<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 001-14217
INDUSTRIAL DATA SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
(State or, other Jurisdiction of
corporation or organization)
88-0322261
(I.R.S. Employer Identification Number)
600 Century Plaza Drive, Building 140, Houston, Texas 77073-6013
(Address of Principal Executive Offices) (Zip Code)
(281) 821-3200
(Registrant's telephone number, including area code)
Check whether the issuer (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 the number of shares outstanding of each of the issuer's classes of
common stock as of the close of business of March 31, 2000.
Common Stock, $.001 Par Value, 12,964,918
<PAGE>
QUARTERLY REPORT ON FORM 10-QSB
FOR THE PERIOD ENDED MARCH 31, 2000
TABLE OF CONTENTS
Page
Number
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets at March 31, 2000
and December 31, 1999............................................. 1
Condensed Consolidated Statements of Income for the
Three Months ended March 31, 2000 and March 31, 1999.............. 2
Condensed Consolidated Statements of Cash Flows for the
Three Months ended March 31, 2000 and March 31, 1999.............. 3
Notes to Condensed Consolidated Financial Statements.............. 4
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 5
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings................................................. 10
ITEM 2. Changes in Securities............................................. 10
ITEM 3. Defaults Upon Senior Securities................................... 10
ITEM 4. Submission of Matters to a Vote of Security Holders............... 10
ITEM 5. Other Information................................................. 10
ITEM 6. Exhibits and Reports on Form 8-K.................................. 10
Signature......................................................... 11
i
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
INDUSTRIAL DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
ASSETS (Unaudited)
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents: $ 120,231 $ 663,972
Marketable securities, at market value - Available-for-sale 800,000 300,000
Accounts receivable - trade, less allowance for doubtful accounts of
Approximately $6,500 for 1999 and $19,000 for 2000 2,645,654 2,540,835
Inventory 775,242 771,808
Notes receivable from stockholder 150,000 150,000
Federal income tax receivable 0 53,000
Prepaid and other 401,091 329,441
---------- ----------
Total current assets 4,892,218 4,809,056
---------- ----------
PROPERTY AND EQUIPMENT, Net 1,466,817 1,070,218
OTHER ASSETS 0 0
71
GOODWILL 30,600 34,650
Total assets $6,389,635 $5,913,924
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Notes payable $ 436,655 $ 342,010
Current portion of note payable to bank and capital lease 49,879 39,259
Accounts payable 855,774 779,017
Income taxes payable 12,999 45,000
Accrued expenses and other current liabilities 288,229 297,454
---------- ----------
Total current liabilities: 1,643,536 1,502,740
---------- ----------
Note payable to bank, term 381,331 384,658
Capital lease payable 132,451 0
DEFERRED INCOME TAX 97,000 52,000
---------- ----------
Total liabilities 2,254,318 1,939,398
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; 75,000,000 shares authorized; 12,964,918 issued
in 2000, 13,073,718 shares issued in 1999 12,965 12,965
Additional paid-in capital 2,640,154 2,640,154
Retained earnings 1,482,198 1,321,407
---------- ----------
Total stockholders' equity 4,135,317 3,974,526
---------- ----------
Total liabilities and stockholders' equity $6,389,635 $5,913,924
========== ==========
</TABLE>
1
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three Months Ended March 31
----------------------------------------------
2000 1999
---- ----
<S> <C> <C>
OPERATING REVENUES $ 3,392,211 $ 2,636,095
OPERATING EXPENSES:
Cost of goods sold 2,399,250 1,809,320
Selling, general and administrative 712,575 551,744
Depreciation and amortization 45,628 31,138
----------- -----------
3,157,453 2,392,202
Operating profit 234,758 243,893
OTHER INCOME (EXPENSE)
Net unrealized gains (losses) on marketable securities 0 (4,195)
Other income 14,290 22,349
Interest income, net (17,003) (14,046)
----------- -----------
(2,713) 4,108
INCOME FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES 232,045 248,001
PROVISION FOR INCOME TAXES 71,254 58,156
----------- -----------
INCOME FROM CONTINUING OPERATIONS 160,791 189,845
LOSS FROM DISCONTINUED OPERATIONS 0 (66,261)
----------- -----------
NET INCOME $ 160,791 $ 123,584
=========== ===========
BASIC AND DILUTED EARNINGS PER COMMON SHARE $ 0.012 $ 0.009
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 12,964,918 13,073,718
----------- -----------
OUTSTANDING
</TABLE>
2
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
--------------------------
(unaudited)
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 160,791 $ 123,584
Adjustment for non-cash items 45,628 65,938
Changes in working capital (123,290) (209,179)
---------- ----------
Net cash provided (used) by operating activities $ 83,129 $ (19,657)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment acquired (232,064) (61,176)
Purchase of marketable securities (500,000) (34,612)
Other assets acquired 0 (12,735)
---------- ----------
Net cash used by investing activities $ (896,599) $ (108,523)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Short-term note repayments (3,327) (16,290)
Increase in notes payable, net 108,521 44,438
Repayments on line of credit 0 (35,000)
---------- ----------
Net cash provided (used) by financing activities $ 105,194 $ (6,852)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ (543,741) $ (135,032)
CASH AND CASH EQUIVALENTS, at beginning of period $ 663,972 $1,225,821
---------- ----------
CASH AND CASH EQUIVALENTS, at end of period $ 120,231 $1,090,789
========== ==========
SUPPLEMENTAL DISCLOSURES:
Interest $ 17,003 $ 14,046
Income taxes paid $ 17,001 $ 110,000
========== ==========
Non-cash:
Lease to finance equipment $ 164,535 --
3
<PAGE>
INDUSTRIAL DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Industrial Data Systems
Corporation (the "Company"), included herein, are unaudited for the three
month period ended March 31, 2000 and 1999. These financial statements
reflect all adjustments (consisting of normal recurring adjustments) which
are, in the opinion of management, necessary to fairly depict the results for
the periods presented. Certain information and note disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been condensed or omitted pursuant to
rules and regulations of the Securities and Exchange Commission. It is
suggested these condensed financial statements be read in conjunction with
the Company's audited financial statements for the years ended December 31,
1999 and 1998, which are included in the Company's annual report on Form 10-
KSB. The Company believes that the disclosures made herein are adequate to
make the information presented not misleading.
2. NOTE RECEIVABLE FROM STOCKHOLDER:
At March 31, 2000, the Company had notes receivable due from a stockholder in
the amount of $150,000. The notes are unsecured, due on demand and bear
interest at a rate of 9% per annum. Interest accrued through March 31,
2000 on these notes amounted to approximately $33,000.
3. DISCONTINUED OPERATIONS:
On October 28, 1999, the Company entered into a settlement agreement with the
former owner of IDS FAB to rescind the original acquisition agreement dated
November 1, 1998. As a result of the settlement agreement, the Company
received the originally issued 50,000 shares of its Common Stock, valued at
$43,750 at the date of the rescission, back from the former owner of IDS FAB
and transferred the stock of IDS FAB to the former owner. All assets and
liabilities of IDS FAB were transferred back to and assumed by the former
owner of IDS FAB.
The discontinued segment accounted for a loss of approximately $66,000 in
the quarter ended March 31, 1999.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION
The following discussion is qualified in its entirety by, and should be
read in conjunction with, the Company's Consolidated Financial Statements
including the notes thereto, included in the Company's Annual Report on Form 10-
KSB for the year ended December 31, 1999.
OVERVIEW
The Company's primary segment, Engineering, which generates approximately
half of the Company's total revenue and employs the majority of its personnel,
offers engineering consulting services primarily to the pipeline and process
industries for the development, management and turnkey execution of engineering
projects. The Engineering segment also performs the execution of capital
projects for its clients on a full service, turnkey basis. Its staff has the
capability of developing a project from the initial planning stages through
detailed design and construction management. The services provided include
conceptual studies, project definition, cost estimating, engineering design, and
material procurement, in addition to project and construction management. These
services are performed on facilities that include cross-country pipelines,
pipeline pump stations, gas compressor stations, metering systems, product
storage facilities, product loading terminals, gas processing facilities,
chemical plants and crude oil refineries. Most of the Company's revenues are
derived from this segment. The Company's various specialty manufacturing
segments provide the remainder of revenues for the Company.
Engineering has generated sales as a percent of total revenue of 46.9% and
47.6% for the three months ended March 31, 2000 and 1999, respectively. The Air
Handling segment has generated sales as a percent of total revenue of 24.4% and
29.5% for the same periods. In the three months ended March 31, 2000, the Power
Systems segment generated sales as a percent of total revenue of 25.3%. For the
same period in 1999, the Power Systems generated sales as a percent of total
revenue of 16.5%. The Products segment has generated sales as a percent of
total revenue of 3.4% and 6.4% for the three months ended March 31, 2000 and
1999, respectively.
Gross margins vary between each of its operating segments, with the
Engineering segment producing the highest gross margins. The gross margin for
the Engineering segment, was 33.9% for the three months ended March 31, 2000.
The Air Handling segment's gross margin was 24.4% and 21.6% for the three months
ended March 31, 2000 and 1999, respectively. Gross margin generated by the
Power Systems segment was 26.8% and 33.6% for the three months ended March 31,
2000 and 1999, respectively. The gross margin for the Products segment was 18.7%
for the 2000 period and 21.6% for the same period in 1999. The overall gross
margin for the Company, which included the Engineering, Air Handling, Power
Systems and Products segments for the three months ended March 31, 2000 was
29.3%. The overall gross margin for the Company for the same period in 1999 was
31.4%.
The Company's efforts to expand into the Engineering, Procurement and
Construction (EPC) market have brought about increased revenues for the
Engineering segment and since the establishment of the Engineering
operations in Tulsa in the first quarter of 1999, this segment has increased
its participation in an expanded scope of projects. As a result, the
Engineering segment has contributed higher sales revenues and management
expects higher gross margins to be generated in future periods.
5
<PAGE>
YEAR 2000 (Y2K) ISSUES AND CONSEQUENCES
The Company experienced no adverse effects on its ability to conduct
business as a result of Y2K issues and management foresees no adverse effects
in future periods.
FORWARD-LOOKING STATEMENTS
Certain information contained in this Form 10QSB Quarterly Report,
as well as other written and oral statements made or incorporated by reference
from time to time by the Company and its representatives in other reports,
filings with the Securities and Exchange Commission, press releases,
conferences, or otherwise, may be deemed to be forward-looking statements with
the meaning of Section 21E of the Securities Exchange Act of 1934. This
information includes, with limitation, statements concerning the Company's
future financial position, and results of operations; planned capital
expenditures; business strategy and other plans for future operations; the
future mix of revenues and business; commitments and contingent liabilities;
Year 2000 issues; and future demand and industry conditions. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. When used in this report, the words "anticipate,"
"believe," "estimate," "expect," "may," and similar expressions, as they relate
to the Company and its management, identify forward-looking statements actual
results could differ materially from the results described in the forward-
looking statements due to the risks and uncertainties set forth with this
Quarterly Report of Form 10QSB.
6
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain financial
data derived from the Company's consolidated statements of income and
indicates percentage of total revenue for each item.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
Amount % Amount %
------ --- ------ ---
<S> <C> <C> <C> <C>
Revenue:
Engineering $1,591,661 46.9 $1,253,849 47.6
Air Handling 828,618 24.4 777,775 29.5
Power Systems 859,541 25.3 434,291 16.5
Products 112,391 3.4 170,180 6.4
---------- ----- ---------- -----
Total revenue $3,392,211 100.0 $2,636,095 100.0
========== ===== ========== =====
Gross Profit:
Engineering $ 539,722 33.9 $ 475,710 37.9
Air Handling 201,923 24.4 168,278 21.6
Power Systems 230,244 26.8 146,014 33.6
Products 21,072 18.7 36,772 21.6
---------- ----- ---------- -----
Total gross profit $ 992,961 29.3 $ 826,774 31.4
========== ===== ========== =====
Selling, general and administrative
expenses and depreciation $ 758,203 22.4 582,881 22.1
---------- ----------
Operating Profit 234,758 6.9 243,893 9.3
Other income (expense) (2,713) (0.1) 4,108 0.2
---------- ----------
Income from continuing operations
Before provisions for income
taxes 232,045 6.8 248,001 9.4
Provision for income taxes 71,254 2.1 58,156 2.2
---------- ----------
Income from continuing operations 160,791 4.7 189,845 7.2
Loss from discontinued operations 0 0.0 (66,261) (2.5)
---------- ----- ---------- -----
Net income $ 160,791 4.7 $ 123,584 4.7
========== ===== ========== =====
</TABLE>
7
<PAGE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
TOTAL REVENUE. Total revenue increased by $756,116 or 28.7% from $2,636,095
for the three months ended March 31, 1999, compared to $3,392,211 in 2000.
Revenue from the Engineering segment which comprised 46.9% of total revenue for
the three months ended March 31, 2000, increased by $337,812 or 26.9%. This
increase is due, in part; to the additional revenues generated by the Tulsa
office and to an overall increase in projects for the Engineering segment.
Revenue from the Air Handling segment, which comprised 24.4% of total revenue
for the three months ended March 31, 2000, increased by $50,843 or 6.5%. Revenue
generated by the Power Systems segment for the three months ended March 31, 2000
was $859,541, which was 25.3% of the total revenue and was an increase from the
1999 period by $425,250 or 97.9%. This increase was generated because the
revenue generated in the 1999 period was abnormally low and the 2000 period is
more representative of the capabilities of the segment.
GROSS PROFIT. Gross profit increased by $166,187 or 20.1% from $826,774 for
the three months ended March 31, 1999 to $992,961 for the same period in 2000.
The gross margin as a percentage of total revenues decreased slightly from 31.4%
for the period ended March 31, 1999 to 29.3% for the same period in 2000. The
decrease was primarily attributable to lower margins contributed by the
Engineering and Power Systems segments. The decrease in gross margin in the
Engineering segment is attributable to non-billable hours spent on business
development during the first quarter of 2000. The gross profit for the
Engineering segment decreased from 37.9% for the period ended March 31, 1999 to
33.9% for the same period in 2000. The gross profit for the Air Handling
segment increased from 21.6% for the period ended March 31, 1999 to 24.4% for
the same period in 2000. This increase was attributable to the addition of
higher margin products to the segment's product line. The Power Systems gross
margin generated in the period ended March 31, 2000 increased by $84,230 or
57.7% over the same period in 1999. The gross margin for the Products segment
decreased from 21.6% for the period ended March 31, 1999 to 18.7% for the same
period in 2000. The decrease was attributable to the decrease in sales
revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $175,322 or 30.1% from $582,881 for the
three months ended March 31, 1999 compared to $758,203 for the same period in
2000. As a percentage of total revenue, selling, general and administrative
expenses increased only slightly from 22.1% for the three months ended March 31,
1999 to 22.4% for the same period in 2000. This increase is primarily
attributable to additional expenses related to an increase in personnel,
accompanied by related payroll and benefit costs and to the expansion of
facilities.
OPERATING INCOME. Operating income decreased by $9,135 or 3.7% from
$243,893 for the three months ended March 31, 1999, compared to $234,758 for the
same period in 2000. Operating income decreased as a percentage of total
revenue from 9.3% for the three months ended March 31, 1999 to 6.9% for the same
period in 2000. The decrease in operating income was a result of overall lower
gross margin contributions and to increased selling, general and administrative
expenses.
NET INCOME. Net income after taxes increased by $37,207 or 30.1% from
$123,584 for the three months ended March 31, 1999 to $160,791 for the same
period in 2000. Net income after taxes in the 1999 period was effected by a
loss from discontinued operations of $66,261. As a percentage of total revenue,
the net income percentage was 4.7% for the three months ended March 31, 1999 and
for 2000
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has satisfied its cash requirements principally
through borrowings under its line of credit and through operations. As of
March 31, 2000, the Company's cash position, including marketable securities,
was sufficient to meet its working capital requirements. The Company had, as of
March 31, 2000, $735,000 in additional advances available under its line of
credit with a bank. The Company's line of credit which provides for maximum
borrowings of $1,250,000 which bears interest at prime plus 0.5%, is for a term
of one year and matures on April 24, 2001. The line of credit is secured by
accounts receivable, inventory and the personal guarantees of certain
stockholders and officers of the Company. As of March 31, 2000, the Company had
$415,000 outstanding against its line of credit. Interest on the outstanding
balance is paid on a monthly basis.
The Company's working capital was $3,248,682 and $3,306,316 at March 31,
2000 and December 31, 2000, respectively.
CASH FLOW
Operating activities provided net cash totaling $247,664 and used net cash
of ($19,657) for the three months ended March 31, 2000 and 1999, respectively.
Trade receivables increased $104,819 since December 31, 1999. Inventory
increased by $3,434 for the same period.
Investing activities used cash totaling $108,523 for the three months
ended March 31, 1999 and used cash totaling $732,064 for the same period in
2000. The Company's investing activities that used cash during the period ended
March 31, 2000 was primarily for the purchase of property and equipment and
marketable securities.
As of March 31, 2000, the Company had a portfolio of bonds with a value of
$800,000. These bonds are purchased with surplus cash and are used by the
Company as part of its plan to provide additional cash for working capital
requirements. These bonds are classified as available-for-sale and are stated
at market value.
Financing activities provided cash totaling $105,194 for the three months
ended March 31, 2000, which was activity related to notes payable. Financing
activities used cash totaling $6,852 for the same period in 1999. The Company
entered into a 60-month lease in the principal amount of approximately $165,000
for the purpose financing a Plate-Fin machine for the Air Handling segment.
ASSET MANAGEMENT
The Company's cash flow from operations has been affected primarily by the
timing of its collection of trade accounts receivable. The Company typically
sells its products and services on short-term credit terms and seeks to minimize
its credit risk by performing credit checks and conducting its own collection
efforts. The Company had net trade accounts receivable of $2,906,816 and
$2,645,654 at March 31, 1999 and 2000, respectively. The number of days' sales
outstanding in trade accounts receivable was 85 days and 72 days, respectively,
at March 31, 1999 and 2000.
9
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in various legal proceedings
arising in the ordinary course of business. The Company is not currently
involved in any legal proceedings that would have a material affect on its
operations.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The following Exhibits are included with this report:
Exhibit
Number Description
------- -----------
10.34 Lease between IDS Engineering, Inc. and d/b/a Wilshire Square
10.35 Master Equipment Lease between Unicapital BSB Leasing and
Thermaire, Inc. dba Thermal Corporation
27 Financial Data Schedule
b. Form 8-K
During the quarter ended March 31, 2000, the Company did not file any
current reports on Form 8-K.
10
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INDUSTRIAL DATA SYSTEMS CORPORATION
Dated: May 12, 2000 By: /s/ Hulda L. Coskey
------------------------------------------
Hulda L. Coskey, Chief Financial Officer,
Secretary-Treasurer
11
<PAGE>
Exhibit 10.34
BUSINESS PARK LEASE
ARTICLE ONE
BASIC LEASE PROVISIONS
Date: March 15, 2000
Landlord: d/b/a Wilshire Square
Address of Landlord: Wilshire Square
7912 East 31 Court, Suite 200
Tulsa, Oklahoma 74145-1346
Tenant: IDS Engineering, Inc.
Address of Tenant: 600 Century Drive, Building 140
Houston, Texas 77073
Address of Tenant
at Wilshire Square: 11008 East 51st Street (5,400 Square Feet)
11004 East 51st Street (2,700 Square Feet)
Tulsa, Oklahoma 74146
Tenant's Trade Name: IDS Engineering, Inc.
Size of Leased Premises: One Story Business Location containing
approximately 8,100 square feet
of ground area. (Article 2)
Use of Premises by Tenant: Engineering Office (Article 4)
Lease Term: 36 Lease Months (Article 3)
Commencement Date: August 1, 2000* (Article 3)
Ending Date: July 31, 2003* (Article 3)
Rental:
1. Minimum Rental: $161, 352.00 for the term of the Lease
payable in equal monthly installments of
$ 4,482.00 subject to adjustment with
the first month's installment due at the
execution of the Lease. (Article 5)
2. Additional Rental: $ 4,050.00 Common Area Fee for the first year
of the Lease payable in equal monthly
installments of $ 337.50 subject to adjustment.
(Article 6)
Security Deposit: $ 2,925.00 transferred from lease dated
February 8, 1999.
Guarantor: None
Broker: CB Richard Ellis/Oklahoma - Matt Klimisch
Expiration of Offer Date: March 31, 2000 (Article 24.1)
*Expiration of Existing Lease: Upon its execution by all parties, this Lease
dated March 15, 2000 shall replace the current
lease in force dated February 8, 1999. Further,
this Lease shall commence August 1, 2000 or
sooner if mutually agreed to by the parties and
the lease dated February 8, 1999 shall terminate
without penalty at that time.
1
<PAGE>
Exhibit 10.34
1.1 Each reference in this Business Park Lease (herein sometimes called
"Lease") to any of the Basic Lease Provisions contained about shall be
deemed and construed to incorporate all of the terms provided under each
such Basic Lease Provision.
1.2 The exhibits enumerated in this Section and attached to this Lease are
incorporated in this Lease by reference and are to be construed as part of
this Lease.
Exhibit "A" - Plot Plan of the Business Park
Exhibit "B" - Legal Description of the Business Park
Exhibit "C" - Description of Landlord's Work
Exhibit "D" - Changes, Alterations and Modifications
Exhibit "E" - Signage Specifications
Exhibit "F" - Rules and Regulations
ARTICLE TWO
PREMISES, IMPROVEMENTS. POSSESSION
2.1 The Leased Premises consist of a one-story space having square footage set
out in Article One. The Premises are shown and outlined in red on the
drawing identified as Exhibit "A", which is attached hereto and made a part
hereof. The Premises are located within a portion of the Business Park
buildings (the "Building") and upon a portion of certain real property (the
"Property") situated in the City of Tulsa, Tulsa County, Oklahoma, which
said real property is more particularly bounded and described in Exhibit
"B", hereto annexed and made a part hereof. Should there exist a
discrepancy between the exact dimensions of the Premises, as set forth on
Exhibit "N', and the locations of the boundary walls of the Premises, as
finally constructed, the actual physical location of the boundary walls
shall control. In addition to the leased Premises, Tenant is hereby
granted a license (the "License") for the non-exclusive use, in connection
with the Tenant's permitted uses of the Premises, in common with Landlord
and other licensees of Landlord, of the parking areas, roadways, service
areas and sidewalks constructed on the Property as indicated approximately
on said Exhibit "A". Said License shall be limited to the use for which
such areas are intended and shall be subject to such reasonable rules and
regulations as the Landlord may prescribe, from time to time, for the
common benefit of Landlord and its licensees and of Tenant and other
tenants of the Property.
2.2 Landlord shall deliver possession of the Premises to Tenant, and Tenant
shall accept the Premises from Landlord, in their present condition as of
the date hereof, provided, however, prior to delivery of possession of the
Premises to Tenant, Landlord shall have made such repairs and improvements
and shall, at Landlord's sole cost and expense, have substantially
performed such work and installation of improvements to the Premises as are
set forth as "Landlord's Work" in Exhibit "C", annexed hereto and made a
part hereof. Any and all improvements to the Premises for the use of
Tenant, other than Landlord's Work, shall be performed at Tenant's sole
cost and expense, in accordance with Article Twenty-Two herein below
contained.
2.3 In the event of any disagreement of dispute between Landlord and Tenant
with reference to work to be performed with respect to the Premises
pursuant to Exhibits "C" or "D", or with respect to whether or not the
Premises are available for Tenant's modifications or Tenant's occupancy,
the certification in writing upon an approved AIA form, of Landlord's
supervising architect, Holmes and Bjomberg Architects, shall be conclusive
and binding upon the parties hereto.
ARTICLE THREE
TERM AND TERMINATION
3.1 Landlord does hereby lease, let and demise the Premises to Tenant for the
term specified in Article One above. Subject to the provisions hereof
relating to making the Premises ready for occupancy, the Commencement Date
and Ending Date shall be as specified in Article One.
3.2 Landlord agrees to exercise due diligence in making the premises available
for Tenant's use and occupancy and to deliver the Premises to Tenant not
later than the Commencement Date Specified in Article One above. However,
should Landlord be unable to complete said Premises by said date, which
delay in completion is due to any
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Exhibit 10.34
occurrence or eventuality outside the direct control of Landlord, the date
of delivery of the Premises to Tenant shall be extended until such time as
Landlord is able to substantially complete the Premises and the
Commencement Date and Ending Date of the term of this Lease shall be
adjusted to take into account the delay in making the premises available
for Tenants use and occupancy. Tenant agrees that no such delay shall be
grounds for cancellation or alteration of the terms and conditions of this
Lease unless such delay exceeds 45 days. In the event of any delay in
delivery of the Premises to Tenant, Landlord shall not be subject to any
liability for failure to give possession after said date. Tenant shall have
thirty days after taking possession to notify Landlord of any deficiencies
in the Premises. Failure of Tenant to so notify Landlord shall be
conclusive evidence that the Premises were in good order and satisfactory
condition when Tenant took possession, unless otherwise agreed in writing.
3.3 This Lease and the tenancy herein created shall cease and terminate at the
end of the lease term set forth above or at the end of any period of
extension or renewal as provided by written extension agreement or as
otherwise provided herein without the necessity of any notice from either
Landlord or Tenant to terminate the same. The Tenant hereby waives notice
to vacate the Premises and agrees that Landlord shall be entitled to the
benefit of all provisions of law respecting the summary recovery of
possession of Premises from Tenant holding over without the consent of
Landlord to the same extend as if a notice had been given. In the event
Tenant holds over and beyond the term of this Lease, for any reason,
without the express written consent of Landlord, Tenant shall be deemed a
"hold over tenant" in violation of the terms of this Lease, and shall be
subject to all covenants and conditions of this Lease Agreement, except
however, that the minimum monthly rental installment during each month, or
fractional part thereof, of continued occupancy shall be two hundred
percent (200%) of the amount payable by Tenant as total rental during the
last one (1) month of the lease term. If Tenant holds over and beyond the
term of this Lease with the consent of Landlord, then, except as otherwise
provided by written agreement, the tenancy of Tenant shall be a month-to-
month tenancy at will, subject to all covenants and conditions of this
Lease Agreement including the monthly rental installment provisions which
shall be applied on a month-to-month basis. Thirty (30) days written notice
(computed from the date of delivery of such notice) shall be required in
order for either party to terminate the tenancy at will.
ARTICLE FOUR
USE OF THE PREMISES
4.1 The Premises shall be used by the Tenant solely for the purpose provided
for in Article One above, and for no other use or purpose without the prior
written consent of Landlord.
4.2 Tenant further covenants and agrees that its use and occupancy of the
Premises shall strictly comply with and not involve any violation of any
federal, state or municipal statute, rule, ordinance or zoning law or any
regulation, rule or directive of any governmental or regulatory agency as
may now exist or may hereafter exist concerning the use, operation or
safety of the Premises. In addition, Tenant covenants and agrees to operate
the Premises in conformance with the Rules and Regulations which are
attached to this Agreement as Exhibit "F", and made a part hereof. Tenant
shall not use the Premises or the building in which the Premises are
contained for any purpose that will increase the insurance rate or risk of
the building above that which is customary and normal for the uses set
forth above and, in such event, Landlord, as an additional remedy for the
violation of this provision, may elect to recover, as "Additional Rental"
(defined below), the total cost of such increase from Tenant, without
contribution of other tenants of the Business Park. (See Article 8.6.)
4.3 All damages to the Premises, the Common Areas or the building in which the
Premises are contained, caused by Tenant's negligence, shall be repaired at
Tenant's expense. Tenant shall not commit waste or allow waste to be
committed on the Premises or the Common Areas. Tenant shall not perform any
acts or carry on any practices which will constitute a nuisance or menace,
or be offensive, to the other tenants or occupants or to the general
public. Tenant shall keep the Premises, its use of the Common Areas and all
its improvements in sound condition, in good repair and safe for the
incidental use of its business invitees.
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Exhibit 10.34
4.4 Tenant shall not make or permit any noise or odor that is objectionable to
the public, to other tenants of the Business Park or to Landlord to emanate
from the Premises and shall not create or maintain a nuisance thereon.
Tenant shall not disturb, solicit or canvas the users of the Common Areas
without the consent of Landlord and shall not do any act tending to injure
the reputation of the Landlord or the Business Park.
4.5 Lessee shall not place or permit any radio antenna, loud speakers, sound
amplifiers or any other thing or item on the exterior of the roof or
outside of the building or the Premises.
4.6 Lessee shall not obstruct, encumber or use the parking areas, sidewalks,
entrances, passages, vestibules, stairways, corridors and halls for any
purpose other than ingress or egress to and from the Premises and for
parking only in the delegated areas for such use.
ARTICLE FIVE
RENTAL
5.1 The total agreed rental (the "Rental") for the term of this Lease is the
sum of: (i) the "Minimum Rental" (defined below) and (ii) the "Additional
Rental" (defined below).
5.2 (a) The Minimum Rental for the lease term shall be in the amount provided
in Article One. In the event the first day of the lease term shall not
be the first day of a calendar month, then the rental for the first
month of the term shall be prorated on a daily basis.
(b) Tenant shall pay the Minimum Rental, in advance, in equal monthly
installments as provided in Article One.
(c) An amount equal to the first installment of Minimum Rental payment
shall be paid by Tenant upon the execution of this Lease. Tenant will
receive, on any prorated minimum rent due and for the first full
month's minimum rent due a credit in an amount equal to this
installment. Any minimum rental for the first full month under this
Lease for which minimum rental is payable, after the application of
the above described credit, will be due on or before the first day of
the month to which it is applicable. other installments of the minimum
rental payment shall be due on or before the first day of the month to
which it is applicable and the rental obligation of Tenant shall be
deemed delinquent if any given monthly installment is not received by
Landlord on or before the fifth day of the month in which it is due.
Any Additional Rental or Rental Adjustments which are not paid within
five (5) days of when they are due shall be deemed delinquent.
All rentals shall be paid by Tenant without any right of offset or
deductions therefrom for any purpose. All rent is, and shall be,
payable in legal tender at Landlord's address as set forth herein for
notice or at such other address as Tenant may be directed from time to
time by notice from Landlord.
5.3 The term "Additional Rental" shall include any cost, charge or expense of
any kind whatsoever which is or may become payable and due to Landlord by
Tenant in accordance with the terms, covenants and conditions of this
Lease, excluding Minimum Rental. Additional Rental includes, but is not
limited to, Tenant's Common Area Maintenance Fees (Article Six), Tenant's
Proportionate Share of Excess Taxes (Article Seven) and Excess Premiums
(Article Eight) and any and all Rental Taxes which are in existence or
which may come into existence, and which are based upon or measured by the
payment of Minimum Rental or items of Additional Rental other than said
Rental Taxes.
5.4 Any installment of rent accruing under the provisions of this Lease that
shall not be paid when due shall bear interest at the annual rate of three
percent (3%) above the prime rate reported from time to time by the Wall
Street Journal as the base rate on corporate loans at large U. S. Money
Center commercial banks from the date when the same was payable by the
terms hereof until the same shall be paid by Tenant.
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Exhibit 10.34
ARTICLE SIX
COMMON AREA MAINTENANCE FEE
6.1 Tenant covenants and agrees to pay to the Landlord, in addition to the
rentals specified in Article Five hereof, as Additional Rental, a Common
Area Maintenance Fee payable in equal monthly installments as provided for
in Article One. Landlord shall have the responsibility of Business Park's
Common Area (defined below) specifically including, without limitation
gardening and landscaping, lighting, removal of Common Area trash, rubbish,
garbage and other refuse, parking lot cleaning, snow removal, outside
window cleaning (monthly), Common Area utilities and lawn maintenance.
"Common Area" means all areas and space provided by Landlord for the common
use and joint use of the occupants of the Business Park and/or their
employees, agents, servants and customers and other invitees, including,
without limitation, parking area, access roads, driveways, retaining walls,
interior store boundary walls, exterior walls and trim (but not store
fronts), exterior utilities and service lines, landscaped areas, truck
service ways loading docks, stairs, ramps and sidewalks.
6.2 Within one hundred twenty days following the end of the year 1999 and each
year thereafter Landlord shall furnish Tenant a statement covering the
calendar year just ended, certified as correct by a certified public
accountant or an authorized representative of Landlord and showing the
total Business Park Common Area Maintenance Costs and the amount of
Tenant's share for such costs. If Tenant's share exceeds the Common Area
Fee provided for in Article One, then Tenants Common Area Fee will be
increased to reflect the increase in the Common Area Maintenance Cost and
will be payable as Additional Rental pursuant to Section 6.1 above.
6.3 Common area maintenance fees shall not escalate more than 5% of base rate
for the term of the Lease.
ARTICLE SEVEN
TAXES
7.1 Landlord agrees to pay all taxes, assessments and governmental charges of
any kind and nature whatsoever (hereinafter collectively referred to as
"Taxes") lawfully levied or assessed against the Business Park, including
the buildings and the grounds, parking areas, driveways and alleys around
the buildings, provided, however, that the maximum in taxes attributable to
the Business Park to be paid by Landlord during any one real estate tax
year shall be those taxes levied against the Business Park during the year
1999 . If in any real estate tax year during the term of this Lease, or any
renewal or extension of this lease, the taxes levied against the buildings
and the grounds, parking areas, driveways and alleys around the buildings
during such tax year shall exceed the amount levied during the year 1999 ,
Tenant shall pay to Landlord as additional rental, Tenant's proportionate
share of the amount of such excess ("Excess Taxes"). Tenant's proportionate
share, as used herein, shall mean a fraction, the numerator of which is the
floor area contained in the Premises as provided in Article One above and
the denominator of which is the total contracted floor area in the Business
Park.
7.2 At Tenant's request Landlord shall employ a tax consulting firm to attempt
to assure a fair tax burden on the buildings and grounds within the
applicable taxing jurisdiction. Tenant shall pay to Landlord upon demand
from time to time, as additional rent, the amount of Tenant's proportionate
share of the cost of such service.
7.3 Any payment to be made pursuant to this Article Seven with respect to the
real estate tax year in any partial lease year shall be prorated.
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Exhibit 10.34
ARTICLE EIGHT
INSURANCE
8.1 The Landlord agrees that it will keep the buildings in the Business Park of
which the Premises is a part (excluding Tenant's improvements and the
contents of the Premises) insured by standard form fire and extended
coverage casualty insurance in an amount not less than eighty percent (80%)
of the original cost thereof (excluding excavations, footings and
foundations).
8.2 The Landlord agrees to maintain public liability insurance covering the
Business Park of which the Premises is a part, it being understood that
such coverage may not insure against the negligence of the Tenant.
8.3 Tenant will keep in force, at its own expense so long as this Lease remains
in effect or during such other time as the Tenant occupies the leased
Premises or any part thereof, public liability insurance with respect to
the leased Premises with minimum limits of One Million Dollars
($1,000,000.00) on account of bodily injury or death of one person, and One
Million Dollars ($1,000,000.00) on account of bodily injuries or death of
more than one person as a result of any one accident or disaster; and
property damage insurance at the minimum limits of 2,000,000.00. Tenant
shall cause Landlord to be named as an additional insured party thereon.
Insurance coverage, as provided, shall be issued by insurance companies
licensed to do business in the State of Oklahoma with a Best's rating of
"N" or better. Tenant shall deliver to the Landlord a certificate or
certificates of insurance of all such insurance coverage, a copy of all
such insurance policies and proof of payment of annual premiums.
8.4 Landlord shall insure at its sole cost and expense any and all plate and
other glass damaged or broken from any cause whatsoever in and about the
Premises.
8.5 Tenant agrees that it will not keep, use, sell or offer for sale in or upon
the Leased Premises any article which may be prohibited by the standard
from of fire insurance policy. Tenant agrees to pay any increases in
premiums for fire and extended coverage insurance that may be charged
during the Lease Term on the amount of such insurance which may be carried
by Landlord on the Premises or the Business Park, resulting from the type
of materials kept or stored by Tenant in the Premises, whether or not
Landlord has consented to the same. In determining whether increased
premiums are the result of Tenant's use of the Premises, a schedule, issued
by the organization making the insurance rate on the Premises, showing the
various components of such rate, shall be conclusive evidence of the
several items and charges which make up the fire insurance rate on the
Premises.
8.6 In the event Tenant's occupancy causes any increase of premium for the fire
and/or casualty rates on the Premises or Business Park or any part thereof
above the rate for the least hazardous type of occupancy legally permitted
in the Premises, the Tenant shall pay the additional premium on the fire,
and/or casualty insurance policies by reason thereof. The Tenant also shall
pay, in such event, any additional premium on the rent insurance policy
that may be carried by the Landlord for its protection against rent loss
through fire. Bills for such additional premiums shall be rendered by
Landlord to Tenant at such times as Landlord may elect, and shall be due
from, and payable by, Tenant when rendered, and the amount thereof shall be
deemed to be, and be paid as, additional rent.
8.7 If during the year 1999, or during any subsequent year of the primary term
or any renewal or extension, Landlord's cost of maintaining the insurance
provided for in this Article shall-exceed Landlord's cost of maintaining
such insurance for the year 1999, Tenant agrees to pay to Landlord, as
additional rental, Tenant's full Proportionate Share, as defined in
Paragraph 7.1 above, of such excess ("Excess Premiums").
8.8 Any payment to be made pursuant to this paragraph with respect to a partial
lease year shall be subject to a pro rata adjustment based on the ratio of
the partial lease year to a full lease year.
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Exhibit 10.34
ARTICLE NINE
DEFAULT
9.1 In the event of a default, as herein described, on the part of the Tenant,
Landlord shall have the following remedies which shall be cumulative and
shall not exclude any other right or remedy given to Landlord as Landlord
under the laws of the State of Oklahoma.
9.2 If Tenant shall file a petition in voluntary bankruptcy or be adjudged
bankrupt in involuntary proceedings or make all assignment for benefit of
creditors or like arrangements or composition or file a petition in the
federal court for reorganization or otherwise seek relief under the Code of
Bankruptcy of the United States of America or files for the appointment of
a receiver or trustee or discontinues business in the Premises for any
reason whatsoever, except as otherwise permitted by this Lease, such is to
be considered a default under this Lease and Landlord, without further
notice or demand and either with or without entry upon Premises, at its
discretion at anytime thereafter, may elect to terminate Tenant's rights
under this Lease and thereafter be entitled to recover damages in the
amount equal to the then present value of the then remaining and unpaid
portion of the Minimum Rental for the remaining and unexpired portion of
the term of this Lease. Said present value shall be calculated using a
discount factor equal to the then cost of funds published by the Eleventh
District Federal Home Loan Bank; and/or
9.3 Upon the following events of default by Tenant:
(a) The payment of any Rental not being made upon the day the same shall
become due and same remains unpaid for five (5) days after written
notice from Landlord to Tenant of such nonpayment of Rental.
(b) The neglect, failure or refusal by the Tenant in the performance of
any of the other terms, conditions or covenants of this Lease by said
Tenant to be performed, and the continued neglect, failure or refusal
for a period of ten (10) days after the service of written notice of
such default by the Landlord on Tenant; then the Landlord may enter
into and upon the Premises or any part thereof and repossess the same
with or without terminating this Lease and, without prejudice to any
of its remedies for rent or breach of covenant and in any such event,
may, at its option: (i) terminate said Lease by giving written notice
of its election to so do, or may, at its option, (ii) lease the
Premises or any part thereof as the agent of the Tenant, or otherwise,
or may, at its option, (iii) accelerate to the entire remaining unpaid
balance of Minimum Rental, in which event the then present value of
the entire unpaid balance of Minimum Rental shall be immediately due
and payable as similarly provided in Article 10.2 below. In the event
of any such re-letting, as described in (ii) above, the Tenant shall,
without demand or further process of law, pay to Landlord at the end
of each month during the full term of this Lease, the deficiency of
the net Minimum Rental.
9.4 Landlord shall, in addition thereto, have a lien against all merchandise,
fixtures, furniture, equipment or other personal property located in the
Premises for the payment of rents or other amounts due hereunder.
9.5 In the event of breach or Rental default as provided herein, Landlord shall
be entitled to common law and statutory (Oklahoma) remedy of distraint and
Landlord shall be entitled to the immediate possession of the Premises and
may sell and dispose of the leasehold, as well as the property of the said
Tenant, at public auction. Tenant hereby acknowledges that this is a lease
for business purposes only and does, by these presents, waive any rights
granted to Tenant pursuant to any statutes of the State of Oklahoma. Tenant
shall be liable to Landlord for all sums remaining unpaid in the event of
such a sale and all of the expenses incident to the collection thereof,
including reasonable attorney's fees.
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Exhibit 10.34
ARTICLE TEN
FIRE OR OTHER CASUALTY
10.1 If the Premises (excluding Tenant improvements or contents of the
Premises) shall be damaged by fire or other risk covered by standard form
fire and extended coverage casualty insurance and is not thereby rendered
untenantable, in whole or in part, Landlord shall promptly, upon receipt
of insurance proceeds, cause such damage to be repaired and the rent shall
not be abated; if, by reason of such occurrence, the Premises shall be
rendered untenantable only in part, the Landlord shall promptly, upon
receipt of insurance proceeds, cause the damage to be repaired and the
minimum rent, meanwhile, shall be abated proportionately as to the portion
of the Premises rendered untenantable; if, by reason of such occurrence,
the Premises should be rendered wholly untenantable, the Landlord shall
promptly, upon receipt of insurance proceeds, cause such damage to be
repaired, and the minimum annual rent, meanwhile, shall be abated in
whole; provided, however, if the leased Premises shall be damaged, whether
or not from a risk of the type covered by Landlord's fire and extended
coverage casualty insurance, to the extent that such damage is fifty
percent (50%) or more of the then replacement cost of the leased Premises,
then, in such event, the Landlord shall have the right, at Landlord's
option, to declare this Lease canceled by giving appropriate written
notice to the Tenant within thirty (30) days first following said
occurrence, whereupon this Lease Agreement and tenancy hereby created
shall cease as of the date of damage occurrence, all rentals to be
adjusted as of such date. The obligation of Landlord, where such
obligation exists under the foregoing sentence, to repair damages shall be
limited to repair and restoration of the damaged portion of the Premises
to substantially the condition of the Premises as existed upon delivery of
possession of the Premises to Tenant at the commencement of the term of
this Lease, is modified by ordinary wear and tear preceding such damage.
If the Premises shall be damaged, whether, or not from a risk of the type
covered by Landlord's fire and extended coverage insurance, provided such
damage was not caused by the negligent or willful acts of the Tenant, and
is thereby rendered untenantable, wholly or in part, following which the
Landlord is unable to repair the Premises within 120 days after receipt by
the Landlord of the insurance proceeds, then, in such event, the Tenant
shall have the right, at Tenant's option, to declare this Lease canceled
by giving appropriate written notice to the Landlord within ten (10) days
first following said 120 day period, following which this Lease Agreement
and tenancy hereby created shall cease as of the date of such notice.
10.2 It is further understood and agreed that, if fifty percent (50%) or more
of the gross floor area of the building of the Business Park wherein the
Premises are located (whether or not the Premises are damaged) are
rendered untenantable by fire or other casualty, following which the
Landlord does not elect to commence restoration of said damages within
sixty (60) days after such occurrence of damages, then, in such event, the
Landlord shall have the option right to declare this Lease canceled by
giving appropriate written notice, within thirty (30) days first following
said sixty (60) day period, following which this Lease Agreement and
tenancy hereby created shall cease as of the last day of the next full
calendar month first following the date of such termination notice.
ARTICLE ELEVEN
REPAIRS AND MAINTENANCE
11.1 Landlord will keep the exterior, including the roof and structural
portions of the Premises, except doors in good repair; provided, however,
Landlord shall not be responsible for the repair of any damage that shall
be caused by the negligence of the Tenant or its agents, servants,
employees, assignees, sublessees, contractors, customers, or invitees. The
Landlord agrees to keep in good repair and to maintain, to the extent
reasonably necessary and consistent with good business practices, the
Common Area of the Business Park, to keep the same reasonably free from
debris and to illuminate such areas adequately. Landlord shall be under no
other liability for repair, maintenance, alteration or other action with
reference to the Premises or any part thereof, or any plumbing, heating,
electrical, air conditioning or other mechanical installation therein,
except as otherwise provided by Article Eleven of this Lease Agreement
relating to repair
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Exhibit 10.34
of damage from a casualty. Landlord shall be responsible for all repair in
excess of $250.00 per occurrence.
11.2 Landlord agrees to provide and maintain the necessary mains, feeders,
ducts and conduits within the Business Park in order to bring gas and
electricity up to the boundary of the Premises; it being understood that
all means of distribution of such services within the Premises shall be
maintained by the Tenant at the Tenant's expense.
11.3 Tenant hereby agrees to keep the interior of the Premises, including any
doors, together with all lighting, electrical, plumbing, heat, ventilating
and air conditioning systems and other mechanical installations therein,
in good order and repair and will make all replacements thereto at its own
expense. Tenant will surrender the leased Premises at the expiration of
the term or at such other time as it may vacate the Premises in as good a
condition as when received, excepting depreciation caused by ordinary wear
and tear and damage by other causes not required hereunder to be repaired
by Tenant.
11.4 Landlord agrees that on all new interior construction, the normal
contractor and equipment warranties will inure to the benefit of Tenant.
ARTICLE TWELVE
UTILITIES
12.1 All utility services except for water and sewage services, used by the
Tenant in connection with the occupancy of the Premises, shall be paid by
Tenant directly to the provider of such services, and the Tenant shall
keep all bills for such services current as they come due. Tenant hereby
indemnifies and agrees to save Landlord harmless from all such liability
for said services. In the event Tenant fails to pay for any such services
as and when they come due, Landlord may elect to pay same and charge
Tenant, as Additional Rental, the amounts paid. It is understood that
utility services, excluding water and sewage, have been designed for
separate metering and that Tenant will provide such deposits, if any, as
may be required by any utility company in order to cause commencement of
utility services to the Premises occupied by Tenant. Water and sewage
services for the Premises shall be provided through a Landlord's common
use meter at Landlord's expense. in no event shall Landlord be liable for
an interruption or failure in the supply of water and sewage services to
the Premises. Water and sewage service shall be paid for by Landlord.
Tenant will be billed periodically for its pro rata share of these charges
as Additional Rental.
ARTICLE THIRTEEN
SIGNS AND ADVERTISING
13.1 Tenant will not place or suffer to be placed or maintained on the exterior
of the Premises any sign, advertising matter or other thing of any kind
and will not place or maintain any decoration, lettering or advertising
matter on the door or any glass of the Premises without first obtaining
the Landlord's written approval thereof. The cost of all signage of any
kind whatsoever shall be borne by Tenant, unless otherwise provided
herein. Upon the installation or removal of any signs or advertising
matter, Tenant shall, at its sole expense, repair any damages to the
Building or to the Common Usage Areas occasioned by such installation or
removal, including restorations occasioned thereby. Any sign or
advertising matter placed or maintained by Tenant will be in conformance
with the provisions of Exhibit "E" attached hereto and made a part hereof.
13.2 The Landlord reserves the right to place any sign or advertisement on the
Building or the Common Usage Areas as it desires and to place restrictions
on the sources furnishing sign painting, lettering or construction, and on
the appearance of such signage.
ARTICLE FOURTEEN
ASSIGNMENTS OR SUBLETTING
14.1 Tenant will not assign this Lease, in whole or in part, nor sublet all or
any part of the Premises without the prior written consent of the Landlord
being first obtained, which consent shall not be unreasonably withheld.
Any such assignment or subletting shall not affect or relieve the Tenant
from any of its obligations under this Lease, including, without
limitation, the obligations to pay the Rentals when due and the
obligations of
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Exhibit 10.34
Tenant to perform all of its covenants hereunder. The terms "assign" and
"sublet" shall be construed to include assignment or subletting by
operation of law.
14.2 If at any time during the Lease Term, any part, or all, of the corporate
shares of Tenant shall be transferred by sale, assignment, bequest,
inheritance, operation of law or other disposition so as to result in a
change in the present effective voting control of Tenant by the person, or
persons, owning a majority of said corporate shares on the date of this
Lease, Tenant shall promptly notify Landlord in writing of such change and
Landlord may terminate this Lease at any time after such change in control
by giving Tenant thirty (30) days' prior written notice of such
termination.
ARTICLE FIFTEEN
PARKING AREAS
15.1 Landlord reserves the right to designate in its sole discretion, certain
portions of the Common Area to be used as parking areas for the exclusive
use of certain tenants and/or their business invitees and to designate
other portions of the Common Area to be used as parking areas for the
general use of all the tenants of the Business Park and their business
invitees.
ARTICLE SIXTEEN
INSPECTION
16.1 Landlord or Landlord's agents shall have the right to enter the Premises
during normal business hours to examine the same and to show them to
prospective purchasers, mortgagees or tenants of the Landlord or to make
such decorations, repairs, alterations, improvements or additions as the
Landlord may deem necessary or desirable.
16.2 In the event of an emergency, Landlord or Landlord's agent may enter the
Premises using whatever means is reasonable under the circumstances to
accomplish such entry.
16.3 Tenant shall, upon termination of the Lease or of Tenant's possession,
surrender all keys of the Premises to Landlord at the place then fixed for
the payment of rent and shall make known to Landlord the explanation of
all combination locks on safes, cabinets and vaults in the Premises.
ARTICLE SEVENTEEN
SUBORDINATION TO MORTGAGE
17.1 At the option of the holder of any present or future mortgage of the land
and buildings of which the Premises are a part, this Lease shall be
subject and subordinate to such mortgage to the full extent of all sums
and amounts secured thereby and, at the request of Landlord or Landlord's
mortgagee, without any way diminishing or negating the effectiveness of
the subordination provided for herein, Tenant shall execute any
instruments or documents that may be deemed necessary or proper by counsel
for Landlord or Landlord's mortgagee to effect such subordination;
provided, however, that, at such time as any subordination is requested,
Landlord shall furnish Tenant evidence that Tenant shall have the right to
remain in possession of the Premises under the terms of this Lease,
notwithstanding any default in such mortgage or trust deed or after
foreclosure thereof, so long as Tenant is not in default under any of the
covenants, conditions and agreements contained in this Lease. In the event
any proceedings are brought for the foreclosure of any mortgage on
property on which the Premises is located, Tenant will attorn to the
purchase at a foreclosure sale and recognize the purchaser as Landlord
under the Lease.
17.2 At Landlord's request, Tenant will execute either an estoppel certificate
addressed to Landlord's mortgagee or any prospective successor of Landlord
or a three-party agreement among Landlord, Tenant and said mortgagee or
successor, certifying to such facts (if true) regarding the status and
terms of this Lease as may be requested and agreeing to such notice
provisions and other matters as such mortgagee or successor may reasonably
require in connection with Landlord's financing or the conveyance of the
Building.
10
<PAGE>
Exhibit 10.34
ARTICLE EIGHTEEN
WARRANTY, COMPLIANCE WITH LAWS
18.1 The Landlord covenants and warrants that it has full right, power and
authority to enter into this Lease for the term herein granted and that,
as of the date hereof, the said Premises may be used by Tenant for the
purposes herein set forth. The Tenant agrees, during its occupancy of the
Premises, to promptly execute, observe and comply with all present and
future laws, ordinances, rules, requirements and regulations of any
federal, state, county, city or any other governmental agency and of any
or all of their respective several departments, offices and bureaus
affecting the Premises.
ARTICLE NINETEEN
NOTICES
19.1 For all purposes hereunder, the addresses of the parties hereto are as
follows:
Landlord: Wilshire Square
c/o CB Richard Ellis/Oklahoma, Property Management
7912 East 31s' Court, Suite 200
Tulsa, Oklahoma 74145-1346
Tenant: At address shown in Article One.
19.2 The parties hereto shall have the right, from time to time, to designate
different addresses than those above set forth by giving written notice to
the other party designating such new address.
19.3 Any notice to be given by either party to the other shall be in writing
and shall be deemed to have been served upon the party to whom it shall be
directed: (i) as of the date of deposit in the United States mail, postage
prepaid, certified or registered mail, addressed to such party at the
address above given, or at such other address as such party may, from time
to time, designate in accordance with the provisions hereof or (ii) as of
the date of and delivery to the Landlord or Tenant as the case may be.
ARTICLE TWENTY
PREMISES ALTERATIONS
20.1 The Tenant shall have the right, at any time and from time to time during
the term of this Lease, to make such changes and alterations to the
interior of the Premises as the Tenant shall deem necessary or desirable
in connection with the requirements of the Tenant's business; provided,
however:
(a) no change or alteration shall weaken, either temporarily or
permanently, the structure of the Premises nor, when completed, shall
be of such a character as to:
(1) affect adversely the value of the Premises;
(2) materially reduce the cubic content of said Premises; or
(3) diminish the general utility of the Premises; and
(b) no change or alteration involving a reasonably estimated (by the
Landlord) cost of more than Five Thousand Dollars ($5,000.00)
(excluding trade fixtures) shall be undertaken except pursuant to the
provisions contained in Exhibit "D" attached hereto.
Tenant shall not make any changes or alterations to the exterior of the
Premises and shall not make any penetrations in the roof or demising walls
of the Premises, regardless of the estimated cost thereof, without the
prior written consent of Landlord in each such occasion obtained.
11
<PAGE>
20.2 All alterations and improvements of said Premises by Tenant shall be and
become a part of the real estate, except such machinery, equipment,
appurtenances, furnishings and fixtures placed therein by Tenant as trade
equipment and fixtures.
ARTICLE TWENTY-ONE
INDEMNIFICATION
21.1 Except as to injury, death or property damage proximately caused by the
negligence of Landlord for which Landlord is legally liable, Tenant agrees
to indemnify and hold Landlord harmless from all claims, suits, actions,
damages, liability and claims (including costs and expenses of defending
against all of the aforesaid) arising (or alleged to arise) from any act
or omission of Tenant or Tenants agents, employees, assignees, sublessees,
contractors, customers or invitees, or arising from any injury to or death
of any person or persons or damage to or destruction of the property of
any person or persons occurring at the Premises, and Common Areas
attendant thereto, and Tenant assumes responsibility for the condition of
the Premises and agrees to give Landlord written notice in the event of
any damage, defect or disrepair therein.
21.2 Tenant agrees to use and occupy the Premises and place its fixtures,
equipment, merchandise and other property thereon at its own risk and
hereby releases Landlord and its agents from all claims for any damage or
injury to the full extent permitted by law. Tenant agrees that Landlord
shall not be responsible or liable to Tenant, or those claiming under
Tenant, for any injury, death or damage or loss occasioned by the acts or
omissions of persons occupying any part of the Premises or, occasioned by
the condition of the Premises, the upkeep for which Tenant is responsible
under the terms of this Lease.
ARTICLE TWENTY-TWO
SECURITY DEPOSIT
22.1 Tenant, contemporaneously with the execution of this Lease, will deposit
with Landlord a security deposit in the sum provided for in Article One,
receipt of which is hereby acknowledged by Landlord. Said deposit shall be
held by Landlord, without liability for interest, as security for the
faithful performance by Tenant of all of the terms, covenants, and
conditions of this Lease by said Tenant to be kept and performed during
the Lease Term. At the end of the Lease Term or upon any earlier
termination of the lease, Landlord shall return the deposit to Tenant,
less any portion thereof needed to compensate Landlord for damages other
than those caused by normal wear and tear.
ARTICLE TWENTY-THREE
CONDEMNATION
23.1 Should so much of the Premises be condemned for public or quasi-public use
so as to render the Premises untenantable for Tenant's use under this
Lease, then either Landlord or Tenant, upon written notice to the other
within 20 days of the taking date, shall be entitled to terminate this
Lease and upon such termination, the rent shall be adjusted to the date of
termination.
23.2 The Tenant shall have no claim against the Landlord for the value of any
unexpired term of the Lease and no right or claim to any part of any
condemnation award for any reason related to the Premises or this Lease,
except that the Tenant shall be entitled in any such condemnation
proceeding to prove and collect damages, if any, for the taking of its
trade fixtures that are not part of the realty. The provisions of the
foregoing paragraphs shall apply whether or not the Lease is terminated as
aforesaid.
ARTICLE TWENTY-FOUR
MISCELLANEOUS PROVISIONS
24.1 Offer and Acceptance. The submission of this "Lease Agreement" for
examination does not constitute agreement between the parties hereto. This
document becomes effective only upon execution and delivery thereof by
Landlord and Tenant on or before the Expiration of Offer Date provided for
in Article One, failing which no reservation or option shall later exist
to complete this "Lease Agreement".
12
<PAGE>
Exhibit 10.34
24.2 Rent Tax. If, at any time during the term of this Lease or any extension
thereof, a tax or excise on rents is levied or assessed against Landlord
by a lawful taxing authority on account of Landlord's interest in this
Lease or the rents or other charges reserved hereunder, Tenant agrees to
pay to Landlord, upon demand, as Additional Rent under Article 5.4 hereof,
the amount of such tax or excise. In the event any such tax or excise is
levied or assessed directly against Tenant, the Tenant shall be
responsible for and shall pay the same at such times and in such manner as
the taxing authority shall require.
24.3 Recording. Tenant shall not record this Lease without the prior written
consent of the Landlord. However, Tenant and Landlord, upon the request of
either, agree to execute and deliver a memorandum of this Lease in
recordable form for the purposes of recordation at Tenant's expense.
24.4 Time. Time is of the essence of this Lease.
24.5 Entire Agreement. This instrument (including all attachments hereto)
constitutes the entire agreement between Landlord and Tenant and the same
may not be amended or modified orally.
24.6 Successors. This Lease shall inure to the benefit of and be binding upon
Landlord and Tenant, their successors and assigns (or heirs, executors and
administrators, as the case may be) subject to the terms, covenants and
conditions stated. In the event of the assignment, of this Lease by
Landlord, Tenant agrees to attorn to the rights of the assignee.
24.7 Construction of Lease.
(a) The term "Landlord", as herein used, means and includes the named
Landlord, its successors and assigns, and the term "Tenant," as herein
used, means and includes the named Tenant, its successors and any
assignees to whom this Lease may be validly assigned as hereinabove
provided, and all of the terms and provisions of this Lease shall be
binding on and inure to the benefit of such successors and assigns.
(b) This Lease shall be governed by and enforced in accordance with the
laws of the State of Oklahoma.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
LANDLORD
D/B/AIWILSHIRE SQUARE, BY ITS AGENT,
CB RICHARD ELLIS/OKLAHOMA,
PROPERTY MANAGEMENT
By: /s/ Lori Bryant Donovan
-----------------------
President
TENANT
IDS ENGINEERING, INC.
By: /s/ William A. Coskey
-----------------------
Name: William A. Coskey
--------------------
Title: President
--------------------
ATTEST:
/s/ Hulda L. Coskey
- -------------------
Secretary
13
<PAGE>
Exhibit 10.34
EXHIBIT "A"
PLOT PLAN OF THE BUSINESS PARK
11004 East 51/st/ 1008 East 51/st/ Street
[DIAGRAM APPEARS HERE]
14
<PAGE>
Exhibit 10.34
EXHIBIT "B"
LEGAL DESCRIPTION OF THE BUSINESS PARK
All of Lot 6; Part of Lot 5; Part of Lot 7, all in Block 1, JOHNSON-FAGG
INDUSTRIAL ADDITION, an Addition in Tulsa, Tulsa County, Oklahoma, according to
the official recorded plat thereof, more particularly described as follows, to-
wit: Beginning at the Northwest corner of said Lot 6; thence S 89' 57' 00" E
along the North boundaries of said Lots 6 and 7 a distance of 486.71 feet to a
point 172.00 feet from the Northeast corner of said Lot 7; thence S 00" 00' 55"
W a distance of 460.21 feet to a point in the South boundary of said Lot 5,
180.65 feet from the Southeast corner thereof; thence S 72" 19' 35" W along the
South boundary of said Lot 5 a distance of 275.75 feet to the Southwest Corner
thereof; thence along the Westerly boundaries of said Lots 5 and 6 as follows:
thence N 290 19' 56" W a distance of 365.36 feet; thence on a curve to the right
having a radius of 350.00 feet a distance of 179.18 feet; thence due North 54.38
feet to the point of beginning, containing 208,511 square feet, more or less.
15
<PAGE>
Exhibit 10.34
EXHIBIT "C"
DESCRIPTION OF LANDLORD'S WORK
Landlord is furnishing the adjacent 2,700 square feet at 11004 East 51/st/
Street "as is", except all mechanical systems shall be in normal working order.
16
<PAGE>
Exhibit 10.34
EXHIBIT "D"
CHANGES, ALTERATIONS AND MODIFICATIONS
All changes, alterations and modifications made by the Tenant to the Premises,
as described by numbered Article Twenty (such modifications, changes and
alterations being hereinafter, in this Exhibit, called "Work"), shall be done in
all cases subject to the following provisions which Tenant covenants to observe
and perform, to-wit:
1. No Work shall be undertaken until detailed plans and specifications have
first been submitted to and approved in writing by Landlord.
2. In the event Tenant shall request Landlord's approval for Work of such
nature as to be deemed complicated and of sufficient magnitude to so
warrant, as determined by Landlord (and as would be similarly so determined
by other prudent persons familiar with shopping center construction matters
in Tulsa, Oklahoma), it shall be reasonable for the Landlord to require that
such Work be undertaken only under the supervision of an architect or
engineer who shall have been approved by Landlord, which approval, as to
said architect or engineer, would not unreasonably be withheld.
3. All Work shall be commenced only after all required municipal and other
governmental permits and authorizations have been obtained (the Landlord
agreeing to join in any application therefor, at the Tenant's expense,
whenever necessary) and shall be done in a good and workmanlike manner and
in compliance with all laws, ordinances, regulations and requirements of all
federal, state and municipal governmental agencies and in accordance with
the requirements of any insurer under an insurance policy then in effect as
to the Premises. The cost of the Work shall be paid in cash at appropriate
intervals so that the Premises, and the Business Park, shall be free at all
times from liens for labor and materials supplied or claimed to have been
supplied to the Premises and the Business Park. The Work shall be prosecuted
with reasonable dispatch, except for unavoidable delays. At all times when
any Work is in progress, the Tenant shall maintain or cause to be
maintained: (a) adequate workmen's compensation insurance covering all
persons employed in connection with the Work and with respect to whom death
or injury claims could be asserted against the Landlord or the Tenant; (b)
for the mutual benefit of the Tenant and the Landlord, comprehensive general
liability insurance against all hazards, including liability assumed under
contracts, to limits of not less than those required for public liability
insurance under Article Eight; and (c) adequate builder's risk insurance
designating the contractor, Landlord and Tenant as co-insureds, as their
interests appear. Such comprehensive general liability insurance shall be in
addition to the insurance under Article Eight but may be effected by an
appropriate endorsement, if obtainable, upon the insurance policy referred
to in said Article Eight.
17
<PAGE>
Exhibit 10.34
EXHIBIT "E"
SIGNAGE SPECIFICATIONS
Signs/Windows
Landlord will provide at no cost to Tenant, the building address numbers above
the front door and Tenant's company name in 2" block letters on the front door
only. All other signs or lettering on doors shall be printed, painted, or
affixed or inscribed at the expense of the Tenant after approval by Landlord and
by the sub-contractor of Landlord's choice.
Specification of sign placement and size is as follows:
Height: Four Feet Maximum
Width: Twelve Feet Maximum
Depth: Two Inch Minimum; Six Inch Maximum
To be adhered to building surface by any method that will not destroy or damage
the existing surface. No direct gluing or caulking will be permitted.
No sign, placard, picture, advertisement, or name shall be attached to any part
of the outside or inside of any window or door and Landlord shall have the right
to remove any such sign, placard, picture, advertisement, name or notice to and
at Tenant's expense.
Tenant shall not place anything or allow anything to be placed near the glass or
any window, door, partition or wall which may appear unsightly from outside the
premises.
All window coverings shall be one inch mini-blinds or equal and color shall be
approved by Landlord in advance in writing and shall be provided by Tenant at
Tenant's expense.
Tenant is responsible to keep interior windows washed.
18
<PAGE>
Exhibit 10.34
EXHIBIT "F"
RULES AND REGULATIONS
1. COMMON AREA/ROOF
All deliveries, etc. to rear. Trash in Waste Disposal.
The sidewalks and entrances, shall not be obstructed or used by Tenant for
any purpose other than for ingress and egress. The exits, entrances, and
roofs are not for the use of the general public and Landlord shall in all
cases retain the right to control and prevent access thereto by all persons
whose presence, in the judgement of the Landlord, shall be prejudicial to
the safety, character, reputation and interests of the Premises and
tenants, provided that nothing herein contained shall be construed to
prevent access to persons with whom Tenant normally deals in the ordinary
course of Tenant's business unless such persons are engaged in illegal
activities. Neither Tenant, nor employees or invitees of Tenant, shall go
upon the roof of the building.
2. PARKING
The parking areas in front of the Business Park Complex shall be used
solely for passenger vehicles during normal business hours and the parking
of trucks, trailers, delivery trucks, recreational vehicles and campers is
specifically prohibited. No vehicle of any type shall be stored in any
parking area at any time. In the event that a vehicle is disabled, it
shall be removed within 48 hours. There shall be no "For Sale" or other
advertising signs on or about any parked vehicle. All Tenants shall park
in the designated parking area as designated by the Landlord from time to
time. Trucks shall use the two 110/th/ Street entrances for access to the
service area. The East drive on 51/st/ Street may be used as an exit.
3. NUISANCES
Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance on the Premises, or permit or suffer the Premises
to be occupied or used in a manner offensive or objectionable to Landlord
or other occupants of the building by reason of noise, odors and/or
vibrations, or interfere in any way with other Tenants or those having
business therein nor shall any animals or birds be brought in or kept in or
about the Premises of the Project. Tenant shall maintain the leased
Premises free from mice, bugs, and ants attracted by food, water or storage
materials.
Tenants shall contract for pest extermination on a regular basis, if
required.
4. DANGEROUS ARTICLES
Tenant shall not use or keep on the Premises of the Project any kerosene,
gasoline or inflammable or combustible fluid or material, or any article
deemed extra hazardous on account of fire or other dangerous properties or
use any other method of heating or air conditioning other than supplied by
Landlord.
5. IMPROPER CONDUCT
Landlord reserves the right to exclude or expel from the Project any person
who in the judgement of the Landlord, is intoxicated or under the influence
of liquor or drugs or who shall in any manner do any act in violation of
the Rules and Regulations of the said Project.
Tenant shall not disturb, solicit, or canvas any occupant of the Project
and shall cooperate to prevent the same.
19
<PAGE>
Exhibit 10.34
6. AUCTION
No auction, public or private will be permitted.
7. EXTERIOR
Tenant shall not place any improvements or moveable objects including
furniture, etc., in the parking area or other areas outside of the said
Premises, or on the roof of said Premises.
8. DAMAGE
Walls, floors and ceilings shall not be defaced in any way and no one shall
be permitted to mark, nail, screw or drill into surface, paint or in any
way mar the building surface. Pictures, certificates, licenses and similar
items normally used in Tenant's Premises may be carefully attached to the
walls by Tenant in a manner to be prescribed by the Landlord. Upon normal
removal of such items by Tenant, any damage to the walls or other surfaces
shall be repaired by Tenant.
9. FURNITURE, SAFES/MOVING
Furniture, freight, equipment, safes or other bulky articles shall be moved
into or out of the Project only in the manner and at such times as Landlord
may direct. Tenant shall not overload the floor of the Premises or in any
way deface the Premises or any part thereof. Landlord shall in all cases
have the right to determine or limit the weight, size and portion of all
safes and other heavy equipment. Landlord will not be responsible for loss
or damage to any safe or property from any cause and all damage done to the
building by moving or maintaining any such safe or other property shall be
repaired at the expense of Tenant.
10. REQUIREMENTS OF TENANT
The requirements of Tenant will be observed upon application to Landlord at
the office of said building. Employees of Landlord shall not perform any
work or do anything outside of the regular duties unless under special
instruction from Landlord. Tenant shall give Landlord prompt notice of any
defects in the water, sewage, gas pipes, electrical lights and fixtures,
heating apparatus, or any other service equipment.
11. USE
The Premises will be used only for general business office purposes and
purposes incidental to that use, and for no other purpose. Tenant will use
the Premises in a careful, safe and proper manner. Tenant will not use or
permit the Premises to be used or occupied for any purpose or in any manner
prohibited by any applicable laws. Tenant will not commit waste or suffer
or permit waste to be committed in, on, or about the Premises. Tenant will
conduct its business and control its employees, agents, and invitees in
such a manner as not to create any nuisance or interfere with, annoy, or
disturb any other Tenant or occupant of the Project or Landlord in its
operation of the Project.
REQUIREMENTS OF LAW; FIRE INSURANCE
12. GENERAL. At its sole cost and expense, Tenant will promptly comply with all
laws, statutes, ordinances, and governmental rules, regulations or
requirements now in force or in force at any given time after the Lease
Date, with the requirements of any board of fire underwriters or other
similar body constituted now or after the Lease Date, with any direction or
occupancy certificate issued pursuant to any law by any public officer or
officers, as well as with the provisions of all recorded documents
affecting the Premises, insofar as they relate to the condition, use, or
occupancy of the Premises, excluding requirements of structural changes to
the Building, unless required by the unique nature of Tenant's use or
occupancy of the Premises.
20
<PAGE>
Exhibit 10.34
13. HAZARDOUS MATERIALS.
(a) For purposes of this Lease, "hazardous materials" means any
explosives, radioactive materials, hazardous wastes, or hazardous
substances, including without limitation asbestos containing
materials, PCB'S, or substances defined as "hazardous substances" in
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42, U.S.C. (S)(S) 9601-9657; the Hazardous
Materials Transportation Act of 1975, 49 U.S.C. (S)(S) 1801-1812; the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. (S)(S) 6901-
6987; or any other federal, state, or local statute, law, ordinance,
code, rule, regulation, order, or decree regulating, relating to, or
imposing liability or standards of conduct concerning hazardous
materials, waste or substances now or at any time hereafter in effect
(collectively, "hazardous materials laws").
(b) Tenant will not cause or permit the storage, use, generation or
disposition of any hazardous materials in, on or about the Premises or
the Project by Tenant, its agents, employees, or contractors. Tenant
will not permit the Premises to be used or operated in a manner that
may cause the Premises or the Project to be contaminated by any
hazardous materials in violation of any hazardous materials laws.
Tenant will immediately advise Landlord in writing of (1) any and all
enforcement, cleanup, remedial, removal or other governmental or
regulatory actions instituted, completed or threatened pursuant to any
hazardous materials laws relating to any hazardous materials affecting
the Premises; and (2) all claims made or threatened by any third party
against Tenant, Landlord, the Premises or the Project relating to
damage, contribution, cost recovery, compensation, loss or injury
resulting from any hazardous materials on or about the Premises.
Without Landlord's prior written consent, Tenant will not take any
remedial action or enter into any agreements or settlements in
response to the presence of any hazardous materials in, on or about
the Premises.
(c) Tenant will be solely responsible for and will defend, indemnify and
hold Landlord, its agents, and employees harmless from and against all
claims, costs, and liabilities, including attorneys' fees and costs,
arising out of or in connection with Tenant's breach of its
obligations in this Article 13. Tenant will be solely responsible for
and will defend, indemnify, and hold Landlord, its agents, and
employees harmless from and against any and all claims, costs and
liabilities, including attorneys' fees and costs, arising out of or in
connection with the removal, cleanup, and restoration work and
materials necessary to return the Premises and any other property of
whatever nature located on the Project to their condition existing
prior to the appearance of Tenant's hazardous materials on the
Premises. Tenant's obligations under this Article 13 will survive the
expiration or other termination of this Lease.
14. CERTAIN INSURANCE RISKS. Tenant will not do or permit to be done any act or
thing upon the Premises or the Project which would (a) jeopardize or be in
conflict with fire insurance policies covering the Project and fixtures and
property in the Project; (b) increase the rate of fire insurance applicable
to the Project to an amount higher than it otherwise would be for general
office use of the Project; or (c) subject Landlord to any liability or
responsibility for injury to any person or persons or to property by reason
of any business or operation being carried on upon the Premises. If the
conduct of the Tenant, or any acts or omissions of the Tenant shall cause
or result in any increase in premiums for insurance carried by the
Landlord, whether or not Landlord allows such act or omission to continue,
Tenant shall pay any increase in premium as Additional Rent.
21
<PAGE>
Exhibit 10.35
LEASE SCHEDULE
MASTER EQUIPMENT
LEASE AGREEMENT NO.__________________
LEASE SCHEDULE NO.____________________
BETWEEN UNICAPITAL BSB LEASING (LESSOR)
-------------------------------
And Thermaire Inc dba Thermal Corp (LESSEE).
------------------------------
1. DESCRIPTION OF EQUIPMENT
Quality Item
------- ----
See Exhibit A attached hereto and made a part hereof
2. EQUIPMENT LOCATION
The above Equipment is to be located and delivered to Lessee's premises at
10500 Windfern Road, Houston, Texas, 77064.
3. RENTAL TERM: 60 months.
4. RENTAL
The first payment in the amount of $3452.60 is due _______, ________.
Subsequent rental payments will be the same amount and due on the same
Monthly (monthly, quarterly, etc.) hereafter.
5. NUMBER AND AMOUNT OF ADVANCE RENTAL PAYMENTS:
NUMBER 1 $3452.60.
-- --------
6. SECURITY DEPOSIT: $0.00
-----
7. THIS SCHEDULE AND ITS TERMS AND CONDITIONS ARE HEREBY INCORPORATED BY
REFERENCE IN THE ABOVE MASTER EQUIPMENT LEASE AGREEMENT. LESSEE PERMITS
LESSOR TO INSERT MODEL AND SERIAL NUMBERS OF EQUIPMENT WHEN DETERMINED BY
LESSOR.
LESSEE: LESSOR:
Thermaire Inc dba Thermal Corp UNICAPITAL BSB LEASING
- ------------------------------ ----------------------
(must be signed by Authorized Corporate
officer partner, or Proprietor)
/s/ William Coskey President /s/ Anne Gantt Funding Admin.
- ------------------------------ --------------------------------
<PAGE>
EXHIBIT 10.35
LESSOR UNICAPITAL BSB Leasing
MASTER EQUIPMENT
LEASE AGREEMENT
MASTER LEASE AGREEMENT NO._________________
Lease Agreement made this 23rd day of February, 2000 between UNICAPITAL BSB
Leasing ("Lessor") with a place of business located at 6825 East Tennessee
Avenue #500 Denver, CO 80224 and Thermaire Inc dba Thermal Corp ("Lessee")
having its principal place of business located at 10500 Windfern Road Houston,
TX 77064
1. LEASE AGREEMENT. Lessor hereby leases to Lessee and Lessee hereby leases
from Lessor all of the personal property ("Equipment") described in Equipment
Lease Schedule(s), which are or may from time to time be executed by Lessor and
Lessee and attached hereto or incorporated herein by reference ("Schedules"),
upon the terms and conditions set forth in this Lease, as supplemented by the
terms and conditions set forth in the appropriate Schedule(s) identifying such
items of Equipment. All terms and conditions of this Lease shall govern the
rights and obligations of Lessor and Lessee except as specifically modified in
writing. Whenever reference is made herein to the "Lease", it shall be deemed to
include each of the various Schedules identifying all items of Equipment, all of
which Constitute one undivided Lease of the Equipment and the terms and
conditions of which are incorporated herein by reference.
2. SELECTION OF EQUIPMENT; ACCEPTANCE. Lessee will select the type, quantity
and supplier of each item of Equipment designated in the appropriate Schedule,
and in reliance thereon such Equipment will then be ordered by Lessor from such
supplier or Lessor will accept an assignment of any existing purchase order
therefore. Lessor will have no liability for any delivery or failure by the
supplier to fill the purchase order or to meet the conditions thereof Lessee
acknowledges that Lessor has not participated and will not participate in any
way in Lessee's selection of the Equipment or of the supplier. Lessee agrees to
inspect the Equipment and to execute an Acknowledgment and Acceptance of
Equipment by Lessee notice, as provided by Lessor, after the Equipment has been
delivered and after Lessee is satisfied that the Equipment is satisfactory in
every respect. Lessee hereby authorizes Lessor to insert in this Lease serial
numbers or other identifying data with respect to the Equipment.
3. DISCLAIMER OF WARRANTIES AND CLAIMS; LIMITATION OF REMEDIES. LESSOR, NOT
BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER'S AGENT, MAKES NO
EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT TO THE
EQUIPMENT, INCLUDING, BUT NOT LIMITED TO, TILE MERCHANTABILITY OF THE EQUIPMENT
OR ITS FITNESS FOR ANY PARTICULAR PURPOSE; THE DESIGN OR CONDITION OF THE
EQUIPMENT; THE QUALITY, Y2K COMPLIANCE OR CAPACITY OF THE EQUIPMENT; THE
WORKMANSHIP IN THE EQUIPMENT; COMPLIANCE OF THE EQUIPMENT WITH THE REQUIREMENT
OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO; PATENT
INFRINGEMENT; OR LATENT DEFECTS. LESSEE LEASES THE EQUIPMENT "AS IS" AND WITH
ALL FAULTS. Lessee accordingly agrees not to assert any claim whatsoever against
Lessor for loss of anticipatory profits or consequential damages. Lessor shall
have no obligation to install, erect, test, service, or maintain the Equipment.
Lessee shall look to the manufacturer and/or seller for any claims related to
the Equipment.
If the Equipment is not properly installed, does not operate as represented or
warranted by the supplier or manufacturer, or is unsatisfactory for any reason,
regardless of cause or consequence, Lessee's only remedy, if any, shall be
against the supplier or manufacturer of the Equipment and not against Lessor,
Lessor hereby acknowledges that any manufacturer's and/or seller's warranties
are for the benefit of both Lessor and Lessee. NOTWITHSTANDING THE FOREGOING,
LESSEE'S OBLIGATIONS TO PAY THE RENTALS OR OTHERWISE UNDER THIS LEASE SHALL BE
AND ARE ABSOLUTE AND UNCONDITIONAL. To the extent permitted by the manufacturer
or seller, and provided Lessee is not in default under this Lease, Lessor shall
make available to Lessee all manufacturer and/or seller warranties with respect
to Equipment.
Lessee specifically acknowledges that the Equipment is leased to Lessee solely
for commercial or business purposes and not for personal, family, household, or
agricultural purposes.
The parties have specifically negotiated and agreed to the foregoing Section 3:
Lessee initials: ____________________
4. STATUTORY FINANCE LEASE. Lessee agrees and acknowledges that it is the
intent of both parties to this Lease that it qualify as a statutory finance
lease under Article 2A of the Uniform Commercial Code. Lessee acknowledges and
agrees that Lessee has selected both: (1) the Equipment: and (2) the supplier
from whom Lessor is to purchase the Equipment. Lessee acknowledges that Lessor
has not participated in any way in Lessee's selection of the Equipment or of the
supplier, and Lessor has not selected, manufactured, or supplied the Equipment.
LESSEE IS ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT EVIDENCING THE
LESSOR'S PURCHASE OF THE EQUIPMENT FROM THE SUPPLIER CHOSEN BY LESSEE AND THAT
LESSEE SHOULD CONTACT THE SUPPLIER OF THE EQUIPMENT FOR A DESCRIPTION OF ANY
SUCH RIGHTS.
<PAGE>
EXHIBIT 10.35
5. ASSIGNMENT BY LESSEE PROHIBITED. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT,
LESSEE SHALL NOT ASSIGN THIS LEASE OR SUBLEASE THE EQUIPMENT OR ANY INTEREST
THEREIN, OR PLEDGE OR TRANSFER THIS LEASE, OR OTHERWISE DISPOSE OF THE EQUIPMENT
COVERED HEREBY.
6. COMMENCEMENT; RENTAL PAYMENTS; INTERIM RENTALS. This Lease shall
commence upon the written acceptance hereof by Lessor and shall end upon full
performance and observance by Lessee of each and every term, condition and
covenant set forth in this Lease, any Schedules hereto and any extensions
hereof. Rental payments shall be in the amounts and frequency as set forth on
the face of this Lease or any Schedules hereto. PROHIBITED addition to regular
rentals, Lessee shall pay to Lessor interim rent for the use of the Equipment
prior to the due date of the first payment Interim rent shall be in an amount
equal to l/30th of the monthly rental, multiplied by the number of days elapsing
between the date on which the Equipment is accepted by Lessee and the
commencement date of this Lease, together with the number of days elapsing
between commencement of the Lease and the due date of the first payment The
payment of interim rent shall be due and payable upon Lessee's receipt of
invoice from Lessor. The rental period under the Lease shall terminate following
the last day of the terms stated on the face hereof or in any Schedule hereto
unless such Lease or Schedule has been extended or otherwise modified. Lessor
shall have no obligation to Lessee under this Lease if the Equipment, for
whatever reason, is not delivered to Lessee within ninety (90) days after Lessee
signs this Lease. Lessor shall have no obligation to Lessee under this Lease if
Lessee fails to execute and deliver to Lessor an Acknowledgement and Acceptance
of Equipment by Lessee acknowledging its acceptance of the Equipment within
thirty (30) days after it is delivered to Lessee, with respect to this Lease or
any Schedule hereto.
7. SECURITY DEPOSIT. As security for the prompt and full payment of rent,
and the faithful and timely performance of all provisions of this Lease, and any
extensions or renewals thereof, Lessee shall pledge and deposit with Lessor the
security amount set forth in the section shown as "Security Deposit" on each
respective Schedule. In the event any default shall be made in the performance
of any of Lessee's obligations under this Lease, Lessor shall have the right,
but shall not be obligated, to apply said security to the curing of such default
Within 15 days after Lessor mails notice to Lessee that Lessor has applied any
portion of the Security Deposit to the curing of any default, Lessee shall
restore said Security Deposit to the full amount set forth in the Schedules. On
the expiration or earlier termination of each Schedule to this Lease, or any
extension or renewal thereof; provided Lessee has paid all of the rent herein
called for and fully performed all other provisions of this Lease with respect
to such Schedule, Lessor will return to Lessee any then remaining balance of the
security deposit with respect to such Schedule, without interest Said security
deposit may be commingled with Lessor's other funds.
8. LIMITED PREARRANGED AMENDMENTS. SPECIFIC POWER OF ATTORNEY. In the event
it is necessary to amend the terms of this Lease or the terms of any Schedule to
reflect a change in one or more of the following conditions:
(1) Lessor's actual cost of procuring the Equipment, or
(2) Lessor's actual cost of providing Equipment to Lessee: or
(3) A change in the Lease payments as a result of(1) and/or (2) above; or
(4) Description of the leased Equipment.
Lessee agrees that any such amendment shall be described in a letter from Lessor
to Lessee, and unless within 15 days after the date of such letter Lessee
objects thereto in a writing delivered to Lessor, this Lease and any affected
Schedules shall be deemed amended and such amendments shall be incorporated
herein/therein as if originally set forth herein/therein.
Lessee grants to Lessor a specific power of attorney for Lessor to use as
follows: (I) Lessor may sign and tile on Lessee's behalf any document Lessor
deems necessary to perfect or protect Lessor's interest in the Equipment or
pursuant to the Uniform Commercial Code; and (2) Lessor may sign, endorse or
negotiate for Lessor's benefit any instrument representing proceeds from any
policy of insurance covering the Equipment.
9. LOCATION. The Equipment shall be kept at the location specified in each
Schedule or, if none is specified, at Lessee's address as set forth above, and
shall not be removed therefrom without Lessor's prior written consent
10. USE. Lessee shall use the Equipment in a careful manner, shall make all
necessary repairs at Lessee's expense, and shall comply with all laws relating
to its possession, use or maintenance, and shall not make any alterations,
additions or improvements to the Equipment without Lessor's prior written
consent. All additions, repairs or improvements made to the Equipment shall
belong to Lessor.
11. OWNERSHIP; PERSONALLY. The Equipment is, and shall remain, the property
of Lessor, and Lessee shall have no right, title or interest therein or thereto
except as expressly set forth in this Lease. The Equipment shall remain personal
property even though installed in or attached to real property.
12. SURRENDER. By this Lease, Lessee acquires no ownership rights in the
Equipment and has no option to purchase same. Upon the expiration or termination
of any Schedule or this Lease, or in the event of a default pursuant to
Paragraph 20 hereof; Lessee, at its expense, shall return the Equipment in good
repair, ordinary wear and tear resulting from proper use thereof alone excepted,
by delivering it, packed and ready for shipment, to such place as Lessor may
specify.
13. RENEWAL. At the expiration of the term set forth in each Schedule,
Lessee shall return the Equipment subject to said Schedule in accordance with
Paragraph 12 hereof At Lessor's option, this Lease, with respect to each
Schedule, may be continued on a month-to-month basis until 30 days after Lessee
returns the Equipment subject to the Schedule to Lessor. In the event that the
Lease, with respect to a Schedule, is so continued, Lessee shall pay to Lessor
rentals in the same periodic amounts as indicated under "Rental" on the
Schedule.
14. LOSS AND DAMAGE. Lessee shall bear the entire risk of loss, theft,
damage or destruction of the Equipment from any cause whatsoever, and no loss,
theft, damage or destruction of the Equipment shall relieve Lessee of the
obligation to pay rent or to comply with any other obligation under this Lease.
In the event of damage to any item of Equipment, Lessee shall immediately place
the same in good repair at Lessee's expense. If Lessor determines that any item
of Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee shall
at Lessee's option do one of the following:
(a) Replace the same with like Equipment in good repair, acceptable to
Lessor; or
(b) Pay Lessor in cash the following: (i) all amounts due by Lessee to
Lessor with respect to all affected Schedules up to the date of the loss; (ii)
the unpaid balance of the total rent for the remaining term of the affected
Schedules attributable to said item, reduced to present value at a discount rate
of 9% as of the date of the loss; and (iii) the Lessor's estimate as of the time
this Lease was entered into of Lessor's residual interest in
<PAGE>
EXHIBIT 10.35
the Equipment, discounted to present value at a discount raze of 9% as of the
date of the loss. Upon Lessor's receipt of payment as set forth above, Lessee
shall be entitled to the Equipment, without any warranties. If insurance
proceeds are used to fully comply with this subparagraph, the balance of any
such proceeds shall go to Lessee to compensate for loss of use of the Equipment
for the remaining term of the Lease.
15. INSURANCE; LIENS; TAXES. Lessee nail provide and maintain insurance
against loss, theft, or destruction of the Equipment in an amount not less than
the full replacement value of the Equipment, with loss payable to Lessor. Lessee
shall also provide and maintain comprehensive general all-risk liability
insurance, including but not limited to product liability coverage, insuring
Lessor and Lessee with a severability of interest endorsement or its equivalent,
aging any and all loss or liability for damages either to persons or property or
otherwise, which might result from or happen in connection with the condition,
use or operation of the Equipment, with such limits and with an insurer as are
satisfactory to Lessor. Each policy shall expressly provide that said insurance
as to Lessor and its assigns shall not be invalidated by any act, omission or
neglect of Lessee and cannot be canceled without 30 days written notice to
Lessor. As to each policy, Lessee shall furnish to Lessor a certificate of
insurance from the insurer, which certificate shall evidence the insurance
coverage required by this Paragraph and shall designate Lessor as loss payee
and/or additional insured. Lessor shall have no obligation to ascertain the
existence or adequacy of insurance, or to provide any insurance coverage for the
Equipment or for Lessee's benefit.
Lessee shall keep the Equipment free and clear of all levies, liens and
encumbrances. Lessee shall pay all charges and taxes (local, state and federal)
which may now or hereafter be imposed upon the ownership, leasing, rental, sale,
purchase, possession or use of the Equipment excluding, however, all taxes on or
measured by Lessor's net income.
If Lessee fails to procure or maintain said insurance or to pay said charges
or taxes, Lessor shall have the right, but shall not be obligated, to effect
such insurance, or pay such charges or taxes. In that event, Lessor shall notify
Lessee of such payment and Lessee shall repay to Lessor the cost thereof within
15 days after such notice is mailed to Lessee.
16. INDEMNITY. Lessee shall indemnify Lessor against any claims, actions,
damages or liabilities, including all attorney fees, arising out of or connected
with the Equipment, without limitation. Such indemnification shall survive the
expiration, cancellation or termination of this Lease. Lessee waives any
immunity Lessee may have under any industrial insurance act with regard to
indemnification of Lessor.
17. ASSIGNMENT BY LESSOR. Any assignee of Lessor shall have all of the
rights but none of the obligations of Lessor under this Lease. Lessee shall
recognize and hereby consents to any assignment of this Lease by Lessor, and
Lessee shall not assert against the assignee any defense, counterclaim or set-
off that Lessee may have against Lessor. Subject to the foregoing, this Lease
insures to the benefit of and is binding upon the heirs, devisees, personal
representatives, survivors, and successors in interest and assigns of the
parties hereto.
18. SERVICE CHARGES; INTEREST. If Lessee shall fail to make any payment
required by this Lease within 10 days of the due date thereof: Lessee shall pay
to Lessor a service charge of 8% of the amount due, provided, however, that not
more than one such service charge shall be made on any delinquent payment
regardless of the length of the delinquency. In addition to the foregoing
service charge, Lessee shall pay to Lessor a $100 default fee with respect to
any payment which becomes thirty (30) days past due. In addition, Lessee shall
pay to Lessor any actual additional expenses incurred by Lessor in collection
efforts, including but not limited to long-distance telephone charges and travel
expenses.
Further, Lessee shall pay to Lessor interest on any delinquent payment or
amount due under this Lease from the due date thereof until paid, at the lesser
of the maximum rate of interest allowed by law or 18% per annum.
19. TIME OF ESSENCE. Time is of the essence of this Lease, and this
provision shall not be impliedly waived by the acceptance on occasion of late or
defective performance.
20. DEFAULT. Lessee shall be in default of this Lease if:
(a) Lessee shall fail to make any payment due under the terms of this Lease
for a period of 10 days from the due date thereof; or
(b) Lessee shall fail to observe, keep or perform any other provision of
this Lease, and such failure shall continue for a period of 10 days; or
(c) Lessee has made any misleading or false statement in connection with
application for or performance of this Lease; or
(d) The Equipment or any part thereof shall be subject to any lien, levy,
seizure, assignment, transfer, bulk transfer, encumbrance, application,
attachment, execution, sublease, or sale without prior written consent of
Lessor, or if Lessee shall abandon the Equipment or permit any other entity or
person to the use Equipment without the prior written consent of Lessor, or
(e) Lessee dies or ceases to exist; or
(f) Lessee defaults on any other agreement it has with Lessor; or
(g) Any guarantor of this Lease defaults on any obligation to Lessor, or any
to the above-listed events of default occur with respect to any guarantor, or
any such guarantor files or has tiled against it a petition under the bankruptcy
laws.
21. REMEDIES. If Lessee is in default, Lessor, with or without notice to
Lessee, shall have the right to exercise any one or more of the following
remedies, concurrently or separately and without any election of remedies being
deemed to have been made:
(a) Lessor may enter upon Lessee's premises and without any court order or
other process of law may repossess and remove the Equipment, or render the
Equipment unusable without removal, either with or without notice to Lessee.
Lessee hereby waives any trespass or right of action for damages by reason of
such entry, removal or disabling. Any such repossession shall not constitute a
termination of this Lease;
(b) Lessor may require Lessee, at its expense, to return the Equipment in
good repair, ordinary wear and tear resulting from proper use thereof alone
excepted, by delivering it, packed and ready for shipment, to such place or
carrier as Less or may specify;
(c) Lessor may cancel or terminate this Lease and may retain any and all
prior payments paid by Lessee;
(d) Lessor may declare all sums due and to become due under this Lease
immediately due and payable, including as to any or all items of Equipment,
without notice or demand to Lessee:
(e) Lessor may re-lease the Equipment to any third party, without notice to
Lessee, upon such terms and conditions as Lessor alone shall determine, or may
sell the Equipment without notice to Lessee, at private or public sale, at which
sale Lessor may be the purchaser;
(t) Lessor may sue for and recover from Lessee the sum of all unpaid rents
and other payments due under this Lease then accrued, plus all accelerated
future payments due under this Lease, reduced to their present value using a
discount rate of 9%, as of the date of default, plus Lessor's estimate at the
time this Lease was entered into of Lessor's residual interest in the Equipment,
reduced to present value at a discount rate of 9%, as of the date of default,
less the net proceeds of disposition, if any, of the Equipment,
(g) To pursue any other remedy available at law, by statute or in equity.
No right or remedy conferred upon or reserved to Lessor is exclusive of any
other right or remedy herein, or by law or by equity provided or permitted, but
each shall be cumulative of every other right or remedy given herein or now or
hereafter existing by law or equity or by statute or otherwise, and may be
enforced concurrently therewith or from time to time. No single or partial
exercise by Lessor of any right or remedy
<PAGE>
EXHIBIT 10.35
hereunder shall preclude any other or further exercise of any other right of
remedy.
22. MULTIPLE LESSEES. Lessee and each of them are jointly and severally
responsible and liable to owner under this Lease. Lessor may, with the consent
of any one of the Lessees hereunder, modify, extend or change any of the terms
hereof without consent or knowledge of the others, without in any way releasing,
waiving or impairing any right granted to Lessor against the others.
23. EXPENSE OF ENFORCEMENT. In the event of any legal action with respect to
this Lease, the prevailing party in any such action shall be entitled to
reasonable attorney fees, including attorney fees incurred at the trial level,
including action in bankruptcy court, on appeal or review, or incurred without
action, suits or proceedings, together with all costs and expenses incurred in
pursuit thereof.
24. MISCELLANEOUS.
(1) LESSEE HEREBY ACKNOWLEDGES THAT THIS LEASE IS NONCANCELABLE FOR THE ORIGINAL
RENTAL TERM SET FORTH IN EACH SCHEDULE.
(2) LESSEE UNDERSTANDS AND ACKNOWLEDGES THAT NO BROKER OR SUPPLIER NOR ANY
SALESMAN, BROKER OR AGENT OF ANY BROKER OR SUPPLIER IS AN AGENT OF LESSOR.
NO BROKER OR SUPPLIER, NOR ANY SALESMAN, BROKER OR AGENT OF ANY BROKER OR
SUPPLIER IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS
LEASE, AND NO REPRESENTATION AS TO THE EQUIPMENT OR ANY OTHER MATTER BY A
BROKER OR SUPPLIER OR ANY SALESMAN, BROKER OR AGENT OF ANY BROKER OR
SUPPLIER SHALL IN ANY WAY AFFECT LESSEE'S DUTY TO PAY THE RENTALS AND TO
PERFORM LESSEE'S OBLIGATIONS SET FORTH IN THIS LEASE.
25. SEVERABILITY. This Lease is intended to constitute a valid and
enforceable legal instrument. In the event any provision hereof is declared
invalid, such provision will be deemed severable from the remaining provisions
of this Lease, all of which will remain in full force and effect.
26. ENTIRE AGREEMENT; WAIVER. This instrument and the Schedules executed by
Lessor and Lessee constitute the entire agreement between Lessor and Lessee with
respect to the Equipment and the subject matter of this Lease. No provision of
this Lease shall be modified unless in writing signed by an authorized
representative of Lessor. Waiver by Lessor of any provision hereof in one
instance shall not constitute a waiver of any other instance.
27. CHOICE OF LAW; JURISDICTION. This Lease shall not be effective until
signed by Lessor at its principal place of business listed above. This Lease
shall be considered to have been made in the state of Lessor's principal place
of business and shall be interpreted in accordance with the laws and regulations
of that state.
Lessee agrees to jurisdiction in the state of Lessor's principal place of
business in any action, suit or proceeding arising out of this Lease, and
concedes that it, and each of them, transacted business in the said state by
entering into this Lease. In the event of legal action to enforce this Lease,
Lessee agrees that venue may be laid in county of Lessor's principal place of
business.
Lessee initials:
LESSEE: Thermaire Inc dba Thermal Corp LESSOR: UNICAPITAL BSB Leasing
/s/ William Coskey Date 2/23/00
- ------------------------- -------
WILLIAM Coskey, President
<PAGE>
EXHIBIT 10.35
Exhibit "A"
UNICAPITAL BSB Leasing Lease No. ______________
Vendor: Suburban Supply
5101 S. Rangeline
Joplin, MO 64804
EQUIPMENT
LOCATION 10500 Windfern Road
Houston, TX
QUANTITY DESCRIPTION
1. AUTO FEEDER OF ALUMINUM ROLL SHEET
1 ALUMINUM SHEET AUTO BATHING SYSTEM
1 MANUAL FEEDING SYSTEM
1 PUNCHING DYE
1 HIGH SPEED AUTO PUNCH
1 MAIN ENGINE AND PNEUMATIC
1 ALUMINUM PEN AUTO COLLECTOR
1 ELECTRIC AUTO CONTROL SYSTEM
1 SCREEN TYPE COMPUTER OPERATOR PLATE
1 HYDRAULIC FOR MOLD TAKE OUT SYSTEM
UNICAPITAL BSB Leasing Lease No. ______________
VENDOR: Tridan International, Inc.
130 N. Jackson Street
Danville, IL 61832
EQUIPMENT
LOCATION Tooling Equipment
10500 Windfern
Houston, TX 77064
QUANTITY DESCRIPTION
1 FLEXPANDER MODEL PE-4S
/s/ William Coskey, President
- -----------------------------
<PAGE>
EXHIBIT 10.35
LESSOR:UNICAPITAL BSB Leasing LEASE NUMBER
DATE OF LEASE___________
- --------------------------------------------------------------------------------
LESSEE: Thermaire Inc dba Thermal Corp
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EQUIPMENT DESCRIPTION:
See Exhibit A Attached hereto and made a part hereof
- --------------------------------------------------------------------------------
ACKNOWLEDGEMENT AND ACCEPTANCE
OF EQUIPMENT BY LESSEE
Lessee hereby acknowledges that the Equipment described above has been received
in good condition and repair, has been properly installed, tested, and
inspected, and is operating satisfactorily in all respects for all of Lessee's
intended uses and purposes. Lessee hereby accepts unconditionally and
irrevocably the Equipment.
By signature below, Lessee specifically authorizes and requests Lessor, to make
payment to the supplier of the Equipment. Lessee agrees that said Equipment has
not been delivered, installed, or accepted on a trial basis.
WITH THE DELIVERY OF THIS DOCUMENT TO LESSOR, LESSEE ACKNOWLEDGES AND AGREES
THAT LESSEE'S OBLIGATIONS TO LESSOR BECOME ABSOLUTE AND IRREVOCABLE AND LESSEE
SHALL BE FOREVER ESTOPPED FROM DENYING THE TRUTHFULNESS OF THE REPRESENTATIONS
MADE IN THIS DOCUMENT.
DATE OF ACCEPTANCE: LESSEE: Thermair Inc dba Thermal Corp
2/23/00 /s/ William Coskey
- ------------------- ------------------
William Coskey, President
IMPORTANT: THIS DOCUMENT HAS LEGAL
AND FINANCIAL CONSEQUENCES TO YOU. I hereby authorize Tim Reichwein, General
DO NOT SIGN THIS DOCUMENT UNTIL YOU Manager to orally verify my/our
HAVE ACTUALLY RECEIVED ALL OF acceptance of the above reference
THE EQUIPMENT AND ARE COMPLETELY equipment in my absence.
SATISFIED WITH IT.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31,
2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 120,231
<SECURITIES> 800,000
<RECEIVABLES> 2,664,482
<ALLOWANCES> (18,828)
<INVENTORY> 775,242
<CURRENT-ASSETS> 4,892,218
<PP&E> 1,937,242
<DEPRECIATION> (470,425)
<TOTAL-ASSETS> 6,389,635
<CURRENT-LIABILITIES> 1,643,538
<BONDS> 513,782
0
0
<COMMON> 12,965
<OTHER-SE> 4,122,352
<TOTAL-LIABILITY-AND-EQUITY> 6,389,635
<SALES> 1,800,550
<TOTAL-REVENUES> 3,392,211
<CGS> 1,347,312
<TOTAL-COSTS> 3,157,453
<OTHER-EXPENSES> (2,713)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,003
<INCOME-PRETAX> 232,045
<INCOME-TAX> 71,254
<INCOME-CONTINUING> 160,791
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 160,791
<EPS-BASIC> 0.012
<EPS-DILUTED> 0
</TABLE>
