair or
replacement is made or done with or without such consent and unless the consent
of the Port Authority shall expressly provide otherwise, the same shall
immediately become the property of the Port Authority and the Lessee shall have
no right to change or remove the same either during the term or at the
expiration thereof. Notwithstanding the foregoing, immediately upon notice from
the Port Authority given at any time during the letting, the Lessee shall remove
or change any of the same made or done by it without the Port Authority's
consent, and in the case of any of the same made or done with the Port
Authority's consent, the Lessee if so required by notice from the Port
Authority, shall remove or change the same immediately upon the expiration or
termination of the letting, or immediately upon receipt of such notice as may be
given within sixty (60) days after such expiration or termination. With respect
to any modifications, additions, alterations, improvements, installations or
construction made or done by the Port Authority at the request of the Lessee
either prior to or during the term of the letting, the Lessee shall have the
same obligations as provided above with respect to that made or done by the
Lessee with the Port Authority's consent.
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Section 13. Signs
Except with the prior consent of the Port Authority, the Lessee shall
not erect, maintain or display any signs, advertising, posters or similar
devices at or on the exterior parts of the premises or in the premises so as to
be visible through the windows, glass walls or exterior doors thereof. Upon the
expiration or termination of the letting, the Lessee shall remove, obliterate or
paint out, as the Port Authority may direct, any and all signs and advertising,
posters or similar devices, and in connection therewith shall restore the area
affected to the same condition as at the commencement of the letting.
Section 14. Injury and Damage to Person or Property
The Port Authority shall not be liable to the Lessee or others for any
personal injury, death or property damage from falling material, water, rain,
hail, snow, gas, steam, dampness, explosion, smoke, radiation, and/or
electricity, whether the same may leak into or fall, issue, or flow from any
part of the premises or of the Facility, including without limitation thereto
any utility, mechanical, electrical, communication or other systems therein, or
from any other place or quarter unless said damage, injury or death shall be due
to the negligent acts of the Port Authority, its employees or agents.
Section 15. Additional Rent and Charges
(a) If the Lessee shall fail or refuse to perform any of its
obligations under this Agreement, the Port Authority, in addition to all other
remedies available to it, shall have the right to perform any of the same and
the Lessee shall pay the Port Authority's cost thereof on demand. If the Port
Authority has paid any sum or sums or has incurred any obligations, expense or
cost which the Lessee has agreed to pay or reimburse the Port Authority for, or
if the Port Authority is required or elects to pay any sum or sums or incurs any
obligations, expense or cost by reason of the failure, neglect or refusal of the
Lessee to perform or fulfill any one or more of the conditions, covenants or
agreements contained in this Agreement, or as a result of an act or omission of
the Lessee contrary to the said conditions, covenants and agreements, including
any legal expense or cost in connection with any actions or proceeding brought
by the Port Authority against the Lessee or by third parties against the Port
Authority, the Lessee agrees to pay the sum or sums so paid or the expense and
the Port Authority's cost so incurred, including all interest costs, damages and
penalties, and the same may be added to any installment of rent thereafter due
hereunder and each and every part of the same shall be and become additional
rent, recoverable by the Port Authority in the same manner and with like
remedies as if it were originally a part of the basic rental as set forth in the
Section of this Agreement entitled "Basic Rental".
(b) "Cost" or "costs" of the Port Authority in this Agreement shall
mean and include (1) payroll costs including but not limited to contributions to
the retirement
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system, or the cost of participation in other pension plans or systems,
insurance costs, sick leave pay, holiday, vacation, authorized absence pay or
other fringe benefits; (2) cost of materials, supplies and equipment used
(including rental thereof); (3) payments to contractors; (4) any other direct
costs; and (5) 30% of the foregoing.
Section 16. Rights of Entry Reserved
(a) The Port Authority, by its officers, employees, agents,
representatives and contractors shall have the right at all reasonable times to
enter upon the premises for the purpose of inspecting the same, for observing
the performance by the Lessee of its obligations under this Agreement, and for
the doing of any act or thing which the Port Authority may be obligated or have
the right to do under this Agreement or otherwise.
(b) Without limiting the generality of the foregoing, the Port
Authority, by its officers, employees, representatives and contractors, shall
have the right, for the benefit of the Lessee or for the benefit of others at
the Facility, to maintain initially existing and future utility, mechanical,
electrical, communication and other systems or portions thereof on the premises,
and to enter upon the premises at all reasonable times to make such repairs,
alternations and replacements as may, in the opinion of the Port Authority, be
deemed necessary or advisable and, from time to time, to construct or install
over, in, under or through the premises new lines, pipes, mains, wires,
conduits, equipment and other such; and to use the premises for access to other
portions of the Facility not otherwise conveniently accessible; provided,
however, that such repair, alteration, replacement, construction or access shall
not unreasonably interfere with the use of the premises by the Lessee.
(c) In the event that any property of the Lessee shall obstruct the
access of the Port Authority, its employees, agents or contractors to any of the
existing or future utility, mechanical, electrical, communication and other
systems and thus shall interfere with the inspection, maintenance, repair or
modification of any such system, the Lessee shall move such property as
requested by the Port Authority, in order that the access may be had to the
system or part thereof for its inspection, maintenance, repair or modification.
(d) Nothing in this Section shall or shall be construed to impose upon
the Port Authority any obligations so to construct or maintain or to make
repairs, replacements, alternations or additions, or shall create any liability
for any failure so to do. The Lessee is and shall be in exclusive control and
possession of the premises and the Port Authority shall not in any event be
liable for any injury or damage to any property or to any person happening on or
about the premises nor for any injury or damage to the premises nor to any
property of the Lessee or of any other person located therein or thereon (other
than those occasioned by the negligent acts of the Port Authority).
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(e) At any time and from time to time during normal business hours
within the six (6) months next preceding the expiration of the letting, the Port
Authority, by its agents and employees, whether or not accompanied by
prospective lessees, occupiers or users of the premises, shall have the right to
enter thereon for the purpose of exhibiting and viewing all parts of the same.
(f) If, during the last month of the letting, the Lessee shall have
removed all or substantially all of the Lessee's property from the premises, the
Port Authority may immediately enter and alter, renovate and redecorate the
premises and change locks on doors in the premises.
(g) The exercise of any or all of the foregoing rights by the Port
Authority or others shall not be or be construed to be an eviction of the Lessee
nor be made on the grounds for any abatement of rental or any claim or demand
for damages, consequential or otherwise.
Section 17. Condemnation
(a) In any action or proceeding instituted by any governmental or other
authorized agency or agencies for the taking for a public use of any interest in
all or any part of the premises, or in case of any deed, lease or other
conveyance in lieu thereof (all of which are in this Section referred to as
"taking or conveyance") the Lessee shall not be entitled to assert any claim to
any compensation, award or part thereof made or to be made therein or therefor
or any claim to any consideration or rental or any part thereof paid therefor,
or to institute any action or proceeding or to assert any claim against such
agency or agencies or against the Port Authority for or on account of any such
taking or conveyance, except for the possible claim to an award for trade
fixtures owned and installed by the Lessee, it being understood and agreed
between the Port Authority and the Lessee that the Port Authority shall be
entitled to all the compensation or awards made or to be made or paid and all
such consideration or rentals, free of any claim or right of the Lessee. No
taking by or delivery to any governmental authority under this paragraph (a)
shall be or be construed to be an eviction of the Lessee or be the basis for any
claim by the Lessee for damages, consequential or otherwise.
(b) In the event of a taking or conveyance of the entire premises by
any governmental or other authorized agency or agencies, then the letter under
this Agreement shall, as of the date possession is taken from the Port Authority
by such agency or agencies, cease and determine in the same manner and with the
same effect as if the term of the letting had on that date expired.
(c) In the event of a taking or conveyance by any governmental or other
authorized agency or agencies of a part of the premises then the letting as to
such part only shall, as of the date possession thereof is taken from the Port
Authority by such
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agency or agencies, cease and determine, and the rental thereafter to be paid by
the Lessee to the Port Authority shall be abated as provided in the Section of
this Agreement entitled "Abatement of Rental" from and after the date of such
taking or conveyance.
(d) In the event that the taking or conveyance or the delivery by the
Lessee or taking by the Port Authority pursuant to Section 41 covers fifty per
cent (50%) or more of the total usable area of the premises, then the Lessee and
the Port Authority shall each have an option exercisable by notice given within
ten (10) days after such taking or conveyance, to terminate the letting
hereunder, as of the date of such taking, and such termination shall be
effective as if the date of such taking, and such termination shall be effective
as if the date of such taking were the original date of expiration hereof.
Section 18. Abatement of Rental
(a) In the event that the Lessee shall at any time become entitled to
an abatement of rent, the basic rental set forth in the Section of the Agreement
entitled "Basic Rental" shall be abated for the period the abatement is in
effect by the same percentage that the area of the part of the premises the use
of which is denied to the Lessee is of the total area of the premises.
(b) For the purposes of this Section, the number of square feet
contained in the premises or parts thereof shall be computed as follows: By
measuring from the inside surface of outer building walls to the surface of the
public area side, or of the non-exclusive area side, as the case may require, of
all partitions separating the space measured from adjoining areas designed for
the use of the public or for use by the Lessee in common with others, and to the
center of partitions separating the space measured form adjoining space
exclusively used by others; no deduction will be made for columns, partitions,
pilasters or projections necessary to the building and contained within the
space measured. Permanent partitions enclosing elevator shafts, stairs,
fire-towers, vents, pipe-shafts, meter-closets, flues, stacks and any vertical
shafts have the same relation to the space measured as do outer building walls.
(c) In the event that during the term of the letting under this
Agreement the Lessee shall be partially evicted and shall remain in possession
of the premises or the balance thereof, the Lessee agrees that notwithstanding
it might have the right to suspend payment of the rent in the absence of this
provision, it agrees to pay and will pay at the times and in the manner herein
provided, the full rent reserved less only an abatement thereof computed in
accordance with the above.
Section 19. Assignment and Sublease
(a) The Lessee shall not assign, sell, convey, transfer, mortgage, or
pledge this Agreement or any part thereof, or any rights created thereby or the
letting, or any part
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thereof, without the prior written consent of the Port Authority.
(b) The Lessee shall not sublet the premises, or any part thereof,
without the prior written consent of the Port Authority.
(c) If the Lessee assigns, sells, conveys, transfers, mortgages,
pledges, or sublets in violation of paragraphs (a) or (b) of this Section or if
the premises are occupied by anybody other than the Lessee, the Port Authority
may collect rent from any assignee, sublessee or anyone who claims a right to
this Agreement or letting or who occupies the premises, and shall apply the net
amount collected to the basic rental herein reserved; and no such collection
shall be deemed a waiver by the Port Authority of the covenants contained in
paragraphs (a) and (b) of this Section nor an acceptance by the Port Authority
of any such assignee, sublessee, claimant or occupant as Lessee, nor a release
of the Lessee by the Port Authority from the further performance by the Lessee
of the covenants contained herein. The granting of consent by the Port Authority
to any assignment or subletting shall not be deemed to operate as a waiver of
the requirement for obtaining the express prior written consent of the Port
Authority to any other or subsequent assignment or subletting.
(d) The Lessee shall not use, or permit any person to use, the premises
or any portion thereof, except for the purposes set forth in the Section of this
Agreement entitled "Rights of User by the Lessee."
Section 20. Termination
(a) If any one or more of the following events shall occur, that is to
say:
(1) The Lessee shall become insolvent, or shall take the benefit
of any present or future insolvency statute, or shall make a general
assignment for the benefit of creditors, or file a voluntary petition
in bankruptcy or a petition or answer seeking an arrangement or its
reorganization or the readjustment of its indebtedness under the
federal bankruptcy laws or under any other law or statute of the
United States or of any State thereof, or consent to the appointment
of a receiver, trustee, or liquidator of all or substantially all of
its property; or
(2) By order or decree of a court the Lessee shall be adjudged
bankrupt or an order shall be made approving a petition filed by any
of the creditors or, if the Lessee is a corporation, by any of the
stockholders of the Lessee, seeking its reorganization or the
readjustment of its indebtedness under the federal bankruptcy laws or
under any law or statute of the United States or of any State thereof;
or
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(3) A petition under any part of the federal bankruptcy laws or
an action under any present or future insolvency law or statute shall
be filed against the Lessee and shall not be dismissed within thirty
(30) days after the filing thereof; or
(4) The letting hereunder or the interest or estate of the Lessee
under this Agreement shall be transferred to, pass to or devolve upon,
by operation of law or otherwise, any other person, firm or
corporation; or
(5) The Lessee, if a corporation, shall, without the prior
consent of the Port Authority, become a possessor or merged
corporation in a merger, a constituent corporation in a consolidation,
or a corporation in dissolution; or
(6) The Lessee is a partnership, and the said partnership shall
be dissolved as the result of any act or omission of its partners or
any of them, or by operation of law or the order or decree of any
court having jurisdiction, or for any other reason whatsoever; or
(7) By or pursuant to, or under authority of any legislative act,
resolution or rule, or any order or decree of any court or
governmental board, agency or officer, a receiver, trustee, or
liquidator shall take possession or control of all or substantially
all the property of the Lessee, or any execution or attachment shall
be issued against the Lessee or any of its property, whereupon
possession of the premises shall be taken by someone other than the
Lessee, and any such possession or control shall continue in effect
for a period of fifteen (15) days; or
(8) Any lien is filed against the premises because of any act or
omission of the Lessee and is not removed within ten (10) days; or
(9) The Lessee shall voluntarily abandon, desert, vacate or
discontinue its operations in the premises, or, after exhausting or
abandoning any right of further appeal, the Lessee shall be prevented
for a period of thirty (30) days by action of any governmental agency
from conducting its operations on the premises, regardless of the
fault of the Lessee; or the Lessee shall fail to take occupancy and
commence operations within fifteen (15) days after the commencement
date; or
(10) The Lessee shall fail duly and punctually to pay the rentals
or to make any other payment required hereunder when due to the Port
Authority; or
(11) The Lessee shall fail to keep, perform and observe each and
every other promise, covenant and agreement set forth in this
Agreement on its part to be kept, performed, or observed, within ten
(10) days after receipt of notice of
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default thereunder from the Port Authority (except where fulfillment
of its obligation requires activity over a period of time, and the
Lessee shall have commenced to perform whatever may be required for
fulfillment within ten (10) days after receipt of notice and continues
such performance without interruption except for causes beyond its
control); or
(12) If this Agreement shall require a guarantor of one or more
of the Lessee's obligations under this Agreement and any of the events
described in subparagraphs (1), (2), (3) or (7) above shall occur to
or with respect to the guarantor (whether or not they shall also occur
to or with respect to the Lessee);
then upon the occurrence of any such event or at any time thereafter during the
continuance thereof, the Port Authority may by five (5) days' notice terminate
the letting, such termination to be effective upon the date specified in such
notice. Such right of termination and the exercise thereof shall be and operate
as a conditional limitation.
(b) If any of the events enumerated in paragraph (a) of this Section
shall occur prior to the commencement of the letting, the Lessee shall not be
entitled to enter into possession of the premises and the Port Authority upon
the occurrence of any such event or at any time thereafter during the
continuance thereof by twenty-four (24) hours' notice may cancel the interest of
the Lessee under this Agreement, such cancellation to be effective upon the date
specified in such notice.
(c) No acceptance by the Port Authority of rentals, fees, charges or
other payments in whole or in part for any period or periods after a default in
any of the terms, covenants and conditions to be performed, kept or observed by
the Lessee shall be deemed a waiver of any right on the part of the Port
Authority to terminate the letting.
(d) No waiver by the Port Authority of any default on the part of the
Lessee in performance of any of the terms, covenants or conditions hereof to be
performed, kept or observed by the Lessee shall be or be construed to be a
waiver by the Port Authority of any other or subsequent default in performance
of any of the said terms, covenants and conditions.
(e) The rights of termination described above shall be in addition to
any other rights of termination provided in this Agreement and in addition to
any rights and remedies that the Port Authority would have at law or in equity
consequent upon any breach of this Agreement by the Lessee, and the exercise by
the Port Authority of any right of termination shall be without prejudice to any
other such rights and remedies.
(f) The Lessee shall not interpose any counterclaims in any summary
proceeding or action for non-payment of rental which may be brought by the Port
Authority.
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Section 21. Right of Re-entry
The Port Authority shall, as an additional remedy upon the giving of a
notice of termination as provided in the Section of this Agreement entitled
"Termination", have the right to re-enter the premises and every part thereof
upon the effective date of termination without further notice of any kind, and
may regain and resume possession either with or without the institution of
summary or any other legal proceedings or otherwise. Such re-entry, or regaining
or resumption of possession, however, shall not in any manner affect, alter or
diminish any of the obligations of the Lessee under this Agreement, and shall in
no event constitute an acceptance of surrender.
Section 22. Survival of the Obligations of the Lessee
(a) In the event that the letting shall have been terminated in
accordance with a notice of termination as provided in the Section of this
Agreement entitled "Termination", or the interest of the Lessee canceled
pursuant thereto, or in the event that the Port Authority has re-entered,
regained or resumed possession of the premises in accordance with the provisions
of the Section of this Agreement entitled "Right of Re-entry", all the
obligations of the Lessee under this Agreement shall survive such termination or
cancellation, re-entry, regaining or resumption of possession and shall remain
in full force and effect for the full term of this Agreement, and the amount or
amounts of damages or deficiency shall become due and payable, as more
specifically stated in paragraph (b) below, to the Port Authority to the same
extent, at the same time or times and in the same manner as if no termination,
cancellation, re-entry, regaining or resumption of possession had taken place.
(b) Immediately upon any termination or cancellation pursuant to the
Section of this Agreement entitled "Termination", or upon any re-entry,
regaining or resumption of possession in accordance with the Section of this
Agreement entitled "Right of Re-entry", there shall become due and payable by
the Lessee to the Port Authority, in addition to rental accrued prior to the
effective date of termination, without notice or demand and as damages, the sum
of the following:
(1) subject to the provisions of paragraph (c) below, an amount
equal to the then present value of all basic rental provided for in
this Agreement for the entire term, following the effective date of
termination, as originally fixed in the Section of this Agreement
entitled "Term" less the amount thereof which may have been actually
paid by the Lessee;
(2) the amount of all other unfulfilled monetary obligations of
the Lessee under this Agreement, including without limitation thereto,
all sums constituting additional rental hereunder and the cost to the
expenses of the Port Authority for fulfilling all other obligations of
the Lessee which would have
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accrued or mature during the balance of the term or on the expiration
date originally fixed or within a stated time after expiration or
termination; and
(3) an amount equal to the cost to and the expenses of the Port
Authority in connection with the termination, cancellation, regaining
possession and restoring and reletting the premises, the Port
Authority's legal expenses and cost, and the Port Authority's costs
and expenses for the care and maintenance of the premises during any
period of vacancy, and any brokerage fees and commissions in
connection with any reletting.
(c) The Port Authority may at any time bring an action to recover all
the damages as set forth above not previously recovered in separate actions, or
it may bring separate actions to recover the items of damages set forth in
subparagraphs (2) and (3) of paragraph (b) above and separate actions
periodically to recover from time to time only such portion of the damages set
forth in subparagraph (1) of paragraph (b) above as would have accrued as rental
up to the time of the action if there had been no termination or cancellation.
In any such action the Lessee shall be allowed a credit against its survived
damages obligations equal to the amounts which the Port Authority shall have
actually received from any tenant, licensee, permittee or other occupier of the
premises or a part thereof during the period for which damages are sought, and
if recovery is sought for a period subsequent to the date of suit a credit equal
to the market rental value of the premises during such period (discounted to
reflect the then present value thereof). If at the time of such action the Port
Authority has relet the premises the rental for the premises obtained through
such reletting shall be deemed to be the market rental value of the premises or
be deemed to be the basis of computing such market rental value if less than the
entire premises were relet. In no event shall any credit be allowed to the
Lessee against its damages for any period exceed the then present value of the
basic rental which would have been payable under this Agreement during such
period if a termination or cancellation had not taken place. In determining
present value of rental an interest rate of 4% per annum shall be used.
Section 23. Reletting by the Port Authority
The Port Authority, upon termination or cancellation pursuant to the
Section of this Agreement entitled "Termination", or upon any re-entry,
regaining or resumption of possession pursuant to the Section of this Agreement
entitled "Right of Re-entry", may occupy the premises or may relet the premises,
and shall have the right to permit any person, firm or corporation to enter upon
the premises and use the same. The Port Authority may grant free rental or other
concessions and such reletting may be of part only of the premises or of the
premises or a part thereof together with other space, and for a period of time
the same as or different from the balance of the term hereunder remaining, and
on terms and conditions and for purposes the same as or different from those set
forth in this Agreement. The Port Authority shall also, upon termination or
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cancellation pursuant to the Section of this Agreement entitled "Termination",
or upon its re-entry, regaining or resumption of possession pursuant to the
Section of this Agreement entitled "Right of Re-entry", have the right to repair
or to make structural or other changes in the premises, including changes which
alter the character of the premises and the suitability thereof for the purposes
of the Lessee under this Agreement, without affecting, altering or diminishing
the obligations of the Lessee hereunder. In the event either of any reletting or
of any actual use and occupancy by the Port Authority (the mere right to use and
occupy not being sufficient however) there shall be credited to the account of
the Lessee against its survived obligations hereunder any net amount remaining
after deducting from the amount actually received from any lessee, licensee,
permittee or other occupier as the rental or fee for the use of the said
premises or portion thereof during the balance of the letting as the same is
originally stated in this Agreement, or from the market value of the occupancy
of such portion of the premises as the Port Authority may during such period
actually use and occupy, all expenses, costs and disbursements incurred or paid
by the Port Authority in connection therewith. No such reletting or such use and
occupancy shall be or be construed to be an acceptance of a surrender.
Section 24. Waiver of Redemption
The Lessee hereby waives any and all rights of redemption, granted by
or under any present or future law, arising in the event it is evicted or
dispossessed for any cause, or in the event the Port Authority obtains or
retains possession of the premises in any lawful manner.
Section 25. Remedies and Suits Against the Lessee
All remedies provided in this Agreement shall be deemed cumulative and
additional and not in lieu of or exclusive of each other or of any other remedy
available to the Port Authority at law or in equity. In the event of a breach or
threatened breach by the Lessee of any term, covenant, condition or provision of
this Agreement, the Port Authority shall have the right of injunction and the
right to invoke any other remedy allowed by law or in equity as if termination,
re-entry, summary proceedings and any other specific remedies including without
limitation thereto, indemnity and reimbursement, were not mentioned herein, and
neither the mention thereof nor the pursuance or exercise or failure to pursue
or exercise any right or remedy shall preclude the pursuance or exercise of any
other right or remedy.
Section 26. Surrender
(a) The Lessee covenants and agrees to yield and deliver peaceably to
the Port Authority possession of the premises on the date of the cessation of
the letting, whether such cessation be by termination, expiration, promptly and
in the same condition as at
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the time the Lessee entered into possession, such reasonable wear excepted as
would not adversely affect or interfere with the efficient and proper
utilization of the premises or any part thereof.
(b) Unless the same are required for the performance by the Lessee of
its obligations hereunder, the Lessee shall have the right at any time during
the letter to remove from the premises, and, on or before the expiration or
earlier termination of the letting, shall so remove its equipment, removable
fixtures and other personal property, and all property of third persons for
which it is responsible, repairing all damages caused by such removal. If the
Lessee shall fail to remove such property on or before the termination or
expiration of the letter, the Port Authority shall have the same rights with
respect to such property as it has in the event of casualty under Section 9(d).
Section 27. Acceptance of Surrender of Lease
No agreement of surrender or to accept a surrender shall be valid
unless and until the same shall have been reduced to writing and signed by the
duly authorized representatives of the Port Authority and of the Lessee. Except
as expressly provided in this Section, neither the doing of, nor any omission to
do, any act or thing, by any of the officers, agents or employees of the Port
Authority, shall be deemed an acceptance of a surrender of the letting or of
this Agreement. Without limiting the foregoing, no employee or officer of the
Port Authority shall be authorized to accept the keys of the premises prior to
the expiration date of the letting as fixed in the Section of this Agreement
entitled "Term" and no delivery of the keys by the Lessee shall constitute a
termination of this Agreement or acceptance of surrender.
Section 28. Notices
(a) Notices, requests, permissions, consents and approvals given or
required to be given to or by either party under this Agreement, shall not be
effective unless they are given in writing, and all such notices and requests
shall be (i) personally delivered to the party or a duly designated officer or
representative of such party; or (ii) delivered to the office of such party,
officer or representative during regular business hours; or (iii) delivered to
the residence of such party, officer or representative; or (iv) if directed to
the Lessee, delivered at the premises at any time; or (v) forwarded to such
party, officer or representative at the office or residence address by
registered or certified mail. The Lessee shall designate an office within the
Port of New York District and an officer or representative whose regular place
of business is at such office. Until further notice, the Port Authority hereby
designates its Executive Director, and the Lessee designates the person named as
representative on the first page hereof as their respective officers or
representatives upon whom notices and requests may be served, and the Port
Authority designates its office at One World Trade Center, New York, New York
10048, and the Lessee designates its office at its address stated on the first
page hereof, as their respective
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offices where notices and requests may be served.
(b) If any notice is mailed or delivered, the giving of such notice
shall be complete upon receipt, or, in the event of a refusal by the addressee,
upon the first tender of the notice to the addressee or at the permitted
address. If any notice is sent by telegraph, the giving of such notice shall be
complete upon receipt or, in the event of a refusal by the addressee, upon the
first tender of the notice by the telegraph company to the addressee or at the
address thereof.
Section 29. Payments
(a) All payments required of the Lessee by this Agreement shall be made
at the office of the Treasurer of the Port Authority, One World Trade Center,
New York, New York 10048, or to such other officer or address as may be
substituted therefor.
(b) No payment by the Lessee or receipt by the Port Authority of a
lesser rental amount than that which is due and payable under the provisions of
this Agreement at the time of such payment shall be deemed to be other than a
payment on account of the earliest rental then due, nor shall any endorsement or
statement on any check or in any letter accompanying any check or payment be
deemed an accord and satisfaction, and the Port Authority may accept such check
or payment without prejudicing in any way its right to recover the balance of
such rental or to pursue any other remedy provided in this Agreement or by law.
Section 30. Subrogation
This Agreement and the letting hereunder are and shall be subject and
subordinate to all mortgages which may now or hereafter affect the premises or
the Facility, and to all renewals, modifications, consolidations, replacements
and extensions thereof, and although the provisions of this Section shall be
deemed to be self-operating and effective for all purposes without any further
instrument on the part of the Lessee, the Lessee shall execute on demand and
without expense to the Port Authority such further instruments confirmatory of
the provisions of this Section as the Port Authority may request.
Section 31. Quiet Enjoyment
The Port Authority covenants and agrees that as long as it remains the
owner of the Facility, the Lessee, upon paying all rentals hereunder and
performing all the covenants, conditions and provisions of this Agreement on its
part to be performed, shall and may peaceably and quietly have, hold and enjoy
the premises free of any act or acts of the Port Authority except as expressly
permitted in this Agreement.
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Section 32. Non-Liability of Individuals
Neither the Commissions of the Port Authority nor any of them, not any
officer, agent or employee thereof, shall be charged personally by the Lessee
with any liability or held liable to it under any term or provision of this
Agreement, or because of its execution or attempted execution, or because of any
breach or attempted or alleged breach thereof.
Section 33. Headings
The section headings and the paragraph headings, if any, are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope or intent of any provision hereof.
Section 34. Construction and Application of Terms
(a) Wherever in this Agreement a third person singular neuter pronoun
or adjective is used referred to the Lessee, the same shall be taken and
understood to refer to the Lessee, regardless of the actual gender or number
thereof.
(b) Whenever in this Agreement the Lessee is placed under an obligation
or covenants to do or to refrain from or is prohibited from doing, or is
entitled or privileged to do, any act or thing, the following shall apply:
(1) If the Lessee is a corporation, its obligations shall be
performed or its rights or privileges shall be exercised only by its
officers and employees; or
(2) If the Lessee is an unincorporated association or a business
or "Massachusetts" trust, the obligation shall be that of its members
or trustees, as well as of itself, and shall be performed only by its
members or trustees, and officers and employees, and the right or
privilege shall be exercised only by its members or trustees, and its
officers and employees; or
(3) If the Lessee is a partnership, the obligation shall be that
of its partners and shall be performed only by its partners and
employees and the rights or privileges shall be exercised only by its
partners and employees; or
(4) If the Lessee is an individual, the obligations shall be that
of himself (or herself) and shall be performed only by himself (or
herself) and his (or her) employees and the right or privilege shall
be exercised only by himself (or herself) and his (or her) employees.
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(5) None of the provisions of this paragraph (b) shall be taken
to alter, amend or diminish any obligation of the Lessee assumed in
relation to its invitees, customers, agents, representatives,
contractors or other persons, firms or corporations doing business
with it.
(c) If more than one individual or other legal entity is the Lessee
under this Agreement, each and every obligation hereof shall be the joint and
several obligation of each such individual or other legal entity.
(d) Unless otherwise stated in the Section of this Agreement entitled
"Rights of User by the Lessee", the rights of user thereby granted to the Lessee
with respect to the premises shall be exercised by the Lessee only for its own
account and, without limiting the generality of the foregoing, shall not be
exercised as agent, representative, factor, broker, forwarder, bailee, or
consignee without legal title to the subject matter of the consignment.
(e) The Lessee's representative, hereinbefore specified in this
Agreement (or such substitute as the Lessee may hereafter designate in writing),
shall have full authority to act for the Lessee in connection with this
Agreement and any things done or to be done hereunder, and to execute on the
Lessee's behalf any amendments or supplements to this Agreement or any extension
thereof.
(f) This Agreement does not constitute the Lessee, the agent or
representative of the Port Authority for any purpose whatsoever.
(g) All designations of time herein contained shall refer to the
time-system then officially in effect in the municipality wherein the premises
are located.
(h) No greater rights or privileges with respect to the use of the
premises or any part thereof or with respect to the Facility are granted or
intended to be granted to the Lessee by this Agreement, or by any provision
thereof, than the rights and privileges expressly granted hereby.
Section 35. Definitions
The following terms, when used in this Agreement, shall have the
respective meanings given below:
(a) "Letting" shall mean the letting under this Agreement for the
original term stated herein, and shall include any extensions thereof which may
be made pursuant to the provisions of this Agreement, or otherwise.
(b) "World Trade Center" or "Facility" shall mean the building complex
to be
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constructed by the Port Authority within the area in the Borough of Manhattan,
City, County, and State of New York, bounded generally by the east side of
Church Street on the east, the south side of Liberty Street and the south side
of Liberty Street extended on the south, the Hudson River on the west, and on
the north by a line beginning at the point of intersection of the Hudson Rider
and the north side of Vesey Street extended, running along the north side of
Vesey Street extended and the north side of Vesey Street to the west side of
Washington Street, then along the west side of Washington Street to the north
side of Barclay Street, then along the north side of Barclay Street to the east
side of West Broadway, then along the east side of West Broadway to the north
side of Vesey Street, then along the north side of Vesey Street to the east side
of Church Street, together with such additional contiguous area as may be agreed
upon from time to time between the Port Authority and the said City of New York;
(c) The phrase "utility, mechanical, electrical, communication and
other systems" shall mean and include (without limitation thereto) the
following: machinery, engines, dynamos, boilers, elevators, escalators,
incinerators and incinerator flues, systems for the supply of fuel, electricity,
water, gas and steam, plumbing, heating, sewerage, drainage, ventilating, air
conditioning, communications, fire-alarm, fire-protection, sprinkler, telephone,
telegraph and other systems, fire hydrants, fire hoses, and their respective
wires, mains, conduits, lines, tubes, pipes, equipment, motors, cables, fixtures
and other equipment.
(d) "Causes or conditions beyond the control of the Port Authority",
shall mean and include acts of God, the elements, weather conditions, tides,
earthquakes, settlements, fire, acts of governmental authority, war, shortage of
labor or materials, acts of third parties for which the Port Authority is not
responsible, injunctions, strikes, boycotts, picketing, slowdowns, work
stoppages, labor troubles or disputes of every kind (including all those
affecting the Port Authority, its contractors, suppliers or subcontractors) or
any other condition or circumstances, whether similar to or different from the
foregoing (it being agreed that the foregoing enumeration shall not limit or be
characteristic of such conditions or circumstances) which is beyond the control
of the Port Authority or which could not be prevented or remedied by reasonable
effort and at reasonable expense.
(e) "Holidays" or "legal holidays" shall mean and include the following
days in each year: the first day of January, known as New Year's day; the
twelfth day of February, known as Lincoln's birthday; the third Monday in
February, known as Washington's birthday; the last Monday in May, known as
Memorial day; the fourth day of July, known as Independence day; the first
Monday in September, known as Labor day; the second Monday in October, known as
Columbus day; the fourth Monday in October, known as Veterans' day; the fourth
Thursday in November, known as Thanksgiving day; and the twenty-fifth day of
December, known as Christmas day; and if any of such days is Sunday, the next
day thereafter; and each general Election day in the State of New York; and such
other or different days or dates as are declared "holidays" or
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"legal holidays" under the laws of the State of New York or as may hereafter be
so declared.
(f) "Normal business hours", shall mean 8:00 o'clock A.M. to 6:00
o'clock P.M. Mondays to Fridays inclusive, legal holidays excepted.
Section 36. Force Majeure
(a) The Port Authority shall not be liable for any failure, delay or
interruption in performing its obligations hereunder due to causes or conditions
beyond the control of the Port Authority. Further, the Port Authority shall not
be liable unless the failure, delay or interruption shall result from failure on
the part of the Port Authority to use reasonable care to prevent or reasonable
efforts to cure such failure, delay or interruption.
(b) No abatement, diminution or reduction of the rent or other charges
payable by the Lessee, shall be claimed by or allowed to the Lessee for any
inconvenience, interruption, cessation or loss of business or other loss caused,
directly or indirectly, by any present or future laws, rules, requirements,
orders, directions, ordinances or regulations of the United States of America,
or of the state, county or city governments, or of any other municipal,
governmental or lawful authority whatsoever, or by priorities, rationing or
curtailment of labor or materials, or by war or any matter or thing resulting
therefrom, or by any other cause or condition beyond the control of the Port
Authority, nor shall this Agreement be affected by any such causes or
conditions.
Section 37. Premises
(a) The Lessee acknowledges that it has not relied upon any
representation or statement of the Port Authority or its Commissioners,
officers, employees or agents as to the suitability of the premises for the
operations permitted on the premises by this Agreement. Without limiting any
obligation of the Lessee to commence operations hereunder at the time and in the
manner stated elsewhere in this Agreement, the Lessee agrees that no portion of
the premises will be used initially or at any time during the letting which is
in a condition unsafe or improper for the conduct of the Lessee's operations
hereunder so that there is a possibility of injury or damage to life or
property. For all purposes of this Agreement the premises hereunder
(notwithstanding any statement elsewhere in this Agreement of any rule for the
measurement of the area hereof) shall be deemed to include all of the enclosing
partitions, and the adjacent exterior building walls and glass to and including
the exterior surface thereof.
(b) The Port Authority may by written authorization allow the Lessee to
enter into the possession of the premises prior to the date specified in the
Section of this Agreement entitled "Term" as the commencement of the term of the
letting, solely for
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the purpose of moving personal property of the Lessee into the premises and of
installing fixtures. If the lessee receives such written authorizations, the
Lessee shall use and occupy the premises in accordance with and subject to all
the terms, covenants, conditions and provisions of this Agreement other than
those relating to payment of rent and rights of user and except as may be
expressly provided otherwise by the written authorization.
Section 38. Governmental Compliance
In the event that all or any portion of the premises is required by the
Port Authority to comply with any present or future governmental law, rule,
regulation, requirement, order or direction, the Port Authority shall give the
Lessee notice that all or any such portion of the premises is so required and
the Lessee shall deliver all or any such portion of the premises so required on
the date specified in such notice and, if the Lessee does not so deliver, the
Port Authority may take the same. No such taking or delivery shall be or be
construed to be an eviction of the Lessee or a breach of this Agreement. In the
event that the Lessee has received a notice hereunder it shall deliver all or
any such portion of the premises so required in the same condition as that
required hereunder for the delivery of the premises on the cessation of the
letting. In the event of the taking or delivery of all the premises, this
Agreement and the letting hereunder shall on the day of such taking or delivery
cease and expire as if that day were the date, originally stated herein for the
expiration of this Agreement; and, in the event of the taking or delivery of any
portion of the premises, then, from and after such taking or delivery, such
portion of the premises shall cease to be a part of the premises hereunder.
There shall be an abatement of the rental in the event of any such taking or
delivery of a portion of the premises as provided in the Section of this
Agreement entitled "Abatement of Rental".
Section 39. Services and Utilities
(a) Subject to all the terms and provisions of this Agreement, the Port
Authority will furnish without additional charge to the Lessee the following:
(1) Heat, ventilation and air cooling to maintain in the premises
an even and comfortable working temperature during normal business
hours;
(2) To the extent that the Lessee's consumption does not exceed
the capacity of feeders, risers or wiring in the premises or Facility,
electricity, during normal business hours, in reasonable quantities
solely for illumination, by which is meant the energizing of
fluorescent and incandescent bulbs (to be supplied, paid for and
installed by the Lessee), and for the operation of such machines and
equipment as the Port Authority may consent to in advance; and
(b) Unless the premises contain toilet and washroom facilities, the
Port Authority shall, without additional charge, furnish non-exclusive toilet
and washroom facilities for
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the employees of the Lessee.
(c) The Port Authority will supply services in the premises as
described in Schedule B attached hereto and hereby made a part hereof.
(d) If the Lessee, in accordance with the Section of this Agreement
entitled "Construction by the Lessee" or otherwise, erects any partitions or
makes any improvements which stop, hinder, obstruct or interfere with the
cooling of the air or the heating of the premises, or if the Lessee shall fail
to close and keep closed the window coverings when the sun is shining on the
windows of the premises, then no such action by the Lessee shall impose any
obligations on the Port Authority to install facilities, fixtures or equipment
for air-cooling or for heating additional to those existing or presently
contemplated or to increase the capacity or output of initially existing
facilities, equipment or fixtures and the Lessee shall not in any such event be
relieved of any of its obligation hereunder because a comfortable temperature is
not maintained. No consent given by the Port Authority to the erection of
partitions or the making of any improvements shall be or be deemed to be a
representation that the work consented to will not stop, hinder, obstruct or
interfere with either the cooling of the air or heating of the premises or any
portion thereof. It is hereby understood further that the installation by the
Lessee of any equipment which itself requires air cooling or which requires
additional quantities of air cooling at the portion of the premises where such
equipment is installed, or the concentration in any portion of the premises of
such a number of people so as to require additional quantities of air cooling,
shall not impose any obligation on the Port Authority to install facilities,
fixtures and equipment for air cooling additional to those initially existing,
or to increase the capacity or output of initially existing facilities,
equipment or fixtures and the Lessee shall not in any event be relieved of any
of its obligations hereunder.
(e) The Lessee shall keep closed all entrance doors and all windows in
the premises except that doors may be opened when required for ingress or
egress. The Lessee shall not otherwise waste or dissipate the air cooling or
heating services. Without otherwise affecting the Port Authority's rights or
remedies in the event of any breach by the Lessee of its obligations under this
Agreement, the Port Authority shall have the right to discontinue or reduce the
said heating or air-cooling service during any period of such waste or
dissipation and any failure of the Port Authority to supply any such service
under such condition shall not affect any of the Lessee's obligations under this
Agreement.
(f) If any federal, state, municipal or other governmental body,
authority or agency or any public utility assesses, levies, imposes, makes or
increases any charge, fee or rent on the Port Authority for any service, system
or utility now or in the future supplied to or available to the premises or to
any occupants or users thereof or to the structure or building of which the
premises form a part (including but not limited to any sewer rent or
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charge for the use of sewer systems), the Lessee shall, at the option of the
Port Authority exercised at any time and from time to time by notice to the
Lessee, pay, in accordance with said notice, such charge, fee or rent or
increase thereof (or the portion thereof allocated by the Port Authority to the
premises or the Lessee's operations hereunder) either directly to the
governmental body, authority or agency or to the public utility or directly to
the Port Authority.
(g) The Port Authority shall have the right to discontinue temporarily
the supply of any of the above services when necessary or desirable in the
opinion of the Port Authority in order to make any repairs, alterations, changes
or improvements in the premises or elsewhere in the Facility including but not
limited to all systems for the supply of services.
(h) No failure, delay, interruption or reduction in any service or
services shall be or shall be construed to be an eviction of the Lessee, shall
be grounds for any diminution or abatement of the rentals payable hereunder, or
shall constitute grounds for any claim by the Lessee for damages, consequential
or otherwise, unless due to the negligent acts of the Port Authority, its
employees or agents. The Lessee shall not be entitled to receive any service or
services during any period during which the Lessee shall be in default under any
of the provisions of this Agreement.
(i) The Port Authority shall be under no obligation to supply any
service or services if and to the extent and during any period that the
supplying of any such service or services or the use of any component necessary
therefor shall be prohibited or rationed by any federal, state or municipal law,
rule, regulation, requirement, order or direction and if the Port Authority
deems it in the public interest to comply therewith, even though such law, rule,
regulation, requirement, order or direction may not be mandatory on the Port
Authority as a public agency.
(j) The Port Authority shall have no obligations or responsibility with
respect to the performance of any services or providing, supplying or furnishing
to the Lessee of any utilities or services whatsoever except as expressly
provided in this Section.
Section 40. Additional Services
(a) From and after the commencement by the Lessee of the business
operations in the premises permitted under Section 3, the Port Authority will
furnish to the Lessee in the premises, for operation of the equipment comprising
special air cooling facilities installed by the Lessee, condenser water
sufficient for a rated capacity of seventy (70) tons, and the Lessee agrees to
pay to the Port Authority for such condenser water an annual charge at the rate
of Seventy-five Thousand Seven Hundred Thirty-seven Dollars and Ninety Cents
($75,737.90), such payment to be made by the Lessee to the Port Authority
regardless of whether the Lessee takes none or a portion only of such condenser
water. If
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the Lessee requires additional quantities of condenser water for use
in its air cooling equipment, and provided the Port Authority has additional
quantities available to furnish to the Lessee, the Port Authority will furnish
the same and the Lessee shall pay to the Port Authority for such additional
condenser water an annual charge at the rate of One Thousand Eighty-one Dollars
and Ninety-seven Cents ($1,081.97) per ton of the rated cooling capacity of the
Lessee's equipment requiring such additional condenser water as determined by
the Port Authority, such payment to be made by the Lessee to the Port Authority
regardless of whether the Lessee takes none or a portion only of such additional
condenser water. The parties hereto acknowledge that the rated capacity of the
Lessee's equipment is eighty (80) tons. In the event of any changes made in the
Lessee's air cooling equipment or the installation thereof, the Lessee shall
supply to the Port Authority such certifications of rated capacity as the Port
Authority shall request, including certifications of third parties. The annual
charge for condenser water, together with the annual charge for additional
condenser water, shall be payable by the Lessee in advance in equal monthly
installments and shall be payable at the same time, in the same manner and shall
be recoverable with like remedies as if it were a part of the basic rental
reserved under this Agreement.
(b) The charges for condenser water stated in paragraph (a) above shall
be subject to increase from time to time as follows: "Wage rate" as used in this
paragraph shall mean the hourly straight time wage rate for Engineers as that
wage rate is established from time to time by collective bargaining agreement
between the Realty Advisory Board on Labor Relations, Incorporated, acting on
behalf of various building owners and Local 94 of the International Union of
Operating Engineers, AFL-CIO, and "basic wage rate" shall mean the wage rate in
effect on January 1, 1992. From and after each wage rate established from and
after January 1, 1992, the Lessee shall pay annual charges in addition to the
charges for condenser water and additional condenser water stated in paragraph
(a) above, such additional charge for condenser water to be at an annual rate of
One Hundred Seventy-five Dollars and No Cents ($175.00) for each one percent
(1%), or major fraction thereof, that the wage rate so established exceeds the
basic wage rate and such additional annual charge for additional condenser water
shall be at an annual rate per ton equal to $2.50 for each one percent (1%), or
major fraction thereof, that the wage rate so established exceeds the basic wage
rate. If either the Realty Advisory Board on Labor Relations, Incorporated, or
Local 94 of the International Union of Operating Engineers, AFL-CIO, shall cease
to exist or a collective bargaining agreement shall cease to be negotiated
between the Realty Advisory Board on Labor Relations, Incorporated and Local 94
of the International Union of Operating Engineers, AFL-CIO, then the wage rate
to be used for computing increases in the said charge shall be the wage rate for
Engineers established under such collective bargaining agreements as the Port
Authority shall select. If the job classification "Engineers" shall be renamed
or abolished, then the Port Authority will select the job classification
performing substantially the same labor functions as Engineers and the wage rate
of the job classification so selected shall be used in computing increases in
the charges provided for herein.
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(c) The furnishing of condenser water and additional condenser water by
the Port Authority as provided for herein shall be subject to all of the terms,
provisions and conditions of Section 42 of this Agreement. Notwithstanding that
the Port Authority is obligated to furnish condenser water as provided in
paragraph (a) hereof, the Port Authority shall have no responsibility whatsoever
for conditioning or cooling the air in that area of the premises served by the
air cooling equipment installed by the Lessee nor for the maintenance therein of
any specified temperature or comfort level, but nothing set forth herein shall
relieve the Port Authority of its obligation to provide ventilation and air
cooling in accordance with and subject to the provisions of Schedule D attached
hereto and hereby made a part hereof. The Lessee shall and does hereby release
the Port Authority from, and shall indemnify the Port Authority against, any and
all claims and demands, losses or damages (including but not limited to any such
occurring to any data processing or other equipment located in the premises or
to any work product thereof) arising or resulting from the failure to maintain a
proper temperature or air quality in the premises and regardless of whether the
same is due to the acts or omissions of the Port Authority, the Lessee or of
others, unless such failure is due to the negligent acts of the Port Authority.
Section 41. Rental Obligations
(a) The Lessee shall pay to the Port Authority a basic rental for the
premises as follows:
(i) During the period from and after the commencement date of the
term of the letting hereunder through September 10, 1997, the Lessee
shall pay a basic rental at the rate of Nine Hundred Fifteen Thousand
Sixty Dollars and No Cents ($915,060.00) per annum, as follows: in the
sum of Twelve Thousand Seven Hundred Nine Dollars and No Cents
($12,709.00) on July 27, 1993 and in advance in equal monthly
installments in the amount of Seventy-six Thousand Two Hundred
Fifty-five Dollars and No Cents ($76,255.00) on August 1, 1993 and on
the first day of each calendar month thereafter through September 10,
1997, provided however that notwithstanding the foregoing, for the
period from and after September 1, 1997 through and including
September 10, 1997, the Lessee shall pay to the Port Authority the sum
of Twenty-five Thousand Four Hundred Eighteen Dollars and No Cents
($25,418.00).
(ii) During the period from and after September 11, 1997 through
September 10, 2002 the Lessee shall pay a basic rental at the rate of
Nine Hundred Seventy-nine Thousand Two Hundred Seventy-two Dollars and
No Cents ($979,272.00) per annum, as follows: in the sum of Fifty-four
Thousand Four Hundred Three Dollars and No Cents ($54,403.00) on
September 11, 1997 and in advance in monthly installments of
Eighty-one Thousand Six Hundred Six
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Dollars and No Cents ($81,606.00) each on October 1, 1997 and on the
first day of each calendar month thereafter through September 10,
2002, provided however that notwithstanding the foregoing, for the
period from and after September 1, 2002 through and including
September 10, 2002, the Lessee shall pay to the Port Authority the sum
of Twenty-seven Thousand Two Hundred Two Dollars and No Cents
($27,202.00).
(iii) During the period from and after September 11, 2002 through
the balance of the term of the letting under this Agreement, the
Lessee shall pay a basic rental at the rate of One Million One Hundred
Seventy-one Thousand Nine Hundred Eight Dollars and No Cents
($1,171,908.00) per annum, as follows: in the sum of Sixty-five
Thousand One Hundred Six Dollars and No Cents ($65,106.00) on
September 11, 2002 and in advance in monthly installments of
Ninety-seven Thousand Six Hundred Fifty-nine Dollars and No Cents
($97,659.00) each on October 1, 2002 and on the first day of each
calendar month thereafter throughout the balance of the term of the
letting under this Agreement, provided however that notwithstanding
the foregoing, for the period from and after September 1, 2007 through
the balance of the term of the letting under this Agreement the Lessee
shall pay to the Port Authority the sum of Thirty-two Thousand Five
Hundred Fifty-three Dollars and No Cents ($32,553.00).
(b) If the expiration or termination date of the letting under this
Agreement is other than the last day of a calendar month, the basic rental for
the portion of the last calendar month during which the letting under this
Agreement is in effect shall be the amount of the monthly installment applicable
to that calendar month multiplied by a fraction the numerator of which shall be
the number of days the letting is in effect in that calendar month and the
denominator of which shall be the number of days in that calendar month.
(c) The provisions of paragraph (b) of Section 4 were deleted in their
entirety.
Section 42. Liability Insurance
(a) The Lessee in its own name as assured shall secure and pay the
premium on a policy of comprehensive general liability insurance including a
contractual liability endorsement for such coverage as may be stipulated by the
Port Authority covering the Lessee's operations hereunder which shall be
effective throughout the letting under this Agreement and shall be in a combined
single limit of not less than $2,000,000 for liability for bodily injury, for
wrongful death and for property damage arising from any one occurrence.
(b) The Port Authority shall be included as an additional insured in
any policy of liability insurance required by this Section.
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(c) As to any insurance required by this Section, a certified copy of
each of the policies or a certificate or certificates evidencing the existence
thereof, or binders, shall be delivered to the Port Authority within twenty (20)
days prior to the commencement date of the letting hereunder. In the event any
binder is delivered, it shall be replaced within thirty (30) days by a certified
copy of the policy or a certificate. Each such copy or certificate shall contain
a valid provision or endorsement that the policy may not be canceled,
terminated, changed or modified, without giving ten (10) days written advance
notice thereof to the Port Authority. A renewal policy shall be delivered to the
Port Authority at least fifteen (15) days prior to the expiration date of each
expiring policy, except for any policy expiring after the date of expiration of
the letting. If at any time any of the policies shall be or become
unsatisfactory to the Port Authority as to form or substance (the Port Authority
hereby agreeing not to act arbitrarily in making such determination), or if any
of the carriers issuing such policies shall be or become unsatisfactory to the
Port Authority, the Lessee shall promptly obtain a new and satisfactory policy
in replacement.
(d) Each policy of insurance required by this Section shall contain a
provision that the insurer shall not without obtaining express advance
permission from the General Counsel of the Port Authority, raise any defense
involving in any way the jurisdiction of the tribunal over the person of the
Port Authority, the immunity of the Port Authority, its Commissioners, officers,
agents or employees, the governmental nature of the Port Authority or the
provisions of any statutes respecting suits against the Port Authority.
Section 43. Electricity
(a) Subject to all the terms, provisions and conditions of Section
42(f), (g), (h) and (i) of this Agreement, and notwithstanding the provisions of
Section 42(a)(2) of this Agreement, and to the extent that the Lessee's
consumption does not exceed the capacity of feeders, risers or wiring in the
building of which the premises is a part or in the premises (it being the
Lessee's sole responsibility for designing and constructing distribution systems
for the premises), the Port Authority will supply to the Lessee electricity
solely for illumination by which is meant the energizing of fluorescent and
incandescent bulbs (to be supplied, paid for and installed by the Lessee) and
for the operation of such machines and equipment as the Port Authority may
consent to in advance and the Lessee shall pay for the same in accordance with
the following provisions of this Section. The total electrical capacity to be
provided by the Port Authority to the premises shall be as set forth in Schedule
D attached hereto and hereby made a part hereof. The quantity of all electricity
supplied to the Lessee shall be measured by a meter or meters furnished by the
Port Authority for that purpose (such meter or meters to be installed by the
Lessee at its sole cost and expense), and in the event any such meter fails to
record such, the quantity of electricity so supplied during any period that a
meter is out of service will be considered to be the same as the quantity
supplied during a like period
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either immediately before or immediately after such interruption as selected by
the Port Authority. The quantity of such electricity shall be paid for by the
Lessee at the greater of the following rates:
(1) the rates (including the fuel or other adjustment factor, if
any) which the Lessee, under the service classification then
applicable to the Lessee, would be required to pay for the same
quantity of electricity to be used for the same purpose under the same
conditions if the Lessee had purchased such electricity directly from
the public utility company supplying the same to commercial buildings
in the vicinity; or
(2) the Port Authority's cost of obtaining and supplying the same
quantity of electricity.
The Lessee shall pay the cost of such consumption and demand for each such
billing period to the Port Authority upon demand therefor and the same shall be
deemed additional rental collectible in the same manner and with like remedies
as if it were a part of the basic rental reserved hereunder.
(b) Notwithstanding that the Port Authority has agreed to supply
electricity to the Lessee, the Port Authority shall be under no obligation to
provide or continue such service if the Port Authority is prevented by law,
agreement or otherwise from submetering electricity as hereinabove set forth or
elects not to so submeter the same and in any such event the Lessee shall make
all arrangements and conversions necessary to obtain electricity directly from
the public utility company supplying electricity in the vicinity. Also, in such
event, the Lessee shall perform the construction necessary for such conversion
and if any lines or equipment of the Port Authority are with the consent of the
Port Authority used therefor, the Port Authority may make an appropriate charge
therefor to the Lessee based on its costs and expenses for the said lines and
equipment.
Section 44. Late Charges
If the Lessee should fail to pay any amount required under this
Agreement when due to the Port Authority, including without limitation any
payment of basic or other rental or any payment of utility or other charges or
if any such amount is found to be due as the result of an audit, then, in such
event, the Port Authority may impose (by statement, bill or otherwise) a late
charge with respect to each such unpaid amount for each late charge period
(hereinbelow described) during the entirety of which* such amount remains
unpaid, each such late charge not to exceed an amount equal to eight-tenths of
one percent of such unpaid amount for each late charge period. There shall be
- ----------------------------
* such late charge period
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twenty-four late charge periods on a calendar year basis; each late charge
period shall be for a period of at least fifteen (15) calendar days except one
late charge period each calendar year may be for a period of less than fifteen
(but not less than thirteen) calendar days. Without limiting the generality of
the foregoing, late charge periods in the case of amounts found to have been
owing to the Port Authority as the result of Port Authority audit findings shall
consist of each late charge period following the date the unpaid amount should
have been paid under this Agreement. Each late charge shall be payable
immediately upon demand made at any time therefor by the Port Authority. No
acceptance by the Port Authority of payment of any unpaid amount or of any
unpaid late charge amount shall be deemed a waiver of the right of the Port
Authority to payment of any late charge or late charges payable under the
provisions of this Section with respect to such unpaid amount. Each late charge
shall be recoverable by the Port Authority in the same manner and with like
remedies as if it were originally a part of the basic rental as set forth in the
section of this Agreement entitled "Basic Rental". Nothing in this Section is
intended to, or shall be deemed to, affect, alter, modify or diminish in any way
(i) any rights of the Port Authority under this Agreement, including without
limitation the Port Authority's rights set forth in the section of this
Agreement entitled "Termination" or (ii) any obligations of the Lessee under
this Agreement. In the event that any late charge imposed pursuant to this
Section shall exceed a legal maximum applicable to such late charge, then, in
such event, each such late charge payable under this Agreement shall be payable
instead at such legal maximum. For purposes of this Section only, any payment
required under this Agreement the amount of which cannot be known by the Lessee
until the Port Authority notifies the Lessee thereof, including, without
limitation thereto, amounts found to have been owing to the Port Authority as
the result of Port Authority audit findings, shall not be deemed due to the Port
Authority until such notice has been given.
Section 45. Finishes To Be Provided By The Lessee
(a) The Lessee has thoroughly examined and inspected the premises and
has found the same to be in good order and repair and suitable for the Lessee's
operations hereunder and agrees to take the premises in the condition it is in
when vacated by the occupant thereof and turned over to the Lessee by the Port
Authority, and the Port Authority shall have no obligation hereunder for
finishing work or preparation of the premises for the Lessee's use except that
the Port Authority, through its employees, agents, representatives, contractors
and subcontractors, shall install a peripheral loop fire protection sprinkler
main serving the floor on which the premises is located and shall also refinish
the public corridors, the passenger elevator lobby and the bathrooms on the said
floor, which refinishing work shall include the installation of building
standard wall coverings, ceilings, floor covering and bathroom finishes
conforming in materials, style and workmanship with the aforesaid installations
customarily found on other multiple-tenant floors in the Facility, and except
further that the Port Authority shall remove and replace or cause to be removed
and replaced from building structural steel members above
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the dropped ceilings in the premises friable asbestos-containing materials as
defined in the guidelines established by the United States Environmental Agency
("USEPA") and set forth in the USEPA publication entitled "Guidance for
Controlling Asbestos-Containing Materials in Buildings" (EPA 560/5-85-024, June
1985), provided that such friable asbestos-containing materials have not been
installed by or for the Lessee, and provided further that, in addition to all
other rights of entry reserved to the Port Authority under this Agreement, the
Lessee expressly provides the Port Authority with access to the premises for
such removal and replacement work. The Lessee shall not do anything during the
term of the letting of the premises which may involve or affect any
asbestos-containing materials which may be or may be found to be present in the
premises except in accordance with any law, rule, regulation, requirement, order
or direction of any governmental authority applicable thereto or which would be
applicable if the building of which the premises are a part were under private
ownership. The Lessee agrees to perform at its sole cost and expense all
construction and installation work that it may require to finish off and
decorate the premises, including the installation of non-asbestos-containing
spray-on fireproofing material in those areas on the underside of the floor slab
immediately above the floor on which the premises is located where fireproofing
material is missing (the said fireproofing material installation work being
hereinafter referred to as the "Additional Work"). In addition, if the Lessee so
elects and if all applicable laws, rules, regulations, orders and directions so
allow, the Lessee, at its cost and expense and in conjunction with its
construction and installation work in the premises, may convert one of the
present women's public bathrooms located on the floor on which the premises is
located into a men's public bathroom which shall include the installation of
urinals and all related plumbing and construction work. In the event the Lessee
so elects to convert a women's public bathroom into a men's public bathroom, the
Port Authority, solely in connection with such initial conversion work, shall
refinish the said converted bathroom in building standard finishes, as provided
above. The Lessee has furnished information to the Port Authority regarding the
gender composition of its current work force and hereby represents and warrants
that such information is complete and accurate. Notwithstanding the above-stated
permission granted to the Lessee to perform the aforesaid bathroom conversion
work, the Lessee shall be required, at any time during the term of the letting
hereunder and at its sole cost and expense, to re-convert the said converted
men's public bathroom into a women's public bathroom within a period of not more
than ninety (90) days following the date of its receipt of demand therefor from
the Port Authority if any applicable laws, rules, regulations orders or
directions, including but not limited to any rules, regulations, orders or
directions set forth in the New York City Building Code (the applicability of
same to be determined as if the Port Authority were a private corporation),
require a women's public bathroom facility on the floor on which the premises is
located in addition to the existing women's public bathroom. In connection with
the foregoing, the Lessee agrees to furnish to the Port Authority, from
time-to-time and upon request, a statement certified by a responsible officer of
the Lessee confirming the gender composition of its then current work force, and
the Lessee shall also furnish to the Port Authority, upon request therefor, any
additional information to
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enable the Port Authority to determine whether any such re-conversion work is
necessary. In the event such reconversion work is required by applicable law or
otherwise in accordance with the provisions hereof and the Lessee fails to
perform such work within the aforesaid ninety (90) day period, the Port
Authority may itself perform such reconversion work and the cost thereof shall
be and become additional rental recoverable by the Port Authority in accordance
with the provisions of Section 15 of this Agreement. The requirement herein that
the Lessee shall conform to the requirements of any applicable laws, rules,
regulations, orders or directions, including but not limited to any rules,
regulations, orders or directions of the New York City Building Code with
respect to the need to perform such reconversion work shall not be or be deemed
to be a recognition by the Port Authority that the New York City Building Code
is applicable to the World Trade Center or to any other facilities owned or
operated by the Port Authority or that the Port Authority is required by any
law, rule, regulation, order or direction to conform to or comply with the New
York City Building Code. Without limiting the generality of the foregoing, the
Lessee acknowledges that facilities for heat, ventilation and air cooling have
heretofore been installed in the premises pursuant to a certain design
configuration, and notwithstanding the provisions of Section 42 of this
Agreement the Port Authority makes no representations that such heat,
ventilation and air-cooling shall maintain in the premises an even and
comfortable working temperature, and in the event any alteration to such
facilities shall be required in order to maintain an even and comfortable
working temperature the cost of the same shall be bome by the Lessee. Subject to
the foregoing, the Port Authority represents that the design criteria and
capacity of the heat, ventilation and air cooling system available to the Lessee
are as set forth in Schedule D attached hereto. The Lessee shall submit to the
Port Authority for its approval a construction application in the form supplied
by the Port Authority and containing such terms and conditions as the Port
Authority may include setting forth in detail and by appropriate plans and
specifications the construction and installation work proposed by the Lessee to
finish off and decorate the premises and the manner of and time periods for
performing the same, including, without limitation thereto, the Additional Work
and also including plans and specifications for any public bathroom conversion
work undertaken by the Lessee in accordance with the provisions of this Section.
The data to be supplied by the Lessee shall describe in detail the fixtures,
equipment and systems to be installed by the Lessee including those for the
emission, handling and distribution of heat, air conditioning, domestic hot and
cold water and electrical and other systems and shall show the proposed method
of tying in the same to the utility lines or connections provided by the Port
Authority either on or off the premises. The Lessee shall be responsible for
retaining all architectural, engineering and other technical consultants and
services as may be required by the Port Authority and for developing, completing
and submitting detailed plans and specifications for the work. The plans and
specifications to be submitted by the Lessee to the Port Authority shall bear
the seal of a qualified architect or professional engineer and shall be in
sufficient detail for a contractor to perform the work. The Lessee shall not
engage any contractor or permit the use of any subcontractor unless and until
each such contractor or
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subcontractor shall have been approved by the Port Authority. The Lessee shall
include in each such contract or subcontract such provisions as the Port
Authority may approve or require including, without limitation thereto,
provisions regarding labor harmony. The Port Authority shall review the
construction application and all plans and specifications furnished by the
Lessee with respect to the premises and any public bathroom conversion work
proposed to be undertaken by the Lessee and will forward its comments on the
same to the Lessee within twenty (20) business days after its receipt thereof
provided that such plans and specifications cover all of the construction and
installation work necessary to finish off and decorate the premises (including
the work required for the conversion of a public bathroom if the Lessee elects
to perform such work), and will review and comment on any corrected, modified or
amended plans and specifications resubmitted to the Port Authority by the Lessee
within ten (10) business days after receipt of any such resubmission. If the sum
of the number of business days actually required by the Port Authority for the
review of each submission and resubmission of the Lessee's plans and
specifications as referred to in this paragraph shall be in excess of the sum of
the number of business days allocated to each review of the Lessee's submission
and resubmission of its plans and specifications (as referred to in this
paragraph), there shall be no postponement of the date fixed in paragraph (a) of
Section 44 of this Agreement for the commencement of payment of basic rental,
but upon completion of the construction and installation work to be performed by
the Lessee hereunder, the Lessee shall be entitled to a credit against its basic
rental obligations next becoming due under this Agreement in an amount which
shall be equal to the product obtained by multiplying the number of such excess
business days by the sum of Two Thousand Five Hundred Seven Dollars and No Cents
($2,507.00). The Lessee hereby expressly agrees that such rental credit shall be
the sole remedy available to the Lessee in the event the Port Authority fails,
within the time periods provided, to respond to the Lessee's submission or
resubmission of its construction application and plans and specifications. The
Lessee hereby assumes the risk of loss or damage to all of the construction and
installation work prior to the completion thereof and the risk of loss or damage
to all property of the Port Authority arising out of or in connection with the
performance of the construction and installation work. In the event of such loss
or damage, the Lessee shall forthwith repair, replace and make good the
construction and installation work and the property of the Port Authority
without cost or expense to the Port Authority. The Lessee shall itself and shall
also require its contractors to indemnify and hold harmless the Port Authority,
its Commissioners, officers, agents and employees from and against all claims
and demands, just or unjust, of third persons (including employees, officers and
agents of the Port Authority) arising or alleged to arise out of the performance
of the Lessee's construction and installation work and for all expenses,
including without limitation thereto legal expenses, incurred by it and by them
in the defense, settlement or satisfaction thereof, including without limitation
thereto, claims and demands for death, for personal injury or for property
damage, direct or consequential, whether they arise from the acts or omissions
of the Lessee, of any contractors of the Lessee, of the Port Authority, or of
third persons, or from acts of God
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or of the public enemy, or otherwise, excepting only claims and demands which
result solely from affirmative willful or solely from negligent acts done by the
Port Authority, its Commissioners, officers, agents and employees with respect
to the construction and installation work, provided, however, that the Lessee
shall not be required to indemnify the Port Authority where such indemnity would
be precluded pursuant to the provisions of Section 5-322.1 of the General
Obligations Law of the State of New York. The Lessee shall, and shall cause each
of its contractors and subcontractors to obtain and maintain in force such
insurance coverage, including without limitation a contractual liability
endorsement covering the obligations assumed by the Lessee in the three
preceding sentences. All work to be performed by the Lessee hereunder shall be
completed in accordance with the said construction application and final plans
and specifications approved by the Port Authority, shall be subject to
inspection by the Port Authority during the progress of the work and after the
completion thereof and the Lessee shall redo or replace at its own expense any
work not done in accordance therewith. Upon completion of the construction and
installation work to be performed by the Lessee pursuant to the construction
application the Lessee shall deliver to the Port Authority a certificate by an
authorized officer of the Lessee and a certificate by the Lessee's qualified
architect or professional engineer, each certifying that the construction and
installation work has been performed strictly in accordance with the
construction application and the final plans and specifications approved by the
Port Authority and the provisions of this Agreement and in compliance with all
applicable governmental laws, ordinances, enactments, resolutions, rules,
regulations and orders. The Port Authority shall inspect the construction and
installation work and if the same has been completed as certified by the Lessee
and such architect or engineer, the Port Authority's General Manager, Planning,
Design and Construction, World Trade Department, shall so certify to the Port
Authority and to the Lessee, subject to the condition that all risks thereafter
with respect to the construction and installation work and any liability
therefor for negligence or other reason shall be borne by the Lessee. The Lessee
shall not use or permit the use of the premises or any portion thereof for any
purpose whatsoever until such certification is received from said General
Manager, Planning, Design and Construction and the Lessee shall not use or
permit the use of the premises or any portion thereof even if such certification
is received with respect to a portion of the construction and installation work
if said General Manager, Planning, Design and Construction states in any such
certification that the premises cannot be used until other specified portions of
the construction and installation work are completed. Upon completion of the
work the Lessee shall supply the Port Authority with "as built" drawings in form
and number requested by the Port Authority. "Business days" as used herein shall
mean Mondays to Fridays, inclusive, legal holidays excepted.
(b) No construction or installation work shall be commenced by the
Lessee until the commencement of the term of the letting under this Agreement
and until the construction application and plans and specifications referred to
in paragraph (a) above have been finally approved by the Port Authority. In the
event of any inconsistency
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between the provisions of this Agreement and the construction application, the
provisions of this Agreement shall control.
(c) The Lessee shall be solely responsible for the plans and
specifications used by it, and for the adequacy and sufficiency of such plans
and specifications and all the improvements depicted thereon or covered thereby,
regardless of the consent thereto or approval thereof by the Port Authority or
the incorporation therein of any Port Authority requirements or recommendations.
The Port Authority shall have no obligations or liabilities in connection with
the performance of the work performed by the Lessee or on its behalf or the
contracts for the performance thereof entered into by the Lessee. The Lessee
shall undertake reasonable efforts to assure that any warranties extended or
available to the Lessee in connection with the aforesaid work shall be for the
benefit of the Port Authority as well as the Lessee.
(d) Without limiting or affecting any other term or provision of this
Agreement, the Lessee shall be solely responsible for the design, adequacy and
operation of all utility, mechanical, electrical, communications and other
systems installed by the Lessee in the premises and shall do all preventive
maintenance and make all repairs, replacements, rebuilding and painting
necessary to keep such systems and all other improvements, additions and
fixtures, finishes and decorations made or installed by the Lessee (whether the
same involves structural or non-structural work) in the condition they were in
when made or installed except for reasonable wear which does not adversely
affect the watertight condition or structural integrity of the building or
adversely affect the efficient or proper utilization or appearance of any part
of the premises.
(e) Title to and property in the construction and installation work and
to all fixtures, equipment and systems (other than trade fixtures and personal
property and the Lessee's telecommunications system) installed pursuant to this
Section and any replacement or replacements thereof shall vest in the Port
Authority upon the construction, installation or replacement thereof and the
Lessee shall execute such necessary documents confirming the same as the Port
Authority may require.
(f) The Port Authority will pay to the Lessee an amount equal to the
lesser of (1) the cost of the construction and installation work performed in
the premises and the cost of any initial conversion work in the existing women's
public bathroom undertaken by the Lessee pursuant to the provisions of this
Section, but excluding therefrom the cost of the Additional Work, or (2) the sum
of One Million Two Hundred Eighty-four Thousand Two Hundred Eighty Dollars and
No Cents ($1,284,280.00), such lesser amount being hereinafter called the
"Lessee's Finishing Allowance", and, notwithstanding anything to the contrary
set forth in paragraph (a) of this Section, shall also pay to the Lessee the
negotiated sum of Two Thousand Two Hundred Fifty Dollars and No Cents
($2,250.00) as and for the cost of the Additional Work. In no event shall the
amount to be paid to the Lessee for the Additional Work be included in the
Lessee's Finishing Allowance. "Cost" as used herein shall mean the sum of the
following amounts paid by the Lessee for performance of its construction and
installation work in the premises and the cost of any initial conversion work in
the existing women's public bathroom: (i) direct labor and material costs, (ii)
contract costs for the purchase and installation of fixtures, equipment and
other finishing and decorating work excluding those types mentioned of contract
costs covered in the following subdivision (iii) and (iii) engineering,
architectural and planning and design fees which, taken together, do not exceed
twenty (20%) of the amount described in subdivisions (i) and (ii) of this
sentence. The Lessee's Finishing
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Allowance will be paid to the Lessee as follows: on or about the 10th day of the
calendar month following the calendar month in which the Lessee commences the
construction and installation work in the premises pursuant to the provisions of
this Section and on the 10th day of each calendar month thereafter during the
period of performance of such construction and installation work the Lessee
shall deliver a certificate to the Port Authority signed by a responsible fiscal
officer of the Lessee which shall certify the amount of the payments made by the
Lessee which are properly includible in the Lessee's cost of performing the
construction and installation work (excluding the Additional Work) during the
preceding calendar month, each such certificate to set forth the total
cumulative payments constituting the Lessee's cost made by the Lessee from the
commencement of the construction and installation work to the date of the
certificate and each such certificate to also contain a certification by the
Lessee that the portion of the Lessee's construction and installation work
performed by the Lessee since the last such certificate and covered by such
certificate has been performed strictly in accordance with the terms of this
Agreement and the construction application. Within 15 days after the delivery of
each such certificate by the Lessee, the Port Authority shall pay to the Lessee
the amount constituting the Lessee's cost of performing the construction and
installation work and paid by the Lessee during the preceding calendar month
less ten percent (10%) thereof, provided that the total of such periodic
payments made by the Port Authority shall not exceed ninety percent (90%) of the
Lessee's Finishing Allowance. Upon completion of the construction and
installation work in the premises to the satisfaction of the Port Authority's
General Manager, Planning, Design and Construction, World Trade Department, and
his certification thereof to the Port Authority and to the Lessee, the Port
Authority will pay to the Lessee the amount so certified by the Lessee which
shall be the final amount payable to the Lessee and shall equal the total of the
ten percent (10%) deductions made in connection with all previous periodic
payments less the amount of the Port Authority's periodic payments which a
preliminary determination of the Lessee's cost discloses exceeds the Lessee's
Finishing Allowance, such payment to be made within 15 days after such
certification. Also, upon completion of all the construction and installation
work to be performed by the Lessee pursuant to the provisions of this Section
(including the Additional Work), the Lessee shall supply to the Port Authority a
full statement of the cost thereof, certified by a responsible fiscal officer of
the Lessee which shall itemize the cost of the Lessee's construction and
installation work in the premises. After examination and approval of such
certified statement and after such further examination of the records
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and books of account of the Lessee as the Port Authority may deem reasonable,
the Port Authority will finally determine the cost of the construction and
installation work performed in the premises (excluding the amount of the
Additional Work) and if such final determination discloses that a part of the
Lessee's Finishing Allowance remains unpaid the Port Authority will pay the same
to the Lessee within fifteen (15) days after such final determination, and if
the final determination discloses that the payments previously made exceed the
Lessee's Finishing Allowance, the Lessee shall repay to the Port Authority the
amount of such excess within fifteen (15) days after notice from the Port
Authority of the amount thereof. Upon the final determination of the cost of the
construction and installation work in the premises, and further upon the mutual
agreement of the Lessee and the Port Authority with respect to the number of
square feet in which fireproofing material has been installed by the Lessee, the
Port Authority shall thereupon pay the Lessee the amount for such work
calculated in accordance with the provisions of this paragraph (f). The Lessee
shall permit the Port Authority by its agents, employees and representatives at
all reasonable times prior to a final determination of cost to examine and audit
the records and other documentation of the Lessee which pertain to and will
substantiate the cost. In no event whatsoever shall cost, as defined and
computed in this paragraph, include any expenses, outlays or charges whatsoever
by or for the account of the Lessee for or in connection with any equipment or
fixtures or the making of any finishing or decorating work unless such are
actually and completely installed in and or made to the premises, nor shall cost
include the cost of any equipment, fixture or improvement which is secured by
liens, mortgages, other encumbrances or conditional bills of sale, nor shall
cost include any payment made to organizations which are owned by or in common
ownership with the Lessee.
Section 46. Additional Provisions Relating to Assignment and Subletting
(a) Notwithstanding the provisions of Section 19(a) of this Agreement,
the Lessee shall have the right to assign this Agreement and the letting
hereunder in its entirety to a corporation which directly or indirectly controls
or is directly or indirectly controlled by the Lessee, or to a corporation which
is directly or indirectly controlled by a corporation which directly controls
the Lessee, and in the case of such indirect control, each of the corporate
entities in the chain between the Lessee and the proposed assignee shall
directly control or be directly controlled by the immediately adjacent corporate
entity in such chain, or to a corporation into or with which the Lessee is
merged or consolidated if all the conditions stated in subparagraph (k)(2) of
Section 54 of this Agreement are met and such assignment is required in
connection with such merger or consolidation, provided however that nothing
contained herein shall limit or affect the provisions of Section 7(h) in any way
and any such assignee shall use the premises solely for the purposes set forth
in Section 3 and for no other purpose whatsoever, and provided further however
that such assignment shall not be effective until an agreement in the form
annexed hereto as "Exhibit Y" has been executed by the Port Authority, the
Lessee, and the proposed assignee, and the Port Authority's consent as herein
stated shall be effective only as long
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as the proposed assignee maintains the above-described relationship to the
Lessee. If such relationship is no longer in effect, the Port Authority shall
have the right, in addition to all other rights and remedies under this
Agreement, to revoke its said consent and the Lessee and assignee will
immediately cause this Agreement and the letting hereunder to be reassigned to
the Lessee.
(b) Notwithstanding the provisions of Section 19(b) of this Agreement,
the Lessee may, after the commencement of the letting, sublet portions of or all
of the premises (but under no circumstances shall there be more than seven
subtenants in the premises at any one time in addition to the Lessee, or eight
subtenants in the premises at any one time if the Lessee no longer occupies
space in the premises) provided that all of the following conditions precedent
and requirements have been met or satisfied: (1) Each proposed subtenant shall,
in the opinion of the Port Authority, be eligible, suitable and qualified as a
World Trade Center tenant (such opinion not to be exercised arbitrarily by the
Port Authority); (2) The rental payable by the subtenant to the Lessee for or in
connection with its use or occupancy of the subleased space shall be not less
than the rental charged by the Port Authority (taking into account any rental
concession and finishing allowance) for comparable space having a comparable
term on the date of such subletting, provided however that if (i) the term of
any proposed subletting consists of the entire then-remaining balance of the
term of the letting under this Agreement, less one day, and (ii) the conditions
and requirements of subdivisions (1), (4) and (5) of this paragraph (b) have
been met or satisfied, then, subject to the provisions of paragraph (g) of this
Section 49, the rental proposed to be paid to by such subtenant may be less than
the rental charged by the Port Authority (taking into account any rental
concession and finishing allowance) for comparable space for a comparable term;
(3) If the rental and any other consideration payable by the subtenant to the
Lessee for or in connection with its use or occupancy of the subleased space
shall be in excess of the rental rate provided for in this Agreement, the Lessee
shall so notify the Port Authority and the Lessee shall pay fifty percent (50%)
of such excess to the Port Authority as received, subject to the deductions
referred to in paragraph (f) hereof; (4) The proposed subtenant is not a current
occupant of the World Trade Center and has not been in discussion with the Port
Authority toward its current or future occupancy for space in the World Trade
Center within a period of one hundred eighty (180) days immediately preceding
the date the Lessee requests the consent of the Port Authority to such
subletting; and (5) The Lessee, the subtenant and the Port Authority have
executed the form of Consent to Sublease Agreement annexed to this Agreement and
marked "Exhibit X".
(c) Execution of the Consent to Sublease Agreement referred to in
paragraph (b) above by the Port Authority and return thereof to the Lessee shall
constitute the determination referred to in subdivision (1) of paragraph (b)
above. The Lessee and subtenant shall present in advance all documents,
information and other data which the Port Authority may reasonably require
relating to the matters covered in subdivisions (1), (2), (3) and (4) of
paragraph (b) above, and the subtenant shall supply during the
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continuance of any approved subletting such additional or current documents,
information or other data as the Port Authority may from time to time reasonably
require. The Port Authority shall execute the Consent to Sublease Agreement, or
shall specify to the Lessee its reasons for refusing to do so, within a period
of thirty (30) days following receipt by the Port Authority of a written
sublease agreement fully executed by the Lessee and a proposed subtenant and any
other documents, information and data reasonably required by the Port Authority
with respect to such proposed subletting.
(d) If, after any subletting pursuant to paragraph (b) of this Section
becomes effective, any of the conditions set forth in said paragraph (b) shall
be violated as to any subtenant in the premises, which violation or breach
continues beyond the giving of notice by the Port Authority and the expiration
of a thirty (30) day period to cure, the Port Authority shall have the right, in
addition to all other rights and remedies available under this Agreement, to
cancel the consent to said subletting by notice to the Lessee, in which event
the Sublease between the Lessee and the said subtenant shall immediately
terminate and expire and the Lessee shall immediately cause the said subtenant
to vacate the portion of the premises or the entire premises, as the case may
be, sublet to the subtenant. Notwithstanding the provisions of this Section, the
Lessee shall be solely responsible for complying with any requirements regarding
the permissible number of persons who may use or occupy the portion of the
premises or the entire premises, as the case may be, sublet to the subtenant.
Use or occupancy of the premises by a subtenant pursuant to the consent granted
hereunder shall not entitle such subtenant, by itself, to have or exercise any
rights or privileges which the Port Authority has or may hereafter accord to
lessees of space in the World Trade Center, including, without limitation
thereto, listings on directories, boards, publications or similar privileges.
(e) "Control" or "Controlled" as used in paragraph (a) of this Section
shall mean the ownership by one corporate entity of at least fifty-one percent
(51%) of the issued and outstanding shares of the capital stock and voting
rights (with the power to exercise such rights) of another corporate entity. The
Lessee and a proposed assignee purporting to meet the conditions of paragraph
(a) of this Section shall present in advance all documents, information and
other data which the Port Authority may require relating to the relationship
between them and during the continuance of any approved assignment they shall
supply such additional or current documentation or other data as the Port
Authority may from time to time require.
(f) If, in connection with any subletting pursuant to the provisions of
paragraph (b) hereof consented to by the Port Authority as provided herein, the
Lessee (1) has paid a brokerage commission (at the current rates prevailing in
the City of New York) to a real estate broker licensed to do business in the
State of New York, which brokerage commission is not reimbursed to the Lessee by
the subtenant, provided such brokerage commission is actually paid for services
and is incurred solely in connection with such subletting and would not have
been required to have been paid except for such subletting;
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or (2) has incurred any cost for finishing and decorating such sublet space to
prepare the same for such subtenant which is not reimbursed to the Lessee by the
subtenant (the total of items (1) and (2) being hereinafter referred to as the
"subleasing expense"), then the Lessee shall divide the subleasing expense by
the number of calendar months and the proportionate part of any partial calendar
month comprising the term of such sublease, and the amount resulting from such
division shall be deducted from the amount of the rental or other consideration
payable by the subtenant to the Lessee each month which is in excess of the
rental rate payable by the Lessee to the Port Authority applicable to the
subleased space for that month, and the balance of such excess of the rental and
other consideration shall be payable by the Lessee to the Port Authority for
that month. If requested by the Port Authority, the Lessee shall make available
from time to time for examination by the Port Authority the Lessee's books and
records relating to the receipt of sublease rental and to the subleasing
expense.
(g) If, in connection with any proposed subletting pursuant to the
provisions of paragraph (b) hereof, the rental payable by the proposed subtenant
to the Lessee for the use and occupancy of the subleased space is less than the
rental being charged by the Port Authority for comparable space having a
comparable term on the date of such proposed subletting and the term of the
proposed sublease is for a term equal to the then-remaining balance of the term
of the letting under this Agreement, less one day, then, by notice to the Lessee
within thirty (30) days following the submission to the Port Authority by the
Lessee of the name and address of the proposed subtenant, the portion of the
premises proposed to be sublet, the use to which the proposed subtenant will put
the premises and the amount of rental, including additional rental payable by
the proposed subtenant under the sublease, the Port Authority may terminate this
Agreement as to the portion of the premises proposed to be subleased (such
termination being hereinafter referred to as the "Port Authority Termination").
The Port Authority Termination shall be effective as of the proposed
commencement date of the proposed sublease, and from and after such effective
date there shall be an abatement of rental in accordance with the provisions of
Section 18 hereof. If, in connection with any proposed subletting pursuant to
the provisions of paragraph (b) hereof, the rental payable by the proposed
subtenant to the Lessee for the use and occupancy of the subleased space is less
than the rental payable by the Lessee under this Agreement and the term of the
proposed sublease is for a term equal to the then-remaining balance of the term
of the letting under this Agreement, less one day, and the Port Authority
exercises its Port Authority Termination option, the Lessee shall pay to the
Port Authority upon the date of such Port Authority Termination the sum of the
following amounts: (i) an amount equal to the then-present value of the
difference between (x) the amount obtained by multiplying the amount of basic
rental payable by the Lessee to the Port Authority under this Agreement for the
premises during the period from the effective date of the Port Authority
Termination through the balance of the term of the letting under this Agreement
by a fraction the numerator of which shall be the number of
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rentable square feet contained in the portion of the premises proposed to be
subleased and the denominator of which shall be the total number of rentable
square feet contained in the premises and (y) the "Total Sublease Basic Rental
Amount"; the Total Sublease Basic Rental Amount shall be the product obtained by
multiplying the number of months from the effective date of the Port Authority
Termination through the balance of the term of the letting under this Agreement
by the average monthly basic rental amount payable under the proposed sublease,
such average amount to be obtained by dividing the number of months in the
proposed sublease term into the total basic rental payable under the proposed
sublease for the entire term of such sublease and (ii) an amount equal to the
work allowance, if any, offered by the Lessee to the proposed sublessee for
finishing and decorating the portion of the premises proposed to be subleased,
and (iii) an amount equal to the brokerage commission payable by the Lessee, if
any, in connection with the proposed subletting. In determining the present
value of basic rental, an interest rate per annum equal to the prime rate
established by Citibank, N.A. at the time of the determination shall be used.
Notwithstanding anything to the contrary contained in the foregoing, the
provisions of this paragraph (g) shall not be applicable to any proposed
subletting in which the term thereof is less than the then-remaining balance of
the term of the letting under this Agreement, less one day, irrespective of the
amount of the rental to be paid by the proposed subtenant.
Section 47. Lessee's Right of Termination
Upon the terms and conditions hereinafter set forth, the Lessee shall
have the right to terminate this Agreement and the letting hereunder effective
as of a date to be specified by the Lessee in a notice to the Port Authority
which date shall be not earlier than the tenth anniversary of the commencement
date of the letting:
(a) Not later than fifteen (15) calendar months prior to the tenth
(10th) anniversary of the commencement date of the letting, the Lessee shall
give to the Port Authority firm and unconditional notice of its intention to
terminate this Agreement and the letting hereunder and on or before the intended
effective date of termination, the Lessee shall pay to the Port Authority the
sum of One Million Two Hundred Thousand Dollars and No Cents ($1,200,000.00),
which sum shall be in addition to all other amounts, including but not limited
to rental amounts, payable by the Lessee to the Port Authority pursuant to the
provisions of this Agreement through the effective date of termination provided
for herein.
(b) No notice of termination by the Lessee pursuant to paragraph (a)
above shall be effective if the Lessee is in default in the performance or
observance of any term, provision or condition of this Agreement, beyond any
applicable period to cure such default, either on the date of the giving of such
notice or on the intended or effective date of the termination provided for
therein or if on either of such dates the Lessee is under notice of termination
by the Port Authority.
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(c) Any effective notice of termination given by the Lessee in
accordance with the provisions of this Section 50 shall have the same force and
effect as if the effective date of termination stated in such notice were the
date originally fixed herein for the expiration of the term of the letting under
this Agreement.
Section 48. Security Deposit
(a) The Lessee has heretofore deposited with the Port Authority the sum
of Ninety Thousand Dollars and No Cents ($90,000.00) as security for the full,
faithful and prompt performance of and compliance with, on the part of the
Lessee, all of the covenants, terms and conditions of an agreement of lease
entered into with the Port Authority covering other space at the World Trade
Center and identified as World Trade Center Lease Number WT-1653-N-5 (985)
(hereinafter, the "Existing Lease") on the part of the Lessee to be fulfilled,
kept, performed and observed, all as provided in Section 46 of the Existing
Lease, paragraph 9 of Supplemental Agreement No. 3 to the Lease, paragraph 9 of
Supplemental Agreement No. 4 to the Lease and paragraph 10 of Supplemental
Agreement No. 7 to the Lease. The Lessee and the Port Authority hereby agree
that the said sum shall also be security for the full, faithful and prompt
performance of and compliance with, on the part of the Lessee, all of the
covenants, terms and conditions contained in this Agreement on the part of the
Lessee to be fulfilled, kept, performed and observed. In addition to any and all
other remedies available to it, the Port Authority shall have the right, at its
option at any time and from time to time with or without notice, to use the said
deposit or any part thereof in whole or partial satisfaction of any of its
claims or demands against the Lessee arising under this Agreement. There shall
be no obligation on the Port Authority to exercise such right and neither the
existence of such right nor the holding of the deposit itself shall cure any
default or breach occurring under this Agreement nor be deemed to release any
person, firm or corporation from any of the obligations, claims or demands
arising under this Agreement. In the event the Port Authority shall at any time
or times so use the deposit or any part thereof, whether in connection with any
obligation, claim or demand arising under the Existing Lease or under this
Agreement, or if bonds shall have been deposited and the market value thereof
shall have declined below the amount mentioned above, the Lessee shall, on
demand of the Port Authority and within two days thereafter, deposit with the
Port Authority additional cash or bonds so as to maintain the deposit at the
full amount of Ninety Thousand Dollars and No Cents ($90,000.00) as hereinabove
stated. All such additional deposits shall be subject to all the terms,
provisions and conditions of Section 46 of the Existing Lease and of this
Agreement. Notwithstanding the provisions of the Existing Lease, no part of the
deposit made under the Existing Lease shall be returned by the Port Authority
upon the expiration, cancellation or termination of the Existing Lease unless
this Agreement shall have expired or have been canceled or terminated. In any
event, upon the expiration or earlier cancellation or termination of this
Agreement (and provided that the Existing Lease has expired or been terminated
prior thereto), and upon request therefor by the Lessee, the Port Authority will
return the full deposit less the
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amount of any and all unpaid claims and demands (including estimated damages) of
the Port Authority by reason of any default or breach by the Lessee of either
the Existing Lease or this Agreement. The Lessee agrees that it will not assign
or encumber the said deposit.
(b) For purposes of the provisions set forth in paragraph (a) hereof,
the Lessee hereby certifies that its I.R.S. Employer Identification No. is
13-2829720.
Section 49. Brokerage
Prior to the execution of this Agreement by either party hereto,
Section 28 was deleted in its entirety and the following is hereby substituted
in lieu thereof:
"Section 28. Brokerage
The Lessee represents and warrants that in connection with the
negotiation of this Agreement and the letting hereunder it has not had any
contacts, dealings or conversations with any broker except Julien J. Studley,
Inc., a New York corporation with an office and place of business at 90 William
Street, New York, New York 10038, and that there is no broker who is or may be
entitled to be paid a commission in connection with this Agreement or the
letting hereunder except Julien J. Studley, Inc. The Lessee shall indemnify the
Port Authority and save it harmless from any and all claims which have been or
may be made by any and all persons, firms or corporations whatsoever for
services in connection with the negotiation and execution of this Agreement or
the letting hereunder arising out of, through or on account of any contacts,
dealings, acts or conversations of the Lessee in connection with the negotiation
and execution of this Agreement or in connection with any letting of the space
referred to herein except for a claim of Julien J. Studley, Inc. if the said
claim is made in accordance with the terms of the Agreement between the Port
Authority and Julien J. Studley, Inc. dated as of July 2, 1992."
Section 50. Changes, Additions and Deletions to this Agreement
Prior to the execution of this Agreement by either of the parties
hereto the following changes, additions and deletions were made:
(a) The Lessee shall not be required by reason of the provisions of
paragraph (c) of Section 5 to make structural improvements, alterations or
repairs to the premises which are also required to be made generally throughout
the World Trade Center unless the requirement generally throughout the World
Trade Center results from particular operations of the Lessee in the premises or
its occupancy thereof which are not common to other tenants at the World Trade
Center.
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(b) (1) The Port Authority hereby agrees to apply the Rules and
Regulations set forth in Exhibit R and any further rule or regulation hereafter
promulgated by the Port Authority equitably and without discrimination against
the Lessee and all other tenants in the Facility except to the extent that any
such rule or regulation may be inapplicable by agreement or otherwise to the
Lessee or any such tenant.
(2) If a rule or regulation set forth in Exhibit R shall conflict with
any express provision of this Agreement, the provision of this Agreement shall
control.
(c) Subject to all the terms and provisions of this Agreement, and
notwithstanding the provisions of paragraph (e) of Section 7 and Rules 15 and
20, the Lessee may install in the premises, pursuant to an approved construction
application, facilities for the warming and serving of food and nonalcoholic
beverages (including a Dwyer or similar type unit or warming or microwave oven,
vending machines, hot coffee and tea dispensing equipment, refrigerator and ice
machine) for consumption on the premises solely by the Lessee's employees and
business guests, and lunchroom facilities or other eating facilities, provided
that if such facilities, machines or equipment are operated or supplied by an
independent operator, such contractor, operator or supplier shall be approved by
the Port Authority (such approval not to be unreasonably withheld). None of the
foregoing facilities, equipment or machines shall be installed unless and until
the Port Authority has consented in writing to the type of facilities, machines
and equipment and the methods of installation and locations where such
facilities, machines or equipment may be installed. In the event the
installation of such facilities, machines and equipment shall require
modifications or alterations to building systems or equipment (including
heating, ventilating or air-conditioning systems), and whether such
installations, modifications or alterations are performed by the Lessee or by
the Port Authority, the Lessee shall be responsible for the cost of such
facilities, machines and equipment, the installation thereof and any such
modifications or alterations, and no such installation, alteration or
modification shall be commenced until the Lessee has received an approved
construction application therefor. The Port Authority reserves the right from
time-to-time to make additional charges to the Lessee for costs incurred by the
Port Authority for any and all utilities or other building services used in
connection with any of the aforesaid facilities, machines or equipment. The
Lessee has represented to the Port Authority that no recognizable or measurable
odors will result outside the premises from its intended use of any facilities,
machines and equipment installed by the Lessee, and the Lessee covenants and
agrees that upon notification from the Port Authority that objectionable odors
emanate or result outside the premises from the Lessee's use of any such
facilities, machines or equipment in the premises (whether through the building
heating, ventilating or air-conditioning systems or otherwise), the Lessee will
immediately discontinue use of any such facilities, machines or equipment and
shall not resume the use or operation thereof until written consent therefor has
been obtained from the Port Authority, such consent not to be arbitrarily
withheld. Nothing herein is intended to permit the furnishing to the public on
the premises of any food or other merchandise or
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any other service of any kind.
(d) (1) The words "and paid for by the Lessee" set forth in the first
and second lines of paragraph (a) of Section 8 were deleted.
(2) Nothing set forth in paragraph (c) of Section 8 shall be deemed
or construed to impose upon the Lessee an obligation to repair any structural
part of the premises, by which is meant the exterior building walls, floor slab,
structural steel members and core walls.
(e) (1) The reference in paragraph (a) of Section 9 to "a casualty
insured against by the Port Authority under the New York Standard Form of Fire
Insurance Policy carried by it on the premises" shall be deemed to include a
casualty which at the time of the occurrence of the damage would have been
covered by the New York Standard Form of Fire Insurance Policy and the New York
Standard Form of Extended Coverage Endorsement, whether or not said policy or
endorsement was actually carried by the Port Authority at the time of such
damage.
(2) The words and figure "ninety (90) days" appearing in the second
and sixth lines of paragraph (a)(1) and in the second line of paragraph (a)(2)
of Section 9 were deleted in each instance the words and figure "one hundred
eighty (180) days" were inserted in lieu thereof.
(3) In the event of damage to the premises under circumstances
described in paragraph (a)(2) of Section 9, the Port Authority shall advise the
Lessee within thirty (30) days after the occurrence of the damage which of the
options set forth in said paragraph (a)(2) it elects to pursue. If the Port
Authority elects under subdivision (i) thereof to repair or rebuild the premises
and estimates that the repairs or rebuilding cannot be completed within one
hundred eighty (180) days after the occurrence of the damage, the Port Authority
shall so notify the Lessee and thereafter the Lessee shall have the right on
thirty (30) days' notice to the Port Authority, exercised within ten (10) days
after the Lessee's receipt of notice from the Port Authority respecting the
duration of the repairs or rebuilding, to terminate the letting under this
Agreement, provided that the chief executive officer of the Lessee certifies to
the Port Authority that the damage to the premises caused by the casualty has
materially impaired the Lessee's ability to conduct its permitted business
operations described in Section 3 of this Agreement prior to the substantial
completion of the repairs or rebuilding and provided further that the Lessee is
not under notice of default or under notice of termination from the Port
Authority either on the date of the giving of its notice to the Port Authority
or on the effective date of such termination. In the event of termination
pursuant to this provision, this Agreement and the letting hereunder shall cease
and expire on the effective date of termination stated in the notice as if such
date were the date originally stated herein for the expiration of this
Agreement. Termination by the Lessee pursuant to the provisions of this
paragraph shall
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not relieve either party hereto of any obligations or liabilities which shall
have accrued on or before the effective date of termination stated in the
notice, or which shall mature on such date.
(4) If, in the event of damage to the premises under the
circumstances described in paragraph (a)(2) of Section 9, the Port Authority
elects under subdivision (ii) thereof to terminate the letting as to the damaged
portion of the premises only, then the Lessee shall have the right, on thirty
(30) days' notice to the Port Authority, exercised within ten (10) days after
the Lessee's receipt of notice from the Port Authority terminating the letting
as to the damaged portion of the premises, to terminate the letting under this
Agreement as to the balance of the premises with the same effect as expiration,
provided that the Lessee has undertaken all reasonable good faith efforts to
relocate its personnel, systems and equipment from the portion of the premises
in which the casualty has occurred and to continue its business operations in
the balance of the premises not directly damaged by the casualty, provided
further that the chief executive officer of the Lessee certifies to the Port
Authority that the loss of use of the damaged portion of the premises has
materially impaired the Lessee's ability to conduct its permitted business
operations described in Section 3 of this Agreement in the balance of the
premises not directly damaged by the casualty, and provided yet further that the
Lessee is not under notice of default or under notice of termination from the
Port Authority either on the date of the giving of its notice to the Port
Authority or on the effective date of such termination. In the event the Lessee
does not exercise the aforesaid right to terminate the letting as to the balance
of the premises, then the Port Authority, through its employees, agents,
representatives, contractors and subcontractors shall construct and install a
demising wall or walls to demise and separate the damaged portion of the
premises from the balance of the premises remaining to the Lessee.
(f) The word "such" appearing in the first line of paragraph (b) of
Section 10 was deleted and the words "referred to in paragraph (a) of this
Section" were inserted following the word "demand" in the second line of said
paragraph (b).
(g) (1) Notwithstanding anything to the contrary set forth in the
provisions of Sections 12, 26 or 48 hereof, the Lessee shall not be required to
remove upon the expiration or earlier termination of the term of the letting
hereunder, but in its discretion may so remove, its telecommunications equipment
and systems which, for purposes hereof, shall be deemed to include all
free-standing individual units of telecommunications equipment and all frames,
switches and closets associated therewith or forming part thereof. In the event
the Lessee elects to remove the aforesaid telecommunications equipment and
systems, it shall remove each and every component unit thereof, but nothing
herein set forth shall require the Lessee to remove the wiring installed for
such systems and equipment. In any event, and irrespective of whether the Lessee
shall elect to remove its telecommunications equipment and systems, the Lessee
shall be required to remove from the premises upon the expiration of the term of
the letting hereunder all of
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its standard office equipment, inventories, removable fixtures and other
personal property of the Lessee or for which the Lessee is responsible.
Notwithstanding the foregoing, the Lessee shall not be required to, and shall
not, remove upon the expiration or earlier termination of the term of the
letting hereunder any and all other finishes, systems, or installations made or
installed by the Lessee at any time during the term of the letting hereunder,
including but not limited to, its battery-powered electrical supply system, its
self-contained back-up cooling system and all proprietary air-cooling and fire
suppression systems, all raised flooring, all carpeting, the kitchen and other
facilities. The Lessee shall repair any damage caused by its required removal
work and any telecommunications equipment removal work and shall also be
required to cap all affected electrical and plumbing lines flush with walls,
floors and ceilings to the condition existing at the time the Lessee entered
into possession of the premises. Other than as set forth above, the Lessee shall
not be required to repair or restore the premises upon the expiration or earlier
termination of the term of the letting hereunder, it being understood that
nothing set forth in this paragraph shall alter, affect or diminish in any way
the Lessee's obligations of maintenance and repair during the term of the
letting in accordance with the provisions of this Agreement.
(2) The Port Authority shall not act arbitrarily or capriciously
in granting or withholding the consent described in Section 12. The provisions
of Section 12 shall be deemed to apply solely to work performed by the Lessee
during the term of the letting following completion of the initial construction
and installation work pursuant to Section 48 hereof and shall not be deemed to
apply to any work which is solely decorative in nature and does not involve
matters of life, safety or health and does not directly or indirectly affect any
building systems.
(h) Prior to exercising any right of entry reserved to it under Section
16, and except in cases of emergency, the Port Authority agrees to give the
Lessee reasonable prior oral notice of its intention to enter the premises.
(i) In addition to the right of termination provided for in paragraph
(d) of Section 17, if, in the event of a taking pursuant to paragraph (c) of
Section 17, or a taking or delivery of a portion of the premises pursuant to
Section 41 of this Agreement, the Lessee shall have the right, on ten (10) days'
written notice to the Port Authority given within ten (10) days after such
taking or delivery, to terminate this Agreement and the letting hereunder as to
the balance of the premises with the same effect as expiration, provided that
the Lessee has undertaken all reasonable good faith efforts to relocate its
personnel, systems and equipment from the portion of the premises so taken or
delivered and to continue its business operations in the balance of the premises
not so taken or delivered, provided further that the chief executive officer
certifies to the Port Authority that the loss of use of the portion of the
premises so taken or delivered has materially impaired the Lessee's ability to
conduct in the balance of the premises not taken or delivered the business
operations of the Lessee permitted under Section 3 of this Agreement and
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provided yet further that the Lessee is not under notice of default or under
notice of termination from the Port Authority either on the date of the giving
of its notice to the Port Authority or on the intended effective date of such
termination. In the event the Port Authority disagrees with the Lessee's
conclusion that the loss of use of the portion of the premises so taken or
delivered has materially impaired the Lessee's ability to conduct its permitted
business operations in the balance of the premises, the Port Authority shall
request arbitration with respect thereto. The arbitration procedures set forth
in subparagraph (e)(4) of this Section 54 shall govern any such arbitration
commenced by the Port Authority. Termination by the Lessee pursuant to the
provisions of this subparagraph shall not relieve the Lessee of any obligations
or liabilities which shall have accrued on or before the effective date of
termination stated in its notice or which shall mature on such date.
(j) In the event that the basic rental payable by the Lessee with
respect to the premises shall be abated pursuant to the provisions of Section
18, then the additional basic rental payable with respect to the premises shall
also be abated. For the purpose of determining the abated additional basic
rental in accordance with the provisions of Schedule A, during the period of
such abatement the "Rentable square feet in the premises" shall be deemed to be
the number of square feet set forth in paragraph (f) of Section 1 of Schedule A
multiplied by a fraction the numerator of which shall be the number of square
feet contained in the remaining portion of the premises and the denominator of
which shall be the number of square feet originally constituting the premises,
both determined as provided in paragraph (b) of Section 18.
(k) The following changes were made in Section 20:
(1) The words "except as expressly permitted in subparagraph
(a)(5) of this Section and in Section 49 of this Agreement" were
inserted at the end of subparagraph (a)(4).
(2) Notwithstanding the provisions of subparagraph (a)(5), a
merger or consolidation shall not be a ground for termination if the
resulting corporation has a financial standing as of the date of the
merger or consolidation at least as good as that of the Lessee, by
which is meant that its ratio of fixed assets to fixed liabilities,
its ratio of current assets to current liabilities and its tangible
net worth shall each be at least as favorable as that of the Lessee.
(3) The word and figure "fifteen (15)" set forth in the last line
of subparagraph (a)(7) were deleted and the word and figure "thirty
(30)" were inserted in lieu thereof.
(4) The word and figure "ten (10)" set forth in the last line of
subparagraph (a)(8) were deleted and the following was substituted
therefor:
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"twenty (20) days of the Lessee's receipt of notice of filing thereof,
unless within such twenty (20)-day period the Lessee shall secure a
bond in the amount of such lien and shall commence an action for
removal of such lien;"
(5) Subparagraph (a)(10) was deleted in its entirety and the
following was substituted in lieu thereof;
"(10) The Lessee shall fail to pay the rentals or to make any
other payments required hereunder within five (5) days after receipt
of notice from the Port Authority; or"
(6) The provisions of paragraph (f) shall not be deemed to
prevent the Lessee from interposing as a counterclaim any claim which
under the law of the State of New York would be deemed to have been
waived if it were not interposed in any action or proceeding referred
to in said paragraph.
(l) In the last line of paragraph (c) of Section 22 the word and figure
"an interest rate of 4% per annum" were deleted and the words "an interest rate
per annum equal to the rate of interest publicly announced by Citibank, N.A. at
the time of the determination as its base rate (or such other term as may be
used by Citibank, N.A., from time-to-time, for the rate presently referred to as
its 'base rate')" were inserted in lieu thereof.
(m) The words "made at the office of the Treasurer of the Port
Authority, One World Trade Center, New York, New York 10048" set forth in the
first and second lines of paragraph (a) of Section 30 were deleted and the words
"mailed to The Port Authority of New York and New Jersey, P.O. Box 17309,
Newark, New Jersey 07194" were inserted in lieu thereof.
(n) In the case of any mortgage which is hereafter to be placed upon
the premises, the Port Authority will request the mortgagee to agree,
notwithstanding the provisions of Section 31 of this Agreement, to give the
Lessee assurance that the mortgagee will not disturb the Lessee's rights and
possession while the Lessee is not in default under this Agreement and that in
the event of the institution of a foreclosure or other suit or proceeding under
or pursuant to such mortgage, the Lessee will not be made a party to any such
suit or proceeding and the same shall not affect the rights of the Lessee under
this Agreement and any purchaser under such foreclosure or other suit or
proceeding shall take the property subject to this Agreement and shall be bound
by all its covenants as though such purchaser were the original landlord.
Failure or refusal of any mortgagee to give such assurance or to include in the
mortgage a provision to the foregoing effect shall not constitute a breach of
any obligation of the Port Authority or limit the Port Authority's right to
proceed to make a mortgage without such assurance to the Lessee, in
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which event the provisions of Section 31 of this Agreement shall be and continue
in full force and effect.
(o) Section 32 was deleted in its entirety and the following was
inserted in lieu thereof
"Section 32. Quiet Enjoyment
The Lessee, upon paying all rentals hereunder and performing all the
covenants, conditions and provisions of this Agreement on its part to be
performed, shall and may peaceably and quietly have, hold and enjoy the premises
free of any act or acts of the Port Authority or any successor landlord, except
as expressly permitted in this Agreement, it being understood and agreed that
the Port Authority's liability hereunder shall obtain only so long as it remains
the owner of the Building of which the premises are a part."
(p) Sections 37 and 38 were deleted in their entirety.
(q) The words "and including" in the last line of paragraph (a) of
Section 40 were deleted and the words "but excluding" were inserted in lieu
thereof.
(r) (1) The Port Authority acknowledges that the Lessee intends to
occupy the premises outside of normal business hours and the Lessee acknowledges
that the Port Authority and its contractors will be required to retain personnel
to perform work and to provide utilities and services in connection with the
Lessee's non-business hour use. The Lessee hereby agrees to pay to the Port
Authority the charges established by the Port Authority for such non-business
hour use, as such charges may be increased from time to time, including without
limitation thereto charges for heat, ventilation and air-cooling and for any
other services for which charges are now or in the future generally imposed by
the Port Authority at the Facility for non-business hour usage, it being
understood that the Lessee shall be required to pay such charges only when the
specific services or utilities for which such charges are imposed have been
requested or ordered by the Lessee, it being further understood that the Port
Authority shall have no obligation to provide such services or utilities to the
Lessee during non-business hours unless such are specifically requested by the
Lessee. The Lessee understands that reduced elevator service is available during
non-business hours and that the Lessee's staff and visitors may be subject to
additional security checks during nonbusiness hours.
(2) The words "and the Lessee shall take and pay for" set forth
in the first line of paragraph (c) of Section 42 were deleted.
(3) The words "or desirable" set forth in the second line of
paragraph (g) of Section 42 were deleted.
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(4) The Port Authority shall not act arbitrarily and capriciously
in temporarily discontinuing the supply of services pursuant to paragraph (g) of
Section 42.
(5) In the event that any failure to supply any service which the
Port Authority has agreed to supply under this Agreement (whether or not excused
by Section 39 or other provisions hereof) renders uninhabitable one or more
portions of the premises so that the Lessee's operations under Section 3 cannot
reasonably be conducted therein, and such failure of service is not the result
of the fault of the Lessee, its officers, employees, agents or contractors, and
provided that the Lessee shall give notice to the Port Authority of such fact
and shall thereafter vacate the said portion of the premises for five (5)
consecutive days, then thereafter, while such uninhabitable and vacant condition
shall continue, the Lessee shall be entitled to an abatement of the basic rental
and the additional basic rental hereunder pursuant to the provisions of Section
18, as amended by the provisions of paragraph (j) of this Section 54, solely as
to the portion of the premises so rendered uninhabitable and vacated.
(s) The Port Authority will not exercise its rights under Rule 27 if
the Lessee removes any lien filed against the premises within twenty (20) days
after the Lessee's receipt of notice of filing thereof or if within such twenty
(20)-day period the Lessee shall secure a bond in the amount of such lien and
shall commence an action for removal of such lien.
It shall be unnecessary to physically make the foregoing changes, additions and
deletions in the aforesaid sections of this Agreement.
Section 51. Entire Agreement
This Agreement consists of the following: pages 1 through 48,
inclusive, plus Exhibits A, X, Y and R and Schedules A, B and D.
It constitutes the entire agreement of the parties on the subject
matter hereof and may not be changed, modified, discharged or extended except by
written instrument duly executed by the Port Authority and the Lessee. The
Lessee agrees that no representations or warranties shall be binding upon the
Port Authority unless expressed in writing in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed these presents as
of the day and year first above written.
THE PORT AUTHORITY OF
NEW YORK AND NEW JERSEY
ATTEST:
/s/
By /s/ Director, World Trade Department
------------------------------------
Secretary (SEAL)
EURO BROKERS INC.
ATTEST:
/s/ Keith E. Reihl
By /s/Donald Marshall
------------------------------------
Secretary (SEAL)
(Title) President
------------------------------------
(CORPORATE SEAL)
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FLOOR PLAN
58
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SCHEDULE A
1. For the purposes of this Schedule A, the following provisions shall
apply:
(a) "Taxes" shall mean real estate taxes and assessments which may be
imposed from time to time by the United States of America, the State of New
York or any municipality or other governmental authority, upon the Port
Authority with respect to the buildings, structures, facilities or land at
the World Trade Center or with respect to the rentals or income therefrom
in lieu of or in addition to any tax or assessment which would otherwise be
a real estate tax or assessment and taxes shall include any payments in
lieu of real estate taxes or assessments which may be agreed upon between
the Port Authority and any of the foregoing governmental authorities, other
than payments in lieu of taxes described in paragraph (b) below.
(b) "Payments in lieu of taxes" shall mean such payments as the Port
Authority has agreed to pay the City of New York under an agreement dated
1967 as it may have been or may be hereafter supplemented or amended
(hereinafter called "the City Agreement").
(c) The "annual per rentable square foot factor" referred to in this
Schedule was initially fixed at $1.25 in the City Agreement and provision
was made in paragraph 7(3) of the City Agreement for changes therein from
time to time to reflect changes in the tax rate and changes in assessed
valuations.
(d) "Tax base" shall mean the annual per rentable square foot factor
finally established to be the annual per rentable square foot factor to be
used in computing payments in lieu of taxes for the tax year beginning July
1, 1992.
(e) "Tax year" shall mean the twelve-month period established by The
City of New York as a tax year for real estate tax purposes.
(f) "Wage rate" shall mean the cost for an hour's work by a porter
engaged to work a 40 hour work week in a Class A office building in the
City of New York which hourly cost shall be limited solely to the hourly
wage rate for porters as that rate is established from time to time by
collective bargaining agreement between the Realty Advisory Board on Labor
Relations, Incorporated, acting on behalf of various building owners and
Local 32B-32J, Service Employees International Union, AFL-CIO, (which
collective bargaining agreement is hereinafter referred to as "the
Contract"), plus a proper proportion of fringe benefits and other payroll
costs. As used herein:
Page 1 of Schedule A
<PAGE>
(1) "Porter" or "porters" shall mean those employees engaged in
the general maintenance and operation of office buildings and
classified as "Others" by the Contract.
(2) "Fringe benefits" shall mean the items of cost which an
employer would be obligated to pay or would incur pursuant to the
Contract on the basis of wages paid to a porter engaged to work a 40
hour work week in Class A office building in New York City who is
entitled to receive on an annual basis the maximum entitlement under
the Contract, including, without limitation, vacation allowances, sick
leave, holiday pay, birthdays, jury duty, medical checkup, lunch time,
relief time, other paid time off, bonuses, union assessments allocable
to pension plans and welfare and training funds, and health, life,
accident, or other such types of insurance.
(3) "Other payroll costs" shall mean taxes payable pursuant to
law by an employer upon the basis of wages paid to a porter engaged to
work a 40 hour work week in a Class A office building in New York
City, including, without limitation, F.I.C.A., New York State
Unemployment Insurance and Federal Unemployment Insurance.
If at any time during the term of the letting under the Lease the
Contract shall require regular employment of porters on days or during
hours when overtime or other premium pay rates are in effect pursuant to
the Contract the hourly wage rate for porters under the Contract for the
applicable period shall be determined by dividing the weekly wage an
employer would be obligated to pay a porter engaged to work a 40 hour work
week in a Class A office building in New York City under the Contract by
40.
If either the Realty Advisory Board on Labor Relations, Incorporated
or Local 32B-32J, Service Employees International Union, AFL-CIO shall
cease to exist or a collective bargaining agreement shall cease to be
negotiated between the Realty Advisory Board on Labor Relations,
Incorporated and Local 32B-32J, Service Employees International Union,
AFL-CIO, or if the job classification "Others" shall be renamed or
abolished in any subsequent collective bargaining agreement entered into
between the Realty Advisory Board on Labor Relations, Incorporated and
Local 32B-32J, Service Employees International Union, AFL-CIO, then the
wage rate to be used in applying the provisions of this Schedule shall be
the wage rate for those employees engaged in the general maintenance and
operation of Class A office buildings either pursuant to any subsequent
collective bargaining agreement between the Realty Advisory Board on Labor
Relations, Incorporated and Local 32B-32J, Service Employees
Page 2 of Schedule A
<PAGE>
International Union, AFL-CIO, or if there is no such agreement, then
pursuant to such agreement as the Port Authority shall select.
(g) "Basic wage rate" shall mean the wage rate in effect on January 1,
1992.
(h) "Rentable square feet in the premises" shall mean 32,107 square
feet.
(i) "Lease" shall mean the agreement of lease to which this schedule
is attached.
2. From and after each July 1, following the commencement date of the
letting under the Lease, the Lessee shall pay an additional basic rental under
the Lease at the annual rate computed by multiplying the rentable square feet in
the premises by the excess over the tax base of the total of: (i) the annual per
rentable square foot amount of taxes for the tax year beginning on that July 1;
and (ii) the annual per rentable square foot factor used in computing payments
in lieu of taxes for the tax year beginning on that July 1. If taxes become
payable on a basis other than an annual amount per rentable square foot, the
Port Authority will allocate those taxes to the rentable square feet of space in
the World Trade Center and will notify the Lessee of the amount of such
allocation.
3. In addition to additional basic rental payable under paragraph 2
above, from and after the commencement date of the letting under the Lease, the
Lessee shall pay additional basic rental under the Lease at an annual rate equal
to $0.0065 for each $0.01, or major fraction thereof, that the wage rate in
affect on the commencement date of the letting and each wage rate thereafter
established from time to time during the term of the letting exceeds the basic
wage rate, multiplied by the rentable square feet in the premises.
4. If the imposition or allocation of taxes or the establishment of an
annual per rentable square foot factor to be used in computing payments in lieu
of taxes for any tax year or the establishment of a wage rate to be effective
for any period of time is delayed for any reason whatsoever, the Lessee shall
nevertheless continue to pay the additional basic rental at the annual rate then
in effect subject to retroactive adjustments at such time as the taxes are
imposed or allocated or the said per rentable square foot factor or wage rate
shall have been established.
5. After imposition and allocation of taxes for any tax year and the
establishment for each tax year of the annual per rentable square foot factor
used in computing payments in lieu of taxes and after the effective date of each
wage rate in excess of the basic wage rate, the Port Authority will compute the
annual rate or rates of additional basic rental payable by the Lessee under
paragraph 2 or 3 above and will notify the Lessee of the amounts thereof.
Additional basic rental accruing under paragraph 2 or
Page 3 of Schedule A
<PAGE>
3 above shall be computed separately and each amount thereof shall be payable by
the Lessee to the Port Authority in advance in monthly installments, each
installment being equal to 1/12 of the annual rate except that if at the time
the Port Authority gives notice to the Lessee under this paragraph, additional
basic rental shall have accrued for a period prior to the notice, the Lessee
shall pay such additional basic rental in full for such period, within ten days
after such notice.
6. If after an amount of additional basic rental shall have been fixed
under paragraphs 2 or 3 above for any period, taxes are imposed or the amount of
taxes or the annual per rentable square foot factor in regard to payments in
lieu of taxes or the wage rate used for computing such additional basic rental
shall be changed or adjusted, then the additional basic rental payable for that
period shall be recomputed and from and after notification of the imposition,
change or adjustment, the Lessee shall make payments based upon the recomputed
additional basic rental and upon demand the Lessee shall pay any excess in
additional basic rental as recomputed over amounts of additional basic rental
theretofore actually paid. If such change or adjustment results in a reduction
in the amount of additional basic rental for any period prior to notification,
the Port Authority will credit the Lessee with the difference between the
additional basic rental as recomputed for that period and amounts of additional
basic rental actually paid.
/s/ Port Authority
-----------------------
For the Port Authority
/s/ Donald Marshall
-----------------------
For the Lessee
Page 4 of Schedule A
<PAGE>
SCHEDULE B
Routine Office Cleaning
- -----------------------
Daily (Five days each week except Saturdays, Sundays, and Holidays
- ------------------------------------------------------------------
1. Empty and damp wipe ash trays, empty waste baskets. Transport
collected waste from normal daily office operations only to trash handling areas
and removal from the building. Collection and removal of waste different from or
in excess of that from normal daily office operations is not included and shall
be deemed additional cleaning services and requested in accordance with the
provisions of this Schedule.
2. Dust horizontal surfaces of office furniture, equipment, ledges, and
sills.
3. Dust sweep vinyl asbestos floor and/or spot vacuum carpeted
surfaces, if any.
4. Clean and sanitize water fountains.
5. Damp wipe fingerprints, smears, smudges, etc., on door, wall and
partition surfaces.
Weekly (Once each week)
- -----------------------
6. Dust vertical surfaces of office furniture and equipment.
7. Vacuum entire carpeted floor surfaces. Quarterly (Once each three
months)
8. Wash interior surfaces of exterior window glass.
9. Dust all pictures, frames, charts, graphs, and similar wall
hangings, plus partitions, doors, and door frame surfaces.
/s/ Port Authority
-----------------------
For the Port Authority
Initialed:
/s/ Donald Marshall
-----------------------
For the Lessee
Schedule B
<PAGE>
SCHEDULE D
----------
HEATING, VENTILATING AND AIR CONDITIONING SYSTEM
------------------------------------------------
The HVAC system is of a dual system design incorporating a peripheral
induction unit system which supplies air within fifteen (15) feet distance
measured inboard from the exterior glass and an interior system which
conditions the balance of the floor area. Each of the systems is designed
to deliver the following quantities subject to a 10% variance.
HVAC AIR SUPPLY QUANTITIES - PERIPHERAL SYSTEM
----------------------------------------------
NORTH WEST
UNIT TYPE UNIT TYPE
NO. OF UNITS/EXP. NO. OF UNITS/EXP.
CFM CFM
----------------- -----------------
FLOOR #3 (19) 50 #1 (9) 50
- -----
84B #2 (1) 35 #2 (1) 35
SOUTH EAST
UNIT TYPE UNIT TYPE
NO. OF UNITS/EXP. NO. OF UNITS/EXP.
CFM CFM
----------------- -----------------
FLOOR #4 (28) 60 #4 (28) 60
- -----
84B #5 (2) 40 #5 (2) 40
Induction units are spaced at the rate of one (1) unit per two (2) windows
average, subject to verification of actual field conditions. Each unit delivers
air of approximately 60(Degree)F utilizing water which in winter ranges between
80(Degree)F to 130(Degree)F as needed, and in summer at 60(Degree)F average
(current schedule for the air conditioning system to be turned on is March 15
and off is November 15). Supply air to induction units is constant with variable
water temperature and rate of flow.
Page 1 of Schedule D
<PAGE>
HVAC AIR SUPPLY QUANTITIES - INTERIOR SYSTEM
AVERAGE SUPPLY
QUADRANT NE NW SE SW AIR TEMP
FLOOR CFM CFM CFM CPM SUMMER - WINTER
- -----------------------------------------------------------------------------
84 4895 610 4895 3107 60(Degree)F
Interior supply air rate is .84 CFM per square foot. Air temperature is
controlled by zone thermostat at central air handling unit. Design is based on
one (1) person per 100 square feet and an average electrical load of four (4)
watts per square foot.
The supply air fed from base building air conditioning systems, for both
interior and perimeter areas, shall be capable of maintaining a 78(Degree)F, 50%
RH when outdoor air conditions are 89(Degree)F DB and 73(Degree)F WB, with
window drapes drawn. The winter design conditions are: outdoor air temperature
at 11(Degree)F, indoor air temperature at 70(Degree)F.
FLOOR LOAD DESIGN CRITERIA
--------------------------
Structural design live load is 100 lbs per square foot reducible.
ELECTRICAL SYSTEM CAPACITY
--------------------------
Effective July 1, 1992, a total of eight (8) watts per rentable (32,107) square
foot of electricity will be available.
/s/ Port Authority
------------------------
FOR THE PORT AUTHORITY
/s/ Donald Marshall
-----------------------
FOR THE LESSEE
Page 2 of Schedule D
<PAGE>
WTC-CSL-101068 X
- ----------------
EXHIBIT X
---------
CONSENT TO SUBLEASE
-------------------
Port Authority Lease No.
(said Lease being dated as of )
THIS AGREEMENT, made as of by and among THE PORT
AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called "the Port Authority"),
a body corporate and politic, created by Compact between the States of New
Jersey and New York, with the consent of the Congress of the United States of
America and having an office at One World Trade Center, in the Borough of
Manhattan, City, County and State of New York, and
(hereinafter called "the Lessee"), and
(hereinafter called "the Sublessee"),
whose representative is
WITNESSETH, That:
WHEREAS, the Port Authority and the Lessee have entered into a lease
identified above by Port Authority Lease Number and by date and covering
premises at the World Trade Center in the Borough of Manhattan, City, County and
State of New York (which lease, as the same may have been or may hereafter be
supplemented and amended is hereinafter called "the Lease"); and
WHEREAS, the Lessee has requested the consent of the Port Authority to
a proposed sublease, a copy of which is attached hereto and made a part hereof
and is hereinafter called "the Sublease";
NOW, THEREFORE, for and in consideration of the covenants and mutual
agreements herein contained, the Port Authority, the Lessee and the Sublessee
hereby agree as follows:
1. On the terms and conditions hereinafter set forth the Port Authority
consents to the Sublease.
2. The Sublease shall terminate and expire, without notice to the
Sublessee, on the day preceding the date of expiration or earlier termination of
the Lease, or on such earlier date as the Lessee and Sublessee may agree upon or
on the effective date of any revocation of this Consent by the Port Authority.
The Sublessee shall quit the subleased premises and remove its personal property
and personal property for which it is
Page 3 of Exhibit X
<PAGE>
responsible therefrom on or before the termination or expiration of the
Sublease.
3. If the Lessee shall at any time be in default under the Lease, the
Sublessee shall on demand of the Port Authority pay directly to the Port
Authority any rental, fee or other amount due to the Lessee. No such payment
shall relieve the Lessee from any obligations under the Lease or under this
Consent or affect the Port Authority's rights or remedies thereunder but all
such payments shall be credited against the obligations of the Lessee or of the
Sublessee, as the Port Authority may determine, for each payment or part
thereof.
4. In any case of difference between the provisions of the Lease or of
this Consent and the provisions of the Sublease, the provisions of the Lease or
of this Consent, as the case may be, shall be controlling, it being the
intention of the Port Authority merely to permit the exercise of the Lessee's
rights (to the extent permitted by the Sublease) by the Sublessee, and not to
enlarge or otherwise change the rights granted by the Lease. All of the terms,
provisions and conditions of the Lease shall be and remain in full force and
effect.
5. The Sublessee, in its operations under or in connection with the
Sublease and its occupancy of the premises, agrees to assume, observe, be bound
by and comply with all the terms, provisions, covenants and conditions of the
Lease.* Without limiting the generality of the foregoing, the Sublessee shall
use the premises for the purposes set forth in Section 3 of the Lease and for no
other purpose whatsoever.**
6. Without in any wise affecting the obligations of the Lessee under
the Lease and under this Consent, the Sublessee agrees with respect to its acts
and omissions to indemnify the Port Authority and to make repairs and
replacements as if it were the Lessee under the Lease. However, all acts and
omissions of the Sublessee shall be deemed to be acts and omissions of the
Lessee under the Lease and the Lessee shall also be severally responsible
therefor, including but not limited to the obligations of indemnification and
repair.
7. In addition to all other remedies available to the Port Authority
under the Lease or otherwise, this Consent may be revoked by the Port Authority
by notice to the Lessee and the Sublessee in the event of any breach by the
Sublessee of any term or provision of the Lease or of this Consent,*** and no
such revocation shall be deemed to affect the Lease or the continuance thereof.
Any notice given to the Sublessee shall be sufficient if given in accordance
with the Section of the Lease entitled "Notices", for the
- ----------------
* Including, without limitation thereto, the repair and restoration
obligations set forth in Sections 12 and 26 of the Lease, as amended by the
provisions of Section 53(g)(1) of the Lease.
** Or for such other purpose as set forth in the Sublease as would render the
Sublessee eligible, suitable and qualified in the Port Authority's
non-arbitrary determination pursuant to Section 49(b) of the Lease.
*** Which breach continues beyond the giving of any required notice and the
expiration of any applicable period to cure.
Page 4 of Exhibit X
<PAGE>
purpose of which the Sublessee hereby designates the person named as
representative on the first page hereof as its officer or representative upon
whom notices may be served and the Sublessee designates its office at the
address stated on the first page hereof as the office where such notices may be
served.
8. The Lessee and Sublessee represent and warrant that the attached
Sublease sets forth the full and entire rental or other consideration payable to
the Lessee by the Sublessee for or in connection with the subletting hereunder
or use or occupancy of the subleased space and they further represent and
warrant that there is no rental or consideration other than as stipulated in the
attached Sublease.
9. The granting of this Consent by the Port Authority shall not be or
be deemed to operate as a waiver of the requirement for consent to any
subsequent subletting (by the Lessee or by the Sublessee) or to any assignment
of the Lease or the Sublease or of any rights under either of them, whether in
whole or in part.
10. References herein to the Sublessee shall mean and include the
Sublessee, its officers, agents, employees and also others on the premises or
the Facility with the consent of the Sublessee.
11. Neither the Commissioners of the Port Authority nor any of them,
nor any officer, agent or employee thereof shall be held personally liable to
the Lessee or to the Sublessee under any term or provision of this Consent or
because of its execution or because of any breach or alleged breach thereof.
IN WITNESS WHEREOF, the Port Authority, the Lessee and the Sublessee
have executed these presents.
ATTEST: THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY
____________________________ By__________________________________
(Title)____________________________
(Seal)
ATTEST: ___________________________________
Lessee
____________________________ By_________________________________
(Title)____________________________
(Corporate Seal)
ATTEST: ___________________________________
Sublessee
____________________________ By_________________________________
Page 5 of Exhibit X
<PAGE>
(Title)____________________________
(Corporate Seal)
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the day of , 19 , before me personally came
to me known, who, being by me duly sworn, did depose and say
that he resides at ;
that he is the of
The Port Authority of New York and New Jersey, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of the
said corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by order of the Board of Commissioners of the said
corporation; and that he signed his name thereto by like order.
____________________________
(notarial seal and stamp)
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the day of , 19 , before me
personally came that he is the of
the corporation described in, and which executed the foregoing instrument; that
he knows the seal of the said corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of the said corporation; and that he signed his name thereto by
like order.
____________________________
(notarial seal and stamp)
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the day of , 19 , before me
personally came to me known, who, being by me duly sworn, did
depose and say
that he resides at ;
that he is the of the corporation
described in, and which executed the foregoing instrument; that he knows the
seal of the said corporation; that the seal affixed to the said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of the said corporation; and that he signed his name thereto by like order.
____________________________
(notarial seal and stamp)
Page 6 of Exhibit X
<PAGE>
EXHIBIT Y
---------
ASSIGNMENT OF LEASE
WITH ASSUMPTION AND CONSENT
(Lease No. )
THIS AGREEMENT, made as of by THE PORT AUTHORITY
OF NEW YORK AND NEW JERSEY (hereinafter called "the Port Authority"), a body
corporate and politic created by Compact between the States of New York and New
Jersey, with the consent of the Congress of the United States of America, having
an office for the transaction of business at One World Trade Center, in the
Borough of Manhattan, in the City, County and State of New York, and
(hereinafter called "the Assignor"),
a corporation organized and existing under the laws of the State of
with an office for the transaction of business at
an individual, residing at
a partnership, consisting of
and
(hereinafter called "the Assignee"),
a corporation organized and existing under the laws of the State of
with an office for the transaction of business at
an individual, residing at
a partnership, consisting of
the representative of which is
WITNESSETH, THAT:
WHEREAS, the Assignor desires to assign to the Assignee that certain
Agreement of Lease dated as of , 19 , made by and between The Port
Authority and the Assignor, and hereinafter, as the same has been heretofore
amended and extended, called "the Lease";
covering premises at
WHEREAS, the Port Authority is willing to consent to such assignment on
certain terms, provisions, covenants and conditions:
Page 1 of Exhibit Y
<PAGE>
NOW, THEREFORE, in consideration of the covenants and mutual promises
herein contained, the Port Authority, the Assignor and the Assignee hereby agree
as follows:
1. The Assignor does hereby assign, transfer and set over to the
Assignee, heirs, executors, administrators and successors to
and their own proper use, benefit and behoof forever, the Lease, to have and to
hold the same unto the Assignee heirs, executors, administrators and successors
from the day of , 19 , for and during all the rest, residue,
and remainder of the term of the letting under the Lease, subject nevertheless
to all the terms, provisions, covenants and conditions therein contained; and
the Assignor does hereby assign, transfer and set over unto the Assignee heirs,
executors, administrators and successors, all right, title and interest of the
Assignor in and to a certain deposit (whether of cash or bonds) in the amount of
made by the Assignor with the Port Authority, as security for the
performance of the terms, provisions, covenants and conditions of the Lease, but
subject to the provisions of the Lease and to any claim or right to the said
deposit or any part thereof heretofore or hereafter made or to be made on the
part of the Port Authority.
2. The Port Authority hereby consents to the foregoing assignment.
Notwithstanding anything herein to the contrary, the granting of such consent by
the Port Authority shall not be, or be deemed to operate as, a waiver of the
requirement for consent or consents to each and every subsequent assignment by
the Assignee or by any subsequent assignee, nor shall the Assignor be relieved
of liability under the terms, provisions, covenants and conditions of the Lease
by reason of this consent of the Port Authority or of one or more other consents
to one or more other assignments thereof.
3. The Assignor agrees that this assignment of the Lease and this
consent of the Port Authority thereto shall not in any way whatsoever affect or
impair the liability of the Assignor to perform all the terms, provisions,
covenants and conditions, including without limitation thereto the obligation to
pay rent, of the Lease on the part of the Lessee or tenant thereunder to be
performed, and that the Assignor shall continue fully liable for the performance
of all the terms, provisions, covenants and conditions, including without
limitation thereto the obligation to pay rent, on the part of the Lessee or
tenant thereunder to be performed.
4. The Assignee does hereby assume the performance of and does hereby
agree to perform, observe and be subject to, all the terms, provisions,
covenants and conditions, including without limitation thereto the obligation to
pay rent, contained in the Lease, which were or are to be performed or observed
by or are applicable to the Lessee thereunder as though the Assignee were the
original signatory to the Lease. Without limiting the foregoing, as an
inducement to the Port Authority to consent to this assignment, the Assignee has
agreed to all the provisions of Section 7(h) and has made the same
representations required of the Lessee under Section 7(h) and the Assignee
hereby covenants and agrees that the Assignee will use the premises solely for
the purpose set forth in Section 3 of the Lease and that such use shall be
subject to the provisions of Section 7(h) of the Lease. The execution of this
instrument by the Port Authority does not constitute a representation by it that
the Assignor has performed or fulfilled every obligation required by the Lease;
and as to such matters the Assignee agrees to rely solely upon the
representation of the Assignor.
Page 2 of Exhibit Y
<PAGE>
5. Neither the Commissioners of the Port Authority nor any of them, nor
any officer, agent or employee thereof, shall be charged personally by the
Assignor or by the Assignee with any liability or held liable to either of them
under any term or provision of this Agreement, or because of its execution or
attempted execution, or because of any breach or attempted or alleged breach
thereof.
IN WITNESS WHEREOF, the Port Authority, the Assignor and the Assignee
have executed these presents as of the date first hereinabove set forth.
ASSIGNOR:
_____________________________
ATTEST: By____________________________
_____________________
(Title)_______________________
(Seal)
ASSIGNEE:
_____________________________
ATTEST: By____________________________
_____________________
(Title)_______________________
(Seal)
WITNESS:
_____________________ _________________________(L.S.)
WITNESS:
_____________________ _________________________(L.S.)
THE PORT AUTHORITY OF NEW
YORK AND NEW JERSEY
_____________________________
ATTEST: By____________________________
_____________________
(Title)_______________________
(Seal)
Page 3 of Exhibit Y
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the day of , 19 , before me came
to me known, who, being by me duly sworn, did depose and say that he resides at
that he is the of THE PORT OF NEW YORK AUTHORITY, the
corporation described in, and which executed the foregoing instrument; that he
knows the seal of the said corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by order of the
Commissioners of the said corporation; and that he signed his name thereto by
like order.
---------------------------
STATE OF )
) ss.
COUNTY OF )
On the day of , 19 , before me personally came
to me known, who, being by me duly sworn, did depose and say, that he resides
that he is the of
the corporation described in and which executed the foregoing instrument; that
he knows the seal of the said corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by order of the Board
of directors of the said corporation; and that he signed his name thereto by
like order.
---------------------------
STATE OF )
) ss.
COUNTY OF )
On the day of , 19 , before me
personally came , to me known, who, being by me duly
sworn, did depose and say, that he resides
that he is the of
the corporation described in and which executed the foregoing instrument; that
he knows the seal of the said corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of the said corporation; and that he signed his name thereto by
like order.
---------------------------
Page 4 of Exhibit Y
<PAGE>
EXHIBIT R
RULES AND REGULATIONS
FOR THE WORLD TRADE CENTER
1. PERMISSION GRANTED TO USE WORLD TRADE CENTER CONDITIONAL. Permission
granted by the Port Authority directly or indirectly, expressly or by
implication, to any person or persons, to enter upon or use any part of the
World Trade Center (including lessees and other persons occupying or using space
at the World Trade Center, persons doing business with the Port Authority or
with its lessees or permittees, and all other persons whatsoever whether or not
of the type indicated), is conditioned upon compliance with the Port Authority
Rules and Regulations as from time to time may be changed; and entry upon or
into the World Trade Center by any person shall be deemed to constitute an
agreement by such person to comply with said Rules and Regulations.
2. The Manager of the World Trade Center shall have authority to deny
the use of the World Trade Center to any person violating the said Rules and
Regulations or laws, ordinances or regulations of the United States, the State
of New York or the City of New York.
3. ENTRY RESTRICTIONS. Persons shall use the common areas and
facilities in the World Trade Center solely for purposes of ingress and egress,
and no person shall cause any obstruction of or loiter in any such common area
or facility. No person shall interfere with the safe, orderly flow of vehicular
or passenger traffic. No person shall be permitted to sleep, lie down or sit on
the floor, ledges, platforms, steps or escalators nor erect any unauthorized
permanent or temporary structure at the World Trade Center without the express
written permission of the Manager. In addition, no person shall spit, urinate or
defecate on any part of the World Trade Center other than in a urinal or toilet
intended for that purpose. No person shall enter upon any court or roof area or
parking area unless specifically so authorized by lease, permit, license or
other agreement with the Port Authority. The Port Authority may exclude from
buildings at the World Trade Center, between the hours of 6 p.m. and 8 a.m. and
at all hours on Saturday, Sundays and legal holidays, all persons who do not
present a pass to the World Trade Center. All such passes shall be in such form
as the Manager of the World Trade Center may prescribe from time to time and no
person shall issue passes unless authorized in writing by the Manager to do so.
Any area barricaded, roped off or otherwise restricted, shall be presumed to be
closed to the public, and members of the public are prohibited from entering
said areas without the express permission of the Manager or his designee.
Furthermore, if the Port Authority deems it advisable for security reasons,
occupants of space at the World Trade Center and persons frequently doing
business there shall provide, and their employees shall wear or carry, badges or
other suitable means of identification which shall be subject to the prior
approval of the Port Authority. Each
Page 1 of Exhibit R
<PAGE>
person responsible for issuance of a pass or other means of identification to
another person shall be liable to the Port Authority for all acts or omissions
of such other persons.
4. No person shall gamble or conduct or engage in any game of chance at
the World Trade Center unless such game of chance is permitted by local, state
and federal law and has been approved by the Manager.
5. No person may for commercial use make drawings or take still
photographs or motion pictures within the World Trade Center without permission
of the Manager.
6. No persons other than authorized persons or employees of the Port
Authority in designated areas, shall bathe, shower, shave, launder or change
clothes or remain undressed in any public restroom, sink. washroom on or within
the World Trade Center.
7. AUTHORIZATION REQUIRED FOR COMMERCIAL ACTIVITY, ENTERTAINMENT OR
SOLICITATION OF FUNDS. No person at the World Trade Center, unless duly
authorized in writing by the Port Authority, shall: (a) sell, or offer for sale
any articles of merchandise or carry on any other commercial activity; or (b)
solicit any business or trade, or perform or offer to perform any service,
including without limitation thereto the carrying of baggage for hire, the
shining of shoes or bootblacking; or (c) entertain or offer to entertain any
persons by any method including, without limitation thereto, by singing, dancing
or playing any musical instrument; or (d) canvass, peddle, or solicit funds for
any purpose.
8. ALCOHOLIC BEVERAGE RESTRICTIONS. No person shall drink or carry any
open alcoholic beverage on any part of the World TRADE Center; provided,
however, that this section shall not apply to those premises or areas wherein
the consumption of alcoholic beverages is permitted pursuant to the provisions
of a lease or other written agreement with the Port Authority.
9. PERMISSION REQUIRED FOR POSTING OR DISTRIBUTION OF PRINTED MATTER,
ETC. No person shall post, distribute, exhibit, inscribe, paint or affix (nor
shall any person cause, direct or order the posting, distributing, exhibiting,
inscribing, painting or affixing of) signs, advertisements, circulars, notices,
posters, or printed or written or pictorial matter or articles or objects of any
kind at, in, on or to any part of the common areas and facilities of the World
Trade Center without the prior written consent of the Manager of the World Trade
Center. In the event of the violation of the foregoing, the Port Authority may
remove the same without any liability, and may charge the expense and cost
incurred for such removal to the person or persons violating this rule.
Page 2 of Exhibit R
<PAGE>
10. PROPERTY DAMAGE. No person shall deface, mark, break or otherwise
damage any part of the World Trade Center or any property thereat. No person
shall remove, alter or deface any barricade, fence or sign at the World Trade
Center.
11. All persons at the World Trade Center shall exercise the utmost
care to avoid and prevent injury to persons and damage to property. Neither any
inclusion in nor any omission from these Rules and Regulations shall be
construed to relieve any person from exercising the utmost care to avoid and
prevent injury to persons and damage to property.
12. LOST ARTICLES TO BE TURNED OVER TO PORT AUTHORITY. Persons finding
lost articles at the World Trade Center shall turn them over to a Port Authority
policeman or to the office of the Manager. Articles which are not claimed by the
owner within 90 days may be turned over to the finders thereof, unless found by
Port Authority employees.
13. ANIMALS AND PETS, BARRED, EXCEPTION. No person except a police
officer or other person authorized by the Manager of the World Trade Center
shall enter in or upon the World Trade Center with any animal or pet of any kind
except a "seeing eye" dog or an animal properly confined for shipment.
14. REQUESTS FOR PORT AUTHORITY EMPLOYEES TO PERFORM WORK OR SERVICES
TO BE DIRECTED TO MANAGER. No person shall request any Port Authority employee
to do any work or perform any service, but shall make all such requests to the
Manager of the World Trade Center who may not comply with the request unless the
person making the request is entitled to receive the service AT the time the
request is made under written agreement with the Port Authority, and each person
claiming to be so entitled shall make known such fact to the Manager when the
request is made.
15. SMOKING, OPERATION OF CUTTING TORCHES AND LIKE DEVICES RESTRICTED.
No person shall smoke or carry lighted cigars. cigarettes, pipes, matches or any
naked flame in any place where smoking is specifically prohibited by signs, and
no person shall operate at the World Trade Center an oxyacetylene torch,
electric arc or similar flame or spark-producing device, cook or light a fire or
otherwise create a fire or life/safety hazard on any part of the World Trade
Center. No person shall tamper with or permit to be done anything which may
interfere with the effectiveness or accessibility of any fire prevention,
warning or extinguisher equipment at the World Trade Center nor use the same for
any purpose other than fire fighting or fire prevention. Tags showing date of
last inspection attached to units of fire extinguishing and fire fighting
equipment shall not be removed therefrom.
16. TRANSPORTATION, STORAGE, ETC. OF CERTAIN MATERIALS AND SUBSTANCES
PROHIBITED. No person shall store, keep, carry, handle, use, dispense or
transport at, in or
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upon the World Trade Center, or bring into the World Trade Center for any
purpose:
(a) any flammable, combustible, explosive, corrosive, oxidizing,
poisonous, compressed or otherwise offensive fluid, gas, chemical substance
or material, at such time or place or in such manner or condition as to
endanger unreasonably or as to be likely to endanger unreasonably persons
or property; or
(b) any firearms or any other weapons, except persons carrying
firearms pursuant to and in compliance with law and all licenses, permits.
etc. in connection therewith including such of the following as may be on
official duty: authorized peace officers, post office, customs or express
carrier employees or members of the armed forces of the United States; or
(c) the following radioactive materials:
(1) source material (as defined in Standards for Protection
Against Radiation, promulgated by the Nuclear Regulatory Commission,
Title 10, Code of Federal Regulations, Part 20) including but not
limited to uranium, thorium, or any combination thereof (but not
including the "unimportant quantities of source material" set forth in
10 CFR 40.13);
(2) special nuclear material (as defined in Standards for
Protection Against Radiation, promulgated by the Nuclear Regulatory
Commission, Title 10, Code of Federal Regulations, Part 20) including,
but not limited to, plutonium, uranium 233, uranium enriched in the
isotope 233 or in the isotope 235, or any material artificially
enriched by any of the foregoing;
(3) nuclear reactor fuel elements that are partially expended or
irradiated;
(4) new nuclear reactor fuel elements;
(5) radioactive waste material; or
(6) any radioactive material moving under an Interstate Commerce
Commission special permit or Nuclear Regulatory Commission permit and
escort.
17. TAMPERING WITH CONTROLS, EQUIPMENT, ETC. PROHIBITED. No person
shall tamper with or permit to be done anything which may interfere with the
effectiveness or accessibility of any World Trade Center controls, machinery or
equipment including without limitation thereto thermostats, heater valves,
sprinkler valves and devices, or blower motors, and no person shall turn on or
off heating or air cooling controls in the World Trade Center or operate, adjust
or otherwise handle or manipulate any of the aforesaid systems or portions
thereof or operate any other equipment, machinery or other devices installed or
located therein unless expressly authorized in writing by the Port Authority to
do so.
18. OVERLOADING OF UTILITY, MECHANICAL, ETC., SYSTEMS
PROHIBITED. No person shall keep, maintain, place or install, use or connect at
the World Trade Center any equipment or engage in any activity or operation at
the World Trade Center which will cause or tend to cause an overloading of the
capacity of any electrical circuit or system or portion of any other utility,
mechanical, electrical, electronic, computerized communication or other systems
serving the World Trade Center, nor do or permit to be done anything which may
interfere with the
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effectiveness or accessibility of existing and future utility, mechanical,
electrical, electronic, computerized communication or other systems or portions
thereof at the World Trade Center. No person shall in any common area plug a TV,
radio or electrical device into any electrical outlet or connect any device to
any utility at or in the World Trade Center without the express written approval
of the Manager.
19. OBSTRUCTION OF EXPANSION OR CONTRACTION JOINTS PROHIBITED. No
person shall place any furniture, machine or equipment over any expansion or
contraction joint unless one end of such furniture, machine or equipment is free
to permit expansion or contraction.
20. PERMISSION REQUIRED FOR INSTALLATIONS OR OPERATION OF CERTAIN
EQUIPMENT. No person shall install or use at the World Trade Center, except with
the prior written consent of the Manager of the World Trade Center, any air
conditioning unit or equipment, refrigerator, heating or cooking apparatus or
other power activated equipment or any signal or call system or other
communication systems or equipment or any device which connects to the power or
other lines for signal or communications or other transmissions in any way
whatsoever. No person shall install or operate at the World Trade Center any
device which may in the Port Authority's opinion interfere with or impair any
radio, television or telephone transmission or reception or any other
communication service.
21. PERMISSION REQUIRED TO LAY FLOOR COVERING. No person shall lay any
linoleum, floor tile, carpeting or any other affixed floor covering at the World
Trade Center without the prior written consent of the Manager of the World Trade
Center, and if such consent is given, such directions as the Port Authority may
give as to methods and procedures to be used in the laying and installing of any
such floor covering shall be followed.
Page 5 of Exhibit R
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22. LOCKS AND KEYS. No person shall place any additional lock of any
kind upon any window or interior or exterior door without the prior written
consent of the Manager and unless a key therefor is delivered to the Port
Authority, nor make any change in any door or window lock or the mechanism
thereof, except with the prior written consent of the Manager. Upon the
expiration or sooner termination of any agreement covering occupancy of space,
the occupant shall surrender to the Port Authority any and all keys to interior
and exterior doors or windows, whether said keys were furnished to or were
otherwise procured by occupants and in the event of the loss of any keys
furnished by the Port Authority the occupant shall pay to the Port Authority the
Port Authority's cost of replacement thereof.
23. OBSTRUCTION OF LIGHT, AIR, HEAT, PASSAGE, ETC. PROHIBITED. No
person shall obstruct or permit the obstruction of light, air or passage in the
World Trade Center, or cover or obstruct any elements of the heating,
ventilating or air cooling systems therein. In addition, no person shall place
any window coverings including without limitation thereto, curtains, blinds,
shades, draperies or screens on any exterior window, without the prior written
consent of the Manager of the World Trade Center, but all occupants of space
shall provide and install, at their expense, such draperies as the Port
Authority may in its discretion require or approve, and all occupants of space
shall keep the draperies closed whenever the sun is shining on the windows.
24. APPROVAL REQUIRED FOR CERTAIN SERVICE CONTRACTS. No person shall
purchase or contract for spring water, ice, waxing, rug shampooing, draperies,
towels, cleaning, glass washing, furniture polishing, lamp servicing, cleaning
of electric fixtures, removal of waste paper, rubbish and garbage, or other like
services at the World Trade Center except from contractors, companies or persons
approved by the Port Authority.
25. MEASURES REQUIRED TO ELIMINATE DAMAGING VIBRATIONS. All persons in
their operations and use of space at the World Trade Center shall take all
reasonable measures to eliminate vibrations tending to damage any part of the
World Trade Center.
26. OBJECTIONABLE NOISE PROHIBITED. No person shall make, continue,
cause or permit to be made or continued, any objectionable or disturbing noises
or disturb or interfere with occupants of the World Trade Center or neighboring
buildings or premises, whether by the use of any loudspeaker or other amplifying
device, musical instrument, radio, talking machine, television, unmusical noise,
whistling, singing, or in any other way. Nothing in this section shall affect
the right of the Port Authority in its sole discretion to authorize commercial
activity, entertainment or solicitation of funds.
27. ACTS OR OMISSIONS RESULTING IN FILING OF LIENS PROHIBITED. No
person shall do or omit to do anything which may be grounds for the filing of
any mechanic's or other lien against the World Trade Center or any part thereof.
Nothing
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herein shall be deemed to be a consent by the Port Authority to any such lien or
the filing thereof or any implication that such lien would be valid or
enforceable against the Port Authority or its property, but if such lien is
filed, notwithstanding that it may be groundless or unenforceable, the Port
Authority may take such steps as may be required to remove it including payment
of any debts alleged to be owed by any person and such person shall pay the Port
Authority the Port Authority's cost thereof upon demand.
28. NAMES OF PERSONS TO BE NOTIFIED IN EVENT OF EMERGENCY TO BE FILED.
Each occupant of space at the World Trade Center shall file with the Port
Authority the name, address, and telephone number of at least two authorized
representatives to be notified in the event of an emergency.
29. DOORS, WINDOWS TO BE LOCKED AND UTILITY SERVICES TURNED OFF UPON
LEAVING. All occupants of space at the World Trade Center shall, before leaving
the same at any time, close and lock all entrance doors therein and turn off all
utility services controllable by the occupant.
30. USE OF PREMISES FOR LODGING, SLEEPING OR IMMORAL PURPOSES
PROHIBITED. No occupant of space at the World Trade Center shall use the same
for lodging or sleeping purposes or for any immoral purposes.
31. USE OF PREMISES DURING OTHER THAN NORMAL BUSINESS HOURS. When an
occupant of space at the World Trade Center intends to occupy the space during
hours other than normal business hours, the occupant shall make a request, in
writing, for such of those services which the occupant is entitled to receive
during normal business hours as the occupant may desire during hours other than
normal business hours, each such request to be made by 4 p.m. of the last
business day before each day during which the services are desired. Such
services will be provided and paid for by the occupant in accordance with the
schedule of rates established by the Port Authority from time to time and the
occupant agrees that the Port Authority has made no representations or
warranties that the premises will be habitable or usable by the occupant during
other than normal business hours unless the aforesaid services are requested in
advance by the occupant. An occupant of any space at the World Trade Center
shall advise the Manager of the World Trade Center one day in advance of any
occasion when the space he occupies will not be occupied during normal business
hours because of vacations or special holidays.
32. SIDEWALKS, OPEN AREAS, ETC. TO BE KEPT FREE FROM SNOW, ICE, DIRT
AND RUBBISH. All persons occupying at the World Trade Center any space which has
an entrance or exit opening out on a sidewalk or other open area, shall keep all
sidewalks, open areas, curbs, lobbies, vestibules and steps adjacent to such
space free from snow, ice, dirt and rubbish.
Page 7 of Exhibit R
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33. ABANDONMENT OF PROPERTY PROHIBITED. No person shall abandon any
property at the World Trade Center. Nor shall any person for himself, herself or
another store either temporarily or permanently any personal property at any
part of the World Trade Center without the approval of the Manager of the World
Trade Center. No person shall store bundles, paper, cloth, cardboard or any
other material in solid, liquid or gas form that could in any way pose a fire or
life/safety hazard or obstruct or hinder passage without the express, written
approval of the Manager.
34. ACCUMULATION AND DISPOSAL OF GARBAGE, DEBRIS, WASTE, ETC.
RESTRICTED. No person shall allow any garbage, debris, or other waste materials
(whether solid or liquid) to collect or accumulate at the World Trade Center and
each person shall be responsible for the removal from the World Trade Center of
all garbage, debris and other waste materials (whether solid or liquid) arising
out of that person's operations or occupancy or use of space at the World Trade
Center. All persons shall use extreme care when effecting removal of all such
waste and in no event shall any person use for such purpose any facilities of
the Port Authority without the prior consent in writing of the Manager of the
World Trade Center. All persons shall effect such removal only during such hours
and by such means as are prescribed by the Manager of the World Trade Center. No
person shall use the water closets, wash bowls or other plumbing fixtures for
any purposes other than those for which they were designed, and no person shall
throw therein any improper articles or substances (whether liquid or solid)
including without limitation thereto garbage, refuse, sweepings, rubbish, rags,
ashes or litter. No person shall drop or throw anything out of the doors,
windows or down the passageways or into any ventilating or elevator shaftway,
stairwell or other openings. The cost of correcting any condition or repairing
any damage resulting from misuse of fixtures or facilities or from other actions
prohibited herein shall be borne by the persons who, or whose officers,
employees, representatives, agents, contractors or invitees, have caused the
same.
35. TRASH REMOVAL. All persons at the World Trade Center are
responsible for providing for their own trash removal to a compactor provided by
the Manager for this purpose. No other method of trash disposal is permitted
without the express written consent of the Manager.
36. MOVEMENT OF INVENTORY, SUPPLIES, EQUIPMENT, FURNISHINGS, ETC.
RESTRICTED. No person shall move inventory, merchandise, supplies or materials,
fixtures, equipment, furnishings, or bulky articles of any kind, including
without limiting the generality thereof, desks, chairs, tables, safes, cabinets,
shelves, business machines, fans or floor coverings, to or from any space at the
World Trade Center except with the prior written consent of the Manager of the
World Trade Center and during such hours on such days as may be prescribed by
the Manager of the World
Page 8 of Exhibit R
<PAGE>
Trade Center. In no event will consent be given unless the person employed or
under contract to perform such moving is competent and responsible and at least
24 hours' notice of the person's desire to have such moving performed has been
given in writing to the Manager of the World Trade Center. No person shall use
hand trucks in the passenger elevators or shall use the passenger elevators to
transport freight or bulky packages of any type without the written consent of
the Manager of the World Trade Center.
37. RIGHT RESERVED TO INSPECT FREIGHT, ARTICLES, PACKAGES, ETC. BROUGHT
IN OR OUT. The Port Authority reserves the right to inspect all freight and
other articles including hand-carried packages brought into or out of the World
Trade Center and to exclude therefrom all articles which violate any of these
Rules and Regulations, and to require the occupants of space and others
regularly doing business at the World Trade Center to issue package passes (in
such form as may be approved by the Port Authority) for packages being carried
to or from, or from one location to another within the World Trade Center.
38. ELEVATOR SERVICE.
(a) Non-exclusive automatic passenger elevator service will be
operated during normal business hours.
(b) Minimal passenger elevator service will be available at times
other than normal business hours for persons who may have business in
the World Trade Center during such times and whose presence in the
World Trade Center is duly authorized in the manner the Port Authority
prescribes.
(c) Freight elevators and truck docks will be available for
routine movements during normal business hours. Notice must be given
within normal business hours to the Manager of the World Trade Center
at least 24 hours in advance in the event freight elevator service is
desired which cannot be accommodated as a routine movement or during
normal business hours. The person requesting the same will pay the
cost for this extra freight elevator service in accordance with the
schedule of rates established by the Port Authority from time to time.
Persons for whose account property is being delivered or picked up at
the truck docks shall arrange for such delivery or pick-up to be made
only at such place or places as may be designated by the Port
Authority for such purposes and shall arrange for the handling and
movement of the property in such a way that it will be removed from
the truck docks immediately upon its arrival there, and such persons
shall not allow any property to be placed or transported at any time
in any common area or facility at the World Trade Center unless the
area or facility is one which the Manager has designated AS a proper
area or facility for that type of property or transportation or to
remain therein for a longer time than is necessary to transport it to
its destination. The Port Authority will not be responsible for the
custody, security, handling or movement of property while at the truck
docks or on the freight elevators or while en route to or from either
of the same and the person for whose account property is being
delivered or picked
Page 9 of Exhibit R
<PAGE>
up at the truck docks or is being transported on, to or from freight
elevators shall make all arrangements for loading, unloading, handling
and movement of the property and its security, including keeping the
property attended at all times. Property may be moved within the World
Trade Center solely by suitable vehicles of the indoor industrial
wheeler type with rubber tire and side guards and by way of such
routes as the Manager may designate from time to time.
39. OPERATION OF ELEVATORS BY PERSONS OTHER THAN PORT AUTHORITY
EMPLOYEES PROHIBITED. No person other than employees of the Port Authority, or
their designees, shall operate any freight elevator or passenger elevator
(except for the operation in automatic passenger elevators of such controls as
are designed for use by passengers) at the World Trade Center.
40. USE OF ELEVATOR, ESCALATORS AND LOADING DOCKS RESTRICTED.
(a) Passenger elevators and escalators may not be used to carry
freight.
(b) The use of any escalator, elevator, private right-of-way or
truck loading dock at the World Trade Center will be subject to the
direct control of the Manager.
(c) No unauthorized person shall cause an elevator or escalator
to stop by means of any emergency stopping device unless continued
operation would appear to result in probable injury to a person or
persons. Any such stopping should be reported immediately to the
Manager.
41. VEHICULAR TRAFFIC RESTRICTED. No person shall (nor shall any
occupant of space at the World Trade Center permit its officers, employees,
agents, representatives of other persons who are connected with or are doing
business with such occupant or who are at the World Trade Center for the purpose
of visiting such space, to) operate any automotive or other vehicle (including
skateboard, roller skates or bicycle, scooter or any self-propelled vehicle or
device) in any area of the World Trade Center not designated for such use, or
operate the same in any vehicular roadway, parking area, public area or street,
in or adjacent to the World Trade Center, or park or allow any vehicle to stand
in any such roadway, area or street except in accordance with such signs, speed
limits, lights, signals, pavement markings, directions, laws, ordinances, rules
and regulations (of the Port Authority or of such other agency, municipality or
other governmental authority having Jurisdiction) as may be in force from time
to time. No person shall park vehicles except in those portions of the parking
area designated for that purpose by the Port Authority and except upon payment
of such parking fees and charges as may from time to time be prescribed and if
specific space is assigned to that person then only in the space so assigned. In
the event that a person shall park in any space other than the specific
Page 10 of Exhibit R
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space assigned to that person then that person shall pay to the Port Authority
upon demand $25 per day per car parked in any area other than those designated.
42. DISABLED, ABANDONED OR ILLEGALLY PARKED VEHICLES SUBJECT TO
REMOVAL. The Manager may remove from any area at the World Trade Center any
vehicle which is disabled, abandoned, parked in violation of these Rules and
Regulations, or which presents an operational problem to any area at the World
Trade Center, at the operator's or owner's expense and without liability for
damage which may result in the course of such moving.
43. OPERATION OF MOTOR VEHICLES. No person shall operate a vehicle at
the World Trade Center in a careless or negligent manner or in disregard of the
rights and safety of others, or without due caution or circumspection, or at a
speed in excess of speed limits posted in the area where the vehicle is being
operated, or in any event at a speed in excess of fifteen (15) miles per hour,
or at any speed or in a manner which endangers unreasonably or is likely to
endanger unreasonably persons or property, or while the driver thereof IS under
the influence of intoxicating liquor, or any narcotic or habit-forming drug or
if such vehicle is so constructed, equipped or loaded as to endanger
unreasonably or be likely to endanger unreasonably persons or property, or
unless (a) the driver thereof is duly authorized to operate such vehicle on
State or municipal highways; and (b) such vehicle is registered in accordance
with the provisions of law.
44. DUTY OF DRIVER OF VEHICLE INVOLVED IN ACCIDENTS. The driver of any
vehicle involved in an accident at the World Trade Center which results in
injury or death to any person or damage to any property shall immediately stop
such vehicle at the scene of the accident, render such assistance as may be
needed, and give his name, address, and operator's license and registration
number to the person injured or to any officer or witnesses of the accident. The
operator of such vehicle shall make a report of such accident in accordance with
the law of the State of New York.
45. DEFINITIONS. As used in these Rules and Regulations:
(a) "Holidays" or "legal holidays" shall mean and include the
following days in each year: the first day of January, known as New
Year's day; the third Monday in January, known as Martin Luther King,
Jr. day; the twelfth day of February, known as Lincoln's birthday; the
third Monday in February, known as Washington's birthday; the last
Monday in May, known as Memorial day; the fourth day of July, known as
Independence day; the first Monday in September, known as Labor day;
the second Monday in October, known as Columbus day; the eleventh day
of November, known as Veteran's day; the fourth Thursday in November,
known as Thanksgiving day; and the twenty-fifth day of December, known
as Christmas day; and if any of such days is Sunday, the next day
thereafter; and each general election day in the State of New York;
and
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such other or different days or dates as are declared "holidays" or
"legal holidays" under the laws of the State of New York or as may
hereafter be so declared.
(b) "Normal business hours" shall mean 8 a.m. to 6 p.m. Mondays
to Fridays inclusive, legal holidays excepted.
(c) "Person" or "persons" shall mean and include natural persons,
corporations and other legal entities, whether foreign or domestic,
sovereign states and governments, governmental and quasi-governmental
authorities, bureaus, agencies, boards and other units of governments,
and partnerships, firms, companies, joint ventures and unincorporated
associations. All persons shall be responsible for the acts or
omissions of their officers, members, employees, agents,
representatives, contractors, customers, guests, invitees, and those
doing business with them.
(d) "Manager" or "Manager of the World Trade Center" shall mean
the person or persons from time to time designated by the Port
Authority to exercise the powers and functions vested in the said
Manager by these Rules and Regulations and shall include a temporary
or acting Manager of the World Trade Center and his duly designated
representative or representatives.
(e) "Common areas and facilities" shall mean and include, without
limiting the generality thereof, entrances, exits, lobbies, toilets,
passages, halls, corridors, courts, plazas, vestibules, stairways and
elevators, escalators and other areas and facilities for the movement
of persons and/or property.
Page 12 of Exhibit R
<PAGE>
(Port Authority Acknowledgment)
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 17th day of June, 1993, before me personally came Charles J.
Markesh to me known, who, being by me duly sworn, did depose and say that he
resides in 144 Old Route 304, New City, New York 10956; that he is the Director,
World Trade Department of The Port Authority of New York and New Jersey, one of
the corporations described in and which executed the foregoing instrument; that
he knows the seal of the said corporation; that the seal affixed to the said
instrument is such corporate seal; that it was so affixed by order of the Board
of Commissioners of the said corporation; and that he signed his name thereto by
like order.
---------------------------------
(Corporate Acknowledgment)
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 24th day of December, 1992, before me personally came Donald
Marshall to me known, who, being by me duly sworn, did depose and say that he
resides in Franklin Lakes, New Jersey; that he is the President of Euro Brokers
Inc., one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of the said corporation; that the seal
affixed to the said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of the said corporation; and that he signed his
name thereto by like order.
---------------------------------
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Exhibit 10.2
Lease No. WT-2887-B-84 (985)
Supplement No. 1
SUPPLEMENTAL AGREEMENT
THIS AGREEMENT, made as of the 21st day of March, 1993, by and
between THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called the
"Port Authority") and EURO BROKERS INC. (hereinafter called the "Lessee"),
WITNESSETH, That:
WHEREAS, the Port Authority and the Lessee heretofore and as
of September 10, 1992 entered into an agreement of lease identified by the above
Port Authority Lease Number covering premises at the Port Authority World Trade
Center in the Borough of Manhattan, City, County and State of New York (which
agreement of lease, as the same may have been heretofore supplemented and
amended, is hereinafter called the "Lease"); and
WHEREAS, the Port Authority and the Lessee desire to add to
the premises under the Lease and to amend the same in certain other respects;
NOW, THEREFORE, for and in consideration of the covenants and
mutual agreements herein contained, the Port Authority and the Lessee hereby
agree as follows:
1. In addition to the premises heretofore let to the Lessee
under the Lease, the letting of which shall continue in full force and effect,
subject to and in accordance with all of the terms, provisions, covenants and
conditions of the Lease, the Port Authority hereby lets to the Lessee and the
Lessee hereby hires and takes from the Port Authority at the Port Authority
World Trade Center in the Borough of Manhattan, City, County and State of New
York the spaces shown in horizontal hatching, diagonal hatching and
crosshatching on the sketch annexed hereto, hereby made a part hereof and marked
"Exhibit A-1", together with the fixtures, improvements and other property of
the Port Authority located or to be located therein or thereon (the space shown
in horizontal hatching on Exhibit A-1, together with the fixtures, improvements
and other property therein or thereon hereinafter being referred to as "Closet
Space A"; the space shown in diagonal hatching on Exhibit A-1, together with the
fixtures, improvements and other property therein or thereon hereinafter being
referred to as "Closet Space B"; and the space shown in crosshatching on Exhibit
A-1, together with the fixtures, improvements and other property therein or
thereon hereinafter being referred to as "Closet Space C"). Each of Closet Space
A, Closet Space B and Closet Space C shall be and become a part of the premises
under the Lease at 12:01 o'clock A.M. on March 22, 1993 and shall continue,
unless sooner terminated, throughout the balance of the term of the letting
under the Lease.
1
<PAGE>
The Port Authority and the Lessee hereby acknowledge that each of Closet Space
A, Closet Space B and Closet Space C constitutes non-residential real property.
2. The Lessee shall use each of Closet Space A, Closet Space B
and Closet Space C solely for storage purposes in connection with its permitted
business activities under the Lease and for no other purpose or purposes
whatsoever.
3. For the period from and after the Effective Date throughout
the balance of the term of the letting under the Lease, the Lessee, in addition
to the basic rental otherwise payable under the Lease, shall pay to the Port
Authority a basic rental for (a) Closet Space A at the rate of One Thousand
Three Hundred Eight Dollars and No Cents ($1,308.00) per annum, in advance in
monthly installments of One Hundred Nine Dollars and No Cents ($109.00) each, on
the Effective Date and on the first day of each calendar month thereafter
throughout the balance of the term of the letting under the Lease; (b) Closet
Space B at the rate of Six Hundred Eighty-four Dollars and No Cents ($684.00)
per annum, in advance in monthly installments of Fifty-seven Dollars and No
Cents ($57.00) each, on the Effective Date and on the first day of each calendar
month thereafter throughout the balance of the term of the letting under the
Lease; and (c) Closet Space C at the rate of Two Thousand Seven Hundred
Seventy-two Dollars and No Cents ($2,772.00) per annum, in advance in monthly
installments of Two Hundred Thirty-one Dollars and No Cents ($231.00) each, on
the Effective Date and on the first day of each calendar month thereafter
throughout the balance of the term of the letting under the Lease.
4. From and after the Effective Date the basic rental for
Closet Space A, Closet Space B and Closet Space C set forth in paragraph 3,
above, shall be subject to adjustment during the term of the lettings of the
said Closet Spaces in accordance with the provisions of Schedule A-1 attached to
this Agreement and hereby made a part hereof. For the purpose of computing
additional basic rental with respect to the said Closet Spaces pursuant to
Schedule A-1 attached hereto, reference in said Schedule A-1 to the premises
shall mean Closet Space A, Closet Space B and Closet Space C, collectively.
5. The Lessee acknowledges that it has inspected Closet Space
A, Closet Space B and Closet Space C and has found them in good order and repair
and has determined them to be suitable for its operations hereunder. The Lessee
agrees to and shall take Closet Space A, Closet Space B and Closet Space C in
their "as is" condition and the Port Authority shall have no obligation for
finishing work or for preparation of the said Closet Spaces for the Lessee's
use. The Lessee acknowledges that it has not relied upon any representation or
statement of the Port Authority or its Commissioners, officers, employees or
agents as to the suitability of Closet Space A, Closet Space B and Closet Space
C for the operations permitted on the said Closet Spaces by this Agreement. The
Lessee further acknowledges and understands that the Port Authority will not
supply heat, ventilation and air-cooling in Closet Space A, Closet Space B and
Closet Space C, and the Lessee further
2
<PAGE>
agrees that no portion of Closet Space A, Closet Space B and Closet Space C will
be used initially or at any time during the letting which is in a condition
unsafe or improper for the conduct of the Lessee's operations under the Lease so
that there is possibility of injury or damage to life or property.
6. (a) Notwithstanding the provisions of paragraph (c) of
Section 42 of the Lease, the Port Authority will not supply cleaning services to
Closet Space A, Closet Space B and Closet Space C.
(b) Notwithstanding the provisions of Section 46 of the
Lease and subject to the provisions of Section 42(f), (g), (h) and (i) of the
Lease, the Port Authority shall, without additional charge, furnish to Closet
Space A, Closet Space B and Closet Space C during normal business hours
electricity for illumination only, by which is meant the energizing of
fluorescent bulbs through existing wires, conduits and outlets, if any.
7. Notwithstanding any other provision of this Agreement, the
Port Authority and the Lessee shall each have the right to terminate the letting
of each of Closet Space A, Closet Space B and Closet Space C under this
Agreement, without cause, at any time on thirty (30) days' notice to the other
party. Any such termination of the letting of Closet Space A, Closet Space B and
Closet Space C shall have the same force and effect as if the effective date of
termination were the date fixed herein for the expiration of the term of the
letting of Closet Space A, Closet Space B and Closet Space C under this
Agreement.
8. The Lessee represents and warrants that no broker has been
concerned in the negotiation and execution of this Agreement or the letting of
Closet Space A, Closet Space B and Closet Space C hereunder and that there is no
broker who is or may be entitled to be paid a commission in connection
therewith. The Lessee shall indemnify and save harmless the Port Authority of
and from any and all claims for commission or brokerage made by any and all
persons, firms or corporations whatsoever for services in connection with the
negotiation and execution of this Agreement or the letting of Closet Space A,
Closet Space B and Closet Space C hereunder.
9. Neither the Commissioners of the Port Authority nor any of
them, nor any officer, agent or employee thereof, shall be charged personally by
the Lessee with any liability, or be held liable to it under any term or
provision of this Agreement, or because of its execution or attempted execution
or because of any breach thereof.
10. As hereby amended, all the terms, covenants, provisions,
conditions and agreements of the Lease shall be and remain in full force and
effect.
11. This Agreement and the Lease which it amends constitute
the entire agreement between the Port Authority and the Lessee on the subject
matter, and may not be
3
<PAGE>
changed, modified, discharged or extended except by instrument in writing duly
executed on behalf of both the Port Authority and the Lessee. The Lessee agrees
that no representations or warranties shall be binding upon the Port Authority
unless expressed in writing in the Lease or this Agreement.
IN WITNESS WHEREOF, the Port Authority and the Lessee have
executed these presents, as of the date first above written.
ATTEST: THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY
BY /s/ The Port Authority of New York and New Jersey
- ------------------------ ---------------------------------------------------
SECRETARY
(TITLE) Director, World Trade Department
------------------------------------
(Seal)
ATTEST: EURO BROKERS INC.
BY/s/ Donald Marshall
- ------------------------ ---------------------------------------------------
SECRETARY
(TITLE) President
------------------------------------
(Corporate Seal)
4
<PAGE>
[DIAGRAM]
ALL DIMENSIONS ARE APPROXIMATE
INITIALED:
/s/
------------------------------------
For the Port Authority
/s/ Donald Marshall
------------------------------------
For the Lessee
SOUTH TOWER BUILDING
FLOOR 84TH THE PORT OF NEW YORK AUTHORITY
THE WORLD TRADE CENTER
DATE: DEC. 9, 1992 EXHIBIT A-1 DRAWING NO. WT-2887-B84
5
<PAGE>
SCHEDULE A-1
1. For the purposes of this Schedule A-1, the following
provisions shall apply:
(a) "Taxes" shall mean real estate taxes and assessments
which may be imposed from time to time by the United States of America, the
State of New York or any municipality or other governmental authority, upon the
Port Authority with respect to the buildings, structures, facilities or land at
the World Trade Center or with respect to the rentals or income therefrom in
lieu of or in addition to any tax or assessment which would otherwise be a real
estate tax or assessment and taxes shall include any payments in lieu of real
estate taxes or assessments which may be agreed upon between the Port Authority
and any of the foregoing governmental authorities, other than payments in lieu
of taxes described in paragraph (b) below.
(b) "Payments in lieu of taxes" shall mean such payments as
the Port Authority has agreed to pay the City of New York under an agreement
dated 1967 as it may have been or may be thereafter supplemented or amended
(hereinafter called "the City Agreement").
(c) The "annual per rentable square foot factor" referred to
in this Schedule was initially fixed at $1.25 in the City Agreement and
provision was made in paragraph 7(3) of the City Agreement for changes therein
from time to time to reflect changes in the tax rate and changes in assessed
valuations.
(d) "Tax base" shall mean $4.06.
(e) "Tax year" shall mean the twelve-month period
established by The City of New York as a tax year for real estate tax purposes.
(f) "Wage rate" shall mean the cost for an hour's work by a
porter engaged to work a 40 hour work week in a Class A office building in the
City of New York which hourly cost shall be limited solely to the hourly wage
rate for porters as that rate is established from time to time by collective
bargaining agreement between the Realty Advisory Board on Labor relations,
Incorporated, acting on behalf of various building owners and Local 32B-32J,
Service Employees International Union, AFL-CIO, (which collective bargaining
agreement is hereinafter referred to as "the Contract"), plus a proper
proportion of fringe benefits and other payroll costs. As used herein:
(1) "Porter" or "porters" shall mean those employees
engaged in the general maintenance and operation of office buildings
and classified as "Others" by the Contract.
Page 1 of Schedule A-1
<PAGE>
(2) "Fringe benefits" shall mean the items of cost
which an employer would be obligated to pay or would incur pursuant to
the contract on the basis of wages paid to a porter engaged to work a
40 hour work week in Class A office building in New York City who is
entitled to receive on an annual basis the maximum entitlement under
the Contract, including, without limitation, vacation allowances, sick
leave, holiday pay, birthdays, jury duty, medical checkup, lunch time,
relief time, other paid time off, bonuses, union assessments allocable
to pension plans and welfare and training funds, and health, life,
accident, or other such types of insurance.
(3) "Other payroll costs" shall mean taxes payable
pursuant to law by an employer upon the basis of wages paid to a porter
engaged to work a 40 hour work week in a Class A office building in New
York City, including, without limitation, F.I.C.A., New York State
Unemployment Insurance and Federal Unemployment Insurance.
If at any time during the term of the letting under the Lease
the Contract shall require regular employment of porters on days or
during hours when overtime or other premium pay rates are in effect
pursuant to the Contract the hourly wage rate for porters under the
Contract for the applicable period shall be determined by dividing the
weekly wage an employer would be obligated to pay a porter engaged to
work a 40 hour work week in a Class A office building in New York City
under the Contract by 40.
If either the Realty Advisory Board on Labor
Relations, Incorporated or Local 32B-32J, Service Employees
International Union, AFL-CIO shall cease to exist or a collective
bargaining agreement shall cease to be negotiated between the Realty
Advisory Board on Labor Relations, Incorporated and Local 32B-32J,
Service Employees International Union, AFL-CIO, or if the job
classification "Others" shall be renamed or abolished in any subsequent
collective bargaining agreement entered into between the Realty
Advisory Board on Labor Relations, Incorporated and Local 32B-32J,
Service Employees International Union, AFL-CIO, then the wage rate to
be used in applying the provisions of this Schedule shall be the wage
rate for those employees engaged in the general maintenance and
operation of Class A office buildings either pursuant to any subsequent
collective bargaining agreement between the Realty Advisory Board on
Labor Relations, Incorporated and Local 32B-32J, Service Employees
International Union, AFL-CIO, or if there is no such agreement, then
pursuant to such agreement as the Port Authority shall select.
(g) "Basic wage rate" shall mean the wage rate in
effect on
Page 2 of Schedule A-1
<PAGE>
January 1, 1993.
(h) "Rentable square feet in the premises" shall
mean 90 square feet as to Closet Space A, 47 square feet as to Closet
Space B and 191 square feet as to Closet Space C.
(i) "Lease" shall mean the agreement of lease to
which this schedule is attached.
2. From and after each July 1, following the commencement date
of the letting under the Lease, the Lessee shall pay an additional
basic rental under the Lease at the annual rate computed by multiplying
the rentable square feet in the premises by the excess over the tax
base of the total of: (1) the annual per rentable square foot amount of
taxes for the tax year beginning on that July 1; and (ii) the annual
per rentable square foot factor used in computing payments in lieu of
taxes for the tax year beginning on that July 1. If taxes become
payable on a basis other than an annual amount per rentable square
foot, the Port Authority will allocate those taxes to the rentable
square feet of space in the World Trade Center and will notify the
Lessee of the amount of such allocation.
3. In addition to additional basic rental payable under
paragraph 2 above, from and after the commencement date of the letting
under the Lease, the Lessee shall pay additional basic rental under the
Lease at an annual rate equal to $0.01 for each $0.01, or major
fraction thereof, that the wage rate in effect on the commencement date
of the letting and each wage rate thereafter established from time to
time during the term of the letting exceeds the basic wage rate,
multiplied by the rentable square feet in the premises.
4. If the imposition or allocation of taxes or the
establishment of an annual per rentable square foot factor to be used
in computing payments in lieu of taxes for any tax year or the
establishment of a wage rate to be effective for any period of time is
delayed for any reason whatsoever, the Lessee shall nevertheless
continue to pay the additional basic rental at the annual rate then in
effect subject to retroactive adjustments at such time as the taxes are
imposed or allocated or the said per rentable square foot factor or
wage rate shall have been established.
5. After imposition and allocation of taxes for any tax year
and the establishment for each tax year of the annual per rentable
square foot factor used in computing payments in lieu of taxes and
after the effective date of each wage rate in excess of the basic wage
rate, the Port Authority will compute the annual rate or rates of
additional basic rental payable by the Lessee under paragraph 2 or 3
above and will notify the Lessee of the amounts thereof. Additional
basic rental accruing under paragraph 2 or 3
Page 3 of Schedule A-1
<PAGE>
above shall be computed separately and each amount thereof shall be
payable by the Lessee to the Port Authority in advance in monthly
installments, each installment being equal to 1/12 of the annual rate
except that if at the time the Port Authority gives notice to the
Lessee under this paragraph, additional basic rental shall have accrued
for a period prior to the notice, the Lessee shall pay such additional
basic rental in full for such period, within ten days after such
notice.
6. If after an amount of additional basic rental shall have
been fixed under paragraphs 2 or 3 above for any period, taxes are
imposed or the amount of taxes or the annual per rentable square foot
factor in regard to payments in lieu of taxes or the wage rate used for
computing such additional basic rental shall be changed or adjusted,
then the additional basic rental payable for that period shall be
recomputed and from and after notification of the imposition, change or
adjustment, the Lessee shall make payments based upon the recomputed
additional basic rental and upon demand the Lessee shall pay any excess
in additional basic rental as recomputed over amounts of additional
basic rental theretofore actually paid. If such change or adjustment
results in a reduction in the amount of additional basic rental for any
period prior to notification, the Port Authority will credit the Lessee
with the difference between the additional basic rental as recomputed
for that period and amounts of additional basic rental actually paid.
/s/
---------------------------
For the Port Authority
/s/ Donald Marshall
---------------------------
For the Lessee
Page 4 of Schedule A-1
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the day of , 19 , before me
personally came to me
known, who, being by me duly sworn, did depose and say that he resides at
that he is the of the Port Authority
of New York and New Jersey, (one of) the corporations described in and which
executed the foregoing instrument; that he knows the seal of the said
corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by order of the Board of Commissioners of the said
corporation; and that he signed his name thereto by like order.
---------------------------
(notarial seal and stamp)
STATE OF )
) ss.
COUNTY OF )
On the day of , 19 , before me
personally came to me
known, who, being by me duly sworn, did depose and say that he resides at
that he is the President of
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of the said corporation; that the seal
affixed to the said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of the said corporation; and that he signed his
name thereto by like order.
---------------------------
(notarial seal and stamp)
Page 5 of Schedule A-1
<PAGE>
Exhibit 10.3
------------
Lease No. WT-2887-B-84(985)
Supplement No. 2
SUPPLEMENTAL AGREEMENT
THIS AGREEMENT, made as of July 1, 1994, by and between THE PORT
AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter called the "Port Authority")
and EURO BROKERS, INC. (hereinafter called the "Lessee"),
WITNESSETH, That:
WHEREAS, the Port Authority and the Lessee heretofore and as of
September 10, 1992 entered into an agreement of lease identified by the above
Port Authority Lease Number (which agreement of lease as the same has heretofore
been supplemented and amended is hereinafter called "the Lease") covering
premises at the Port Authority World Trade Center, in the Borough of Manhattan,
City, County and State of New York, as more particularly described in the Lease;
and
WHEREAS, the Lessee desires to add to the premises under the Lease, and
to amend the same in certain other respects;
NOW, THEREFORE, for and in consideration of the covenants and mutual
agreements herein contained, the Port Authority and the Lessee hereby agree as
follows:
1. In addition to the premises heretofore let to the Lessee under the
Lease, the letting as to which shall continue in full force and effect subject
to all of the terms, provisions, covenants and conditions of the Lease, the Port
Authority hereby lets to the Lessee and the Lessee hereby hires and takes from
the Port Authority at the Port Authority World Trade Center in the Borough of
Manhattan, City, County and State of New York the space shown in diagonal
hatching on a sketch annexed hereto marked "Exhibit A-2" and hereby made a part
hereof, together with the fixtures, improvements and other property of the Port
Authority located or to be located therein or thereon, the said space together
with the said fixtures, improvements and other property (hereinafter
collectively referred to as "Area A-2") to be and become a part of the premises
under the
<PAGE>
Lease, from and after 12:01 o'clock A.M. on September 1, 1994 (such date being
hereinafter referred to as "the Effective Date") and continuing until 11:59
o'clock P.M. on August 31, 2004. The Port Authority and the Lessee hereby
acknowledge that the aforesaid Area A-2 constitutes non-residential real
property.
2. The Lessee shall use Area A-2 for the purposes specified in Section
3 of the Lease and for no other purpose whatsoever.
3. During the period from the Effective Date through the balance of the
term of the letting of Area A-2 hereunder, and in addition to the basic rental
payable by the Lessee under the Lease, the Lessee shall pay to the Port
Authority a basic rental for Area A-2 at the annual rate of Four Hundred
Seventy-six Thousand Six Hundred Forty Dollars and No Cents ($476,640.00)
payable in the amount of Twenty-one Thousand Seven Hundred Eighty-one Dollars
and Ninety-four Cents ($21,781.94) on October 15, 1994, and in advance in equal
monthly installments of Thirty-nine Thousand Seven Hundred Twenty Dollars and No
Cents ($39,720.00) each on the first day of November, 1994, and on the first day
of each calendar month thereafter throughout such period.
4. For the period from and after the Effective Date through the balance
of the term of the letting under the Lease, in addition to the basic rental
payable for Area A-2 hereunder the Lessee shall pay to the Port Authority
additional basic rental for Area A-2 in accordance with the provisions of the
schedule annexed hereto, marked "Schedule A-2", and hereby made a part hereof.
The word "premises" as used in said Schedule A-2 shall be deemed to refer solely
to Area A-2.
5. Effective from and after the Effective Date, the Port Authority
shall provide cleaning services in the entire premises in accordance with the
provisions of the Schedule B attached hereto and hereby made a part hereof.
Effective from and after the Effective Date, the Schedule B attached to the
Lease shall be deemed deleted.
6. (a) From and after the Effective Date, the Port Authority will
furnish to the Lessee in Area A-2, for operation of the equipment comprising
special air cooling facilities installed by the Lessee therein, condenser water
(in addition to that provided pursuant to Section 43 of the Lease) sufficient
for a rated capacity not to exceed Twenty-four and Fifty-five hundredths (24.55)
tons, and the Lessee
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<PAGE>
agrees to pay to the Port Authority for such additional condenser water an
annual charge at the rate of One Thousand Ninety-one Dollars and Ninety-seven
Cents ($1,091.97) per ton of the rated cooling capacity of the Lessee's
equipment. In the event of any changes made in the Lessee's air cooling
equipment or the installation thereof, the Lessee shall supply to the Port
Authority such certifications of rated capacity as the Port Authority shall
request, including certifications of third parties. The annual charge for
additional condenser water shall be payable by the Lessee in advance in equal
monthly installments and shall be payable at the same time, in the same manner
and shall be recoverable with like remedies as if it were a part of the basic
rental reserved under this Agreement.
(b) The charges for condenser water stated in paragraph (a) above
shall be subject to increase from time to time as follows: "Wage rate" as used
in this paragraph shall mean the hourly straight time wage rate for Engineers as
that wage rate is established from time to time by collective bargaining
agreement between the Realty Advisory Board on Labor Relations, Incorporated,
acting on behalf of various building owners and Local 94 of the International
Union of Operating Engineers, AFL-CIO, and "basic wage rate" shall mean the wage
rate in effect on January 1, 1994. From and after each wage rate established
from and after January 1, 1994, the Lessee shall pay annual charges in addition
to the charges for additional condenser water stated in paragraph (a) above,
such additional charge for additional condenser water shall be at an annual rate
per ton equal to $2.50 for each one percent (1%), or major fraction thereof,
that the wage rate so established exceeds the basic wage rate. If either the
Realty Advisory Board on Labor Relations, Incorporated, or Local 94 of the
International Union of Operating Engineers, AFL-CIO, shall cease to exist or a
collective bargaining agreement shall cease to be negotiated between the Realty
Advisory Board on Labor Relations, Incorporated and Local 94 of the
International Union of Operating Engineers, AFL-CIO, then the wage rate to be
used for computing increases in the said charge shall be the wage rate for
Engineers established under such collective bargaining agreements as the Port
Authority shall select. If the job classification "Engineers" shall be renamed
or abolished, then the Port Authority will select the job classification
performing substantially the same labor functions as Engineers and the wage rate
of the job classification so selected shall be used in computing increases in
the charges provided for herein.
3
<PAGE>
(c) The furnishing of additional condenser water by the Port
Authority as provided for herein shall be subject to all of the terms,
provisions and conditions of Section 43 of the Lease, except as specifically
stated otherwise herein. Notwithstanding that the Port Authority is obligated to
furnish condenser water as provided in paragraph (a) hereof, the Port Authority
shall have no responsibility whatsoever for conditioning or cooling the air in
that area of Area A-2 served by the air cooling equipment installed by the
Lessee nor for the maintenance therein of any specified temperature or comfort
level, but nothing set forth herein shall relieve the Port Authority of its
obligation to provide ventilation and air cooling in accordance with and subject
to the Provisions of Schedule D attached hereto and hereby made a part hereof.
The Lessee shall and does hereby release the Port Authority from, and shall
indemnify the Port Authority against, any and all claims and demands, losses or
damages (including but not limited to any such occurring to any data processing
or other equipment located in the premises or to any work product thereof)
arising or resulting from the failure to maintain a proper temperature or air
quality in Area A-2, and regardless of whether the same is due to the acts or
omissions of the Port Authority, the Lessee or of others, unless such failure is
due to the negligent acts of the Port Authority.
7. (a) Subject to all the terms, provisions and conditions of Section
42(f), (g), (h) and (i) of the Lease, and notwithstanding the provisions of
Section 42(a)(2) of the Lease, and to the extent that the Lessee's consumption
does not exceed the capacity of feeders, risers or wiring in the building of
which Area A-2 is a part or in Area A-2 (it being the Lessee's sole
responsibility for designing and constructing distribution systems for Area
A-2), the Port Authority will supply to the Lessee electricity solely for
illumination by which is meant the energizing of fluorescent and incandescent
bulbs (to be supplied, paid for and installed by the Lessee) and for the
operation of such machines and equipment as the Port Authority may consent to in
advance and the Lessee shall pay for the same in accordance with the following
provisions of this Section. The total electrical capacity to be provided by the
Port Authority to Area A-2 shall be as set forth in Schedule D attached hereto
and hereby made a part hereof. The quantity of all electricity supplied to the
Lessee in Area A-2 shall be measured by a meter or meters furnished by the Port
Authority for that purpose (such meter or meters to be installed by the Lessee
at its sole cost and expense), and in the event any such meter fails to record
such, the quantity of electricity so
4
<PAGE>
supplied during any period that a meter is out of service will be considered to
be the same as the quantity supplied during a like period either immediately
before or immediately after such interruption as selected by the Port Authority.
The quantity of such electricity shall be paid for by the Lessee at the greater
of the following rates:
(1) the rates (including the fuel or other adjustment factor, if
any) which the Lessee, under the service classification then
applicable to the Lessee, would be required to pay for the same
quantity of electricity to be used for the same purpose under the same
conditions if the Lessee had purchased such electricity directly from
the public utility company supplying the same to commercial buildings
in the vicinity; or
(2) the Port Authority's cost of obtaining and supplying the same
quantity of electricity.
The Lessee shall pay the cost of such consumption and demand for each such
billing period to the Port Authority upon demand therefor and the same shall be
deemed additional rental collectible in the same manner and with like remedies
as if it were a part of the basic rental reserved hereunder.
(b) Notwithstanding that the Port Authority has agreed to supply
electricity to the Lessee, the Port Authority shall be under no obligation to
provide or continue such service if the Port Authority is prevented by law,
agreement or otherwise from submetering electricity as hereinabove set forth or
elects not to so submeter the same and in any such event the Lessee shall make
all arrangements and conversions necessary to obtain electricity directly from
the public utility company supplying electricity in the vicinity. Also, in such
event, the Lessee shall perform the construction necessary for such conversion
and if any lines or equipment of the Port Authority are with the consent of the
Port Authority used therefor, the Port Authority may make an appropriate charge
therefor to the Lessee based on its costs and expenses for the said lines and
equipment.
8. (a) The Lessee has thoroughly examined and inspected Area A-2 and
has found the same to be in good order and repair and suitable for the Lessee's
operations hereunder and agrees to take Area A-2 in the condition it is in when
vacated by the occupant thereof and turned over to the Lessee by the Port
Authority, and the Port Authority shall have no
5
<PAGE>
obligation hereunder for finishing work or preparation of Area A-2 for the
Lessee's use. The Lessee agrees to perform at its sole cost and expense, except
as stated in paragraph (f) of this Section 8, all construction and installation
work that it may require to finish off and decorate Area A-2 including the
installation of non-asbestos-containing spray-on fireproofing material in those
areas on the underside of the floor slab immediately above the floor on which
Area A-2 is located where fireproofing material is missing, and the installation
of any floor tiles which are missing in Area A-2 (the said fireproofing material
installation work and installation of floor tiles being hereinafter referred to
as the "Additional Work"). The Lessee acknowledges that facilities for heat,
ventilation and air cooling have heretofore been installed in Area A-2 pursuant
to a certain design configuration, and notwithstanding the provisions of Section
42 of the Lease, the Port Authority makes no representations that such heat,
ventilation and air-cooling shall maintain in Area A-2 an even and comfortable
working temperature, and in the event any alteration to such facilities shall be
required in order to maintain an even and comfortable working temperature the
cost of the same shall be borne by the Lessee. Subject to the foregoing, the
Port Authority represents that the design criteria and capacity of the heat,
ventilation and air cooling system available to the Lessee are as set forth in
Schedule D attached hereto. The Lessee shall submit to the Port Authority for
its approval a construction application in the form supplied by the Port
Authority and containing such terms and conditions as the Port Authority may
include setting forth in detail and by appropriate plans and specifications the
construction and installation work proposed by the Lessee to finish off and
decorate Area A-2 and the manner of and time periods for performing the same,
including, without limitation thereto, the Additional Work. The data to be
supplied by the Lessee shall describe in detail the fixtures, equipment and
systems to be installed by the Lessee including those for the emission, handling
and distribution of heat, air conditioning, domestic hot and cold water and
electrical and other systems and shall show the proposed method of tying in the
same to the utility lines or connections provided by the Port Authority either
on or off Area A-2. The Lessee shall be responsible for retaining all
architectural, engineering and other technical consultants and services as may
be required by the Port Authority and for developing, completing and submitting
detailed plans and specifications for the work. The plans and specifications to
be submitted by the Lessee to the Port Authority shall bear the seal of a
qualified architect or professional engineer and shall be in sufficient
6
<PAGE>
detail for a contractor to perform the work. The Lessee shall not engage any
contractor or permit the use of any subcontractor unless and until each such
contractor or subcontractor shall have been approved by the Port Authority. The
Lessee shall include in each such contract or subcontract such provisions as the
Port Authority may approve or require including, without limitation thereto,
provisions regarding labor harmony. The Port Authority shall review the
construction application and all plans and specifications furnished by the
Lessee with respect to Area A-2 and will forward its comments on the same to the
Lessee within twenty (20) business days after its receipt thereof provided that
such plans and specifications cover all of the construction and installation
work necessary to finish off and decorate Area A-2, and will review and comment
on any corrected, modified or amended plans and specifications resubmitted to
the Port Authority by the Lessee within ten (10) business days after receipt of
any such resubmission. If the sum of the number of business days actually
required by the Port Authority for the review of each submission and
resubmission of the Lessee's plans and specifications as referred to in this
paragraph shall be in excess of the sum of the number of business days allocated
to each review of the Lessee's submission and resubmission of its plans and
specifications (as referred to in this paragraph), there shall be no
postponement of the date fixed in paragraph (a) of Section 3 of this Agreement
for the commencement of payment of basic rental, but upon completion of the
construction and installation work to be performed by the Lessee hereunder, the
Lessee shall be entitled to a credit against its basic rental obligations next
becoming due under this Agreement in an amount which shall be equal to the
product obtained by multiplying the number of such excess business days by the
sum of One Thousand Fifty-two Dollars and No Cents ($1,052.00). The Lessee
hereby expressly agrees that such rental credit shall be the sole remedy
available to the Lessee in the event the Port Authority fails, within the time
periods provided, to respond to the Lessee's submission or resubmission of its
construction application and plans and specifications. The Lessee hereby assumes
the risk of loss or damage to all of the construction and installation work
prior to the completion thereof and the risk of loss or damage to all property
of the Port Authority arising out of or in connection with the performance of
the construction and installation work. In the event of such loss or damage, the
Lessee shall forthwith repair, replace and make good the construction and
installation work and the property of the Port Authority without cost or expense
to the Port Authority. The Lessee shall itself and shall also require its
7
<PAGE>
contractors to indemnify and hold harmless the Port Authority, its
Commissioners, officers, agents and employees from and against all claims and
demands, just or unjust, of third persons (including employees, officers and
agents of the Port Authority) arising or alleged to arise out of the performance
of the Lessee's construction and installation work and for all expenses,
including without limitation thereto legal expenses, incurred by it and by them
in the defense, settlement or satisfaction thereof, including without limitation
thereto, claims and demands for death, for personal injury or for property
damage, direct or consequential, whether they arise from the acts or omissions
of the Lessee, of any contractors of the Lessee, of the Port Authority, or of
third persons, or from acts of God or of the public enemy, or otherwise,
excepting only claims and demands which result solely from affirmative willful
or solely from negligent acts done by the Port Authority, its Commissioners,
officers, agents and employees with respect to the construction and installation
work, provided, however, that the Lessee shall not be required to indemnify the
Port Authority where such indemnity would be precluded pursuant to the
provisions of Section 5-322.1 of the General Obligations Law of the State of New
York. The Lessee shall, and shall cause each of its contractors and
subcontractors to obtain and maintain in force such insurance coverage,
including without limitation a contractual liability endorsement covering the
obligations assumed by the Lessee in the three preceding sentences. All work to
be performed by the Lessee hereunder shall be completed in accordance with the
said construction application and final plans and specifications approved by the
Port Authority, shall be subject to inspection by the Port Authority during the
progress of the work and after the completion thereof and the Lessee shall redo
or replace at its own expense any work not done in accordance therewith. Upon
completion of the construction and installation work to be performed by the
Lessee pursuant to the construction application (including the Additional Work)
the Lessee shall deliver to the Port Authority a certificate by an authorized
officer of the Lessee and a certificate by the Lessee's qualified architect or
professional engineer, each certifying that the construction and installation
work and the Additional Work has been performed strictly in accordance with the
construction application and the final plans and specifications approved by the
Port Authority and the provisions of this Agreement and in compliance with all
applicable governmental laws, ordinances, enactments, resolutions, rules,
regulations and orders. The Port Authority shall inspect the construction and
installation work and the Additional Work, and if the
8
<PAGE>
same has been completed as certified by the Lessee and such architect or
engineer, the Port Authority's General Manager, Planning, Design and
Construction, World Trade Department, shall so certify to the Port Authority and
to the Lessee, subject to the condition that all risks thereafter with respect
to the construction and installation work and any liability therefor for
negligence or other reason shall be borne by the Lessee. The Lessee shall not
use or permit the use of Area A-2 or any portion thereof for any purpose
whatsoever until such certification is received from said General Manager,
Planning, Design and Construction and the Lessee shall not use or permit the use
of Area A-2 or any portion thereof even if such certification is received with
respect to a portion of the construction and installation work if said General
Manager, Planning, Design and Construction states in any such certification that
Area A-2 cannot be used until other specified portions of the construction and
installation work are completed. Upon completion of the work the Lessee shall
supply the Port Authority with "as built" drawings in form and number requested
by the Port Authority. "Business days" as used herein shall mean Mondays to
Fridays, inclusive, legal holidays excepted.
(b) No construction or installation work shall be commenced by the
Lessee until the construction application and plans and specifications referred
to in paragraph (a) above have been finally approved by the Port Authority.
Subject to the foregoing and the provisions of Section 39 of the Lease, Area A-2
shall be available for prior entry by the Lessee on July 1, 1994. The Lessee's
occupancy of Area A-2 for the period from and after July 1, 1994 through the
Effective Date hereunder shall be subject to and in accordance with all of the
terms, covenants and provisions of the Lease and this Agreement except those
relating to rights of user and payment of rental. Payment of rental shall
commence in accordance with the provisions of Section 3 of this Agreement
regardless of whether the Lessee completes the construction and installation
work in Area A-2. In the event of any inconsistency between the provisions of
this Agreement and the construction application, the provisions of this
Agreement shall control.
(c) The Lessee shall be solely responsible for the plans and
specifications used by it, and for the adequacy and sufficiency of such plans
and specifications and all the improvements depicted thereon or covered thereby,
regardless of the consent thereto or approval thereof by the Port Authority or
the incorporation therein of any Port
9
<PAGE>
Authority requirements or recommendations. The Port Authority shall have no
obligations or liabilities in connection with the performance of the work
performed by the Lessee or on its behalf or the contracts for the performance
thereof entered into by the Lessee. The Lessee shall undertake reasonable
efforts to assure that any warranties extended or available to the Lessee in
connection with the aforesaid work shall be for the benefit of the Port
Authority as well as the Lessee.
(d) Without limiting or affecting any other term or provision of this
Agreement, the Lessee shall be solely responsible for the design, adequacy and
operation of all utility, mechanical, electrical, communications and other
systems installed by the Lessee in Area A-2, and shall do all preventive
maintenance and make all repairs, replacements, rebuilding and painting
necessary to keep such systems and all other improvements, additions and
fixtures, finishes and decorations made or installed by the Lessee (whether the
same involves structural or non-structural work) in the condition they were in
when made or installed except for reasonable wear which does not adversely
affect the watertight condition or structural integrity of the building or
adversely affect the efficient or proper utilization or appearance of any part
of Area A-2.
(e) Title to and property in the construction and installation work and
to all fixtures, equipment and systems (other than trade fixtures and personal
property and the Lessee's telecommunications system) installed pursuant to this
Section and any replacement or replacements thereof shall vest in the Port
Authority upon the construction, installation or replacement thereof and the
Lessee shall execute such necessary documents confirming the same as the Port
Authority may require.
(f) (i) The Port Authority, in connection with the Lessee's performance
of the construction and installation work in Area A-2, excluding the Additional
Work, will pay to the Lessee an amount equal to the lesser of (1) the cost of
such construction and installation work performed in Area A-2, excluding the
Additional Work, or (2) the sum of Six Hundred Fifty-four Thousand Forty Dollars
and No Cents ($654,040.00) (such lesser amount being hereinafter referred to as
the "Area A-2 Finishing Allowance"). The Area A-2 Finishing Allowance will be
paid to the Lessee as follows: the Lessee, at such single time during the
performance of the construction work as the Lessee shall elect, shall deliver to
the Port Authority a certificate signed by a responsible
10
<PAGE>
officer of the Lessee which certificate shall certify the total payments made by
the Lessee that are properly includible in the Lessee's "cost" (as hereinafter
defined) of performing the construction and installation work for the period
from the commencement of the construction and installation work through the date
thereof and which shall also certify that the construction and installation work
completed during such period by the Lessee has been performed in accordance with
the terms of this Agreement and the approved Construction Application applicable
to Area A-2. Within fifteen (15) days after the delivery of such certificate by
the Lessee, the Port Authority shall pay to the Lessee the lesser of (1) ninety
percent (90%) of the total payments actually made by the Lessee for work
actually performed in Area A-2, as certified by the Lessee or (2) the sum of
Five Hundred Eighty-eight Thousand Six Hundred Thirty-six Dollars and No Cents
($588,636.00). Upon completion of all of the construction and installation work
in Area A-2 in accordance with the approved Construction Application and receipt
by the Port Authority of the certificates of the Lessee and the Lessee's
architect or engineer described in subparagraph (a) of this paragraph with
respect to Area A-2, and the delivery by the Port Authority to the Lessee of the
subsequent certificate of the Port Authority's Assistant Director, Physical
Facilities, World Trade Department, the Lessee shall deliver to the Port
Authority a full statement of the cost thereof (as "cost" is hereinafter
defined), certified by a responsible officer of the Lessee. After examination
and approval of such certified statement and after such further examination of
the records and books of account of the Lessee by the Port Authority, the Port
Authority will finally determine the Lessee's "cost" of the construction and
installation work performed in Area A-2, and the amount of the Area A-2
Finishing Allowance, and if such final determination discloses that the payment
previously made by the Port Authority pursuant to this paragraph (f) exceeds the
total of the Area A-2 Finishing Allowance, the Lessee shall repay to the Port
Authority the amount of such excess within seven (7) business days of its
receipt of notice from the Port Authority setting forth the amount thereof; if
the final determination discloses that a part of the Area A-2 Finishing
Allowance remains unpaid, the Port Authority will pay the same to the Lessee
within fifteen (15) business days after the date of the said final
determination. "Cost" as used herein shall mean the sum of direct labor and
material costs and contract costs for the purchase and installation of fixtures,
equipment and other finishing and decorating work. In no event whatsoever shall
expenses, as defined and computed in this paragraph, include any expenses,
11
<PAGE>
outlays or charges whatsoever by or for the account of the Lessee for or in
connection with any materials unless such are actually and completely installed
in and or made to Area A-2, nor shall "cost" include the cost of any materials
secured by liens, mortgages, other encumbrances or conditional bills of sale,
nor shall "cost" include any payment made to organizations which are owned by or
in common ownership with the Lessee.
(ii) Upon receipt by the Port Authority of the certificated of the
Lessee and the Lessee's architect or engineer described in paragraph (a) of this
Section and the delivery by the Port Authority to the Lessee of the subsequent
certificate of the Port Authority's Assistant Director, Physical Facilities,
World Trade Department also described in said paragraph (a), the Port Authority
will pay to the Lessee, notwithstanding anything to the contrary set forth in
paragraph (a) of this Section, the negotiated sum of Thirty-nine Thousand Seven
Hundred Fifteen Dollars and No Cents ($39,715.00) as and for the cost of the
Additional Work.
9. Upon the terms and conditions hereinafter set forth, and subject to
the Lessee validly exercising the right of termination set forth in Section 50
of the Lease, the Lessee shall have the right to terminate this Agreement and
the letting of Area A-2 hereunder effective as of the same date to be specified
by the Lessee in the notice to the Port Authority pursuant to said Section 50 of
the Lease:
(a) Not later than fifteen (15) calendar months prior to
September 11, 2002, the Lessee shall give to the Port Authority firm
and unconditional notice of its intention to terminate this Agreement,
and the letting of Area A-2 hereunder, and such notice shall be
accompanied by a certified check or cashier's check in the amount of
One Hundred Eighty-two Thousand Five Hundred One Dollars and No Cents
($182,501.00) payable to the Port Authority and drawn on a banking
institution having an office within the Port of New York District;
(b) No notice of termination by the Lessee pursuant to paragraph
(a) above shall be effective if (i) the Lessee is in default in the
performance or observance of any term, provision or condition of the
Lease or of this Agreement beyond any applicable period to cure such
default, either
12
<PAGE>
on the date of the giving of such notice or on the intended or
effective date of the termination provided for therein,(ii) if on
either of such dates the Lessee is under notice of termination by the
Port Authority or (iii) the Lessee fails to pay the amount required in
paragraph (a) of this Section 9 at the time of the giving of such
notice; and
(c) Any effective notice of termination given by the Lessee in
accordance with the provisions of this Section 9 shall have the same
force and effect as if the effective date of termination stated in
such notice were the date originally fixed herein for the expiration
of the term of the letting of Area A-2 under this Agreement.
(d) If the Port Authority has received any payment in connection
with an ineffective notice of termination, said payment may be
retained by the Port Authority and applied to any sums then owing to
the Port Authority under any of the provisions of this Agreement.
10. (a) The Lessee shall have the right to extend the term of the
letting of Area A-2 hereunder for the period commencing upon the expiration date
of the term of the letting of Area A-2 hereunder, provided that the Lessee shall
give unconditional written notice to the Port Authority of its election to do so
not later than ninety (90) days prior to the expiration of the term of the
letting of Area A-2 hereunder, and provided further that on the date of the
giving of the said notice and on the effective date thereof the Lessee is not in
default in the performance or observance of any term, provision or condition of
this Agreement, and that the Lessee has not been served with a notice of
termination of this Agreement by the Port Authority and this Agreement is then
in full force and effect.
(b) In the event the Lessee shall give to the Port Authority the
notice referred to in paragraph (a) above, the annual rental rate for Area A-2
during the extended term shall be the fair rental value of Area A-2 at the time
the aforesaid notice is given. The Port Authority shall, not later than sixty
(60) days subsequent to its receipt of such notice from the Lessee, advise the
Lessee in writing of the annual basic rental to be payable by the Lessee during
the extension period. In the event the Port Authority elects to set forth in its
notice to the Lessee a fair rental value
13
<PAGE>
rental for Area A-2 pursuant to the provisions of paragraph (b) of this Section
10, and in the further event the Lessee concludes that the annual basic rental
so stated in the Port Authority's notice is not the fair rental value for Area
A-2 for the extension period, the Lessee shall, within thirty (30) days after
the date of the Port Authority's said notice, advise the Port Authority in
writing that it has so concluded and request arbitration with respect thereto.
Such arbitration shall be by three arbitrators, one to be appointed by the Port
Authority, one to be appointed by the Lessee and the third to be appointed by
the arbitrators so appointed. The arbitration shall be pursuant to the
then-rules of the American Arbitration Association or by a successor
organization, and the question to be answered by the arbitrators shall be:
"Is the annual basic rental established by the Port
Authority the fair rental value for Area A-2?"
If the arbitrator's decision is in the affirmative (or if the Lessee does not
contest the rental rate after notice thereof from the Port Authority) then from
and after the first day of the extended term of the letting hereunder the Lessee
shall pay to the Port Authority such annual basic rental in equal monthly
installments on the first day of the extension period hereunder and on the first
day of each calendar month thereafter throughout the succeeding period, and if
the first day of the extension period hereunder is other than on the first day
of a calendar month the monthly installment of basic rental for any period of
less than a full calendar month during the said extension period shall be
prorated on a daily basis. If the decision of the arbitrators is that the annual
basic rental stated in the Port Authority's notice is not the fair rental value
for Area A-2, the arbitrators shall thereupon determine the fair rental value
for Area A-2, and in such event from and after the first day of the extended
term of the letting hereunder the Lessee shall pay to the Port Authority an
annual basic rental for Area A-2 equal to the fair rental value so determined by
the arbitrators; which annual basic rental shall be payable in equal monthly
installments in advance as above provided. In the event the annual basic rental
has not been determined as herein provided prior to the commencement of the
extended term of the letting hereunder, the Lessee shall continue to pay the
monthly installments of basic rental at the rate theretofore in effect, and upon
determination of the annual basic rental pursuant to the provisions of this
Section, the Lessee shall within thirty (30) days thereafter pay any amounts due
to the Port Authority arising out of the excess (if any) of the
14
<PAGE>
monthly installments of the annual basic rental as so determined over the
monthly installments thereof actually paid by the Lessee for such period. In
addition to the basic rental payable as provided in this paragraph (b) the
Lessee shall, from and after the commencement of the extended term of the
letting hereunder, continue to pay additional basic rental in accordance with
the provisions of the Schedule A-2 attached hereto. The cost of the aforesaid
arbitration shall be borne equally by the Port Authority and the Lessee.
11. The Lessee represents and warrants that no broker has been
concerned in the negotiation of this Agreement or the letting of Area A-2, and
that there is no broker who is or may be entitled to be paid a commission in
connection therewith. The Lessee shall indemnify and save harmless the Port
Authority of and from any and all claims for commission or brokerage made by any
and all persons, firms or corporations whatsoever for services in connection
with the negotiation and execution of this Agreement or the letting of Area A-2
hereunder.
12. Neither the Commissioners of the Port Authority nor any of them,
nor any officer, agent or employee thereof, shall be charged personally by the
Lessee with any liability, or held liable to it under any term or provision of
this Agreement or because of its execution or attempted execution or because of
any breach thereof.
13. As hereby amended, all of the terms, covenants, provisions,
conditions and agreements of the Lease shall be and remain in full force and
effect.
14. This Agreement and the Lease which it supplements constitute the
entire agreement between the Port Authority and the Lessee on the subject
matter, and may not be changed, modified, discharged or extended except by
instrument in writing duly executed on behalf of both the Port Authority and the
Lessee. The Lessee agrees that no representations or warranties shall be binding
upon the Port Authority unless expressed in writing in the Lease or in this
Agreement.
15
<PAGE>
IN WITNESS WHEREOF, the Port Authority and the Lessee have executed
these presents, as of the day and year first above written.
ATTEST: THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY
/s/ The Port Authority of
By New York and New Jersey
- ---------------------- --------------------------------
Assistant Secretary
[Title] Director
------------------------
[Seal]
ATTEST: EURO BROKERS, INC.
By /s/ Donald Marshall
- ---------------------- --------------------------------
Secretary
[Title] President
-------------------------
[Seal]
16
<PAGE>
[GRAPHIC]
Exhibit A-2
<PAGE>
SCHEDULE A-2
1. For the purposes of this Schedule A-2, the following provisions
shall apply:
(a) "Taxes" shall mean real estate taxes and assessments which may
be imposed from time to time by the United States of America, the State of New
York or any municipality or other governmental authority, upon the Port
Authority with respect to the buildings, structures, facilities or land at the
World Trade Center or with respect to the rentals or income therefrom in lieu of
or in addition to any tax or assessment which would otherwise be a real estate
tax or assessment and taxes shall include any payments in lieu of real estate
taxes or assessments which may be agreed upon between the Port Authority and any
of the foregoing governmental authorities, other than payments in lieu of taxes
described in paragraph (b) below.
(b) "Payments in lieu of taxes" shall mean such payments as the
Port Authority has agreed to pay the City of New York under an agreement dated
1967 as it may have been or may be thereafter supplemented or amended
(hereinafter called "the City Agreement").
(c) The "annual per rentable square foot factor" referred to in
this Schedule was initially fixed at $1.25 in the City Agreement and provision
was made in paragraph 7(3) of the City Agreement for changes therein from time
to time to reflect changes in the tax rate and changes in assessed valuations.
(d) "Tax base" shall mean the annual per rentable square foot
factor finally established to be the anual per rentable square foot factor to be
used in computing payments in lieu of taxes for the tax year beginning July 1,
1994.
(e) "Tax year" shall mean the twelve-month period established by
The City of New York as a tax year for real estate tax purposes.
(f) "Wage rate" shall mean the cost for an hour's work by a porter
engaged to work a 40 hour work week in a Class A office building in the City of
New York which hourly cost shall be limited solely to the hourly wage rate for
porters as that rate is established from time to time by collective bargaining
agreement between the Realty Advisory
Page 1 of Schedule A-2
<PAGE>
Board on Labor relations, Incorporated, acting on behalf of various building
owners and Local 32B-32J, Service Employees International Union, AFL-CIO, (which
collective bargaining agreement is hereinafter referred to as "the Contract"),
plus a proper proportion of fringe benefits and other payroll costs. As used
herein:
(1) "Porter" or "porters" shall mean those employees engaged in
the general maintenance and operation of office buildings and
classified as "Others" by the Contract.
(2) "Fringe benefits" shall mean the items of cost which an
employer would be obligated to pay or would incur pursuant to the
contract on the basis of wages paid to a porter engaged to work a 40
hour work week in Class A office building in New York City who is
entitled to receive on an annual basis the maximum entitlement under
the Contract, including, without limitation, vacation allowances, sick
leave, holiday pay, birthdays, jury duty, medical checkup, lunch time,
relief time, other paid time off, bonuses, union assessments allocable
to pension plans and welfare and training funds, and health, life,
accident, or other such types of insurance.
(3) "Other payroll costs" shall mean taxes payable pursuant to
law by an employer upon the basis of wages paid to a porter engaged to
work a 40 hour work week in a Class A office building in New York
City, including, without limitation, F.I.C.A., New York State
Unemployment Insurance and Federal Unemployment Insurance.
If at any time during the term of the letting under the Lease the
Contract shall require regular employment of porters on days or during
hours when overtime or other premium pay rates are in effect pursuant
to the Contract the hourly wage rate for porters under the Contract
for the applicable period shall be determined by dividing the weekly
wage an employer would be obligated to pay a porter engaged to work a
40 hour work week in a Class A office building in New York City under
the Contract by 40.
If either the Realty Advisory Board on Labor Relations,
Incorporated or Local 32B-32J, Service Employees International Union,
AFL-CIO shall cease to
Page 2 of Schedule A-2
<PAGE>
exist or a collective bargaining agreement shall cease to be
negotiated between the Realty Advisory Board on Labor Relations,
Incorporated and Local 32B-32J, Service Employees International Union,
AFL-CIO, or if the job classification "Others" shall be renamed or
abolished in any subsequent collective bargaining agreement entered
into between the Realty Advisory Board on Labor Relations,
Incorporated and Local 32B-32J, Service Employees International Union,
AFL-CIO, then the wage rate to be used in applying the provisions of
this Schedule shall be the wage rate for those employees engaged in
the general maintenance and operation of Class A office buildings
either pursuant to any subsequent collective bargaining agreement
between the Realty Advisory Board on Labor Relations, Incorporated and
Local 32B-32J, Service Employees International Union, AFL-CIO, or if
there is no such agreement, then pursuant to such agreement as the
Port Authority shall select.
(g) "Basic wage rate" shall mean the wage rate in effect on
January 1, 1994.
(h) "Rentable square feet in the premises" shall mean 16,351
square feet.
(i) "Lease" shall mean the agreement of lease to which this
schedule is attached.
2. From and after each July 1, following the commencement date of the
letting under the Lease, the Lessee shall pay an additional basic rental under
the Lease at the annual rate computed by multiplying the rentable square feet in
the premises by the excess over the tax base of the total of: (1) the annual per
rentable square foot amount of taxes for the tax year beginning on that July 1;
and (ii) the annual per rentable square foot factor used in computing payments
in lieu of taxes for the tax year beginning on that July 1. If taxes become
payable on a basis other than an annual amount per rentable square foot, the
Port Authority will allocate those taxes to the rentable square feet of space in
the World Trade Center and will notify the Lessee of the amount of such
allocation.
3. In addition to additional basic rental payable under paragraph 2
above, from and after the commencement date of the letting under the Lease, the
Lessee shall pay additional basic rental under the Lease at an annual rate equal
to $0.01 for each $0.01, or major fraction thereof,
Page 3 of Schedule A-2
<PAGE>
that the wage rate in effect on the commencement date of the letting and each
wage rate thereafter established from time to time during the term of the
letting exceeds the basic wage rate, multiplied by the rentable square feet in
the premises.
4. If the imposition or allocation of taxes or the establishment of
an annual per rentable square foot factor to be used in computing payments in
lieu of taxes for any tax year or the establishment of a wage rate to be
effective for any period of time is delayed for any reason whatsoever, the
Lessee shall nevertheless continue to pay the additional basic rental at the
annual rate then in effect subject to retroactive adjustments at such time as
the taxes are imposed or allocated or the said per rentable square foot factor
or wage rate shall have been established.
5. After imposition and allocation of taxes for any tax year and the
establishment for each tax year of the annual per rentable square foot factor
used in computing payments in lieu of taxes and after the effective date of each
wage rate in excess of the basic wage rate, the Port Authority will compute the
annual rate or rates of additional basic rental payable by the Lessee under
paragraph 2 or 3 above and will notify the Lessee of the amounts thereof.
Additional basic rental accruing under paragraph 2 or 3 above shall be computed
separately and each amount thereof shall be payable by the Lessee to the Port
Authority in advance in monthly installments, each installment being equal to
1/12 of the annual rate except that if at the time the Port Authority gives
notice to the Lessee under this paragraph, additional basic rental shall have
accrued for a period prior to the notice, the Lessee shall pay such additional
basic rental in full for such period, within ten days after such notice.
6. If after an amount of additional basic rental shall have been fixed
under paragraphs 2 or 3 above for any period, taxes are imposed or the amount of
taxes or the annual per rentable square foot factor in regard to payments in
lieu of taxes or the wage rate used for computing such additional basic rental
shall be changed or adjusted, then the additional basic rental payable for that
period shall be recomputed and from and after notification of the imposition,
change or adjustment, the Lessee shall make payments based upon the recomputed
additional basic
Page 4 of Schedule A-2
<PAGE>
rental and upon demand the Lessee shall pay any excess in additional basic
rental as recomputed over amounts of additional basic rental theretofore
actually paid. If such change or adjustment results in a reduction in the amount
of additional basic rental for any period prior to notification, the Port
Authority will credit the Lessee with the difference between the additional
basic rental as recomputed for that period and amounts of additional basic
rental actually paid.
/s/
------------------------------
For the Port Authority
/s/ Donald Marshall
------------------------------
For the Lessee
Page 5 of Schedule A-2
<PAGE>
SCHEDULE B
Routine Cleaning in Office Areas
- --------------------------------
Daily (Five Days each week except Saturdays, Sundays and Holidays)
- ------------------------------------------------------------------
1. Empty and damp wipe ash trays, empty waste baskets. Transport collected
waste to trash handling areas and removal from building. Collection and removal
of waste different from or in excess of that from normal daily office operations
is not included and shall be deemed additional cleaning services and requested
by the Lessee in advance in accordance with the provisions of this Schedule.
2. Dust horizontal surfaces of office furniture, equipment, ledges, and
sills.
3. Dust sweep vinyl asbestos floor and/or spot vacuum carpeted surfaces.
4. Clean and sanitize water fountains.
5. Damp wipe fingerprints smears, smudges, etc., on door, wall and
partition surfaces.
Weekly (Once each week)
- -----------------------
6. Dust vertical surfaces of office furniture and equipment.
7. Vacuum entire carpeted floor surfaces.
Quarterly (Once each three months)
- ----------------------------------
8. Wash interior surfaces of window glass.
9. Dust all pictures, frames, chattel graphs, and similar wall hangings,
plus partitions, doors, and door frame surfaces.
Routine Cleaning in Corridor Areas
- ----------------------------------
Daily (Five days a week except Saturdays, Sundays, and Holidays)
- ----------------------------------------------------------------
1. Dust sweep corridor floor surfaces once each day.
2. Damp wipe fingerprints, smudges, smears, etc., on
Page 1 of Schedule B
<PAGE>
corridor door and wall surfaces.
Once each week
- --------------
3. Damp mop and buff corridor floor surfaces.
4. Dust wall fixtures, ledges and sills.
Once each month
- ---------------
5. Floor conditioning.
Routine Cleaning in Toilet Areas
- --------------------------------
Daily (Five days each week except Saturdays, Sundays, and Holidays)
- -------------------------------------------------------------------
1. Service and provide necessary supplies for each toilet daily and check
dispensing equipment, damp wipe wash basins, empty receptacles and spot mop
liquid spillage.
2. Once daily clean toilet and powder rooms.
Once each month
- ---------------
3. Machine scrub ceramic tile floor surfaces.
4. Floor conditioning of powder room floors.
Once each year
- --------------
5. Wash walls.
Routine cleaning in Passenger Elevators Lobbies
- -----------------------------------------------
Daily (Five days each week except Saturdays, Sundays, and Holidays)
- -------------------------------------------------------------------
1. Vacuum entire carpeted floor surface and elevator door saddles.
2. Damp wipe fingerprints, smears, smudges, etc., on elevator doors and
framework, floor indicators, mail chute, floor directories, wall surfaces and
wall hung fixtures.
3. Empty and damp wipe cigarette receptacles.
Once each week
- --------------
4. Complete dusting of wall surfaces including wall fixtures and
directories.
Page 2 of Schedule B
<PAGE>
5. Spot clean carpet.
Once each year
- --------------
3. Shampoo carpet surfaces.
4. Clean and polish wood panel wall surfaces.
Routine Cleaning in Freight Elevator Lobbies
- --------------------------------------------
Daily (Five days each week except Saturdays, Sundays, and Holidays)
- -------------------------------------------------------------------
1. Dust sweep vinyl asbestos floors.
2. Damp wipe fingerprints smears, smudges, etc., on door and wall surfaces.
Once each week
- --------------
3. Mop and rinse floor surfaces.
Once each month
- ---------------
4. Machine scrub and refinish floor surfaces.
Once each year
- --------------
5. Wash door and wall surfaces.
Routine Cleaning in Janitor closets
- -----------------------------------
1. Maintain in a clean and orderly condition and appearance.
-------------------------------
For the Port Authority
Initialed:
-------------------------------
For the Lessee
Page 3 of Schedule B
<PAGE>
SCHEDULE D
----------
HEATING VENTILATION AND AIR CONDITIONING SYSTEM
-----------------------------------------------
The HVAC system is of a dual system design incorporating a peripheral
induction unit system which supplies air within fifteen feet (15) distance
measured inboard from the exterior glass, and an interior system which
conditions the balance of the floor area. Each of the systems is designed to
deliver the following quantities subject to a 10% variance.
HVAC AIR SUPPLY QUANTITIES PERIPHERAL SYSTEM
-------------------------- -----------------
WEST SOUTH
UNIT TYPE UNIT TYPE
NO. OF UNITS/CFM NO OF UNITS/CFM
Floor #1 (21) 50
84B
#2 (1) 35
NORTH EAST
UNIT TYPE UNIT TYPE
NO. OF UNITS/CFM NO OF UNITS/CFM
Floor #3 (15) 50
84B
#2 (1) 35
Induction units are spaced at the rate of one (1) unit per two (2) windows
average, subject to verification of actual field conditions. Each unit delivers
air of approximately 60 deg. F. utilizing water which in winter ranges between
80 deg. F. to 130 degrees F. as needed, and in summer at 69 deg. F. average.
Supply air to induction units is a constant with variable water temperature and
rate of flow.
Page 1 of Schedule D
<PAGE>
HVAC AIR SUPPLY QUANTITIES - INTERIOR SYSTEM
--------------------------------------------
QUADRANT NE NW SE SW
FLOOR CFM CFM CFM CFM
----- --- --- --- ---
84B 185 5265 1820
Interior supply air is .84 CFM per square foot. Air temperature is
controlled by zone thermostat at central air handling unit. Design is based on
one (1) person per 100 square foot. Floor load design criteria is 100 lbs. per
square foot, reducible pursuant to NYC code. The maximum electrical supply is 6
watts per square foot, 480V - lighting; 120V - power.
The supply air fed from base building air conditioning systems, for both
interior and perimeter areas shall be capable of maintaining a 78 deg. F, 50% RH
when outdoor air conditions are 89 deg. F, D.B. and 70 deg. WB, with window
drapes drawn. The winter design conditions are: outdoor air at 11 deg. F, indoor
air temperature at 70 deg. F.
FLOOR LOAD DESIGN CRITERIA
--------------------------
Structural design live load is 100 lbs per square foot reducible.
ELECTRICAL SYSTEM CAPACITY
--------------------------
Effective October 1, 1994, a total of eight (8) watts per rentable (16,351)
square foot of electricity will be available.
-------------------------------
FOR THE PORT AUTHORITY
-------------------------------
FOR THE LESSEE
(84B EUROBROKERS)
Page 2 of Schedule D
<PAGE>
(Port Authority Acknowledgment)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day of , 1994, before me personally came
to me known, who, being by me duly sworn, did depose and say that he resides in
; that he is the of the
Port Authority of New York and New Jersey, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Commissioners of said corporation; and
that he signed his name thereto by like order.
------------------------------------
(Corporate Acknowledgement)
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1994, before me personally came
to me known, who, being by me duly sworn, did depose and say that he
resides in ;
that he is the of one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
------------------------------------
<PAGE>
(Individual Acknowledgment)
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1994, before me personally came
, to me known and known to me to be the individual
described in and who executed the foregoing instrument, and acknowledged to me
that he executed the same.
------------------------------------
2
<PAGE>
Exhibit 10.4
DATED 28th May 1993
CHESTERMOUNT PROPERTIES LIMITED
-to-
EURO BROKERS HOLDINGS LIMITED
-----------------------
U N D E R L E A S E
of
`
Premises on the Second Floor
of Five Acre Square,
126/137 Houndsditch, London EC3
-----------------------
NABARRO NATHANSON
50 Stratton Street
London W1X 5FL
Telephone: 071-493 9933
<PAGE>
T H I S U N D E R L E A S E made the 28th day of May
One thousand nine hundred and ninety three B E T W E E N CHESTERMOUNT
PROPERTIES LIMITED whose registered office is at 38 Curzon Street London W1
(hereinafter called "the Landlord") of the one part and EURO BROKERS HOLDINGS
LIMITED whose registered office is at Adelaide House London Bridge EC4R 9EQ
(hereinafter called "the Tenant") of the other part W I T N E S S E T H as
follows:-
DEFINITIONS
1. In these presents whenever the context admits the following expressions
shall have the meanings hereby assigned to them namely:-
1.1 "Act of Parliament" means every Act of Parliament that may be
relevant to the Demised Premises its use or any thing or any
person thereon at any time including (without limitation) even
Act of Parliament whether in force at the date hereof or not
and any subsequent statutory re-enactment or modification of
any Act of Parliament and any order regulation directive
bye-law rule consent or licence made or granted under any Act
of Parliament or by any public or local authority (acting in
its
1
<PAGE>
official capacity or by any court of competent jurisdiction
1.2 "the Break Date" means 24th March 2003
1.3 "the Building" means the whole of the building known as Five
Acre Square 126/137 (inclusive) Houndsditch London EC3
(including the Demised Premises) and the curtilage thereof
(the present position of the ground floor whereof is shown for
the purpose identification only edged blue on Plan A annexed
hereto) and any permitted alterations or additions to the same
together with the fixtures in the nature of Landlord's
fixtures which are now or at any time hereafter may be affixed
to or upon the same including without prejudice to the
generality of the foregoing the Plant
1.4 "the Business Hours" means the hours of 7.30 am to 7.30 pm on
weekdays excluding bank and public holidays provided that the
Landlord may from time to time vary or modify or extend such
hours as it may reasonably deem fit in the interest of good
estate management of the Building
2
<PAGE>
1.5 "the Car Park" means the area of the Common Parts shown
hatched blue on Plan A annexed hereto but subject to variation
in accordance with Clause 1.7
1.6 "the Supplemental Deed" means a deed of even date between
(inter alia) the parties hereto relating to (inter alia) the
provision by the Tenant of additional security for the
performance of its obligations under this Underlease
1.7 "the Common Parts" means the parts of the Building and all
fixtures fittings and furnishings and facilities within such
parts which from time to time are provided or designated by
the Landlord for the common or general use by or for the
benefit of all or substantially all the tenants and occupiers
of the Building and where appropriate visitors to the Building
which shall for the avoidance of doubt include the Car Park
and the Service Area the present position of such areas being
shown at ground floor first floor and second floor levels only
edged green on the Plans PROVIDED that any variations to the
extent of the Common Parts at the aforesaid levels shall not
render such
3
<PAGE>
areas materially less commodious to the Tenant
1.8 "the Conduits" means gutters gullies pipes drains sewers
watercourses channels ducts flues wires cables communications
and special installations and other conducting media
1.9 "Demised Premises" means the premises described in the First
Schedule hereto and any permitted alterations or additions to
the same together with all fixtures in the nature of
Landlord's fixtures which are now or at any time hereafter may
be affixed to or in or upon the said premises including
without prejudice to the generality of the foregoing any of
the Conduits affixed to or in or upon the same and exclusively
serving the same but excluding the Plant
1.10 "Insured Risks" means the following risks to be included in
any policy or policies of insurance effected under the terms
of this Underlease namely the risks of fire storm tempest
flood lightning explosion earthquake aircraft and other aerial
devices articles dropped therefrom riot or civil commotion
malicious damage impact subsidence heave bursting and
overflowing of boilers water tanks apparatus or pipes (and in
4
<PAGE>
the absolute discretion of the Landlord damage caused by
terrorist action) and such other insurable risks as the
Landlord shall from time to time upon reasonable notice
reasonably require to be insured
1.11 "Interest" means interest at the rate of three pounds per
centum per annum above the base rate or its equivalent for the
time being in force of National Westminster Bank plc or if
such base rate or equivalent no longer exists such alternative
rate set by the same or a comparable bank as is reasonably
nominated by the Landlord or if this provision shall in the
future become impossible to administer such other comparable
rate of interest as the Landlord shall from time to time
reasonably determine
1.12 "Landlord" shall include the person for the time being
entitled to the reversion immediately expectant on the
determination of the term hereby created and shall also be
deemed to include any Superior Landlord except for the
purposes of Clause 5
5
<PAGE>
1.13 "the Lettable Space" means the internal space in the Building
(including for the avoidance of doubt the Demised Premises)
designed for occupation other than the Common Parts and the
lifts and the parts (a) designed for occupation by the
Landlord in its capacity as landlord of the Building and (b)
designed for occupation by statutory undertakers in their
capacity as statutory undertakers
1.14 "Loss of Rent" means loss for a period of five years of the
aggregate of all rents which can reasonably be expected from
time to time to become payable during the ensuing five years
to the Landlord in respect of the Demised Premises or all
parts of the Demised Premises
1.15 "Party Structures" means the footings foundations walls and
roofs separating and dividing the Building from any other
premises and not exclusively belonging to the Building
1.16 "Permitted Part" means any part of the Demised Premises that
is capable of being separately underlet without breaching any
fire or other statutory regulations
6
<PAGE>
1.17 "Planning Acts" means the Town and Country Planning Act 1990
the Planning (Listed Buildings and Conservation Areas) Act
1990 the Planning (Hazardous Substances) Act 1990 the Planning
(Consequential Provisions) Act 1990 and the Planning and
Compensation Act 1991 and includes any other applicable town
and country legislation
1.18 "The Plans" means the plans annexed hereto
1.19 "Plant" means all lifts boilers central heating refrigeration
air conditioning and ventilation plant and apparatus
communications and special installations hot and cold water
and drinking water installations and boosting pumps sprinkler
systems and other fire prevention and fire fighting equipment
fire smoke and security alarms and systems smoke extraction
systems lighting and lightning protection installations
standby generators automatic controls and any other electrical
and mechanical equipment in or serving the Building or any
part thereof
1.20 "Reinstatement Cost" means the full reinstatement cost of the
Building including (but without limitation) allowance for
inflation in
7
<PAGE>
costs the cost of demolition and clearance of debris the cost
of temporary support and protection incidental expenses
consequent upon rebuilding or reinstating including the cost
of compliance with all local authority and statutory
requirements architects' quantity surveyors' structural and
civil engineers' mechanical and electrical engineers' and
other professional fees together with VAT on all the foregoing
including without limitation VAT on any self supply under
Paragraphs 5 and 6 of Schedule 6A to the VAT Act whether or
not the Landlord has made a VAT Election
1.21 "the Services" shall have the meaning ascribed to it in
Paragraph l(ii) of the Fifth Schedule hereto
1.22 "the Service Area" means the area of the Common Parts the
present position of which is shown hatched yellow on Plan A
annexed hereto but subject to variation in accordance with
Clause 1.7
1.23 "Superior Landlord" means all Superior Landlords no matter how
remote
8
<PAGE>
1.24 "Superior Lease" means the Lease under which the Landlord
holds the Demised Premises and any Lease or Leases superior
thereto
1.25 "Surveyor" means a surveyor (whether or not an employee of the
Landlord or any company associated with the Landlord) and who
acts in accordance with the principles of good estate
management
1.26 "Tenant" shall include its successors in title and permitted
assigns
1.27 "The Term" means the term hereby granted and any period of
holding over or any extension or continuance thereof whether
by statute or common law
1.28 "the Utilities" means air water sewage of all kinds gas
electricity wireless telegraphic communication and all other
forms of communication and other services serving the Demised
Premises
1.29 "VAT" means Value Added Tax or any similar tax from time to
time replacing it or performing a similar fiscal function
1.30 "VAT Act" means the Value Added Tax Act 1983 as amended from
time to time and any Act replacing
9
<PAGE>
re-enacting or consolidating it
1.31 "VAT Election" means an election under Paragraph 2 of Schedule
6A to the VAT Act (or any equivalent provision) for exemption
to be waived which has effect in relation to the Building
1.32 "VAT Supply" shall have the meaning which "supply" has for the
purposes of the VAT Act
INTERPRETATION
- --------------
2. In these presents unless there is something in the context or subject
inconsistent therewith:-
2.1 words importing the masculine gender only shall include the
feminine gender and vice versa
2.2 words importing the singular number only shall include the
plural number and vice versa and where there are two or more
persons included in the expression "the Tenant" covenants
contained in these presents which are expressed to be made by
the Tenant shall be deemed to be made by such persons jointly
and severally
2.3 words importing persons shall include corporations and vice
versa
2.4 any reference to a specific Act of Parliament or Acts of
Parliament or enactments generally
10
<PAGE>
shall include any modification or re-enactment thereof for the
time being in force and shall include all instruments orders
regulations permissions and directions for the time being
issued or given thereunder or deriving validity therefrom
2.5 references to Clauses shall unless otherwise expressly
provided be to Clauses of this Underlease
2.6 the index and clause headings hereto shall not affect the
construction of these presents
DEMISE HABENDUM AND REDDENDUM
- -----------------------------
3. In consideration of the rents hereby reserved and of the covenants by
the Tenant hereinafter contained the Landlord HEREBY DEMISES unto the
Tenant ALL THAT the Demised Premises TOGETHER with the rights set out
in Part I of the Second Schedule hereto SUBJECT to the easements rights
and privileges specified in Part II of the Second Schedule hereto which
(in so far as they do not already affect the Landlord's estate in the
Demised Premises) are hereby EXCEPTED out of the demise AND RESERVED
unto the Landlord and all others to whom the Landlord may hereafter
grant the benefit of the same or any of them TO HOLD the
11
<PAGE>
same (except and reserved and subject as aforesaid and subject also as
mentioned in Part III of the Second Schedule hereto) UNTO the Tenant
from the 25th day of March One thousand nine hundred and ninety three
for the term of TWENTY FIVE YEARS (subject to early determination as
herein provided) YIELDING AND PAYING therefor yearly during the Term
and so in proportion for any period less than a year FIRST:-
3.1 for the period from 29th September 1994 to 23rd June 1996 the
sum of SEVEN HUNDRED AND NINETY THREE THOUSAND NINETY NINE
POUNDS AND EIGHT PENCE ((pound)793,099.08) per annum and
3.2 for the period from 24th June 1996 to 24th March 1998 the sum
of EIGHT HUNDRED AND NINETY FIVE THOUSAND FIVE HUNDRED AND
FIFTY POUNDS ((pound)895,550.00) per annum and
then subject to review as provided in the Third Schedule hereto such
rent to be paid quarterly in advance on the Twenty fifth day of March
the Twenty fourth day of June the Twenty ninth day of September and the
Twenty fifth day of December in each year and in each case without any
deduction whatsoever the first payment or a proportionate part thereof
to
12
<PAGE>
be paid on 29th day of September One thousand nine hundred and ninety
four in respect of the period from the 29th day of September One
thousand nine hundred and ninety four to the day before the quarter day
immediately following thereafter (both dates inclusive) SECONDLY by way
of further or additional rent all such sums as shall become payable by
way of or on account of service charge under the Fifth Schedule hereto
such sums to be payable as therein provided THIRDLY by way of further
or additional rent a fair and reasonable proportion determined by a
Surveyor whose decision shall be final and binding (save in the case of
manifest error) of the sum or sums which the Landlord may expend in
effecting or maintaining or procuring the effecting and maintaining of
insurance of the Building including the Plant in the Reinstatement Cost
against (a) the Insured Risks (b) Loss of Rent and (c) property owner
and public liability with the intention that the Tenant will not bear
the cost of the proportion of the sums which are attributable to any
other Lettable Space such sum or sums to be paid on demand FOURTHLY by
way of further or additional rent the cost to the Landlord of supplying
electricity to
13
<PAGE>
the Demised Premises taking into account any discount to which the
Landlord may be entitled and FIFTHLY by way of further or additional
rent Interest (as well after as before judgment) upon rents or any such
other sums payable by the Tenant to the Landlord calculated from the
date when the same become due until payment thereof such Interest to be
payable on demand SIXTHLY by way of further or additional rent VAT
payable by the Tenant to the Landlord under this Underlease SEVENTHLY
by way of further or additional rent but without prejudice to any other
right remedy or power herein contained or otherwise available to the
Landlord all such other sum or sums as may become payable by the Tenant
to the Landlord under the provisions of this Underlease but not
otherwise reserved as rent such sum or sums to be payable on demand
unless otherwise expressly hereinbefore provided for
TENANT'S COVENANT
- -----------------
4. The Tenant HEREBY COVENANTS with the Landlord as follows:-
TO PAY RENT
- -----------
4.1 To pay the rents sums and payments at the times and in the
manner at and in which the same are
14
<PAGE>
hereinbefore reserved and made payable without any deduction
(except as aforesaid)
OUTGOINGS
- ---------
4.2.1 To pay and discharge all rates taxes duties charges
assessments impositions and outgoings whatsoever
whether parliamentary parochial local or of any other
description which are now or may at any time
hereafter be taxed assessed charged or imposed upon
or payable in respect of the Demised Premises or on
the owners or occupiers in respect thereof (including
for the avoidance of doubt the supply of electricity
charged via a meter in the Demised Premises and any
meter charge therefor) or a proportion properly
attributable to the Demised Premises of any such
outgoings as may be taxed assessed charged or imposed
upon or payable in respect of premises of which the
Demised Premises form part (such proportion to be
determined by the Surveyor whose decision shall be
conclusive) Provided that the Tenant shall not be
obliged to pay any rates taxes duties
15
<PAGE>
charges assessments impositions or other such
outgoings arising in respect of the grant of this
Underlease any dealing with the reversion mediately
or immediately expectant on the determination of the
Term or the right to receive the rents payable
hereunder or any income or corporation tax or any
other tax on income profits or gains not otherwise
payable by the Tenant and for the avoidance of doubt
this Clause 4.2.1 does not apply to VAT unless on a
payment otherwise due under this Clause 4.2.1
4.2.2 To pay and indemnify the Landlord against all rates
taxes duties charges assessments impositions and
outgoings which are payable by the Landlord as a
result of the Demised Premises being vacant at any
date prior to the expiry or earlier determination of
the Term AND this sub-clause shall remain in force
notwithstanding the expiry or earlier determination
of the Term as aforesaid
16
<PAGE>
STATUTES AND BYE-LAWS
- ---------------------
4.3 At all times during the Term:-
4.3.1 to observe and comply in all respects with the
provisions and requirements of any and every Act of
Parliament so far as they relate to or affect the
Demised Premises or any part thereof or the user
thereof or the employment or residence therein of any
person whether by the or Tenant or any undertenant or
occupier of the Demised Premises
4.3.2 to execute all works and provide and maintain all
arrangements which by or under any Act of Parliament
or by any government department local authority or
other public authority or duly authorised officer or
Court of competent jurisdiction acting under or in
pursuance of any such Act are or may be directed or
required to be executed provided and maintained at
any time during the Term upon or in respect of the
Demised Premises or any part thereof or in respect of
the user thereof or the employment or residence
therein of any person
17
<PAGE>
whether by the Tenant or any undertenant or occupier
of the Demised Premises
4.3.3 to indemnify the Landlord at all times against all
costs charges and expenses of or incidental to the
execution of any works or the provision or
maintenance of any arrangements so directed or
required under sub-clauses 4.3.1 and 4.3.2
4.3.4 not to do or omit or suffer to be done or omitted on
or about the Building any act or thing by reason of
which the Landlord may under any enactment incur or
have imposed upon the Landlord or become liable to
pay any penalty damages compensation costs charges
and expenses
PROVIDED ALWAYS that without prejudice to the foregoing the
Landlord and the Tenant shall be entitled to object to any
such directions provisions requirements or other matters
specified in this sub-clause in which event the Tenant at the
request of the Landlord but at the cost of the Tenant will
join with the Landlord in making any such objection
18
<PAGE>
GAS ELECTRICITY WATER TELEPHONES AND REFUSE
- -------------------------------------------
4.4 To pay and discharge and indemnify the Landlord against all
charges for the Utilities in connection with or consumed in
the Demised Premises and all meter rents in connection
therewith and all charges in connection with the collection of
refuse from the Demised Premises and to observe and perform
all regulations and requirements of the Utilities authorities
in respect of the Demised Premises in accordance with the
principles of good estate management
ABATEMENT OF NUISANCE
- ---------------------
4.5 From time to time to pay all costs charges and expenses
incurred by the Landlord in abating a nuisance in respect of
the Demised Premises and executing all such works as may be
necessary for abating a nuisance in obedience to a notice
served by a local or other competent authority
MISCELLANEOUS COSTS
- -------------------
4.6 To pay to the Landlord all costs charges and expenses
(including legal costs and fees payable to surveyors
consultants and architects) which may be reasonably and
properly incurred by the Landlord:-
19
<PAGE>
4.6.1 in or in contemplation of any proceedings under
Section 146 or Section 147 of the Law of Property Act
1925 or either of them or the preparation and service
of notice thereunder whether or not any right of
re-entry or forfeiture has been waived by the
Landlord or notice served under either of the said
sections is complied with by the Tenant or the Tenant
has been relieved under the provisions of the said
Act and notwithstanding forfeiture is avoided
otherwise than by relief granted by the Court
4.6.2 in connection with the preparation and service of all
schedules of dilapidations whether before or after
the expiration of the Term
4.6.3 in connection with the recovery of any arrears of
rent due hereunder including the charges of any
bailiff appointed to recover the same whether he
actually levies distress or not
4.6.4 otherwise in connection with any breach by the Tenant
of any covenants or conditions
20
<PAGE>
herein contained and
4.6.5 in connection with any valuation of the Demised
Premises for insurance purposes provided such
valuations are not more frequent than once every year
REPAIR
- ------
4.7 To repair and keep the Demised Premises and all appurtenances
of whatsoever nature belonging to the Demised Premises in good
and substantial repair (damage by any of the Insured Risks and
damage by terrorist action whether or not the Landlord had
opted to insure against the same excepted save to the extent
that the policy or policies of insurance shall have been
vitiated or payment of any of the policy moneys withheld or
refused by reason of any act neglect or default of the Tenant
or any underlessee or their respective servants agents
licensees or invitees)
SERVICE OF PLANT
- ----------------
4.8 To keep any plant installed by the Tenant properly maintained
DECORATION
- ----------
21
<PAGE>
4.9.1 As often as may be necessary and in any event in the
fifth year of the Term and thereafter in every
succeeding fifth year thereof and also during the
last year thereof (howsoever the same may be
determined) to paint all the internal surfaces
originally painted and all additions thereto in the
Demised Premises with two coats at least of good
quality paint and well and sufficiently to grain
varnish paper plaster and emulsion all the interior
parts of the Demised Premises as are usually or ought
to be so treated and generally to redecorate
throughout restoring and making good the Demised
Premises in accordance with good standards of
workmanship and materials
4.9.2 As often as the Landlord may reasonably consider
necessary to clean and treat in an appropriate manner
to the reasonable satisfaction of the Landlord all
materials surfaces and finishes of the interior of
the Demised Premises which ought normally to be so
cleaned and treated and in par-
22
<PAGE>
ticular (but without prejudice to the generality of
the foregoing) all wood plaster metal granite and/or
stonework and to wash down all surfaces requiring to
be washed PROVIDED THAT this Clause shall not create
any greater obligation in respect of the requirements
for decoration contained in Clause 4.9.1 than are
imposed by Clause 4.9.1
4.9.3 Not to decorate the surfaces of the Demised Premises
not previously decorated
GLAZING
- -------
4.10 To clean all glazing of the Demised Premises (except the
external surfaces of the windows) not less frequently than
once in every month of the Term
YIELD UP
- --------
4.11.1 At the expiration or sooner determination of the Term
quietly to yield up unto the Landlord the Demised
Premises and in such state and condition as shall in
all respects be consistent with a full and due
performance by the Tenant of the covenants on the
Tenant's part herein contained
23
<PAGE>
(damage by any of the Insured Risks excepted save to
the extent that the policy or policies of insurance
shall have been vitiated or payment of any of the
policy moneys withheld or refused by reason of any
act neglect or default of the Tenant or any
underlessee or their respective servants agents
licensees or invitees) but the Tenant shall be
entitled (and on the demand of the Landlord bound) to
remove all or any Tenant's fixtures and fittings and
on the demand of the Landlord shall be bound to
remove any other fixtures fittings or improvements
installed in the Demised Premises during the Term the
Tenant making good all damage caused by any removal
as aforesaid to the reasonable satisfaction of the
Surveyor and all relevant authorities
4.11.2 Wherever any plant or machinery or other fixtures
fittings or improvements to be removed are connected
to or take supplies from any of the main services
they shall be disconnected in such a manner that all
24
<PAGE>
redundant service media are removed and sealed off at
points as close as possible to the various ring mains
or principal distribution pipes which provide the
supplies such removal and sealing off to be carried
out so as not to interfere with the continued
function of the remaining services
PERMIT ENTRY FOR INSPECTION
- ---------------------------
4.12 To permit the Landlord or the Landlord's agents or such
workmen as may be authorised by them (upon at least 48 hours
prior written notice except in the case of emergency) at
convenient times and as often as may be necessary to enter
into and upon the Demised Premises and examine the state of
repair and condition of the same and within three calendar
months or sooner if requisite after notice in writing to the
Tenant shall have been given or left at the Demised Premises
of all defects and wants of reparation for which the Tenant is
liable hereunder found on such examination to commence to
repair and make good the same according to such notice and the
covenants in that behalf hereinbefore con-
25
<PAGE>
tained and thereafter continue diligently with such work and
in case the Tenant shall make default in so doing it shall be
lawful but not obligatory for workmen or others to be employed
by the Landlord to enter upon the Demised Premises and repair
and restore the same and all expenses reasonably incurred
thereby (including professional fees) and Interest thereon
from the date of expenditure by the Landlord shall on demand
be paid by the Tenant to the Landlord and if not so paid shall
be recoverable by the Landlord as a liquidated debt and shall
be recoverable in the same manner as the Landlord is entitled
to recover overdue rent
PERMIT ENTRY FOR REPAIR
- -----------------------
4.13 To permit the Landlord and the Superior Landlord or their
respective agents or workmen and the tenants and occupiers of
any other part of the Building or any premises adjoining the
same now or at any time hereafter belonging to the Landlord
and/or the Superior Landlord with tools and apparatus at any
time or times during the Term (at reasonable hours in the
daytime upon not less than 48 hours prior written no-
26
<PAGE>
tice except in the case of emergency) to enter upon the
Demised Premises for the purposes set out in Part II of the
Second Schedule hereto
IMPROVEMENT AND ALTERATIONS
- ---------------------------
4.14.1 Subject to Clause 4.14.3 not to execute any
improvement in respect of the Demised Premises and
not to make any structural alteration thereto nor
otherwise cut maim or remove any of the walls
ceilings floors girders or timbers of the Demised
Premises (unless for the purpose of making good
defects) nor make alter nor cause or permit to be
altered the exterior appearance of the Demised
Premises and not to make any alteration in or
addition to the Demised Premises
4.14.2 not to carry out any development or change of use on
the Demised Premises or any part thereof within the
meaning of the Planning Acts
4.14.3 not to erect nor alter any partitions or other items
of a non structural nature in the Demised Premises
without the Landlord's prior written consent which
consent
27
<PAGE>
provided such proposed erection or alteration will
not interfere with or impair the performance of the
Plant or the Conduits shall not be unreasonably
withheld PROVIDED THAT no such consent shall be
required for alterations which are both de minimis in
themselves and which remains de minimis when taken
together with other such de minimis alterations which
have been permitted under this Clause
4.14.4 not to alter the electrical wiring and installations
in the Demised Premises so as to exceed the design
capacity of the installations to the Demised Premises
nor upgrade the design capacity of the installations
to the Demised Premises other than in accordance with
the Regulations of the Institution of Electrical
Engineers and the consent of the Landlord (such
consent not to be unreasonably withheld) and not to
overload the same
4.14.5 not to remove any of the Plant or the Conduits
(except to renew or amend the same or any part
thereof which is included in
28
<PAGE>
the Demised Premises)
4.14.6 to the extent (if any) required by the Landlord the
Tenant will remove at the expiration or sooner
determination of the Term any alterations permitted
under this Underlease and will reinstate the Demised
Premises to their original state and condition making
good any damage caused to the Landlord's reasonable
satisfaction
SIGNS
- -----
4.15 Not to exhibit or permit or suffer to be exhibited on the
exterior (so as to be visible from the outside) of the Demised
Premises any aerial sign signboard advertisement hoarding
fascia placard bill notice poster or other notification
whatsoever except such as shall have been previously approved
by the Landlord (such approval not to be unreasonably withheld
in relation to any sign boards on or near to the exterior of
the door of the Demised Premises at second floor level showing
the occupiers' names required under Section 348 of the
Companies Act 1985 or similar statute) in addition to any
permission required by statute regulation or
29
<PAGE>
bye-law and shall thereafter be maintained to the satisfaction
of the Landlord
GOODS OUTSIDE THE PREMISES
- --------------------------
4.16 Not to place or hang or permit or suffer to be placed or hung
any goods outside the building lines of the Building nor to
exhibit any goods or articles outside the said lines
AUCTIONS
- --------
4.17 Not to hold or permit or suffer to be held any sale by auction
which imposes additional statutory obligations concerning
attendance of members of the public on the Demised Premises
PLANNING
- --------
4.18.1 Not at any time during the continuance of the Term to
do or omit or permit to be done or omitted anything
on or in connection with the Demised Premises the
doing or omission of which shall be a contravention
of the Planning Acts or of any licences consents
permissions approvals and conditions (if any) granted
or imposed thereunder or under any enactment repealed
thereby and to indemnify the Landlord against all
actions proceedings damages
30
<PAGE>
penalties costs charges claims and demands in respect
of such acts and omissions or any of them
4.18.2 In the event of the Landlord giving written consent
to any of the matters prohibited by Clause 4.14
hereof or for which the Landlord's consent is
required thereunder and in the event that such
matters require licence consent permission or
approval under the provisions of the Planning Acts
not to submit the application to the appropriate
national or local or other public authority
(hereinafter referred to as the said planning
authority) unless and until the form and wording of
the application and any drawings calculations and
information to accompany the same meet with the
approval in writing of the Landlord (such approval
not to be unreasonably withheld) and subject thereto
any application shall be made at the cost of the
Tenant and (if requested) in the name of the Landlord
and all other persons (if any) interested in the
Demised Pre-
31
<PAGE>
mises and of all such licences consents permissions
and approvals granted or refused in pursuance of such
approved applications forthwith to give notice with a
copy thereof to the Landlord and in the event of the
said planning authority indicating its willingness to
grant the desired licence consent permission or
approval only with modifications or subject to
conditions not to accept such modifications or
conditions or implement the development or change of
use to which such licence consent permission or
approval relates without the consent in writing of
the Landlord (such consent not to be unreasonably
withheld) and to give the Landlord forthwith full
particulars of such modifications or conditions
4.18.3 Not to implement or otherwise put into effect any
licence consent permission or approval relating to
the Demised Premises or any part thereof or otherwise
affecting the same under or in pursuance of the
Planning Acts without first obtaining the
32
<PAGE>
consent in writing of the Landlord (such consent not
to be unreasonably withheld)
4.18.4 If and when a Landlord's consent is obtained pursuant
to Clause 4.18.2 and/or 4.18.3 to carry out works and
other things authorised by the said consent and the
planning permission therein referred to at the cost
in all respects of the Tenant and to observe and
perform all conditions attached to such consent and
planning permission respectively and to keep the
Landlord effectually indemnified against all actions
proceedings damages penalties costs charges claims
and demands whatsoever in respect of the costs of the
said application and works and things done in
pursuance of the said planning permission and in
respect of all breaches (if any) of the said
conditions and every part thereof respectively
4.18.5 To give notice forthwith to the Landlord and produce
a copy of any notice order or proposal for a notice
or order served on the Tenant under the Planning Acts
and if
33
<PAGE>
so required in writing by the Landlord at the cost of
the Landlord to make or join in making such
objections or representations in respect of any
proposal as the Landlord may require
4.18.6 To comply at the Tenant's own cost with any notice or
order served under the provisions of the Planning
Acts on any person relating to the Demised Premises
4.18.7 If the Tenant shall receive any compensation with
respect to the Tenant's interest hereunder because of
revocation or modification of a planning permission
or of any restriction placed upon the user of the
Demised Premises under or by virtue of the Planning
Acts then unless the Landlord shall have already
received compensation the same shall be apportioned
between the Landlord and the Tenant in the same
proportion as the value of their respective interests
in the Demised Premises to be determined in the event
of dispute by an independent surveyor with at least
ten years experience of the sale and leasing
34
<PAGE>
and valuation of offices in the City of London acting
as an expert and not an arbitrator to be appointed
(in case the parties are unable to agree on such
appointment) by the President for the time being of
the Royal Institution of Chartered Surveyors whose
fees and those of the said surveyor shall be paid as
the said surveyor shall direct
RESTRICTION ON PLANNING APPLICATIONS AND DEVELOPMENT
- ----------------------------------------------------
4.19 Notwithstanding Clauses 4.14 and 4.18 not to make any
application for planning permission in respect of the Demised
Premises or to carry out any development or works or change of
user whatsoever at the Demised Premises if the making of such
application for planning permission or the grant of a planning
permission pursuant thereto or the carrying out of such
development or works or change of user would or might
reasonably be expected to give rise to any tax charge or other
levy payable by the Landlord or would or might reasonably be
expected to give rise to the compulsory acquisition of the
Demised Premises or any interest therein without
35
<PAGE>
first giving the Landlord a full indemnity for such
eventualities
ASSIGNMENT AND UNDERLETTING
- ---------------------------
4.20.1 Not to assign transfer mortgage charge underlet or
part with or share the possession or occupation of
the Demised Premises or any part thereof PROVIDED
however that the Landlord shall not unreasonably
withhold consent to an assignment or charging of the
whole of the Demised Premises or to an underletting
of the whole or a Permitted Part so long as the
Tenant shall first submit written details to the
Landlord of:-
(a) any premises proposed to be underlet
(being either the whole of the Demised
Premises or a Permitted Part)
(b) the rents proposed to be payable
pursuant to any proposed underletting or
the premium to be paid on any proposed
assignment
(c) the other terms of the proposed
underletting or assignment
36
<PAGE>
(d) evidence that such rents are the open
market rents
(e) the identity of the proposed underlessee
or assignee and any surety and all
financial information (with copies)
obtained by the Tenant in relation
thereto sufficient to demonstrate that
the proposed underlessee or assignee is
patently able to meet the obligations of
the proposed underlease or this
Underlease (as the case may be) and in
all respects constitutes a good and
substantial tenant
4.20.2 Any assignee or underlessee approved by the Landlord
as aforesaid shall first enter into a direct covenant
with the Landlord to observe and perform the
covenants herein (except in the case of an
underletting (a) the covenant to pay the rents hereby
reserved and (b) any covenants herein which are
inconsistent with those which the Tenant is required
to impose in such underlease in which case
37
<PAGE>
the underlessee will covenant with the Landlord to
observe and perform the latter in lieu and in the
case of an underletting of a Permitted Part only to
the extent that the covenants herein are appropriate
to the Permitted Part)
4.20.3 If the Landlord shall reasonably so require a surety
reasonably acceptable to the Landlord shall be
obtained who shall prior to or contemporaneously with
the making of such underlease or assignment covenant
with the Landlord in the terms of the Fourth Schedule
hereto with such amendments only as are necessary by
virtue of such covenants being contained in a
separate deed and given later than the date of this
Underlease and the number of sureties and (in the
case of an underletting) by virtue of the fact that
the obligations being guaranteed by the surety are
those in the proposed underlease and not these
presents
4.20.4 Any permitted underlease whether of the whole or a
Permitted Part shall contain:-
38
<PAGE>
(a) provisions which enable the Tenant to
recoup from the proposed underlessee an
appropriate proportion of the service
charge payable by the Tenant pursuant to
the provisions hereof
(b) provisos for rent review which the
Tenant hereby covenants to operate and
enforce corresponding both as to terms
and dates with the provisions set out in
the Third Schedule hereto
(c) an unqualified covenant on the part of
the underlessee that the underlessee
will not otherwise than by way of an
assignment of the whole of such premises
or an underletting of the whole or a
part thereof (being a further Permitted
Part and subject to Clause 4.20.5)
assign transfer underlet part with or
share the possession or occupation of or
mortgage or charge the whole or any part
of the premises thereby demised except
to the same extent permitted to the
Tenant under clause 4.20.10
39
<PAGE>
(d) a covenant on the part of the
underlessee that the underlessee will
not assign the whole of the premises
thereby demised or underlet the whole or
such permitted part thereof without
obtaining the previous consent in
writing of the Landlord under these
presents (such consent not to be
unreasonably withheld)
(e) such covenants by the underlessee which
the Tenant hereby covenants to enforce
as to prohibit the underlessee from
doing or suffering any acts or things
upon or in relation to the premises
demised by the underlease which will
contravene any of the Tenants
obligations hereunder and
(f) a condition for re-entry
4.20.5.1 No underlease shall comprise other than:-
(a) the whole of the Demised Premises or
(b) a Permitted Part
40
<PAGE>
4.20.5.2 Any underlease of a Permitted Part shall
contain an agreement authorised by the Court
pursuant to Section 38(4) of the Landlord
and Tenant Act 1954 (as amended) excluding
in relation to that underlease the
provisions of sections 24-28 (inclusive) of
the Landlord and Tenant Act 1954
4.20.5.3.1 Not more than four underleases of Permitted
Parts shall subsist at any one time PROVIDED
THAT not more than three shall be permitted
at any one time if the Tenant or a Permitted
Occupier (as hereinafter defined) remains in
occupation of any remaining part or parts of
the Demised Premises
4.20.5.3.2 In addition to the underleases permitted
under Clause4.20.5.3.1 above the Tenant
(here meaning Euro Brokers Holdings Limited
or a group company) shall also be permitted
to underlet a Permit-
41
<PAGE>
ted Part to Liberty Euro Brokers Limited
("Liberty") for so long as Liberty remains in the
same group (as defined in Clause 4.20.10.2) of the
Tenant
4.20.6 No fine or premium shall be taken from any
underlessee
4.20.7 Neither the Demised Premises nor any part thereof
which the Tenant may be permitted to underlet in
accordance with the provisions hereinbefore contained
shall be underlet at less than the rent reasonably
achievable in the open market
4.20.8 The Tenant shall throughout the Term notify the
Landlord forthwith if the Demised Premises or any
part thereof which the Tenant may have been permitted
to underlet under the provisions hereinbefore
contained reverts to the Tenant for any reason
(including but without prejudice to the generality of
the foregoing surrender disclaimer forfeiture or any
notice or failure to serve notice or apply to the
Court under the Landlord and Tenant Act
42
<PAGE>
1954) and of any proceedings under the said Act
4.20.9 The Tenant shall keep the Landlord fully informed of
(and of all negotiations with the underlessee in
relation to) any rent review under an underlease and
forthwith supply all such further information in
relation thereto as the Landlord may reasonably
require and will not settle any rent review except in
accordance with the written agreement of the Landlord
which agreement shall not be unreasonably withheld
4.20.10.1 Notwithstanding anything hereinbefore contained in
this Clause 4.20 the Tenant may share occupation
of the Demised Premises with a company which is
throughout its occupation of the Demised Premises
a member of the same group of companies as the
Tenant on condition that no tenancy is created by
that occupation and further on condition that the
Landlord is promptly advised in writing at the
43
<PAGE>
beginning and end of any sharing arrangement and
of the identity of the sharing company
4.20.10.2 For the purposes of Clause 4.20.10.1 above the
company will be deemed to be in the same group as
the Tenant if throughout its occupation of the
Demised Premises it meets the criteria set out in
Section 42 (1) of the Landlord and Tenant Act 1954
in the form of that Section as it exists at the
date hereof or if it is a company whose issued
equity share capital (as defined in Section 744 of
the Companies Act 1985) is beneficially owned as
to at least 50% (or 20% whilst this Underlease
remains vested in Euro Brokers Holdings Limited or
a group company) by the Tenant or another member
of the same group as the Tenant
NOTICE OF ASSIGNMENT OR UNDERLETTING
- ------------------------------------
4.21 Within one calendar month next after any transfer mortgage
charge assignment underlease or
44
<PAGE>
devolution of the Demised Premises or of any part thereof
permitted hereunder to give notice in writing of such transfer
mortgage charge assignment underlease or devolution and of the
name address and description of the transferee mortgagee
chargee assignee or person upon whom the Demised Premises or
any part thereof may have devolved or of the underlessee (as
the case may be) to the Landlord AND to produce to the
Landlord or the Solicitors for the time being of the Landlord
the instrument of transfer mortgage charge assignment or
devolution or the counterpart of the underlease and leave with
it or them two certified copies of any of the foregoing and to
pay its and/or their reasonable fee therefor being not less
than twenty pounds for the registration of a transfer
assignment mortgage or charge and fifty pounds (plus VAT) for
the registration of an underlease together with such fees as
are payable to the Superior Landlord or its solicitors
SCHEDULE OF OCCUPANCIES
- -----------------------
4.22 If and when called upon by the Landlord so to do to supply to
the Landlord from time to time
45
<PAGE>
a schedule containing full details of all subsisting
occupancies of the Demised Premises and every part thereof
USER
- ----
4.23.1 Not to use the Demised Premises or any part thereof
or permit or suffer the same to be used for any
illegal or immoral purpose
4.23.2 Not to use the Demised Premises or any part thereof
or permit or suffer the same to be used except as
offices within Class B1 in the Schedule to the Town
and Country Planning (Use Classes) Order 1987; and
for no other purpose whatsoever
4.23.3 Without prejudice to the foregoing provisions of this
Clause 4.23 if the Tenant or any permitted occupier
uses the Demised Premises for any different use the
Landlord may treat such use as a deemed application
by the Tenant for consent to change the permitted use
and the Landlord may at any time during the
continuation of such use grant consent to such
application accordingly
46
<PAGE>
NUISANCE
- --------
4.24 Generally not to do or permit or suffer to be done upon or in
connection with the Building or in the Demised Premises or any
part thereof anything which shall be or tend to be a nuisance
or cause of damage to the Landlord or to any neighbouring
adjoining or adjacent property or the owner or occupier
thereof or to the public
OVERLOADING
- -----------
4.25 Not to place or keep or permit to be placed or kept in the
Demised Premises any heavy articles in such position or in
such quantity or weight or otherwise in such manner howsoever
as to overload or cause damage to or be in the reasonable
opinion of the Landlord likely to overload or cause damage to
the Building
DRAINAGE
- --------
4.26 To take all such measures as may be reasonably necessary to
ensure that any effluent discharged into the drains and sewers
which belong to or are used for the Building or any part
thereof in common with other premises or not will not be
corrosive or in any way harmful to
47
<PAGE>
the said drains or sewers or cause any obstruction or deposit
therein
ELECTRICAL INSTALLATIONS
- ------------------------
4.27 Not to use the electrical wiring and electrical installations
in the Demised Premises or any part thereof in such a way as
to overload the wiring system or any other part of the
electrical installations and within three months of any
request by the Landlord in that behalf to produce a
certificate of test of the electrical wiring and electrical
installations in the Demised Premises such certificate to be
given by a competent electrical engineer in accordance with
the regulations of the Institution of Electrical Engineers and
the local electricity supply authority or either of them
ENCROACHMENTS
- -------------
4.28.1 Not to obstruct or suffer to be obstructed any of the
windows or lights belonging to the Demised Premises
and to use its best endeavours to prevent any new
window light passage drainage or other encroachment
or easement to be made into against upon or over the
Demised Premises or any part
48
<PAGE>
thereof other than those emanating from any land or
buildings of the Landlord and/or the Superior
Landlord
4.28.2 In case any encroachment or easement whatsoever shall
be attempted to be made or acquired by any person or
persons whomsoever to give notice thereof in writing
to the Landlord immediately the same shall come to
the notice of the Tenant and at the cost of the
Tenant to do all such things as may be proper for
preventing any encroachment or easement being made or
acquired other than those emanating from any land or
buildings of the Landlord and/or the Superior
Landlord
PERMIT INSPECTION BY PROSPECTIVE PURCHASERS
- -------------------------------------------
4.29 At all reasonable times upon not less than 48 hours prior
notice during the Term to permit all prospective purchasers of
or dealers in the Landlord's reversionary interest by order in
writing of the Landlord or the Landlord's agents to view and
take measurements of the Demised Premises without interruption
49
<PAGE>
PERMIT RE-LETTING NOTICES
- -------------------------
4.30 To permit the Landlord or the Landlord's agents at any time
within twelve calendar months next before the expiration or
sooner determination of the said Term or at any time while any
of the circumstances described in Clause 6.1 shall subsist to
enter upon the Demised Premises and to fix and retain without
interference upon any suitable parts thereof notice boards for
re-letting the same (or at any time during the Term for any
other dealing with the same) provided that these do not
materially affect access of light to the windows of the
Demised Premises and to permit all persons by order in writing
of the Landlord and/or the Superior Landlord or their
respective agents to view the Demised Premises at reasonable
hours in the daytime upon at least 48 hours notice without
interruption
PERMIT BUILDING ON ADJOINING LAND
- ---------------------------------
4.31 To permit the Superior Landlord or any party now or hereafter
authorised by the Superior Landlord at any time during the
Term to erect or rebuild or alter any buildings or erections
50
<PAGE>
facing adjoining or near to the Building to any extent and in
the manner permitted by the Superior Lease notwithstanding
that the building so erected rebuilt or altered may obstruct
or interfere with the access of light or air for the time
being to or enjoyed with the Demised Premises or any part
thereof or any buildings for the time being thereon
NO CLAIM FOR BUILDING WORKS
- ---------------------------
4.32 Not to make or permit or suffer any objection to or claim in
respect of any works of construction building alteration
addition or repair carried out upon any other part of the
Building by the Landlord and/or the Superior Landlord or any
party now or hereafter authorised by the Landlord and/or the
Superior Landlord or by any of the other tenants and occupiers
of the Building or upon any land or property adjoining or near
any part of the Demised Premises by the Landlord and/or the
Superior Landlord or any party now or hereafter authorised by
the Landlord and/or the Superior Landlord or by the tenants
and occupiers of such land or property PROVIDED THAT any such
matters
51
<PAGE>
(when undertaken by the Landlord or its agents) shall not
materially interfere with the Tenant's use and enjoyment of
the Demised Premises
COSTS OF LICENCES
- -----------------
4.33 To pay the Landlord's reasonable and proper legal expenses
managing agents' and surveyors' and consultants' fees
(including disbursements and stamp duties and the fees of any
surveyors in considering plans or the execution of any works
carried out pursuant to any licence) resulting from all
applications by the Tenant for any consent or approval of the
Landlord or its managing agents or surveyors required by these
presents including charges fees and disbursements actually
incurred in cases where consent is refused or the application
is withdrawn for any reason whatsoever except where such
consent is shown by a Court to have been unreasonably withheld
GIVE NOTICES
- ------------
4.34 To give written notice forthwith to the Landlord of:-
4.34.1 any notice order or proposal for a notice or order
served on the Tenant by any per-
52
<PAGE>
son or authority and to provide the Landlord with a
copy thereof and if so required in writing by the
Landlord and at the cost of the Landlord to join in
making such objections or representations in respect
of any such notice order or proposal as the Landlord
may require and
4.34.2 any defect in the Demised Premises which might give
rise to a duty of care on the Landlord under the
Defective Premises Act 1972 or otherwise
INDEMNITIES
- -----------
4.35 The Tenant will keep the Landlord fully indemnified against
all damages losses costs expenses proceedings and liabilities
arising directly or indirectly from:-
4.35.1 the existing state of repair or use of the Demised
Premises and/or any works carried out at the Demised
Premises
4.35.2 any breach of the Tenant's obligations contained in
this Lease or any failure to comply with any Act of
Parliament
4.35.3 imposition on the Landlord of any tax levy charge or
other fiscal imposition of any
53
<PAGE>
nature including (without limitation) penalties and
interest on overdue tax relating to any works carried
out at the Demised Premises by the Tenant its
underlessees or any persons authorised by it or them
or any breach of any covenant on the part of the
Tenant
BREACH OF UNDERLEASE COVENANTS
- ------------------------------
4.36 In the event of a breach non-performance or non-observance of
any of the covenants conditions agreements and provisions
contained or referred to in these presents (except the
covenant for payment of rent) or in any underlease of the
Demised Premises or any part thereof or any other part of the
Building forthwith upon discovering the same to give full
particulars thereof to the Landlord and in the case of these
presents to take and institute all necessary steps and
proceedings to remedy such breach non-performance or
non-observance or in the case of any underleases of the
Demised Premises or any part thereof to either enforce the
covenant for re-entry or take such other action to enforce
such covenant or covenants as
54
<PAGE>
the Landlord shall reasonably require
ELECTRONIC EQUIPMENT
- --------------------
4.37 Not to use or permit or suffer any radio electric or
electronic equipment to be used in the Demised Premises or the
Common Parts in such manner or condition as to cause electric
electronic or other forms of interference to any other part of
the Building or any adjoining or neighbourlng premises or
equipment owned or operated therein
AERIALS AND FLAG POLES
- ----------------------
4.38 Not to erect or permit or suffer to be erected any external
wireless or television aerial or flag pole on the Demised
Premises without the previous consent of the Landlord in
writing such consent not to be unreasonably withheld
NOT TO VITIATE INSURANCE
- ------------------------
4.39 Not to do or permit or suffer to be done any act or thing
which may make void or voidable any policy for the insurance
of the Building or any part or parts thereof or which may
cause an increased premium or loading to be payable for such
insurance unless repayment is made to the Landlord of all sums
paid by way of increased
55
<PAGE>
premiums and loading and all expenses incurred by it in
consequence of any act or default of the Tenant or any
underlessee or the servants agents licensees or invitees of
the Tenant or any underlessee
TO PAY FOR REBUILDING IF INSURANCE MONEY IRRECOVERABLE
- ------------------------------------------------------
4.40 In the event of the Building or any part thereof being
destroyed or damaged by any of the Insured Risks and the
insurance money under any insurance against the same effected
thereon by the Landlord being wholly or partially
irrecoverable by reason solely or in part of any act neglect
or default of the Tenant or any underlessee or the servants
agents licensees or invitees of the Tenant or any underlessee
then and in every such case the Tenant will forthwith pay to
the Landlord the whole or (as the case may require) a fair
proportion of the cost of completely rebuilding and
reinstating the same
USER AND INSURANCE - TO PAY COSTS
- ---------------------------------
4.41 In the event that user or proposed user of the Demised
Premises shall result in an increase in the insurance premium
payable by the Land-
56
<PAGE>
lord or if the Landlord's insurers shall require any works to
be carried out to the Demised Premises or their appurtenances
as a result of such user the Tenant shall repay on demand to
the Landlord the full amount of such increased premium and
shall comply with all requirements of the Landlord's insurers
as aforesaid and shall pay on demand to the Landlord the
Landlord's proper costs arising as- a result of any such
requirement including all proper legal expenses and managing
agents' and surveyors' and other professional fees and
disbursements
COVENANTS IN LANDLORD'S TITLE
- -----------------------------
4.42 At all times to observe and perform all and singular the
covenants conditions provisions and stipulations referred to
in Part III of the Second Schedule hereto so far as they
relate to or affect the Demised Premises or any part thereof
(save insofar as they are inconsistent with the terms of this
Underlease) and at all times to indemnify the Landlord from
and against all actions proceedings costs claims and demands
arising or which may arise out of
57
<PAGE>
any breach or non-observance of any of the said covenants and
stipulations save as aforesaid
UNLOADING
- ---------
4.43 That all loading and unloading of vehicles in connection with
the use of the Demised Premises and the activities carried on
thereon or therein shall take place within the boundaries of
the Building and that no such loading or unloading of vehicles
as aforesaid shall take place from or in any highway
PARKING
- -------
4.44 Not to park or suffer to be parked any vehicle in or upon any
private road access way or service area except in so far as
may be necessary to enable such vehicle to be loaded or
unloaded and such loading or unloading shall be carried out as
expeditiously as possible and in such a manner as to cause no
inconvenience to any persons lawfully using the said private
road access way or service area
REGULATIONS
- -----------
4.45 To comply with all such lawful and reasonable regulations and
directions as the Landlord may from time to time make or give
for the orderly
58
<PAGE>
convenient and proper management of the Building or for the
regulation of vehicular traffic into from and within the same
VALUE ADDED TAX
- ---------------
4.46.1 Where this Underlease requires the Tenant to repay
reimburse or provide any amount or other
consideration in respect of a VAT Supply to the
Tenant by the Landlord it will be deemed to be
exclusive of any VAT chargeable on that VAT Supply
(whether by virtue of a VAT Election made or to be
made or otherwise) and the Tenant will pay to the
Landlord a sum equal to that VAT and the Landlord
will within thirty days of receipt of that sum render
a valid VAT invoice for it to the Tenant
4.46.2 Where this Underlease requires the Tenant to pay
repay reimburse or provide any amount or other
consideration in respect of a VAT Supply to the
Landlord the Tenant will pay to the Landlord a sum
equal to any VAT charged to the Landlord on that VAT
Supply by reference to that amount or consideration
or where the VAT Supply
59
<PAGE>
relates to the Building as a whole or to the Common
Parts a fair proportion of that sum (such proportion
to be conclusively determined by the Surveyor) less
any part of that VAT or the proportion of that VAT
(as the case may be) for which the Landlord is
entitled to credit under Sections 14 and 15 of the
VAT Act or any equivalent legislation
4.47 Supplemental Deed
-----------------
4.47.1 The Tenant (here meaning Euro Brokers Holdings
Limited) shall observe and perform the obligations of
the Tenant contained in the Supplemental Deed
4.47.2 The Tenant (excluding Euro Brokers Holdings Limited)
shall observe the obligations of the Tenant contained
in the Supplemental Deed in so far as they have not
been performed but in any event excluding Clauses 4,
5 and 6 of such Deed
LANDLORD'S COVENANTS
- --------------------
5. The Landlord HEREBY COVENANTS with the Tenant as follows:-
60
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QUIET POSSESSION
- ----------------
5.1 That the Tenant duly paying the said rents and sums and other
payments hereby reserved and made payable and observing and
performing the covenants and conditions therein contained and
on the Tenant's part to be observed and performed shall and
may peaceably and quietly possess and enjoy the Demised
Premises during the Term without any disturbance by the
Landlord or any persons lawfully claiming through under or in
trust for the Landlord
INSURANCE
- ---------
5.2 To procure that the Building is insured and kept insured in
the names of the Landlord the Superior Landlord and any other
persons the Landlord and/or the Superior Landlord reasonably
thinks fit against loss or damage by the Insured Risks in an
insurance office of good repute to be selected by the Superior
Landlord in such amount as the Superior Landlord from time to
time considers to be the full reinstatement value particulars
of the policy of insurance and evidence of payment of the
current year's premium to be produced to the Ten-
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ant as soon as practicable upon written demand but not more
that once a year and further in the event of the destruction
of or damage by any of the Insured Risks to the Demised
Premises or any part thereof or any other parts of the
Building which makes the Demised Premises incapable of
beneficial use and occupation with all convenient speed (as
soon as the necessary labour materials permits and consents
can be obtained) to use its reasonable endeavours to procure
that the Superior Landlord complies with its repairing and
reinstating provisions contained in clause 5.2.1 of the
Superior Lease
PAY SUPERIOR LEASE RENT
- -----------------------
5.3 To pay the rent reserved by the Superior Lease and to perform
so far as the Tenant is not liable for such performance under
the covenants on its part contained in this Underlease
(insofar as they relate to the Demised Premises) the tenant's
covenants contained in the Superior Lease and to use
reasonable endeavours at the written request and cost of the
Tenant to obtain (where the Tenant has applied for consent
under this Underlease which also requires the
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consent of the Superior Landlord) any consent which may be
required from the Superior Landlord
SERVICES
- --------
5.4 To use all reasonable endeavours to provide the Basic Services
and also any Optional Services (both as defined in the Fifth
Schedule) in accordance with the principles of good estate
management that are reasonably necessary for the use and
enjoyment of the Demised Premises (and other premises in the
Building which have been demised) and appropriate for the time
of day or the time of year PROVIDED that the Landlord shall
have no liability to the Tenant for:-
5.4.1 failure to provide a Service (also as defined in the
Fifth Schedule hereto) during any period when the
Tenant is more than one month in arrears with payment
of any monies properly due from the Tenant to the
Landlord hereunder
5.4.2 the interruption of a Service for reasons of
inspection maintenance repair or other works (in
which event the Landlord will
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restore the relevant Service as soon as reasonably
practicable)
5.4.3 failure to provide a Service due to damage breakdown
inclement weather shortage of fuel or water or any
other cause beyond the Landlord's reasonable control
(although the Landlord will then take all reasonable
steps to restore the relevant Service or (where
practicable) provide an alternative Service as soon
as reasonably practicable)
5.4.4 withdrawal of a Service if the Landlord reasonably
considers it no longer appropriate
5.5 VAT
---
5.5.1 Not later than 7 days (or if the Tenant has underlet
the whole or a Permitted Part or Parts of the Demised
Premises in accordance with the terms of this
Underlease then 30 days) before the first time when
for VAT purposes a taxable VAT Supply to the Tenant
is made under this Underlease by reason of a VAT
Election (the first "tax point") the Landlord shall
give writ-
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ten notice to the Tenant that it will be charging VAT
with effect from that time 5.5.2 If at any time the
Landlord or any other person shall have made a VAT
Election and on the basis of the VAT Election the
Landlord charges or intends to charge to the Tenant
any amount in respect of VAT in relation to this
Underlease the Landlord shall if requested in writing
by the Tenant (and only once in respect of the same
Landlord) provide the Tenant with copies of:-
5.5.2.1 the VAT registration certificate of the
Landlord or any person making the supply to
the Tenant for VAT purposes; and
5.5.2.2 either the prior written permission of HM
Customs and Excise to elect and any other
correspondence required to evidence the
election and when it takes effect or (if no
permission is necessary) the notification of
the VAT Election to HM Customs and Excise
and an acknowledgment by HM Customs
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and Excise of the notification
USE OUTSIDE BUSINESS HOURS
- --------------------------
5.6.1 For the purposes of this Clause the expressions
"Special Services" (or "Special Service") and "the
Special Service Charge" shall have the meanings
ascribed to them in Part II of the Fifth Schedule
hereto
5.6.2 If the Tenant requires the supply of a Special
Service or Special Services outside Business Hours
the Tenant shall make prior arrangements with the
Landlord or its agents in relation to such supply and
subject to the Landlord being able to procure such
supply and subject also to the Tenant paying the
Special Service Charge at the times and in the manner
provided in Part II of the Fifth Schedule hereto the
Landlord shall make such supply as requested as may
be reasonably practicable but shall not be liable for
the failure to make such supply in the circumstances
described in Clauses 5.4.1 5.4.2 and 5.4.3 hereof
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5.6.3 Where any Special Service or Special Services is or
are requested by the Tenant or other tenants with the
frequency at which the Landlord reasonably determines
it would be appropriate in the interests of good
estate management to include the same within the
Services the Landlord shall be entitled so to do and
thereupon the cost of provision thereof shall be
payable in the manner described in Part I of the
Fifth Schedule hereto
PROVISOS
- --------
6. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as
follows:-
RE-ENTRY
- --------
6.1 If any of the contingencies specified in this Clause 6.1 occur
(and where the Tenant or any surety is more than one
individual or entity then the Landlord's rights under this
Clause 6.1 will arise if a contingency occurs in respect of
any of those individuals or entities) it will be lawful for
the Landlord at any time thereafter to reenter the Demised
Premises or any part of the Demised Premises in the name of
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the whole and on the date of such re-entry this Underlease
will determine. In this Clause 6.1 the Insolvency Act 1986 is
called the 1986 Act". The contingencies referred to above are
as follows:-
6.1.1 any rent reserved remains unpaid for twenty one days
after becoming due and payable whether formally
demanded or not
6.1.2 the Tenant or any surety fails to comply with any of
their respective obligations under this Underlease or
any supplemental document
6.1.3 the Tenant or any surety (if a company) enters into
liquidation whether compulsory or voluntary or passes
a resolution for winding-up except where the
liquidation or winding-up resolution is for the
purpose of reconstruction or amalgamation while the
Tenant or such surety (as the case may be) remains
solvent under a scheme forthwith put into effect
6.1.4 the Tenant or any surety (if a company) has an
administration order made in respect of it or a
receiver or administra-
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tive receiver is appointed
6.1.5 the Tenant or any surety (if an individual) has a
receiving order made against him or becomes bankrupt
or enters into a composition with his creditors
6.1.6 if distress is levied on any of the Tenants goods on
the Demised Premises
PROVIDED THAT neither the existence of the Landlord's rights
under this Clause 6.1 nor the consequences of exercise of such
rights are to affect any other right or remedy available to
the Landlord under this Underlease or otherwise
ABATEMENT OF RENT
- -----------------
6.2 If the Building or any part thereof shall at any time during
the Term be destroyed or damaged by any of the Insured Risks
including damage by terrorist action whether or not the
Landlord has opted to insure against the same so as to make
the Demised Premises unfit for use then (save to the extent
that any policy or policies of insurance effected by the
Landlord and/or the Superior Landlord shall have been vitiated
or payment of the policy moneys refused in whole or any part
in consequence of
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any act or default of the Tenant or any underlessee or their
respective servants agents licensees or invitees) the rent
hereby firstly reserved or a fair proportion thereof according
to the nature and extent of the damage sustained shall until
the earlier of (a) the expiration of five years from the date
of such destruction or damage or (b) the date when the Demised
Premises shall have been rebuilt or reinstated and made fit
for occupation and use be suspended and cease to be payable
and any dispute concerning this sub-clause shall be determined
by a single arbitrator in accordance with the Arbitration Acts
1950 and 1979
DISPUTES WITH ADJOINING TENANTS
- -------------------------------
6.3 Disputes as between the Tenant and the tenants or occupiers of
any other part of the Building or any adjoining or
neighbouring property now or at any time during the Term
belonging to the Superior Landlord as to the nature and extent
of any easement right or privilege in favour of or affecting
the Demised Premises or the other part of the Building or the
adjoining or neighbouring property shall be decided in a
manner
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to be approved by the Superior Landlord and in the case of
disputes with tenants or occupiers of other parts of the
Building by the Surveyor provided that in any event the cost
of settling any such dispute is not included in the rent
secondly reserved under this Underlease
SURVEYOR'S DECISION
- -------------------
6.4 That any decision of the Surveyor on any matter on which he is
required or entitled to decide under the provisions of this
Underlease shall be final and binding on the parties hereto
and shall not be subject to challenge in any manner whatsoever
(except in the case of manifest error)
CONSENTS RIGHTS AND POWERS OF SUPERIOR LANDLORDS
- ------------------------------------------------
6.5.1 That in all cases where the consent or approval of
the Landlord is required under the terms of this
Underlease the giving of such consent or approval
shall be conditional upon the consent of the Superior
Landlord also being obtained so far as may be
required by the terms of the Superior Lease and all
powers of entry upon the Demised Premises during the
Term shall
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also be exercisable by the Superior Landlord
6.5.2 All rights and powers (including without prejudice to
the generality of the foregoing the right to approve
or consent to any matter or otherwise) of the
Landlord hereunder shall where the terms of the
Superior Lease so require also be exercisable by the
Superior Landlord without any of the restrictions on
such rights imposed herein (unless such restrictions
shall also appear in the Superior Lease)
TENANT'S GOODS LEFT IN PREMISES
- -------------------------------
6.6 If at such time as the Tenant has vacated the Demised Premises
after the determination of the Term either by effluxion of
time or otherwise any property shall remain in or on the
Demised Premises and shall not be removed within fourteen days
after written request by the Landlord to the Tenant so to do
then and in such case the Landlord may as the agent of the
owner of such property (and the Landlord is hereby appointed
by the Tenant to act in that behalf and the Tenant undertakes
to obtain ratification of
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such appointment from the owner of such property) sell such
property and shall then hold the proceeds of sale after
deducting the costs and expenses of removal storage and sale
reasonably and properly incurred by it to the order of the
Tenant PROVIDED THAT the Tenant will indemnify the Landlord
against any liability incurred by it to any third party whose
property shall have been sold by the Landlord in the mistaken
belief (which shall be presumed unless the contrary be proved)
that such property was liable to be so dealt with pursuant to
this sub-clause
SERVICE OF NOTICES
- ------------------
6.7 Section 196 of the Law of Property Act 1925 as amended by the
Recorded Delivery Service Act 1962 shall apply to all notices
required to be served hereunder
NO RESTRICTION ON USE OF ADJOINING LAND
- ---------------------------------------
6.8 Nothing herein contained or implied shall impose or be deemed
to impose any restriction on the use of any land or buildings
not comprised in this Underlease or give the Tenant the
benefit of or the right to enforce or to have enforced or to
prevent the release or modifica-
73
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tion of any covenant condition or stipulation entered into by
any lessee or tenant of the Landlord in respect of property
not comprised in this Underlease or shall operate to prevent
or restrict in any way the development of any land not
comprised in this Underlease PROVIDED THAT this condition
shall not entitle any person to take action prejudicial to the
Tenant's interest in the Demised Premises and the rights
granted to the Tenant under this Underlease or disentitle the
Tenant from exercising its remedies in relation to any such
action or threatened action
NO WARRANTY AS TO PERMITTED USE
- -------------------------------
6.9 Nothing herein contained or implied shall be taken to be a
covenant warranty or representation by the Landlord that the
Demised Premises can lawfully be used for any particular
purpose
QUALIFICATION OF LANDLORD'S LIABILITY
- -------------------------------------
6.10 The Landlord will not in any circumstances incur any liability
for damage to person or property or otherwise from any
accidental damage which may at any time be done to the Demised
Premises or any of the goods persons
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or property of the Tenant other than any act neglect default
or misfeasance of the Landlord its servants employees agents
or independent contractors.
MUTUAL OPTION TO DETERMINE
- --------------------------
6.11 If the Demised Premises or the means of access thereto over
the Common Parts shall be destroyed or damaged by any one of
the Insured Risks or by terrorist action whether or not the
Landlord has insured against such risk so as to render the
Demised Premises unfit for occupation and use and the Demised
Premises or the means of access over the Building are not
rebuilt or reinstated within two years and six months after
the date ("the Damage Date") following the happening of such
destruction or damage so as to render the Demised Premises fit
for occupation and use then at any time after the expiry of
two years and six months from the Damage Date either the
Landlord or the Tenant may determine this Underlease by giving
not less than six months notice ("the Termination Notice") to
the other and upon the expiry of such notice this Underlease
shall then deter-
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mine and the Tenant shall provide full vacant possession of
the Demised Premises to the Landlord but the Underlease shall
not determine in any of the following circumstances:-
6.11.1 if the Termination Notice was served by the Tenant
and the policy or policies of insurance of the
Demised Premises shall have been vitiated in whole or
in part as a consequence of any act neglect default
or omission of the Tenant any undertenant or other
occupier of the Premises and its or their respective
servants or agents; or
6.11.2 the Demised Premises and any other parts of the
Building which makes the Demised Premises capable of
beneficial use and occupation are rebuilt or
reinstated as mentioned in Clause 5.2 on or before
three years from the Damage Date
LANDLORD'S OPTION TO DETERMINE
- ------------------------------
6.12 If the Demised Premises or a substantial part of them or a
substantial part of the remainder of the Building shall be
destroyed or damaged by terrorist action and if the Landlord
has not insured against such risk then the Landlord
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may at any time within three months of the date ("the Damage
Date") following the happening of such destruction or damage
determine this Underlease by giving not less than six months
notice ("the Termination Notice") to the Tenant and upon the
expiry of such notice:-
6.12.1 this Underlease shall then determine but without
prejudice to any antecedent breaches
6.12.2 the Tenant shall provide full vacant possession of
the Demised Premises to the Landlord
6.13 Tenants Option to Determine
6.13.1 Subject to the Pre Conditions (as hereinafter
defined) being satisfied if the Tenant shall desire
to determine the Term on the Break Date (time being
of the essence for such date) and shall give to the
Landlord notice to that effect ("the Break Notice")
not later than twelve months and not earlier than
eighteen months before the Break Date (time to be of
the essence for such notice) then on the Break Date
the Term shall thereupon cease and deter-
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mine but without prejudice to the remedies of either
party against the other in respect of any antecedent
claim or breach of covenant
6.13.2 For the purpose of sub-clause 6.13.1 above the Pre
Conditions are that on the Break Date:
6.13.2.1 this Underlease remains vested in the Tenant
named herein or a Group Company ("Group
Company" meaning a company that is a member
of the same group as the Tenant within the
meaning of Section 42 of the Landlord and
Tenant Act 1954 in the form of that Section
as it exists at the date of this Underlease
and so remains a member during the period in
which the Underlease is vested in that
company)
6.13.2.2 the Tenant provides vacant possession of the
whole of the Demised Premises
6.13.2.3 the Tenant has paid the rent first reserved
and the "on account" service charge payable
under this Underlease
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6.13.2.4 the Tenant pays the Due Sum (if any)
referred to in Clause 6.13.3 not later than
four weeks before the Break Date PROVIDED
THAT if the Assessor (as hereinafter
defined) shall fail to make an assessment
("the Assessment") of the Due Sum (as
hereinafter defined) and notify the Tenant
of the Due Sum six weeks before the Break
Date the Tenant shall pay to the Landlord
the Due Sum within 14 days of being notified
of the Assessment ("the Due Date") PROVIDED
FURTHER that if the Due Date is later than
the Break Date this condition shall not be
treated as a precondition but shall be a
condition subsequent
6.13.3.1 The provisions of this Clause 6.13.3 shall
only apply in the event of the Tenant
serving a Break Notice
6.13.3.2 In the event of any dispute as to any sums
payable under this Underlease (whether in
relation to dilapidations
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service charges or otherwise) the Due Sum
(as hereinafter defined) shall be the
subject of a deposit of cash with (or the
provision of an unconditional guarantee from
a London Clearing Bank in favour of) the
Landlord's solicitors
6.13.3.3 The Due Sum shall be the amount needed to
remedy any breaches of covenant and/or make
good any deficiency in payments to the
Landlord due under the Underlease and the
Due Sum shall be agreed between the Landlord
and Tenant and if not so agreed within six
months from the service of the Break Notice
it shall be assessed by an independent
appropriately qualified surveyor ("the
Assessor") (acting as expert) appointed by
the Landlord who is a representative of a
reputable firm or company experienced in
disputes of this nature who in fixing the
figure shall acknowledge a duty of care to
the Landlord and to
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the Tenant to endeavour to meet a fair
result between their respective positions
and who shall use his best endeavours to
provide his assessment within 3 months of
his appointment
6.13.3.4 The amount of the Due Sum shall not bind the
Landlord or the Tenant in relation to any
claim for any breach made on or after the
termination of the Underlease but shall
merely constitute security for the Landlord
in relation to all or part of any eventual
claim. The amount shall not be treated as
evidence of the justifiable figure for any
such claim
6.13.3.5 Upon the conclusion of any claim made at or
after the expiry of the Underlease (and it
is acknowledged that the Landlord has the
right to make claims in respect of any
breach of the Underlease and the Tenant has
the right to make a claim for the repayment
of the whole or part of the Due Sum or the
release of any guarantee)
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the amount due to the Landlord shall be
released to the Landlord (together with
interest accrued on such sum) and the
balance (together with interest accrued
thereon) shall be released to the Tenant
6.13.3.6 If either party considers it is being
prejudiced by any delay in the final
settlement of any claim under Clause
6.13.3.5 above it shall be entitled to call
upon the Assessor to make an interim
assessment of such sum or sums (payable to
the Landlord and/or to be released to the
Tenant) as should in any event be payable
(notwithstanding the dispute as to the
balance) and payments or releases based on
such interim assessment shall be made
forthwith
VAT
- ---
6.14 Notwithstanding anything in this Underlease or Section 42 of
the VAT Act the Tenant shall not be liable to pay any amount
in respect of VAT on a VAT Supply made before 24th March 1998
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where such VAT Supply would have been exempt save for a VAT
Election
6.15 RELEASE OF TENANT LIABILITY ON ASSIGNMENT
6.15.1 In this Clause 6.15:-
6.15.1.1 "Value" means the value to a Landlord of the
Building of which the Demised Premises forms
part which is to be assessed in accordance
with the objective view of a reasonable
Landlord
6.15.1.2 "Package" means the aggregate of covenants
proviso's obligations and other terms
providing benefits (whether actual or
contingent) to the Landlord contained in
this Underlease and in any document
supplemental hereto or entered into for the
purposes of providing any assurance or
security for the Landlord that the Tenant
will comply with its obligations (including
any personal or corporate or bank guarantee
rent deposit or other bond security or
undertaking)
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6.15.1.3 "Tenant Package" means the Package provided
to the Landlord at the date of this
Underlease or (if of greater value) the
Package held by the Landlord as at the date
it receives an application from the Tenant
for licence to assign to the Special
Assignee
6.15.1.4 "Special Assignee" means the assignee to
whom the Tenant proposes to assign this
Underlease and in connection with such
assignment obtain a release of liability
pursuant to this Clause
6.15.1.5 "New Package" means the Package provided by
the Special Assignee
6.15.1.6 "Outgoing Tenant" means the person who is
the Tenant under this Underlease immediately
prior to any assignment to a Special
Assignee
6.15.2 In the event of the Outgoing Tenant assigning this
Underlease (in accordance with the provisions for
assignment herein contained) to a Special Assignee in
circumstances where the New Package is
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equivalent to or greater in Value than the Tenant
Package then at the request and cost of the Outgoing
Tenant the Landlord will execute a release of all the
Outgoing Tenant's obligations and liabilities under
the terms of this Underlease (and any other
obligations and liabilities contained in the Tenant
Package) but without prejudice to the preservation of
any claim on any outstanding matter
IN WITNESS whereof the parties hereto have caused their respective Common Seals
to be hereunto affixed the day and year first above written
THE FIRST SCHEDULE above referred to
------------------------------------
(The Demised Premises)
----------------------
ALL THOSE parts of the second floor of Five Acre Square 126/137 (inclusive)
Houndsditch EC3 in the City of London which are for the purpose of
identification only shown edged red on Plan C including:-
1. The raised floors and the screened surfaces of the floor slabs of the
premises hereby demised and the air space between them
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2. The internal plaster surfaces and plasterwork of the walls bounding the
premises hereby demised (but not the remaining thickness or external
surfaces of such walls) the internal architraves of the doors between
the premises hereby demised and the Common Parts and the skirting
within the premises hereby demised but excluding the doors between the
premises hereby demised and the Common Parts the external architraves
door frames and door furniture thereof all window frames and furniture
and the glass fitted therein
3. The surfaces of the ceilings of the premises hereby demised or any
suspended ceiling installation including all fitments therein and the
supporting framework thereof (but for the avoidance of doubt not the
air conditioning and sprinkler installations in and above the suspended
ceiling installation)
4. The whole of all non-load bearing walls or partitions (if any) wholly
within the premises hereby demised
5. The external plastered coverings of the pillars within the premises
hereby demised but not the remaining thickness or internal structure of
such pillars
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BUT EXCLUDING the areas coloured blue on Plan C
THE SECOND SCHEDULE above referred to
-------------------------------------
PART I
------
Easements granted
-----------------
1. Full right and liberty for the Tenant and all persons authorised by it
(in common with all other persons entitled to the like right) at all
times and for all purposes in connection with the permitted user of the
Demised Premises to go pass and repass on foot over and through and
along the entrances to the Building and the foyers staircases landings
the six main lifts and the goods lift in the Building only for such
purposes and for access to any parking spaces occupied under separate
licence and with or without vehicles over the Service Area (so far only
as necessary for deliveries to and collection from the Demised
Premises)
2. The uninterrupted passage of the Utilities which serve the Demised
Premises from and to the Demised Premises through the Conduits which do
not form part of the Demised Premises for the time being running in
over under or through the Building or any part thereof
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3. The right for the Tenant with servants workmen and others at
all reasonable times upon giving three days previous notice
in writing to the occupier thereof (or in the case of
emergency without notice) to enter into and upon other parts
of the Building where there is no reasonably practicable
alternative for the purpose of repairing maintaining altering
cleansing examining or testing the Demised Premises and in
any case causing as little damage and disturbance as possible
and making good any damage caused
4. The right to use all toilet facilities in the Common Parts on
the second floor of the Building PROVIDED THAT the Landlord
may from time to time designate different toilet facilities
or suspend the use thereof in order to carry out any
necessary maintenance or repair to or replacement of the same
or of any Plant therein or to carry out or provide the
Services therein so long as toilet facilities at least in
respect of male and female toilets are equally extensive as
those referred to above and adequate to permit the continued
use and occupation of the Demised Premises remain available
at all times
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5. The right to escape in the case of emergency over the routes designated
by the Landlord from time to time
6. The right to affix to the roof of the Building in a position first
approved by the Landlord (such approval not to be unreasonably
withheld) and use a satellite dish or similar apparatus (not exceeding
two in number) suitable for the receipt of programmes broadcast by
satellite of a design and specification first approved by the Landlord
(such approval not to be unreasonably withheld) and the right to
install in a position and in manner first approved by the Landlord
(such approval not to be unreasonably withheld) in or on the Building
(but excluding any Lettable Space and the Common Parts) and use any
necessary cables linking the satellite dish or similar equipment to the
Demised Premises
PROVIDED THAT:-
6.1 the Tenant shall carry out such works causing as little damage
disturbance inconvenience and annoyance to the Landlord and the other
occupiers of the Building and forthwith making good all damage caused
to the reasonable satisfaction of the Landlord
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6.2 the Tenant will remove any equipment installed (including the
cabling) on the first to occur of:-
6.2.1 the end or sooner determination of the Term and
6.2.2 the equipment ceasing to be required by the Tenant
the Tenant in any event forthwith making good any
damage caused by such removal and reinstatement to
the reasonable satisfaction of the Landlord
PART II
-------
(Reservations)
--------------
PASSAGE OF UTILITIES
- --------------------
1. The right in common with the Tenant and those deriving title through or
under it to the uninterrupted passage of the Utilities which serve the
remainder of the Building and/or any of the adjoining or neighbouring
property of the Landlord and/or the Superior Landlord through the Conduits
for the time being running in over under or through the Demised Premises
ENTRY TO INSPECT AND FOR WORKS
- ------------------------------
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2. Full right and liberty for the Landlord and its surveyors agents and
workmen and others authorised by the Landlord at a time reasonably
agreed between the Landlord and the Tenant and from time to time (upon
48 hours prior notice save in case of emergency) to enter into and upon
the Demised Premises and all parts thereof for the purpose of:-
2.1 repairing maintaining altering cleansing examining and/or
testing the Demised Premises and all parts thereof and the
Conduits serving the same and/or any other part of the
Building and/or any adjoining or neighbouring property of the
Landlord and/or the Superior Landlord where there is no
reasonably practicable alternative and to make all connections
and disconnections which may be necessary in relation thereto
and for the purpose of carrying out any work or doing anything
whatsoever for which the Tenant is liable hereunder and in
respect of which the Tenant shall for the time being be in
default
2.2 making connections with any or all of the Conduits existing
from time to time laying new Conduits and altering repairing
renewing
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cleansing emptying and inspecting the Conduits and/or the
Plant as necessary in connection with the accommodation of any
other part of the Building
2.3 repairing renewing altering and/or maintaining any other part
of the Building where there is no reasonably practicable
alternative
2.4 carrying out any other work which the Landlord must or may
carry out under the provisions of Clause 5.4 hereof
2.5 any other necessary or reasonable purposes whatsoever where
there is no reasonably practicable alternative
PROVIDE THAT neither the Landlord nor the Superior Landlord nor any
other person exercising any of the above rights shall be liable for any
disturbance inconvenience or loss of business resulting from any such
entry or the making of such repairs or the performance of any such work
but PROVIDED FURTHER THAT in the exercise of the above rights the
Landlord or any other person so entering shall cause as little damage
and disturbance as reasonably possible and shall make good any damage
caused to the Demised Premises resulting therefrom to the reasonable
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satisfaction of the Tenant
BUILD ON ADJACENT LAND
- ----------------------
3.1 The right of the Superior Landlord in accordance with the
terms of the Superior Lease to build or rebuild or alter or
permit the building rebuilding or alteration of any adjacent
or neighbouring land or building of the Superior Landlord in
any manner whatsoever and to let the same for any purpose or
otherwise deal therewith notwithstanding the light or air to
the Demised Premises is in any such case thereby diminished or
any other liberty easement right or advantage belonging to the
Tenant is thereby diminished or prejudicially affected
3.2 The right to build rebuild or alter or permit the building
rebuilding or alteration of the remainder of the Building by
the Landlord and to let the same for any purpose or otherwise
deal therewith provided that such works do not materially
adversely affect the Tenant's use and occupation of the
Demised Premises for the purposes permitted by this Underlease
SUPPORT AND SHELTER
- -------------------
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4. The right to subjacent and lateral support and to shelter and
protection for other parts of the Building from the Demised
Premises
PART III
--------
(Matters to which the Demised Premises is subject)
--------------------------------------------------
COVENANTS IN SUPERIOR LEASE
- ---------------------------
1. The covenants on the lessee's part contained in the Superior Lease
(except only the covenant for payment of the rents reserved thereby)
2. All matters contained or referred to in the Charges Register as at 9th
March 1993 of the Landlord's title number NGL681489 (other than entries
numbered 2, 3, 4, 6 and 7)
THE THIRD SCHEDULE above referred to
------------------------------------
(Rent Review)
-------------
1. In this Schedule the following expressions shall have the meanings
assigned to them hereunder:-
"the rent review dates" shall mean the fifth tenth fifteenth and
twentieth anniversary of the date from which the Term is calculated
"the Open Market Rent" shall mean the yearly rent for which the
Demised Premises could reasonably be expected to be let by a willing
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lessor to a willing lessee without fine or premium with vacant
possession on the relevant rent review date in the open market for a
term of lO years or a term equal to the residue then unexpired of
the Term (whichever be the longer) but in either event commencing on
the relevant rent review date and otherwise upon the terms and
conditions (save as to the actual amount of rent payable and any
rent free period allowed to the Tenant but including the provisions
for review contained in this Underlease) on the basis of the user
permitted hereunder and on the assumption if not a fact that:-
(a) all covenants hereunder have been complied with
(b) that the Demised Premises are fitted out and ready for
immediate beneficial occupation and use and without limitation
that the Demised Premises have been finished to the
specification described in the Technical Handbook (a copy
whereof is annexed hereto) together with the provision of good
quality carpeting and adequate floor outlet boxes all at the
Landlord's expense
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and that the said floor outlet boxes are live
(c) that the hypothetical tenant has had immediately prior to the
relevant review date the benefit of an adequate rent free
and/or reduced rent period for the purposes of fitting out
(d) that the Demised Premises comply with all statutory byelaws
and planning requirements
there being disregarded:-
(i) any effect on rent of the fact that the Tenant or any
underlessee or lawful occupier or any predecessor in
title to the same has been in occupation of the
Demised Premises
(ii) any goodwill attached to the Demised Premises by
reason of the business carried on thereat by the
Tenant or any underlessee or lawful occupier or any
predecessor in title to the same
(iii) any effect on rent of any improvement made during the
Term or any period of prior occupation by the Tenant
and/or
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pursuant to any agreement for Underlease by the Tenant or any
underlessee or lawful occupier or any predecessor in title to
the same (where a written application for the consent of the
Landlord if required hereunder has been made) so far as made
at its own expense and to the extent that there is no
liability on the Landlord to pay or contribute to the cost of
such improvement but excluding any improvement undertaken in
performance of an obligation to the Landlord other than:-
(a) the obligation imposed under Clause 4.18 or
(b) under any licence for alterations granted by the Landlord to
the Tenant under this Underlease
(iv) any diminution in rental value attributable to any
work carried out by any Tenant or undertenant or any
other permitted occupier during the
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Term
(v) Clause 2(iii) of this Third Schedule
2. As from each rent review date the yearly rent first hereby reserved
shall be whichever is the higher of:-
(i) the yearly rent first hereby reserved and payable immediately
before the relevant rent review date and
(ii) the Open Market Rent; and
(iii) in the case of the rent review due on 25th March 1998 the sum
of ONE MILLION AND SEVENTY FOUR THOUSAND SIX HUNDRED AND SIXTY
POUNDS ((pound)1,074,660.00)
3. If the Landlord and the Tenant shall not have agreed the Open Market
Rent at the relevant rent review date the Open Market Rent shall
(unless subsequently agreed by the Landlord and the Tenant) be
determined by a surveyor qualified for not less than ten years and
experienced and conversant in the office letting market of the City of
London and its environs (hereinafter called "the Appointed Surveyor")
to be agreed upon in writing by the Landlord and the Tenant (in which
event the capacity in which the Appointed Surveyor shall act shall be
agreed between
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the Landlord and the Tenant) and in default of agreement to make such
appointment the Appointed Surveyor shall be nominated by the President
for the time being of the Royal Institution of Chartered Surveyors upon
the application of the Landlord or the Tenant which may be made at any
time (in which event the determination of the Open Market Rent by the
Appointed Surveyor shall be made by him as an arbitrator pursuant to
the provisions of the Arbitration Acts 1950 and 1979 and not as an
expert)
4. Nothing contained in this Schedule shall prevent the Landlord and the
Tenant agreeing the Open Market Rent at any time after the nomination
or appointment of the Appointed Surveyor but prior to any determination
made by him and in such event such agreement shall be binding upon the
parties hereto
5. Upon the agreement or determination of the reviewed rent a memorandum
thereof shall forthwith be annexed to this Underlease and the
Counterpart hereof in such form as the Landlord's Solicitors shall
reasonably determine
6. In the event of the Landlord at the relevant rent review date being
prevented or prohibited by reason of any legislation government order
or decree (in
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this paragraph collectively referred to as "legislation") from
exercising its rights under this Schedule and/or obtaining the whole or
any part or parts of any increase in the rent ("increase" in this
context meaning such increase as disregarding the provisions of any
such legislation would otherwise have been obtainable at the relevant
rent review date by reason of the provisions of this Schedule) then:-
(i) In the event of the legislation permitting the whole of such
increase in rent to take effect at a date subsequent to the
relevant rent review date the said increase shall take effect
at the earliest date permitted by legislation or
(ii) in the event of legislation permitting only limited increases
in the rent on dates subsequent to the relevant rent review
date the said increases shall take effect on the earliest
dates on which they are so permitted to take effect and until
such time or times as the Landlord shall be entitled to take
the benefit of whole of the increase in rent which but for the
legislation it would have been able to ob-
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tain at the relevant rent review date
7. If the rent first hereby reserved and payable from the relevant rent
review date shall not have been ascertained by that date then the
Tenant shall from such date pay at the times and in manner aforesaid a
yearly rent on account thereof equal to the rent first hereby reserved
and payable immediately before the relevant rent review date and within
fourteen days after the agreement or determination of the rent to be
payable in accordance with paragraphs 2 and 3 of this Schedule the
Tenant will pay to the Landlord an amount equal to the excess (if any)
of the rent so agreed or determined over the rent paid on account for
the period from the relevant rent review date together with interest
thereon at base rate or the equivalent for the time being in force of
National Westminster Bank plc or such substitute rate as is provided
for in Clause 1.11 from the date or dates on which the same or each
instalment thereof would otherwise have been payable until payment
THE FOURTH SCHEDULE above referred to
-------------------------------------
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Covenant by Surety to this Underlease
-------------------------------------
The Surety HEREBY JOINTLY AND SEVERALLY COVENANT with the Landlord that
1. The Tenant will at all times during the continuance of the Term (which
shall be deemed to include for all the purposes of this Schedule any
new underlease of the Demised Premises granted to the Tenant by order
of the Court or by negotiation pursuant to an application by the Tenant
to the Court) pay the rents for the time being reserved and perform and
observe the covenants on the part of the Tenant to be observed and
performed and that if the Tenant shall make default in payment of the
said rents or any part thereof at the times fixed for payment thereof
or in observing and performing the said covenants or any of them and
provided that notice of any sums which are first second thirdly
fourthly fifthly and sixthly reserved by the Underlease is served on
the Surety within 100 days of the due date then and in every such case
the Surety will pay the rents or observe and perform any covenant in
respect whereof the Tenant shall be in default as aforesaid PROVIDED
that notwithstanding the forbearance by the Landlord to enforce against
the Tenant the payment
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<PAGE>
of the said rents or the observance or performance of the Tenant's
covenants or the giving of time by the Landlord to the Tenant in
relation thereto the Surety any assignment of this Underlease or any
Variation to the terms of this Underlease shall not thereby be
discharged from liability under the foregoing covenant and
2. If the Tenant shall enter into liquidation whether compulsory or
voluntary not being merely a voluntary liquidation of a solvent company
for the purposes of amalgamation or reconstruction under a scheme
forthwith put into effect or shall become bankrupt and the liquidator
or trustee in bankruptcy of the Tenant shall disclaim these presents or
if the Landlord shall for any reason enforce its right of re-entry
under Clause 6.1 and if the Landlord shall within six months after such
disclaimer or re-entry by notice in writing require the Surety or
either/any of them to accept an Underlease of the Demised Premises for
a term commensurate with the interest vested in the Tenant immediately
before such disclaimer or re-entry at the same rents and subject to the
like covenants and conditions as are payable under and applicable to
the tenancy immediately before
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<PAGE>
the date of such disclaimer or re-entry (the said new Underlease and
the rights and liabilities thereunder to take effect as from the date
of the said disclaimer or re-entry and subject to and with the benefit
of these presents if they still subsist) then and in every such case
the Surety or such of them as the Landlord may require shall accept
such Underlease accordingly and execute a counterpart thereof and pay
the Landlord's costs of such new Underlease and if the Landlord shall
not require the Surety or either/any of them to accept such Underlease
the Surety shall nevertheless pay to the Landlord upon demand a sum
equal to the rents which would have been payable but for such
disclaimer or re-entry from the date of such disclaimer or re-entry
until the expiration of six months therefrom or until the Demised
Premises shall have been re-let by the Landlord whichever shall first
occur
THE FIFTH SCHEDULE above referred to
------------------------------------
PART I
------
1. For the purpose of Part I of this Schedule:-
(i) An "Accounting Period" shall mean a period commencing on the
First day of January
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and ending on the Thirty first day of December in each year or
such other period as the Landlord may in its absolute
discretion from time to time determine
(ii) "the Services" shall mean the Basic Services (hereinafter
defined) and such of the Optional Services (hereinafter
defined) as the Landlord (subject to Clause 5.4.4 of this
Underlease) provides and "Service" shall be construed
accordingly
(iii) "the Basic Services" shall mean the services to be provided to
a standard appropriate to a high quality office building in
the City of London and which are namely:-
(a) keeping the Building (except the Lettable Space but
including the Plant) in good and substantial repair
(b) procuring the regular inspection servicing and
maintenance by specialist contractors of the Plant
and the modernisation upgrading or replacement of the
same whenever reasonably necessary
(c) keeping the exterior and interior of the Building
(except the Lettable Space) clean
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and decorated whenever reasonably necessary
(d) complying with all Acts of Parliament in relation to
the Building (except those in relation to the Demised
Premises which are the obligation of the Tenant
hereunder and the like in relation to other Lettable
Space) and the Plant
(e) procuring the supply of electricity to the Demised
Premises
(f) providing adequate heating cooling and ventilation to
the Demised Premises during the Business Hours
(g) keeping the Service Area adequately lit as necessary
both within and outside the Business Hours
(h) keeping the Common Parts adequately appointed in
keeping with the standard appropriate to a high
quality office building in the City of London
(i) providing hot and cold water towels soap and sanitary
facilities to the toilet and lavatory accommodation
in the Common Parts designated for use by the Tenant
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<PAGE>
(j) providing a satisfactory lift service appropriate to
a high quality office building in the City of London
(k) providing one or more commissionaires or
receptionists during the Business Hours
(l) providing twenty four hour security personnel to
control ingress and egress to the Building as
appropriate for the time of day or night
(m) providing other necessary staff or external
contractors for the proper management and day to day
running of the Building and the Plant
(n) providing necessary communication facilities for the
aforesaid staff or external contractors together with
office and workroom and storage accommodation
furnishings office equipment and stationary tools
appliances plant and equipment
(o) providing uniforms and protective clothing for the
aforesaid staff
(p) providing containers for refuse and the collection
thereof by the City of London Corporation or other
private contractor
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<PAGE>
(q) providing signage within the Common Parts and outside
the Building
(iv) "the Optional Services" shall mean:-
(a) landscaping and providing and maintaining all plants
and shrubs whether within the Common Parts or outside
the Building and keeping the same properly maintained
(b) providing decorative lighting whether within the
Common Parts or outside the Building
(c) providing flags for the flag pole over the main
entrance in Houndsditch
(d) providing close circuit television or other
mechanical or electronic security systems whether in
the Common Parts or outside the Building
(e) valuing the Demised Premises not more frequently than
once in each year for insurance purposes
(f) providing any further services as are reasonably
required by the Landlord in the interests of good
estate management
(v) The "Annual Cost" shall mean the expenditure incurred by the
Landlord in any Accounting
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Period in carrying out or procuring the carrying out of the
Services together with but without prejudice to the generality
of the foregoing:-
(a) a reasonable charge by the Landlord (not exceeding
8.25% of the Annual Cost disregarding this Clause
(v)(a)) in respect of the cost of management or the
reasonable cost of employing Managing Agents;
(b) the proper costs of any Accountant or Surveyor
employed to determine or audit the Annual Cost or the
interim payments or the Service Charge (as
hereinafter defined); and
(c) the cost of maintaining the necessary bank account or
accounts and the cost of money borrowed in connection
with the provision of the Services; and
(d) the cost of the Landlord's contribution to the repair
and maintenance of party structures and
(e) the cost to the Landlord of sewage disposal and
refuse collection whether via the environmental
charge or otherwise
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<PAGE>
BUT EXCLUDING:-
(f) any charge made in respect of the cost of collection
of rents
(g) any charges referrable to any unlet Lettable Space
(vi) The "Service Charge" shall be a fair and reasonable proportion
attributable to the Demised Premises of the Annual Cost to be
determined (and variable from time to time and in varying
proportions (which in appropriate cases may be the whole) in
respect of different parts of the Services) by the Surveyor or
Accountant (whose decision shall be final and binding on the
parties hereto save in the case of manifest error) by
reference to floor area or such other basis as may
appropriately be adopted on the basis that the whole of the
Annual Cost is intended (once all the Lettable Space is fully
let) to be recoverable from the tenants and/or the occupiers
of the Building
2. The sum payable on account of the Service Charge for the Accounting
period current at the date hereof shall be calculated pro rata on a
daily basis at the rate of TWO HUNDRED AND THIRTY ONE THOUSAND FOUR
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HUNDRED AND TEN POUNDS AND TWELVE PENCE ((pound)231,410.12) per annum
and the first payment shall be made on the execution hereof and shall
be in respect of the period from the date hereof to the day before the
quarter day immediately following the execution hereof (both dates
inclusive)
3. The sum payable on account of the Service Charge for all subsequent
Accounting Periods shall be an amount equal to the estimated Service
Charge for the relevant Accounting Period as specified in the
Certificate to be served by the Surveyor upon the Tenant as soon as
practicable containing an estimate of the Annual Cost and the Service
Charge for the relevant Accounting Period
4. The said sums payable on account shall be paid to the Landlord by equal
instalments in advance on the usual quarter days
5. In any Accounting Period less or more than a year the difference
between the Service Charge and the payments on account as set out in
paragraphs 3 and 4 of Part I of this Schedule shall be calculated on a
pro rata daily basis
6. As soon as practicable after the end of each Accounting Period the
Surveyor shall:-
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(i) compute the Annual Cost for such Accounting Period
(ii) serve upon the Tenant a Certificate of the Annual Cost and the
Service Charge for the immediately preceding Accounting Period
and the aforesaid Certificate of the Landlord's accountant or the Surveyor
shall be conclusive and binding on the parties hereto in relation to all
matters of fact therein set out (save in the case of manifest error)
7. Within twenty eight days of the service of such Certificate the Tenant
shall pay to the Landlord or the Landlord shall allow to the Tenant
against the sums payable on account of the Service Charge as the case may
be any difference between the Service Charge for the immediately preceding
Accounting Period and the total of the interim sums paid on account of the
Service Charge for the preceding Accounting Period
PART II
-------
For the purpose of Part II of this Schedule:-
(i) "the Special Accounting Period" shall mean a period commencing
on the 1st day of January and ending on the 31st day of
De-
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cember in each year or such other period as the Landlord may
in its absolute discretion from time to time reasonably
determine having particular regard to the frequency of and the
period in which the Special Service or Special Services (as
hereinafter defined) are supplied
(ii) "the Special Services" shall mean the provision at the request
of the Tenant of any of the Basic Services and/or Optional
Services (normally only provided during the Business Hours)
outside the Business Hours "Special Service" shall be
construed accordingly
(iii) "the Special Annual Cost" shall mean the expenditure incurred
by the Landlord in any Special Accounting Period in carrying
out or procuring the carrying out of the Special Services
together with but without prejudice to the generality of the
foregoing:-
(a) a reasonable charge by the Landlord (not to exceed
8.25% of the Special Annual Cost disregarding this
Clause
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(iii)(a)) in respect of the cost of management or the cost of
employing management agents in relation to the Special
Services
(b) the proper cost of any accountant or surveyor
employed to determine or audit the Special Annual
Cost or the interim payments or the Special Service
Charge (as hereinafter defined) and
(c) the cost of maintaining the necessary bank account or
accounts and the cost of money borrowed in connection
with the provision of the Special Services
(iv) "the Special Service Charge" shall be a fair and reasonable
proportion attributable to the Demised Premises of the Special
Annual Cost to be determined (and variable from time to time
and in varying proportions (which in appropriate cases may be
the whole) in respect of different parts of the Special
Services) by the Surveyor or Landlord's accountant (whose
decision shall be final and binding on the
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<PAGE>
parties hereto save in the case of manifest error ) by
reference to the floor area and the degree of use of the
Special Services or such other basis as may appropriately and
reasonably be adopted on the basis that the whole of the
Annual Cost is intended (once all the Lettable Space is fully
let) to be recoverable from the Tenants and/or the occupiers
of the Building
and the aforesaid Certificate of the Landlord's accountant or the
Surveyor shall be conclusive and binding on the parties hereto in
relation to all matters of fact set out therein (save in the case of
manifest error)
6. Within twenty eight days of the service of such Certificate the Tenant
shall pay to the Landlord or the Landlord shall allow to the Tenant
against the sums payable on account of the Special Service Charge as
the case may be any difference between the Special Service Charge for
the immediately preceding Special Accounting Period and the total of
the interim sums paid on account of the Special Service Charge for the
preceding Special Accounting Period
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<PAGE>
THE COMMON SEAL of CHESTERMOUNT )
PROPERTIES LIMITED was hereunto )
affixed to this Deed in the )
presence of:- )
Director
Director/Secretary
116
<PAGE>
Exhibit 10.7
FINANCIAL SERVICES ACQUISITION CORPORATION
1996 STOCK OPTION PLAN
1. Purpose; Types of Awards; Construction.
The purpose of the Financial Services Acquisition Corporation
1996 Stock Option Plan (the "Plan") is to align the interests of executive
officers, other key employees and nonemployee directors of Financial Services
Acquisition Corporation and its subsidiaries with those of the stockholders of
Financial Services Acquisition Corporation, to afford an incentive to such
officers, employees and directors to continue as such, to increase their efforts
on behalf of the Company and to promote the success of the Company's business.
To further such purposes, the Committee may grant options to purchase shares of
the Company's common stock. The provisions of the Plan are intended to satisfy
the requirements of Section 16(b) of the Securities Exchange Act of 1934 and of
Section 162(m) of the Internal Revenue Code of 1986, and shall be interpreted in
a manner consistent with the requirements thereof, as now or hereafter
construed, interpreted and applied by regulations, rulings and cases.
2. Definitions.
As used in this Plan, the following words and phrases shall
have the meanings indicated below:
(a) "Agreement" shall mean a written agreement
entered into between the Company and an Optionee in connection with an award
under the Plan.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Cause," when used in connection with the
termination of an Optionee's employment by the Company or the cessation of an
Optionee's service as a member of the Board, shall mean (i) the conviction of
the Optionee for the commission of a felony, (ii) the willful and continued
failure by the Optionee substantially to perform his duties and obligations to
the Company or a Subsidiary (other than any such failure resulting from his
incapacity due to physical or mental illness), or (iii) the willful engaging by
the Optionee in misconduct that is demonstrably injurious to the Company or a
Subsidiary. For purposes of this Section 2(c), no act, or failure to act, on an
Optionee's part shall be considered "willful" unless done, or omitted to be
done, by the Optionee in bad faith and without reasonable belief that his action
or omission was in the best interest of the Company. The Committee shall
determine whether a termination of employment is for Cause for purposes of the
Plan.
(d) "Change in Control" shall mean the occurrence of
the event set forth in any of the following paragraphs:
- ----------------------
Amended and Restated as of 8/27/96
<PAGE>
(i) any Person (as defined below) is or
becomes the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or indirectly,
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its subsidiaries) representing 50% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the following individuals cease for
any reason to constitute a majority of the number of directors then
serving: individuals who, on the date hereof, constitute the Board and
any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was
previously so approved or recommended; or
(iii) there is consummated a merger or
consolidation of the Company or a direct or indirect subsidiary thereof
with any other corporation, other than (A) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, at
least 50% of the combined voting power of the securities of the Company
or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities
acquired directly from the Company or its subsidiaries) representing
50% or more of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company
approve a plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets, other than
a sale or disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by Persons in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
2
<PAGE>
For purposes of this Section 2(d), "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(e) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(f) "Committee" shall mean a committee established
by the Board to administer the Plan.
(g) "Common Stock" shall mean shares of common
stock, par value $.001 per share, of the Company.
(h) "Company" shall mean Financial Services
Acquisition Corporation, a corporation organized under the laws of the State of
Delaware, or any successor corporation.
(i) "Disability" shall mean an Optionee's inability
to perform his duties with the Company or on the Board by reason of any
medically determinable physical or mental impairment, as determined by a
physician selected by the Optionee and acceptable to the Company.
(j) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time, and as now or hereafter
construed, interpreted and applied by regulations, rulings and cases.
(k) "Fair Market Value" per share as of a particular
date shall mean (i) if the shares of Common Stock are then listed on a national
securities exchange, the closing sales price per share of Common Stock on the
national securities exchange on which the Common Stock is principally traded for
the last preceding date on which there was a sale of such Common Stock on such
exchange, or (ii) if the shares of Common Stock are then traded in an
over-the-counter market, the average of the closing bid and asked prices for the
shares of Common Stock in such over-the-counter market for the last preceding
date on which there was a sale of such Common Stock in such market, or (iii) if
the shares of Common Stock are not then listed on a national securities exchange
or traded in an over-the-counter market, such value as the Committee, in its
sole discretion, shall determine.
3
<PAGE>
(l) "Incentive Stock Option" shall mean any option
intended to be and designated as an incentive stock option within the meaning of
Section 422 of the Code.
(ll) "Nonemployee Director" shall mean a member of
the Board who is not an employee of the Company.
(m) "Nonqualified Option" shall mean an Option that
is not an Incentive Stock Option.
(n) "Option" shall mean the right, granted
hereunder, to purchase shares of Common Stock. Options granted by the Committee
pursuant to the Plan may constitute either Incentive Stock Options or
Nonqualified Stock Options.
(o) "Optionee" shall mean a person who receives a
grant of an Option.
(p) "Option Price" shall mean the exercise price of
the shares of Common Stock covered by an Option.
(q) "Parent" shall mean any company (other than the
Company) in an unbroken chain of companies ending with the Company if, at the
time of granting an Option, each of the companies other than the Company owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other companies in such chain.
(r) "Plan" shall mean this Financial Services
Acquisition Corporation 1996 Stock Option Plan, as it may be amended from time
to time.
(s) "Retirement" shall mean the retirement of an
Optionee in accordance with the terms of any tax-qualified retirement plan
maintained by the Company or a Subsidiary in which the Optionee participates. If
the Optionee is not a participant in such a plan, such term shall mean the
termination of the Optionee's employment or cessation of the Optionee's service
as a member of the Board, other than by reason of death, Disability or Cause on
or after attainment of the age of 65.
(t) "Rule 16b-3" shall mean Rule 16b-3, as from time
to time in effect, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act, including any successor to such Rule.
(u) "Subsidiary" shall mean any company (other than
the Company) in an unbroken chain of companies beginning with the Company if, at
the time of granting an Option, each of the companies other than the last
company in the unbroken chain owns stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
companies in such chain.
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(v) "Ten Percent Stockholder" shall mean an Optionee
who, at the time an Incentive Stock Option is granted, owns (or is deemed to own
pursuant to the attribution rules of Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary.
3. Administration.
The Plan shall be administered by the Committee, the members
of which shall, except as may otherwise be determined by the Board, be
"nonemployee directors" under Rule 16b-3 and "outside directors" under Section
162(m) of the Code.
The Committee shall have the authority in its discretion,
subject to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to
grant Options; to determine which Options shall constitute Incentive Stock
Options and which Options shall constitute Nonqualified Stock Options; to
determine the purchase price of the shares of Common Stock covered by each
Option; to determine the persons to whom, and the time or times at which awards
shall be granted; to determine the number of shares to be covered by each award;
to interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the Agreements
(which need not be identical) and to cancel or suspend awards, as necessary; and
to make all other determinations deemed necessary or advisable for the
administration of the Plan.
The Committee may delegate to one or more of its members or to
one or more agents such administrative duties as it may deem advisable,
including delegating to one or more of the Company's management employees the
authority to grant Options to employees who are not "insiders" for purposes of
Section 16 of the Exchange Act and who are not "covered employees" for purposes
of Section 162(m) of the Code, and the Committee or any person to whom it has
delegated duties as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may have under
the Plan. The Board shall have sole authority, unless expressly delegated to the
Committee, to grant Options to Nonemployee Directors. All decisions,
determination and interpretations of the Committee shall be final and binding on
all Optionees of any awards under this Plan.
The Board shall have the authority to fill all vacancies,
however caused, in the Committee. The Board may from time to time appoint
additional members to the Committee, and may at any time remove one or more
Committee members. One member of the Committee shall be selected by the Board as
chairman. The Committee shall hold its meetings at such times and places as it
shall deem advisable. All determinations of the Committee shall be made by a
majority of its members either present in person or
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participating by conference telephone at a meeting or by written consent. The
Committee may appoint a secretary and make such rules and regulations for the
conduct of its business as it shall deem advisable, and shall keep minutes of
its meetings.
No member of the Board or Committee shall be liable for any
action taken or determination made in good faith with respect to the Plan or any
award granted hereunder.
4. Eligibility.
Awards may be granted to executive officers and other key
employees of the Company, EBIC and their Subsidiaries, including officers and
directors who are employees, and to Nonemployee Directors. In determining the
persons to whom awards shall be granted and the number of shares to be covered
by each award, the Committee shall take into account the duties of the
respective persons, their present and potential contributions to the success of
the Company and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.
5. Stock.
The maximum number of shares of Common Stock reserved for the
grant of awards under the Plan shall be 1,800,000, subject to adjustment as
provided in Section 9 hereof. Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or may be
reacquired by the Company.
If any outstanding award under the Plan should for any reason
expire, be cancelled or be forfeited without having been exercised in full, the
shares of Common Stock allocable to the unexercised, cancelled or terminated
portion of such award shall (unless the Plan shall have been terminated) become
available for subsequent grants of awards under the Plan.
In no event may an Optionee be granted during any calendar
year an Option to acquire more than 500,000 shares of Common Stock.
6. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be evidenced by
an Agreement, in such form and containing such terms and conditions as the
Committee shall from time to time approve, which Agreement shall comply with and
be subject to the following terms and conditions, unless otherwise specifically
provided in such Option Agreement:
(a) Number of Shares. Each Option Agreement shall
state the number of shares of Common Stock to which the Option relates.
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<PAGE>
(b) Type of Option. Each Option Agreement shall
specifically state that the Option constitutes an Incentive Stock Option or a
Nonqualified Stock Option.
(c) Option Price. Each Option Agreement shall state
the Option Price, which shall not be less than one hundred percent (100%) of the
Fair Market Value of the shares of Common Stock covered by the Option on the
date of grant unless, with respect to Nonqualified Stock Options, otherwise
determined by the Committee. The Option Price shall be subject to adjustment as
provided in Section 9 hereof. The date as of which the Committee adopts a
resolution expressly granting an Option shall be considered the day on which
such Option is granted, unless such resolution specifies a different date.
(d) Medium and Time of Payment. The Option Price
shall be paid in full, at the time of exercise, in cash or in shares of Common
Stock then owned by the Optionee having a Fair Market Value equal to such Option
Price or in a combination of cash and Common Stock or, unless the Committee
shall determine otherwise, by a cashless exercise procedure through a
broker-dealer.
(e) Exercise Schedule and Period of Options. Each
Option Agreement shall provide the exercise schedule for the Option as
determined by the Committee; provided, however, that, the Committee shall have
the authority to accelerate the exercisability of any outstanding Option at such
time and under such circumstances as it, in its sole discretion, deems
appropriate. The exercise period shall be ten (10) years from the date of the
grant of the Option unless otherwise determined by the Committee; provided,
however, that, in the case of an Incentive Stock Option, such exercise period
shall not exceed ten (10) years from the date of grant of such Option. The
exercise period shall be subject to earlier termination as provided in Sections
6(f) and 6(g) hereof. An Option may be exercised, as to any or all full shares
of Common Stock as to which the Option has become exercisable, by written notice
delivered in person or by mail to the Secretary of the Company, specifying the
number of shares of Common Stock with respect to which the Option is being
exercised.
(f) Termination. Except as provided in this Section
6(f) and in Section 6(g) hereof, an Option may not be exercised unless (i) with
respect to an Optionee who is an employee of the Company, the Optionee is then
in the employ of the Company or a Subsidiary (or a company or a Parent or
Subsidiary company of such company issuing or assuming the Option in a
transaction to which Section 424(a) of the Code applies), and unless the
Optionee has remained continuously so employed since the date of grant of the
Option and (ii) with respect to an Optionee who is a Nonemployee Director, the
Optionee is then serving as a member of the Board or as a member of a board of
directors of a company or a Parent or Subsidiary company of such company issuing
or assuming the Option. In the event that the employment of an Optionee shall
terminate or the service of an Optionee as a member of the Board shall cease
(other than by reason of death, Disability, Retirement or Cause), all Options of
such Optionee that are
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exercisable at the time of such termination may, unless earlier terminated in
accordance with their terms, be exercised within thirty (30) days after the date
of such termination or service (or such different period as the Committee shall
prescribe).
(g) Death, Disability or Retirement of Optionee. If
an Optionee shall die while employed by the Company or a Subsidiary or serving
as a member of the Board, or within thirty (30) days after the date of
termination of such Optionee's employment or cessation of such Optionee's
service (or within such different period as the Committee may have provided
pursuant to Section 6(f) hereof), or if the Optionee's employment shall
terminate or service shall cease by reason of Disability or Retirement, all
Options theretofore granted to such Optionee (to the extent otherwise
exercisable) may, unless earlier terminated in accordance with their terms, be
exercised by the Optionee or by his beneficiary, at any time within one year
after the death, Disability or Retirement of the Optionee (or such different
period as the Committee shall prescribe). In the event that an Option granted
hereunder shall be exercised by the legal representatives of a deceased or
former Optionee, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the right of such
legal representative to exercise such Option. Unless otherwise determined by the
Committee, Options not otherwise exercisable on the date of termination of
employment shall be forfeited as of such date.
(h) Other Provisions. The Option Agreements
evidencing awards under the Plan shall contain such other terms and conditions
not inconsistent with the Plan as the Committee may determine, including
penalties for the commission of competitive acts.
7. Nonqualified Stock Options.
Options granted pursuant to this Section 7 are intended to
constitute Nonqualified Stock Options and shall be subject only to the general
terms and conditions specified in Section 6 hereof.
8. Incentive Stock Options.
Options granted pursuant to this Section 8 are intended to
constitute Incentive Stock Options and shall be subject to the following special
terms and conditions, in addition to the general terms and conditions specified
in Section 6 hereof. An Incentive Stock Option may not be granted to a
Nonemployee Director.
(a) Value of Shares. The aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted) of the shares
of Common Stock with respect to which Incentive Stock Options granted under this
Plan and all other option plans of any subsidiary become exercisable for the
first time by each Optionee during any calendar year shall not exceed $100,000.
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<PAGE>
(b) Ten Percent Stockholder. In the case of an
Incentive Stock Option granted to a Ten Percent Stockholder, (i) the Option
Price shall not be less than one hundred ten percent (110%) of the Fair Market
Value of the shares of Common Stock on the date of grant of such Incentive Stock
Option, and (ii) the exercise period shall not exceed five (5) years from the
date of grant of such Incentive Stock Option.
9. Effect of Certain Changes.
(a) In the event of any extraordinary dividend,
stock dividend, recapitalization, merger, consolidation, stock split or other
similar transactions, each of the number of shares of Common Stock available for
awards, the number of such shares covered by outstanding awards, and the price
per share of Options, as appropriate, shall be equitably adjusted by the
Committee to reflect such event and preserve the value of such awards; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated.
(b) Upon the occurrence of a Change in Control, each
Option granted under the Plan and then outstanding but not yet exercisable shall
thereupon become fully exercisable.
10. Surrender and Exchange of Awards.
The Committee may permit the voluntary surrender of all or a
portion of any Option granted under the Plan or any option granted under any
other plan, program or arrangement of the Company or any Subsidiary
("Surrendered Option"), to be conditioned upon the granting to the Optionee of a
new Option for the same number of shares of Common Stock as the Surrendered
Option, or may require such voluntary surrender as a condition precedent to a
grant of a new Option to such Optionee. Subject to the provisions of the Plan,
such new Option may be an Incentive Stock Option or a Nonqualified Stock Option,
and shall be exercisable at the price, during such period and on such other
terms and conditions as are specified by the Committee at the time the new
Option is granted.
11. Period During Which Awards May Be Granted.
Awards may be granted pursuant to the Plan from time to time
within a period of ten (10) years from the date the Plan is adopted by the
Board, or the date the Plan is approved by the shareholders of the Company,
whichever is earlier, unless the Board shall terminate the Plan at an earlier
date.
12. Nontransferability of Awards.
Except as otherwise determined by the Committee, awards
granted under the Plan shall not be transferable otherwise than by will or by
the laws of descent and
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distribution, and awards may be exercised or otherwise realized, during the
lifetime of the Optionee, only by the Optionee or by his guardian or legal
representative.
13. Approval of Shareholders.
The Plan shall take effect upon its adoption by the Board and
shall terminate on the tenth anniversary of such date, but the Plan (and any
grants of awards made prior to the shareholder approval mentioned herein) shall
be subject to the approval of Company's shareholders, which approval must occur
within twelve months of the date the Plan is adopted by the Board.
14. Agreement by Optionee Regarding Withholding Taxes.
If the Committee shall so require, as a condition of exercise
of a Nonqualified Stock Option (a "Tax Event"), each Optionee who is not a
Nonemployee Director shall agree that no later than the date of the Tax Event,
such Optionee will pay to the Company or make arrangements satisfactory to the
Committee regarding payment of any federal, state or local taxes of any kind
required by law to be withheld upon the Tax Event. Alternatively, the Committee
may provide that such an Optionee may elect, to the extent permitted or required
by law, to have the Company deduct federal, state and local taxes of any kind
required by law to be withheld upon the Tax Event from any payment of any kind
due the Optionee. The withholding obligation may be satisfied by the withholding
or delivery of Common Stock.
15. Amendment and Termination of the Plan.
The Board at any time and from time to time may suspend,
terminate, modify or amend the Plan; provided, however, that, unless otherwise
determined by the Board, an amendment that requires stockholder approval in
order for the Plan to continue to comply with Rule 16b-3, Section 162(m) of the
Code or any other law, regulation or stock exchange requirement shall not be
effective unless approved by the requisite vote of stockholders. Except as
provided in Section 9(a) hereof, no suspension, termination, modification or
amendment of the Plan may adversely affect any award previously granted, unless
the written consent of the Optionee is obtained.
16. Rights as a Shareholder.
An Optionee or a transferee of an award shall have no rights
as a shareholder with respect to any shares covered by the award until the date
of the issuance of a stock certificate to him for such shares. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distribution of other rights for which the
record date is prior to the date such stock certificate is issued, except as
provided in Section 9(a) hereof.
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17. No Rights to Employment or Service as a Director.
Nothing in the Plan or in any award granted or Agreement entered into pursuant
hereto shall confer upon any Optionee the right to continue in the employ of the
Company or any Subsidiary or as a member of the Board or to be entitled to any
remuneration or benefits not set forth in the Plan or such Agreement or to
interfere with or limit in any way the right of the Company or any such
Subsidiary to terminate such Optionee's employment or service. Awards granted
under the Plan shall not be affected by any change in duties or position of an
employee Optionee as long as such Optionee continues to be employed by the
Company or any Subsidiary.
18. Beneficiary.
An Optionee may file with the Committee a written designation
of a beneficiary on such form as may be prescribed by the Committee and may,
from time to time, amend or revoke such designation. If no designated
beneficiary survives the Optionee, the executor or administrator of the
Optionee's estate shall be deemed to be the Optionee's beneficiary.
19. Governing Law.
The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware.
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Exhibit 10.10
EMPLOYMENT AGREEMENT
by and between
FINANCIAL SERVICES ACQUISITION CORPORATION
and
Roger E. Schwed
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 11, 1996, by and between Roger E.
Schwed (the "Executive"), and Financial Services Acquisition Corporation, a
Delaware corporation (the "Company").
WHEREAS, the Company desires to employ the Executive and the
Executive desires to furnish services to the Company and its subsidiaries on the
terms and conditions hereinafter set forth; and
WHEREAS, the parties desire to enter into this agreement setting
forth the terms and conditions of the employment relationship of the Executive
with the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. Term. The period of employment of the Executive by the Company
hereunder (the "Employment Period") shall commence (the "Commencement Date") on
the business day immediately following the date that the notice period given by
the Executive to his current employer expires (it being understood that the
Executive will inform the Company of the Commencement Date, which is anticipated
to be not later than October 1, 1996), and ending on the second anniversary of
the Commencement Date, unless further extended as provided in this Section 2 or
sooner terminated in the event that the Executive's employment is terminated
without breach of this Agreement as provided in Section 7. On the first
anniversary of the Commencement Date and on each successive anniversary
thereafter, the term of the Executive's employment shall be automatically
extended for one (1) additional year unless, on or prior to such anniversary,
the Company shall have delivered to the Executive or the Executive shall have
delivered to the Company written notice that the term of the Executive's
employment hereunder will not be
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extended.
3. Position and Duties. During the Employment Period, the Executive
shall serve as Vice President, General Counsel, and Assistant Secretary of the
Company and Vice President and Assistant Secretary of the Company's subsidiary,
Euro Brokers Investment Corporation ("EBIC"). The Executive's responsibilities
and authority shall include such responsibilities and authority as may from time
to time be assigned to the Executive by the Chairman or Vice Chairman of the
Company, provided that such responsibilities and authority are consistent with
the Executive's position with the Company and EBIC. The Executive agrees to
devote substantially all of his working time and efforts to the performance of
his duties for the Company and EBIC.
4. Place of Performance. In connection with the Executive's employment
by the Company, the Executive shall be based at the principal executive offices
of EBIC in New York, New York, except for reasonably required travel on the
Company's business.
5. Compensation and Related Matters.
(a) Base Salary. As compensation for the performance by the Executive
of his obligations hereunder, during the Employment Period, the Company shall
pay the Executive a base salary at the rate of $215,000 per annum ("Base
Salary"). Base Salary shall be paid in approximately equal installments in
accordance with the Company's and EBIC's customary payroll practices. Base
Salary may be increased from time to time in accordance with the normal
business practices of the Company and EBIC and, if so increased, shall not
thereafter during the Employment Period be decreased.
(b) Guaranteed Bonus. During the Employment Period, the Company shall
pay the Executive a guaranteed minimum bonus at the rate of $35,000 per annum
("Minimum Bonus"). Minimum Bonus shall be paid in approximately equal
semi-annual installments. Minimum Bonus may be increased from time to time in
accordance with the normal business practices of the Company and EBIC.
(c) Other Bonuses. During the Employment Period, the Executive shall be
eligible to receive, in addition to the Minimum Bonus, such annual bonus (the
"Annual Bonus") as may be awarded to him as the Chairman or Vice Chairman of the
Company shall determine, or if an annual incentive plan is adopted by the
Company or a
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subsidiary thereof, in accordance with the terms of such plan.
(d) Pro Ration. The Executive shall be entitled to pro rata payments
under Section 5(b) above, and to be considered for pro rata payments under
Section 5(c) above, in each case to the extent that the period of his service to
the Company at the regular time for the determination for such payments is less
than the full period over which the determination of such payments is normally
measured.
(e) Expenses. The Company shall promptly reimburse the Executive for
all reasonable business expenses incurred during the Employment Period by the
Executive in performing services hereunder, including all expenses of travel and
living expenses while traveling on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company.
(f) Other Benefits. The Executive shall be entitled to participate in
all of the employee benefit plans currently maintained by the Company or a
subsidiary thereof, in accordance with the terms of such plans, and shall be
entitled to participate in or receive benefits under any employee benefit plan
made available by the Company or a subsidiary thereof in the future to its
executives and key management employees (including without limitation each
incentive plan, pension and retirement plan, supplemental pension and retirement
plan, stock option plan, life insurance and health-and-accident plan, medical
insurance plan, disability plan, survivor income plan, relocation plan and
vacation plan), subject to and on a basis consistent with the terms, conditions
and overall administration of such plans. Nothing paid to the Executive under
any plan currently in effect or made available in the future shall be deemed to
be in lieu of the salary or bonus payable to the Executive pursuant to
subsections (a) and (b) of this Section 5.
(g) Vacation. The Executive shall be entitled to 20 vacation days in
each calendar year (and a pro rata number of vacation days for any initial
portion of the Employment Period that is not a full calendar year).
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The Executive shall also be entitled to all paid holidays given by the
Company to its executives.
(h) Services Furnished. During the Employment Period, the Company shall
furnish the Executive with office space, stenographic assistance and such other
facilities and services as shall be suitable to the Executive's position and
adequate for the performance of his duties as set forth in Section 3 hereof.
6. Offices. Subject to Section 3 hereof, the Executive agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of the Company or any subsidiaries of the Company and as a member of any
committees of the board of directors of any such corporations, and in one or
more executive positions of any of the Company's subsidiaries, provided that the
Executive is indemnified for serving in any and all such capacities on a basis
no less favorable than is currently provided to any other director of the
Company or any of its subsidiaries, or any such executive position, as the case
may be.
7. Termination. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the circumstances set forth in
the following subsections (a), (b), (c), (d) and (e):
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for the entire period of six
consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8 hereof) is given shall not have returned to
the performance of his duties hereunder on a full-time basis, the Company may
terminate the Executive's employment hereunder for "Disability."
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon the occurrence of
any of the following events:
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(i) the conviction of the Executive for the
commission of a felony; or
(ii) the willful and continuing failure by the Executive to
substantially perform his duties hereunder (other than such failure resulting
from the Executive's incapacity due to physical or mental illness or subsequent
to the issuance of a Notice of Termination by the Executive for Good Reason)
after demand for substantial performance is delivered by the Company in writing
that specifically identifies the manner in which the Company believes the
Executive has not substantially performed his duties; or
(iii) the willful misconduct by the Executive (including, but
not limited to, breach by the Executive of the provisions of Section 11
hereof) that is demonstrably and materially injurious to the Company or
its subsidiaries, whether monetarily or otherwise.
For purposes of this Section 7(c), no act or failure to act on the Executive's
part shall be considered "willful" unless done or failed to be done by the
Executive in bad faith and without reasonable belief that the Executive's action
or omission was in the best interest of the Company.
(d) Good Reason. The Executive may terminate his employment
during the Employment Period hereunder for "Good Reason" within 90 days after
the occurrence, without the written consent of the Executive, of an event
constituting a material breach of this Agreement by the Company that has not
been fully cured within ten (10) days after written notice thereof has been
given
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<PAGE>
by the Executive to the Company. The Executive's right to terminate his
employment hereunder for Good Reason shall not be affected by his incapacity due
to physical or mental illness.
(e) Unilateral. The Executive may unilaterally terminate his
employment during the Employment Period other than for Good Reason, and without
the Company's consent, upon not less than 60 days written notice to the Company.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination pursuant
to Section 7(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 14. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
(b) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated for Disability pursuant to Section
7(b), thirty (30) days after Notice of Termination (provided that the Executive
shall not have returned to the performance of his duties on a full-time basis
during such thirty (30) day period), (iii) if the Executive's employment is
terminated for Cause pursuant to Section 7(c), the date specified in the Notice
of Termination, which shall not be earlier than the date of the Notice of
Termination and (iv) if the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given or any later date
(within 60 days) set forth in such Notice of Termination.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), the Executive shall continue to receive his full
Base Salary and Minimum Bonus at the rate in effect at the beginning of such
period and continue as a participant in all compensation and employee benefit
plans in which the Executive was participating
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<PAGE>
pursuant to Section 5(f) until his employment is terminated pursuant to Section
7(b) and shall continue to receive such Base Salary and Minimum Bonus for a
period of six months thereafter. Subsequent to the six-month period following
termination of the Executive's employment pursuant to Section 7(b), or in the
event the Executive's employment is terminated by reason of his death, the
Company shall have no further obligations to the Executive under this Agreement
and the Executive's benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance with the
terms of such programs.
(b) By Company without Cause or by the Executive for Good Reason. If
during the Employment Period the Executive's employment is terminated by the
Company other than for Cause or Disability or by the Executive for Good Reason,
then --
(i) in addition to any amounts due the Executive pursuant to
Sections 5(a), 5(b) or 5(c) hereof, the Company shall continue to pay
to the Executive (or his legal representatives or estate) his Base
Salary and Minimum Bonus as in effect on the Date of Termination for
the remainder of the Employment Period or, if greater, for one year;
and
(ii) the Company or a subsidiary thereof shall maintain in
full force and effect, for the continued benefit of the Executive and
his dependents for the remainder of the Employment Period or, if
greater, for one year, all medical, dental and life insurance benefit
plans and programs in which the Executive was entitled to participate
immediately prior to the Date of Termination, provided that the
Executive's continued participation is possible under the general terms
and provisions of such plans and programs. In the event that the
Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive and his dependents with
benefits substantially similar to those which the Executive and his
dependents would otherwise have been entitled to receive under such
plans and programs from which their continued participation is barred.
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<PAGE>
(c) By Company for Cause or by the Executive Other than for Good
Reason. If the Executive's employment shall be terminated by the Company for
Cause or by the Executive other than for Good Reason, then the Company shall pay
the Executive his Base Salary and Minimum Bonus (at the rate in effect at the
time Notice of Termination is given) through the Date of Termination, and the
Company shall have no additional obligations to the Executive under this
Agreement except as set forth in subsection (d) of this Section 9.
(d) Compensation Plans. Following any termination of the Executive's
employment, the Company shall pay the Executive all unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination under any
compensation plan or program of the Company, at the time such payments are due.
10. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for the Executive by seeking other employment or
otherwise, nor, except as is hereinafter specifically provided in this Section
10, shall the amount of any payment or benefit provided for the Executive
hereunder be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company or otherwise. To the
extent that the Executive, during the relevant period described in Section
9(b)(i) hereof, shall receive from a subsequent employer base salary and/or any
bonus similar to the Minimum Bonus, the payments to be provided under the
provisions of said Section shall be correspondingly reduced. To the extent that
the Executive, during the relevant period described in Section 9(b)(ii) hereof,
shall receive from a subsequent employer benefits similar to those to be
provided under Section 9(b)(ii), the benefits to be provided under the
provisions of said Section shall be correspondingly reduced.
8
<PAGE>
11. Confidential Information; Noncompetition Requirement.
(a) Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all trade secrets, confidential
information, and knowledge or data relating to the Company and its businesses,
which shall have been obtained by the Executive during the Executive's
employment by the Company and which shall not have been or now or hereafter have
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). The Executive shall not,
without the prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such trade secrets,
information, knowledge or data to anyone other than the Company and those
designated by the Company. Any termination of the Executive's employment or of
this Agreement shall have no effect on the continuing operation of this Section
11(a).
(b) Noncompetition Requirement. During (1) any period that the
Executive is performing services hereunder, (2) a period of six months following
a termination of the Executive's employment by the Company for Cause or by the
Executive other than for Good Reason (if the Company so requests, notifies and
pays the Executive as provided in Section 11(c) below) and (3) with respect to
clauses (i) and (ii) of this Section 11(b), any period that the Executive is
entitled to payment pursuant to Section 9(b)(i), the Executive agrees that,
without the prior written consent of the Company, he shall not, directly or
indirectly, with or without pay, either as an employee, employer, consultant,
agent, principal, partner, stockholder, corporate officer, director, manager,
investor, lender, advisor, owner, associate or in any other individual or
representative capacity, (i) solicit, entice, encourage or otherwise attempt to
procure or service by telephone or otherwise accounts from any customers
(determined as of the Date of Termination) of the Company or a subsidiary
thereof for a business that is directly competitive (a "Competitive Business")
with the business in which the Company is then engaged (the "Business"), (ii)
solicit, entice or encourage any employee (determined as of the Date of
Termination) of the Company or a subsidiary thereof to terminate such employee's
employment in order to work in a Competitive Business, or (iii) upon the
9
<PAGE>
written request of the Company, directly engage or participate in any
Competitive Business unless such Competitive Business is located more than
seventy-five (75) miles from the site, as of the Date of Termination, of the
Company's executive offices in New York and Connecticut; provided, however,
that (x) trading by the Executive for his own benefit or in proprietary
accounts shall not constitute a Competitive Business and (y) the Executive may
engage or participate in a business which has a Competitive Business as a
component or portion thereof if engaging or participating in such Competitive
Business does not constitute a substantial part of the Executive's duties.
(c) Salary and Bonus Continuation. Following a termination of the
Executive's employment by the Company for Cause or by the Executive other than
for Good Reason, the Company may elect, by written notice given to the Executive
within 7 days of such notice of termination, to require the Executive to perform
the covenant provided in subsection (b)(iii) of this Section 11 during the
six-month period following the effectiveness of such termination. As additional
consideration for the Executive's performance of such covenant during such
period, but only for so long as the Executive shall continue to perform such
covenant, the Company shall pay the Executive for each month during such
six-month period an amount equal to one-twelfth (1/12th) of the Executive's
Base Salary and Minimum Bonus. It is agreed and understood that such payment
constitutes full and fair consideration to the Executive for observance of such
covenant.
(d) Injunctive Relief. In the event of a breach or threatened breach of
subsections (a), (b) or (c) of this Section 11, the Executive agrees that the
Company shall be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, the Executive
acknowledging that damages would be inadequate and insufficient.
12. Indemnification; Legal Fees. The Company shall indemnify the
Executive to the full extent permitted by law and the by-laws of the Company for
all expenses, costs, liabilities and legal fees which the Executive may incur in
the discharge of his duties hereunder. The Company shall also reimburse the
Executive for any reasonable legal fees and expenses incurred by the Executive
in contesting or disputing any termination of the Executive's employment
hereunder or in seeking to obtain or enforce any right or benefit provided by
this Agreement, but only if the Executive shall substantially prevail with
respect to the preponderance of the matters at issue. Such payments shall be
made within five (5) days after the Executive's request for payment accom-
10
<PAGE>
panied with such evidence of his having prevailed (as described
in the preceding sentence) and such evidence of the fees and expenses incurred,
as the Company may reasonably require. Any termination of the Executive's
employment or of this Agreement shall have no effect on the continuing operation
of this Section 12.
13. Successors; Binding Agreement.
(a) Company's Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from the Company
in the same amount and on the same terms as he would be entitled to hereunder if
the Company had terminated his employment other than for Cause, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 13 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
(b) Executive's Successors. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
11
<PAGE>
14. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Roger E. Schwed
225 West 106th Street, Apt. 11A
New York, New York 10025
With a copy to the offices of the Company
If to the Company:
Financial Services Acquisition Corporation
667 Madison Avenue, 11th Floor
New York, New York 10021
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and an authorized officer of the Company
(other than the Executive). No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. This Agreement
shall be binding on all successors to the Company. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without regard to its conflicts of law principles. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local
12
<PAGE>
law. The obligations of the Company and the Executive under Sections 9, 10, 11
and 12 hereof shall survive the expiration of the term of or the termination of
this Agreement. The compensation and benefits payable to the Executive under
this Agreement shall be in lieu of any other severance benefits to which the
Executive may otherwise be entitled upon his termination of employment under any
severance plan, program, policy or arrangement of the Company.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
FINANCIAL SERVICES ACQUISITION
CORPORATION
By:/s/ Gilbert D. Scharf
---------------------
Name: Gilbert D. Scharf
Title: President
/s/ Roger E. Schwed
- -----------------------------
Roger E. Schwed ("Executive")
<PAGE>
Exhibit 10.11
DATED 23 MAY 1994
EURO BROKERS LIMITED
- AND -
MICHAEL MORRISON
-------------
AGREEMENT
-------------
<PAGE>
AN AGREEMENT MADE ON 23 MAY 1994
BETWEEN:
(1) EURO BROKERS LIMITED of 133 Houndsditch, London EC3A 7AJ ("the
Company"), and
(2) MICHAEL MORRISON of 1Middlemarch', 4 Lissoms Road, Chipstead, Surrey,
CR5 3LE.
In accordance with the requirements of Section 1 of the Employment Protection
(Consolidation) Act 1978, this Agreement incorporates a statement of the main
terms and conditions binding upon you at the date hereof.
Any amendments or additions to this Contract (other than as to rates of pay)
will be issued as a supplement to individual employees and should be affixed to
this Agreement.
1. JOB TITLE
1.1 You are appointed as Finance Director of the Euro Brokers group of
Companies in London. It is the Company1s intention that any oral
instructions or written descriptions of your job duties and
responsibilities should serve as a guide to the major areas for which
you will be accountable. Because of the changing nature of the
business, the obligations upon you will inevitably vary and develop.
The Company reserves the right at any time during your employment, upon
reasonable notice, to require you to undertake any duties which fall
within your capabilities.
<PAGE>
1.2 Whilst in the Company's employment you may not have other employment,
including working on your own account, without specific prior approval
from the Company's Board of Directors. On no account will other
employment which is concluded to conflict with the interests of the
Company or the Euro Brokers Group of Companies be permitted.
2. COMMENCEMENT DATE AND DURATION
2.1 This Agreement shall be deemed to have commenced on 1 June 1994 and
shall continue for a fixed term of two years unless terminated by you
or the Company giving six months notice in writing to expire at any
time on or after the said fixed term.
2.2 Your period of continuous employment commenced on 1 February 1987.
Employment with any previous employer before this date does not count
as part of the continuous employment.
2.3 Your retiring age shall be 60 and unless otherwise agreed, this
Agreement or any agreement with the company shall automatically
determine when you reach that age.
2.4 Notice to terminate this contract in accordance with clause 2.1 (or
otherwise) may only be given by Donald Marshall or Keith Reihl,
President and Chief Financial Officer respectively of Euro Brokers
Investment Corp., the Company's ultimate holding company or their
successors.
3. REMUNERATION
3.1 Your remuneration is a fixed salary of (pound)100,000 per annum for the
duration of this Agreement unless otherwise agreed, payable by twelve
monthly installments by direct credit transfer to your bank account on
the last working day of every month. Any future changes will be
notified to you in writing.
3.2 You may in addition be entitled to receive a performance bonus
currently payable in February and August of each year but awarded at
the entire discretion of the Company.
<PAGE>
4. HOURS OF WORK AND EXPENSES
4.1 Your hours of work are market hours, Monday to Friday each week. You
may be required to vary your start and finishing times of work, or to
work reasonable additional hours in order to satisfactorily complete
your duties and satisfy the business interests of the Company and you
will not be entitled to receive any payments for work performed outside
normal business hours.
4.2 You are entitled to be reimbursed for all reasonable out of pocket
expenses wholly and exclusively incurred by you on the Company's
business (including entertainment and travelling expenses) which should
be evidenced in the manner required and as approved by the Company.
4.3 In this position you must be willing to travel and work overseas,
staying away for periods of up to several weeks duration as required.
5. STATUTORY REQUIREMENTS AND CONFIDENTIALITY
5.1 You must adhere at all times to all statutory requirements and laws
controlling dealing and broking operations, together with any
requirements laid down by the Regulatory Bodies. In this regard, you
accept that you have read and will adhere to the requirements of the
Grey Paper and you are required to sign an undertaking acknowledging
your full compliance with the Company Securities (Insider Dealing) Act
1985 (Appendix 1).
5.2 Other than as required by your bona fide duties, you are prohibited
from disclosing to any third party any information regarding your
duties, the Company, its activities or any information about clients or
their operations which could conceivably be security risks or of
commercial value to competitors. This restriction will also operate
after employment with the Company ceases.
5.3 It is strictly forbidden to offer to any third party or accept any
benefit whether financial or in kind from any other party (other than
your proper remuneration from the Company). It is strictly forbidden to
accept gifts or hospitality other than by way of a token nature from
<PAGE>
any person or business with whom they are involved on Company business.
You must always clear the position with the Company's Board of
Directors before accepting any gift or hospitality whatever the nature.
6. COMPANY CAR
6.1 Entitlement to the use and continued use of a Company car is
discretionary and dependent upon the approval of the Board of Directors
of the Company. If you have or become entitled to the use of a Company
car, it will be provided to you subject to and upon the Terms and
Conditions of the rules issued by the Company. The Company reserves the
right to change the size or nature of the car being used by you or to
remove the entitlement at its discretion in the light of an assessment
of the current requirements of the job. You will be responsible for
ensuring that the vehicle is always maintained in a clean and road
worthy condition. In the event of you choosing to leave the Company,
you may be required to reimburse some monies to the Company if the car
is not due for replacement for a period of more than 6 months. You will
find attached to this statement the rules and regulations relating to
the Company Car Scheme (Appendix 2). Please also sign this document as
it will constitute an integral part of your Contract of Employment.
7. HOLIDAY ENTITLEMENT
7.1 The holiday year starts on 1 January. Entitlement in a full year is 30
working days, or pro rata for a part-year's service, plus 8 statutory
holidays each year.
7.2 The Company reserves the right to allocate up to 5 days holiday each
year for all employees.
7.3 Any variation between holiday entitlement and days actually taken at
time of leaving service will be translated to an equivalent number of
days at basic rate and thus either payable to the employee or
deductible from final payment.
7.4 No other payment for holiday entitlements will be made.
<PAGE>
7.5 No carry-over of holiday entitlement will be permitted to the following
holiday year, unless exceptionally given in writing by the Company's
Board of Directors.
7.6 For full details of the Company's Holiday Arrangements see Appendix 3.
8. SICKNESS AND INJURY - GENERAL RULES (APPENDIX 4)
8.1 If you are absent from work as a result of sickness or injury, you must
notify the Company of the reason for your absence by 9.00 am on the
first day of absence.
8.2 Employees must self-certificate absences from work up to seven days
including weekends. Failure to complete a Self Certificate under these
circumstances, or the provision of false information will be
disciplinary offences.
8.3 If you are absent for a period of 8 days or more you must provide a
Doctor's certificate which should be sent to your Personnel
Administrator immediately and on return to work you must provide a
medical certificate which states you are fit to resume your duties
unless the previous certificate gives the date on which you may resume
work.
8.4 Provided that you have complied with the sickness and injury procedure
as laid down by the company, employees with more than 6 months
continuous service may at the Company's discretion be entitled up to a
maximum of 26 weeks pay during any period of 12 months absence. Any
Company sickness absence payments will be at the basic rate less the
value of any state benefits or Statutory Sick Payments to which the
employee is entitled. Qualifying Days for Statutory Sick Pay purposes
are Monday to Friday each week.
8.5 It is a condition of your employment that you will agree to have a
medical examination with a Company nominated Doctor if required by the
Company and agree that the results of such examination may, on request,
be disclosed to the Company.
<PAGE>
9. PENSIONS AND MEDICAL CARE
9.1 Initially, you will be automatically entered into the State Pension
Scheme unless you are a member of an Approval Personal Pension Scheme.
9.2 The Company operates four insurance schemes for the benefit of
employees after they are appointed to the permanent staff:
(a) Salary Sacrifice Scheme to provide pensions and if required life
assurance benefits.
(b) Group Disability scheme to enable you to receive a permanent income in
case of illness or permanent disability.
(c) Medical Insurance to enable you and your family to receive private
medical treatment currently with PPP.
(d) Life Assurance cover of four times your annual salary as at 1 February
of each year, capped at a maximum figure as determined by the Inland
Revenue.
Scheme (a) requires that you authorise the Company to deduct your agreed
contribution at source.
Schemes (b), (c) and (d) will be paid for by the Company.
Full details of any of these schemes can be obtained from the Personnel
Administrator.
10. GARDEN LEAVE
Should you give inadequate or no notice to terminate your employment
under Clause 2 above, the Company may elect to waive your breach of
contract and hold you to the terms of this Agreement for the notice
period or a maximum period of 6 months whichever is the lesser period
in circumstances where it is reasonable to believe that you will be
interested or concerned in any capacity in any business company or
firm carrying
<PAGE>
on the business of moneybroking.
11. PROTECTIVE COVENANTS
11.1 You covenant with the Company (for itself and as trustee for each Group
Company) that you will not:
(a) for a period of 6 months from the Relevant Date (defined below) be
concerned in any business which is carried on within a radius of 3.5
miles of the Bank of England, Threadneedle Street, London EC2 (this
being the area in which the Company's vital client connections are
located) and which is competitive or to your knowledge is likely to be
competitive with any business carried on at the Relevant Date by a
Group Company and with which you were actively concerned during the
year ending on that date; or
(b) for a period of 6 months from the Relevant Date (except on behalf of a
Group Company) canvass or solicit business, orders or custom (whether
directly or indirectly) for goods of similar type of those being
manufactured or dealt in or for services similar to those being
provided by any Group Company at the Relevant Date from any person who
is at that date or who has been at any time within the year ending on
that date a supplier or customer of a Group Company with whom you were
actively engaged or concerned; or
(c) for a period of 12 months from the Relevant Date induce or attempt to
induce (whether directly or indirectly) any supplier of a Group Company
to cease to supply, or to restrict or vary the terms of supply to, that
company; or
(d) for a period of 12 months from the Relevant Date induce or attempt to
induce or encourage (whether directly or indirectly) any employee of a
Group Company to leave the employment of that company.
11.2 For the purposes of sub-clause 11.1:
(a) "Relevant Date" means the date on which your employment with the
Company terminates OR the date upon which contractual notice of such
termination is given under Clause 2.1
<PAGE>
above providing the full notice period is adhered to by the Employee OR
the date upon which short notice of such termination is given and
agreed in writing by the Company, whichever is the earlier date.
(b) You are concerned in a business if you carry it on as a principal or
agent or if:
(i) you are directly or indirectly a partner, director, employee, secondee,
consultant or agent in, of or to any person who carried on the
business; or
(ii) you have any direct or indirect financial interest (as shareholder or
otherwise) in any person who carries on the business; or
(iii) you are directly or indirectly a partner, director, employee, secondee,
consultant or agent in, of or to any person who has direct or indirect
financial interest (as a shareholder or otherwise) in any person who
carries on the business disregarding any financial interest of a person
in securities which are listed or dealt in on any Recognised Investment
Exchange if that person, you and any person connected with you (within
the meaning of section 839 of the Income and Corporation Taxed Act
1988) are interested in securities which amount to less than one per
cent of the issued securities of that class and which, in all
circumstances, carry less than one per cent of the voting rights (if
any) attaching to the issued securities of that class; and
(c) reference to a Group Company shall mean any subsidiary of Euro Brokers
Holdings Limited and shall include its successors in business.
11.3 The restrictions in each paragraph or sub-clause above shall be
enforceable independently of each of the others and its validity shall
not be affected if any of the others is invalid; if any of those
restrictions is void but would be valid if some part of the
restrictions were deleted the restriction in question shall apply with
such modification as may be necessary to make it valid.
11.4 You acknowledge that the above provisions of this clause are no more
extensive than is reasonable to protect the Company and the Group.
<PAGE>
12. DISCIPLINARY PROCEDURE
12.1 If you have a grievance relating to your employment, the issue should
be raised initially with the Board of Directors of Euro Brokers
Investment Corp. (Delaware) as the ultimate Parent Company.
12.2 You may only be dismissed summarily for gross misconduct. Persistent
breaches of this Agreement or one breach of a fundamental term of the
Agreement including Clause 1.2 and 5.3 may amount to gross misconduct
as would any act or omission bringing the Company into disrepute.
13. RELEVANT LAW
This Agreement shall be governed and construed under English Law and
each of the parties hereto submits to the jurisdiction of the English
Courts.
14. PREVIOUS CONTRACTS
14.1 This Agreement is in substitution for and supersedes all previous
contracts of employment between the Company and yourself which shall be
deemed to have been terminated by mutual consent as from the date on
which this Agreement commences together with all and any rights and
obligations under such previous contracts of employment which have been
and shall be treated as replaced by the terms and conditions of
employment set out in this Agreement.
15. CONTINUING EFFECT OF THIS AGREEMENT
Any termination of this Agreement shall not, even in a case where the
termination involves a breach of contract on the part of the Company,
operate to affect those provisions in this Agreement which are
intended to have effect after such termination. Without limiting the
application of the two preceding sentences such termination shall not,
even in such a case as mentioned above, release you from the
continuing observance and performance by you of your obligations
contained in Clauses 5.2 and 11.
<PAGE>
The Terms and Conditions of your Employment are in accordance with, and subject
to the Company's Rules, Policy Documents and current Employment Legislation. The
relevant Company documents are available for your inspection upon request. This
document supersedes and replaces any earlier particulars of Terms of Employment
and letter of appointment issued to you. Any future changes to your Terms and
Conditions of employment will be recorded and notified to you in writing giving
the appropriate period of notice.
SIGNED by Donald Marshall } /s/ Donald Marshall
for and on behalf of the }
Company in the presence }
of:- }
SIGNED by Michael Morrison } /s/ Michael Morrison
in the presence of:- }
<PAGE>
Exhibit 10.12
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of this 1st day of September, 1996, between EURO
BROKERS INC., a New York corporation (the "Company"), or affiliates as the
Company may assign from time to time, with principal offices at Two World Trade
Center, Suite 8400, New York, New York 10048 and WALTER E. DULSKI ("Employee"),
residing at 70 Dogwood Court, Stamford, Connecticut 06903.
In consideration of the covenants and agreements herein contained, the
parties agree as follows:
1. Employment, Acceptance and Term
Subject to the provisions hereof, the Company agrees to employ
Employee, and Employee agrees to serve the Company as Senior Vice President
for a term commencing on the date hereof and ending on August 31, 1999,
which date (the "Termination Date") shall also be the date upon which this
Agreement shall terminate (except for such provisions hereof as shall
expressly survive termination or expiration). This Agreement and the term
of employment of Employee will automatically continue unless terminated by
the Company or the Employee on not less than six months prior written
notice expiring on or after the Termination Date (the "Termination
Notice"). The last date of the term of this Agreement pursuant to any such
automatic continuance is herein called the "Extended Termination Date."
2. Duties and Authority
2.1 During the term hereof, Employee shall faithfully and diligently
devote Employee's full time, best efforts, skills and energies to the
business of the Company consisting of the activities set forth in Exhibit A
hereto (collectively, the "Business"). Employee acknowledges that
Employee's abilities and position in the financial services and securities
industry are of a special, unique, unusual, extraordinary and intellectual
character and, accordingly, shall not accept any other employment or render
advisory services during the initial or any extended term of this
Agreement, nor shall Employee permit such personal business interests as
Employee may have to interfere with the performance of Employee's duties
hereunder. Employee acknowledges that neither the Company nor any of its
affiliates for which Employee may be working hereunder or with respect to
which Employee may have access to confidential information ("Affiliates")
shall have any obligation to elect Employee a director or an officer, but
Employee agrees to serve as such if so elected. Employee agrees to
faithfully and diligently perform, to the best of Employee's abilities,
such duties as may from time to time be assigned to Employee by the
Company's Board of Directors (or its designee). Employee will duly,
punctually and faithfully perform and observe all rules that the Company
may from time to time establish concerning the conduct of the Business. All
such services shall be rendered for and in consideration of the
compensation payable to the Employee under Section 3 hereof.
2.2 Employee grants the Company the right to obtain insurance on
Employee's life during the term hereof for the benefit of the Company in
such amount as the Company shall deem appropriate and hereby agrees to
execute all such documents and perform all such acts as the Company shall
deem necessary in connection therewith.
<PAGE>
Employment Agreement: WALTER E. DULSKI
September 1, 1996
3. Compensation
During the term hereof, the Company shall pay Employee compensation at
the rate of $270,000 per annum, payable periodically in accordance with the
Company's then prevailing practices (the "Base Salary"). In addition, the
Employee may be paid a bonus, on a semi-annual basis, at the sole
discretion of the Board of Directors of the Company, but the Company shall
not be obligated to pay any such bonus. Any bonus award, if paid, will be
made after consideration of Company profits and the satisfactory
performance by Employee of his obligations under this Agreement.
4. Expenses
4.1 In addition to the compensation payable to Employee pursuant to
Section 3 hereof, the Company shall pay or reimburse Employee, upon
submission of proper vouchers in respect thereof, all reasonable and
necessary transportation, hotel, living and related expenses incurred by
Employee on business trips and all other business and entertainment
expenses, provided that all such expenses shall have been approved in
advance by the President of the Company or his designee.
4.2 Employee is aware that Employee may incur business expenses for
which it will be impracticable to claim reimbursement hereunder and
acknowledges that the compensation hereunder has been fixed to enable
Employee to bear such expenses out of such compensation.
5. Additional Benefits
Employee shall be entitled to an annual vacation in accordance with
the Company's policies as established from time to time, and shall be
entitled to participate in all retirement, insurance, hospitalization,
disability and other plans which the Company may in its sole discretion
establish from time to time, provided that Employee is eligible by the
terms thereof to participate therein.
6. Discharge for Cause
The Company may at any time terminate this Agreement and discharge
Employee for Cause. "Cause" herein shall mean Employee's (i) breach of any
material term hereof, (ii) failure to act in accordance with any reasonable
direction of the Company's President or his designee, (iii) commission of
any material act of disloyalty against the Company or any Affiliate, or
(iv) violation of any statute, rule or regulation governing the Company,
any Affiliate or the Business.
7. Termination of Employment
Notwithstanding anything to the contrary herein, Employee's employment
hereunder shall automatically terminate as follows, and the Company shall
have no obligations hereunder other than to pay sums due to Employee as of
the date of such termination: (i) upon Employee's death; (ii) based on
Employee's failure to perform the duties of the position
[2]
<PAGE>
Employment Agreement: WALTER E. DULSKI
September 1, 1996
for a period of 60 days (except as may be prohibited by federal, state or
local disability laws); (iii) upon Employee's unilateral termination as
hereinafter defined; (iv) upon termination by mutual consent of the
parties; (v) upon notice to Employee of discharge for Cause; (vi) by the
Company on not less than thirty (30) days' prior written notice if the
Company decides, in its sole discretion, to no longer offer the services or
products in connection with which the Employee was employed. For purposes
hereof "unilateral termination" shall mean Employee's termination of
Employee's employment hereunder for any reason or no reason with or without
notice.
8. Non-Competition
8.1 Employee acknowledges that Employee's abilities and position in
the financial services and securities industry are of a special, unique,
unusual, extraordinary and intellectual character involving skill of the
highest order and giving them peculiar value, and that Employee's knowledge
of the Company's (and that of its Affiliates) trade secrets, client lists
and other confidential information is so complete that the breach, or
threatened breach, by Employee of the provisions of this Section 8 shall
cause irreparable harm to the Company and its Affiliates, which harm cannot
be fully redressed by the payment of damages to the Company or the
Affiliates. Employee also acknowledges that the Business may be carried on
anywhere within the United States and that, as a result, upon termination
of the Employee's employment hereunder, it is a reasonable requirement that
Employee refrain from engaging in a business competitive with the Business
during the time period, within the geographical limits and under the
circumstances set forth in this Section 8. Accordingly, Employee shall not,
(1) during the initial or any extended term hereof or (2) upon the written
request of the Company, for a period of six months following the
termination of the Employee's employment hereunder for any reason including
without limitation termination upon the expiration of the initial or any
extended term hereof, in any manner, directly or indirectly, as an officer,
director, stockholder, partner, associate, employee, consultant, owner,
agent, coventurer or otherwise (i) solicit, entice, encourage or otherwise
attempt to procure or service by telephone or otherwise accounts for a
business competitive with the Business from any customers (determined as at
the date of termination) of the Company's (or of any Affiliate's) located
within a 75 mile radius of the Company's main office at the address set
forth above (the "Territory"), or (ii) be or become interested in or be
associated, by employment or otherwise, with any other corporation, firm,
business or person located or engaged within the Territory in a business
competitive with the Business. The Employee's ownership, directly or
indirectly, of not more than three percent (3%) of the issued and
outstanding voting stock of any corporation the shares of which are
regularly traded on a national securities exchange or on the
over-the-counter markets shall not be deemed to be a violation of the
provisions of this Section 8. As additional consideration for the
Employee's performance of the covenants provided in this Section 8.1
relating to any six-month period following the termination of the
Employee's employment hereunder, but only for so long as the Employee shall
continue to perform such covenants, the Company shall pay the
[3]
<PAGE>
Employment Agreement: WALTER E. DULSKI
September 1, 1996
Employee for each month during such six-month period an amount equal to
one-twelfth (1/12th) of the Base Salary. It is agreed and understood that
such payment constitutes full and fair consideration to Employee for
Employee's observance of such covenants and his possible abstinence from
the Business for such period.
8.2 The Company or any Affiliate shall be entitled, in addition to any
other right or remedy it may have, at law or in equity, to an injunction,
without the posting of any bond or other security, enjoining or restraining
Employee from any violation or threatened violation of this Section 8, and
Employee hereby consents to the issuance of such injunction. If any of the
rights or restrictions contained herein shall be deemed to be unenforceable
by reason of the extent, duration or geographical scope, or other provision
hereof, or any other provision of this Agreement, the parties hereto
contemplate that the court shall reduce such extent, duration, geographical
scope or other provision and enforce this Section 8 in its reduced form for
all purposes in the manner contemplated hereby. This Section 8 shall
survive the Termination Date and any Extended Termination Date and the
cessation of Employee's employment hereunder.
8.3 In addition to the above, should Employee unilaterally terminate
Employee's employment hereunder prior to the Termination Date or should
this Agreement be terminated for Cause as defined in Paragraph 6 and such
Employee become engaged in a business competitive with the Business within
a period of twelve months following termination, the Company will be
entitled, in addition to any other remedies it may be entitled to, to a
return of the bonus compensation received by Employee for the six-month
period ended immediately prior to such termination. It is understood and
agreed that such repayment is fair considering the terms of this Agreement.
9. Confidential Information; Other Employees
9.1 Employee acknowledges that due to Employee's position with the
Company (as set forth in section 1 hereof) and Employee's special, unique,
unusual, extraordinary and intellectual abilities and skills, Employee will
have access to the Company's (and that of its Affiliates) trade secrets,
client lists and other confidential information. Accordingly, Employee
agrees that Employee shall not at any time (whether during the term hereof,
the period of non-competition hereunder, or at any time thereafter) use
outside the scope of Employee's employment hereunder or disclose to anyone
any confidential information, client lists or trade secrets of or relating
to the Company, its Affiliates, or the Business.
9.2 Employee agrees that Employee shall not at any time (whether
during the term hereof, and during the one (1) year period immediately
subsequent to the Termination Date or Renewal Termination Date, as the case
may be, enter into any arrangement with or otherwise solicit, entice or
encourage any employee (determined as the date of termination or within
three months prior to the date of termination) of the Company or any
Affiliate to terminate such employee's employment in order to work
[4]
<PAGE>
Employment Agreement: WALTER E. DULSKI
September 1, 1996
for a competitor of the Company or any Affiliate; provided, however, that
the foregoing provisions of this Section 9.2 shall not apply to any
employees in any business in which the Company has ceased to conduct
operations as of the date of the termination of Employee's employment
hereunder.
9.3 Tolling. Employee acknowledges and agrees that any violation of
the restrictive covenants, agreements and promises contained in Sections 8
and 9 above shall suspend the expiration of the time limits of each of
those covenants for so long as the violation continues.
9.4 Employee acknowledges that given Employee's unique position with
the Company and given Employee's access to the Company's trade secrets,
client lists and other confidential information and given the vital
importance to the Company and its Affiliates of their human resources, that
any breach, or threatened breach, by Employee of the provisions of this
Section 9 shall cause irreparable harm to the Company and its Affiliates,
which harm cannot be fully redressed by the payment of damages to the
Company or the Affiliates. Accordingly, Employee agrees that the Company or
any Affiliate shall be entitled, in addition to any other right and remedy
it may have, at law or in equity, to an injunction, without the posting of
any bond or other security, enjoining or restraining Employee from any
violation or threatened violation of this Section 9, and Employee hereby
consents to the issuance of such injunction. If any of the rights or
restrictions contained herein shall be deemed to be unenforceable, the
parties contemplate that the court shall reduce such rights or restrictions
and enforce this Section 9 in its reduced form for all purposes in the
manner contemplated hereby. This Section 9 shall survive the Termination
Date and any Extended Termination Date and the cessation of Employee's
employment hereunder.
10. Enforcement Costs
Should the Company or Employee be required to engage legal counsel to
enforce or prevent the breach of any of the provisions of this Agreement,
to institute any action or proceeding to enforce any such provision of this
Agreement, to seek an injunction, to seek damages by reason of any alleged
obligations, or to seek any other judicial or equitable remedy, then the
prevailing party in such action shall be entitled to recover from the other
party all costs and expenses incurred thereby, including, but not limited
to, reasonable attorneys' fees, expenses and all other costs.
11. Representations and Warranties of Employee
Employee represents and warrants that Employee is free to enter
into this Agreement and to perform the duties required hereunder, and
that there are no employment contracts, restrictive covenants or other
restrictions preventing the performance of Employee's duties hereunder.
[5]
<PAGE>
Employment Agreement: WALTER E. DULSKI
September 1, 1996
12. Inventions, Discoveries, Etc.
(a) Employee shall promptly and fully disclose to the Company and with
all necessary detail for a complete understanding of the same, all
developments, knowhow, discoveries, inventions, improvements, concepts,
ideas, writings, formulae, processes and methods (whether copyrightable,
patentable or otherwise) made, received, conceived, acquired or written
during working hours or otherwise by Employee (whether or not at the
request or upon the suggestion of the Company) during the period of
Employee's employment with the Company or any of its Affiliates, solely or
jointly with others, in or relating to any activities of the Company or its
Affiliates or any other respective customers known to him as a consequence
of Employee's employment (collectively referred to as the "Subject
Matter").
(b) Employee hereby assigns and transfers, and agrees to assign and
transfer, to the Company, all Employee's right, title and interest in and
to the Subject Matter, and Employee further agrees to deliver to the
Company any and all drawings, notes, specifications and data relating to
the Subject Matter and to execute, acknowledge and deliver all such further
papers, including applications for copyrights and patents for any thereof
in any and all countries, and to vest title thereto in the Company.
Employee shall assist the Company in obtaining such copyrights or patents
during the term of this Agreement and any time thereafter and to testify in
any prosecution or litigation involving any of the Subject Matter.
13. Notices
All notices hereunder shall be in writing and delivered by hand or
sent by registered mail or by telegram or telex, addressed to such party at
its address referred to above, or at such other address as such party may
from time to time designate by notice to the other party. Any such notice
shall be deemed to have been given on the date delivered by hand, telegram
or telex, or on the fifth day after the mailing thereof.
14. Waivers
No waiver of any breach of any provision of this Agreement shall be
deemed to constitute a waiver of any other breach of such provision or a
waiver of any breach of any other provision of this Agreement.
15. Agreement Complete; Amendments
There are no oral agreements or understandings with respect to or
affecting this Agreement, and this Agreement may not be amended,
supplemented, canceled or discharged except by a written instrument
executed by the parties hereto and, without limiting the generality of the
foregoing, the parties may, in writing, without notice to or consent of any
third person, at any time waive any rights hereunder or amend this
Agreement in any respect or terminate this Agreement.
[6]
<PAGE>
Employment Agreement: WALTER E. DULSKI
September 1, 1996
16. Governing Law and Exclusive Jurisdiction
This Agreement will be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed entirely within such State. Any claims, disputes or controversies
arising from or relating to this Agreement, including, but not limited to,
the negotiation, performance, termination, or to the breach hereof, which
claims, disputes, or controversies seek only money damages as a remedy,
shall be decided by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association then in force and
said arbitration shall be filed and held in New York, New York.
Notwithstanding the above, the parties hereby submit to the exclusive
jurisdiction of the courts of New York in and for New York County or any
Federal court held therein for other non-monetary relief such as an
injunction or a declaratory judgment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EURO BROKERS INC.
By:/s/ Donald R. A. Marshall
-------------------------
DONALD R. A. MARSHALL
President
Employee:
/s/ Walter E. Dulski
- --------------------
WALTER E. DULSKI
[7]
<PAGE>
Employment Agreement: WALTER E. DULSKI
September 1, 1996
EXHIBIT A
Brokering of securities, swaps, repurchase agreements, commodities
(including currencies), futures, assets, other financial instruments,
non-financial instruments and related services, assets or products, and
derivatives of any of the foregoing (including, without limitation, options and
hybrids), to any member of the wholesale dealer or institutional community (for
this purpose the term "brokering" shall include, without limitation, acting as
agent, agent for undisclosed principal, riskless principal or principal with the
intent of effectuating a matching transaction).
[8]
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION
EURO BROKERS INVESTMENT CORPORATION
November 19, 1996
Mr. Donald R.A. Marshall
927 Mohawk Road
Franklin Lakes, NJ 07417
Dear Donald:
This letter, when signed by all parties, will confirm our agreement
with respect to the changes in your employment and other relationships with each
of Financial Services Acquisition Corporation ("FSAC") and Euro Brokers
Investment Corporation (the "Company").
1. Termination of Existing Employment Agreement. The existing
employment agreement between you and the Company, dated as of March 8, 1996 (the
"Employment Agreement"), is hereby terminated by mutual agreement, effective as
of the close of business on November 22, 1996 (the "Effective Date"). You hereby
resign, effective as of the Effective Date, as an employee, officer and director
of each of FSAC, the Company and their subsidiaries.
2. Term and Certain Services. From and after the Effective Date, and
continuing through the third anniversary of the Effective Date (the "Term"), you
agree to make yourself reasonably available from time to time on reasonable
notice to consult and cooperate with and advise the Company with respect to such
matters involving the business of the Company as may reasonably be requested
(including, if required, being deposed in third-party lawsuits relating to
periods prior to the Effective Date). There is no minimum amount of time,
however, for which you must make yourself available and it is expressly
understood that you may pursue other personal or business interests during the
Term (subject to the non-competition and other provisions hereof).
3. Compensation. During the Term, in consideration of the above
services and the non-solicitation/non-competition covenants below, the Company
will pay you annual compensation of $450,000, payable in approximately equal
installments in accordance with past practices and the Company's customary
payroll procedures. In addition, you will remain eligible to receive a bonus for
the six-month period ending December 31, 1996, it being understood, however,
that the determination as to the making and, if made, the amount of any such
award will be in the sole discretion of the Board of Directors of the Company.
In addition, during the ten year period following the Effective Date, as
specific additional compensation for your covenants in Paragraph 7 below, the
Company will pay you $2,000 per month, either as reimbursement for your expenses
upon submission of appropriate receipts and invoices or, to the extent such
expenses are not incurred by you, as additional compensation.
FSAC * EBIC
TWO WORLD TRADE CENTER, SUITE 8400, NEW YORK, NEW YORK
TEL. 212-748-7000 FAX 212-748-7329
<PAGE>
Mr. Donald R.A. Marshall
November 19, 1996
Page 2
4. Other Benefits. During the Term (unless you are earlier employed by
another company offering similar benefits), you shall continue to be eligible to
participate, at the Company's expense, in the life insurance, medical insurance
and accident and disability insurance plans that the Company offers to its
executive officers (subject to the requirements of such plans and applicable
law). After the Term and continuing until your death (or, if you are still
married to and predecease your current spouse, continuing until her death), the
Company will use its reasonable best efforts to maintain your participation in
its group medical insurance plan or, if the terms of the plan or of applicable
law do not so allow, will procure and pay for such separate medical insurance
coverage for you and your spouse as is obtainable at a cost not materially in
excess of the cost to the Company at such time of your participation in its
plan. It is understood that the coverage of any such medical insurance (group or
separate) will terminate during any periods in which you otherwise obtain, or
are employed by another company offering, medical insurance benefits and will be
limited to the extent that Medicare/Medicaid (or similar programs) eventually
provide you and your spouse with coverage. The Company will continue to provide
you with your current office space through December 31, 1996.
5. Options. Prior to the Effective Date, FSAC will award you 150,000
stock options under FSAC's 1996 Stock Option Plan, with such options to vest in
three equal installments on the first, second and third anniversaries of the
Effective Date.
6. Stock. FSAC will use its reasonable best efforts during the first
year of the Term to arrange for the private sale or sales, at mutually agreed
prices, of up to 50% of the shares of its common stock currently owned by you
(and up to 50% of any shares received by you during such time upon exchange or
exercise of FSAC warrants currently owned by you).
7. Non-Solicitation/Non-Competition/Confidentiality Covenants. In
consideration of the compensation and other benefits and arrangements provided
for herein, you agree that, without the prior written consent of FSAC's Chief
Executive Officer, you will not, directly or indirectly, with or without pay,
either as an employee,
FSAC * EBIC
TWO WORLD TRADE CENTER, SUITE 8400, NEW YORK, NEW YORK
TEL. 212-748-7000 FAX 212-748-7329
<PAGE>
Mr. Donald R.A. Marshall
November 19, 1996
Page 3
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director, manager, investor, lender, advisor, owner, associate or in any other
individual or representative capacity, (i) during the Term solicit, entice,
encourage or otherwise attempt to procure or service by telephone or otherwise
accounts from, or otherwise interfere with, disrupt or damage or attempt to
interfere with, disrupt or damage the relationship of the Company or a
subsidiary with, any customers or prospective customers (in each case determined
as of the Effective Date) of the Company or a subsidiary thereof for a business
that is engaged in or otherwise conducts or provides a business or service that
is competitive in any manner (a "Competitive Business") with any of the
businesses or services in which the Company is engaged (or known to you to be
specifically contemplating being engaged) as of the Effective Date (the
"Business"), (ii) during the Term either solicit, entice or encourage any
employee (determined as of the Effective Date) of the Company or a subsidiary
thereof to terminate such employee's employment or aid or assist in any fashion
a Competitive Business in the hiring of such employee or (iii) during the two
year period following the Effective Date engage or participate in, or aid or
assist in any manner, any Competitive Business. Notwithstanding the termination
of the Employment Agreement, you agree that Section 11(a) thereof (relating to
confidentiality) shall survive.
8. Publicity; Non-Disparagement. The content of all press releases and
other publicity concerning the agreement made hereby shall be mutually agreed
among you, FSAC and the Company. Neither you, on the one hand, nor FSAC and the
Company, on the other hand, shall make or publish, directly or indirectly, any
statement which is (or might reasonably be construed to be) disparaging of the
other.
9. No Other Claims. The obligations contained in this letter agreement
constitute the entirety of FSAC's and the Company's obligations to you and,
except for any breach by FSAC or the Company of their respective obligations
hereunder, you agree that none of FSAC, the Company, their subsidiaries or the
respective officers, directors, employees and shareholders thereof will have any
liability to you with respect to the Employment Agreement, your employment with
the Company or the termination of that employment.
10. Key Man Life Insurance and Share Purchase Obligations. Without
limiting the generality of the foregoing Paragraph 9, and notwithstanding
anything to the contrary contained elsewhere in this letter agreement, it is
agreed that the letter agreement, dated May 18, 1995, between you and the
Company with respect to key man life insurance and certain related matters is
hereby terminated in its entirety (to be replaced solely by the obligations of
this Paragraph 10). It is acknowledged that the premiums with respect to the
policy referred to in such letter agreement (the "Policy") have been prepaid
until February
FSAC * EBIC
TWO WORLD TRADE CENTER, SUITE 8400, NEW YORK, NEW YORK
TEL. 212-748-7000 FAX 212-748-7329
<PAGE>
Mr. Donald R.A. Marshall
November 19, 1996
Page 4
1, 1997. The Company agrees to maintain the Policy in effect until such date,
but will not be obligated to (although you hereby agree that the Company will be
permitted to) continue the Policy in effect after such date. If you should die
before February 1, 1997 (or such later date as the Company chooses to maintain
the Policy), it is hereby agreed that FSAC or its designee will purchase at a
price equal to 50% of the after-tax proceeds of the Policy actually received by
the Company (the "Price"), and you hereby agree to sell to FSAC or its designee
at the Price (which agreement shall be binding on your estate), all securities
of FSAC beneficially owned by you (including FSAC securities previously
transferred by you, and FSAC securities received in exchange for the Company's
securities previously transferred by you, in each case to any of your spouse,
descendants or trusts for any of the foregoing) at the time of your death (the
"Shares"). Notwithstanding the immediately preceding sentence, if the Policy is
extended by the Company beyond February 1, 1997 and the fair market value of the
Shares at the time of the purchase contemplated hereby would exceed the Price,
then FSAC shall be entitled to purchase, and you (and your estate) shall be
obligated to sell, only that number of the Shares as is equal to the quotient
obtained by dividing the Price by such fair market value. For purposes of the
immediately preceding sentence, the fair market value of the Shares shall be
determined by an investment banker jointly selected by FSAC and your legal
representative or, if they cannot promptly agree on a banker, by an investment
banker jointly selected by investment bankers respectively selected by each of
FSAC and your legal representative. Notwithstanding anything in this Paragraph
10 to the contrary, if you so request of the Company in writing prior to the
expiration or termination of the Policy, and it is permitted by the terms of the
Policy and the underwriter thereof, the Company will fully cooperate with you in
attempting to have the Policy (in its original, or any adjusted, amount of
coverage) and all of its rights (including the right to designate a beneficiary)
and obligations (including the obligation to pay premiums) assigned to you by,
and assumed by you from, the Company. If such assignment and assumption is made,
all rights and obligations under this Paragraph 10 with respect to the Shares
shall thereupon automatically cease.
11. Remedies. In the event of a breach or threatened breach by you of
any of the provisions of Paragraph 7 above, you agree that the Company shall be
entitled, in addition to any other remedies, to injunctive relief in a court of
appropriate jurisdiction to remedy such breach or threatened breach. You agree
and acknowledge that the payment of compensation and other benefits under
Paragraphs 3 and 4 above, and the vesting and exercisability of the options to
be granted under Paragraph 5 above, are expressly conditioned on the continued
performance of your covenants under Paragraph 7 above.
12. Validity. The invalidity or unenforceability of any provision of
this letter agreement shall not affect the validity or enforceability of any
other provision hereof;
FSAC * EBIC
TWO WORLD TRADE CENTER, SUITE 8400, NEW YORK, NEW YORK
TEL. 212-748-7000 FAX 212-748-7329
<PAGE>
Mr. Donald R.A. Marshall
November 19, 1996
Page 5
provided, however, that if any one or more of the terms contained in Paragraph 7
above shall for any reason be held to be excessively broad with regard to time,
duration, geographic scope or activity, that term shall not be deleted but shall
be construed and/or reformed in a manner to enable it to be enforced to the
maximum extent possible.
13. Attorneys' Fees. In the event that you, on the one hand, and FSAC
and/or the Company, on the other hand, become involved in any action, suit or
proceeding relating to an alleged breach of this letter agreement and a monetary
judgment or injunctive relief in such action, suit or proceeding is rendered or
entered against either party, such party shall be liable for and pay to the
prevailing party on demand all costs and expenses (including reasonable
attorneys' fees) incurred by such prevailing party in connection with such
action, suit or proceeding, including any appeal therefrom.
14. Assignment. This letter agreement, and your rights and obligations
hereunder, are personal to you and may not be assigned by you.
15. Binding Effect; Amendment; Governing Law. This letter agreement
contains all material terms of the agreement among you, FSAC and the Company,
and shall be fully effective and binding upon its execution by all parties
hereto. This letter agreement may not be amended except by a writing signed by
all parties hereto. This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
FSAC * EBIC
TWO WORLD TRADE CENTER, SUITE 8400, NEW YORK, NEW YORK
TEL. 212-748-7000 FAX 212-748-7329
<PAGE>
Mr. Donald R.A. Marshall
November 19, 1996
Page 6
If this letter agreement correctly sets forth your understanding of our
agreement, please so indicate by signing below, whereupon this letter agreement
shall become effective.
Very truly yours,
FINANCIAL SERVICES ACQUISITION
CORPORATION
By: /s/ Gilbert Scharf
-------------------
Gilbert Scharf, Chairman
EURO BROKERS INVESTMENT
CORPORATION
By: /s/ Gilbert Scharf
-------------------
Gilbert Scharf, Vice Chairman
Agreed:
/s/ Donald R.A. Marshall
- ------------------------
Donald R.A. Marshall
FSAC * EBIC
TWO WORLD TRADE CENTER, SUITE 8400, NEW YORK, NEW YORK
TEL. 212-748-7000 FAX 212-748-7329
<PAGE>
Exhibit 10.14
-------------
June 7, 1993
(Revised 12/27/93)
Euro Brokers, Maxcor Inc.
Two World Trade Center
Suite 8400
New York, N.Y. 10048-0697
Re: Agreement For Securities Clearance Services
Dear Sirs:
This letter sets forth our agreement ("Agreement") concerning certain
clearing services to be performed by Daiwa Securities America Inc. ("Daiwa") for
Euro Brokers Maxcor Inc. ("Introducing Firm") with respect to certain of
Introducing Firm's customer transactions in the securities specified in Exhibit
A hereto ("Specified Securities"). As described fully below, Introducing Firm
shall pay to Daiwa clearing fees calculated based upon the schedule set forth in
Exhibit B hereto. Notwithstanding anything to the contrary contained herein, it
is expressly understood and agreed that this Agreement is contingent upon the
approval of the New York Stock Exchange, Inc. ("NYSE").
1. Subject to the provisions of this Agreement and any special limitations
set forth in Exhibit C hereto, Daiwa shall clear securities transactions on a
fully disclosed basis for those of Introducing Firm's customer accounts
("Accounts") as may be mutually agreed between the parties hereto. Daiwa shall
indicate its acceptance of such Accounts by written notice to Introducing Firm.
Daiwa may, in its sole discretion, but not unreasonably, notwithstanding any
other provision of this Agreement, at any time refuse to accept any particular
trade for any Account, provided, however, that Daiwa will endeavor to give
Introducing Firm prompt written notice in the event that Daiwa should determine
not to accept trades in any class or type of security or the trades of any
particular Account.
2. Introducing Firm shall arrange for completion of all Daiwa forms and
provide any supporting documents required for the opening and maintenance of the
Account. In connection with the introduction of each prospective Account,
Introducing Firm shall promptly furnish Daiwa with all information concerning
its customer and Introducing Firm's relationship with its customer and any
related documents that Daiwa may reasonably require.
<PAGE>
Nothing herein shall restrict Daiwa from making any further inquiry or
investigation as Daiwa deems necessary.
3. Daiwa shall send a letter substantially in the form of Exhibit C hereto
to each accepted Account. Daiwa shall send a copy of such letter to Introducing
Firm.
4. (a) 4Daiwa shall clear trades under this Agreement by executing as a
principal, back-to-back purchases and sales of Specified Securities initiated by
Introducing Firm between an Account and Daiwa on the one hand, and Daiwa and
another Account or dealer on the other (each a "Back-to-Back Transaction").
Introducing Firm by its designated employee(s) shall notify promptly a
designated employee of Daiwa by telephone of the Terms of each Back-to-Back
Transaction that has been initiated; if such trade is rejected by Daiwa, Daiwa
shall by telephone (with written facsimile confirmation) promptly notify
Introducing Firm, who shall promptly notify its customer, and if such trade has
been accepted by Daiwa, Daiwa shall directly confirm it with Introducing Firm's
customer and the other dealer, by telephone. Nothing herein shall prohibit
Introducing Firm from initiating a purchase or sale for an Account directly with
Daiwa as dealer of its inventory. Introducing Firm and its customer shall each
be provided with an Account's purchases and sales confirmations and statements
of Account by Daiwa at such times and with such frequency as Daiwa normally
provides such statements to its own customers. Daiwa shall notify Introducing
Firm of any discrepancies in trade confirmations with contra parties promptly
upon discovery but no later than 48 hours after trade date or the date which the
trade is received, whichever is later.
(b) Back-to-Back Transactions shall normally generate revenue as a
result of the difference between the price at which Introducing Firm arranges
for Daiwa to purchase a security from an Account or another dealer (or, if sold
from Daiwa inventory, the price quoted to Introducing Firm) and the price at
which Introducing Firm arranges for Daiwa to sell such security to another
dealer or an Account (or, if purchased for Daiwa inventory, the price quoted to
Introducing Firm). Such revenue shall be retained by Daiwa until the end of each
calendar month during the term hereof, at which time Daiwa shall pay to
Introducing Firm, within five business days after the end of such calendar
month, an amount equal to any revenue remaining, after deduction of Daiwa's
clearing fees therefrom ("Remaining Revenue").
2
<PAGE>
(c) Daiwa shall furnish Introducing Firm with a supporting schedule
together with each Remaining Revenue payment, and determination of the amount
payable to Introducing Firm with respect to any calendar month shall be
conclusive and binding on the parties hereto if Introducing Firm does not object
thereto in writing, with specific details of its objections, within thirty (30)
days after its receipt of such supporting schedule.
5. This Agreement and all transactions in the Accounts, will be subject to
the applicable Constitution, Rules, By-Laws, Regulations and customs of any
securities market, association, exchange or clearing house where such
transactions are effected or of which Daiwa is a member, and also to all
applicable U.S. Federal and state laws and regulations. All of the foregoing are
hereinafter called the "Applicable Rules".
6. Except as otherwise specified in this Agreement Introducing Firm shall
be solely responsible for the opening, approving and monitoring of the Accounts,
and ensuring that the transactions conducted therein are in compliance with the
Applicable Rules. Such responsibility includes, but is not limited to: (i) using
due diligence to learn and on a continuing basis to know the essential facts of
each customer, knowing all persons holding power of attorney over any Account,
being familiar with each order in any Account and at all times to fully comply
with Rule 405 of the New York Stock Exchange, Inc. and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. ("NASD"), and
any interpretations thereof, and all similar Applicable Rules; (ii) selecting,
investigating, training and supervising all personnel who open, approve or
authorize transaction in the Accounts; (iii) establishing written procedures for
the conduct of the Accounts and ongoing review of all transactions in Accounts,
and maintaining compliance and supervisory personnel adequate to implement such
procedures; (iv) determining the suitability of all transactions; (v) ensuring
that there is a reasonable basis for all recommendations made; (vi) determining
the appropriateness of the frequency of trading in Accounts; (vii) determining
the authorization and legality of each transaction in the Account; (viii)
acceptance of orders; (ix) initiating Back-to-Back Transactions and determining
the amount of any difference between the prices paid or received by an Account
for a Specified Security and the prices paid or received by Daiwa for said
Specified Security; (x) obtaining and maintaining all documents necessary for
the performance of Introducing Firm's responsibilities under this Agreement and
retaining such documents in accordance with all the Applicable Rules; and (xi)
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responding to all its customer inquiries and complaints, and promptly notifying
Daiwa in writing of complaints concerning Daiwa.
7. (a) Daiwa shall be responsible for (i) entering into accepted
Back-to-Back Transactions as directed by Introducing Firm; (ii) the delivery and
for receipt of funds and/or Specified Securities to and from Accounts, as
applicable, and for the transfer of Specified Securities to and from Accounts;
and (iii) the receipt, timely delivery and safeguarding of funds and securities,
and maintenance of books and records (including preparation and timely
transmittal of trade confirmations and statements) relating to transactions
between Daiwa and Accounts.
(b) Daiwa shall have no responsibility for (i) supervising the
investment advisory, sales and trading activities of Introducing Firm's
employees or for any of Introducing Firm's books or records or (ii) opening or
approving Accounts, screening of orders or for monitoring of Account activity.
For purposes of the Securities and Exchange Commission's financial
responsibility rules and SIPC, the Introducing Firm's customers will be
considered customers of Daiwa and not customers of the Introducing Firm. Nothing
herein shall cause the Introducing Firm's customers to be construed or
interpreted as customers of Daiwa for any other purpose or to negate the intent
of any other section of this agreement, including but not limited to, the
delineation of responsibilities as set forth elsewhere in this Agreement.
8. Each party shall be solely responsible for (i) its own errors in
connection with any Account; (ii) adherence to the respective securities laws,
regulations and rules which apply to it regarding its own operations and the
supervision of its own personnel; (iii) compliance with all restricted/control
stock requirements, as applicable to it; (iv) compiling and filing its
respective regulatory reports, as applicable; (v) supplying the other with
reasonable access to its relevant records and supplying any information in its
possession reasonably requested by such party in order for both parties to
properly perform their respective functions under the Agreement
9. Introducing Broker represents, warrants and covenants to Daiwa as
follows:
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(a) It is a member in good standing of the NASD.
(b) It is and during the term of this Agreement will remain duly
registered or licensed and in good standing as a broker/dealer under the
Applicable Rules.
(c) It has all the requisite authority in conformity with all
Applicable Rules to enter into this Agreement and to retain the services of
Daiwa in accordance with the terms hereof and you have taken all necessary
action to authorize the execution of this Agreement and the performance of the
obligations hereunder.
(d) It is in compliance, and during the term of this Agreement will
remain in compliance with (i) the capital and financial reporting requirements
of any and all national securities exchange or other securities exchange and/or
securities association of which it is a member, (ii) the capital requirements of
the Securities and Exchange Commission, (iii) the capital requirements of every
state in which it is licensed as a broker/dealer, and (iv) the NASD Rules of
Fair Practice.
(e) It shall not generate any statements, billings or confirmations
respecting any Account or transaction in any Account.
(f) It shall provide representatives of any governmental body having
jurisdiction over the respective businesses of the parties with reasonable
access to the records relating to Accounts and their owners.
(g) It shall keep confidential any information it may acquire as a
result of this Agreement regarding the business and affairs of Daiwa, which
requirements shall survive the life of this Agreement.
10. Daiwa represents, warrants and covenants as follows:
(i) Daiwa is a member in good standing of the National Association of
Securities Dealers, Inc. and of the major national securities exchanges.
(ii) Daiwa is and during the term of this Agreement will remain duly
licensed and in good standing as a broker/dealer under the Applicable
Rules.
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(iii)Daiwa has all the requisite authority, in conformity with all
Applicable Rules to enter into and perform this Agreement and has taken all
necessary action to authorize the execution of this Agreement and the
performance of the obligations hereunder.
(iv) Daiwa is in compliance, and during the term of this Agreement
will remain in compliance with (1) the capital and financial reporting
requirements of every national securities exchange and/or other securities
exchange or association of which it is a member, (2) the capital
requirements of the Securities and Exchange Commission, and (3) the capital
requirements of every state in which it is licensed as a broker/dealer.
(v) The names and addresses of Introducing Firm's customers which have
or which may come to Daiwa's attention in connection with the clearing and
related functions it has assumed under this Agreement are confidential and
shall not be utilized by Daiwa except in connection with the functions
performed by Daiwa pursuant to this Agreement. Notwithstanding the
foregoing, should any customer of Introducing Firm request, on an
unsolicited basis that Daiwa become its broker, acceptance of such Account
by Daiwa shall in no way violate this representation and warranty, nor
result in a breach of this Agreement.
(vi) Daiwa shall keep confidential any information it may acquire as a
result of this Agreement regarding your business and affairs, which
requirement shall survive the life of this Agreement.
11. (a) Each party (here referred to as the "indemnifying party") shall
indemnify the other, and its officers, directors, employees, agents and
affiliates (each of the foregoing being an "indemnified party") from and against
any and all claims, losses, damages (excluding any indirect, consequential or
special damages), expenses (including, without limitation, reasonable attorneys'
fees) and liabilities (all of the foregoing being referred to as "liabilities"),
directly caused by or directly resulting from the acts or omissions, under or in
connection with this Agreement or any transaction made pursuant to this
Agreement, of the indemnifying party, or any of its officers, directors,
employees or agents, including, without limitation, any failure by the
indemnifying party, its officers,
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directors, employees or agents to comply with any applicable law or regulation,
and any fraud, dishonesty or gross negligence by the indemnifying party.
Notwithstanding anything expressed or implied to the contrary in the foregoing,
the parties agree: (i) without limiting the generality of the foregoing
indemnity, that Introducing Firm shall be solely liable for, and shall indemnify
Daiwa, its officers, directors, employees, agents and affiliates from and
against, any and all liabilities in any way caused by or resulting from any
investment advice or any incorrect or unauthorized instructions given by
Introducing Firm; (ii) that in no event shall Daiwa, or any of its officers,
directors, employees, agents or affiliates, have any liability to Introducing
Firm (or any other indemnified party) for liabilities resulting from, or alleged
to have resulted from, Daiwa's exercise of its rights hereunder to refuse to
approve a particular Account or any particular trade or transaction in the
manner provided for herein; and (iii) that neither party shall be required by
the terms hereof to indemnify the other (or any other indemnified party) for any
liabilities to the extent caused by the negligent or wrongful conduct of the
indemnified party.
(b) Payment of indemnity obligations shall be made promptly following
receipt of written notice thereof and final determination of liability by
adjudication, arbitration or settlement agreed to by the indemnifying party.
Each party agrees to give the other prompt written notice of any grievance or
complaint, threat of action, commencement of litigation against either party in
connection with this Agreement or any transaction consummated pursuant hereto,
and of any other matter likely to give rise to an indemnity claim hereunder. The
indemnifying party shall have the right, at its option, to compromise or defend,
at its own expense and by its own counsel, any such matter involving the
asserted liability of the indemnified party, provided that the indemnifying
party may not, without the prior written consent of the indemnified party,
compromise any such asserted liability if the terms of such compromise require
any action by, or impose any liability upon, the indemnified party other than
the payment of money. If the indemnifying party intends to compromise or defend
any such asserted liability, it shall give prompt written notice to the
indemnified party of its intention to do so, and the indemnified party agrees to
cooperate fully with the indemnifying party and its counsel in such compromise
or defense. In any event, the indemnified party shall have the right, at its own
expense, to participate in the defense of any such asserted liability.
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12 (a) Daiwa shall limit its services pursuant to the terms of this
Agreement to that of clearing functions and the related services expressly set
forth herein and Introducing Firm shall not hold itself out as an agent of Daiwa
or of any subsidiary or company controlled directly or indirectly by or
affiliated with Daiwa. Neither this Agreement nor any operation hereunder shall
create a general or limited partnership, association or joint venture or agency
relationship between the parties.
(b) Introducing Firm shall not, without the prior written approval of
Daiwa, place any advertisement in any newspaper, publication, periodical or any
other media if such advertisement in any manner makes reference to Daiwa or to
the clearing arrangements and the services embodied in this Agreement.
(c) Should Introducing Firm in any way hold itself out as, advertise or
represent that you are the agent of Daiwa, Daiwa shall have the power, at its
option, to terminate this Agreement and Introducing Firm shall be liable for any
loss, liability, damage, claim, cost or expense (including but not limited to
fees and expenses of legal counsel) sustained or incurred by Daiwa as a result
of such a representation of agency or apparent authority to act as an agent of
Daiwa or agency by estoppel.
13. (a) To further ensure Introducing Firm's performance of its
obligations under this Agreement (including, without limitation, its indemnity
obligations), there shall be established a securities holding account with Daiwa
to be opened in the name of Introducing Firm and designated as the Introducing
Firm Collateral Account (the "Collateral Account"). The Collateral Account shall
at all times contain cash, securities, or a combination of both, having a market
value of not less than the sum set forth in Exhibit B hereto (the "Collateral
Amount"). Said securities shall consist only of direct obligations issued by or
guaranteed as to principal and interest by the United States and such other
securities as Daiwa may in writing consent to, in its sole discretion, from time
to time. As collateral security for all of its obligations to Daiwa under and
with respect to this Agreement, Introducing Firm hereby pledges, assigns and
grants a first priority security interest and lien to Daiwa in and upon all
property from time to time now or hereafter in the Collateral Account, and Daiwa
shall have all rights and remedies with respect thereto of a secured party under
the New York Uniform Commercial Code or other applicable law, as well as
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its other rights hereunder. Introducing Firm represents and warrants that any
collateral shall be free of any lien, pledge or interest other than that of
Daiwa. Introducing Firm shall be entitled to receive all cash distributions made
on or in respect of the securities unless the market value of the cash and/or
securities in the Collateral Account is less than the Collateral Amount. If the
Collateral Account consists of cash, Daiwa shall pay interest to the Introducing
Firm on this cash held from time to time at the rate mutually agreed upon. If at
any time the market value of the cash and/or securities in the Collateral
Account shall be less than ninety percent (90%) of the Collateral Amount, as
determined by Daiwa, Daiwa may, by notice to Introducing Firm, demand that
Introducing Firm deliver additional collateral to the Collateral Account to
increase the market value to the full Collateral Amount, in which event such
delivery shall be made within five business days following such demand. If the
market value of the cash and/or securities in the Collateral Account exceeds one
hundred and ten percent (110%) of the Collateral Amount, as determined by Daiwa,
Daiwa shall notify Introducing Firm, in which event Introducing Firm may, by
notice to Daiwa, demand that Daiwa authorize and direct the redelivery to
Introducing Firm of a portion of the collateral so that the remaining collateral
has a market value equal to at least the Collateral Amount.
(b) Introducing Firm may from time to time direct the investment of any
cash in the Collateral Account, but no purchases shall be made on margin and
securities purchased shall consist only of the aforementioned types of
securities. Except as provided herein, Introducing Firm shall not have access
to, nor have any right to transfer or withdraw any cash or securities from, the
Collateral Account without the prior written consent of Daiwa. The Collateral
Account shall not be deemed to be margin for any Customer accounts.
14. If Daiwa shall have any claim against Introducing Firm or shall suffer
any loss or incur any expenses for which it is entitled to be indemnified
pursuant to this Agreement, upon the final determination of the liability of
Introducing Firm for such claim, loss or expense, Daiwa shall have the right to
deduct the amount of such claim, loss or expense from any amounts owed to
Introducing Firm hereunder. If the amount owed to Introducing Firm hereunder is
less than the amount of such claim, loss or expense, Daiwa shall have the right
to withdraw from the Collateral Account cash and/or securities having a market
value equal to the amount of such deficiency. Introducing Firm shall then be
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obligated to deposit immediately in the Collateral Account cash and/or
securities sufficient to bring the Collateral Account back to a market value of
at least the Collateral Amount.
15. Within thirty (30) days of the termination of this Agreement, Daiwa
will (a) effect the payment and delivery to Introducing Firm of the funds and/or
securities in the Collateral Account, less any amounts Daiwa is entitled to
withdraw under the preceding paragraph; provided, however, that Daiwa may retain
in the Collateral Account such amount as it reasonably deems appropriate for its
protection from any claim or proceeding of any type then threatened or pending,
until the final determination thereof is made, and (b) deliver or cause to be
delivered to Introducing Firm (without the reproduction or other copying
thereof) all documents and other materials, including customer lists, prepared
in connection with this Agreement or the business of Introducing Firm, except
for such documents and other materials as Daiwa may have destroyed in the normal
course of its business or may be required to keep for regulatory purposes or
otherwise as may be required by law. In any event, Daiwa agrees that no such
documents or other materials will be distributed by it to any person or group in
or outside Daiwa that does not have responsibility for the administration, legal
or audit review of this Agreement or transactions thereunder. Daiwa further
acknowledges and agrees that Introducing Firm may, in developing its business,
contact persons or entities that may be customers of Daiwa and that in doing so
they will not be in violation of this or any other agreement between Daiwa and
Introducing Firm.
16. This Agreement shall be binding upon and inure to the benefit of each
party hereto and its successors and assigns; provided, however, that Introducing
Firm may not assign its rights and/or obligations hereunder without the prior
written consent of Daiwa. No express or implied waiver of any default shall
constitute a waiver of any other default, and no exercise of any right or remedy
hereunder by either party shall constitute a waiver of its right to exercise any
other right or remedy hereunder. No modification or waiver of any provision of
this Agreement and no consent by either party to a departure herefrom shall be
effective unless in writing and executed by both parties hereto (or in the case
of a waiver or consent, by the party granting the same).
17. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW
PRINCIPLES.
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18. Each party agrees that any claim, dispute, grievance or controversy
arising under this Agreement or any transactions executed or arising therefrom
or thereunder shall be settled by arbitration pursuant to and in accordance with
Article XI of the NYSE Constitution and the NYSE Arbitration Rules. Each party
further agrees to service of process in any arbitration proceeding by mailing of
copies thereof (by registered or certified mail, if practicable) postage
prepaid, or by telex, to it at an address for notices under this Agreement; and
agrees that nothing herein shall affect the other party's right to effect
service of process in any other manner permitted by NYSE Arbitration Rules, and
that each party shall have the right to bring a proceeding for enforcement of a
judgment entered by any arbitration panel against the other party in any court
or jurisdiction in accordance with applicable law.
19. (a) This Agreement supersedes all other agreements between the parties
with respect to the transactions contemplated herein.
(b) This Agreement shall not be binding upon Daiwa until signed by a
duly authorized officer of Daiwa and may not be amended except in writing signed
by Introducing Firm and Daiwa's duly authorized officer.
(c) This Agreement may be terminated by either party upon thirty (30)
days' written notice given to the other party at any time, or written notice
following an Event of Default which event shall occur if (i) either party shall
fail to perform or observe any term, covenant or condition to be performed or
observed by it hereunder and such failure shall continue to be unremedied for a
period of 30 days after written notice from the non-defaulting party to the
defaulting party specifying the failure and demanding that the same be remedied;
or (ii) any representation or warranty made by either party shall prove to be
incorrect at any time in any material respect; or (iii) a receiver, liquidator
or trustee of either party, or of any property held by either party, is
appointed by court order and such order remains in effect for more than 30 days;
or either party is adjudicated bankrupt or insolvent; or any of its property is
sequestered by court order and such order remains in effect for more than 30
days; or a petition is filed against either party under the bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, and is
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not dismissed within 30 days after such filing; or (iv) either party makes an
assignment for the benefit of its creditors, or admits in writing its inability
to pay its debts generally as they become due, or consents to the appointment of
a receiver, trustee or liquidator of either party, or of any property held by
either party.
Upon the occurrence of any such Event of Default, the non-defaulting
party may, at its option, by written notice to the defaulting party declare that
this Agreement shall be thereby terminated and such termination shall be
effective as of the date such notice has been received by the defaulting party.
Notice sent to the address provided for by this Agreement shall be assumed to
have been received three days after mailing or, if communicated by hand or by
fax, on the day sent.
20. Written notices shall be properly made if hand delivered, mailed
(registered mail) or telecopied ("faxed") to the party entitled to receive such
notices at the following address or telephone number:
To: Introducing Firm
Euro Brokers, Maxcor Inc.
2 World Trade Center - Suite 8400
New York, N.Y. 10048-0697
Tel. No: 212-748-7040
Fax No.: 212-748-7049
Attn.: Susan J. Tysk, V.P. and Controller
To: Daiwa
Daiwa Securities America Inc.
One World Financial Center
200 Liberty Street, Tower A
New York, New York 10281
Tel. No.: (212) 341-0682
Fax No.: (212) 341-0685
Attn.: Managing Director
Correspondent Services
21. (a) There will be no Accounts opened on behalf of employees or officers
of New York Stock Exchange member organizations, self-regulatory organizations
and other financial institutions without the prior written consent of Daiwa.
(b) There will be no margin under the Agreement. Daiwa is extending no
credit pursuant to the Agreement. The
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provisions of Regulation T will be complied with, as applicable. In the event
that credit is extended to Introducing Firm and there is a
rehypothecation/lending of securities under the Agreement, such activity will
not contravene the provisions of Rule 8c-1 of the Securities Exchange Act of
1934.
(c) Any and all telephone conversations in connection with transactions
under the Agreement may be electronically recorded and may be utilized to
resolve any uncertainty or any dispute arising in connection with this Agreement
or any transaction hereunder.
(d) Each party acknowledges that the payment of dividends, and the
handling of exchange/tender offers, rights and warrants and redemptions are not
applicable to this Agreement.
Please indicate your agreement with the foregoing by signing and
returning the enclosed copy of this letter.
Very truly yours,
DAIWA SECURITIES AMERICA INC.
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST SET FORTH ABOVE:
EURO BROKER, MAXCOR INC.
By:/s/ Susan J. Tysk
-----------------------
Name:Susan J. Tysk
---------------------
Title:V.P. and Controller
---------------------
ACCEPTED AND AGREED TO:
DAIWA SECURITIES AMERICA INC.
BY:/s/ Thomas W. Kielty
-----------------------
Name:Thomas W. Kielty
---------------------
Title:Executive V.P. and Senior Managing Director
--------------------------------------------
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EXHIBIT A
---------
Schedule of Specified Securities
--------------------------------
For purposes of the Agreement date June 7, 1993 concerning certain
clearing services to be performed by Daiwa Securities America Inc. for Euro
Brokers Maxcor Inc. ("Introducing Firm") with respect to transactions with
customers of Introducing Firm, the term Specified Securities shall be limited to
the following:
1. Securitized Adjustable Rate Mortgages
2. Asset-backed Securities bearing a credit rating
of AA or better
3. Collateralized Mortgage Obligations bearing a
credit rating of AA or better
4. GNMA, FNMA and Freddie Mac Securities ("Interest
Only/Principal Only" portions of these securities)
5. U.S. Government and Agency Securities
6. Sovereign Debt - Euroclear/CEDEL Eligible
7. Euro Bonds
8. Municipal Securities
<PAGE>
EXHIBIT B
---------
Exhibit B has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
<PAGE>
EXHIBIT C
---------
Daiwa Letterhead
_____, 19____
[Customer Name and Address]
Re: Euro Brokers Maxcor Inc.
Allocation of Brokerage Account Responsibilities
------------------------------------------------
Gentlemen:
As you know, your account has been introduced to Daiwa Securities
America Inc. ("Daiwa") by your brokerage firm Euro Brokers, Maxcor Inc. ("Euro
Brokers") for the purpose of Daiwa clearing trades in certain specified
securities ("Specified Securities") listed in the attached Additional Clearing
Services Terms and Conditions ("Additional Terms").
This letter and the Additional Terms are to inform you, and obtain
your agreement to, certain terms upon which Daiwa shall clear your trades
through principal transactions directed by Euro Brokers, and the allocation of
responsibilities between Euro Brokers and Daiwa.
In establishing this relationship, providing trading advice and
initiating trades for your account, Euro Brokers is acting solely on your behalf
and not on behalf of, or as agent of, Daiwa. Euro Brokers shall remain
responsible for the ongoing relationship that it has with you, and Daiwa shall
be responsible only for trade clearing related functions, each as set forth
below.
Euro Brokers shall at all times be exclusively responsible for:
- Learning your investment objectives and opening, approving and
monitoring your account.
- Reviewing your account and all orders in it and supervising all
investment advice, when given.
- Accepting or rejecting your orders, errors in initiating and
transmitting orders, and screening orders prior to execution.
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- Transmitting instructions concerning your account to Daiwa,
including instructing Daiwa as to the prices at which Daiwa will
act as principal to execute orders for your account.
- Ensuring that all the transactions conducted in your account are
in compliance with all applicable law and rules.
- Responding to any inquiries or complaints you may make concerning
your account.
Additionally, Euro Brokers is responsible to Daiwa for supplying all
documentation required by Daiwa notwithstanding the fact that Daiwa has at all
times the right to contact you directly regarding its information requirements.
Daiwa has at all times the right, exercisable in its sole discretion, to refuse
to accept orders for your account.
Daiwa will be responsible for the following areas:
- Executing as principal transactions in your account pursuant to
Euro Brokers' instruction.
- Maintaining books and records, documentation,
compiling and filing regulatory reports.
- Delivering and receiving funds and securities to or from your
account, transfers of securities, payment of dividends or
interest and the handling of exchange or tender offers, rights,
warrants and redemptions in accordance with the last instructions
received either from you or Euro Brokers.
- Safeguarding funds and securities.
- Preparing and transmitting confirmations and
statements.
Any questions you may have concerning the conduct of your account
should be addressed directly to Euro Brokers.
You and Daiwa agree that any and all telephone conversations between
us with respect to the contemplated transactions may be tape recorded and we
each authorize the other to do so, and we each hereby waive further notice.
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THE ATTACHED ADDITIONAL TERMS SET FORTH ADDITIONAL INFORMATION,
PROCEDURES AND LIMITATIONS APPLICABLE TO TRANSACTIONS IN YOUR ACCOUNT. PLEASE
READ IT CAREFULLY. BY SIGNING AND REDELIVERING THIS LETTER YOU AGREE TO BE BOUND
BY THE TERMS OF THIS LETTER AND ADDITIONAL TERMS.
Please sign and deliver to Daiwa (Attention: Thomas S. Dillon, Managing
Director) the enclosed copy of this letter. Upon Daiwa's receipt of the signed
copy, this letter agreement and the terms and procedures described in the
Additional Terms shall remain in effect until terminated in writing by either of
us. All transactions entered into before notice of termination is received shall
be handled in accordance with this letter agreement.
Very truly yours,
By:______________________________
DAIWA SECURITIES AMERICA INC.
Thomas S. Dillon
ACKNOWLEDGED AND AGREED:
By:__________________________
Name:________________________
Title:_______________________
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Additional Clearing Services Terms and Conditions
-------------------------------------------------
The following additional terms, procedures and limitations are
applicable to trades of Specified Securities (as defined below) which will be
initiated by Euro Brokers Maxcor Inc. ("Euro Brokers"), and in which Daiwa
Securities America Inc. ("Daiwa") will act as principal in order to clear and
settle your trades.
Euro Brokers will be initiating trades for your account in which Daiwa
will buy from or sell to you a Specified Security which Euro Brokers has also
arranged for Daiwa to sell to or purchase from another party. Daiwa will act as
a principal in each of these back-to-back transactions which will generate
revenue in an amount depending upon the relative prices at which the
back-to-back trades are executed. These prices are determined solely by Euro
Brokers, which shall retain the resulting revenue less the amount of Daiwa's
clearing fee. Daiwa shall not initiate these trades nor shall it determine their
prices, and Daiwa shall have no responsibility to you for investigating,
screening or approving trades or their prices.
Authorized employees of Euro Brokers may, by telephone, directly
contact your trading desk to initiate transactions between you and Daiwa.
However, such employees of Euro Brokers will not be acting as agent for Daiwa
and no proposed transaction will be deemed approved or confirmed by Daiwa and no
such transaction will be consummated by Daiwa until your trading desk compares
the transaction by telephone with Daiwa's authorized personnel and Daiwa
directly confirms by telephone the transaction. Daiwa agrees that once a
transaction has been so confirmed, Daiwa is thereafter acting as principal in
the trade. You agree that you will always act as principal on the other side of
the trade. All your customary documentation for trades in which you act as
principal, regardless of how initiated, should be sent directly to Daiwa and
Daiwa will send you its usual documentation.
Specified Securities shall mean: Securitized Adjustable Rate Mortgages;
Asset-backed Securities bearing a credit rating of AA or better; Collateralized
Mortgage Obligations bearing a credit rating of AA or better; GNMA, FNMA and
Freddie Mac Securities ("Interest Only/Principal Only" portions of these
securities); U.S. Government and Agency Securities; and Sovereign Debt,
EuroClear/CEDEL eligible.
Mortgage trades should be submitted to Chris Ryan for comparison. Our
number is (212) 341-0725; FAX (212) 341-0874.
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Confirmations should be sent to: Daiwa Securities America Inc. Attn: Chris Ryan,
One World Financial Center, 24th Floor, New York, N.Y. 10281.
Government trades should be submitted to Lou Mennella for comparison.
Our number is (212) 341-0639; FAX (212) 341-0770. Confirmations of such trades
should be sent to: Daiwa Securities America Inc., Attn: Lou Mennella, One World
Financial Center, 24th Floor, New York, N.Y. 10281.
All other trades should be submitted to John Schipano for comparison.
Our number is (212) 341-5639; FAX (212) 341-0782. Confirmations should be sent
to: Daiwa Securities America Inc. Attn. John Schipano, One World Financial
Center, 24th Floor, New York, N.Y. 10281.
No trade will arise until Daiwa gives this confirmation and whether or
not Daiwa confirms a trade, Euro Brokers will never itself be liable as
principal in a trade or responsible for the performance of a trade.
Attached please find a complete list of all delivery instructions.
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Exhibit 11
Financial Services Acquisition Corporation
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
For the Year Ended December 31,
1995 1996
------------ ------------
Pro Forma Weighted Common Shares Outstanding 9,011,295 9,011,295
Pro Forma Primary Earnings Per Share $ .38 $ .41
The Merger has been accounted for as a recapitalization of EBIC, with the
issuance of shares by EBIC for the net assets of the Company. The consolidated
results of operations and financial position of the Company for periods and
dates prior to the Merger are the consolidated historical results of operations
and financial position of EBIC and its subsidiaries and affiliates for such
periods and dates. Pro forma number of shares outstanding and related pro forma
earnings per share information have been presented as if all shares to be issued
in the Merger had been issued as of January 1, 1995 and all such shares were
outstanding for the merged and recapitalized entity since that date.
At December 31, 1996, the Company had outstanding 8,926,547 shares of Common
Stock. Once all certificates formerly representing EBIC common stock (all of
which were canceled in the Merger) are exchanged, the Company expects it will
have approximately 9,011,295 shares outstanding.
<PAGE>
FINANCIAL SERVICES ACQUISITION CORPORATION Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
JURISDICTION
SUBSIDIARY OF INCORPORATION
- ------------------------------------------ ---------------------
EURO BROKERS INVESTMENT CORPORATION DELAWARE
EURO BROKERS HOLDINGS INC. NEW YORK
EURO BROKERS INC. NEW YORK
EURO BROKERS MAXCOR INC. NEW YORK
(ALSO DOING BUSINESS AS MAXCOR FINANCIAL GROUP)
E-B FUNDING CORPORATION DELAWARE
EURO BROKERS DATA INC. NEW YORK
EURO BROKERS HOLDINGS LTD. ENGLAND
EURO BROKERS INTERNATIONAL LTD. ENGLAND
EURO BROKERS FINANCIAL SERVICES LTD. ENGLAND
EURO BROKERS SERVICES LTD. ENGLAND
EURO BROKERS TOKYO INC. DELAWARE
YAGI EURO CORPORATION JAPAN
EURO BROKERS CANADA LTD. CANADA
EURO BROKERS MEXICO, S.A. de C.V. MEXICO
EURO BROKERS AUSTRALIA LTD. ENGLAND
EURO BROKERS AUSTRALIA PTY LTD. AUSTRALIA
YAGI EURO (HONG KONG) LTD. HONG KONG
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF FINANCIAL SERVICES ACQUISITION CORPORATION
AT DECEMBER 31, 1996 AND FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 18,231,926
<RECEIVABLES> 9,042,613
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 8,751,276
<PP&E> 13,624,500
<TOTAL-ASSETS> 97,172,715
<SHORT-TERM> 9,688,983
<PAYABLES> 1,826,250
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 1,724,531
<LONG-TERM> 7,379,762
0
0
<COMMON> 9,011
<OTHER-SE> 32,441,863
<TOTAL-LIABILITY-AND-EQUITY> 97,172,715
<TRADING-REVENUE> 333,200
<INTEREST-DIVIDENDS> 1,801,442
<COMMISSIONS> 178,109,899
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 693,132
<COMPENSATION> 115,536,731
<INCOME-PRETAX> 10,048,255
<INCOME-PRE-EXTRAORDINARY> 10,048,255
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,704,960
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
