SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 2O549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended DECEMBER 31, 1995
Commission file number 1-7675
AUDITS & SURVEYS WORLDWIDE, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-1809586
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
650 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10011
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 212-627-9700
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK AMERICAN STOCK EXCHANGE
PAR VALUE $.01
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to 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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 15, 1996: $ 14,805,326.
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Number of shares of Common Stock outstanding at March 15, 1996: 13,099,103
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DOCUMENTS INCORPORATED BY REFERENCE: Selected portions of Audits & Surveys
Worldwide, Inc.'s 1996 Proxy Statement are incorporated by reference into Part
III of this report on Form 10-K.
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ITEM 1. BUSINESS
Recent Developments
The Company was incorporated in Delaware in 1967. Unless the context
otherwise requires, the terms "Company" or "ASW" refer to Audits & Surveys
Worldwide, Inc. and its consolidated subsidiaries. On March 24, 1995, the
Company, formerly known as The Triangle Corporation ("Triangle"), consummated a
previously announced merger with Audits and Surveys, Inc. ("A&S"). Pursuant to
the Merger Agreement, A&S was merged with and into Triangle and the separate
corporate existence of A&S ceased. Upon completion of the merger, the name of
the Company was changed to "Audits & Surveys Worldwide, Inc." to reflect the
nature of the Company's ongoing business. Each share of Triangle's common stock
outstanding prior to the merger remained outstanding. Each share of A&S's common
stock outstanding immediately prior to the merger was exchanged for 1,407.565
shares of Triangle's common stock. Accordingly, upon completion of the merger,
the holders of Triangle's common stock immediately prior to the merger owned 20%
of the Company's common stock and the holders of A&S's common stock immediately
prior to the merger owned 80% of the Company's common stock. For accounting and
financial reporting purposes, the merger has been treated as a reverse
acquisition with A&S being deemed to have acquired Triangle's net assets in
return for a 20% equity interest in the Company.
Business. GENERAL. Audits and Surveys, founded in 1953, is an
international marketing research firm providing clients with a broad selection
of services and information used to assist in the development of marketing,
advertising and investment strategies for their products and services. These
marketing research services are provided to a wide variety of major commercial,
industrial, institutional and academic organizations in over 60 countries. The
Company's most significant clients in terms of 1995 revenue include ActMedia,
AT&T, Burger King, Campbell Soup, The Coca-Cola Company, IBM, MasterCard, Shell
Oil Company, Volvo Corporation of North America and Xerox.
ASW provides its marketing research services on a custom, continuous
tracking or syndicated basis. Such services may include the monitoring of market
share trends or measuring the impact of new product advertising or service
introductions. The Company conducts surveys for media and advertisers who
require the measurement of the size and demographics of target audiences and
also provides clients with data on customer satisfaction, mystery shopping
studies at client product or service outlets and litigation research.
The Company believes that it has earned an impressive reputation for
providing quality marketing research by meeting difficult marketing challenges
with state-of-the-art statistical and sampling techniques created and developed
by members of its staff. Technologically, ASW has designed an in-house advanced
Computer-Assisted Telephone Interviewing system (A&S/CATI), special analytic
software, multimedia software for client presentations and a system for
digitizing respondents' answers to telephone surveys (A&S/Voice CATI(R)). The
services and products offered by ASW are supported by a large in-house computer
capacity and a full staff of programmers, statisticians, psychologists,
sociologists and marketing professionals.
ASW believes that its ability to provide comparable consumer and
retail data with the highest professional statistical standards nationally and
internationally yields marketing insights to its clients which are unavailable
from any other industry source. The Company also believes that the breadth of
its marketing research services, when combined with its technological and
professional capabilities, provide significant advantages over other marketing
research firms and serve as a platform for the development of new services and
products to both domestic companies and multinational corporations, whatever
their country of origin.
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INDUSTRY OVERVIEW. The marketing research industry is highly
fragmented, comprising several large firms, including ASW, and a large number of
smaller firms. Many firms specialize in specific industries, products, services
or methodologies. For various reasons, including resource constraints, the bulk
of the smaller firms offer limited services and conduct their research primarily
in the consumer market while larger firms generally provide services in the
retail, consumer and industrial markets. The industry's three principal types of
marketing research services are classified as custom research projects,
continuous tracking studies and syndicated studies.
CUSTOM RESEARCH PROJECTS - involve research of awareness, knowledge,
attitudes and behavior toward specific products or services offered by a company
among consumers with particular demographics or a defined profile. Custom
projects may also include measurement of opinions on marketing, advertising
and/or political issues and candidates.
CONTINUOUS TRACKING STUDIES - allow a company to track consumer
attitudes and behavior on an ongoing basis in order to determine changes in the
market toward its products or services. Customer satisfaction studies are
continuous tracking studies that focus on measuring customer satisfaction at
either the retail point-of-sale or among a company's clients in the commercial
or industrial market.
SYNDICATED STUDIES - provide historical information regarding
consumer purchasing decisions or behavior related to specific product categories
or media as well as product inventory and distribution data. Information from
these studies is customarily made available to the marketplace on a
nonexclusive, multi-client basis.
SERVICES OF ASW. The Company offers a wide array of custom research,
continuous tracking and syndicated marketing research services to a broad
variety of clients in domestic and international markets. Clients utilize these
services to develop and refine marketing, advertising and investment strategies
for their products. These services include continuous retail sales measurement,
test marketing, tests of in-store promotions and measurement of product
distribution on a local, regional, national and international basis. ASW
complements these "audit" efforts for its clients through surveys of consumers,
retailers and industrial establishments.
The percentages of the Company's revenues by type of research service
for the last three years have been as follows:
1995 1994 1993
Custom Research Projects 36% 41% 38%
Continuous Tracking Studies 49% 39% 44%
Syndicated Studies 15% 20% 18%
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100% 100% 100%
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The Company's client services are provided by six primary internal
organizations.
AUDIT DIVISION. The Audit Division provides clients with a wide
variety of services that track retail sales, product inventory and factors
relating to distribution. Most of the Division's services are syndicated,
multi-client or continuous tracking programs, with the remainder being
customized one-time programs, often off-shoots of syndicated programs.
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Major continuous sales tracking services are:
SERVICE DESCRIPTION
Computer Products Sales Index A monthly measurement of sales of
Personal Computers and related
products through Computer Dealers,
Computer Super Stores, Electronic
Super Stores, Office Super Stores
and other retail outlets.
Tech/Track A comprehensive syndicated study of
sales, incidence and usage of
personal computers, software, peri-
pherals, online services and other
technology products in the home.
National Home Improvement Products A monthly or bi-monthly measurement
Sales Index of sales of Do-It-Yourself products
through the rapidly growing Home
Center channel.
PETS A continuous tracking of the sales
of Pet Products through Veterina-
rians, Pet Supply Stores and
Farm/Feed Dealers.
Small Food Store Sales Index In-person audits and point-of-sale
information to measure sales and
distribution in small food stores.
Special Markets Audit Measurement of distribution and
sales in small ethnic food stores.
Aftermarket Sales Index Measurement of sales of specific
product categories in the retail
automotive chain store market.
The Audit Division also offers continuous sales tracking for a broad array of
other products including jewelry, optical products, photographic products, and
home health care.
Other principal services offered by the Audit Division are as follows:
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SERVICE DESCRIPTION
Retail Census of Product Distribution Measurement of penetration of
client and competing products
among a nationally projectable
sample of 35,000 retail and
service outlets throughout
the U.S.
Brand Name Store Search Research to help clients avoid
problems arising from the choice of
a brand name that may be
confusingly similar in look, sound
or meaning to existing brand names.
Selling Area Distribution Index Syndicated market-by-market
measurement of brand availability,
facings, in-store location and
pricing in over 60 individual
measurement areas.
VENDtrack The only national on-site
continuous tracking service of
vending machine distribution.
Product Pickup Service Retail product retrieval for
product recalls, age-dating
analysis, packaging integrity
examination and competitive
new product introductions.
Custom Retail Measurements Market-by-market data used to
develop effective product and
advertising strategies -- including
test markets, controlled in-store
variable tests and interviews of
store customers and management.
SURVEY DIVISION. The Survey Division provides custom and syndicated
research services which help clients increase market share, focus media
advertising and promotion, identify areas for enhancement of consumer goodwill
and generally assist in the development of marketing, advertising and investment
strategies for their products and services. The Company believes it enjoys an
industry-wide reputation for creating and applying new technologies
state-of-the-art techniques in research design, sampling theory and data
analysis to solve difficult client problems. Numerous and wide-ranging domestic
and international research studies are conducted annually for commercial,
industrial, institutional and academic clients.
The Survey Division features a high quality professional staff with
years of business experience in statistics, data processing, psychology and
marketing. Management's continued involvement, supervision and quality control
are integral parts of all research assignments. ASW specializes in statistical
sample design and interview completion among hard-to-reach publics and other
special universes. Through the use of in-house sampling, telephone interviewing,
coding, data processing and graphics facilities, the Company delivers high
quality, cost-efficient services. ASW's statistical department specializes in
developing personal or telephone interview probability samples on local,
regional, national and international levels. The Company also maintains national
area probability samples based on TIGER (Topologically Integrated Geographic
Encoding and
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Referencing) Technologies, a digitized mapping product from the U.S. Census
Bureau. A regularly updated computer file of all telephone exchange prefixes in
use serves as the basis for national random digit dialing telephone samples. ASW
continually updates its business sample history, which can pinpoint demographics
of the retail units sampled, and its Field Control Department provides liaison
and quality control on each research project, working with local interviewing
services.
The Division's telephone interviewing is conducted at A&S/CATI
facilities in Chicago, Philadelphia and Portland. A&S/CATI, developed by the
Company's own computer research and development personnel, is one of the most
advanced systems available in the industry. The A&S/Voice CATI(R) system
digitally captures the respondent's own voice, allowing researchers to overcome
the limitations of interviewer and coder interpretation and facilitate the
transfer of voice data to clients through a variety of digital media. This
allows researchers to better understand the emotions behind the answers and to
evaluate responses by tone, inflection and intensity of feeling.
The Division recently introduced TECH/TRACK, a comprehensive
syndicated study of sales, incidence and usage of personal computers, software,
peripherals, online services and other technology products in the home. This
study provides PC manufacturers with information on ownership and product
awareness, customer loyalty and computer service membership. Because the survey
includes both owner and nonowner households, Tech/Track also provides market
research on prime potential customer markets.
INTERNATIONAL DIVISION - The International Division helps clients
identify growth opportunities and develop marketing strategies for their
products and services on six continents and in more than 60 countries. The
division offers a broad range of services from problem definition to research
analysis in new product development testing, market share data, attitude and
usage profiles, brand and corporate imagery, and retail product availability
measurement. Methods of international consumer and industrial data collection
are tailored to client need, budget and the countries to be surveyed. They
include face-to-face and telephone interviewing, mailed questionnaires and focus
groups. The International Division specializes in conducting major, continuous
research programs with quality standards that permit truly comparable results to
be obtained across and within all researched countries over time.
CUSTOMER SATISFACTION DIVISION - The Company pioneered the
measurement of customer satisfaction in the 1950's. Today its services go beyond
traditional customer satisfaction studies to examine the many individual
components that create customer satisfaction. Qualitative studies listen to the
voice of consumers in focus groups. Customer satisfaction studies measure how
successfully a client meets the needs of its customers and prospects. Mystery
shopper programs use anonymous visits to client outlets to measure standards of
product and service performance at randomly scheduled intervals to provide
objective point-of-contact measurement of the quality of service and the total
environment customers experience. Benchmarking/comparison research measures and
compares client effectiveness against their key competitors and their own
established standards and goals. Employee satisfaction studies are used to
assess and develop employee morale and to enhance customer service. Feedback
management systems provide a channel for soliciting complaints and monitoring
performance. Motivational/incentive programs increase client employee morale and
reinforce the behaviors that lead to improved customer service. Communications
and training are used to implement the results of the research objectives.
THE MEDIA DIVISION has developed the first syndicated study of media
and consumer markets encompassing nineteen Latin American countries. This study,
funded by a consortium of more than 20 of the largest multinational cable TV
networks, advertising agencies, advertisers and magazines, provides a
standardized
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method of evaluating multinational, multimedia advertising plans in Latin
America. It also provides one of the most comprehensive statistical platforms
from which to generate future syndicated research throughout Latin America. The
Company is also the only company authorized to sell and service the IBOPE Latin
American Television Ratings Service, the first and only pan-regional television
ratings service in Latin America. The Media Division has also been developing a
syndicated print measurement service for publishers and advertising agencies.
This service is unique in that it takes advantage of database marketing
technologies and the Company's reputation for developing new print measures.
PUBLIC AFFAIRS DIVISION - The Public Affairs Division assists many
Fortune 500 corporations, advertising and public relations firms, universities
and foundations, associations, government agencies and law firms in
understanding the perceptions and concerns of their varied constituencies in
order to develop and deliver more effective communications. The Division
conducts research in all areas of public relations and public policy including
corporate image and reputation, crisis communications, publicity research,
communications audits, public affairs/public policy research, issue tracking and
management, investor relations research, media effectiveness, communications
program effectiveness, political research and government research. In 1995 the
Division launched IssueTrack(R)/USA, an unique syndicated service that tracks
consumer perceptions of safety and health issues. Interviewing is conducted
daily on A&S/CATI and A&S/Voice CATI(R) among a national sample of adults. The
service is currently monitoring perceptions of dozens of issues in areas such as
food products, health care, lifestyle, transportation, environmental, consumer
products and services, media/entertainment and children's issues.
CLIENTS. The Company's 10 largest clients, based on revenue for the
year ended December 31, 1995, were ActMedia Incorporated, AT&T, Burger King,
Campbell Soup Company, The Coca-Cola Company, IBM, MasterCard, Shell Oil
Company, Volvo Corporation of North America and Xerox. The Coca-Cola Company has
been a client of ASW for over 30 years and represented approximately 23% of the
Company's 1995 revenues. No other client accounted for more than 6 % of ASW's
revenues during such fiscal year. Of the other nine clients listed above, 7 have
been clients of the Company for at least 7 years.
The Company has conducted numerous domestic and international custom
and consumer tracking studies for The Coca-Cola Company. Its Audit Division has
also conducted an annual International Availability study, as well as a domestic
retail sample census and numerous test market studies for this client. These
studies were requested by different divisions of The Coca-Cola Company,
including The Coca-Cola Foods and Fountain Divisions.
MARKETING AND SALES. Historically, the Company has relied primarily
on its professional staff of researchers to perform business development and
sales functions and to generate new business. New business development has
centered on continuous nurturing of existing client relationships by the
researchers and professionals directly involved with the client. The Company
believes excellent provider/client relationships create the best opportunities
for future business with existing clients, and significantly assist in the
generation of new business through client referrals and recommendations.
The Company's marketing staff is responsible for the overall
monitoring of client relationships and for the development of domestic and
international opportunities in addition to those market entries generated by the
research staff. The marketing staff determines the feasibility of new market
penetration through analyses of industry trends, consumer buying patterns and
potential client needs. The Company owns several registered trademarks and
service marks, and has applied for registration of certain other trademarks and
service marks.
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The Company does not believe that the loss of any such mark would have a
material adverse effect on its business and operations.
OPERATIONS. The Company is headquartered in New York City and
operates regionally through offices in Chicago, Minneapolis, Philadelphia,
Portland and San Francisco. International research studies are coordinated in
New York and are conducted in Europe through the Company's 51% owned subsidiary,
Audits & Surveys Europe, Ltd., located in London. In Latin America the Company
recently entered into a strategic business relationship with the marketing
research firm ASECOM, S.A. of Buenos Aires to provide research services
throughout Latin America.
The Company's offices in Chicago, Philadelphia and Portland contain
approximately 180 A&S/CATI terminals which enable the Company to conduct
telephone interviews in three time zones across the United States. The multiple
locations of A&S/CATI operations provide the Company with a competitive
advantage by increasing interviewer scheduling flexibility, expanding the number
of daily interviews that can be conducted and allowing for alternative
interviewing facilities in the event that extreme weather conditions or an
area-wide power failure temporarily incapacitates any given location.
COMPETITION. The market research industry is highly competitive and
is characterized by a large number of competitors, ranging from relatively small
organizations to companies with substantial resources. These competitors also
include in-house marketing research departments, advertising agencies and
business consulting firms. Although the Company believes that no single
competitor offers a comparable combination of services, there can be no
assurance that other companies, some with greater financial resources, will not
attempt to offer a broader range of services than those offered by the Company.
The Company believes that it competes primarily on the basis of the quality of
the design of its market research proposals and on its ability to perform,
analyze and provide results of its research projects on a timely basis,
consistently.
The Company believes that its ability to offer a wide variety of
statistically valid marketing services to a broad base of clients in both
domestic and international markets is critical to its competitive advantage and
believes that providing a combination of custom, tracking and syndicated
research services for the consumer and industrial markets further enhances its
competitive position in the industry. The Company also believes that its ability
to design and develop research services and technologies in response to changing
clients' needs, as well as in anticipation of marketing trends, has enabled the
Company to achieve and sustain a leadership position in the market research
industry.
Employees. At December 31, 1995, the Company had 623 employees, 336
of whom were part-time hourly support employees and 287 were full-time staff.
The full-time staff includes 105 professional employees, 86 support employees
and 96 individuals in administrative and management functions. The part-time
employees are primarily engaged in A&S/CATI operations and other data gathering
and processing operations.
The Company conducts regular training sessions for professional staff
and enrolls selected staff members in the training programs sponsored by CASRO,
a marketing research industry association. In addition, the Company monitors the
performance of its staff on a regular basis and conducts special training
sessions for all its telephone interviewing staff in order to maintain high
quality standards.
Many of the Company's professional staff have advanced degrees in
fields such as marketing, economics, computer science, management, finance,
business, statistics, mathematics and psychology. None of its
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employees is subject to a collective bargaining agreement, nor has the Company
experienced any work stoppages. The Company believes that its relations with
employees are excellent.
Compliance with Environmental Laws. The Company has a subsidiary,
Rawn Company, Inc., which is currently for sale. Rawn (which was a subsidiary of
Triangle prior to its merger with A&S) is a packager, blender and distributor of
aerosol and service chemicals. The Company believes that Rawn's compliance with
federal, state and local provisions which have been enacted or adopted
regulating the discharge of materials into the environment, or otherwise
relating to the protection of the environment, should have no material effect
upon its capital expenditures, earnings or competitive position. (See Note 15 to
the Consolidated Financial Statements.)
Backlog. A majority of the Company's revenues are recorded utilizing
the percentage of completion method of accounting, which recognizes revenues as
services are performed. In addition, revenues are recognized on syndicated
research studies on a pro rata basis over the terms of the individual contracts.
At December 31, 1995 and 1994, the Company had total unrecognized revenues of
$18,165,000 and $13,968,000, respectively. All such unrecognized revenues at
December 31, 1995 are expected to be recognized in 1996.
ITEM 2. PROPERTIES
The Company's principal office is located in New York, New York where
it leases approximately 107,000 square feet under a lease that expires on
February 28, 2003. It currently subleases approximately 42,000 square feet at
this location to two unaffiliated parties through the date on which the primary
lease expires.
The Company also leases an aggregate of approximately 24,000 square
feet of office space in San Francisco, Chicago, Philadelphia, Minneapolis,
Portland, Oregon and Livonia, Michigan and, through its subsidiary, leases
office space in London.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any litigation that is expected to have
a material effect on its results of operations or financial condition. (See Note
15 to the Consolidated Financial Statements for a discussion of an environmental
action involving Triangle's inactive subsidiary, Diamond Tool and Horseshoe Co.,
now known as Tri-North, Inc.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) PRICE RANGE OF COMMON STOCK
The Company's common stock is traded on the American Stock Exchange ("AMEX").
The following table shows the range of closing prices for the common stock for
the calendar quarters indicated, as reported by AMEX:
1994 HIGH LOW
First Quarter 1- 5/16 5/8
Second Quarter 7/8 5/8
Third Quarter 4 - 3/4 9/16
Fourth Quarter 4 - 1/2 2-7/8
1995
First Quarter 4 - 1/2 2 - 7/8
Second Quarter 4 - 1/8 2 - 7/8
Third Quarter 3 - 11/16 2 - 3/8
Fourth Quarter 2 - 3/4 1 - 1/2
(b) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
The approximate number of record holders of the Company's common stock as of
March 15, 1996 was 646.
(c) DIVIDENDS
There have been no cash dividends to stockholders since the Company became a C
Corporation for income tax purposes on December 1, 1993. Prior to December 1,
1993 the Company was an S Corporation for income tax purposes and distributed
substantially all of its earnings in the form of S Corporation distributions.
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ITEM 6. SELECTED FINANCIAL DATA
(Dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
One Month
Years ended ended Years ended
Dec. 31,1995 Dec. 31,1994 Dec. 31,1993 Nov. 28, 1993 Nov. 29, 1992 Dec. 1, 1991
Selected Income Statement
Data:
<S> <C> <C> <C> <C> <C> <C>
Revenues $54,626 $43,917 $2,568 $40,173 $35,367 $33,764
Income ( Loss ) before taxes $1,553 $1,868 ($422) $1,485 $1,703 $1,992
Net Income:
Historical $846 $1,016 $538(a) $1,323 $1,534 $1,786
Pro forma (b) -- -- -- $808 $928 $1,086
Income per share:
Historical $0.07 $0.10 $0.05 -- -- --
Pro forma (b) -- -- -- $0.08 $0.09 $0.10
Weighted average shares
outstanding 12,499,213 10,475,804 10,475,804 10,475,804 10,475,804 10,475,804
Selected Balance Sheet Data:
Total assets $24,887 $16,478 $13,068 $12,642 $12,279 $11,559
Total debt $4,802 $2,454 $2,543 $1,869 $2,066 $1,972
Stockholders' equity $6,627 $1,132 $1,648 $1,110 $1,063 $1,585
Cash dividends per share (c) -- -- -- -- -- --
</TABLE>
(a) In connection with the termination of the Company's S Corporation tax status
as of December 1, 1993, a cumulative Federal and New York State deferred tax
asset of $759,000 was recognized with an offsetting credit to the provision for
income taxes for the one month period ended December 31, 1993.
(b) For the years ended November 28, 1993, November 29, 1992 and December 1,
1991, the Company was an S Corporation for tax purposes and its historical
results provided limited state and local income taxes and no Federal income
taxes. Pro forma net income shown above for these three years has been adjusted
to reflect an estimate of the actual taxes that would have been paid had the
Company been a C Corporation.
(c) There have been no cash dividends to stockholders since the Company became a
C Corporation on December 1,1993. Prior to December 1, 1993, the Company
distributed substantially all of its earnings in the form of S Corporation
distributions.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
On March 24, 1995, Audits and Surveys, Inc. ("A&S") and The Triangle
Corporation ("Triangle") consummated a merger pursuant to which A&S was merged
with and into Triangle. Triangle was the surviving corporation and the separate
existence of A&S ceased. (Triangle and A&S after the merger are hereinafter
referred to as the "Company.") The name of the merged corporation was changed to
"Audits & Surveys Worldwide, Inc." Upon consummation of the Merger, the
holders of Triangle's common stock immediately prior to the Merger owned 20% of
the Company's common stock and the holders of A&S's common stock immediately
prior to the Merger owned 80% of the Company's common stock. For accounting and
financial reporting purposes, the Merger has been treated as a reverse
acquisition. Accordingly, A&S was deemed to have acquired Triangle's net assets
in return for a 20% equity interest in the Company.
The Company's consolidated financial statements and the following
discussion of financial condition and results of operations include the accounts
of Triangle subsequent to the Merger. Triangle's operations for the period March
24, 1995 to March 31, 1995 were not significant. For convenience, the
acquisition has been recorded as of March 31, 1995 for accounting purposes.
Results of Operations
1995 COMPARED WITH 1994
Revenues for 1995 rose $10.7 million (24%) to $54.6 million compared
with $43.9 million in 1994. Approximately 85% of the increase in 1995 stemmed
from new customer satisfaction continuous tracking studies and major
international consumer products surveys. The remaining portion of the revenue
increase came from a variety of new custom research studies.
Direct costs increased $8.9 million (50%) in 1995 compared with 1994,
principally as a result of the increased revenues. As a percentage of revenues,
direct costs were 49% in 1995 compared with 41% in 1994. The overall increase in
direct costs as a percentage of revenues was caused primarily by the survey
studies which generated a significant portion of the increased revenues having
substantially higher direct cost levels than the Company's historical mix of
survey studies. In addition, direct costs as a percentage of revenues reflected
the effect of expenses incurred in the development of various new research
services.
Selling, general and administrative (SG&A) expenses increased $3.7
million (18%) in 1995. Approximately $2.6 million of the increase resulted from
higher base compensation for several key employees upon implementation of new
compensation agreements (see Incentive bonuses discussion below) and additional
salaries of new personnel related to the increased revenues previously
discussed. Other SG&A expenses increased $1.1 million, with approximately half
of these increases stemming from higher professional and consulting fees and
other expenses incurred in connection with the Company making the transition
from a private to a publicly owned corporation and for improvements to the
Company's information system. In addition, increases in rent, utilities,
telephone and associated costs were incurred to accommodate the new personnel
described above.
Incentive bonuses decreased $2.2 million in 1995 which resulted from
a decline in the operating income on which the incentive bonuses are calculated
as well as the implementation of new compensation agreements with several key
employees which increased base salaries (see SG&A above) and simultaneously
reduced incentive bonuses.
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Results of operations in 1995 were adversely impacted by a charge of
$175,000 against "Other Income" resulting from the termination of a sublease
with a subtenant and the occupancy of the space by the Company to accommodate
the increased personnel referred to above.
Income before taxes in 1994 was favorably effected by $215,000 as a
result of three nonrecurring transactions. The Company sold its investment in an
Argentinean affiliate at a gain of $1,335,000. The gain was offset by costs of
$779,000 incurred in connection with stock bonuses issued to certain key
employees and $341,000 representing the settlement costs of a retirement
agreement with the estate of a former shareholder.
No similar nonrecurring transactions arose in 1995.
1994 COMPARED WITH 1993
Effective November 29, 1993, the Company adopted a calendar year for
financial reporting purposes. The following discussion compares results of
operations for the year ended December 31, 1994 with the results for the 52 week
period ended November 28, 1993.
Revenues for 1994 rose $3.7 million (9%) to $43.9 million compared
with $40.1 million in 1993. Approximately 75% of the revenue increase in 1994
stemmed from additional custom research projects. The balance of the increase
came from additional syndicated studies including the introduction of an unique
audience measurement service in 19 Latin American countries.
Direct costs increased $2.9 million (20%) in 1994 compared with 1993
as a result of the increased revenues. As a percentage of revenues, direct costs
were 41% in 1994 compared with 37% in 1993. The increase in direct costs as a
percentage of revenues was impacted by an increase in the proportion of higher
cost custom research studies in the overall 1994 revenue mix compared with 1993.
Direct costs, as a percentage of revenues, were also effected by the incurrence
of costs associated with the development and introduction of new services in the
Audit division. The Company's practice is to expense all development costs as
incurred.
SG&A expenses increased $1.9 million (10%) in 1994. Approximately
$1.1 million of the increase was in compensation costs principally associated
with additional research and support staff related to the increase in custom
research studies. The majority of the remaining increase of $.8 million in SG&A
expenses were incurred in areas such as maintenance and repairs, rent,
telephone, utilities and bad debt expense.
Incentive bonuses decreased $1.2 million in 1994 compared with 1993
as a result of a decline in the operating income on which a significant portion
of the incentive bonuses were based.
As previously noted, income before taxes in 1994 was favorably
effected by $215,000 as a result of three nonrecurring transactions. The Company
sold its investment in an Argentinean affiliate at a gain of $1,335,000. The
gain was offset by costs of $779,000 incurred in connection with stock bonuses
issued to certain key employees and $341,000 representing the settlement costs
of a retirement agreement with the estate of a former shareholder.
Financial Condition, Liquidity and Capital Resources
At December 31, 1995, the Company had working capital of $1.9 million
and a current ratio of 1.15 to 1 compared with a working capital deficit of $2.2
million and a current ratio of .84 to 1 at December 31, 1994. The improvements
in 1995 were, in part, related to the debt restructuring described below.
12
<PAGE>
Cash flow from operations and borrowings under its credit facilities
with its bank are the Company's principal sources of funds. The Company's cash
flow and borrowings have been sufficient to provide funds for working capital,
capital expenditures and payment of indebtedness. On March 11, 1996, the Company
received a commitment from its bank to refinance its existing $5,000,000
short-term credit facility into a $2,500,000 term loan and a $2,500,000 secured
line of credit. At December 31, 1995, the Company reclassified $2,500,000 of its
then outstanding short-term indebtedness to reflect the commitment. The term
loan and the line of credit contain customary affirmative and negative covenants
including those requiring the Company to maintain certain financial ratios (see
Note 5 to the consolidated financial statements).
Net cash used in operating activities was $1,875,000, consisting
primarily of net income of $846,000, which included non-cash expenses of
$1,439,000, offset primarily by increases in accounts receivable of $1,709,000,
other assets of $1,227,000 (including payment of $1,000,000 to a supplier for
retail sales data discussed in Note 15 to the consolidated financial statements)
and by decreases in accrued payroll and bonuses of $1,516,000.
Net cash provided by investing activities was $292,000 and consisted
of approximately $1,090,000 of cash received in connection with the Triangle
merger offset by $588,000 of purchases of property and equipment and the payment
of additional merger expenses of $210,000. The Company's planned capital
expenditures in 1996 are estimated to be $300,000.
Net cash provided by financing activities was $1,765,000 consisting
of proceeds from borrowings under the short-term line of credit of $3,700,000
offset by the repayment of $1,500,000 of notes due to officers/stockholders and
payments of other long-term debt and capital lease obligations of $435,000.
The Company believes that its recently revised credit arrangements
with its bank combined with funds generated by its operations will be adequate
to fund its planned capital expenditures, meet its debt obligations and finance
its operations for at least the next twelve months.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of the report. (See
Item 14).
13
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required in response to this item with respect to
Directors is contained in the Company's 1996 Proxy Statement to be filed with
the Securities and Exchange Commission pursuant to Regulation 14A within 120
days after the close of the Company's fiscal year and, accordingly, is omitted
pursuant to General Instruction G(3).
The following sets forth the names and ages of the Company's
Executive Officers, together with all positions and offices held with the
Company by such Executive Officers. Officers are appointed to serve until the
meeting of the Board of Directors following the next Annual Meeting of
Stockholders and until their successors have been elected and have qualified:
Solomon Dutka (72) has served as a director, Chairman and Chief
Executive Officer of the Company since March 1995. A founder of A&S
in 1953, he served A&S in various capacities, including as its
Chairman and President, prior to the merger with Triangle in March
1995.
H. Arthur Bellows, Jr. (58) has served as a director, President and
Chief Operating Officer of the Company since March 1995. He served as
a director and Chairman of Triangle from August 1967 until the merger
with A&S in March 1995 and as Triangle's President from October 1971
until March 1995.
Carl Ravitch (54) has served as a director and Executive Vice
President of the Company since March 1995. He joined A&S in 1967 and
served as its Executive Vice President - Chief Marketing Officer from
1992 until the merger with Triangle in March 1995.
Anthony Timiraos (42) has served as a director and Executive Vice
President of the Company since March 1995. He joined A&S in 1988 as
Vice President-Finance and served as its Senior Vice President -
Finance and Chief Financial Officer from 1992 until the merger with
Triangle in March 1995.
Alan J. Ritter (55) has served as Senior Vice President and Corporate
Controller of the Company since September 1995. He served as Vice
President - Finance of Triangle from October 1993 until the merger
with A&S in March 1995 and as Triangle's Corporate Controller from
December 1978 until September 1993.
14
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this item is contained in the
Company's 1996 Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the close of the
Company's fiscal year and, accordingly, is omitted pursuant to General
Instruction G(3).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required in response to this item is contained in the
Company's 1996 Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the close of the
Company's fiscal year and, accordingly, is omitted pursuant to General
Instruction G(3).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this item is contained in the
Company's 1996 Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the close of the
Company's fiscal year and, accordingly, is omitted pursuant to General
Instruction G(3).
15
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of Documents filed as part of this Report.
1. FINANCIAL STATEMENTS PAGE NUMBER
Independent Auditor's Report F-1
Consolidated Balance Sheets at December 31, 1995 F-2 to F-3
and December 31, 1994
Consolidated Statements of Income for the years ended F-4
December 31, 1995 and 1994, November 28, 1993 and for
the one-month ended December 31, 1993.
Consolidated Statements of Stockholders' Equity F-5
for the years ended December 31, 1995 and 1994,
November 28, 1993 and for the one-month ended
December 31, 1993.
Consolidated Statements of Cash Flows for the years F-6 to F-7
ended December 31, 1995 and 1994 and November 28, 1993.
Notes to Consolidated Financial Statements F-8 to F-19
2. FINANCIAL STATEMENT SCHEDULES
SCHEDULE NUMBER DESCRIPTION
II Valuation and Qualifying Accounts S -1
All other financial statement schedules not listed have
been omitted since the required information is included in
the consolidated financial statements or the notes thereto,
or is not applicable or required.
18
<PAGE>
3.Exhibit
EXHIBITS
NUMBERS DESCRIPTION
2.01 Merger Agreement between The Triangle Corporation and Audits and Surveys,
Inc., dated as of August 11, 1994 (the "Merger Agreement"). Incorporated by
reference to Exhibit (2) (I) to the Company's Report on Form 10-Q for the
quarter ended September 30, 1994.
2.02 Amendment No. 1 to the Merger Agreement, dated as of October 7, 1994.
Incorporated by reference to Exhibit (2) (ii) to the Company's Report on
Form 10- Q for the quarter ended September 30, 1994.
2.03 Amendment No. 2 to the Merger Agreement, dated as of January 6, 1995.
Incorporated by reference to Exhibit 2 (iii) to the Company's Report on
Form 10- K for the year ended December 31, 1994.
2.04 Amendment No. 3 to the Merger Agreement, dated as of January 31, 1995.
Incorporated by reference to Exhibit 2 (iv) to the Company's Report on Form
10- K for the year ended December 31, 1994.
2.05 Amendment No. 4 to the Merger Agreement, dated as of February 8, 1995.
Incorporated by reference to Exhibit 2 (v) to the Company's Report on Form
10-K for the year ended December 31, 1994.
2.06 Stock and Asset Purchase Agreement between Cooper Industries, Inc. and The
Triangle Corporation, dated April 9, 1993 (the "Stock and Asset Purchase
Agreement"). Incorporated by reference to Exhibit (2) to the Company's
Report on Form 10-Q for the quarter ended March 31, 1993.
2.07 Amendment No. 1 to the Stock and Asset Purchase Agreement, dated April 30,
1993. Incorporated by reference to Exhibit (2) (ii) to the Company's Report
on Form 10-Q for the quarter ended June 30, 1993.
2.08 Amendment No. 2 to the Stock and Asset Purchase Agreement, dated August 4,
1993. Incorporated by reference to Exhibit (2) (iii) to the Company's
Report on Form 10-Q for the quarter ended June 30, 1993.
2.09 Asset Purchase Agreement between The Triangle Corporation and SPX
Corporation, dated as of December 21, 1990. Incorporated by reference to
Exhibit (28) (I) to the Company's Report on Form 8-K, dated January 15,
1991.
3.01 Restated and Amended Certificate of Incorporation of the Company.
Incorporated by reference to Exhibit 4.1 to the Company's Report on Form
10- Q/A for the quarter ended March 31, 1995.
19
<PAGE>
3.02 Amended and Restated By-laws of the Company. Incorporated by reference to
Exhibit 4.2 to the Company's Report on Form 10-Q/A for the quarter ended
March 31, 1995.
4.01 Registration Rights Agreement among the Company, H. Arthur Bellows, Jr.,
Carl Ravitch and the Estate of Irving I. Roshwalb, dated March 24, 1995.
Incorporated by reference to Exhibit 4.3 to the Company's Report on Form
10- Q/A for the quarter ended March 31, 1995.
4.02 Shareholders Agreement among the Company, H. Arthur Bellows, Jr., Solomon
Dutka, Solomon Dutka Trust for James Dutka, Solomon Dutka Trust for Michael
Dutka, Solomon Dutka Trust for Joyce Dutka, Carl Ravitch, Anthony Timiraos,
Dexter Neadle, Lawrence Karp, George Fabian, Fred Winkel, Joel S. Klein,
William Liebman, Nagesh Gupta, Thomas Ryan, Joel Dorfman, Josh Libresco,
Donald Pace, Paul Donato, Fred Nicholson and Joel J. Klein, dated March 24,
1995. Incorporated by reference to Exhibit 4.4 to the Company's Report on
Form 10-Q/A for the quarter ended March 31, 1995.
4.03 Shareholders Agreement between The Triangle Corporation and the Estate of
Irving I. Roshwalb, dated February 9, 1995. Incorporated by reference to
Exhibit 4.5 to the Company's Report on Form 10-Q/A for the quarter ended
March 31, 1995.
10.01** The Triangle Salaried Profit Sharing Plan. Incorporated by reference to
Exhibit (10) (vi) to the Company's Report on Form 10-K for the year ended
December 31, 1992.
10.02** The Triangle Salaried Pension Guarantee Plan. Incorporated by reference
to Exhibit (10) (vii) to the Company's Report on Form 10-K for the year
ended December 31, 1992.
10.03** The Triangle Salaried Incentive Savings Plan. Incorporated by reference
to Exhibit (10) (viii) to the Company's Report on Form 10-K for the year
ended December 31, 1992.
10.04**The Triangle Retirement Savings Plan Trust Agreement. Incorporated by
reference to Exhibit (10) (ix) to the Company's Report on Form 10-K for the
year ended December 31, 1992.
10.05** 1994 Stock Option Plan of The Triangle Corporation. Incorporated by
reference to Exhibit 10.1 to the Company's Report on Form 10-Q/A for the
quarter ended March 31, 1995.
10.06** Letter Agreement between The Triangle Corporation and Alan J. Ritter,
Vice President - Finance with respect to severance payments when and if
terminated, dated July 7, 1994. Incorporated by reference to Exhibit (10)
to the Company's Report on Form 10-Q for the quarter ended June 30, 1994.
20
<PAGE>
10.07** Employment agreement between the Company and Solomon Dutka, dated March
24, 1995. Incorporated by reference to Exhibit 10.2 to the Company's Report
on Form 10-Q/A for the quarter ended March 31, 1995.
10.08** Employment agreement between the Company and H. Arthur Bellows, Jr.,
dated March 24, 1995. Incorporated by reference to Exhibit 10.3 to the
Company's Report on Form 10-Q/A for the quarter ended March 31, 1995.
10.09** Employment agreement between the Company and Carl Ravitch, dated March
24, 1995. Incorporated by reference to Exhibit 10.4 to the Company's Report
on Form 10-Q/A for the quarter ended March 31, 1995.
10.10** Employment agreement between the Company and Anthony Timiraos, dated
March 24, 1995. Incorporated by reference to Exhibit 10.5 to the Company's
Report on Form 10-Q/A for the quarter ended March 31, 1995.
10.11** Employment agreement between the Company and Alan J. Ritter, dated
September 13, 1995. Incorporated by reference to Exhibit 10 to the
Company's Report on Form 10-Q for the quarter ended September 30, 1995.
10.12* Lease between Tobias Associates and Audits & Surveys, Inc., dated
February 13, 1987.
10.13* Lease between Tobias Associates and Audits & Surveys, Inc., dated October
26, 1990.
10.14* Term Loan Agreement between Audits & Surveys Inc., Solomon Dutka and Carl
Ravitch and Chemical Bank, dated November 30, 1993 (the "Term Loan
Agreement").
10.15* Amendment and Waiver of certain terms of the Term Loan Agreement, dated
March 21, 1994.
10.16* Security Agreement between Audits and Surveys, Inc. and Chemical Bank,
dated November 14, 1991.
21.01* List of subsidiaries of the Company.
27.01* Financial Data Schedule.
- --------------------
* Filed herewith.
** Management contracts or compensatory plan or arrangement required to be
noted pursuant to Item 14(a)3 of Form 10-K.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Audits & Surveys Worldwide, Inc.
By: /S/ H. ARTHUR BELLOWS, JR. MARCH 29, 1996
-------------------------- --------------
H. Arthur Bellows, Jr Date
President and Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed on its behalf by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /S/ SOLOMON DUTKA MARCH 29, 1996
-------------------------- --------------
Solomon Dutka Date
Chairman, Chief Executive Officer and Director
By: /S/H. ARTHUR BELLOWS, JR. MARCH 29, 1996
-------------------------- --------------
H. Arthur Bellows, Jr. Date
President and Chief Operating Officer and Director
By: /S/CARL RAVITCH MARCH 29, 1996
-------------------------- --------------
Carl Ravitch Date
Executive Vice President and Director
By: /S/ANTHONY TIMIRAOS MARCH 29, 1996
-------------------------- --------------
Anthony Timiraos Date
Executive Vice President and Director
(Principal Financial Officer)
By: /S/ALAN J. RITTER MARCH 29, 1996
-------------------------- --------------
Alan J. Ritter Date
Sr. Vice President (Principal Accounting Officer)
By: /S/CHARLES E. BRADLEY MARCH 29, 1996
-------------------------- --------------
Charles E. Bradley Date
Director
By: /S/BRIAN G. DYSON MARCH 29, 1996
-------------------------- --------------
Brian G. Dyson Date
Director
<PAGE>
By: /S/MATTHEW GOLDSTEIN MARCH 29, 1996
-------------------------- --------------
Matthew Goldstein Date
Director
By: /S/ ROBERT MILLER MARCH 29, 1996
-------------------------- --------------
Robert Miller Date
Director
By: /S/WILLIAM NEWMAN MARCH 29, 1996
-------------------------- --------------
William Newman Date
Director
By: /S/SOL YOUNG MARCH 29, 1996
-------------------------- --------------
Sol Young Date
Director
By: /S/WILLIAM A. ZEBEDEE MARCH 29, 1996
-------------------------- --------------
William A. Zebedee Date
Director
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Audits & Surveys Worldwide, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Audits & Surveys
Worldwide, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity and cash flows
for the years ended December 31, 1995 and 1994 and November 28, 1993, and the
consolidated statements of income and stockholders' equity for the one-month
ended December 31, 1993. Our audits also included the financial statement
schedule listed in the Index at Item 14. These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Audits & Surveys Worldwide, Inc.
and Subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for the years ended December 31, 1995 and 1994,
and November 28, 1993 and results of their operations for the one-month ended
December 31, 1993 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
New York, New York
March 15, 1996
F-1
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1995 1994
CURRENT ASSETS:
<S> <C> <C>
Cash $ 936 $ 736
Accounts receivable:
Billed (net of allowance for doubtful accounts of $150 and $129) 8,687 7,413
Unbilled 2,366 1,948
Refundable income taxes 299 -
Prepaid expenses and inventories 1,320 700
Deferred income taxes 168 196
Other current assets 139 304
Net assets held for sale 983 -
--------- ----------
Total current assets 14,898 11,315
PROPERTY AND EQUIPMENT - Net 3,127 2,524
RECEIVABLE FROM SALE OF ASSETS 500 -
PREPAID PENSION COSTS 943 -
DEFERRED INCOME TAXES 3,398 793
DEFERRED MERGER COSTS - 1,112
OTHER ASSETS 2,021 734
--------------- --------------
TOTAL ASSETS $24,887 $16,478
=============== ==============
</TABLE>
See notes to consolidated financial statements. (Continued)
F-2
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
<S> <C> <C>
CURRENT LIABILITIES:
Short-term bank debt $ 1,200 $ -
Accounts payable and accrued expenses 4,877 2,941
Accrued payroll and bonuses 1,917 3,433
Notes payable to officers/stockholders - 1,500
Customer billings in excess of revenues earned 4,282 4,613
Income taxes payable - 595
Current portion of long-term debt 658 366
Current portion of capital lease obligations 75 44
--------------- --------------
Total current liabilities 13,009 13,492
LONG-TERM DEBT - Net of current portion 2,647 440
CAPITAL LEASE OBLIGATIONS - Net of current portion 222 104
DEFERRED INCOME TAX LIABILITIES 405 -
OTHER LIABILITIES 1,977 1,310
--------------- --------------
Total liabilities 18,260 15,346
--------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 1,000,000 shares authorized and
unissued - -
Common stock, no par value, 10,000 shares authorized and issued
at December 31, 1994 - 14
Common stock, $.01 par value, 30,000,000 shares authorized and
13,094,755 shares issued at December 31, 1995 131 -
Additional paid-in capital 4,486 334
Retained earnings 2,014 1,168
Cumulative foreign currency translation adjustment (4) (4)
--------------- --------------
6,627 1,512
Treasury stock, at cost (2,558 shares) - (380)
Total stockholders' equity 6,627 1,132
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $24,887 $16,478
=============== ==============
</TABLE>
See notes to consolidated financial statements. (Concluded)
F-3
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ONE-MONTH YEAR
ENDED ENDED
YEAR ENDED DECEMBER NOVEMBER
DECEMBER 31, 31, 28,
1995 1994 1993 1993
<S> <C> <C> <C> <C>
REVENUES $ 54,626 $ 43,917 $ 2,568 $ 40,173
---------------- ---------------- ----------------- ----------------
COSTS AND EXPENSES:
Direct costs 26,732 17,815 930 14,878
Selling, general and administrative expenses 24,410 20,696 1,759 18,846
Incentive bonuses 1,765 3,947 343 5,182
Stock bonuses - 779 - -
Provision in connection with retirement agreement - 341 - -
Interest expense 435 206 13 168
Gain on sale of investment in affiliate - (1,335) - -
Other (income) - net (269) (400) (55) (386)
---------------- ---------------- ----------------- ----------------
Total costs and expenses 53,073 42,049 2,990 38,688
INCOME BEFORE PROVISION (BENEFIT) FOR
INCOME TAXES 1,553 1,868 (422) 1,485
PROVISION (BENEFIT) FOR INCOME TAXES 707 852 (960) 162
---------------- ---------------- ----------------- ----------------
NET INCOME $ 846 $ 1,016 $ 538 $ 1,323
================ ================ ================= ================
NET INCOME PER SHARE $ .07 $ .10 $ .05
================ ================ =================
PRO FORMA INCOME DATA:
Income before provision for income taxes
- as reported $ 1,485
Pro forma income tax provision 677
----------------
Pro forma net income $ 808
================
Pro forma net income per share $ .08
================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 12,499,213 10,475,804 10,475,804 10,475,804
OUTSTANDING ================ ================ ================= ================
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLAR AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
COMMON STOCK COMMON STOCK ADDITIONAL CURRENCY TREASURY
$.01 PAR VALUE NO PAR VALUE PAID-IN RETAINED TRANSLATION STOCK
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENTS SHARES AMOUNTS TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 28, 1992 - $ - 10,000 $ 14 $ 15 $ 1,353 $ - 2,338 $ (319) $ 1,063
Net income - - - - - 1,323 - - - 1,323
Foreign currency adjustment - - - - - - (54) - - (54)
Purchase of treasury shares - - - - - - - 1,478 (254) (254)
Issuance of treasury shares to an - - - - - - - (260) 45 45
officer pursuant to a stockholders'
agreement
Distributions to stockholders - - - - - (868) - - - (868)
Acquisition of Audits & Surveys, - - - - - (145) - - - (145)
Canada Ventures, Inc.
BALANCE, NOVEMBER 28, 1993 - - 10,000 14 15 1,663 (54) 3,556 (528) 1,110
Net income - - - - - 538 - - - 538
BALANCE, DECEMBER 31, 1993 - - 10,000 14 15 2,201 (54) 3,556 (528) 1,648
Net income - - - - - 1,016 - - - 1,016
Foreign currency adjustment - - - - - - 50 - - 50
Stock bonuses - - - 319 - - (998) 148 467
Distributions to stockholders - - - - - (2,049) - - - (2,047)
BALANCE, DECEMBER 31, 1994 - - 10,000 14 334 1,168 (4) 2,558 (380) 1,132
Net income - - - - - 846 - - - 846
Recapitalization and merger 13,094,755 131 (10,000) (14) 4,152 - - (2,558) 380 4,649
BALANCE, DECEMBER 31, 1995 13,094,755 $131 - $ - $ 4,486 $ 2,014 $ (4) - $ - $6,627
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 29,
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 846 $1,016 $1,323
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:
Depreciation and amortization 581 531 549
Provision for bad debts 92 152 -
Deferred income taxes 240 13 15
Deferred compensation 31 30 25
Loss on investment in affiliate - - 17
Amortization of deferred charges 285 24 43
Increase in cash surrender value of officers' life insurance 50 (24) (79)
Accrued rent 160 (244) 36
Income from investment accounted for on the equity method - (72) (7)
Gain on sale of affiliate - (1,335) -
Stock bonuses to officers - 467 -
Minority interest (54) 49 -
Changes in operating assets and liabilities:
Accounts receivable (1,709) (3,205) (509)
Prepaid expenses 296 (63) (258)
Other current assets 202 (61) (61)
Other assets (1,227) (18) 36
Accounts payable and accrued expenses 638 1,553 162
Accrued payroll and bonuses (1,516) 362 316
Other liabilities 530
Customer billings in excess of revenues earned (331) 1,881 (175)
Payment of deferred compensation - (69) -
Income taxes payable (894) 837 -
Net assets held for sale (102) - -
Prepaid pension costs (64) - -
Other 71 105 -
--------- --------- ----------
Net cash (used in) provided by operating activities (1,875) 1,929 1,433
--------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan to affiliates - - (64)
Loans to officers/stockholders - (111) (123)
Repayment of officer/stockholders' loans - 171 88
Purchases of property and equipment (588) (253) (842)
Investment in subsidiary - - (56)
Cash received from Triangle merger 1,090 - -
Proceeds from sale of affiliate - 1,500 -
Payment of deferred merger costs (210) (1,113) -
--------- --------- ----------
Net cash provided by (used in) investing activities: 292 194 (997)
--------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable to officers/stockholders - 1,500 391
Principal payments on notes payable to officers/stockholders (1,500) (391) (710)
Proceeds from long-term debt - - 254
Principal payments on long-term debt (334) (407) (329)
Proceeds from short-term bank debt 3,700 750 -
Repayment of short-term bank debt - (1,500) -
Principal payments on capital lease obligations (101) (41) (30)
Distributions to stockholders - (2,049) (869)
Purchase of treasury shares - - (254)
Issuance of treasury shares - - 44
--------- --------- ----------
Net cash provided by (used in) financing activities 1,765 (2,138) (1,503)
--------- --------- ----------
(Continued)
See notes to consolidated financial statements.
F-6
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 29,
1995 1994 1993
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH $ - $ 49 $ (39)
========= ========= ==========
NET INCREASE (DECREASE) IN CASH $ 182 $ 34 $ (1,106)
CASH, BEGINNING OF YEAR 754 720 1,555
--------- --------- ----------
CASH, END OF YEAR $ 936 $ 754 $ 449
========= ========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ 334 $ 161 $ 141
========= ========= ==========
Income taxes $ 1,335 $ 1 $ 224
========= ========= ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Capital lease obligation incurred for purchase of equipment $ 250 $ 223
========= ==========
Financing of capital improvements $ 333
=========
The Company issued common stock in order to effect the merger with
Triangle. Such stock aggregated $4,488 (net of $1,323 of related merger
costs). In conjunction with the acquisition, liabilities were assumed as
follows:
Fair value of assets acquired (includes $1,090 of cash acquired) $ 5,267
Value of common stock issued (net of $1,323 of related merger 4,488
costs) ---------
Liabilities assumed $ 779
=========
</TABLE>
See notes to consolidated financial statements.
(Concluded)
F-7
<PAGE>
AUDITS & SURVEYS WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION - The consolidated
financial statements include the accounts of Audits & Surveys
Worldwide, Inc. (the "Company"), and its majority owned subsidiary,
Audits & Surveys Europe Ltd. ("A&SE"). The consolidated financial
statements also include the accounts of The Triangle Corporation
("Triangle") subsequent to the merger (Note 2). All significant
intercompany transactions and balances have been eliminated.
BUSINESS ACTIVITY - The Company is an international marketing
research firm providing its clients with a broad selection of
services and information used to assist in the development of
marketing, advertising and investment strategies for their products
and services. These services are provided to a wide variety of
commercial, industrial and academic organizations on a custom,
continuous tracking or syndicated basis.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
INVESTMENTS IN AFFILIATES - The equity method of accounting was used
by the Company in connection with investments in its Canadian and
Pacific joint ventures. These ventures were sold during 1995. Under
the equity method, original investments are recorded at cost and
adjusted for the Company's share of earnings or losses and
distributions.
INVENTORIES - Inventories, which consist primarily of components and
finished goods, are stated at the lower of cost (principally on a
first-in, first-out basis) or market.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost
less accumulated depreciation and amortization. Depreciation of
furniture and fixtures and equipment is provided using accelerated
methods over five to ten years. Amortization of leasehold
improvements and assets held under capital leases is provided using
the straight-line method over the lease term.
LONG-LIVED ASSETS - In March 1995, the Financial Accounting Standards
Board issued Statement No. 12 1, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of." This
statement is effective for fiscal years beginning after December 15,
1995. The Company does not expect the effect on its consolidated
financial condition and results of operations from the adoption of
this statement to be material.
FAIR VALUE OF FINANCIAL INSTRUMENTS - For financial instruments
including cash, accounts receivable accounts payable and accrued
expenses, it was assumed that the carrying amount approximated fair
value because of their short maturities. The carrying amount of
long-term debt, including capitalized lease
F-8
<PAGE>
obligations, approximates fair value because such debt is subject to
floating interest rates or, with respect to capitalized leases,
contain current market rates.
REVENUE RECOGNITION - The accompanying financial statements have been
prepared using the percentage-of-completion method of accounting for
certain contracts and, therefore, take into account the revenue, cost
and estimated earnings on contracts not yet completed. Income is
recognized on the excess of contract price over direct costs in the
percentage that actual costs to date relate to total estimated costs
to be incurred. At the time a loss on a contract becomes known, the
entire amount of the estimated loss is recognized in the financial
statements. In some instances, billing arrangements allow for amounts
billed to exceed the revenue recognized, thus resulting in a
liability. In those cases where revenue recognized exceeds billings
to customers, an unbilled receivable is recorded.
Revenues for the distribution of certain marketing research
information is recognized pro rata over the life of the contract.
INCOME TAXES - As of December 1, 1993, the Company terminated its S
corporation status. During the period the Company was an S
corporation, the provision for income taxes included New York City
general corporation tax and taxes for other states which do not
recognize S corporation status. No Federal income taxes were provided
as such taxes were paid directly by the Company's stockholders.
Deferred income taxes are recognized for the tax consequences of
differences between the bases of assets and liabilities for income
tax and financial statement reporting, based on enacted tax laws.
Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized.
STOCK OPTIONS AND WARRANTS - In October 1995, the Financial
Accounting Standards Board issued Statement of Financial Standards
No. 123, "Accounting for Stock-Based Compensation," which requires
adoption of its disclosure provisions for fiscal years beginning
after December 15, 1995 and adoption of the measurement and
recognition provisions for non-employee transactions for fiscal years
beginning after December 15, 1995. The new standard defines a fair
value method of accounting for stock options and other equity
instruments. Under the fair value method, compensation cost is
measured at the grant date based on the fair value of the award and
is recognized over the service period, which is usually the vesting
period.
Pursuant to the new standard, companies are encouraged but are not
required, to adopt the fair value method of accounting for employee
stock-based transactions. Companies are also permitted to continue to
account for such transactions under Accounting Principles Board
Option No. 25, "Accounting for Stock Issued to Employees," but would
be required to disclose in a note to the financial statements pro
forma net income and pro forma net income per share as if the Company
had applied the new method of accounting. The new standard also
requires increased disclosure for stock-based compensation
arrangements regardless of the method chosen to measure and recognize
compensation for employee stock-based arrangements.
The accounting requirements of the new method are effective for all
transactions entered into during the fiscal year of adoption. The
Company has not yet determined if it will elect to change to the fair
value method, nor has it determined the effect the new standard will
have on net income and net income per share should it elect to make
such a change.
F-9
<PAGE>
TRANSLATION OF FOREIGN CURRENCIES - Financial statements of the
Company are reported in U.S. dollars based on the determination that
the U.S. dollar is the Company's functional currency. A&SE, using the
pound as its functional currency, translates its financial statements
into U.S. dollars. Assets and liabilities are translated at the rates
of exchange in effect at year end; common stock and additional
paid-in capital are translated using historical rates and revenue and
expense accounts are translated at the average rates of exchange in
effect during the period. Translation adjustments are reflected as a
separate component of stockholders' equity.
NET INCOME PER SHARE AND PRO FORMA NET INCOME PER SHARE - The number
of shares used in the determination of net income per share
represents the weighted average number of common and common
equivalent shares outstanding during the periods presented. Common
stock equivalents include shares issuable under the Company's stock
option plan when dilutive. Shares outstanding have been retroactively
adjusted for the number of equivalent shares received in the Merger.
Pro forma net income has been adjusted to reflect a tax provision
which reflects the actual taxes that would have been paid had the
Company been a C corporation for fiscal 1993.
2. MERGER
On March 24, 1995, Audits & Surveys, Inc. (A&S) and The Triangle
Corporation ("Triangle") consummated a merger pursuant to which A&S
was merged with and into Triangle. Triangle was the surviving
corporation and the separate existence of A&S ceased. The name of the
merged corporation was changed to "Audits & Surveys Worldwide, Inc."
Each share of Triangle's common stock outstanding prior to the
consummation of the Merger remained outstanding. Each share of A&S'
common stock outstanding prior to the Merger was exchanged for
1,407.565 shares of Triangle's common stock. Upon consummation of the
Merger, the holders of Triangle's common stock immediately prior to
the Merger owned 20% of the Combined Company's common stock and the
holders of A&S' common stock immediately prior to the Merger owned
80% of the Company's common stock.
For accounting and financial reporting purposes, the Merger has been
treated as a reverse acquisition. Accordingly, A&S was deemed to have
acquired Triangle's net assets in return for a 20% equity interest in
the Company. Inasmuch as Triangle's operations were limited. the
purchase price was recorded at the fair value of Triangle's net
assets acquired plus approximately $1,323,000 of merger related
expenses. Any excess purchase price has been charged to paid-in
capital. No goodwill has been recorded in connection with this
transaction.
At the date of Merger, Triangle had net operating loss carryforwards
of approximately $7,600,000. No deferred tax assets were initially
recognized by the Company due to the limitations in the tax laws
relating to the change in Triangle's stock ownership and the planned
disposition of Triangle's only two operating entities subsequent to
the Merger. In the fourth quarter of 1995, management reevaluated its
tax planning alternatives with respect to the disposition of one of
Triangle's operating entities, thereby permitting the limited
utilization of Triangle's operating loss carryforwards. Accordingly,
in December 1995, the Company recognized approximately $2,600,000 of
deferred tax assets with a corresponding increase in paid-in capital.
The accompanying consolidated financial statements include the
accounts of Triangle subsequent to the Merger. Triangle's operations
for the period March 24, 1995 to March 31, 1995 were not significant.
For convenience, the acquisition has been recorded as of March 31,
1995 for accounting purposes.
F-10
<PAGE>
The following unaudited pro forma condensed consolidated operating
information is presented to illustrate the effects of certain
adjustments to the historical statements of operations of the Company
that would result from the merger and is presented as if the merger
occurred on January 1, 1 994.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994
(UNAUDITED)
(000'S)
<S> <C> <C>
Revenues $ 54,766 $ 44,771
================ ==============
Net income $ 753 $ 1,321
================ ==============
Net income per share $ 0.06 $ .10
================ ==============
Weighted average shares outstanding 13,094,755 13,094,755
================ ==============
3. PROPERTY AND EQUIPMENT
Furniture and fixtures $ 413 $ 368
Equipment 1,873 1,566
Leasehold improvements 3,183 2,729
Assets held under capital leases (Note 6) 386 223
---------------- ------------
Total 5,855 4,886
Less accumulated depreciation and
amortization 2,728 2,362
---------------- ------------
Property and equipment - net $ 3,127 $ 2,524
================ ============
</TABLE>
Depreciation and amortization expense for the years ended December
3,1 995 and 1994, and November 28, 1993 and for the one-month period
ended December 31, 1993 were $581,000, $531,000, $549,000 and
$43,000, respectively.
F-11
<PAGE>
4. OTHER ASSETS
Other assets consist of the following:
DECEMBER 31,
1995 1994
Cash surrender value of officer's life insurance $ 243 $ 293
Deferred charges 1,649 266
Security deposits 129 138
Due from officers/stockholders - 37
------- -------
$2,021 $734
======= =======
Deferred charges at December 31, 1995 principally include
approximately $1,286,000, representing the unamortized portion of
costs related to an agreement with a supplier for retail sales data
(see Note 15).
Deferred charges also include commission payments made in connection
with the sublease of portions of the Company's premises. Such amounts
have been deferred and are being amortized over the lease terms of
the related subleases.
5. DEBT
<TABLE>
DECEMBER 31,
1995 1994
($000)
<S> <C> <C>
SHORT-TERM DEBT
Short term loans payable to a bank pursuant to a $2,500,000 credit facility;
interest is payable at the bank's prime rate (8.5% at December 31, 1995) or
LIBOR plus 250 basis points. The line of credit matures in June 1997 and is
collateralized by accounts receivable (a). $1,200 $ -
====== -------
LONG-TERM DEBT
Term loan payable to a bank with interest at 1/2% over the bank's prime rate or
LIBOR plus 300 basis points. The loan is repayable in twenty quarterly
installments of $125,000 beginning in June 1996 and is collateralized by
accounts receivable (a). $2,500 $ -
F-12
<PAGE>
DECEMBER 31,
1995 1994
($000)
Note payable to a bank with interest at 1% above the prime rate, due in
quarterly installments of $62,500 beginning March 1995 through
September 1997. 500 688
Note payable to subtenant for leasehold improvements, due in quarterly
installments of $15,000, including interest at the rate of 11.02%
through January 2003. 303 -
Note payable to a former stockholder with interest at 7 percent per annum, due
in quarterly installments of principal and interest of $23,600
through December 1995. - 90
Installment note payable to a finance company, due in monthly installments of
$2,300 including interest at the rate of 12.35 percent. This note is
collateralized by certain computer equipment and
matures in February 1996. 2 28
------- ------
Total 3,305 806
Less current portion 658 366
------- ------
Long-term portion $2,647 $440
======= ======
</TABLE>
F-13
<PAGE>
a. On March 11, 1996, the Company received a commitment from
its bank to refinance its existing $5,000,000 short-term
facility into a $2,500,000 term loan and a $2,500,000
secured line of credit. At December 31, 1995, the Company
reclassified $2,500,000 of its then outstanding short-term
indebtedness to reflect the commitment. The term loan and
line of credit contain customary affirmative and negative
covenants including those requiring the Company to maintain
certain financial ratios. The weighted average interest
rate in effect for the year ended December 31, 1995 under
the prior short-term credit facility was 8.74%.
Long-term debt matures in each of the years subsequent to December
31, 1995, as follows:
YEAR ENDING
DECEMBER 31, ($000)
1996 $ 658
1997 785
1998 538
1999 542
2000 547
Thereafter 235
--------
$3,305
========
6. CAPITAL LEASE OBLIGATIONS
During 1993, the Company entered into lease agreements for computer
and office equipment that have been accounted for as capital leases
due to the provisions of the lease agreements. The equipment has been
recorded in the accompanying consolidated financial statements at the
present value of the future minimum lease payments.
At December 31, 1995, future minimum lease payments are as follows:
YEAR ENDING
DECEMBER 31, ($000)
1996 $ 109
1997 91
1998 62
1999 59
2000 63
----------
Total future minimum lease payments 384
Less amounts representing interest 87
Present value of future minimum lease
payments (including $75,000 payable
currently) $ 297
----------
F-14
<PAGE>
Accumulated depreciation related to assets held under capital leases
at December 31, 1995 was $119,000.
7. INCOME TAXES
The components of the provision (benefit) for income taxes are as
follows:
<TABLE>
<CAPTION>
ONE-MONTH
YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, NOVEMBER 28,
------------ ------------ -----------
1995 1994 1993 1993
($000)
<S> <C> <C> <C> <C>
Federal $237 $672 $(112) $ -
State and local 200 166 (60) 146
Foreign 30 1 - -
Deferred 240 13 (788) 16
------- ------ -------- ------
$707 $852 $(960) $ 162
======= ====== ======== ======
</TABLE>
The tax effects of temporary differences which give rise to deferred
tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
<S> <C> <C>
($000)
Current deferred income tax assets:
Accrued vacation pay $ 101 $ 130
Other 67 66
------- --------
$ 168 $ 196
======= ========
Noncurrent deferred income tax assets:
Net operating loss carryforwards $2,468 $ -
Accrued rent 539 432
Basis of leasehold improvements 252 229
Deferred compensation 139 132
--- ---
$3,398 $ 793
======= ========
Deferred income tax liabilities:
Prepaid pension costs $ (405) $ -
======= ========
</TABLE>
The following reconciles Federal taxes at the statutory rate to the
tax expense (benefit) recorded in the financial statements:
F-15
<PAGE>
<TABLE>
<CAPTION>
ONE
MONTH
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1993
($000)
<S> <C> <C> <C>
Federal taxes at statutory rate $ 528 635 $(143)
State taxes, net of federal benefit 132 110 (40)
Recognition of deferred taxes upon conversion
to C corporation status - - (788)
Other 47 107 11
------- ------- ------
$707 $ 852 $(960)
======= ======= ======
</TABLE>
Prior to December 1, 1993, the Company was taxed as an S corporation.
Accordingly, no reconciliation for fiscal 1993 has been provided as
taxes on earnings of the Company, except for certain state and local
income taxes, were the responsibility of the stockholders.
8. DEFERRED COMPENSATION
The Company is a party to deferred compensation agreements with
certain key employees. Amounts due under such agreements amounted to
$324,000 and $293,000 at December 31, 1995 and 1994, respectively.
The costs related to these agreements for the years ended December
31, 1995 and 1994, and November 28, 1993 and for the one-month period
ended December 31, 1993 were $31,000, $30,000, $25,000, and $0,
respectively.
9. ACCRUED RENT
The Company has entered into various lease agreements which provide
for scheduled rent increases and free rent periods. In accordance
with generally accepted accounting principles, rent expense has been
recorded on the straight-line basis over the life of the leases. At
December 31, 1995 and 1994, accrued rent of $1,124,000 and $964,000,
respectively, represents that portion of rent expense (net of
sublease income) which has not yet been paid.
10. STOCKHOLDERS' EQUITY
In December 1992, the Company acquired 1,478 shares from a former
officer pursuant a stockholders' agreement for an aggregate cost of
$254,000. The Company also issued 260 shares of stock to another
officer of the Company pursuant to a stockholders' agreement. Such
stock was issued from treasury shares at a cost of $45,000.
On July 21, 1994, the Company issued 998 shares of common stock to
certain key employees, some of whom were already shareholders of the
Company. In connection with this transaction, the Company charged
$779,000 to operations representing the estimated fair value of the
stock of $467,000 plus the estimated tax cost to the recipients of
$312,000. Upon the effectiveness of the merger (Note 2), all existing
redemption agreements terminated and stockholders' agreements became
effective which among
F-16
<PAGE>
other things, precludes the sale of the Company's stock by the
parties to the agreements for a period of two years, subject to
certain limited exceptions.
During the years ended December 31, 1995, December 31, 1994, and
November 28, 1993 and for the one-month ended December 31, 1993, the
Company declared and paid distributions of $0, $2,049,000 and
$868,000, respectively.
11. STOCK OPTION PLAN
The Company's 1994 Stock Option Plan, which became effective upon
consummation of the Merger (Note 2), provides that the maximum number
of shares of the Company's common stock for which options may be
granted is 650,000 shares. Options granted may either be incentive
stock options or non qualified options. As of December 31, 1995 no
options had been granted. On March 14, 1996, options to purchase
474,000 shares were granted at an exercise price of $2 per share,
under the plan.
12. RELATED PARTY TRANSACTIONS
Notes payable to officers/stockholders at December 31, 1994 represent
temporary working capital advances. Such notes were repaid in 1995 by
monthly payments of principal and interest at a rate of 7.75 percent.
On November 28, 1994, effective December 6, 1994, the Company sold
its investment in IPSA for an aggregate of $1,500,000, thereby
realizing a net gain of $1,335,000.
The Company is obligated under various incentive compensation
agreements with certain key employees. Such agreements provide for
incentive bonuses based on the financial performance of their
respective divisions. Total incentive bonuses amounted to
approximately $1,765,000, $3,947,000 and $5,183,000, in the years
ended December 31, 1995 and 1994, and November 28, 1993,
respectively, and $343,000 for the one-month ended December 31, 1993.
On January 31, 1994, the Company entered into an agreement with one
of its shareholders who owned approximately 9% of the Company's
outstanding stock ("Retirement Agreement"), which provided for, among
other things, the payment of salary, incentive bonuses and special
bonuses and the repurchase of the shareholder's stock on November 30,
1995 at a price equal to two times the book value of those shares
determined as of the redemption date. On August 19, 1994 the
shareholder died. On February 9, 1995 the Company entered into a
revised agreement with the estate of the deceased shareholder which
amended the Company's obligations under the Retirement Agreement and
provided for aggregate payments of $341,000 through August 1995 in
full settlement of all obligations to the estate. Additionally, the
estate will not be required to redeem the shares of common stock held
by it. During fiscal 1993, the Company accrued approximately $82,000
of incentive bonus for this individual.
13. ECONOMIC DEPENDENCY AND CONCENTRATION OF CREDIT RISK
Approximately 23 percent, 21 percent, and 32 percent of the Company's
revenues for the years ended December 31, 1995 and 1994, and November
28, 1993, respectively, and 36 percent for the one-month ended
December 31, 1993 were derived from one client. No other client
accounted for more than 10% of the Company's revenues.
F-17
<PAGE>
14. EMPLOYEE BENEFIT PLANS
DEFINED CONTRIBUTION PLAN - The Company sponsors a defined
contribution plan covering substantially all of its employees.
Contributions to the plan amounted to $173,000, $192,000 and $201,000
for the years ended December 31, 1995 and 1994 and November 28, 1993,
respectively, and $16,000 for the one month ended December 31, 1993.
The Company's contributions are determined annually by management.
DEFINED BENEFIT PLAN - The Company maintains a retirement plan
covering the former employees of Triangle. Pension costs are based on
the provisions of SFAS 87. The net periodic pension credit for the
period from March 31, 1995 (the date of the merger) to December 31,
1995 included the following components:
($000)
Service-cost benefits $ 24
Interest cost on projected benefit obligation 273
Return on plan assets (361)
--------
Net periodic pension credit $ (64)
========
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5%, the rate
of increase in future compensation levels was 4% and the weighted
average long-term rate of return on assets was 8.5%.
The following table indicates the funded status of the plan and the
amount recognized as prepaid pension costs in the consolidated
balance sheet at December 31, 1995:
($000)
Actuarial present value of benefit obligations:
Accumulated benefits obligation, including vested
benefits of $5,202,000 $ (5,216)
============
Projected benefit obligation $ (5,268)
Plan assets at fair value, primarily listed stocks and
corporate obligations 6,269
------------
Plan assets in excess of projected benefit obligation 1,001
Unrecognized net gain (58)
------------
Prepaid pension costs $ 943
============
15. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES - The Company is obligated under lease agreements
for office space which expire at various dates through February 28,
2003. Under the terms of the leases the Company is obligated to pay
F-18
<PAGE>
its portion of operating costs and real estate tax increases. Rent
expense for the years ended December 31, 1995 and 1994, and November
28, 1993 was approximately $1,676,000, $1,610,000, and $1,61 0,000,
respectively, and $122,000 for the one-month ended December 31, 1993.
Rental income for the years ended December 31, 1995 and 1994, and
November 28, 1993 was approximately $667,000, $937,000 and $937,000,
respectively and $78,000 for the one-month ended December 31, 1993.
Future minimum lease conunitments and sublease income at December 31,
1995 are as follows:
YEAR ENDING LEASE SUBLEASE
DECEMBER 31, COMMITMENT INCOME
1996 $ 1,557 $ 786
1997 1,610 825
1998 1,769 854
1999 1,719 875
2000 1,669 875
Thereafter 3,583 1,896
------------ ------------
$ 11,907 $ 6,111
============ ============
On March 24, 1995, the Company entered into employment and
compensation agreements with its Chief Executive Officer ("CEO"), its
President and two of its Executive Vice-Presidents. The agreement
with the CEO provides that he will be employed for a period of five
years at a base salary of $350,000 per annum, plus discretionary
bonuses as may be determined by the Board of Directors. At any time
after March 24, 1998, the CEO may elect to terminate his status as a
full-time employee and become a consultant to the Company for the
balance of the term of his employment agreement and receive a
consulting fee of $175,000 per annum. The President and two Executive
Vice-Presidents have entered into employment agreements, each for a
term of three years at a salary of $300,000, $250,000, and $195,000
per annum, respectively, as well as discretionary bonuses as may be
determined by the Board of Directors.
On February 6, 1996, the Company entered into a five-year agreement
with a supplier whereby the Company will pay $1,500,000 for retail
sales data and other rights as specified in the agreement. In the
event of termination, the amounts owed to the supplier would be
prorated based on the proportion of sales data received during the
period prior to termination. As of December 31, 1995, the Company has
paid the supplier $1,000,000. The balance of $500,000 is to be paid
over a five-year period.
Triangle's inactive subsidiary, Diamond Tool and Horseshoe Co., now
known as Tri-North, Inc., is one of a large number of third-party
defendants in an action brought by the U.S. Environmental Protection
Agency. The action involves the cleanup of the Arrowhead Refinery
Superfund site in Minnesota and the defendants are seeking the right
to reimbursement of a portion of their costs from the third-party
defendants. In prior years, Triangle expensed $ 1,000,000, excluding
legal costs, relating to this action. Any further liability with
respect to this action would constitute an Assumed Liability (as
defined) under the terms of an agreement with Cooper Industries, Inc.
("Cooper") dated August 4, 1998 pursuant to which Triangle sold
substantially all of the assets constituting its mechanics hand tool,
horseshoe and former tool business. Cooper is obligated to indemnify
the Company against any such liability (including the cost of
obtaining a settlement or consent order releasing the Company from
further
F-19
<PAGE>
liability). However, the final conditional payment due from Cooper of
$500,000 (plus interest thereon) is due when and if the Company
obtains a satisfactory settlement or consent order releasing it from
further liability with respect to this action. Notwithstanding the
fact that the Company's maximum exposure from this litigation is
therefore in effect limited to the loss of this $500,000 conditional
payment, a range of possible loss cannot be reasonably estimated. The
Company's ultimate liability in this matter is not, however, expected
to have a material effect on the Company's consolidated results of
operations or financial position.
16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Unaudited summary results of operations for 1995 and 1994 (in
thousands, except for per share data) were as follows:
<TABLE>
<CAPTION>
1995 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Revenues $13,313 $14,519 $12,783 $14,011
Income (loss) before taxes 929 619 (925) 903
Net income (loss) 567 291 (490) 478
Income (loss) per share 0.05 0.02 (0.04) 0.04
1994
Revenues 9,551 10,154 12,109 12,103
Income (loss) before taxes 483 37 (246) 1,594
Net income (loss) 328 (136) (158) 982
Income (loss) per share) 0.03 (0.01) (0.02) 0.10
</TABLE>
*******
F-20
<PAGE>
ITEM 14. FINANCIAL STATEMENT SCHEDULE
AUDITS & SURVEYS WORLDWIDE INC. AND SUBSIDIARIES
SCHEDULE II -VALUATION AND QUALIFYING ACCOUNTS (000'S)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
Balance at Charge
Beginning to Profit Balance at
Description of Period and Loss (A) End of Period
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year ended November 28, 1993 $ - $ - $ - $ -
Month ended December 31, 1993 - - - -
Year ended December 31, 1994 - 129 - 129
Year ended December 31, 1995 $ 129 $ 92 $ 71 $ 150
(A) Represents writeoffs of uncollectible accounts receivable
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
2.01 Merger Agreement between The Triangle Corporation and Audits and Surveys,
Inc., dated as of August 11, 1994 (the "Merger Agreement"). Incorporated by
reference to Exhibit (2) (I) to the Company's Report on Form 10-Q for the
quarter ended September 30, 1994.
2.02 Amendment No. 1 to the Merger Agreement, dated as of October 7, 1994.
Incorporated by reference to Exhibit (2) (ii) to the Company's Report on
Form 10- Q for the quarter ended September 30, 1994.
2.03 Amendment No. 2 to the Merger Agreement, dated as of January 6, 1995.
Incorporated by reference to Exhibit 2 (iii) to the Company's Report on
Form 10- K for the year ended December 31, 1994.
2.04 Amendment No. 3 to the Merger Agreement, dated as of January 31, 1995.
Incorporated by reference to Exhibit 2 (iv) to the Company's Report on Form
10- K for the year ended December 31, 1994.
2.05 Amendment No. 4 to the Merger Agreement, dated as of February 8, 1995.
Incorporated by reference to Exhibit 2 (v) to the Company's Report on Form
10-K for the year ended December 31, 1994.
2.06 Stock and Asset Purchase Agreement between Cooper Industries, Inc. and The
Triangle Corporation, dated April 9, 1993 (the "Stock and Asset Purchase
Agreement"). Incorporated by reference to Exhibit (2) to the Company's
Report on Form 10-Q for the quarter ended March 31, 1993.
2.07 Amendment No. 1 to the Stock and Asset Purchase Agreement, dated April 30,
1993. Incorporated by reference to Exhibit (2) (ii) to the Company's Report
on Form 10-Q for the quarter ended June 30, 1993.
2.08 Amendment No. 2 to the Stock and Asset Purchase Agreement, dated August 4,
1993. Incorporated by reference to Exhibit (2) (iii) to the Company's
Report on Form 10-Q for the quarter ended June 30, 1993.
2.09 Asset Purchase Agreement between The Triangle Corporation and SPX
Corporation, dated as of December 21, 1990. Incorporated by reference to
Exhibit (28) (I) to the Company's Report on Form 8-K, dated January 15,
1991.
3.01 Restated and Amended Certificate of Incorporation of the Company.
Incorporated by reference to Exhibit 4.1 to the Company's Report on Form
10- Q/A for the quarter ended March 31, 1995.
3.02 Amended and Restated By-laws of the Company. Incorporated by reference to
Exhibit 4.2 to the Company's Report on Form 10-Q/A for the quarter ended
March 31, 1995.
<PAGE>
4.01 Registration Rights Agreement among the Company, H. Arthur Bellows, Jr.,
Carl Ravitch and the Estate of Irving I. Roshwalb, dated March 24, 1995.
Incorporated by reference to Exhibit 4.3 to the Company's Report on Form
10- Q/A for the quarter ended March 31, 1995.
4.02 Shareholders Agreement among the Company, H. Arthur Bellows, Jr., Solomon
Dutka, Solomon Dutka Trust for James Dutka, Solomon Dutka Trust for Michael
Dutka, Solomon Dutka Trust for Joyce Dutka, Carl Ravitch, Anthony Timiraos,
Dexter Neadle, Lawrence Karp, George Fabian, Fred Winkel, Joel S. Klein,
William Liebman, Nagesh Gupta, Thomas Ryan, Joel Dorfman, Josh Libresco,
Donald Pace, Paul Donato, Fred Nicholson and Joel J. Klein, dated March 24,
1995. Incorporated by reference to Exhibit 4.4 to the Company's Report on
Form 10-Q/A for the quarter ended March 31, 1995.
4.03 Shareholders Agreement between The Triangle Corporation and the Estate of
Irving I. Roshwalb, dated February 9, 1995. Incorporated by reference to
Exhibit 4.5 to the Company's Report on Form 10-Q/A for the quarter ended
March 31, 1995.
10.01** The Triangle Salaried Profit Sharing Plan. Incorporated by reference to
Exhibit (10) (vi) to the Company's Report on Form 10-K for the year ended
December 31, 1992.
10.02** The Triangle Salaried Pension Guarantee Plan. Incorporated by reference
to Exhibit (10) (vii) to the Company's Report on Form 10-K for the year
ended December 31, 1992.
10.03** The Triangle Salaried Incentive Savings Plan. Incorporated by reference
to Exhibit (10) (viii) to the Company's Report on Form 10-K for the year
ended December 31, 1992.
10.04**The Triangle Retirement Savings Plan Trust Agreement. Incorporated by
reference to Exhibit (10) (ix) to the Company's Report on Form 10-K for the
year ended December 31, 1992.
10.05** 1994 Stock Option Plan of The Triangle Corporation. Incorporated by
reference to Exhibit 10.1 to the Company's Report on Form 10-Q/A for the
quarter ended March 31, 1995.
10.06** Letter Agreement between The Triangle Corporation and Alan J. Ritter,
Vice President - Finance with respect to severance payments when and if
terminated, dated July 7, 1994. Incorporated by reference to Exhibit (10)
to the Company's Report on Form 10-Q for the quarter ended June 30, 1994.
10.07** Employment agreement between the Company and Solomon Dutka, dated March
24, 1995. Incorporated by reference to Exhibit 10.2 to the Company's Report
on Form 10-Q/A for the quarter ended March 31, 1995.
<PAGE>
10.08** Employment agreement between the Company and H. Arthur Bellows, Jr.,
dated March 24, 1995. Incorporated by reference to Exhibit 10.3 to the
Company's Report on Form 10-Q/A for the quarter ended March 31, 1995.
10.09** Employment agreement between the Company and Carl Ravitch, dated March
24, 1995. Incorporated by reference to Exhibit 10.4 to the Company's Report
on Form 10-Q/A for the quarter ended March 31, 1995.
10.10** Employment agreement between the Company and Anthony Timiraos, dated
March 24, 1995. Incorporated by reference to Exhibit 10.5 to the Company's
Report on Form 10-Q/A for the quarter ended March 31, 1995.
10.11** Employment agreement between the Company and Alan J. Ritter, dated
September 13, 1995. Incorporated by reference to Exhibit 10 to the
Company's Report on Form 10-Q for the quarter ended September 30, 1995.
10.12* Lease between Tobias Associates and Audits & Surveys, Inc., dated
February 13, 1987.
10.13* Lease between Tobias Associates and Audits & Surveys, Inc., dated October
26, 1990.
10.14* Term Loan Agreement between Audits & Surveys Inc., Solomon Dutka and Carl
Ravitch and Chemical Bank, dated November 30, 1993 (the "Term Loan
Agreement").
10.15* Amendment and Waiver of certain terms of the Term Loan Agreement, dated
March 21, 1994.
10.16* Security Agreement between Audits and Surveys, Inc. and Chemical Bank,
dated November 14, 1991.
21.01* List of subsidiaries of the Company.
27.01* Financial Data Schedule.
- --------------------
* Filed herewith.
** Management contracts or compensatory plan or arrangement required to be
noted pursuant to Item 14(a)3 of Form 10-K.
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York
AGREEMENT OF LEASE, made as of this 13th day of February 1987, between
TOBIAS ASSOCIATES, 450 Seventh Avenue, New York, N.Y. 10123
party of the first part, hereinafter referred to as OWNER, and
AUDITS AND SURVEYS, INC., 1 Park Avenue, New York, N.Y.
party of the second part, hereinafter referred to as TENANT,
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from Owner
entire 2nd, 3rd, 4th, 5th and 6th floors
in the building known as 650 Sixth Avenue
in the Borough of Manhattan, City of New York, for the term of Sixteen (16)
Years
(Or until such term shall sooner cease and expire as
hereinafter provided to commence on the 1st
day of March nineteen hundred and eighty-seven and to end on the 28th day of
February Two Thousand and three both dates inclusive, at an annual rental rate
of
SEE ATTACHED RIDER
By check subject to collection
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever.
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
RENT 1. Tenant shall pay the rent as above and as hereinafter
provided.
OCCUPANCY 2. Tenant shall use and occupy demised premises for general and
executive offices of the Tenant, including data processing
and printing (not trade printing) and for no other purpose.
TENANT 3. Tenant shall make no changes in or to the demised premises
ALTERATIONS: of any nature without Owner's prior written consent. Subject
to the prior written consent of Owner, and to the provisions
of this article, Tenant at Tenant's expense, may make
alterations, installations, additions or improvements which
are non-structural and which do not affect utility services
or plumbing and electrical lines, in or to the interior of
the demised premises. Tenant shall, before making any
alterations, additions, installations or improvements, at
its expense, obtain all permits, approvals and certificates
required by any governmental or quasi-governmental bodies
and (upon completion) certificates of final approval thereof
and shall deliver promptly duplicates of all such permits,
approvals and certificates to Owner and Tenant agrees to
carry and will cause Tenant's contractors and
sub-contractors to carry such workman's compensation,
general liability, personal and property damage insurance as
Owner may require. If any mechanic's lien is filed against
the demised premises, or the building of which the same
forms a part, for work claimed to have been done for, or
materials furnished to, Tenant, whether or not done pursuant
to this article, the same shall be discharged by Tenant
within thirty days thereafter, at Tenant's expense, by
filing the bond required by law. All fixtures and all
paneling, partitions, railings and like installations,
installed in the premises at any time, either by Tenant or
by Owner in Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner, by
notice to Tenant no later than sixty (60) days prior to the
date fixed as the termination of this lease, elects to
relinquish Owner's right thereto and to have then removed by
Tenant, in which event the same shall be removed from the
premises by Tenant prior to the expiration of the lease, at
Tenant's expense. Nothing in this Article shall be construed
to give Owner title to or to prevent Tenant's removal of
trade fixtures, moveable office furniture and equipment, but
upon removal of any such from the premises or upon removal
of other installations as may be required by owner, Tenant
shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and
repair any damage to the demised premises or the building
due to such removal. All property permitted or required to
be removed, by Tenant at the end of the term remaining in
the premises after Tenant's removal shall be deemed
abandoned and may, at the election of Owner, either be
retained as Owner's property or may be removed from the
premises by Owner, at Tenant's expense.
MAINTENANCE 4. Tenant shall, throughout the term of this lease, take good
AND care of the demised premises and the fixtures and
REPAIRS: appurtenance therein. Tenant shall be responsible for all
damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof,
whether requiring structural or nonstructural repairs caused
by or resulting from carelessness, omission, neglect or
improper conduct of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any
work, labor, services or equipment done for or supplied to
Tenant or may subtenant or arising out of the installation,
use or operation of the property or equipment of Tenant or
any subtenant. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of
Tenant's fixtures, furniture and equipment. Tenant shall
promptly make, at Tenant's expense, all repairs in and to
the demised premises for which Tenant is responsible. Any
other repairs in or to the building or the facilities and
systems thereof for which Tenant is responsible shall be
performed by Owner at the Tenant's expense after reasonable
notice. Owner shall maintain in good working order and
repair the exterior and the structural portions of the
building, including the structural portions of its demised
premises, and the public portions of the building interior
and the building plumbing, electrical, heating and
ventilating systems serving the
-1-
<PAGE>
demised premises. Tenant agrees to give prompt notice of any
defective condition in the premises which Tenant knew or
should have known about and for which Owner may be
responsible hereunder. There shall be no allowance to Tenant
for diminution of rental value and no liability on the part
of Owner by reason of inconvenience, annoyance or injury to
business arising from Owner or others making repairs,
alterations, additions or improvements in or to any portion
of the building or the demised premises or in and to the
fixtures, appurtenances or equipment thereof. It is
specifically agreed that Tenant shall not be entitled to any
setoff or reduction of rent by reason of any failure of
Owner to comply with the covenants of this or any other
article of this Lease. Tenant agrees that Tenant's sole
remedy at law in such instance will be by way of an action
for damages for breach of contract. The provisions of this
Article 4 shall not apply in the case of fire or other
casualty which are dealt with in Article 9 hereof.
WINDOW 5. Tenant will not clean nor require, permit, suffer or allow
CLEANING: any window in the demised premises to be cleaned from the
outside in violation of Section 202 of the Labor Law or any
other applicable law or of the Rules of the Board of
Standards and Appeals, or of any other Board or body having
or asserting jurisdiction.
REQUIREMENTS 6. Prior to the commencement of the lease term, if Tenant is
OF LAW, then in possession, and at all times thereafter, Tenant, of
FIRE INSURANCE, Law, at Tenant's sole cost and expense, shall promptly
FLOOR LOADS: comply with all present and future laws, orders and
regulations Fire Insurance, of all state, federal, municipal
and local governments, departments, commissions and boards
and any direction of Floor Loads: any public officer
pursuant to law, and all orders, rules and regulations of
the New York Board of Fire Underwriters, Insurance Service
Office, or any similar body which shall impose any
violation, order, or duty upon Owner or Tenant with respect
to the demised premises, whether or not arising out of
Tenant's use or manner of use thereof, (including Tenant's
permitted use) or, with respect to the building if arising
out of Tenant's use or manner of use of the premises or the
building (including the use permitted under the lease).
Nothing herein shall require Tenant to make structural
repairs or alterations unless Tenant has, by its manner of
use of the demised premises or method or operation therein,
violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto, and such
violation related to alteration made by Tenant. Tenant may,
in its [text in original illegible] to all violations
arising out of Tenant's willful, [text in original
illegible], after securing Owner to Owner's satisfaction
against all damages, interest, penalties and expenses,
including, but not limited to, reasonable attorney's fees,
by cash deposit or by surety bond in an amount and in a
company satisfactory to Owner, contest and appeal any such
laws, ordinances, orders, rules, regulations or requirements
provided same is done with all reasonable promptness and
provided such appeal shall not subject Owner to prosecution
for a criminal offense or constitute a default under any
lease or mortgage under which Owner may be obligated, or
cause the demised premises or any part thereof to be
condemned or vacated. Tenant shall not do or permit any act
or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict
with public liability, fire or other policies of insurance
at any time carried by or for the benefit of Owner with
respect to the demised premises or the building of which the
demised premises form a part, or which shall or might
subject Owner to any liability or responsibility to any
person or for property damage. Tenant shall not keep
anything in the demised premises except as now or hereafter
permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization or other
authority having jurisdiction, and then only in such manner
and such quantity so as not to increase the rate for fire
insurance applicable to the building, nor use the premises
in a manner which will increase the insurance rate for the
building or any property located therein over that in effect
prior to the commencement of Tenant's occupancy. Tenant
shall pay all costs, expenses, fines, penalties, or damages,
which may be imposed upon Owner by reason of Tenant's
failure to comply with the provisions of this article and if
by reason of such failure the fire insurance rate shall, at
the beginning of this lease or at any time thereafter, be
higher than it otherwise would be, then Tenant shall
reimburse Owner, as additional rent hereunder, for that
portion of all fire insurance premiums thereafter paid by
Owner which shall have been charged because of such failure
by Tenant. In any action or proceeding wherein Owner and
Tenant are parties, a schedule or "make-up" of rate for the
building or demised premises issued by the New York Fire
Insurance Exchange, or other body making fire insurance
rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several
items and charges in the fire insurance rates then
applicable to said premises. Tenant shall not place a load
upon any floor of the demised premises exceeding the floor
load per square foot area which it was designed to carry and
which is allowed by law. Such installations shall be placed
and maintained by Tenant, at Tenant's expense, in settings
sufficient, in Owner's judgment, to absorb and prevent
vibration, noise and annoyance.
SUBORDINATION: 7. This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now ->
or-hereafter affect such leases or the real property of
which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions
of any such underlying leases and mortgages. This clause
shall be self-operative and no further instrument of
subordination shall be required by any ground or underlying
lessor or by any mortgagee, affecting any leases or the real
property of which the demised premises are a part. In
confirmation of such subordination, Tenant shall execute
promptly any certificate that Owner may request.
- ---------------
Rider to be added if necessary.
PROPERTY- 8. Owner or its agents shall not be liable for any damage to
LOSS, DAMAGE, property of Tenant or of others entrusted to employees of
REIMBURSEMENT, the building, nor for loss of or damage to any property of
INDEMNITY: tenant by theft or otherwise, nor for any injury or damage
to persons or property resulting from any cause of
whatsoever nature, unless caused by or due to the negligence
of Owner, its agents, servants or employees. Owner or its
agents will not be liable for any such damage caused by
other tenants or persons in, upon or about said building or
caused by operations in construction of any private, public
or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked
up (or permanently closed, darkened or bricked up, if
required by law) for any reason whatsoever including, but
not limited to Owner's own acts, Owner shall not be liable
for any damage Tenant may sustain thereby and Tenant shall
not be entitled to any compensation therefor nor abatement
or diminution of rent nor shall the same release Tenant from
its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all
liabilities, obligations, damages, penalties, claims, costs
and expenses for which Owner shall not be reimbursed by
insurance, including reasonable attorneys fees, paid,
suffered or incurred as a result of any breach by Tenant,
Tenant's agents, contractors, employees, invitees, or
licensees, of any covenant or condition of this lease, or
the carelessness, negligence or improper conduct of the
Tenant, Tenant's agents, contractors,
-2-
<PAGE>
employees, invitees or licensees. Tenant's liability under
this lease extends to the acts and omissions of any
subtenant, and any agent, contractor, employee, invitee or
licensee of the sub-tenant. In case any action or proceeding
is brought against Owner by reason of any such claim,
Tenant, upon written notice from Owner, will, at Tenant's
expense, resist or defend such action or proceeding by
counsel approved by Owner in writing, such approval not to
be unreasonably withheld.
DESTRUCTION, 9. (a) If the demised premises or any part thereof shall be
FIRE AND OTHER damaged by fire or other casualty, Tenant shall give
CASUALTY: immediate notice thereof to Owner and this lease shall
continue in full force and effect except as hereinafter set
(b) If the demised premises are partially damaged or
rendered partially unusable by fire or other casualty, the
damages thereto shall be repaired by and at the expense of
Owner and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the
casualty according to the part of the premises which is
usable. (c) If the demised premises are totally damaged or
rendered wholly unusable by fire or other casualty, then the
rent shall be proportionately paid up to the time of the
casualty and thenceforth shall cease until the date when the
premises shall have been repaired and restored by Owner,
subject to Owner's right to elect not to restore the same as
hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building
shall be so damaged that Owner shall decide to demolish it
or to rebuild it, then, in any of such events, Owner may
elect to terminate this lease by written notice to Tenant,
given within 60 days after such fire or casualty, specifying
a date for the expiration of the lease, which date shall not
be more than 30 days after the giving of such notice, and
upon the date specified in such notice the term of this
lease shall expire as fully and completely as if such date
were the date set forth above for the termination of this
lease and Tenant shall forthwith quit, surrender and vacate
the premises without prejudice however, to Landlord's rights
and remedies against Tenant under the lease provisions in
effect prior to such termination, and any rent owing shall
be paid up to such date and any payments of rent made by
Tenant which were on account of any period subsequent to
such date shall be returned to Tenant. Unless Owner shall
serve a termination notice as provided for herein, Owner
shall make the repairs and restorations under the conditions
of (b) and (c) hereof, with all reasonable expedition,
subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as
reasonably possible, all of Tenant's salvageable inventory
and movable equipment, furniture, and other property.
Tenant's liability for rent shall resume five (5) days after
written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other
casualty. Notwithstanding the foregoing, each party shall
look first to any insurance in its favor before making any
claim against the other party for recovery for loss or
damage resulting from fire or other casualty, and to the
extent that such insurance is in force and collectible and
to the extent permitted by law, Owner and Tenant each hereby
releases and waives all right of recovery against the other
or any one claiming through or under each of them by way of
subrogation or otherwise. The foregoing release and waiver
shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver
shall not invalidate the insurance. If, and to the extent,
that such waiver can be obtained only by the payment of
additional premiums, then the party benefitting from the
waiver shall pay such premium within ten days after written
demand or shall be deemed to have agreed that the party
obtaining insurance coverage shall be free of any further
obligation under the provisions hereof with respect to
waiver of subrogation. Tenant acknowledges that Owner will
not carry insurance on Tenant's furniture and/or furnishings
or any fixtures or equipment, improvements, or appurtenances
removable by Tenant and agrees that Owner will not be
obligated to repair any damages thereto or replace the same.
(f) Tenant hereby waives the provisions of Section 227 of
the Real Property Law and agrees that the provisions of this
article shall govern and control in lieu thereof.
EMINENT 10. If the whole or any part of the demised premises shall be
DOMAIN: acquired or condemned by Eminent Domain for any public or
quasi public use or purpose, then and in that event, the
term of this lease shall cease and terminate from the date
of title vesting in such proceeding and Tenant shall have no
claim for the value of any unexpired term of said lease and
assigns to Owner, Tenant's entire interest in any such
award.
ASSIGNMENT, 11. Tenant, for itself, its heirs, distributees, executors,
MORTGAGE, administrators, legal representatives, successors and
ETC.: assigns, expressly covenants that it shall not assign,
mortgage or encumber this agreement, nor underlet, or suffer
or permit the demised premises or any part thereof to be
used by others, without the prior written consent of Owner
in each instance. Transfer of the majority of the stock of a
corporate Tenant shall be deemed an assignment. If this
lease is assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than
Tenant, Owner may, after default by Tenant, collect rent
from the assignee, under-tenant or occupant, and apply the
net amount collected to the rent herein reserved, but no
such assignment, underletting, occupancy or collection shall
be deemed a waiver of this covenant, or the acceptance of
the assignee, under-tenant or occupant as tenant, or a
release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The
consent by Owner to an assignment or underletting shall not
in any wise be construed to relieve Tenant from obtaining
the express consent in writing of Owner to any further
assignment or underletting.
ELECTRIC 12. Rates and conditions in respect to submetering or rent
CURRENT: inclusion, as the case may be, to be added in RIDER attached
hereto. Tenant covenants and agrees that at all times its
use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment
which, in Owner's opinion, reasonably exercised, will
overload such installations or interfere with the use
thereof by other tenants of the building. The change at any
time of the character of electric service shall in no wise
make Owner liable or responsible to Tenant, for any loss,
damages or expenses which Tenant may sustain.
ACCESS TO 13. Owner or Owner's agents shall have the right (but shall not
PREMISES be obligated) to enter the demised premises in any emergency
at any time, and, at other reasonable times, to examine the
same and to make such repairs, replacements and improvements
as Owner may deem necessary and reasonably desirable to the
demised premises or to any other portion of the building or
which Owner may elect to perform. Tenant shall permit Owner
to use and maintain and replace pipes and conduits in and
through the demised premises and erect new pipes and
conduits therein provided they are concealed within the
walls, floor or ceiling. Owner may, during the progress of
any work in the demised premises, take all necessary
materials and equipment into said premises without the same
constituting an eviction nor shall the Tenant be entitled to
any abatement of rent while such work is in progress nor to
any damages by reason of loss or interruption of business or
otherwise. Throughout the term hereof Owner shall have the
right to enter the demised premises at reasonable hours for
the purpose of showing the same to prospective purchasers or
mortgagees of the building, and during the last six months
of the term for the purpose of showing the same to
-3-
<PAGE>
prospective tenants. If Tenant is not present to open and
permit an entry into the premises, Owner or Owner's agents
may enter the same whenever such entry may be necessary or
permissible by master key or forcibly and provided
reasonable care is exercised to safeguard Tenant's property,
such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term
Tenant shall have removed all or substantially all of
Tenant's property therefrom, Owner may immediately enter,
alter, renovate or redecorate the demised premises without
limitation or abatement of rent, or incurring liability to
Tenant for any compensation and such act shall have no
effect on this lease or Tenant's obligations hereunder.
VAULT, 14. No Vaults, vault space or area, whether or not enclosed or
VAULT SPACE covered, not within the property line of the building is
AREA: leased hereunder, anything contained in or indicated on any
sketch, blue print or plan, or anything contained elsewhere
in this lease to the contrary notwithstanding. Owner makes
no representation as to the location of the property line of
the building. All vaults and vault space and all such areas
not within the property line of the building, which Tenant
may be permitted to use and/or occupy, is to be used and/or
occupied under a revocable license, and if any such license
be revoked, or if the amount of such space or area be
diminished or required by any federal, state or municipal
authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any
compensation or diminution or abatement of rent, nor shall
such revocation, diminution or requisition be deemed
constructive or actual eviction.
OCCUPANCY: 15. Tenant will not at any time use or occupy the demised
premises in violation of the certificate of occupancy issued
for the building of which the demised premises are a part.
Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's
work, if any. In any event, Owner makes no representation as
to the condition of the demised premises and Tenant agrees
to accept the same subject to violations, whether or not of
record.
BANKRUPTCY 16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by the
sending of a written notice to Tenant within a reasonable
time after the happening or any one or more of the following
events: (1) the commencement of a case in bankruptcy or
under the laws of any state naming Tenant as the debtor; or
(2) the making by Tenant of an assignment or any other
arrangement for the benefit of creditors under any state
statute. Neither Tenant nor any person claiming through or
under Tenant, or by reason of any statute or order of court,
shall thereafter be entitled to possession of the premises
demised but shall forthwith quit and surrender the premises.
If this lease shall be assigned in accordance with its
terms, the provisions of this Article 16 shall be applicable
only to the party then owning Tenant's interest in this
lease.
(b) It is stipulated and agreed that in the event of the
termination of this lease pursuant to (a) hereof, Owner
shall forthwith, notwithstanding any other provisions of
this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the
difference between the rent reserved hereunder for the
unexpired portion of the term demised and the fair and
reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after
the date of termination and the fair and reasonable rental
value of the demised premises for the period for which such
installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If
such premises or any part thereof be relet by the Owner for
the unexpired term of said lease, or any part thereof,
before presentation of proof of such liquidated damages to
any court, commission or tribunal, the amount of rent
reserved upon such reletting shall be deemed to be the fair
and reasonable rental value for the part or the whole of the
premises so re-let during the term of the re-letting.
Nothing herein contained shall limit or prejudice the right
of the Owner to prove for and obtain as liquidated damages
by reason of such termination, an amount equal to the
maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such
damages are to be proved, whether or not such amount be
greater, equal to, or less than the amount of the difference
referred to above.*
DEFAULT: 17. (1) If Tenant defaults in fulfilling any of the covenants of
this lease other than the covenants for the payment of rent
or additional rent; or if the demised premises becomes
vacant or deserted; or if any execution or attachment shall
be issued against Tenant or any of Tenant's property
whereupon the demised premises shall be taken or occupied by
someone other than Tenant; or if this lease be rejected
underss.235 of Title 11 of the U.S. Code (bankruptcy code)
upon Owner serving a written ten (10) days notice upon
Tenant specifying the nature of said default and upon the
expiration of said 10 days, if Tenant shall have failed to
comply with or remedy such default, or if the said default
or omission complained of shall be of a nature that the same
cannot be completely cured or remedied with said 10 day
period, and if Tenant shall not have diligently commenced
during such default within such 10 day period, and shall not
thereafter with reasonable diligence and in good faith,
proceed to remedy or cure such default, then Owner may serve
a written five 5 days' notice of cancellation of this lease
upon Tenant, and upon the expiration of said 5 days this
lease and the term thereunder shall end and expire as fully
and completely as if the expiration of such five 5 day
period were the day herein definitely fixed for the end and
expiration of this lease and the term thereof and Tenant
shall quit and surrender the demised premises to Owner but
Tenant shall remain liable as hereinafter provided.
* Tenant shall have sixty (60) days within which to remove
or vacate an involuntary petition filed against it.
(2) If the notice provided for in (1) hereof shall have been
given, and the term shall expire as aforesaid: or if Tenant
shall make default in the payment of the rent reserved
herein or any item or additional rent herein mentioned or
any part of either or in making any other payment herein
required: then and in any of such events Owner may
dispossess Tenant by summary proceedings or otherwise, and
the legal representative of Tenant or other occupant of
demised premises and remove their effects and hold the
premises as if this lease had not been made, and Tenant
hereby waives the service of notice of intention to re-enter
or to institute legal proceedings to that end. If Tenant
shall make default hereunder prior to the date fixed as the
commencement of any renewal or extension of this lease,
Owner may cancel and terminate such renewal or extension
agreement by written notice.
REMEDIES OF 18. In case of any such default, re-entry, expiration and/or
OWNER AND dispossess by summary proceedings or otherwise, (a) the rent
WAIVER OF shall become due thereupon and be paid up to the time of
REDEMPTION: such re-entry, dispossess and/or expiration, (b) Owner may
re-let the premises or any part or parts thereof, either in
the name of Owner or otherwise, for a term or terms, which
may at Owner's option be less than or exceed the period
which would otherwise have constituted the balance of the
term of this lease and may grant concessions or charge a
higher rental than that in this lease, and/or (c) Tenant or
the legal representatives of Tenant shall also pay Owner as
liquidated damages for the failure of Tenant to observe and
perform said Tenant's covenants herein contained, any
deficiency between the
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rent hereby reserved and/or covenanted to be paid and the
net amount, if any, of the rents collected on account of the
lease or leases of the demised premises for each month of
the period which would otherwise have constituted the
balance of the term of this lease. The failure of Owner to
re-let the premises or any part or parts thereof shall not
release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to
the said deficiency such expenses as Owner may incur in
connection with re-letting, such as legal expenses,
attorneys' fees, brokerage, advertising and for keeping the
demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in
monthly installments by Tenant on the rent day specified in
this lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any month
shall not prejudice in any way the rights of Owner to
collect the deficiency of any subsequent month by a similar
proceeding. Owner, in putting the demised premises in good
order or preparing the same for re-rental may, at Owner's
option, make such alterations, repairs, replacements, and/or
decorations in the demised premises as Owner, in Owner's
sole judgment, considers advisable and necessary for the
purpose of re-letting the demised premises, and the making
of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release
Tenant from liability hereunder as aforesaid. Owner shall in
no event be liable in any way whatsoever for failure to
re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent
thereof under such re-letting, and in no event shall Tenant
be entitled to receive any excess, if any, of such net rents
collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by
Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke
any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not herein
provided for. Mention in this lease of any particular
remedy, shall not preclude Owner from any other remedy, in
law or in equity. Tenant hereby expressly waives any and all
rights of redemption granted by or under any present or
future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Owner
obtaining possession of demised premises, by reason of the
violation of Tenant of any of the covenants and conditions
of this lease, or otherwise.
FEES AND 19. If Tenant shall default in the observance or performance of
EXPENSES: any term or covenant on Tenant's part to be observed or
performed under or by virtue of any of the terms or
provisions in any article of this lease, then, after
reasonable notice and unless in an emergency, unless
otherwise provided elsewhere in this lease, Owner may
immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in
connection with the foregoing or in connection with any
default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the
payment of money, including but not limited to attorney's
fees, in instituting, prosecuting or defending any action or
proceeding, then Tenant will reimburse Owner for such sums
so paid or obligations incurred with interest and costs. The
foregoing expenses incurred by reason of Tenant's default
shall be deemed to be additional rent hereunder and shall be
paid by Tenant to Owner within five (5) days of rendition of
any bill or statement to Tenant therefor. If Tenant's lease
term shall have expired at the time of making of such
expenditures or incurring of such obligations, such sums
shall be recoverable by Owner as damages.
BUILDING 20. Owner shall have the right at any time without the same
ALTERATIONS constituting an eviction and without incurring liability to
AND Tenant therefor to change the arrangement and/or location of
MANAGEMENT: public entrances, passageways, doors, doorways, and
corridors, elevators, stairs, toilets or other public parts
of the building and to change the name, number or
designation by which the building may be known. There shall
be no allowance to Tenant for diminution of rental value and
no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from
Owner or other Tenants making any repairs in the building or
any such alterations, additions and improvements.
Furthermore, Tenant shall not have any claim against Owner
by reason of Owner's imposition of such controls of the
manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the
security of the building and its occupants.
NO REPRE- 21. Neither Owner nor Owner's agents have made any
SENTATION BY representations or promises with respect to the physical
OWNER: condition of the building, the land upon which after
reasonable notice and unless in an emergency it is erected
or the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related
to the premises except as herein expressly set forth and no
rights, easements or licenses are acquired by Tenant by
implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the
building and the demised premises and is thoroughly
acquainted with their condition and agrees to take the same
"as is" and acknowledges that the taking of possession of
the demised premises by Tenant shall be conclusive evidence
that the said premises and the building of which the same
form a part were in good and satisfactory condition at the
time such possession was so taken, except as to latent
defects. All understandings and agreements heretofore made
between the parties hereto are merged in this contract,
which alone fully and completely expresses the agreement
between Owner and Tenant and any executory agreement
hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in
part, unless such executory agreement is in writing and
signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
END OF 22. Upon the expiration or other termination of the term of this
TERM: lease, Tenant shall quit and surrender to Owner the demised
premises, broom clean, in good order and condition, ordinary
wear and damages which Tenant is not required to repair as
provided elsewhere in this lease excepted, and Tenant shall
remove all its property. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other
termination of this lease. If the last day of the term of
this Lease or any renewal thereof, falls on Sunday, this
lease shall expire at noon on the preceding Saturday unless
it be a legal holiday in which case it shall expire at noon
on the preceding business day.
QUIET 23. Owner covenants and agrees with Tenant that upon Tenant
ENJOYMENT: paying the rent and additional rent and observing and
performing all the terms, covenants and conditions, on
Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised,
subject, nevertheless, to the terms and conditions of this
lease including, but not limited to, Article 31 hereof and
to the ground leases, underlying leases and mortgages
hereinbefore mentioned.
FAILURE 24. If Owner is unable to give possession of the demised
TO GIVE premises on the date of the commencement of the term hereof,
POSSESSION: because of the holding-over or retention of possession of
any tenant, undertenant or occupants or if the demised
premises are located in a building being constructed,
because such building has not been sufficiently completed to
make the premises ready for occupancy or because of the fact
that a certificate of occupancy has not been procured or for
any other reason, Owner shall not be subject to any
liability for failure to give possession on
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<PAGE>
said date and the validity of the lease shall not be
impaired under such circumstances, nor shall the same be
construed in any wise to extend the term of this lease, but
the rent payable hereunder shall be abated (provided Tenant
is not responsible for Owner's inability to obtain
possession) until after Owner shall have given Tenant
written notice that the premises are substantially ready for
Tenant's occupancy. If permission is given to Tenant to
enter into the possession of the demised premises or to
occupy premises other than the demised premises prior to the
date specified as the commencement of the term of this
lease, Tenant covenants and agrees that such occupancy shall
be deemed to be under all the terms, covenants, conditions
and provisions of this lease, except as to the covenant to
pay rent. The provisions of this article are intended to
constitute "as express provisions to the contrary" within
the meaning of Section 233-a of the New York Real Property
Law.
NO WAIVER: 25. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or
condition of this lease or of any of the Rules or
Regulations, set forth or hereafter adopted by Owner, shall
not prevent a subsequent act which would have originally
constituted a violation from having all the force and effect
of an original violation. The receipt by Owner of rent with
knowledge of the breach of any covenant of this lease shall
not be deemed a waiver of such breach and no provision of
this lease shall be deemed to have been waived by Owner
unless such waiver be in writing signed by Owner. No payment
by Tenant or receipt by Owner of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other
than on account of the earliest stipulated rent, nor shall
any endorsement or statement of any check or any letter
accompanying any check or payment as rent be deemed an
accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the
balance of such rent or pursue any other remedy in this
lease provided. No act or thing done by Owner or Owner's
agents during the term hereby demised shall be deemed as
acceptance of a surrender of said premises, and no agreement
to accept such surrender shall be valid unless in writing
signed by Owner. No employee of Owner or Owner's agent shall
have any power to accept the keys of said premises prior to
the termination of the lease and the delivery of keys to any
such agent or employee shall not operate as a termination of
the lease or a surrender of the premises.
WAIVER OF 26. It is mutually agreed by and between Owner and Tenant that
TRIAL BY JURY: the respective parties hereto shall and they hereby do waive
trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other
(except for personal injury or property damage) on any
matters whatsoever arising out of or in any way connected
with this lease, the relationship of Owner and Tenant,
Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Owner commences
any summary proceeding for possession of the premises,
Tenant will not interpose any counterclaim of whatever
nature or description in any such proceeding including a
counterclaim under Article 4.
INABILITY TO 27. This Lease and the obligation of Tenant to pay rent
PERFORM: hereunder and perform all of the other covenants and agree-
ments hereunder on part of Tenant to be performed shall in
no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or
to supply or is delayed in supplying any service expressly
or impliedly to be supplied or is unable to make, or is
delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Owner is prevented or
delayed from so doing by reason of strike or labor troubles
or any cause whatsoever including, but not limited to,
government preemption in connection with a National
Emergency or by reason of any rule, order or regulation of
any department or subdivision thereof of any government
agency or by reason of the conditions of supply and demand
which have been or are affected by war or other emergency.
BILLS AND 28. Except as otherwise in this lease provided, a bill,
NOTICES: statement, notice or communication which Owner may desire or
be required to give to Tenant, shall be deemed sufficiently
given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed
to Tenant at the building of which the demised premises form
a part or at the last known residence address or business
address of Tenant or left at any of the aforesaid premises
addressed to Tenant, and the time of the rendition of such
bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same
is delivered to Tenant, mailed, or left at the premises
provided in the Rider. Any notice by Tenant to Owner must be
served by registered or certified mail addressed to Owner at
the address first hereinabove given or at such other address
as Owner shall designate by written notice.
SERVICES 29. As long as Tenant is not in default under any of the
PROVIDED BY covenants of this lease, Owners shall provide: (a) necessary
OWNERS: elevator facilities on business days from 8 a.m. to 6 p.m.
and on Saturdays from 8 a.m. to 1 p.m. and have one elevator
subject to call at all other times; (b) heat to the demised
premises when and as required by law, on business days from
8 a.m. to 6 p.m. and on Saturday from 8 a.m. to 1 p.m.; (c)
water for ordinary lavatory purposes, but if Tenant uses or
consumes water for any other purposes or in unusual
quantities including air-conditioning, washing facilities,
which Tenant plans to install and is permitted by Landlord,
(of which fact Owner shall be the sole judge), Owner may
install a water meter at Tenant's expense which Tenant shall
thereafter maintain at Tenant's expense in good working
order and repair to register such water consumption and
Tenant shall pay for water consumed as shown on said meter
as additional rent as and when bills are rendered. Said
premises are to be kept clean by Tenant, it shall be done at
Tenant's sole expense, in a manner satisfactory to Owner and
no one other than persons approved by Owner shall be
permitted to enter said premises or the building of which
they are a part for such purpose which consent will not be
unreasonably withheld. Owner shall pay the cost of removal
of Tenant's refuse and rubbish from the building; (e) if the
demised premises is serviced by Owner's air conditioning/
cooling and ventilating system, air conditioning/cooling
will be furnished to tenant from May 15th through September
30th on business days (Mondays through Fridays, holidays
excepted) from 8:00 a.m. to 6:00 p.m., and ventilation will
be furnished on business days during the aforesaid hours
except when air conditioning/cooling is being furnished as
aforesaid. If Tenant requires air conditioning/cooling or
ventilation for more extended hours or on Saturdays, Sundays
or on holidays, as defined under Owner's contract with
Operating Engineers Local 94-94A, Owner will furnish the
same at Tenant's expense. RIDER to be added in respect to
rates and conditions for such additional service; (f) Owner
reserves the right to stop services of the heating,
elevators, plumbing, air-conditioning, power systems or
cleaning or other services, if any, when necessary by reason
of accident or for repairs, alterations, replacements or
improvements necessary or desirable in the judgment of Owner
for as long as may be reasonably required by reason thereof.
If the building of which the demised premises are a part
supplies manually-operated elevator service, Owner at any
time may substitute automatic-control elevator service and
upon ten days' written notice to Tenant, proceed with
alterations necessary therefor without in any wise affecting
this lease or the obligation of Tenant hereunder. The same
shall be done with a minimum of inconvenience to Tenant and
Owner shall pursue the alteration with due diligence.
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<PAGE>
CAPTIONS: 30. The Captions are inserted only as a matter of convenience
and for reference and in no way define, limit or describe
the scope of this lease nor the intent of any provisions
thereof.
DEFINITIONS: 31. The term "office", or "offices", wherever used in this
lease, shall not be construed to mean premises used as a
store or stores, for the sale or display, at any time, of
goods, wares or merchandise, of any kind, or as a
restaurant, shop, booth, bootblack or other stand, barber
shop, or for other similar purposes or for manufacturing.
The term "Owner" means a landlord or lessor, and as used in
this lease means only the owner, or the mortgagee in
possession, for the time being of the land and building (or
the owner of a lease of the building or of the land and
building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building
or of said lease, or in the event of a lease of said
building, or of the land and building, the said Owner shall
be and hereby is entirely freed and relieved of all
covenants and obligations of Owner hereunder, and it shall
be deemed and construed without further agreement between
the parties or deemed and construed without further
agreement between the parties or their successors in
interest, or between the parties and the purchaser, at any
such sale, or the said lessee of the building, or of the
land and building, that the purchaser or the lessee of the
building has assumed and agreed to carry out any and all
covenants and obligations of Owner, hereunder. The words
"re- enter" and "re-entry" as used in this lease are not
restricted to their technical legal meaning. The term
"business days" as used in this lease shall exclude
Saturdays (except such portion thereof as is covered by
specific hours in Article 29 hereof), Sundays and all days
observed by the State or Federal Government as legal
holidays and those designated as holidays by the applicable
building service union employees service contract or by the
applicable Operating Engineers contract with respect to HVAC
service.
ADJACENT 32. If an excavation shall be made upon land adjacent to the
EXCAVATION demised premises, or shall be authorized to be made, Tenant
SHORING: shall afford to the person causing or authorized to cause
such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which
demised premises form a part from injury or damage and to
support the same by proper foundation without any claim for
damages or indemnity against Owner, or diminution or
abatement of rent.
RULES AND 33. Tenant and Tenant's servants, employees, agents, visitors,
REGULATIONS: and licensees shall observe faithfully, and comply strictly
with, the Rules and Regulations and such other and further
reasonable Rules and Regulations as Owner or Owner's agents
may from time to time adopt. Notice of any additional rules
or regulations shall be given in such manner as provided in
Paragraph "29". In case Tenant disputes the reasonableness
of any additional Rule or Regulation hereafter made or
adopted by Owner or Owner's agents, the parties hereto agree
to submit the question of the reasonableness of such Rule or
Regulation for decision to the New York office of the
American Arbitration Association, whose determination shall
be final and conclusive upon the parties hereto. The right
to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless
the same shall be asserted by service of a notice, in
writing upon Owner within ten (10) days after the giving of
notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to
enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant
and Owner shall not be liable to Tenant for violation of the
same by any other tenant, it servants, employees, agents,
visitors or licensees.
SECURITY: 34. Tenant has deposited with Owner the sum of $[See Rider P.
52] as security for the faithful performance and observance
by Tenant of the terms, provisions and conditions of this
lease; it is agreed that in the event Tenant defaults in
respect of any terms, provisions and conditions of this
lease, including, but not limited to, the payment of rent
and additional rent, Owner may use, apply or retain the
whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or
any other sum as to which Tenant is in default or for any
sum which Owner may expend or may be required to expend by
reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not
limited to, any damages or deficiency in the re-letting of
the premises, whether such damages or deficiency accrued
before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully
comply with all of the terms, provisions, covenants and
condition of this lease, the security shall be returned to
Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises
to Owner. In the event of a sale of the land and building or
leasing of the building, of which the demised premises form
a part, Owner shall have the right to transfer the security
to the vendee or lessee and Owner shall thereupon be
released by Tenant from all liability for the return of such
security; and Tenant agrees to look to the new Owner solely
for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or
assignment made of the security to a new Owner. Tenant
further covenants that it will not assign or encumber or
attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or
assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
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space to be filled in or deleted.
ESTOPPEL 35. Tenant, at any time, and from time to time, upon at least 10
CERTIFICATE: days' prior notice by Owner, shall execute, acknowledge and
deliver to Owner, and/or to any other person, firm or
corporation specified by Owner, a statement certifying that
this Lease is unmodified and in full force and effect (or,
if there have been modifications, that the same is in full
force and effect as modified and stating the modifications),
stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying
each such default.
SUCCESSORS 36. The covenants, conditions and agreements contained in this
AND ASSIGNS: lease shall bind and inure to the benefit of Owner and
Tenant and their respective heirs, distributees, executors,
administrators, successors, and except as otherwise provided
in this lease, their assigns.
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<PAGE>
8
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
Witness for Owner: Audits And Surveys, Inc.
__________________________ _______________________________Corp. Seal
By:/s/_____________________________[L.S.]
Witness for Tenant: TOBIAS ASSOCIATES, INC.
-------------------------------Corp. Seal
__________________________ By:/s/_____________________________[L.S.]
ACKNOWLEDGMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss.:
On this day of , 19 , before me personally came
to me known, who being by me
duly sworn, did depose and say that he resides in
; that he is the
of the corporation described in and which executed the foregoing
instrument, as OWNER; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporation seal; that it was so affixed by
order of the Board of Directors of said corporation, and that he signed his name
thereto by like order.
...................................
INDIVIDUAL OWNER
STATE OF NEW YORK, ss.:
On this day of , 19 , before me personally came
to me known and known to me to be the individual ;
described in and who, as OWNER, executed the foregoing instrument and acknow-
ledged to me that he executed the same.
...................................
CORPORATE TENANT
STATE OF NEW YORK, ss.:
On this day of , 19 , before me personally came
to me known, who being by me
duly sworn, did depose and say that he resides in
; that he is the
of the corporation described in and which executed the foregoing
instrument, as TENANT; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporation seal; that it was so affixed by
order of the Board of Directors of said corporation, and that he signed his name
thereto by like order.
............................................
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
On this day of , 19 , before me personally came
to me known and known to me to
be the individual ; described in and
who, as TENANT, executed the foregoing instrument and acknowledged to me that
he executed the same.
............................................
-8-
<PAGE>
GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to
Owner making the within lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full performance and observance of all the
covenants, conditions and agreements, therein provided to be performed and
observed by Tenant, including the "Rules and Regulations" as therein provided,
without requiring any notice of non-payment, non-performance, or non-observance,
or [text in original illegible] of, or notice, or demand, whereby to charge the
undersigned therefor, all of which the undersigned hereby expressly waives and
expressly agrees that the validity of this agreement and the obligations of the
guarantor hereunder shall be so wise be terminated, affected or impaired by
reason of the [text in original illegible] by Owner against Tenant of any of the
right or remedies reserved to Owner pursuant to the provisions of the within
lease. The undersigned further covenants and agrees that this guaranty shall
remain in full force and effect as to any renewal, modification or extension of
this lease and during any period when Tenant is occupying the premises as a
"statutory tenant." As a further inducement to Owner to make this lease and in
consideration thereof, Owner and the undersigned covenant and agree that in any
action or proceeding brought by either Owner or the undersigned against the
other on any matters whatsoever arising out of, under, or by virtue of the terms
of this lease or of this guaranty that Owner and the undersigned shall and do
hereby waive trial by jury.
Dated New York City.........................................19 ___
the foregoing Guaranty and acknowledge to me that he executed the same.
WITNESS: ............................................
Notary
........................... ............................................
STATE OF NEW YORK, ) ss.:
County of )
On this day of , 19 , before me personally came
, to me known and known to me
to be the individual described in, and who executed.......................
Residence.......................................................................
Business Address................................................................
Firm Name.......................................................................
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by Tenant or by jobbers or others in the delivery or receipt of
merchandise, any hand trucks, except those equipped with rubber tires and
sideguards. If said premises are situated on the ground floor of the building,
Tenant thereof shall further, at Tenant's expense, keep the sidewalk and curb in
front of said premises clean and free from ice, snow, dirt and rubbish.
2. The water and wash closets and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the building by reason of noise,
orders, and/or vibrations, or interfere in any way with other Tenants or those
having business therein, nor shall any animals or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the outside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability, and may charge the
expenses incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any
part of the demised premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used as interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of comment or other similar adhesive material being expressly
prohibited.
-9-
<PAGE>
7. Each Tenant must, upon the termination of his Tenancy, restore to
Owner all keys of stores, offices and toilet rooms, either furnished to, or
otherwise procured by, such Tenant, and in the event of the loss of any keys, so
furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the premises only on
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease or which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited
and each Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building between the
hours of 6:00 P.M. and 8 A.M. and at all hours on Sundays, and legal holidays
all persons who do not present a pass to the building signed by Owner. Owner
will furnish passes to persons for whom any Tenant requests same in writing.
Each Tenant shall be responsible for all persons for whom he requests such pass
and shall be liable to Owner for all acts of such persons.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a building for offices, and upon written notice from
Owner, Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible or explosive fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the demised premises.
13. If the building contains central air conditioning and ventilation,
Tenant agrees to keep all windows closed at all times and to abide by all rules
and regulations issued by the Owner with respect to such services. If Tenant
requires air conditioning or ventilation after the usual hours, Tenant shall
give notice in writing to the building superintendent prior to 3:00 P.M. in the
case of services required on week days, and prior to 3:00 P.M. on the day prior
in the case of after hours service required on weekends or on holidays.
14. Tenant shall not move any safe, heavy machinery, heavy equipment,
bulky matter, or fixtures into or out of the building without Landlord's prior
written consent. If such safe, machinery, equipment, bulky matter or fixtures
requires special handling, all work in connection therewith shall comply with
the Administrative Code of the City of New York and all other laws and
regulations applicable thereto and shall be done during such hours as Owner may
designate.
Address 650 Sixth Avenue
New York, N.Y.
Premises
- --------------------------------------------------------------------------------
TOBIAS ASSOCIATES,
TO
AUDITS AND SURVEYS, INC.,
- --------------------------------------------------------------------------------
STANDARD FORM OF
[text in Office [text in
original Lease original
illegible] illegible]
The Real Estate Board of New York, Inc.
(C)Copyright 1983. All rights Reserved.
Reproduction in whole or in part prohibited.
- --------------------------------------------------------------------------------
Dated February 1987
Rent per Year
Rent per Month
Term Sixteen (16)
From March 1, 1987
To February 28, 2003
Drawn by..................Checked by.................
Entered by................Approved by................
- --------------------------------------------------------------------------------
-10-
<PAGE>
RIDER TO LEASE DATED: FEBRUARY 13, 1987
-between-
TOBIAS ASSOCIATES, as Landlord
-and-
AUDITS AND SURVEYS, INC, an Tenant
PREMISES: ENTIRE 2ND, 3RD, 4TH, 5TH AND 6TH FLOORS IN
#650 AVENUE OF AMERICAS
37. PROVISIONS OF RIDER TO PREVAIL:
In the event of any conflict between the printed portion of this Lease
and the Rider, the provisions of this Rider shall prevail.
38. TERM:
This Lease shall be for a term of sixteen (16) years commencing on
March 1, 1987 and terminating on February 28, 2003.
39. FIXED ANNUAL RENT:
The fixed annual rent during the term of the Lease shall be as
follows:
40. POSSESSION:
(a) Landlord shall deliver possession of and Tenant may take possession
of the 4th, 5th and 6th floors upon the execution of this lease, but said
possession
(b) With respect to the 2nd and 3rd floors, Tenant acknowledges that
same are currently occupied by other tenants who will not have vacated said
premises by March 1, 1987. Landlord shall take all steps reasonable, necessary
and in conformity with its Leases with said tenants to have them vacate said
premises as soon as is reasonable, practicable and lawful. Tenant need not take
possession of either floor unless both are available for possession at the same
time. Tenant shall take possession of the 2nd and 3rd floors on January 1, 1988
provided Landlord has completed Landlord's Work therein and after due notice, as
provided herein, but Tenant may take possession sooner if same are available. If
Landlord cannot give possession of said floors by said date, this Lease shall
not terminate in any respect nor give rise to any rights to Tenant except with
respect to rent abatement, as provided in paragraph "41", below. Landlord shall
give Tenant at least forty-five (45) days prior
<PAGE>
written notice of the proposed date of possession for said floors.
41. RENT ABATEMENT:
Notwithstanding the provisions of paragraph "39" and "40" above, the
monthly installments of fixed annual rent shall be abated as follows:
(d) The granting of the above abatements of rent and the method thereof
shall and do not, except as provided herein, limit, modify or amend the
letting of the demised premises and the fixed annual rent payable
therefor. Default in any payment as it applies to any particular floor,
as provided above, shall be a default under this lease with respect to
the entire demised premises and not any particular floor.
42. REAL ESTATE TAX ESCALATIONS:
(a) In the event that the Real Estate taxes (including vault tax if
same shall be levied on the building) levied on the property of which the
demised premises are a part shall for any year after the fiscal year 1987/1988
be in excess of the Real Estate taxes levied against the said property for the
fiscal year 1987/1988, hereafter known as the "base year tax year" the Tenant
shall pay to the Landlord as additional rent an amount equal to 83 1/3% of such
excess, if any. The submission of a duplicate original tax bill of the Landlord
shall be deemed conclusive evidence of the amount of the taxes paid by the
Landlord for each year and shall be the basis for the computation of any excess
so to be paid by the Tenant. Such excess shall be payable in the same
installments as payable by Landlord, except that Tenants portion of said
obligation shall be payable to Landlord thirty (30) days prior to said
installment being due and payable by Landlord. Tenant shall be liable for any
interest or penalties by reason of Tenant's failure to timely pay its obligation
hereunder.
(b) The Landlord, if a mortgage is placed upon the premises which
require monthly Installments of taxes, may demand that that Tenant's obligation
hereunder shall be payable in monthly installments, in which event Landlord
shall submit a schedule of monthly payments, computations therefore, and
thereafter Tenant shall be billed and pay said obligation in accordance with
said schedule.
(c) In the event the Tenant has paid the increased taxes as in this
paragraph provided and thereafter Landlord obtains a refund or credit the
Landlord shall pay a portion of said refund or credit to Tenant in the same
proportion as original tax was paid of obtaining such reduction including legal
fees, but nothing herein contained shall obligate Landlord to seek a reduction
in tax. [Text in original illegible]
(d) Tenant may contest in good faith, by appropriate proceedings
conducted at Tenant's expense, in the Tenant's name (or when necessary in the
Landlord's name) any proposed assessed valuation, taxes, assessments, duties or
charges, imposed against the Demised Premises. Landlord
<PAGE>
agrees to cooperate with Tenant and to execute any documents or pleadings
reasonably required for such purpose, provided that Landlord shall not incur any
expense or liability in connection therewith Tenant may defer payment of the
contested tax, assessment, duty or charge pending such contest, provided that
the written consent of the first mortgage$, if any, is theretofore obtained, and
further provided that Tenant shall deposit with the Landlord a sum which shall
be at least equal to the amount of any payment so deferred, plus estimated
penalties and interest thereon. Landlord may, upon reasonable notice to Tenant,
pay or cause to be paid such contested item or items out of any sums so
deposited in case of undue delay in the prosecution of such contest, or if the
protection of the property or Landlord's interest therein shall, in the
reasonable judgment of Landlord, require such payment. When any such contested
item or items shall have been paid or canceled, any sum so deposited to cover
the same and not applied by Landlord as aforesaid, shall be repaid to Tenant.
Any tax refund relating to the payments made by Tenant shall be the sole
property of Tenant.
(e) The foregoing to the contrary notwithstanding, the Tenant shall pay
sixty (60%) percent of the dollar amount computed above until it takes
possession of or is required to take possession of the 2nd and 3rd floors, as
provided in this lease after which time the full amount shall be due and
payable. In the event Tenant takes possession of the 2nd or 3rd floor, but not
both, Tenant shall pay eighty (80%) percent of the dollar amount computed as
provided above.
43. OPERATING COST ESCALATIONS:
In the event during the term of this Lease, the operating costs, as
hereinafter defined, shall increase over and above the operating costs for the
fiscal year July 1, 1987 to June 30, 1988 (hereinafter referred to as "base
year") the Tenant shall pay to the Landlord as additional rent a sum equal to 83
1/3% of the amount of such increase.
The operating cost shall mean and include (1) the amounts actually paid
for employees and/or contractors who work customarily in and about the building
and whose duties are connected with its regular operations, including but not
limited to cleaning, maintenance or repair including (2) social security taxes,
unemployment taxes, and the cost of providing disability benefits imposed by law
(if any) applicable with respect to such employees; (3) the cost to the landlord
of any pension, hospitalization or retirement plan respecting such employees;
(4) the cost of uniforms, working clothes and towels furnished such employees;
(5) medical expenses incident to the hiring of such employees; (6) any expenses
imposed on the Landlord pursuant to any collective bargaining agreement covering
such employees; (7) the cost of fuel for heating; (8) public light and power;
(9) water and sewer charges, and (10) insurance usually maintained for the
ownership and management of a building of this type and character.
On or before the 1st day of August 1989, and the 1st day of August of
each succeeding year, the Landlord will furnish to the Tenant a comparative
statement showing a comparison of the operating costs as herein defined of the
base year and those of such succeeding fiscal year and in the event that such
comparative statement show an increase of the operating costs over the costs of
the base year, the Tenant agrees to pay to the Landlord 83 1/3% of such increase
within (10) days after the submission of such comparative statement. In the
event the Landlord shall for any reason be unable to furnish a comparative
statement on the 1st day of August in any such year, the Landlord may thereafter
furnish the Tenant with such statement at a later date with the same force and
effect and the Tenant's obligations to pay such percentage of increase shall be
paid within ten (10) days after this issuance of such comparative statement.
Within a reasonable time after receipt of a written
<PAGE>
request by Tenant, Landlord shall shall submit to Tenant all documents
reasonable and necessary to substantiate the obligations of Tenant hereunder.
The foregoing to the contrary notwithstanding, the Tenant shall pay
sixty (60%) percent of the dollar amount computed above until it takes
possession of or is required to take possession of the 2nd and 3rd floors, as
provided in this lease, after which time the full amount shall be due and
payable. In the event Tenant takes possession of the 2nd or 3rd floor, but not
both, Tenant shall pay eighty (80%) percent of the dollar amount computed as
provided above.
44. LANDLORD'S WORK/TENANT'S WORK:
(a) Landlord shall improve the Building and such portion or portions
thereof as Landlord may elect, which shall include, among other improvements,
the demised premises, as set forth in "Landlord's Work" in Exhibit "A" annexed
hereto, and made a part hereof. Landlord's work shall be limited to the scope of
construction described as Landlord's work in said Exhibit "A" and such other
work as Landlord may elect to undertake and shall in no event include
performance, procurement and/or installation of those items of work, fixtures
and equipment which are to be performed, procured and/or installed by Tenant, at
Tenant's expense, and which are hereinafter described as "Tenant's Work",
Exhibit "B". As used herein, "Tenant's Work" shall mean all work, other than
Landlord's Work, necessary (i) in order for Tenant to obtain a certificate of
occupancy and any other required governmental permits or approvals in respect of
the demised premises, and (ii) to enable Tenant to occupy, and to operate its
business at the demised premises in accordance with the terms of this Lease.
(b) In addition to Tenant's Work, Tenant shall perform such other and
further work upon the building and building systems as is required to procure
compliance with all applicable local laws, rules, regulations and directives of
governmental authorities which is required for Tenant to obtain a Certificate of
Occupancy for the premises for the permitted uses (hereinafter "Compliance
Work"). Compliance Work shall include, but shall not be limited to, all work
necessary to accomplish the Compliance Work, including but not limited to
Architectural, Engineering, exipditing, Construction Management, coordination
and construction including the furnishing of materials and equipment, cleanup of
waste and debris, general services, protection of work, temporary maintenance
and services, (called "Construction Services"), including, but not limited to
"compliance with local laws, rules, regulations and directives which may require
wiring and installation of structures and equipment within and without the
demised premises.
(c) The reasonable costs, fees and expenses incurred and paid by the
Tenant for the Compliance Work (but no portion of such costs, fees and expenses
incurred and paid for the performance of Tenant's Work) shall be paid for by the
Landlord, as follows:
(i) The Tenant shall submit to the landlord, monthly, all bills,
charges and estimates which Tenant shall receive for performance of Compliance
Work, and Tenant shall consult with Landlord as to reasonable ways to keep costs
down; (ii) Costs of overtime premium and other extraordinary costs
incurred solely to hasten completion of the Compliance Work shall be borne by
the Tenant. All other and reasonable costs incurred and paid in connection with
the Compliance Work shall be reimbursed by Landlord.
(iii) Landlord shall reimburse Tenant within ten (10) days after
Landlord receives a "Paid" bill or cancelled check with invoice from Tenant.
Should the Landlord elect not to reimburse the Tenant directly in the time
provided above, the tenant shall have the right to deduct the
<PAGE>
said costs together with the interest thereon at the prime rate as fixed by
Citibank, N.A. as from time to time, may be adjusted, computed from the time pf
payment of the bill, from the first rents due under this lease.
(d) Prior to the commencement of Tenant's Work and Compliance Work the
Tenant shall submit all the plans for such work an provided in Paragraph 46,
together with any applications and other documents necessary for filing same
(hereinafter referred to as "plans") to the Landlord. As soon as practicable,
but in no event later than ten (10) working days after receipt thereof, Landlord
shall notify Tenant, in writing, of its objections to the plans. Objections
shall be limited to technical objections affecting those portions of the plans
requiring structural changes or changes to the building system or public areas.
No objections shall be made for asthetics. They shall specify the portion of the
plan or specification objected to and propose a remedy acceptable to Landlord if
possible. If the Landlord fails to make objections within the time provided,
said plans shall be deemed accepted and Landlord shall execute and deliver to
Tenant owner's contents and other documents required to file the plans, and to
prosecute the applications to their conclusions. Landlord and its agents shall
be reasonably available before the plans are submitted, and thereafter, for
consultation, to supply data available to them on existing conditions, and to
review necessary remedies to Department of Building objections.
(e) It is understood that Landlord may be performing Landlord's Work at
the same time that Tenant's Work and Compliance Work is being performed. The
parties and their contractors shall cooperate so that all work can be
completedin and orderly fashion.
(f) Notwithstanding the foregoing, in no event shall Landlord be liable
for damages, direct, contingent or otherwise, or any injury, loss or claim
sustained by Tenant as a result of Tenant being unable to lawfully occupy the
demised premises as a result of Landlord not having fully complied with any
local law, rule or regulation governing the demised premises, unless said
failure to so comply is the result of Landlord's intention or willful breach of
its obligations to be performed hereunder.
(g) In the event of any objection by Landlord to Tenant's plans, as
provided above or any issue that may involve obtaining any permits, licenses or
certificates, or Tenants execution of all Work to performed by it, which cannot
be resolved between the parties, the matter shall be submitted to an Impartial
Engineer, selected as hereinafter provided, whose decision shall be final and
binding. The Impartial Engineer shall be selected by the Tenant from a list of
three independent and reputable engineers submitted by Landlord to Tenant within
ten (10) days from the date hereof. If none of them wish to serve, a new list
will be submitted. If Landlord and Tenant cannot resolve any such dispute,
Landlord and Tenant shall be prepared to present such issues to the Impartial
Engineer within 48 hours after demand by either party for arbitration (excluding
weekends). Landlord and Tenant shall request the Impartial Engineer to render an
immediate decision. The expenses of the Impartial Engineer shall be paid as he
may direct, and if not so directed then equally by Landlord and Tenant.
45. SPRINKLER SYSTEM
(a) With respect to the sprinkler system in the demised premises,
Landlord warrants and represents that:
(1) at the time of the signing of this lease, said system
is in working order and complies with all laws, rules and regulations governing
same; and that
(2) said system an it currently exists does or will comply
with all
<PAGE>
applicable laws, rules and regulations with respect to the permitted use of the
demised premises by the Tenant.
(b) Except with respect to any modifications of the system that may be
made my Landlord to comply with the representations set forth above, all other
modifications made to said system by the Tenant shall be at Tenant's sole cost
and expense and shall comply with all other applicable provisions of this lease.
46. TENANT'S PLANS:
Tenant agrees to submit to Landlord, for Landlord's written approval,
complete architectural and engineering plans and specifications for the demised
premises, prepared by licensed architects or engineers, describing all of
Tenant's work, or such portions of Tenant's Work and Compliance Work as is
necessary for Tenant to obtain a certificate of occupancy. [Text in original
illegible] Such plans may be submitted on a floor by floor basis. Such plans and
specifications shall show in sufficient detail the location of all of Tenant's
work. In the event Tenant's plans or specifications are incomplete or
inadequate, or would subject Landlord to material additional costs and expenses
in the performance of Landlord's work, and/or would provide for or require any
installation or work which is or might reasonably be unlawful or create an
unsound or dangerous condition or adversely affect the structural soundness of
the Building or any part thereof, and/or would interfere with or abridge the use
and enjoyment of any other space in the Building (except the roof for which
Tenant has exclusive use subject to the rights of the Landlord as provided in
the lease), and/or would affect to alter in any way the exterior of the
Building, and/or the color or surfacing thereof, Landlord may deny approval of
Tenant's proposed plans and specifications by notice to Tenant setting forth in
writing and in reasonable detail Landlord's objections thereto, or if Tenant's
work shall entail structural changes to the Building, Owner may condition its
approval thereof to, among other matters, the posting by Tenant of adequate
security therefor (no additional security to be required for Tenant's
installation of an HVAC system on the roof, interior stair case(s) or
modifications to the existing sprinkler system). Tenant acknowledges that the
Building is an area designated as a "Proposed Landmark District" and shall
comply with all laws, rules and regulations pertaining thereto and obtain all
necessary permits, leases and consents or the like from any and all governmental
agencies, governing bodies or pertaining jurisdiction thereof.
47. TENANT'S CONTRACTORS:
Tenant agrees to employ reputable contractors and subcontractors to
perform Tenant's Work and Compliance Work in accordance with Tenant's plans
following delivery of possession of the demised premises to Tenant, as
hereinabove set forth. Notwithstanding the foregoing, however, Tenant or its
contractors shall not be authorized to commence Tenant's Work and Compliance
Work until Landlord shall have been furnished with (i) the insurance policies
Tenant or its contractors or subcontractors are obliged to procure and maintain
hereunder as set forth in Paragraph 49 hereof, and (ii) copies of all permits,
approvals, licenses and certificates required by any governmental authorities to
be obtained by Tenant or its contractors or subcontractors for the performance
of Tenant's work.
<PAGE>
48. MECHANICS LIEN:
(a) LANDLORD NOT LIABLE: Nothing contained in this Lease shall be
deemed or construed in any way as constituting the consent or request of
Landlord, express or implied, by inference or otherwise, to any contractor,
subcontractor, laborer or materialmen for the performance of any labor or the
furnishing of any materials for any specific improvement, alteration to or
repair of the demised premises or any part thereof, nor as giving Tenant any
right, power or authority to contract for or permit the rendering of any
services or the furnishing of materials that would give rise to the filing of a
lien against the Building or Demised Premises or any part thereof, or any assets
of Landlord.
(b) DISCHARGE OF LIENS: If any mechanic's, laborer's, vendor's,
materialman's or other statutory lien shall at any time be filed against any
assets of Landlord by reason of work, labor, services or materials performed or
furnished, or alleged to have been performed or furnished, to Tenant or to
anyone holding the demised premises through or under Tenant, Tenant shall cause
the same to be vacated of record or discharged by bonding to the satisfaction of
Landlord within twenty (20) days after notice of the filing thereof. If Landlord
shall incur any attorneys' fees or expenses by reason of the filing of any such
lien, Tenant shall repay such fees and expenses to Landlord on demand. If Tenant
shall fail to cause such lien forthwith to be so vacated, discharged or fully
bonded within twenty (20) days after being notified of the filing thereof, then,
in addition to any other right or remedy of Landlord, Landlord may vacate or
discharge the same by paying the amount claimed to be due or by bonding the
same, and the amount so paid by Landlord, including reasonable attorneys' fees
and expenses incurred by Landlord either in defending against such lien or in
procuring the vacatur or discharge of such lien, together with interest at the
Default Rate, shall be due and payable by Tenant to Landlord as additional
rental upon demand. Landlord shall permit Tenant's attorneys to a reasonable
opportunity to comply with the provisions of this Paragraph be engaging its own
attorneys.
49. ________________
(a) INSURANCE: In furtherance of Tenant's obligations under this
Paragraph, but not in limitation thereof, at all times following the delivery of
possession of the demised premises to Tenant and throughout the Term (except as
otherwise provided below), Tenant shall secure and maintain in force, at
Tenant's expense, provided same is available from insurance companies licensed
to do business in New York State:
(i) Comprehensive General Liability Insurance, on an
occurrence basis, including, without limitation, insurance
against assumed or contractual liability under this lease and
water damage legal liability, naming Landlord as "Additional
Insured-Lessor", providing coverage against claims for bodily
and personal injury, death and property damage occurring on,
in or about the demised premises, with limits of not be less
than $3,000,000 combined single limit per occurrence with
respect to bodily or personal injury, death and property
damage, to be increased as hereinafter provided.
(ii) All-risk Property Insurance (Improvements and Betterments
or similar coverage), naming Tenant and Landlord as the named
insureds, covering the full replacement cost of all Permanent
Leasehold Improvements, which insurance shall be effective
from the date of completion of Tenant's work; which amount
shall be increased as hereinafter provided. All proceeds paid
under such policy shall be trust
<PAGE>
funds to be held and applied by Tenant to replace Permanent
Leasehold Improvements, in the event of a Destruction, Fire or
Other Casualty as provided in Paragraph 9.
(iii) Statutory Worker's Compensation Insurance, employer's
liability insurance and New York State disability benefits
insurance, covering all persons employed by Tenant at the
demised premises, and other statutory forms of insurance for
all persons who under applicable law shall be required to be
covered thereby;
(iv) All-Risk insurance covering the full rental value of the
demised premises, naming Landlord as the only named insured,
with limits of not less than one-year's Fixed Annual Rent plus
the additional rent payable pursuant to Paragraphs 39, 42 and
43. Landlord shall take out this policy for and on behalf of
Tenant and bill Tenant for same as additional rent. Landlord
represents that the current cost for such insurance does not
exceed $2,000.00 per annum.
(b) INSURANCE DURING CONSTRUCTION: During any period following delivery
of possession and throughout the Term when construction work is being performed
in the demised premises, Tenant shall require any contractor or subcontractor of
Tenant to carry and keep in force and effect until such construction work is
completed, and at no expense to Landlord:
(i) Comprehensive General Liability Insurance, on an
occurrence basis, including contractual liability coverage
(designating the indemnity provisions of any construction
contracts), completed operations coverage, broad form property
damage endorsement and Contractor's Protective Liability
coverage covering the operations of all subcontractors,
providing that the contractor or subcontractor in the named
insured and that Tenant, at Landlord's election, Landlord's
construction manager, are additional insureds, and providing
liability limits as reasonably designated by Landlord from
time to time, taking into account the hazards associated with
Tenant's construction, but in any event not less than
$3,000,000 combined single limit per occurrence with respect
to bodily and personal injury, death and property damage.
(ii) Statutory Worker's Compensation, Employer's Liability,
New York State disability benefits and other statutory forms
of insurance in form and limits as required by law covering
all persons employed by Tenant's contractors or
subcontractors; and
(iii) All-Risk Property Insurance (builder's risk completed
value non-reporting form or installation floater, as
applicable) covering Permanent Leasehold Improvements, naming,
among others, Tenant, Landlord, the general contractor and all
subcontractors employed by Tenant or by the general
contractor, as insureds, as their respective interests may
appear, effective from the commencement until the completion
of Tenant's Work, but terminating no sooner than the inception
of the policy described In subdivision (b)(ii) of this
Paragraph; and
(iv) such additional insurance coverage as Landlord may
reasonably designate
<PAGE>
from time to time.
(c) FORM OF POLICIES; EVIDENCE OF INSURANCE: All of the insurance
required to be maintained or caused to be maintained by Tenant, as well as the
form and issuer of such insurance shall be subject to Landlord's's reasonable
approval and shall be issued by responsible companies licensed to do business in
the State of New York. All of the property insurance coverages referred to in
subdivisions (a)(i) and (ii) and (b) (i) and (iii) of this Paragraph shall
contain a usual waiver of subrogation by the insurer of any right to recover the
amount of any loss due to negligence of Landlord, Tenant or their respective
agents or employees. No property insurance shall provide for any deductible or
self-insured retention in excess of $500 per occurrence. The liability insurance
limits referred to in subdivision (a)(i) shall apply to the demised premises.
Prior to Tenant or its contractors entering into possession of the demised
premises and at least thirty (30) days prior to the expiration of any of the
policies to be maintained or caused to be maintained by Tenant, Tenant shall
deliver or cause to be delivered to Landlord a duplicate certified copy
(certified by an officer of the Tenant) of each of the required policies
evidencing the issuance of such insurance by the insurer, if requested by
Landlord, and proper certificates of insurance in form satisfactory to Landlord,
together with satisfactory proof of payment of the premiums therefor. If Tenant
shall fail to maintain or cause to be maintained any of such insurance from and
after the date of it or its contractors entering into possession of the demised
premises or at any time during the Term, Landlord may obtain such insurance, at
Tenant's expense, and the cost therefor shall be deemed to be additional rent
and shall be payable by Tenant to Landlord on demand. Tenant shall comply, and
shall cause its contractors to comply, with the provisions of all insurance
policies required to be maintained pursuant to this Paragraph, and shall give
the insurer, Landlord notice of all claims, accidents and losses promptly upon
Tenant, or its contractors, as the case may be, acquiring knowledge of the same.
(d) Landlord and Tenant waive all rights against each other for any
damage caused by fire or other perils to the extent covered by insurance
obtained pursuant to this paragraph or any other insurance applicable to the
demised premises or any work performed in the demised premises or the building.
A similar provisions shall be contained in any contract between Landlord or
Tenant and any of their contractors.
50. "AS IS" CONDITION:
Tenant acknowledges and represents to Landlord that it has inspected
and examined the Building and the demised premises, or has caused the same to be
inspected and examined, and that, except for the performance of Landlord's work,
Tenant agrees to accept possession of the demised premises in its existing
condition and state of repair "as is".
51. REPAIRS BY LANDLORD:
Landlord shall have no obligation to make any repairs or replacements
or to render any services of any kind to the demised premises, other than
building systems and structural repairs. Tenant shall promptly after notice from
Landlord make all repairs to the demised premises and appurtenances thereto
which may be reasonably requested by an (i) carrier of Landlord's insurance, or
(ii) mortgagee having an interest in the Building, or (iii) any governmental
body having jurisdiction. Subject to the provisions of paragraphs 5 and 79,
Tenant shall clean and maintain the demised premises and windows and any
appliances and equipment located therein (including without limitation the HVAC
equipment) at Tenant's expense without cost to Landlord.
<PAGE>
52. SECURITY DEPOSIT:
It is agreed that in the event Tenant defaults in respect of any of the
terms, provisions and conditions of this Lease, including, but not limited to,
the payment of rent and additional rent. Landlord may use, apply or retain the
whole or any part of the security so deposited to the extent required for the
payment of any rent and additional rent of any other sum as to which Tenant is
in default or for any sum which Landlord may expend or may be required to expend
by reason of Tenant's default in respect of any terms, covenants and conditions
of this Lease, including but not limited to, any damages or deficiency in the
reletting of the premises, whether such damages or deficiency accrued before or
after summary proceedings or other re-entry by Landlord. In the event that
Tenant shall fully and faithfully comply with all of the terms, provisions,
covenants and conditions of this Lease, the security shall be returned to Tenant
after the date fixed as the end of the Lease and after delivery of entire
possession of the Demised Premises to Landlord. In the event of a sale of the
land and building or leasing of building, of which the Demised Premises form a
part, Landlord shall have the right to transfer the security to the vendee or
lessee and Landlord shall thereupon be released by Tenant from all liability for
the return of such security; and Tenant agrees to look to the new Landlord
solely for the return of said security, and it is agreed that the provisions
hereof shall apply to every transfer or assignment of the security to a new
Landlord. Tenant further covenants that it will not assign or encumber or
attempt to assign or encumber the monies deposited herein as security and that
neither Landlord nor its successors or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or attempted encumbrance.
(a) If Landlord at any time utilizes any portion of the security
deposit in respect or by reason of a default by Tenant, Tenant shall, within
five (5) days after demand, restore and pay Landlord the amount so utilized.
(b) Concurrently with each adjustment in the Fixed Annual Rent pursuant
to Paragraph 39, Tenant shall deposit with Landlord, as additional security, an
amount equal to the difference between one month Fixed Rent, as so adjusted, and
the amount then held by Landlord as security for Tenant's faithful performance
and observance of the terms, provisions and conditions of this Lease.
(c) Said security deposit shall be placed by Landlord in an interest
bearing account. Interest that may accrue thereon shall belong to Tenant, except
such portion thereof as shall be equal to one percent (1%) per annum, which
percentage shall belong to and be the sole property of Landlord and which
Landlord may withdraw from time to time and retain. That portion of the interest
belonging to Tenant shall be accumulated and paid to Tenant annually following
the end of each calendar year and upon the expiration of this Lease. The
obligation to pay any taxes related to or affecting any interest earned on such
security deposit (except as to that portion thereof which belongs to Landlord)
shall be the sole responsibility of Tenant and Tenant hereby agrees to pay same
and to forever indemnify and save harmless Landlord in respect thereof. Tenant
shall, within fifteen (15) days after demand, furnish Landlord or its agent with
a tax identification number for use in respect of such deposit.
(d) Landlord shall notify Tenant of the name of the bank under which
said funds are held and the name of the account, which must signify that it is a
security account.
(e) One (1) year after Tenant has fully occupied the demised premises
and not in default in the payment of rent or additional rent, Tenant may
substitute the security deposit with a Letter of Credit drawn a local reputable
banking institution and containing provisions reasonably
<PAGE>
satisfactory to Landlord.
53. LATE CHARGES:
If Landlord shall not receive any rent, additional rent or other
payments under this Lease within ten (10) days after same is due, Landlord shall
telephone Tenant informing it of same and if payment is not received within 48
hours thereafter, Tenant shall pay, as additional rent, the sum of prime plus 5%
(prime as set by Citibank N.A. as of the first day of that month that rent is
late) of the late amount as a late charge for each day such rent, additional
rent or other payment shall be late, beginning with date said payment was first
due.
54. ALL PAYMENTS DEEMED RENT OR ADDITIONAL RENT:
All payments to be made by Tenant pursuant to this Lease shall be
deemed rent or additional rent, and, in the event of any nonpayment thereof,
Landlord shall have all rights and remedies provided for herein or by law for
non-payment of rent. In the event Landlord shall be required to pay for any
occupancy, permit, or license fee or tax imposed by any governmental authority
by reason of the use of the demised premises for use as herein provided, Tenant
shall forthwith pay to Landlord the amount thereof as additional rent. Without
limiting the foregoing, Tenant shall receive a separate bill for submetered
electric current from the submetering company servicing the building, which
shall not be deemed additional rent except for purposes of Landlord's remedies.
55. RENT DURING HOLD-OVER PERIOD:
The monthly rent during any holdover shall be at the rate of one and
one-half (1 1/2) times the monthly rent by Tenant for the final month of the
herein term (including all escalations).
56. LIMITATION OF LIABILITY OF LANDLORD:
In any action brought to enforce any of the terms, covenants,
provisions or obligations to be performed on part of Landlord under or in
connection with this Lease or the transactions contemplated hereby, any judgment
shall not be the basis of execution on, or be a lien on, any assets of Landlord
or any assets of any party being a partner, joint venturer or tenant in common,
or in other association with Landlord or stockholder in Landlord, other than the
interest in the Building.
57. ALTERATIONS:
(a) COMPLIANCE WITH REQUIREMENTS GOVERNING ALTERATIONS:
Tenant, in making such Alterations, shall comply with the requirements
governing Tenant's Work as are set forth in Paragraph 44, as well as with the
rules and regulations attached to and made a part of this Lease and such other
rules and regulations as Landlord may reasonably prescribe as per paragraph "33"
for the performance of such Alterations by Tenant and its contractors. Tenant
will not call upon Landlord for any costs or expenses connected with such
Alterations and will reimburse Landlord for all costs and expenses which may be
incurred by Landlord in connection therewith, including reasonable architects'
and engineers' fees for reviewing Tenant's plans and specifications and
verifying conformance therewith during or following the completion of such
Alterations, or expenses
<PAGE>
incurred on account of any failure of Tenant to comply with any requirements of
law or public authorities or of this Lease pertaining to the making of such
Alterations. Landlord's approval of Tenant's plans and specifications for any
such proposed Alterations, or any revisions thereto, or Landlord's inspection of
such Alterations to verify conformance with Tenant's plans and specifications
therefor, shall not constitute an opinion or agreement by Landlord that the same
are adequate or sufficient or that the same are in compliance with law or fire
underwriters requirements nor shall such approval or inspection impose any
present or future liability on Landlord, waive any of Landlord's rights or
release Tenant from any of its obligations hereunder.
(c) OWNER'S RIGHT TO INSPECT ALTERATIONS: At all times during the
progress of such Alterations and until final certificates of approval therefor
shall have been delivered to Landlord, Landlord shall have the right to have its
representatives inspect the work being performed in the demised premises and to
verify compliance with the plans and specifications therefor approved by Owner.
58. END OF TERM, CONTINUED:
(a) Paragraph 22 is hereby amended to add the following:
PERMANENT LEASEHOLD IMPROVEMENTS: At the Expiration Date all
improvements to the demised premises made by Tenant as part of Tenant's Work or
any subsequent Alterations made by Tenant (collectively, "Permanent Leasehold
Improvements") shall remain upon and be surrendered with the demised premises,
unless Landlord directs that same or any part of them be removed, upon sixty
(60) days prior written notice, as provided in paragraph 3. As used herein,
"Permanent Leasehold Improvements" shall be deemed to include, without
limitation, all electric plumbing, sprinkler, heating, air conditioning and
lighting systems, fixtures, floor and wall covering, window treatment,
equipment, meters and related installations necessary for the operation thereof
within or serving the demised premises and all other installations the removal
of which will either cause damage to the demised premises, its appurtenances or
any other portion of the Building or will render the item so removed inoperable
or without significant values; however, Permanent Leasehold Improvements shall
not include Tenant's Personal Property.
(b) Tenant shall complete restoration of the demised premises in
accordance with the above provisions within thirty (30) days after the
expiration of the lease at no additional rental. The cost of such restoration
shall be borne equally by Landlord and Tenant.
59. RESTRICTIONS ON RENT:
If at the Commencement Date or at any time or times during the Term,
the Base Rent or additional rents reserved in this Lease shall not be fully
collectible by reason of any Federal, State or City law, proclamation, order or
regulation, or direction of any public officer or body pursuant to law, Tenant
shall enter into such agreement(s) and take such other steps as Landlord may
request and as may be legally permissible to permit Landlord to collect the
maximum rents which may from time to time during the continuance of such legal
rental restriction be legally permissible (and not in excess of the amounts
reserved therefor under this Lease). Upon the termination of such legal rent
restriction prior to the expiration of the Term, (a) the rents shall become and
thereafter be payable hereunder in accordance with the amounts reserved in this
Lease for the periods following such
<PAGE>
termination, and (b) Tenant shall pay to Landlord, if legally permissible, an
amount equal to the rents which would have been paid pursuant to this Lease but
for such legal rent restriction, less the rents paid by Tenant to Landlord
during the period(s) such legal rent restriction was in effect.
60. NONDISTURBANCE AGREEMENT BETWEEN MORTGAGEE AND TENANT:
Landlord represents that the building of which the demised premises
form a part are not presently mortgaged nor subject to any ground or underlying
leases, but should a mortgage be placed upon the building the following
provisions shall apply:
(a) So long as the Tenant is not in default in the payment of rent or
additional rent or in the performance of any of the terms of the Lease, the
Tenant's possession of the leased property and the Tenant's rights and
privileges under the Lease or any renewal thereof shall not be diminished or
interfered with by the Mortgagee.
(b) In the event the mortgage is foreclosed for any reason, and the
Mortgagee succeeds to the interest of the Landlord under the Lease, the Tenant
shall be bound to the Mortgagee under all of the terms of the Lease for the
balance of the term thereof remaining with the same force and effect as if the
Mortgagee were the Landlord under the Lease, and the Tenant hereby attorns to
the Mortgagee as its Landlord, such attornment to be effective and
self-operative, without the execution of any further instrument on the part of
either of the parties hereto, immediately upon the Mortgagee succeeding to the
interest of the Landlord under the Lease. Notwithstanding anything herein to the
contrary, the Tenant shall be under no obligation to pay rent to the Mortgagee
until the Tenant receives written notice from the Mortgagee that it has
succeeded to the interest of the Landlord under the Lease. The respective rights
and obligations of the Tenant and the Mortgagee upon such attornment shall to
the extent of the then remaining balance of the term of the Lease be the same as
now set forth therein, it being the intention of the parties hereto for this
purpose to incorporate the Lease in this Agreement by reference with the same
force and effect as if set forth at length herein.
(c) In the event that the mortgage is foreclosed for any reason and the
Mortgagee succeeds to the interest of the Landlord under the Lease, the
Mortgagee shall be bound to the Tenant under all of the terms of the Lease, and
the Tenant shall, from and after such event, have the same remedies against the
Mortgagee for the breach of an agreement contained in the Lease that the Tenant
might have had under the Lease against the prior Landlord thereunder. In no
event shall the Mortgagee be liable for any act or omission of any prior
Landlord, be subject to any offsets or defenses which the Tenant might have
against any prior Landlord, or be bound by any rent or additional rent which the
Tenant might have paid to any prior Landlord for more than the current month.
(d) The rights and obligations hereunder of the Tenant and the
Mortgagee shall bind and inure to the benefit of their respective successors and
assigns.
61. ASSIGNMENT & SUBLETTING:
Anything contained herein to the contrary, notwithstanding, Landlord
shall not unreasonably withhold consent to the assignment or subletting of this
Lease provided:
A. Any such assignment or subletting shall be made solely upon the
following terms and conditions:
1. Tenant shall submit to Landlord in writing:
<PAGE>
(a) The name of the proposed assignee or subtenant;
(b) The terms of the proposed assignment or sublease;
(c) The nature and character of the business which the
proposed ssignee or subtenant will conduct in the Demised Premise; and
(d) thereafter shall submit to the Landlord any other
information concerning the assignment or sublease which the Landlord way
reasonably request and which Tenant may reasonably be able to obtain.
2. Upon receiving Landlord's written consent a duly executed
copy of the sublease or assignment shall be delivered to Landlord within ten
(10) days after execution thereof.
B. In the event of a proposed assignment or a proposed sublease for all
or substantially all of the Demised Premises, Landlord shall have the further
option to be exercised within the said thirty (30) day period, to cancel and
terminate Tenant's Lease, effective on the date of Tenant's proposed assignment
or sublease, in which event this Lease and the term hereof shall expire and
terminate on that date as if it was the date herein fixed for the termination
and expiration of the term of this Lease.
1. If at the time a request to assign or sub-let the premises
is made as provided above and the composit of Tenants' and the proposed assignee
or sub-tenants' financial net worth is equal to or greater than Two Million
($2,000,000.00) Dollars, than Landlord shall not have the option to terminate
the lease.
C. Subject to paragraph "B" above, if the Landlord shall not exercise
its foregoing option within the time set forth aboved, its consent to the
proposed assignment or subletting shall not be unreasonably withheld, provided,
however, that it may withhold consent therein if in the reasonable exercise of
its judgment it determines that the general reputation of the proposed assignee
or subtenant are not consistent with the character of the building and its
tenants.
D. In the event of any subletting or assignment pursuant to the
provisions of this Paragraph, Tenant shall have the right to all rent payable by
said sub-tenant until Tenant is reimbursed its reasonable expenses expended in
connection with sub-letting said premises, after which all profits made by the
Tenant pursuant to said sub-lease or assignment shall be divided equally between
Landlord and Tenant.
E. If this Lease shall be assigned, or if the Demised Premises or any
part thereof, be sublet or occupied by any person or persons other than Tenant,
Landlord may, after default by Tenant, collect rent from the assignee, subtenant
or occupant and apply the net amount collected to the rent herein reserved, but
no such assignment, subletting, occupancy or collection of rent shall be deemed
a waiver of the covenants in this Paragraph, nor shall it be deemed acceptance
of the assignee, subtenant or occupancy as a Tenant, or a release of Tenant from
the full performance by Tenant of all the terms, conditions and covenants of
this Lease.
F. Each permitted assignee or transferee shall assume and be deemed to
have assumed this Lease and shall be and remain liable jointly and severally
with Tenant for the payment of the rent and additional rent and for the due
performance of all the terms, covenants, conditions, and agreements hereto
contained on Tenant's part to be performed for the term of this Lease, limited
only by the term of said sub-lease and the space occupied by said sub-tenant. No
assignment shall be binding on Landlord unless such assignee or Tenant shall
deliver to Landlord a duplicate original of the instrument of assignment, in
form reasonably satisfactory to Landlord containing a covenant of assumption by
the assignee of all of the obligations aforesaid and shall obtain from Landlord
the
<PAGE>
aforesaid written consent, prior thereto.
G. Anything herein contained to the contrary notwithstanding:
1. The transfer of a majority of the issued and outstanding
capital stock of any corporate Tenant of this Lease or a majority of the total
interest in any partnership Tenant, whether effected by operation of law or
otherwise, shall be deemed an assignment of this Lease, except that the merger
or acquisition of the Tenant by or with a person, firm or corporation whose
resulting net worth is equal to or greater than that of Tenant shall be
permitted (subject only to the provisions of paragraphs Al, A2 and F above) or a
transfer of shares amongst current shareholders and key employees of the Tenant.
2. No other or further assignment or subletting shall be
made except in compliance with the provisions of this Paragraph.
62. LANDLORD'S RIGHTS ON ABANDONMENT
AND AFTER ENTRY:
If, at any time during the term, the Demised Premises shall be
abandoned by Tenant, Landlord may, upon five (5) days notice to Tenant, at
Landlord's option, enter into and upon the same by force or otherwise, without
becoming liable to Tenant for damages or for any payment of any kind whatsoever,
and may, in Landlord's uncontrolled discretion, as agent of Tenant, re-let the
Demised Premises, or any part thereof, for the whole or any part of the then
unexpired term, and, for the purposes of such re-letting, Landlord may make
alterations and modifications of the Demised Premises, and may receive and
collect all rent payable by virtue of said re-letting, and hold Tenant liable
for the difference between the rent and other charges that would have been
payable hereunder during the residue of the term, if this Lease had continued in
force, and the rent for such period realized by Landlord by means of re-letting
to any other party or parties. The terms and conditions of any such re-letting
shall be in the uncontrolled discretion of Landlord.
63. NOTICES:
All notices or demands required or provided to be given or served
pursuant to this Lease, shall be deemed to have been given or served only if in
writing, forwarded by Certified Mail, postage prepaid, addressed to the parties
at the respective addresses hereinabove set forth and their respective attorneys
as follows:
For Landlord: SCHAEFFER, SCHAEFFER & SANDS
450 SEVENTH AVENUE
NEW YORK, NEW YORK 10123
For Tenant: BECKER, GOLDSTEIN & GRAFF
36 WEST 44TH STREET
NEW YORK, NEW YORK 10036
unless notified in writing of a change of such attorneys. Such addresses by any
party, may be
<PAGE>
changed, from time to time, by serving notice as herein provided. Neither party
shall be required to send more than three separate notices or demands to the
other party if the interest of Landlord or Tenant is hereafter assigned to more
than three interests. Personal notice may be made upon the Tenant by service
upon Leonard Spector, Marvin Crair or Richard Lysaker, or any other person who
is an officer of the Tenant who is designated in writing to Landlord.
64. LANDLORD'S CERTIFICATE:
Landlord shall, without charge, at any time and from time to time,
within ten (10) days after reasonable request by Tenant, deliver a written
instrument to Tenant or any other person, firm or corporation specified by
Tenant, duly executed and acknowledged; certifying:
A. Whether Tenant has faithfully and full made all payments
then and theretofore due to Landlord;
B. Whether this Lease is unmodified and in full force and
effect; or if there has been any modification, whether this Lease is in full
force and effect as modified, and stating any such modification;
C. Whether Landlord knows or does not know, as the case
may be, of any default by Tenant in the performance by Tenant of all agreements,
terms, covenants and conditions on Tenant's part to be performed. If Landlord
certified that it knows of any such default, it shall specify the same in said
written instrument; and
D. The dates to which the Fixed Rent, additional rent and
other charges hereunder have been paid.
65. TENANT'S CERTIFICATES:
Tenant shall, without charge, at any time and from time to time, within
ten (10) days after reasonable request by Landlord, deliver a written
instrument, to Landlord or any other person, firm or corporation specified by
Landlord, duly executed and acknowledged, certifying:
A. Whether this Lease is unmodified and in full force and
effect, or, if there has been any modification, whether the same is in full fore
and effect as modified, and stating any such modification;
B. Whether or not there are then existing any setoffs or
defenses against the enforcement of any of the agreements, terms, covenants or
conditions of this Lease and any modification thereof upon the part of Tenant to
be performed or complied with, and, if so, specifying the same; and
C. The dates to which the Fixed Rent, additional rent and
other charges hereunder have been paid.
66. FEES & EXPENSES:
If Tenant shall default in the observance or performance of any
term or covenant on Tenant's part to be observed or performed under or by virtue
of any of the terms or provisions of this Lease, after notice and upon
expiration of the applicable grace period, Landlord may immediately or at any
time thereafter and without notice perform the same for the account of Tenant.
If Landlord makes any expenditures or incurs any obligations for the payment of
money in connection therewith, including but not limited to, attorneys' fees in
instituting, prosecuting or defending any action or proceeding, such sums paid
or obligations incurred with 10% interest and costs shall be deemed to
<PAGE>
be additional rent hereunder and shall be paid by Tenant to Landlord within five
(5) days after rendition of any bill or statement to Tenant therefor.
67. NO WAIVER BY LANDLORD OR TENANT:
The receipt of any rent, or any portion thereof, whether specifically
reserved or payable under any of the covenants herein contained, after a default
on the part of the Tenant (whether such rent is due before or after such
default) shall not be deemed to operate as a waiver of any other default or of
the right of Landlord to enforce the payment of any rent herein reserved or to
declare a forfeiture of this Lease and to recover the possession of the Demised
Premises as provided in this Lease. The failure to enforce any covenant after
its breach or any provision after default shall not be construed as a waiver on
the part of Landlord or Tenant of any rights under this Lease.
68. LANDLORD'S REMEDIES CUMULATIVE:
All the rights and remedies herein given to the Landlord for the
recovery of the Demised Premises because of the default by the Tenant in the
payment of any sums which may be payable pursuant to the terms of this Lease, or
upon the breach of any of the term thereof, or the right to re-enter and take
possession of the Demised Premises upon the happening of any of the defaults or
breaches any of the Tenant's covenants, or the right to maintain any action for
rent or damage, are hereby reserved and conferred upon the Landlord as distant,
separate and cumulative remedies, and no one of them, whether exercised by the
Landlord or not, shall be deemed to be in exclusion of any of the others.
69. HEADING NOTES:
The heading notes used as headings for the various paragraphs of this
Lease are used only as a matter of convenience for reference, and are not to be
considered as a part of this Lease or to be used in determining the intent of
the parties hereto.
70. DEFINITIONS & INTERPRETATIONS:
The words "Landlord" and "Tenant" and the pronouns referring thereto,
as used in this Lease, shall mean, where the context requires or admits, the
persons named herein as Landlord and as Tenant, respectively, and their
respective heirs, legal representatives, successors and assigns, irrespective of
whether singular or plural, masculine, feminine or neuter. Except as herein
provided otherwise, the agreements and conditions of this Lease contained on the
part of Landlord to be performed and observed shall be binding upon Landlord and
its heirs, legal representatives, successors and assigns and shall enure to the
benefit of Tenant and it's heir, legal representatives, successors and assigns;
and except as herein provided otherwise, the agreements and conditions on the
part of the Tenant to be performed and observed shall be binding upon the Tenant
and its heirs, legal representatives, successors and assigns and shall enure to
the benefit of Landlord and its heirs, legal representatives, successors and
assigns. The word "Landlord" as used herein means only the owner for the time
being of Landlord's interest in this Lease, that is, in the event of any
transfer of Landlord's interest in the premises, upon written notice to Tenant,
the transferor shall cease to be liable, and shall be released from all
liability for the performance or observance of any agreements or conditions on
the part of the Landlord to be performed or observed subsequent to the time of
said transfer, it being understood and agrees that from and after said transfer
the transferee shall be liable for the
<PAGE>
performance and observance of said agreements and conditions.
If Landlord or Tenant shall consist of more than one person, then the
liability of all such persons, including the guarantors, shall be joint and
several.
It is agreed that if any provisions of this Lease shall be determined
to be void by any Court of competent jurisdiction, then such determination shall
not affect any other provisions of this Lease, all of which other provisions
shall remain in full force and effect; and it is the intention of the parties
hereto that if any provision of this Lease is capable of two constructions, one
of which would render the provision void and the other of which would render the
provision valid, then the provision shall have the meaning which renders it
valid.
71. BROKER:
The parties represent that KAUFMAN MANAGEMENT and NEWMARK REAL ESTATE
are the only brokers who brought about this Lease whose fees shall be paid by
LANDLORD. In the event that a claim for brokerage commission is brought against
Landlord by any brokerage firm, individual or entity other than aforementioned
firms, claiming to have dealt with Tenant with respect to the demised premises,
then and in such event Tenant does hereby agree to indemnify, reimburse, save
and hold Landlord harmless from any such claims and costs. Tenant shall have the
right to use its own attorneys to defend any such claim.
72. APPLICABLE LAW, ETC.:
This Lease contains the entire agreement between Landlord and Tenant
with respect to the subject matter hereof and includes and supercedes all prior
discussions, agreements and understandings. This Lease shall be governed by and
construed in accordance with the applicable laws of the State of New York. This
Lease, including this article, may not be modified except by a writing executed
by both Landlord and Tenant. Except as herein provided to the contrary, the
covenants and agreements herein contained shall bind and inure to the benefit of
Landlord and Tenant and their respective successors and assigns.
73. SALE OF PREMISES:
In the event of a bonafide offer to purchase the building of which the
demised premises form a part, then and in such event, Landlord shall not sell
the demised premises without giving the Tenant a fifteen (15) day option within
which to purchase the premises on the same terms and conditions as those on
which the Landlord is willing to make to such bonafide purchaser. In such event
Landlord shall, by registered mail furnish Tenant with the terms and conditions
of such proposed sale and the Tenant shall have the opportunity of purchasing
the premises upon the identical terms and conditions as those offered by a
prospective bonafide purchaser. If Tenant does not reply in writing by
registered mail, addressed to the Landlord, within such fifteen (15) day period,
the failure to do so shall be deemed a refusal to purchase on the part of the
Tenant.
74. ACCESS TO ROOF AND SKYLIGHTS:
Tenant shall have access to and use of the roof of the building of
which the demised premises form a part without additional fee for any use not
inconsistent with this lease, including installing any permanent leasehold
improvements, the installation of a deck thereon and opening and maintaining the
skylights thereon, provided Tenant has, is and will comply with all of the terms
and provisions of
<PAGE>
this lease.
75. CREDIT FOR IMPROVEMENTS
76. OPTION TO LEASE ADDITIONAL SPACE
Tenant shall have the first option to lease any additional space that
becomes available in the building of which the demised premises are a part
pursuant to the following provisions:
(a) When such space is or is about to become available, Landlord shall
notify Tenant of same, indicating the proposed tenant, use, date of occupancy,
location, number of square feet available and the price per square foot for the
balance of Tenant's term.
(b) Tenant shall have ten (10) days within which to accept such offer
in writing. If Landlord does not receive acceptance within said ten (10) days,
Tenant shall be deemed to have rejected said offer.
(c) If the offer is accepted, Landlord and Tenant shall enter into an
agreement with respect to said additional space incorporating the terms of said
offer and this lease.
(d) If the offer is not accepted, as provided above, Landlord may lease
the space to the proposed tenant.
(e) In the event the premises first offered to Tenant are not leased by
Landlord to the proposed tenant, then Landlord shall re-offer them to Tenant
prior to leasing them to a third party, all in accordance with the provisions
set forth above.
77. ACCESS TO PREMISES
Tenant shall have access to the demised premises, basement
and roof 24 hours a day, seven days a week. However, Tenant shall be pay for all
heating, electrical, employee or other cost directly associated and arising out
of Tenants use of the demised premises beyond those hours and days set forth in
Paragraph 29 of the printed portion of this lease. If any such expenses cannot
be precisely determined, they way be reasonably estimated by Landlord.
78. LOCAL LAWS
Following completion of the Compliance Work, in the event that the
building of which the demised premises form a part shall thereafter not comply
with Local Laws, Landlord shall take all steps necessary to have the building
comply with such Laws, all at Landlord's expense. Tenant shall fully co-operate
with Landlord in all respects in order to enable Landlord to comply with said
Laws, including the manner and timing of construction by Tenant and the
submission and, if necessary, modification of all plans for construction by the
Tenant.
79. WINDOW CLEANING
Landlord shall clean the windows In the demised premises after same are
occupied by Tenant two times every year.
80. BASEMENT SPACE
<PAGE>
81. ADDITIONAL BUILDING EMPLOYEES
Tenant shall have the option the hire an elevator starter to work in
and about the building in that capacity, all at Tenant's sole cost and expense,
including but not limited to any and all union obligations in connection with
such employment.
Tenant shall have the further right to engage such employees to work in
and about the building on weekends at Tenant's sole cost and expense, if
Landlord cannot supply said personnel if reasonable notice of such requirements.
All such personnel are subject to Landlords approval before hiring by
Tenant, which consent shall not unreasonably be withheld.
82. CONSENTS
Any time under this lease that Landlord or Tenants consent is required,
same shall not be unreasonably be withheld or delayed and there shall be no
charge therefore.
83. STEAM
Subject to the applicable provisions of this lease, Tenant may connect
the buildings steam system to the HVAC system to be installed by Tenant, all at
Tenants sole cost and expense.
84. EMERGENCY REPAIRS BY TENANT
Tenant may make emergency repairs to the demised premises or the
building of which they form a part and Landlord shall reimburse Tenant for all
reasonable expenses incurred in connection with said repairs. Tenant shall be
liable for the quality, character and necessity of said repairs.
85. ATTORNEY'S FEES
In any action or proceeding between the Landlord and Tenant, the
prevailing party shall be entitled to recover reasonable attorneys fees, as may
be fixed and determined by the court or tribunal having jurisdiction over the
matter.
86. REPAIRS BY LANDLORD
Any repairs required to be made by Landlord shall be promptly commenced
and completed, taking into account the time that may be required to draw and
file plans, obtain permits, licenses or the like and the availability of
contractors, labor or any other person, firm or corporation necessary to make
and complete said repairs. Landlord shall not be liable for any delays beyond
its control, including but not limited to labor disputes, acts of God, war,
insurrection or inclement weather.
87. DESTRUCTION OF PREMISES
In amplification of Paragraph 9 of the printed portion of the lease, it
is agreed as follows:
(a) In the event all or substantially all of the demised premises
are rendered unusable, Tenant shall, immediately after said casualty, consult
with Landlord in locating and renting alternative temporary space of
approximately 60,000 square feet that would permit Tenant to carry on its
business and affairs. Landlord and Tenant shall cooperate in finding suitable
temporary space for Tenant.
(b) In the event Landlord elects to restore the premises, Tenant shall
remain at its temporary location until the demised premises are restored and
available for occupancy by Tenant.
<PAGE>
If Landlord does not restore the entire demised premises within twelve (12)
months after the casualty, Tenant may cancel this lease at which point the term
of this shall end as if that were the termination date originally set forth
therein.
(c) Landlord shall pay to Tenant any excess annual rent or additional
rent it is required to pay in its temporary space over the amount of rent and
additional Tenant would have been required to pay to Landlord under this lease,
if any, for the time commencing with when the Landlord must elect to restore the
premises until the right arises for Tenant to cancel this lease, as provided
above.
88. RE-LETTING PREMISES
Notwithstanding the provisions of paragraph 18, Landlord
shall use reasonable efforts to re-let the demised premises after they have been
vacated by Tenant.
89. EMINENT DOMAIN
Notwithstanding the provisions of paragraph 10, Tenant shall
be entitled to receive any award or portion thereof directly attributable to the
unamortized cost of any alteration, installation, addition or improvement to the
demised premises made at the expense of the Tenant. Furthermore, Tenant shall
not be precluded from asserting an independent claim against the condemning
authority for the foregoing moving expenses.
90. OCCUPANCY
In furtherance of paragraph 15, Landlord will cure or cause
to be cured any building violation which (a) are not required to be cured by
Tenant, and (b) prevent Tenant from the permitted use of the demised premises.
91. ARBITRATION
With respect to paragraph 33, any arbitration proceeding
brought thereunder shall be an expedited or speedy proceeding.
92. SIGNS ON THE BUILDING
Subject to the provisions of this lease and the applicable
laws, rules and regulations affecting same, Tenant may place a sign on the
exterior portion the building naming the building after the Tenant, placing
Tenants name on any floor it occupies and upon the lobby directory. No other
name may be placed upon the face of the building except with respect to the
commercial stores on the ground floor. Tenant may make reasonable objection to
the signs to be placed upon the building, if any.
93. DECORATIONS
Notwithstanding the provisions of paragraph 6 of the Rules
and Regulations of this lease, Tenant may perform all usual and customary
cosmetic interior non-structural decorations of the demised premises intended by
this lease.
94. MAINTAINING THE 2ND AND 3RD FLOORS
Tenants obligation to maintain and repair the 2nd and 3rd
floors of the demised premises shall not commence until Tenant takes possession
thereof or is required to take possession
<PAGE>
thereof, whichever shall first occur.
95. PARTIAL YEAR
Any calculation based upon an annual or fiscal year shall be prorated
to take into account the Tenants actual or required possession during a portion
of said annual or fiscal year.
96. USE OF FREIGHT ELEVATOR
If permitted by law, Landlord shall make the necessary applications to
permit the freight elevator to be used as a passenger elevator for the use
intended in this paragraph. Any expenses associated with the application or
modification of the freight elevator to permit its use as a passenger elevator
shall be paid for by Tenant. If Tenant elects not to pay for same, Landlord is
under no obligation to make any such changes, improvements or modifications. If
the freight elevator is permitted to be used as a passenger elevator, Tenant may
have use of same for such purpose from 8:30 AM to 9:30 AM and 4:30 PM to 5:30 PM
weekdays, subject to the rights of all tenants' use thereof as a freight
elevator.
97. ELECTRIC RATE
In the event of any conflict between the provisions of this paragraph
and the provisions of the electric rider attached to this lease identified as ER
18, the provisions of this paragraph shall prevail.
The Landlord has and shall agree to install submeters for each of the
five floors comprising the Total Demised Premises. The Landlord shall furnish
electricity to the Demised Premises on a submetered basis and Tenant covenants
and agrees to purchase the same from Landlord or Landlord's designated agent at
the rate set forth below, at which the Landlord from time to time purchases
electric current from the public utility corporation servicing the Building for
distribution to tenants in the Building and for use in all public areas of the
Building, such costs to take account of all charges, fuel adjustments, service
classifications, taxes or charges or credits of any kind imposed on or in
connection with the purchase of such electric current. The "Landlord's Cost"
shall be determined by dividing the total dollar sum appearing on the invoice,
less all itemized taxes, (Landlord's Cost) submitted to the Landlord by the
Utility, by the # of KW HRS appearing on said invoice. This amount shall be
referred to as the "Cost per KWH" and is represented by the following equation:
Landlord Cost
------------------------------------- = Cost Per KWH
No. of KW HRS Consumed
The Landlord's invoice to the tenant shall be this sum, plus 15%, times the # of
KWH consumed by the tenant, as determined by the submeters measuring electricity
delivered to the Tenant plus all applicable taxes based upon Tenants invoice.
Where more than one meter measures the service of Tenants in the Building, the
service rendered through each meter may be computed and billed separately in
accordance with the provisions hereof. Bills shall be rendered at the same
frequency as
<PAGE>
the Landlord receives bills from the utility and based on the usage determined
by the meter, and shall be paid within 10 days of after the same are rendered.
If any invoice is unpaid after thirty (30) days, Landlord may discontinue the
service of electric current to the Demised Premises without releasing Tenant
from any liability under this Lease and without Landlord or Landlord's agent
incurring any liability for any damage or loss sustained by Tenant by such
discontinuance of service. Unless non-payment arises from a dispute concerning
the computation of the amount billed, in which event service will not be
discontinued if Tenant places in Escrow with Tenant's attorney the amount in
dispute and pays to Landlord the amount not in dispute. In no event shall bills
rendered by Landlord include any charge for electricity furnished to portions of
the Buildings other than the Demised Premises or equipment exclusively serving
same.
98. INSURANCE ADJUSTMENT
The insurance required to be obtained by Tenant pursuant to paragraph
49(i) and (ii) in this lease shall be adjusted as of the times and in the manner
set forth in this Article:
(a) Definitions: For the purpose of this paragraph, the following
shall apply:
(i) The term "Base Year"shall mean the Indice for the month
of March, 1987.
(ii) The term "Price Index" shall mean the "Consumer Price
Index" published by the Bureau of Labor Statistics of the U.S.
Department of Labor, All Items, New York, NY -- Northeastern, NJ,
for the urban wage earners and appropriately adjusted.
(iii) The term "Price Index for the Base Year" shall mean
the monthly All Item Price Indice for the month of March, 1987.
(b) Effective as of each January subsequent to the Base Year but in no
event sooner than one (1) year after the commencement date of this
lease, there shall be made a cost of living adjustment of the amount of
said insurance to be maintained by Tenant. The January adjustment shall
be based on such percentage difference between the Price Index for the
preceding month of December and the Price Index for the Base.
(i) In the event the Price Index for January in any calendar
year during the
<PAGE>
term of this lease reflects an increase over the Price Index
for the Base, then the amount of said insurance as of the
January following such month of December (unchanged by any
adjustment under this Article) shall be multiplied by the
percentage difference between the Price Index for December and
the Price Index for the Base Year, and the resulting sum shall
be added to such insurance, effective as of such January lst.
In the event that the Price Index ceases to use 1967 - 100 average as the basis
of calculation, or if a substantial change is made in the terms or number of
items contained in the Price Index, then the Price Index shall be adjusted to
the figure that would have been arrived at had the manner of computing the Price
Index in effect at the date of this lease not be altered. In the event such
Price Index (or a successor or substitute index) is not available, a reliable
governmental or other non-partisan publication evaluating the information
theretofore used in determining the Price Index shall be used.
No adjustments or recomputations, retroactive or otherwise, shall be made due to
any revision which may later be made in the first published figure of the Price
Index for any month.
(c) The statements of the cost of living adjustment to be furnished by
Lessor as provided in subdivision (b) above shall consist of data
prepared for the Lessor by the Landlord's Managing Agent (who may be
the firm now or then currently employed by Lessor). Within thirty (30)
days after receipt of statement, Tenant shall increase its insurance as
provided above, by the amount reflected in said statement. Tenant need
not increase it's insurance before receipt of said statement.
(d) In no event shall the original amount of insurance provided to be
maintained under this Lease (exclusive of the adjustments under this
Article) be reduced by virtue of this Article.
(e) Any delay or failure of Lessor, January or any year in computing or
billing for the insurance adjustments hereinabove provided, shall not
constitute a waiver of or in any way impair the continuing obligations
of Lessee to make such adjustments hereunder.
AUDITS AND SURVEYS, INC.
BY: /s/____________________________________
TOBIAS ASSOCIATES
BY: /s/____________________________________
<PAGE>
EXHIBIT "A"
LANDLORD'S WORK:
The Landlord agrees to do the following:
(1) Install one (1) new first class passenger elevator, to take approximately
one (1) year from the date hereof, the location of which and design
specification shall be agreed upon by Landlord and Tenant. In the event said
elevator is not operational within one year from the date hereof, the Tenant
shall be entitled to a rent abatement in the amount of 5% of each installment of
the fixed annual rent due for each month or portion thereof that the said
elevator is not operational after said one year period.
(2) Re-skin the existing passenger elevator, including new walls, floor and
ceiling, in a like character as the new elevator;
(3) Prepare floors on floors 2, 3 and 6 in a similar manner and fashion as
previously done on floors 4 and 5, except for bathrooms;
(4) Repair windows and reglaze where necessary;
(5) Supply at least 2000 amps of electric power to pull boxe(s) and submeter(s)
floors 4, 5 and 6, including installation of new risers where necessary. Tenant
to notify Landlord in writing of the exact distribution of said amps to said
floors within 10 days from the date hereof. Landlord shall supply an additional
2000 amps to pull boxe(s) and sub-meter(s) to the demised premises after Tenant
takes possession the the 2nd and 3rd floors. Tenant shall give Landlord written
notice of how it wants said amps distributed in the demised premises by
September 1, 1987.
(6) Install security intercom voice-activated buzzer system connecting main
front door with a buzzer-intercom box on each floor and closed circuit
television system comprising of one camera at main lobby door and one monitor of
each floor of the demised premises (Tenant may have additional cameras and
monitors installed at its expense);
(7) Install lock out panels on passenger elevators so as to prevent access
through elevators to floors. Panels to operate from elevators and lobby.
(6) Re-furbish Lobby. With respect to re-furbishing of the lobby and elevators,
Landlord shall deliver to Tenant a copy of final plans for same and Tenant may
submit to Landlord its comments with respect to same. Landlord in under no
obligation to follow any of Tenant's recommendations. Landlord shall spend
approximately $50,000.00 doing such work.
<PAGE>
EXHIBIT "B"
TENANT'S WORK:
Tenant agrees to renovate the demised premises through the installation
of Permanent Leasehold Improvements in an amount of not less than $25.00 per
square foot, for a total of not less than $2,500,000.00.
All such work shall be performed in accordance with the terms and
provisions of this Lease.
Tenant shall commence said renovations of each floor of the demised
premises as soon after the taking of possession as is reasonable and
practicable. Failure to commence said renovations as herein provided, or to
perform same except as in accordance with this Lease or complete same within a
commercially reasonable time shall be deemed a substantial breach of this Lease.
Landlord to give Tenant 60 days prior written notice of any such default.
Tenant may have this obligation fullfilled by its sub-tenants with
respect to the 2nd and 3rd floors, provided said sub-tenants comply with all of
the provisions relating to construction that apply to Tenant under this lease.
<PAGE>
ER-18
RIDER TO LEASE DATED FEBRUARY 13, 1987 BETWEEN
AUDITS & SURVEYS, INC. AS TENANT AND
TOBIAS ASSOCIATES AS LANDLORD.
The Tenant agrees to purchase from Consolidated Electric Meter Co.,
Inc. hereinafter referred to as the Meter Company supplying electric current to
the building, all electric current consumed, used or to be used in the demised
premises, The amount to be paid by the Tenant for current consumed shall be
determined by the meter or meters on the premises, or to be installed and billed
according to each meter. Bills for current consumed shall be rendered by the
meter company to the Tenant at such times as the Meter Company may elect. The
Tenant further agrees, on demand by the Meter Company, to sign an application
for electric service and to place with the Meter Company, a cash deposit
sufficient to secure a two (2) month payment for the peak current consumed by
the Tenant in the demised premises, as estimated by the Meter Company [Text in
original illegible] Tenant agrees to pay for all electric current consumed, at a
rate specified in Paragraph 97. If any increased utility bill, charge or cost.
Is imposed on the building at any time from any source after the date of this
lease, such increase or increases shall be charged to and paid by the Tenant to
the Meter Company at a sum equal to the same percentage of increase as received
by the building and said same percentage of increase shall be charged to the
Tenant over and above the Tenant's [Text in original illegible] rate in effect
as of the date of such increase provided such increase, if any, results in a
higher yield to the Meter Company. If, the Tenant's installation overloads any
riser or risers, and/or switch or switches, and/or meter or meters in the
building of which the demised premises are a part, the Tenant will at the
Tenant's own expense, provide, install and maintain any riser or risers, and/or
any or all switch and/or switches or meter or meters that may be necessary, but
no riser or risers, and/or switch or switches or meter and/or meter and/or
meters will be installed without the written consent of Landlord. [All meters to
be installed will be purchased form the Meter Company and all risers, switches
and meters so installed shall be, become and remain the property of the building
but the building may, at its option, demand of the Tenant and the Tenant shall,
upon such demand remove all such meters, switches or related equipment at
Tenant's own cost and expense.] Any tax or charge now in effect or hereinafter
imposed upon the receipts of the Meter Company from the sale or resale of
electrical energy to the Tenant by any Municipal, State or Federal agency shall
be passed on the Tenant and included in the bill and paid by the Tenant to the
Meter Company. In the event that permission is granted by the Meter Company for
any alternating current installations, the Tenant will, at its own expense,
furnish and install all equipment, risers, service wiring, switches and meters
that may be necessary for such installation and will at its own cost and expense
maintain and keep in good repair all such riser, risers, wiring and/or switch or
switches, and/or meter or meters. The Meter Company and/or The Landlord shall
not in any way be liable or responsible to the Tenant for any loss or damage or
expense which Tenant may sustain or incur if either the quantity, quality or
character of electric service is changed, is not available or suitable for
Tenant's requirements. In the event any legislature, order of the Public Service
Commission, any judicial or governmental body enacts any law, ruling or
regulation to effect the service classification, rate or charge under which The
Tenant now purchases electric current from the Meter Company, then and in such
event, Tenant will pay, newly promulgated rate or change in accordance with P.
97. In the event any legislature, order of the Public Service Commission or any
judicial or governmental body, or any executive order of decree
<PAGE>
from any governmental body after the date hereof establishes, enacts, orders or
decrees any wage an price controls of any kind establishing, limiting, freezing
or reducing the rates charged by the public utility company supplying electric
current to the building containing the demised premises, then the Meter Company,
at its option may increase its charges from and after the effective date of said
order or decree, by the same percentage of increase as The United States
Consumer Price index for Urban Consumers prepared by the United States
Government, Department of Labor, Bureau of Labor Statistics, or successor
thereto is increased over above the index in effect on the effect on the
effective date of such order or decree, such increase(s) to be billed to tenant
monthly or for any greater period not exceeding every six months, but in no
event shall a decrease in said consumer Price index reduce The rates charged by
the Meter Company below the rate in effect at the time of such order or decree.
In the event the sale of the electric current in the building
containing the demised premises is hereafter prohibited and/or regulated by any
law hereinafter enacted, or by any order or ruling of The Public Service
Commission of the State of New York, or by any judicial decision of any
appropriate court, then the Meter Company, by reason of such prohibition, and/or
regulation and/or for any other reason whatsoever, may, at its option and in its
sole and absolute discretion, elect to terminate the practice of submetering in
the building containing the demised premises; and upon such election, the Tenant
will, upon notice from the Meter Company, apply within five (5) days thereafter
to the appropriate Public Service Corporation servicing the building containing
the demised premises for electric services, and comply with all the rules and
regulation of such Public Service Corporation, and all costs associated with the
pertaining thereto, and the Meter Company shall be relieved of any further
obligation to furnish electric current to the Tenant pursuant to this rider. The
Meter Company may, however, if it so elects, furnish unmetered current to the
Tenant, and the Tenant shall pay to the Meter Company on the first day of the
month next following such furnishing of unmetered current to be pro rated to the
first of the month and monthly thereafter during the term of this lease, so long
as unmetered electric current is furnished to the Tenant, a sum equal to
one-twelfth of the invoices billed to the Tenant for all electric current
consumed in the demised premises for the twelve month period directly preceding
the month in which the furnishing of unmetered current to the Tenant is
commenced by the Meter Company and/or as estimated at any time by the Meter
Company as hereinabove and below provided. In the event the Meter Company
supplies unmetered electric current to the Tenant, any and all applications and
security already on deposit with the Meter Company for the Tenant, to secure
payment for current consumed, shall be held by The Meter Company to secure
payment of Tenant's monthly charge for the supply of unmetered current to the
Tenant by the Meter Company plus [Text in original illegible]. If after the date
the Meter Company commences supplying unmetered current to the Tenant, any
additional electrically operated equipment is installed in the premises or the
hours of usage of the electric installation are increased in the demised
premises, then the monthly payment to the Meter Company shall be increased to
equal the value of the additional electric current consumed by such newly
installed electrically operated equipment and/or increased hours of usage of the
electric installation, such increased value to be determined by the Tenant's
base rate in effect at the time of such installation electrically operated
equipment and/or increased hours of usage. [Text in original illegible] Tenant
shall pay the amount of such increase or increase retroactively to the date of
the installation of all newly installed electrically operated equipment and/or
the increase in usage by the Tenant. If after the date the Meter
<PAGE>
Company commences supplying unmetered electric current to the Tenant there is
any increase in the utility bill charge or cost is imposed upon the building at
any time from any source, such increase or increases shall be charged to and
paid by the Tenant to the Meter Company at a sum equal to the same percentage of
increases as received by the building and said same percentage of the increase
shall be charged to the Tenant over and above the Tenant's monthly base rate
then in effect as of the date of such increase, provided such increase. If any,
results in a higher yield to the Meter Company. In the event any legislature,
order of the Public Service Commission, or any judicial or governmental body, or
any executive order or decree from any governmental body after the date hereof
establishes, enact orders or decrees any wage and price controls, of any kind,
establishing, limiting, freezing or reducing the rates charged by the public
utility company supplying electric current to the building containing the
demised premises, then the Meter Company, at its option, may increase the
monthly charges for supplying unmetered current from and after the effective
date of said order or decree by the same percentage of increase as The united
States Consumer Price index for Urban Consumers prepared by the United States
Government, Department of Labor, Bureau of Labor Statistics, or successor
thereto is increased over and above the index in effect on the effective date of
such order or decree; such increase(s) to be billed to tenant monthly or for any
greater period not exceeding every six months, but in no event shall a decrease
in Consumer Price index reduce the Monthly charges for the supply of unmetered
current by the Meter Company below the charges in effect at the time of such
order or decree. If for any reason the Meter Company, within it sole and
absolute discretion, elects or is required to terminate the furnishing of
unmetered current, as hereinabove described, or in the event permission is
granted to the tenant by the Meter Company for direct service from the utility
company, the Tenant will, at its own cost and expense, furnish and install all
risers, service wiring, switches, meter equipment and meters and any and all
other equipment or related expenses, charges or costs that may be necessary for
such installation and will, at its own cost and expense, maintain and keep in
good repair, all such riser or risers, wiring and/or switch or switches,
metering equipment and/or meter or meters; and all such wiring and/or switches
and/or meters so installed shall be, become and remain the property of the
building but building may at its option, demand of the Tenant and the Tenant
shall, upon such demand, remove all such meters or switches at Tenant's own cost
and expense. In the event any legislature, order of the Public Service
Commission or any judicial or governmental body enacts any law, ruling or
regulation to effect the service classification, rate or charge under which the
Tenant receives unmetered electric current from the Meter Company, then and in
such event Tenant will pay to the Meter Company that rate or charge as set forth
by said legislature, order of the Public Service Commission or judicial or
governmental body. [Text in original illegible] Notwithstanding anything
hereinabove set forth, the tenant agrees to pay to the Meter Company for metered
or unmetered electric current a minimum charge of $25.00 per month. Anything to
the contrary notwithstanding, if at any time the Meter Company elects to furnish
unmetered current or sell electric current from any source whatsoever to the
Tenant, then and in either of such events, Tenant agrees to discontinue the
purchase of electric service within ten (10) days from the date of notice
thereof from the Public Service Company servicing the part of the city where the
building is located, or from any other source, and to sign a release, or any
other necessary papers required by said utility company for the discontinues of
electric services: and the tenant agrees to purchase from or pay to the Meter
Company, as the case may be, the cost and installation of all meters as may be
necessary in the sole discretion of the Meter Company and for all electric
current consumed in the demised premises subject to all of the terms and
conditions as set forth above. No
<PAGE>
current shall be furnished until [Text in original illegible] the equipment of
the Tenant has been approved by the proper public authorities, the New York
Board or Fire Underwriters and the New York Fire Insurance Rating Organization
or similar organization having jurisdiction. The Tenant shall make no changes in
wiring in the demised premises, without the written consent of the Landlord
first had and obtained [Text in original illegible] will be allowed by the
Landlord for exposed work.
In any case where Tenant shall or is required to bring additional power
into the demise premises, it may use the existing risers if same can be lawfully
and safely used for such purpose. With respect to the installation of meters and
the amount of power to be supplied to the demised premises, the provisions of
exhibit "A" shall prevail. Notwithstanding anything set forth above, Landlord
shall supply submetered electric current to the Tenant, unless prohebited by any
law, rule or regulation.
<PAGE>
FLOORS 2 THROUGH 6 - 20,000 square feet
EXHIBIT C
<PAGE>
1. Provide a minimum of one operable radiator (along with hardware)
per every two windows so that every window is supplied with heat.
2. All active elevators to have elevator call buttons with plate
and light indicators with plate.
3. All existing fire doors to properly latch providing a tight
secure fit.
4. All windows will be operable and lockable.
5. All stickers to be removed from glass.
6. Provide exit light at all fire stairs as provided by Codes.
7. All sprinkler piping to be a minimum of 1" diameter.
8. Provide a sprinkler tamper switch, if required by Code covering
the Premises as they presently exist, as modified only by the change in diameter
of the sprinkler piping described in Item 7.
9. Landlord has installed a Mini Class E System in the Building
which has not yet been approved by appropriate authorities. If that System is
required to be upgraded to a full Class E System to conform to Code
requirements, Overtenant insures that such installation will be accomplished and
that the System will contain the minimum number of contact points required by
Code for the type of system installed. If such full Class E System is required
to be installed to comply with Code, and, if Undertenant requires or desires
additional contact points, Overtenant agrees that Undertenant may add contact
points at Undertenant's cost and expense, subject to the requirement that
Undertenant complies with Code and does not overload the System. Furthermore, if
Undertenant chooses to add contact points, Overtenant will reimburse Undertenant
for the cost of one (1) contact point.
Items 8 and 9 above are not subject to the two (2) month completion
period set forth in paragraph 15(a) of the Sublease.
EXHIBIT D
<PAGE>
THE PHILLIPS JANSON GROUP
Architects, P.C.
11 West 42nd Street, New York, N.Y. 10036 (212) 768-0800 FAX (212) 768-1597
PROJECT CHURCHILL LIVINGSTONE, INC. Project No. 9040900
650 AVENUE OF THE AMERICAS Issue Date 08-24-90
NEW YORK, NY Sq. Footage 20,000 S.F.
[ P R O J E C T S C H E D U L E ]
EXHIBIT E
STANDARD FORM OF LOFT LEASE The
Real Estate Board of New York, Inc.
(C)Copyright 1982. All Rights Reserved.
Reproduction in whole or in part prohibited.
AGREEMENT OF LEASE, made as of this 26th day of October 1990, between
TOBIAS ASSOCIATES, c/o Kaufman Management Company
450 Seventh Avenue, New York, NY 10123
party of the first part, hereinafter referred to as OWNER, and
AUDITS AND SURVEYS, INC., currently located at
650 Avenue of the Americas
New York, New York 10011
party of the second part, hereinafter referred to as TENANT,
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from
Owner portion of the basement space consisting of
approximately 2,000 square feet as shown on the attached
plan "Exhibit A".
in the building known as 650 Sixth Avenue
in the Borough of Manhattan, City of New York, for the term of twelve (12) years
(Or until such term shall sooner cease and expire
as hereinafter provided) to commence on the 1st day of March nineteen hundred
and ninety-one, and to end on the 28th date of February Two Thousand and three
both dates inclusive, at an annual rental rate of ELEVEN THOUSAND ($11,000)
DOLLARS per annum ($916.67 per month)
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner of such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installment(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
OCCUPANCY: 1. Tenant shall pay the rent as above and as hereinafter
provided.
USE: 2. Tenant shall use and occupy demised premises for storage,
and for no other purpose.
ALTERATIONS: 3. Tenant shall make no changes in or to the demised premises
of any nature without Owner's prior written consent. Subject
to the prior written consent of Owner, and to the provisions
of this article, Tenant at Tenant's expense, may make
alterations, installations, additions or improvements which
are non-structural and which do not affect utility services
or plumbing and electrical lines, in or to the interior of
the demises premises using contractors or mechanics first
approved by Owner. Tenant shall, at its expense, before
making any alterations, additions, installations or
improvements obtain all permits, approval and certificates
required by any governmental or quasi- governmental bodies
and (upon completion) certificates of final approval thereof
and shall deliver promptly duplicates of all such permits,
approvals and certificates to Owner. Tenant agrees to carry
and will cause Tenant's contractors and sub-contractors to
carry such workman's compensation, general liability,
personal and property damage insurance as Owner may require.
If any mechanic's lien is filed against the demised
premises, or the building of which the same forms a part,
for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within
thirty days thereafter, at Tenant's expense, by filing the
bond required by law or otherwise. All fixtures and all
paneling, partitions, railing and like installations,
installed in the premises at any time, either by Tenant or
by Owner on Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner, by
notice to Tenant no later than twenty days prior to the date
fixed as the termination of this lease, elects to relinquish
Owner's right thereto and to have them removed by Tenant, in
which event the same shall be removed from the demised
premises by Tenant prior to the expiration of the lease, at
Tenant's expense. Nothing in this Article shall be construed
to give Owner title to or to prevent Tenant's removal of
trade fixtures, moveable office furniture and equipment, but
upon removal of any such from the premises or upon removal
of other installations as may be required by Owner, Tenant
shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and
repair any damage to the demised premises or the building
due to such removal. All property permitted or required to
be removed, by Tenant at the end of the term remaining in
the premises after Tenant's removal shall be deemed
abandoned and may, at the election of Owner, either be
retained as Owner's property or removed from the premises by
Owner, at Tenant's expense.
REPAIRS: 4. Owner shall maintain and repair the exterior of and the
public portions of the building. Tenant shall, throughout
the term of this lease, take good care of the demised
premises including the bathrooms and lavatory facilities (if
the demised premises encompass the entire floor of the
building) and the windows and window frames and, the
fixtures and appurtenances therein and at Tenant's sole cost
an expense promptly make all repairs thereto and to the
building, whether structural or non-structural in nature,
caused by or resulting from the carelessness, omission,
neglect or improper conduct of Tenant, Tenant's servants,
employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required
by other provisions of this lease, including Article 6.
Tenant shall also repair all damage to the building and the
demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be
of quality or class equal to the original work
<PAGE>
or construction. If Tenant fails, after ten days notice, to
proceed with due diligence to make repairs required to be
made by Tenant, the same may be made by the Owner at the
expense of Tenant, and the expenses thereof incurred by
Owner shall be collectible, as additional rent, after
rendition of a bill or statement therefor. If the demised
premises be or become infested with vermin, Tenant shall, at
its expense, cause the same to be exterminated. Tenant shall
give Owner prompt notice of any defective condition in any
plumbing, heating system or electrical lines located in the
demised premises and following such notice, Owner shall
remedy the condition with due diligence, but at the expense
of Tenant, if repairs are necessitated by damage or injury
attributable to Tenant, Tenant's servants, agents,
employees, invitees or licensees as aforesaid. Except as
specifically provided in Article 9 or elsewhere in this
lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of
Owner by reason of inconvenience, annoyance or injury to
business arising from Owner, Tenant or others making or
failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the
demised premises or in and to the fixtures, appurtenances or
equipment thereof. The provisions of this Article 4 with
respect to the making of repairs shall not apply in the case
of fire or other casualty with regard to which Article 9
hereof shall apply.
WINDOW 5. Tenant will not clean nor require, permit, suffer or allow
CLEANING: any window in the demised premises to be cleaned from the
outside in violation of Section 202 of the New York State
Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or
body having or asserting jurisdiction.
REQUIREMENTS 6. Prior to the commencement of the lease term, if Tenant is
OF LAW, then in possession, and at all times thereafter. Tenant
FIRE INSURANCE, shall, at Tenant's sole cost and expense, promptly comply
FLOOR LEADS: with all present and future laws, orders and regulations of
all state, federal, municipal and local governments,
departments, commissions and boards and any direction of any
public officer pursuant to law, and all orders, rules and
regulations of the New York Board of Fire Underwriters, or
the Insurance Services Office, or any similar body which
shall impose any violation, order or duty upon Owner or
Tenant with respect to the demised premises, whether or not
arising out of Tenant's use or manner of use thereof, or,
with respect to the building, if arising out of Tenant's use
or manner of use of the demised premises or the building
(including the use permitted under the lease). Except as
provided in Article 30 hereof, nothing herein shall require
Tenant to make structural repairs or alterations unless
Tenant has, by its manner of use of the demised premises or
method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with
respect thereto. Tenant shall not do or permit any act or
thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict
with public liability, fire or other policies of insurance
at any time carried by or for the benefit of Owner. Tenant
shall not keep anything in the demised premises except as
now or hereafter permitted by the Fire Department, Board of
Fire Underwriters, Fire Insurance Rating Organization and
other authority having jurisdiction, and then only in such
manner and such quantity so as not to increase the rate for
fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate
for the building or any property located therein over that
in effect prior to the commencement of Tenant's occupancy.
If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or
at any time thereafter, be higher than it otherwise would
be, then Tenant shall reimburse Owner, as additional rent
hereunder, for that portion of all fire insurance premiums
thereafter paid by Owner which shall have been charged
because of such failure by Tenant. In any action or
proceeding wherein Owner and Tenant are parties, a schedule
or "make-up" or rate for the building or demised premises
issued by a body making fire insurance rates applicable to
said premises shall be conclusive evidence of the facts
therein stated and of the several items and charges in the
fire insurance rates then applicable to said premises.
Tenant shall not place a load upon any floor of the demised
premises exceeding the floor load per square foot area which
it was designed to carry and which is allowed by law. Owner
reserves the right to prescribe the weight and position of
all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Tenant, at
Tenant's expense, in settings sufficient, in Owner's
judgment, to absorb and prevent vibration, noise and
annoyance.
SUBORDINATION: 7. This lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or
hereafter affect such leases or the real property of which
demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions
of any such underlying leases and mortgages. This clause
shall be self-operative and no further instrument of
subordination shall be required by any ground or underlying
lessor or by any mortgagee, affecting any lease or the real
property of which the demised premises are a part. In
confirmation of such subordination, Tenant shall execute
promptly any certificate that Owner may request.
PROPERTY - 8. Owner or its agents shall not be liable for any damage to
LOSS, DAMAGE, property of Tenant or of others entrusted to employees of
REIMBURSEMENT, the building, nor for loss of or damage to any property
INDEMNITY: of Tenant by theft or otherwise, nor for any injur or
damage to persons or property resulting from any cause of
whatsoever nature, unless caused by or due to the negligence
of Owner, its agents, servants or employees; Owner or its
agents shall not be liable for any damage caused by other
tenants or persons in, upon or about said building or caused
by operations in connection of any private, public or quasi
public work. If at any time any windows of the demises
premises are temporarily closed, darkened or bricked up (or
permanently closed, darkened or bricked up, if required by
law) for any reason whatsoever including, but not limited to
Owner's own acts, Owner shall not be liable for any damage
Tenant may sustain thereby and Tenant shall not be entitled
to any compensation therefor nor abatement or diminution of
rent nor shall the same release Tenant from its obligations
hereunder nor constitute an eviction. Tenant shall indemnify
and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses
for which Owner shall not be reimbursed by insurance,
including reasonable attorneys fees, paid, suffered or
incurred as a result of any breach by Tenant, Tenant's
agents, contractors, employees, invitees, or licensees, of
any covenant or condition of this lease, or the
carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or
licensees. Tenant's liability under this lease extends to
the acts and omissions of any sub-tenant, and any agent,
contractor, employee, invitee or licensee of any subtenant.
In case any action or proceeding is brought against Owner by
reason of any such claim, Tenant, upon written notice from
Owner, will, at Tenant's expense, resist or defend such
action or proceeding by counsel approved by Owner in
writing, such approval not to be unreasonably withheld.
DESTRUCTION, 9. (a) If the demised premises or any part thereof shall
FIRE AND OTHER immediate notice thereof to Owner and this lease shall
CASUALTY: continue in full force and effect except as hereinafter set
forth. (b) If the demised premises are partially damaged or
rendered partially unusable by fire or other casualty, the
damages thereto shall be repaired by and at the expense of
Owner and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the
casualty according to the part of the
-2-
<PAGE>
premises which is usable. (c) If the demised premises are
totally damaged or rendered wholly unusable by fire or other
casualty, then the rent shall be proportionately paid up to
the time of the casualty and thenceforth shall cease until
the date when the premises shall have been repaired and
restored by Owner, subject to Owner's right to elect not to
restore the same as hereinafter provided. (d) If the demised
premises are rendered wholly unusable or (whether or not the
demised premises are damaged in whole or in part) if the
building shall be so damaged that Owner shall decide to
demolish it or to rebuild it, then, in any of such events,
Owner may elect to terminate this lease by written notice to
Tenant, given within 90 days after such fire or casualty,
specifying a date for the expiration of the lease, which
date shall not be more than 60 days after the giving of such
notice, and upon the date specified in such notice the term
of this lease shall expire as fully and completely as if
such date were the date set forth above for the termination
of this lease and Tenant shall forthwith quit, surrender and
vacate the premises without prejudice however, to owner's
rights and remedies against Tenant under the lease
provisions in effect prior to such termination, and any rent
owing shall be paid up to such date and any payments of rent
made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. -
_________ Rider to be added if necessary. Unless Owner shall
serve a termination notice as provided for herein, Owner
shall make the repairs and restorations under the conditions
of (b) and (c) hereof, with all reasonable expedition,
subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as
reasonably possible, all of Tenant's salvageable inventory
and movable equipment, furniture, and other property.
Tenant's liability for rent shall resume five (5) days after
written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other
casualty. Notwithstanding the foregoing, each party shall
look first to any insurance in its favor before making any
claim against the other party for recovery for loss or
damage resulting from fire or other casualty, and to the
extent that such insurance is in force and collectible and
to the extent permitted by law, Owner and Tenant each hereby
releases and waives all right of recovery against the other
or any one claiming through or under each of them by way of
subrogation or otherwise. The foregoing release and waiver
shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver
shall not invalidate the insurance. If, and to the extent,
that such waiver can be obtained only by the payment of
additional premiums, then the party benefitting from the
waiver shall pay such premium within ten days after written
demand or shall be deemed to have agreed that the party
obtaining insurance coverage shall be free of any further
obligation under the provisions hereof with respect to
waiver of subrogation. Tenant acknowledges that Owner will
not carry insurance on Tenant's furniture and or furnishings
or any fixtures or equipment, improvements, or appurtenances
removable by Tenant and agrees that Owner will not be
obligated to repair any damages thereto or replace the same.
(f) Tenant hereby waives the provisions of Section 227 of
the Real Property Law and agrees that the provisions of this
article shall govern and control in lieu thereof.
EMINENT 10. If the whole or any part of the demised premises shall be
DOMAIN: acquired or condemned by Eminent Domain for any public or
quasi public use or purpose, then and in that event, the
term of this lease shall cease and terminate from the date
of title vesting in such proceeding and Tenant shall have no
claim for the value of any unexpired term of said lease.
ASSIGNMENT, 11. Tenant, for itself, its heirs, distributees, executors,
MORTGAGE, ETC.: administrators, legal representatives, successors and
assigns, expressly covenants that it shall not assign,
mortgage or encumber this agreement, nor underlet, or suffer
or permit the demised premises or any part thereof to be
used by others, without the prior written consent of Owner
in each instance. Transfer of the majority of the stock of a
corporate Tenant shall be deemed an assignment. If this
lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than
Tenant, Owner may, after default by Tenant, collect rent
from the assignee, under-tenant or occupant, and apply the
net amount collected to the rent herein reserved, but no
such assignment, underletting, occupancy or collection shall
be deemed a waiver of this covenant, or the acceptance of
the assignee, under-tenant or occupant as tenant, or a
release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The
consent by Owner to an assignment or underletting shall not
in any wise be construed to relieve Tenant from obtaining
the express consent in writing of Owner to any further
assignment or underletting.
ELECTRIC 12. Rates and conditions in respect to submetering or rent
CURRENT: inclusion, as t he case may be, to be added in RIDER
attached hereto. Tenant covenants and agrees that at all
times its use of electric current shall not exceed the
capacity of existing leeders to the building or the risers
or wiring installation and Tenant may not use any electrical
equipment which, in Owner's opinion, reasonably exercised,
will overload such installations or interfere with the use
thereof by other tenants of the building. The change at any
time of the character of electric service shall in no wise
make Owner liable or responsible to Tenant, for any loss,
damages or expenses which Tenant may sustain.
ACCESS TO 13. Owner or Owner's agents shall have the right (but shall not
PREMISES: be obligated) to enter the demised premises in any emergency
at any time, and, at other reasonable times, to examine the
same and to make such repairs, replacements and improvements
as Owner may deem necessary and reasonably desirable to any
portion of the building or which Owner may elect to perform
in the premises after Tenant's failure to make repairs or
perform any work which Tenant is obligated to perform under
this lease, or for the purpose of complying with laws,
regulations and other directions of governmental
authorities. Tenant shall permit Owner to use and maintain
and replace pipes and conduits in and through the demised
premises and to erect new pipes and conduits therein
provided, wherever possible, they are within walls, or
otherwise concealed. Owner may, during the progress of any
work in the demised premises, take all necessary materials
and equipment into said premises without the same
constituting an eviction nor shall the Tenant be entitled to
any abatement of rent while such work is in progress nor to
any damages by reason of loss or interruption of business or
otherwise. Throughout the term hereof Owner shall have the
right to enter the demised premises at reasonable hours for
the purpose of showing the same to prospective purchasers or
mortgagees of the building, and during the last six months
of the term for the purpose of showing the same to
prospective tenants and may, during said six months period,
place upon the premises the usual notices "To Let" and "For
Sale" which notices Tenant shall permit to remain thereon
without molestation. If Tenant is not present to open and
permit an entry into the premises, Owner or Owner's agents
may enter the same whenever such entry may be necessary or
permissible by master key or forcibly and provided
reasonable care is exercised to safeguard Tenant's property,
such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term
Tenant shall have removed all or substantially all of
Tenant's property therefrom, Owner may immediately enter,
alter, renovate or redecorate the demised premises without
limitation or abatement of rent, or incurring liability to
Tenant for any compensation and such act shall have no
effect on this lease or Tenant's obligations hereunder.
-3-
<PAGE>
VAULT, 14. No Vaults, vault space or area, whether or not enclosed or
VAULT SPACE, covered, not within the property line of the building is
AREA: leased hereunder, anything contained in or indicated on any
sketch, blue print or plan, or anything contained elsewhere
in this lease to the contrary notwithstanding. Owner makes
no representation as to the location of the property line of
the building. All vaults and vault space and all such areas
not within the property line of the building, which Tenant
may be permitted to use and/or occupy, is to be used and/or
occupied under a revocable license, and if any such license
be revoked, or if the amount of such space or area be
diminished or required by any federal, state or municipal
authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any
compensation or diminution or abatement of rent, nor shall
such revocation, diminution or requisition be deemed
constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid
by Tenant, if used by Tenant, whether or not specifically
leased hereunder.
OCCUPANCY: 15. Tenant will not at any time use or occupy the demised
premises in violation of the certificate of occupancy issued
for the building of which the demised premises are a part.
Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's
work, if any. In any event, Owner makes no representation as
to the condition of the premises and Tenant agrees to accept
the same subject to violations, whether or not of record. If
any governmental license or permit shall be required for the
proper and lawful conduct of Tenant's business, Tenant shall
be responsible for and shall procure and maintain such
license or permit.
BANKRUPTCY: 16. (a)Anything elsewhere in this lease to the contrary notwith-
standing, this lease may be canceled by Owner by sending of
a written notice to Tenant within a reasonable time after
the happening or any one or more of the following events:
(1) the commencement of a case in bankruptcy or under the
laws of any state naming Tenant as the debtor; or (2) the
making by Tenant of an assignment or any other arrangement
for the benefit of creditors under any state statute.
Neither Tenant nor any person claiming through or under
Tenant, or by reason of any statute or order of court, shall
thereafter be entitled to possession of the premises demised
but shall forthwith quit and surrender the premises. If this
lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to
the party then owning Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the
termination of this lease pursuant to (a) hereof, Owner
shall forthwith, notwithstanding any other provisions of
this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the
difference between the rental reserved hereunder for the
unexpired portion of the term demised and the fair and
reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after
the date of termination and the fair and reasonable rental
value of the demised premises for the period for which such
installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If
such premises or any part thereof be relet by the Owner for
the unexpired term of said lease, or any part thereof,
before presentation of proof of such liquidated damages to
any court, commission or tribunal, the amount of rent
reserved upon such reletting shall be deemed to be the fair
and reasonable rental value for the part or the whole of the
premises so re-let during the term of the re-letting.
Nothing herein contained shall limit or prejudice the right
of the Owner to prove for and obtain as liquidated damages
by reason of such termination, an amount equal to the
maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such
damages are to be proved, whether or not such amount be
greater, equal to, or less than the amount of the difference
referred to above.
DEFAULT: 17. (1) If Tenant defaults in fulfilling any of the covenants of
this lease other than the covenants for the payment of rent
or additional rent; or if the demised premises becomes
vacant or deserted "or if this lease be rejected under ss.
235 of Title 11 of the U.S. Code (bankruptcy code);" or if
any execution or attachment shall be issued against Tenant
or any of Tenant's property whereupon the demised premises
shall be taken or occupied by someone other than Tenant; or
if Tenant shall make default with respect to any other lease
between Owner and Tenant; or if Tenant shall have failed,
after five (5) days written notice, to redeposit with Owner
any portion of the security deposited hereunder which Owner
has applied to the payment of any rent and additional rent
due and payable hereunder or failed to move into or take
possession of the premises within fifteen (15) days after
the commencement of the term of this lease, of which fact
Owner shall be the sole judge; then in any one or more of
such events, upon Owner serving a written five (5) days
notice upon Tenant specifying the nature of said default and
upon the expiration of said five (5) days, if Tenant shall
have failed to comply with or remedy such default, or if the
said default or omission complained of shall be of a nature
that the same cannot be completely cured or remedied within
said five (5) day period, and if Tenant shall not have
diligently commenced during such default within such five
(5) days period, and shall not thereafter with reasonable
diligence and in good faith, proceed to remedy or cure such
default, then Owner may serve a written three (3) days'
notice of cancellation of this lease upon Tenant, and upon
the expiration of said three (3) days this lease and the
term thereunder shall end and expire as fully and completely
as if the expiration of such three (3) day period were the
day herein definitely fixed for the end and expiration of
this lease and the term thereof and Tenant shall then quit
and surrender the demised premises to Owner but Tenant shall
remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been
given, and the term shall expire as aforesaid: or if Tenant
shall make default in the payment of the rent reserved
herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein
required: then and in any of such events Owner may without
notice, re-enter the demised premises either by force or
otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and
hold the premises as if this lease had not been made, and
Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed
as the commencement of any renewal or extension of this
lease, Owner may cancel and terminate such renewal or
extension agreement by written notice.
REMEDIES OF 18. In case of any such default, re-entry, expiration and/or
OWNER AND dispossess by summary proceedings or otherwise, (a) the
WAIVER OF rent and additional rent, shall become due thereupon and be
REDEMPTION: paid up to the time of such re-entry, dispossess and/or
expiration, (b) Owner may re-let the premises or any part or
parts thereof, either in the name of Owner or other- wise,
for a term or terms, which may at Owner's option be less
than or exceed the period which would otherwise have
constituted the balance of the term of this lease and may
grant concessions or free rent or charge a higher rental
than that in this lease, (c) Tenant or the legal
representatives of Tenant shall also pay Owner as liquidated
damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency
between the rent hereby reserved and or covenanted to be
paid and the net amount, if any, of the rents collected on
account of the subsequent lease or leases of the demised
premises for each month of the period which would otherwise
have constituted the balance of the term of this lease. The
failure of Owner to re-let the premises or any
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part or parts thereof shall not release or affect Tenant's
liability for damages. In computing such liquidated damages
there shall be added to the said deficiency such expenses as
Owner may incur in connection with re-letting, such as legal
expenses, attorneys' fees, brokerage, advertising and for
keeping the demised premises in good order or for preparing
the same for re-letting. Any such liquidated damages shall
be paid in monthly installments by Tenant on the rent day
specified in this lease and any suit brought to collect the
amount of the deficiency for any month shall not prejudice
in any way the rights of Owner to collect the deficiency for
any subsequent month by a similar proceeding. Owner, in
putting the demised premises in good order or preparing the
same for re-rental may, at Owner's option, make such
alterations, repairs, replacements, and/or decorations in
the demised premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of
re-letting the demised premises, and the making of such
alterations, repairs, replacements, and/or decorations shall
not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in
any way whatsoever for failure to re-let the demised
premises, or in the event that the demised premises are
re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to
receive any excess, if any, of such net rents collected over
the sums payable by Tenant to Owner hereunder. In the event
of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right
of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and
other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner
from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by
or under any present or future laws.
FEES AND 19. If Tenant shall default in the observance or performance of
EXPENSES: any term or covenant on Tenant's part to be observed or
performed under or by virtue of any of the terms or
provisions in any article of this lease, then, unless
otherwise provided elsewhere in this lease, Owner may
immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in
connection with the foregoing or in connection with any
default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the
payment of money, including but not limited to attorney's
fees, in instituting, prosecuting or defending any action or
proceedings, then Tenant will reimburse Owner for such sums
so paid or obligations incurred with interest and costs. The
foregoing expenses incurred by reason of Tenant's default
shall be deemed to be additional rent hereunder and shall be
paid by Tenant to Owner within five (5) days of rendition of
any bill or statement to Tenant therefor. If Tenant's lease
term shall have expired at the time of making of such
expenditures or incurring of such obligations, such sums
shall be recoverable by Owner as damages.
BUILDING 20. Owner shall have the right at any time without the same
ALTERATIONS constituting an eviction and without incurring liability
AND MANAGEMENT: to Alterations Tenant therefor to change the arrangement and
or location of public entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets or other
public parts of the building and to change the name, number
or designation by which the building may be known. There
shall be no allowance to Tenant for diminution of rental
value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from
Owner or other Tenant making any repairs in the building or
any such alterations, additions and improvements.
Furthermore, Tenant shall not have any claim against Owner
by reason of Owner's imposition of any controls of the
manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the
security of the building and its occupants.
NO REPRE- 21. Neither Owner nor Owner's agents have made any representa-
SENTATIONS BY tions or promises with respect to the physical condition of
OWNER: the building, the land upon which it is erected or the
demised premises, the rents, leases, expenses of operation
or any other matter or thing affecting or related to the
demised premises or the building except as herein expressly
set forth and no rights, easements or licenses are acquired
by Tenant by implication or otherwise except as expressly
set forth in the provisions of this lease. Tenant has
inspected the building and the demised premises and is
thoroughly acquainted with their condition and agrees to
take the same "as is" on the date possession is tendered and
acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the
said premises and the building of which the same form a part
were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone
fully and completely expresses the agreement between Owner
and Tenant and any executory agreement hereafter made shall
be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such executory
agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or
abandonment is sought.
END OF 22. Upon the expiration or other termination of the term of this
TERM: lease, Tenant shall quit and surrender to Owner the demised
premises, broom clean, in good order and condition, ordinary
wear and damages which Tenant is not required to repair as
provided elsewhere in this lease excepted, and Tenant shall
remove all its property from the demised premises. Tenant's
obligation to observe or perform this covenant shall survive
the expiration or other termination of this lease. If the
last day of the term of this Lease or any renewal thereof,
falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
QUIET 23. Owner covenants and agrees with Tenant that upon Tenant
ENJOYMENT: paying the rent and additional rent and observing and
performing all the terms, covenants and conditions, on
Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised,
subject, nevertheless, to the terms and conditions of this
lease including, but not limited to, Article 34 hereof and
to the ground leases, underlying leases and mortgages
hereinbefore mentioned.
FAILURE 24. If Owner is unable to give possession of the demised
TO GIVE premises on the date of the commencement of the term hereof,
POSSESSION: because of the holding-over or retention of possession of
any tenant, undertenant or occupants or if the demised
premises are located in a building being constructed,
because such building has not been sufficiently completed to
make the premises ready for occupancy or because of the fact
that a certificate of occupancy has not been procured or if
Owner has not completed any work required to be performed by
Owner, or for any other reason, Owner shall not be subject
to any liability for failure to give possession on said date
and the validity of the lease shall not be impaired under
such circumstances, nor shall the same be construed in any
wise to extend the term of this lease, but the rent payable
hereunder shall be abated (provided Tenant is not
responsible for Owner's inability to obtain possession or
complete any work required) until after Owner shall have
given Tenant notice that the premises are substantially
ready for Tenant's occupancy. If permission is given to
Tenant to enter into the possession of the demised premises
or to occupy premises other than the demised premises prior
to the
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date specified as the commencement of the term of this
lease. Tenant covenants and agrees that such occupancy shall
be deemed to be under all the terms, covenants, conditions
and provisions of this lease, except as to the covenant to
pay rent. The provisions of this article are intended to
constitute "an express provision to the contrary" within the
meaning of Section 233-a of the New York Real Property Law.
NO WAIVER: 25. The failure of Owner to seek redress for violation of, or
to insist upon the strict performance of any covenant or
condition of this lease or of any of the Rules or
Regulations, set forth or hereafter adopted by Owner, shall
not prevent a subsequent act which would have originally
constituted a violation from having all the force and effect
of an original violation. The receipt by Owner of rent with
knowledge of the breach of any covenant of this lease shall
not be deemed a waiver of such breach and no provision of
this lease shall be deemed to have been waived by Owner
unless such waiver be in writing signed by Owner. No payment
by Tenant or receipt by Owner of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other
than on account of the earliest stipulated rent, nor shall
any endorsement or statement of any check or any letter
accompanying any check or payment as rent be deemed an
accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the
balance of such rent or pursue any other remedy in this
lease provided. All checks tendered to Owner as and for the
rent of the demised premises shall be deemed payments for
the account of Tenant. Acceptance by Owner of rent from
anyone other than Tenant shall not be deemed to operate as
an attornment to Owner by the payor of such rent or as a
consent by Owner to an assignment or subletting by Tenant of
the demised premises to such payor, or as a modification of
the provisions of this lease. No act or thing done by Owner
or Owner's agents during the term hereby demised shall be
deemed an acceptance of a surrender of said premises, and no
agreement to accept such surrender shall be valid unless in
writing signed by Owner. No employee of Owner or Owner's
agent shall have any power to accept the keys of said
premises prior to the termination of the lease and the
delivery of keys to any such agent or employee shall not
operate as a termination of the lease or a surrender of the
premises.
WAIVER OF 26. It is mutually agreed by and between Owner and Tenant that
TRIAL BY JURY: the respective parties hereto shall and they hereby do waive
trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other
(except for personal injury or property damage) on any
matters whatsoever arising out of or in any way connected
with this lease, the relationship of Owner and Tenant,
Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Owner commences
any summary proceeding for possession of the premises,
Tenant will not interpose any counterclaim of whatever
nature or description in any such proceeding.
INABILITY TO 27. This Lease and the obligation of Tenant to pay rent
PERFORM: hereunder and perform all of the other covenants and agree-
ments hereunder on part of Tenant to be performed shall in
no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or
to supply or is delayed in supplying any service expressly
or impliedly to be supplied or is unable to make, or is
delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Owner is prevented or
delayed from so doing by reason of strike or labor troubles
or any cause whatsoever beyond Owner's sole control
including, but not limited to, government preemption in
connection with a National Emergency or by reason of any
rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the
conditions of supply and demand which have been or are
affected by war or other emergency.
BILLS AND 28. Except as otherwise in this lease provided, a bill,
statement, notice or communication which Owner may desire
or
NOTICES: be required to give to Tenant, shall be deemed sufficiently
given or rendered it, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed
to Tenant at the building of which the demised premises form
a part or at the last known residence address or business
address of Tenant or left at any of the aforesaid premises
addressed to Tenant, and the time of the rendition of such
bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same
is delivered to Tenant, mailed, or left at the premises as
herein provided. Any notice by Tenant to Owner must be
served by registered or certified mail addressed to Owner at
the address first hereinabove given or at such other address
as Owner shall designate by written notice.
WATER 29. If Tenant requires, uses or consumes water for any purpose
CHARGES: in addition to ordinary lavatory purposes (of which fact
Tenant constitutes Owner to be the sole judge) Owner may
install a water meter and thereby measure Tenant's water
consumption for all purposes. Tenant shall pay Owner for the
cost of the meter and the cost of the installation, thereof
and throughout the duration of Tenant's occupancy Tenant
shall keep said meter and installation equipment in good
working order and repair at Tenant's own cost and expense in
default of which Owner may cause such meter and equipment to
be replaced or repaired and collect the cost thereof from
Tenant, as additional rent. Tenant agrees to pay for water
consumed, as shown on said meter as and when bills are
rendered, and on default in making such payment Owner may
pay such charges and collect the same from Tenant, as
additional rent. Tenant covenants and agrees to pay, as
additional rent, the sewer rent, charge or any other tax,
rent, levy or charge which now or hereafter is assessed,
imposed or a lien upon the demised premises or the realty of
which they are part pursuant to law, order or regulation
made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or
sewage connection or system. If the building or the demised
premises or any part thereof is supplied with water through
a meter through which water is also supplied to other
premises Tenant shall pay to Owner, as additional rent, on
the first day of each month, -> % ($NONE) of the total meter
charges as Tenant's portion. Independently of and in
addition to any of the remedies reserved to Owner
hereinabove or elsewhere in this lease, Owner may sue for an
collect any monies to be paid by Tenant or paid by Owner for
any of the reasons or purposes hereinabove set forth.
SPRINKLERS: 30. Anything elsewhere in this lease to the contrary notwith-
standing, if the New York Board of Fire Underwriters or the
New York Fire Insurance Exchange or any bureau, department
or official of the federal, state or city government
recommend or require the installation of a sprinkler system
or that any changes, modifications, alterations, or
additional sprinkler heads or other equipment be made or
supplied in an existing sprinkler system by reason of
Tenant's business, or the location of partitions, trade
fixtures, or other contents of the demised premises, or for
any other reason, or if any such sprinkler heads or other
such equipment, become necessary to prevent the imposition
of a penalty or charge against the full allowance for a
sprinkler system in the fire insurance rate set by any said
Exchange or by any fire insurance company, Tenant shall, at
Tenant's expense, promptly make such sprinkler system
installations, changes, modifications, alterations, and
supply additional sprinkler heads or other equipment as
required whether the work involved shall be structural or
non-structural in nature. Tenant
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shall pay to Owner as additional rent the sum of
$_______________, on the first day of each month during the
term of this lease, as Tenant's portion of the contract
price for sprinkler supervisory service.
ELEVATORS, 31. As long as Tenant is not in default under any of the cove-
HEAT, nants of this lease Owner shall: (a) provide necessary
CLEANING: passenger elevator facilities on business days from 8 a.m.
to 6 p.m. and on Saturdays from 8 a.m. to 1 p.m.; (b) if
freight elevator service is provided, same shall be provided
only on regular business days Monday through Friday
inclusive, and on those days only between the hours of 9
a.m. and 12 noon and between 1 p.m. and 5 p.m.; (c) furnish
heat, water and other services supplied by Owner to the
demised premises, when and as required by law, on business
days from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1
p.m.; (d) clean the public halls and public portions of the
building which are used in common by all tenants. Tenant
shall, at Tenant's expense, keep the demised premises,
including the windows, clean and in order, to the
satisfaction of Owner, and for that purpose shall employ the
person or persons, or corporation approved by Owner. Tenant
shall pay to Owner the cost of removal of any of Tenant's
refuse and rubbish from the building. Bills for the same
shall be rendered by Owner to Tenant at such time as Owner
may elect and shall be due and payable hereunder, and the
amount of such bills shall be deemed to be, and be paid as,
additional rent. Tenant shall, however, have the option of
independently contracting for the removal of such rubbish
and refuse in the event that Tenant does not wish to have
same done by employees of Owner. Under such circumstances,
however, the removal of such refuse and rubbish by others
shall be subject to such rules and regulations as in the
judgment of Owner, are necessary for the proper operations
of the building. Owner reserves the right to stop service of
the heating, elevator, plumbing and electric systems, when
necessary, by reason of accident, or emergency, or for
repairs, alterations, replacements or improvements, in the
judgment of Owner desirable or necessary to be made, until
said repairs, alterations, replacements or improvements
shall have been completed. If the building of which the
demised premises are a part supplies manually operated
elevator service, Owner may proceed with alteration
necessary to substitute automatic control elevator service
upon ten (10) day written notice to Tenant without in any
way affecting the obligations of Tenant hereunder, provided
that the same shall be done with the minimum amount of
inconvenience to Tenant, and Owner pursues with due
diligence the completion of the alterations.
SECURITY: 32. Tenant has deposited with Owner the sum of - $NONE as secu-
rity for the faithful performance and _____ observance by
Tenant of the terms, provisions and conditions of this
lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of
this lease, including, but not limited to, the payment of
rent and additional rent, Owner may use, apply or retain the
whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or
any other sum as to which tenant is in default or for any
sum which Owner may expend or may be required to expend by
reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not
limited to, any damages or deficiency in the reletting of
the premises, whether such damages or deficiency accrued
before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully
comply with all of the terms, provisions, covenants and
conditions of this lease, the security shall be returned to
Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises
to Owner. In the event of a sale of the land and building or
leasing of the building, of which the demised premises form
a part, Owner shall have the right to transfer the security
to the vendee or lessee and Owner shall thereupon be
released by Tenant from all liability for the return of such
security; and Tenant agrees to look to the new Owner solely
for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or
assignment made of the security to a new Owner. Tenant
further covenants that it will not assign or encumber or
attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or
assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
CAPTIONS: 33. The Captions are inserted only as a matter of convenience
and for reference and in no way define, limit or describe
the scope of this lease nor the intent of any provisions
thereof.
DEFINITIONS: 34. The term "Owner" as used in this lease means only the owner
of the fee of the leasehold of the building, or the
mortgagee in possession, for the time being of the land and
building (or the owner of a lease of the building or of the
land and building) of which the demised premises form a
part, so that in the event of a lease of said building, or
of the land and building, the said Owner shall be and hereby
is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and
construed without further agreement between the parties or
their successors in interest, or between the parties and the
purchaser, at any such sale, or the said lessee of the
building, or of the land and building, that the purchaser or
the lessee of the building has assumed and agreed to carry
out any and all covenants and obligations of Owner
hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal
meaning. The term "rent" includes the annual rental rate
whether so-expressed or expressed in monthly installments,
and "additional rent." "Additional rent" means all sums
which shall be due to new Owner from Tenant under this
lease, in addition to the annual rental rate. The term
"business days" as used in this lease shall exclude
Saturdays(except such portion thereof as is covered by
specific hours in Article 31 hereof), Sundays and all days
observed by the State or Federal Government as legal
holidays and those designated as holidays by the applicable
building service union employees service contract or by the
applicable Operating Engineers contract with respect to HVAC
service.
ADJACENT 35. If an excavation shall be made upon land adjacent to the
EXCAVATION demised premises, or shall be authorized to be made,
SHORING: Tenant shall afford to the person causing or authorized to
cause such excavation, license to enter upon the demised
premises for the purpose of doing such work as said person
shall deem necessary to preserve the wall or the building of
which demised premises form a part from injury or damage and
to support the same by proper foundation without any claim
for damages or indemnity against Owner, or diminution or
abatement of rent.
RULES AND 36. Tenant and Tenant's servants, employees, agents, visitors,
REGULATIONS: and licensees shall observe faithfully, and comply strictly
with, the Rules and Regulations annexed hereto and such
other and further reasonable Rules and Regulations as Owner
or Owner's agents may from time to time adopt. Notice of any
additional rules or regulations shall be given in such
manner as Owner may elect. In case Tenant disputes the
reasonableness of any additional Rule or Regulation
hereafter made or adopted by Owner or Owner's agents, the
parties hereto agree to submit the question of the
reasonableness of such Rule or Regulation for decision to
the New York office of the American Arbitration Association,
whose determination shall be final and conclusive upon the
parties hereto. The right to dispute the reasonableness of
any additional Rule or Regulation upon Tenant's part shall
be deemed waived unless the same shall be asserted by
service of a notice, in writing upon Owner within ten (10)
days after the giving of notice thereof. Nothing in this
lease contained shall be construed to impose upon Owner any
duty or obligation to enforce the Rules and Regulations or
terms, covenants or conditions in any other lease, as
against
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<PAGE>
any other tenant and Owner shall not be liable to Tenant for
violation of the same by any other tenant, it servants,
employees, agents, visitors or licensees.
GLASS: 37. Owner shall replace, at the expense of the Tenant, any and
all plate and other glass damaged or broker from any cause
whatsoever in and about the demised premises. Owner may
insure, and keep insured, at Tenant's expense, all plate and
other glass in the demised premises for an in the name of
Owner. Bills for the premiums therefor shall be rendered by
Owner to Tenant at such times as Owner 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.
ESTOPPEL 38. Tenant, at any time, and from time to time, upon at least 10
CERTIFICATE: days' prior notice by Owner, shall execute, acknowledge and
deliver to Owner, and/or to any other person, firm or
corporation specified by Owner, a statement certifying that
this Lease is unmodified in full force and effect (or, if
there have been modifications, that the same is in full
force and effect as modified and stating the modifications),
stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying
each such default.
DIRECTORY 39. If, at the request of and as accommodation to, Tenant, Owner
BOARD LISTING: shall place upon the directory board in the lobby of the
building, one or more names of persons other than Tenant,
such directory board listing shall not be construed as the
consent by Owner to an assignment or subletting by Tenant to
such person or persons.
SUCCESSORS 40. The covenants, conditions and agreements contained in this
AND ASSIGNS: lease shall bind and inure to the benefit of Owner and
Tenant and their respective heirs, distributees, executors,
administrators, successors, and except as otherwise provided
in this lease, their assigns.
- -----------------
- - Space to be filled in or deleted.
AS PER RIDER ATTACHED AND MADE PART OF LEASE DATED: October 26th, 1990
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IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
WITNESS FOR OWNER: TOBIAS ASSOCIATES
______________________ By: __________________ L.S. [Corp. Seal]
Witness for Tenant: AUDITS AND SURVEYS, INC.
______________________ By: __________________ L.S. [Corp. Seal]
WITNESS FOR TENANT:
(L.S.)
______________________
ACKNOWLEDGMENTS
CORPORATE TENANT
STATE OF NEW YORK, SS.:
COUNTY OF
On this day of , 19 , before me personally came to me known, who
being by me duly sworn, did depose and say that he resides in that he is the of
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporation seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
...........................................................
INDIVIDUAL TENANT
STATE OF NEW YORK, SS.:
COUNTY OF
On this day of , 19 , before me personally
came to me known and known to me to be the individual described in and who, as
TENANT, executed the foregoing instrument and acknowledged to me that he
executed the same.
...........................................................
-> IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the building by reason of noise,
orders, and/or vibrations, or interfere in any way with other Tenants or those
having business therein, nor shall any animals or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of the Owner.
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<PAGE>
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the outside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability, and may charge the
expenses incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any
part of the demised premises or the building of which they form a part. No
boring, cutting or stringing of wires shall be permitted, except with the prior
written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used as interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky
matter of any description shall be delivered to and removed from the premises
only on the freight elevators and through the service entrances and corridors,
and only during hours and in a manner approved by Owner. Owner reserves the
right to inspect all freight to be brought into the building and to exclude from
the building all freight which violates any of these Rules and Regulations of
the lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises ice,
drinking water, towel and other similar services, or accept barbering or
bootblacking services in the demised premises, except from persons authorized by
Owner, and at hours and under regulations fixed by Owner. Canvassing, soliciting
and peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building between the
hours of 6:00 P.M. and 8 A.M. on business days, after 1 p.m. on Saturdays, and
at all hours on Sundays, and legal holidays all persons who do not present a
pass to the building signed by Owner. Owner will furnish passes to persons for
whom any Tenant requests same in writing. Each Tenant shall be responsible for
all persons for whom he requests such pass and shall be liable to Owner for all
acts of such persons. Notwithstanding the foregoing, Owner shall be required to
allow Tenant or any person to enter or remain in the building, except on
business days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m.
to 1:00 p.m.
11. Owner shall have the right to prohibit any advertising by any
Tenant which in Owner's opinion, tends to impair the reputation of the building
or its desirability as a loft building, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on
the demised premises, any inflammable, combustible or explosive fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the demised premises.
13. Tenant shall not use the demised premises in a manner which
disturbs or interferes with other Tenants in the beneficial use of their
premises.
Address
Premises
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TO
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Real Estate STANDARD FORM OF Real Estate
Board of New York LOFT LEASE Board of New York
organized 1896 organized 1896
Inc 1908 Inc 1908
THE REAL ESTATE BOARD OF NEW YORK, INC.
(C)Copyright 1982. All rights Reserved.
Reproduction in whole or in part
prohibited.
===============================================================================
Dated 19
Rent per Year
Rent per Month
Term
From
To
Drawn by........................Checked by......................................
Entered by......................Approved by.....................................
===============================================================================
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<PAGE>
#44. EXHIBIT "A"
FLOOR PLAN
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<PAGE>
RIDER ATTACHED TO AND MADE PART OF LEASE DATED: October 26th, 1990
-between-
TOBIAS ASSOCIATES
Landlord
-and-
AUDITS AND SURVEYS, INC.
Tenant
Portion of basement space in building known and
designated as 650 AVENUE OF THE
AMERICAS, NEW YORK, NEW YORK
#41. The Tenant agrees that all lighting and other electrical devices in
the Demised Premises will be connected to the submeter presently existing in the
adjacent basement space currently occupied by Audits and Surveys, Inc.
The electrical consumption in the Demised Premises will be charged to
the Tenant under the same terms and conditions specified in the Lease between
Audits and Surveys, Inc., and Tobias Associates dated February 13th, 1987,
covering all of the space in 650 Avenue of the Americas, currently occupied by
Audits and Surveys, Inc.
#42. The submission of this Lease to Tenant shall not be construed as an
offer, nor shall Tenant have any rights with respect thereto unless and until
Landlord shall execute a copy of this Lease and deliver the same to Tenant.
Until such execution and delivery, any action taken or expense incurred by
Tenant shall be at its sole risk and account.
#43. With reference to Paragraph 11, Landlord agrees that it wil
not unreasonably withhold or delay its consent to an Assignment or sublet by
Tenant provided that said assignment or sublet is for storage space for a
Subtenant having a Lease for Office Space at 650 Avenue of the Americas. In
addition, Landlord consents to a sublet of the premises to Churchill
Livingstone, Inc. in accordance with the terms of Paragraph 7 of a certain
sublease agreement between Tenant and Churchill Livingstone, Inc. dated October
1, 1990 (the "Sublease").
TOBIAS ASSOCIATES
By: __________________________ L.S.
AUDITS AND SURVEYS, INC.
By:________________________L.S.
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<PAGE>
October 26th, 1990
Audits and Surveys, Inc.
650 Avenue of the Americas
New York, New York 10011
Gentlemen:
Confirming our understanding with reference to lease this day executed by you
(the "Tenant") with us (the "Landlord"), for space known and designated as
portion of the basement space located in the building known as 650 Avenue of the
Americas, New York, New York, we hereby agree at our own cost and expense to do
the following work ("Landlord's Work") in accordance with all applicable laws
and building standards:
1. Construct demising walls of metal or sheetrock at Landlord's option with
two (2) lockable doors;
2. Provide reinforced cement floor similar to that which exists in present
Audits and Surveys space. Audits and Surveys will pay one-half (1/2) the
cost of the cement floor with their contribution not to EXCEED SIX THOUSAND
FIVE HUNDRED ($6,500) DOLLARS.
It is understood that the aforesaid work will be commenced after execution of
said lease. You do hereby grant us an irrevocable license to enter the premises
for the purpose of doing the aforesaid work. It is also understood you are to
receive no abatement or diminution of rent, nor are you to make any claim for
injury to person, or damage to property, for interruption or loss of business,
or disturbance in possession, resulting directly or indirectly from the doing of
the aforesaid work by us. It is also understood that the doing of said work is
subject to strikes/and or lockouts and all other causes beyond the Landlord's
control.
Very truly yours,
TOBIAS ASSOCIATES
By: ____________________________L.S.
AGREED TO AND ACCEPTED
AUDITS AND SURVEYS, INC.
BY:________________________L.S.
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TERM LOAN AGREEMENT
AGREEMENT dated as of the 30th day of November, 1993, among AUDITS &
SURVEYS, INC., a New York corporation having its principal office and place of
business at 650 Avenue of the Americas, New York, New York 10011 (the
"Borrower"), SOLOMON DUTKA and CARL RAVITCH (the "Guarantors") and CHEMICAL
BANK, a New York banking corporation having an office and place of business
located at Midtown Region, 1375 Broadway, 8th Floor, New York, New York 10018
(the "Bank").
PRELIMINARY STATEMENT
WHEREAS, the Borrower has requested and the Bank has agreed to provide for
a term loan agreement in the sum of NINE HUNDRED THIRTY SEVEN THOUSAND FIVE
HUNDRED AND 00/100 ($937,500.00) DOLLARS in order to refinance short term
financing for leasehold improvements at the Borrower's office at 650 Avenue of
the Americas, New York, New York 10011 (the "Premises");
NOW, THEREFORE, the Borrower and the Bank hereby agree as follows:
I. ISSUANCE OF TERM LOAN.
The Bank agrees to issue a term loan to the Borrower, in the principal
amount of $937,500.00 in accordance with the terms hereof (the "Term Loan"), and
for the purposes set forth above.
II. TERM NOTE.
The Term Loan shall be evidenced by a note (the "Term Note"), payable to
the order of the Bank in fifteen (15) equal quarterly installments of $62,500.00
each commencing on March 31, 1994; any principal balance remaining unpaid shall
be due and payable on September 30, 1997.
III. INTEREST ON TERM NOTE.
The Term Note shall bear interest on the principal balance from time to
time unpaid computed from the date hereof until paid at the fluctuating rate per
annum equal to the Alternate Base Rate plus 1% and shall be calculated on the
basis of the actual number of days elapsed over a year of 360 days; and the
interest computed as aforesaid shall be payable quarterly in arrears commencing
December 31, 1993 until the principal is fully paid; PROVIDED, HOWEVER, that if
not sooner paid then the interest accrued and unpaid calculated at the rate
aforesaid shall be due and payable on September 30. 1997.
<PAGE>
If the Borrower shall default in the payment of the principal of or
interest on the Term Loan or any other amount becoming due hereunder, the
Borrower shall, on demand, from time to time pay interest, to the extent
permitted by law, on such defaulted amount up to the date of actual payment
(after, as well as before, judgment) at a rate per annum equal to the sum of (a)
3%, plus (b) the Alternate Base Rate.
IV. FACILITY FEE.
The Borrower shall pay to the Bank on the date hereof a non-refundable
facility fee in the amount of $10,900 (being a total facility fee of $18,750
less $7,850.00 already paid).
V. INTEREST ADJUSTMENT.
If at any time or from time to time the rate of interest on the Term Note
calculated pursuant to Section III hereof would exceed the maximum rate
permitted under applicable law (the "Highest Lawful Rate"), the interest payable
on such Term Note shall be limited to the amount payable at the Highest Lawful
Rate.
VI. COLLATERAL.
As security for payment of the aggregate principal and interest on the Term
Note and all other monetary obligations under this Agreement and performance of
all other obligations under this Agreement, the Bank is relying on (i) the
Security Agreement dated November 14, 1991 executed by the Borrower and
delivered to the Bank covering accounts receivable as more fully described
therein along with the appropriate UCC filings related thereto (the "Security
Agreement") and (ii) a guaranty of payment from the Guarantors to the Bank, of
even date herewith (the "Guaranty"; the Guaranty and the Security Agreement
hereinafter being referred to as the "Collateral"). The Collateral shall at all
times be in form and in substance satisfactory to the Bank. The Bank shall have
the right, in its sole and absolute discretion, to realize upon any or all of
the Collateral to the fullest extent of the Borrower's obligations as
hereinbefore referred to in this Section VI in the event of a default on the
part of the Borrower.
VII. PREPAYMENT.
The Borrower may prepay the Term Note in whole or in multiples of
$50,000.00 without penalty, upon at least five (5) business days' prior written
notice to the Bank, together with accrued interest on the principal amount being
prepaid to the date of prepayment; such prepayment to be applied to installments
of principal in inverse order of maturity. Each notice of prepayment shall
specify the prepayment date and the principal amount to be prepaid, shall be
irrevocable, and shall commit the Borrower to prepay such principal amount on
the date stated in such notice.
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<PAGE>
VIII. CAPITAL ADEQUACY.
If after the date of this Agreement, the Bank shall have determined that
the applicability of any law, rule, regulation or guideline adopted pursuant to
or arising out of the August 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", "or the adoption after the date
hereof of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank (or any lending office of the Bank) or the
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital or on the capital of the Bank's holding company, if any,
as a consequence of its obligations under the instruments executed and delivered
to evidence and/or to secure the Tenn Loan to a level below that which the Bank
or the Bank's holding company could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's policies and the policies of
the Bank's holding company with respect to capital adequacy) by an amount deemed
by the Bank to be material, then, within fifteen (15) days after demand therefor
by the Bank, the Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank or the Bank's holding company for any such
reduction suffered.
IX. REPRESENTATIONS AND WARRANTIES.
The Borrower, and, where expressly stated, the Guarantors, each represents
and warrants to the Bank that:
(A) VALID EXISTENCE. It: (a) is duly organized, validly existing and in
good standing as, with respect to the Borrower, a corporation under the laws of
the State of New York, and under the laws of any other jurisdiction in which it
does business; (b) has the power and authority to lease property and to carry on
its business as presently conducted; (c) is qualified to do business in every
jurisdiction where such qualification is necessary to conduct its business; and
(d) it has the power and authority as may be required by the United States
government necessary to conduct business with foreign countries; and the
Borrower has the power to execute, deliver and perform this Agreement and to
execute and deliver all documents to effect the transactions contemplated by
this Agreement.
(B) AUTHORIZATION. The execution, delivery and performance of this
Agreement, the Term Note and the other documents referred to herein and the
granting of the security interest contemplated by this Agreement by the Borrower
(a) has been duly authorized by all necessary corporate action and (b) will not
violate (i) any provision of the Certificate of Incorporation or By-Laws of the
Borrower, (ii) any provision of law or any order of any court or other agency of
government, which is applicable to the Borrower and which would, if violated,
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<PAGE>
adversely affect the business of the Borrower, or (iii) any indenture, agreement
or other instrument to which the Borrower or either Guarantor is a party, or by
which any of the property or assets of the Borrower or either Guarantor is
bound, or be in conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the property or assets of
the Borrower or either Guarantor which are security to the Bank for the Term
Loan. This Agreement constitutes the legal, valid and binding obligation of the
Borrower enforceable in accordance with its terms and the Guaranty constitutes
the legal, valid and binding obligation of the Guarantors enforceable in
accordance with its terms.
(C) FINANCIAL STATEMENTS. The Borrower has heretofore furnished to the Bank
its current combined financial statements dated as of November 30, 1992 and July
31, 1993 and the Guarantors have heretofore furnished to the Bank their
respective personal financial statements dated as of March 31, 1993 in the case
of Solomon Dutka and June 7, 1993 in the case of Carl Ravitch. All such
financial statements present fairly and accurately the financial position and
results of operations and other matters as of the dates and for the periods
indicated therein, such financial statements show all known material
liabilities, direct or contingent, and such financial statements of the Borrower
and the Guarantors were prepared in accordance with Generally Accepted
Accounting Principles applied on a consistent basis and such financial
statements shall be in form and substance satisfactory to the Bank. There is no
obligation or liability, contingent or otherwise, which is material in amount
and which is not, or shall not be, reflected in such financial and other
statements.
(D) NO ADVERSE CHANGE. There has been no adverse change since the date of
the last above-referenced financial statements in the condition, financial or
otherwise, of the Borrower or Guarantors.
(E) LITIGATION. Except as set forth on Schedule I hereto, there is no
claim, action, suit, or proceeding at law or in equity or by or before any
governmental instrumentality or other agency, domestic or foreign, pending or,
to its knowledge, threatened against or affecting the Borrower or either
Guarantor, or any of its properties or rights which, if adversely determined,
would impair its right to carry on its business as presently conducted or would
adversely affect its business, operations, prospects, properties or assets, or
financial conditions or the interests granted to the Bank in the Collateral.
(F) AGREEMENTS.
(i) Neither the Borrower nor either Guarantor is a party to any agreement,
indenture, lease or instrument or subject to any charter or other corporate or
other restriction or any judgment, writ, injunction, decree, rule or regulation
which adversely affects its business, properties or assets, operations or
conditions (financial or otherwise), or the interest granted to the Bank in the
Collateral or the effect of which would affect the ability of the
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<PAGE>
Borrower to perform its obligations under this Agreement. There are no material
unrealized losses with respect to any such agreement, indenture, lease or
agreement.
(ii) Neither the Borrower nor either Guarantor is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which they are a party or
by which any of their respective assets or properties are bound.
(G) TITLE TO PROPERTIES: LIENS OR ENCUMBRANCES. The Borrower and each
Guarantor has good and marketable title to all its properties and assets
reflected in the financial statements referred to in paragraph (C) above, and
all such properties and assets are not subject to any lien or encumbrance which
is not permitted by this Agreement or any other loan document contemplated to be
executed on its behalf, except to the extent set forth on Schedule 11 hereto,
which Schedule is to be satisfactory to the Bank in its sole and absolute
discretion.
(H) TAXES. The Borrower and each Guarantor has filed or caused to be filed
all Federal, state and local tax returns including those for corporate franchise
taxes, and has paid all required Federal, State and local taxes pursuant to any
assessment received by it and it has set aside on its financial statements
adequate reserves with respect to any such tax or assessment being contested in
good faith by appropriate proceedings.
(I) ERISA. Based upon ERISA and the regulations and published
interpretations thereunder, it is in full compliance with all applicable ERISA
provisions. No Reportable Event (as defined in Section 4043(b) of Title IV of
ERISA) has occurred with respect to any Plan administered by it, or by any
administrator designated by it.
(J) APPROVAL. Its Board of Directors (and if required the shareholders
thereof) has approved this Agreement and the other documents referred to herein
and the transactions contemplated thereby.
(K) FEDERAL RESERVE REGULATIONS. (a) It has not engaged principally, or as
one of its important activities, in the business of extending credit for the
purposes, whether immediate, incidental or ultimate, of purchasing or carrying
any margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System of the United States).
(b) No part of the proceeds of the Term Loan made hereunder will be used,
directly or indirectly:
(i) to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carry any such margin
stock or to refund indebtedness originally incurred for such
purpose, or
(ii) for the purpose that violates, or is inconsistent with, any of
the provisions of
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<PAGE>
Regulation G, T, Q or X or any other regulation of said Board of Governors.
If requested by the Bank, it will furnish to the Bank a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in said
Regulation U.
(L) INVESTMENT COMPANY ACT. It is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(M) SUBSIDIARIES OR AFFILIATES. The Borrower has no subsidiaries or
affiliates through common ownership other than those set forth on Schedule III
hereto.
(N) LOAN PROCEEDS. The proceeds of the Term Loan will be used by the
Borrower for the sole purpose of refinancing short term financing of leasehold
improvements at the Premises.
(O) CONTINGENT LIABILITIES. The Borrower has no contingent liabilities
except as set forth on Schedule IV hereto.
X. CONDITIONS OF LENDING.
The obligation of the Bank to issue the Term Loan is subject to the
following conditions precedent:
(A) REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in Article IX hereof shall be true and correct on and as of the date
hereof except to the extent that they expressly relate to another date.
(B) OPINION OF COUNSEL. Opinion of counsel for the Borrower and the
Guarantors to the effect that (i) the Borrower is validly incorporated under the
laws of the State of New York and is duly qualified to do business in the State
of New York; (ii) Solomon Dutka is the Chairman and Chief Executive Officer of
the Borrower and is authorized to execute loan documents on behalf of the
Borrower and Anthony Timiraos is the Senior Vice President and Chief Financial
Officer of the Borrower and is authorized to execute loan documents on behalf of
the Borrower; (iii) the documents to be executed on behalf of the Borrower by
Solomon Dutka as Chairman and Chief Executive Officer and Anthony Timiraos, as
Senior Vice President and Chief Financial Officer, and attested to by Leonard
Spector as Secretary, have all been approved by all requisite corporate and
shareholder action on behalf of the Borrower; (iv) the documents contemplated to
be executed and delivered by or on behalf of the Borrower and the Guarantors
will, upon delivery, be valid, binding and enforceable in accordance with the
terms of said documents (subject only to the usual caveats in respect of
bankruptcy and insolvency and creditors' rights generally); (v) based upon ERISA
and the regulations and published interpretations thereunder, the Borrower is in
full compliance with all applicable ERISA provisions; and (vi) containing such
other provisions as may be requested by the Bank.
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<PAGE>
(C) NO-DEFAULT. On the date hereof, the Borrower and the Guarantors shall
be in compliance with all the terms and provisions set forth herein, in the Term
Note and the Collateral on their respective parts to be observed or performed,
and no Event of Default specified in Article XIII hereof, nor any event which
upon notice or lapse of time or both would constitute such an Event of Default,
shall have occurred and be continuing on the date hereof.
(D) CERTIFICATE. On the date hereof, the Borrower shall have delivered to
the Bank a certificate dated the date hereof, in form and in substance
satisfactory to the Bank and to counsel for the Bank, signed by the Chairman of
the Board, the President, the Chief Executive Officer or the principal financial
officer of the Borrower confirming compliance with all of the conditions
precedent set forth in Sections (A) and (C) of this Article X and specifically
excluding therefrom such conditions as have been expressly waived by the Bank in
writing.
(E) CORPORATE DOCUMENTS. On or before the date hereof the Bank shall have
received copies of (i) the Certificate of Incorporation and any amendments
thereto of the Borrower; (ii) the By-Laws of the Borrower; (iii) up to date good
standing and tax status certificates for the Borrower from the New York
Secretary of State; (iv) corporate resolutions of the Borrower authorizing the
Term Loan and the execution of this Agreement; (v) incumbency certificates of
the Borrower; (i), (ii), (iii), (iv) and (v) to be certified by an authorized
officer of the Borrower to be true and correct and complete; (vi) the financial
statements of the Borrower and the Guarantors referred to in Section (C) of
Article IX hereof, with respect to the Guarantors, said financial statements
should be signed by the respective Guarantors, and with respect to the Borrower,
said financial statements shall be reviewed by an independent certified public
accountant satisfactory to the Bank; and (vii) such other documents relating to
the Borrower and the Guarantors as the Bank may request.
(F) SCHEDULES. On the date hereof the Bank shall have received schedules of
all indebtedness for borrowed money, contingent liabilities, liens, encumbrances
and guaranties of the Borrower including thereon all capitalized leases AND a
schedule of all subleases affecting the Premises, all of which shall be in form
and substance satisfactory to the Bank.
(G) APPROVAL OF COUNSEL FOR THE BANK. All legal matters incident to this
Agreement and the transactions contemplated hereby shall be satisfactory to
counsel for the Bank and at the request of Bank's counsel, Borrower shall supply
satisfactory evidence that all Federal and State laws and regulations have been
complied with.
(H) EVIDENCE OF INSURANCE. Provide to the Bank satisfactory evidence of the
existence and maintenance of all of the insurance which the Borrower has
covenanted to maintain pursuant to Section XI(B) below, as reviewed and approved
by the Risk & Insurance Management Department of the Bank.
(I) FEES. Receipt by the Bank of all appropriate fees, expenses and
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<PAGE>
reimbursements due from the Borrower.
(J) THE TERM NOTE. Receipt by the Bank of the Term Note, in form and
substance satisfactory to the Bank and;
(K) THE GUARANTY . Receipt by the Bank of the Guaranty, in form and
substance satisfactory to the Bank.
XI. AFFIRMATIVE COVENANTS.
The Borrower and, where expressly stated, the Guarantors, each covenant and
agree with the Bank that, so long as this Agreement shall remain in effect or
any portion of the Term Note shall be outstanding, it will:
(A) VALID EXISTENCE. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its valid existence, rights,
licenses, permits and franchises which, if not done, would have a material
adverse effect on its condition (financial or otherwise) or its ability to
comply with its obligations under this Agreement and/or the documents referred
to herein, conduct its business substantially as presently conducted; at all
times maintain, preserve and protect all material franchises, rights, permits,
licenses, agency agreements and trade names and preserve all of its property
used or useful in the conduct of its business and keep the same in good repair,
working order and condition, and from time to time make, or cause to be made,
all needful and proper repairs, renewals and replacements, betterments and
improvements thereto so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.
(B) INSURANCE. Keep its insurable properties adequately insured at all
times by financially sound and reputable insurers, maintain such other insurance
to such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same or
similar businesses, maintain in full force and effect adequate public liability
insurance against claims for personal injury, death or property damage in such
amount as it shall reasonably deem necessary, and maintain such other insurance
as may be required by law or by the Bank.
(C) PAYMENT OF INDEBTEDNESS AND TAXES. (i) Pay all indebtedness and
obligations in accordance with their respective terms; (ii) pay and discharge
all taxes; assessments and governmental charges or levies imposed upon it or in
respect of its income and profits, or upon any of its property, real, personal
or mixed, or upon any part thereof, before the same shall become in default, as
well as all lawful claims for labor, materials and supplies or otherwise which,
if unpaid, might become a lien or charge upon such properties or any part
thereof, PROVIDED, HOWEVER, that the Borrower shall not be required to pay and
discharge or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim so long as the validity thereof shall be contested in good
faith by appropriate proceedings and the Borrower shall have set aside on its
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books adequate reserves with respect to any such tax, assessment, charge, levy
or claim so contested.
(D) FINANCIAL STATEMENTS. Furnish to the Bank:
(i) as soon as available and in any event within 120 days after
the end of each of its fiscal years, a combined balance sheet and statements of
earnings and changes in financial position, together with supporting notes
thereto, all such balance sheets, statements and notes of the Borrower prepared
in accordance with Generally Accepted Accounting Principles applied on a
consistent basis and audited (or reviewed, in the case of such balance sheets,
statements and notes for the fiscal year of the Borrower ended November 30,
1992) by independent public accountants of recognized standing selected by the
Borrower and acceptable to the Bank, showing the respective financial condition
of the Borrower at the close of such year and the results of its operations
during such year; and
(ii) as soon as available and in any event within 60 days after
the end of each four month trimester, unaudited combined financial statements
prepared and certified by its principal financial officers; and
(iii) with respect to the Guarantors, as soon as available, and
in any event within 90 days after the end of each fiscal year, signed personal
financial statements including any contingent liabilities, satisfactory in form
and substance to the Bank, and
(iv) with the statements submitted under subsections (i) and (ii)
above, certificates of its independent public accountants or principal financial
officers, as the case may be, (i) certifying that to the best of his knowledge
no Event of Default, nor any event which, upon notice or lapse of time or both,
would constitute such an Event of Default, has occurred, or, if such an Event of
Default or event has occurred, specifying the nature and extent thereof and (ii)
setting forth the computations required by Article XII hereof; and
(v) promptly, from time to time, such other information regarding
its operations, business affairs and financial condition as the Bank may
request;
(vi) immediately upon obtaining knowledge thereof, notice of
any event which with notice and/or lapse of time or both would constitute a
default under any agreement or instrument which materially adversely affects its
business, property or assets, operation or condition (financial or otherwise),
or the performance, observance and fulfillment of any of the obligations,
covenants or conditions contained in any instrument or agreement to which it is
a party or by which any of its properties or assets is bound, the effect of
which would materially affect the ability of the Borrower to perform its
obligations under this Agreement and the documents referred to therein; and
(vii) within 15 days after the end of each month, monthly
schedules, in
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form and substance satisfactory to the Bank, current as of the close of business
on the last business day of such month, of all accounts receivable and accounts
payable of the Borrower showing separately those which are more than 30 days, 60
days and 90 days old.
(E) LITIGATION NOTICE. Give the Bank notice, promptly, of any action, suit
or proceeding at law or in equity or by or before any governmental
instrumentality or other agency which, if adversely determined, would impair its
right to carry on its business substantially as presently conducted, or could
materially adversely affect its business, operations. properties. assets or
condition. financial or otherwise, which notification should include an
assessment, acceptable to the Bank, of the probable outcome of such litigation.
(F) BOOKS AND RECORDS. Keep and maintain at its own cost and expense
satisfactory and complete books of account and records and allow the Bank, or
its representative, the right to visit from time to time on reasonable notice
any of the properties of the Borrower and to visit the place or places of
business of the Borrower and to inspect, audit and make extracts from the
Borrower's books, accounts, records, journals, orders, notices and
correspondence or other data relating to the business or transactions relating
hereto and to discuss its affairs, finances and accounts with its officers and
its independent certified public accountants or other parties preparing
statements for or on its behalf.
(G) COMPLIANCE WITH LAWS. Comply with all applicable laws, rules,
ordinances, regulations and requirements of governmental authorities (including,
without limitation. ERISA and the rules and regulations thereunder) which, if
not complied with, would have a material adverse effect on its business or
financial condition except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
(H) ERISA. (i) as soon as possible, and in any event within 30 days after
any of its executive officers knows that any Reportable Event (as defined in
Section 4043(b) of Title IV of ERISA) with respect to any Plan has occurred, a
statement of its principal financial officer setting forth details as to such
Reportable Event and the action which it is proposed to be taken with respect
thereto, together with a copy of the notice of such Reportable Event given to
the Pension Benefit Guaranty Corporation (hereinafter called the "PBGC"),
(ii) promptly after the filing thereof with the United States
Secretary of Labor or the PBGC, copies of each annual and other report or form
with respect to any Plan administered by it or any administrator designated by
it, and
(iii) promptly after receipt thereof, a copy of any notice it
may receive from PBGC relating to the intention of the PBGC to terminate any
Plan or to appoint a trustee to administer any Plan.
(I) REPORTS TO GOVERNMENTAL AGENCIES. Provide to the Bank copies of all
material reports, documents and other information submitted to any governmental
the terms instrumentality
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or other agency and all information related thereto.
(J) DEFAULT. Promptly notify the Bank of any Event of Default under the
terms of this Agreement.
(K) PAYMENTS. The Borrower shall make full and timely payments of principal
and interest on the Term Note and all other indebtedness of the Borrower to the
Bank, whether now existing or hereafter arising.
(L) NOTICE OF MATERIAL ADVERSE CHANGE. Give to the Bank prompt written
notice of any material adverse change in its condition, financial or otherwise.
(M) SECURITY. From time to time do and perform any act and execute,
acknowledge, deliver, file, register or record any instrument reasonably
requested by the Bank in order to preserve, renew or keep in full force and
effect the first and prior security interest created and granted the Bank by the
Collateral.
(N) GUARANTORS. In the event of the death, disability, retirement, or
bankruptcy of any of the Guarantors, give to the Bank prompt written notice of
the proposed substitute guarantor, which guarantor shall be satisfactory to the
Bank in its sole and absolute discretion.
(O) LEASE AGREEMENTS. ETC. Promptly notify the Bank of any change in (i)
the lease agreement dated February 13, 1987 between Tobias Associates and the
Borrower, and (ii) sublease agreements with Banco Popular de Puerto Rico and
Churchill Livingston.
XII. NEGATIVE COVENANTS.
The Borrower covenants and agrees with the Bank that so long as this
Agreement shall remain in effect or any portion of the Term Note shall be
outstanding, or fees, expenses or amounts payable or incurred hereunder or under
any document referred to herein shall be unpaid, the Borrower will not, without
the prior written consent of the Bank, directly or indirectly:
(A) INDEBTEDNESS; LEASES. Incur, create, assume or permit to exist from and
after the date hereof, any indebtedness or liability for borrowed money or any
indebtedness evidenced by notes, bonds, debentures or similar obligations,
except:
(i) the Term Loan and other obligations to the Bank;
(ii) that owing on the date hereof as set forth on Schedule V
hereto, which indebtedness shall not be renewed, extended, increased or
refinanced;
(iii) Subordinated Debt in form and substance satisfactory to the
Bank and approved in writing by the Bank;
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(iv) short term working capital borrowing from the Bank;
(v) capitalized lease obligations; and
(vi) purchase money indebtedness not to exceed $200,000.00
in the aggregate; PROVIDED that such indebtedness shall in no event be greater
than the purchase price of the asset being purchased; and,
(vii) loans from stockholders in an aggregate amount not
exceeding $1,000,000.
(B) LIENS. Incur, create, assume or permit to exist any mortgage, pledge,
lien, charge or other encumbrance of any nature whatsoever (including
conditional sales or other title retention agreements) on any property or assets
of the Borrower whether now owned or hereinafter acquired, other than:
(i) liens, mortgages and security interests securing indebtedness
created under this Agreement;
(ii) pledges and deposits in connection with workmen's
compensation, unemployment insurance, old age pensions and other social security
benefits and to secure the performance of statutory obligations, provided such
payments are not delinquent;
(iii) other liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's and vendors' liens, incurred in good faith in the
ordinary course of business,
(iv) liens arising under subsection (A)(i), (ii), (iv) and (v)
above; and
(v) purchase money security interests, provided that such
security interests shall not secure any indebtedness greater than the purchase
price of the asset being purchased, nor shall it attach to any other asset of
the Borrower.
(C) GUARANTIES. Guarantee, endorse, become surety for, indemnify or
otherwise in any way become or be responsible for, obligations of any other
person, whether by agreement to purchase the indebtedness of any other person or
agreement for the furnishing of funds, directly or indirectly, by way of stock
purchase, capital contribution or loan or through the purchase of goods,
supplies or services, or for the purpose of payment of the indebtedness of any
other person, or otherwise enter into or be a party to any contract for the
purchase of merchandise, materials, supplies or other property if such contract
provides that payment for such merchandise, materials, supplies or other
property shall be made regardless of whether delivery of such merchandise,
supplies or other property is ever made or tendered, except endorsements of
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negotiable instruments for collection or deposit in the ordinary course of
business.
(D) NATURE OF BUSINESS. Materially alter the nature of its present business
affairs and/or practices.
(E) DISPOSAL OF ASSETS. Sell, transfer, discount, or otherwise dispose of
notes, accounts receivable or other rights to receive payment, with or without
recourse, except for collection in the ordinary course of business.
(F) DISPOSAL OF PROPERTY; MERGER. Sell, lease, transfer or otherwise
dispose of all or a substantial part of its properties, assets or stock, whether
or not pursuant to an order of a governmental agency or commission, or
consolidate with, or merge into any other corporation or permit any other
corporation to merge into it, or acquire all or substantially all of the
property or assets of any person, or enter into any sale and leaseback
arrangement or form any new subsidiaries or affiliates.
(G) CAPITAL EXPENDITURE. Permit Consolidated Capital Expenditures
(including capitalized lease obligations) to exceed $500,000.00 during any
fiscal year of the Borrower.
(H) LOANS AND INVESTMENTS. Lend or advance money, credit or property to any
person, or invest in (by capital contribution or otherwise), purchase,
repurchase or hold beneficially any stock, other securities, or evidences of
indebtedness of, purchase or acquire all or a substantial part of the assets or
properties of, make or permit to exist any interest whatsoever in, any other
person, except that the Borrower may invest in:
(i) direct obligations of the United States of America or any
governmental agency thereof, or obligations guaranteed by the United States of
America, provided that such obligations mature within one year from the date of
acquisition thereof, or
(ii) money marke mutual funds having assets in excess of
$2,000,000,000.00; or
(iii) dollar denominated certificates of deposit issued by any
commercial bank organized and existing under the laws of the United States or
any state thereof and having aggregate capital and surplus in excess of
$500,000,000.00;
(iv) as related to a joint venture or joint ventures as set
forth on Schedule VI hereto, plus an additional amount related to a joint
venture or joint ventures not exceeding $150,000 in the aggregate at any one
time; or
(v) investments in, and advances to, affiliated companies, stock-
holders and employees as shown on Schedule VII hereto which investments and
advances shall not exceed $650,000 for any fiscal year of the Borrower or for
any trimester therein.
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<PAGE>
(I) CAPITAL FUNDS. Permit Capital Funds (as hereinafter defined) to be less
than (i) $3,500,000 for the fiscal year of the Borrower ended November 30, 1993
or for either of the succeeding two trimesters ended March 3 1, 1994 and July 1,
1994, (ii) $3,750,000 for the fiscal year of the Borrower ended November 30,
1994 or for either of the succeeding two trimesters ended March 31, 1995 and
July 31, 1995, (iii) $4,000,000 for the fiscal year of the Borrower ended
November 30, 1995 or for either of the succeeding two trimesters ended March 31,
1996 or July 31, 1996 and (iv) $4,250,000 for any fiscal year or trimester
thereafter. For the purposes of this section (I) "Capital Funds" shall mean the
sum of Consolidated Tangible Net Worth and Subordinated Debt.
(J) CURRENT RATIO. Permit the ratio of Total Consolidated Current Assets to
Total Consolidated Current Liabilities to be less than 1.1:1 at the end of any
fiscal year of the Borrower or at the end of any trimester therein.
(K) CONSOLIDATED NET LOSS. Permit a Consolidated Net Loss in any two
consecutive fiscal trimesters or in any fiscal year of the Borrower.
(L) TOTAL CONSOLIDATED UNSUBORDINATED LIABILITIES. Permit the ratio of
Total Consolidated Unsubordinated Liabilities to Consolidated Tangible Net Worth
plus Subordinated Debt to exceed (1) 2.25:1 during the Borrower's 1992-1993
fiscal year (or during any trimester period within such fiscal year) and (ii)
2.2:1 during each trimester period for the remainder of the existence of the
Term Loan.
(M) DIVIDENDS OR SHAREHOLDER BONUS. Permit in any fiscal year the pay out
in the form of dividends or shareholder bonuses in an amount which would make
the cumulative total of all such payouts since November 30, 1992 exceed 75% of
the cumulative total of Consolidated Net Income of the Borrower for such period.
XIII. EVENTS OF DEFAULT.
Upon the occurrence of any of the following events ("Events of Default")
then, and in any such Event of Default and at any time thereafter during the
continuance of such Event of Default, the Bank may by written notice to the
Borrower (i) terminate the Term Loan, and (ii) declare the Term Note to be
forthwith due and payable, both as to principal and interest, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Term Note to the
contrary notwithstanding; PROVIDED, HOWEVER, that if an event specified in
Section XIII(H) shall have occurred the Term Loan shall automatically terminate
and the Term Note shall immediately become due and payable.
(A) MATERIAL ADVERSE CHANGE. If the Bank reasonably determines that a
material adverse change in the Borrower's or either Guarantor's financial
condition or in any Collateral has occurred and the Borrower, upon the written
request of the Bank, shall fail to
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secure the payment of the Term Note in a manner that the Bank in its sole
discretion deems necessary as security for its proper protection.
(B) MISREPRESENTATION. Material falsity of representations and warranties
made by the Borrower or any of the Guarantors in this Agreement or in a
certificate, report, financial statement or other instrument delivered hereunder
or pursuant to this Agreement.
(C) PAYMENT OF PRINCIPAL AND INTEREST. If any portion of the principal of,
or interest on, the Term Loan is not paid on the due date.
(D) PAYMENT OF EXPENSES. If any portion of any expenses, fees, charges or
other sums payable in accordance with the terms and conditions of this Agreement
and the documents referred to herein are not paid within five (5) days after the
due date.
(E) FAILURE OF NEGATIVE COVENANTS. Failure of the Borrower (or any of the
Guarantors if applicable) in the observance or performance of any negative
covenant set forth in Article XII hereof to be observed or performed thereunder.
(F) FAILURE OF AFFIRMATIVE COVENANTS. Default shall continue for more than
ten (10) days after the failure of the Borrower or any of the Guarantors in the
due observance or performance of any affirmative covenant set forth in Article
XI hereof to be observed or performed thereunder.
(G) DEFAULT OF INDEBTEDNESS. Default with respect to any indebtedness
(other than the Term Note) of the Borrower or of either Guarantor when due or
the performance of any other obligation of the Borrower or of either Guarantor
incurred in connection with any indebtedness for borrowed money, if the effect
of such default is to accelerate the maturity of such obligation or to permit
the holder or obligee thereof (or a trustee on behalf of such holder or obligee)
to cause such obligation to become due prior to the stated maturity thereof or
which, with the passage of time, the giving of notice or both would constitute
an event of default under any agreement, or any such obligation shall not be
paid when due after giving effect to any applicable grace periods, or there is
any default under the Term Loan Agreement between the Borrower, the Guarantors,
the Bank and the other parties thereto dated August 9, 1989.
(H) BANKRUPTCY.
(i) if a court of competent jurisdiction without the application,
approval or Consent of the Borrower enters a decree or order for relief with
respect to the Borrower under Title II of the United States Code as now
constituted or hereafter amended or under any other applicable Federal or state
bankruptcy law or other similar law, or if such court enters a decree or order
appointing a receiver, liquidator, assignee, trustee, sequestrator (or similar
official) of the Borrower or of any substantial part of its properties, or if
such court decrees or orders the winding up or liquidation of the affairs of the
Borrower, and such order,
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judgment or decree shall continue unstayed and in effect for a period of 60
days; or
(ii) if the Borrower files a petition or answer or consent seeking
relief under Title II of the United States Code as now constituted or hereafter
amended, or under any other applicable Federal or state bankruptcy law or other
similar law, or if the Borrower consents to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Borrower, or of any substantial
part of its properties, or if the Borrower fails generally to pay its debts as
such debts become due, or if the Borrower takes any action in furtherance of any
action described in this Section (H).
(I) JUDGMENT. The entry of a final judgment against the Borrower exceeding
$25,000.00 if such final judgment remains unbonded, unstayed or undischarged for
30 days after entry thereof.
(J) ERISA EVENT. A Reportable Event (as defined in Section 4043 (b) of the
Title IV of ERISA) occurs.
(K) OFFICERS. Solomon Dutka shall cease to be active in the day-to-day
operations of the Borrower.
(L) CHANGE IN OWNERSHIP. Any material change in ownership or control of the
Borrower.
(M) OTHER DEFAULT. Default shall continue for more than ten (10) days after
the failure of the Borrower or any of the Guarantors in the observance or
performance of any other covenant or condition contained in this Agreement, the
Term Note or any other document executed and delivered to evidence and/or secure
the Term Loan.
(N) DEATH, ETC. Death, disability or bankruptcy of either Guarantor.
XIV. DEFINITIONS.
For the purposes of this Agreement, each accounting term not defined herein
shall have the meaning given to it under Generally Accepted Accounting
Principles. "Generally Accepted Accounting Principles" shall mean those
generally accepted accounting principles and practices which are recognized as
such by the American Institute of Certified Public Accountants acting through
its Accounting Principles Board or by the Financial Accounting Standards Board
or through other appropriate boards or committees thereof and which are
consistently applied for all periods from and including March 31, 1986, so as to
properly reflect the financial, and the results of operations and changes in
financial position of the Borrower, except that any accounting principle or
practice required to be changed by the said Accounting Principles Board or
Financial Accounting Standards Board (or other appropriate board or committee of
the said Boards) in
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order to continue as a generally accepted accounting principle or practice may
be so changed. In addition, the following terms shall have the following
meanings only:
"Alternate Base Rate" shall mean for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day (b) the Base CD Rate in effect on such day plus
1 % and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Bank as its prime rate in effect at
its principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is announced. "Base CD Rate" shall mean the
sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii)
Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary CD Rate"
shall mean, for any day, the secondary market rate for three-month certificates
of deposit reported as being in effect on such day (or, if such day shall not be
a Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it. "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it. If
for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate, or both, for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined without
regard to clause (b) or (c), or both, of the first sentence of this definition,
as appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Business Day" shall mean any day not a Saturday, Sunday or legal holiday,
on which the Bank is open for business at its principal office.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
published rules, regulations and rulings from time to time promulgated
thereunder.
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"Consolidated Capital Expenditures" shall mean any expenditure (including
deposits) by the Borrower for assets which it is contemplated will be used or
usable in fiscal years subsequent to the year of acquisition and which are
properly classifiable as fixed assets the cost of which may not be deducted from
income in the year of acquisition in accordance with Generally Accepted
Accounting Principles.
"Consolidated Net Income (Loss)" shall mean the aggregate net income of the
Borrower (or net loss) for such period equal to net revenues and other proper
income less the aggregate of any and all items that are treated as expenses
under Generally Accepted Accounting Principles, and less Federal, state and
local income taxes, but excluding from the definition of Net Income any
extraordinary gains or losses or any gains or losses from the sale or
disposition of assets other than in the ordinary course of business, all
computed and calculated in accordance with Generally Accepted Accounting
Principles applied on a consistent basis.
"Consolidated Tangible Net Worth" shall mean, at any time, the excess of
(i) the net book value of the assets of the Borrower (other than patents, patent
rights, trademarks, trade names, franchises, copyrights, licenses, permits,
goodwill and other intangible assets classified as such in accordance with
Generally Accepted Accounting Principles) after all appropriate deductions in
accordance with Generally Accepted Accounting Principles (including without
limitation reserves for doubtful receivables, obsolescence, depreciation and
amortization) over (ii) the consolidated liabilities (including tax and other
proper accruals) of the Borrower, in each case computed and consolidated in
accordance with Generally Accepted Accounting Principles.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended, and "Plan" shall mean any employee benefit plan subject
to the provisions of Title IV of ERISA and which is maintained for employees of
the Borrower.
"Person" shall include natural persons, corporations (which shall be deemed
to include business trusts), associations, companies, joint ventures and
partnerships.
"Plan" shall have the meaning specified in the definition of "ERISA".
"Subordinated Debt" shall mean indebtedness subordinated in writing in a
manner approved by the Bank to the prior payment in full of the Term Note and
all other monetary obligations of the Borrower hereunder.
"Total Consolidated Current Assets" shall mean, at any date, the aggregate
amount of all assets of the Borrower which would be properly classified as
current assets at such date, all computed in accordance with Generally Accepted
Accounting Principles consistently applied.
"Total Consolidated Current Liabilities" shall mean, at any date, the
aggregate amount of all liabilities of the Borrower including without limitation
tax and other proper accruals which would be properly classified as current
liabilities at such date, all computed in accordance
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with Generally Accepted Accounting Principles consistently applied.
"Total Consolidated Unsubordinated Liabilities" shall mean all items (other
than Subordinated Debt) which, in accordance with Generally Accepted Accounting
Principles, would properly be included on the liability side of the balance
sheet as of the date on which the amount of Total Consolidated Unsubordinated
Liabilities is to be determined, of the Borrower, computed and consolidated in
accordance with Generally Accepted Accounting Principles consistently applied.
XV. MISCELLANEOUS.
(A) NOTICES. Any notice shall be conclusively deemed to have been received
and shall be effective on the day on which delivered (including delivery by
telex) (a) in the case of the Borrower: addressed to Mr. Anthony Timiraos,
S.V.P. and Chief Financial Officer, Audits & Surveys, Inc., 650 Avenue of the
Americas, New York, New York 10011 (b) in the case of the Bank: addressed to
Chemical Bank, Midtown Region, 1375 Broadway, 8th Floor, New York, New York
10018, Attention: Audits & Surveys, Inc., Credit Deputy.
(B) SURVIVAL OF AGREEMENT. All covenants, agreements, representations and
warranties made herein and the certificates delivered pursuant hereto shall
continue in full force and effect so long as the Term Loan is outstanding or any
amount is owing to the Bank hereunder or under any of the documents referred to
herein. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
Borrower and/or the Guarantors which are contained in this Agreement shall inure
to the benefit of the successors and assigns of the Bank.
(C) SETOFF. The Bank shall be entitled to exercise any bankers' lien or
right of setoff it may hereafter acquire, notwithstanding anything contained in
this Agreement to the contrary.
(D) EXPENSES. The Borrower shall pay all out-of-pocket expenses incurred by
the Bank in connection with the preparation of this Agreement (whether or not
the transactions hereby or thereby contemplated shall be consummated), the
issuance of any Term Loan and the enforcement and protection of the rights of
the Bank in connection with this Agreement or with the Term Loan issued
hereunder, and with respect to any action which may be instituted by any person
against the Bank in respect of the foregoing or as a result of any transaction,
action or inaction arising from the foregoing including, but not limited to,
fees and disbursements of counsel to the Bank, including allocated costs of
internal counsel.
(E) APPLICABLE LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York.
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(F) MODIFICATIONS. No modification, amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower therefrom, nor any
approval required or permitted hereunder shall be effective unless it shall be
in writing and signed by the Borrower and the Bank. Any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
given. This Agreement shall not be modified, amended, changed or terminated
orally, but only in a writing signed by the party against whom enforcement of
such modification, amendment, change or termination is sought.
(G) NO WAIVER BY BANK. Neither any failure nor any delay on the part of the
Bank in exercising any right, power or privilege hereunder or under the Term
Note shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise of any other right, power or
privilege. No right, power or remedy herein conferred upon or reserved to the
Bank is intended to be exclusive of any other right, power or remedy or
remedies, and each and every right, power or remedy of the Bank pursuant to this
Agreement, the Term Note or the documents referred to herein, or now or
hereafter existing at law or in equity or by statute or otherwise shall, to the
extent permitted by law, be cumulative and concurrent and shall be in addition
to every other right, power or remedy pursuant to this Agreement, the Term Note
or such documents, or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by the Bank
of any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise by the Bank of any or all such other rights,
powers or remedies.
(H) SEVERABILITY. In case any one or more of the provisions contained in
this Agreement, or the Term Note or any other document contemplated to be
executed hereunder. shall be invalid, illegal or unenforceable then the
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
(I) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Bank and their respective successors and
assigns.
(J) DUPLICATE ORIGINALS. This Agreement may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
(K) HEADINGS. Article and Section headings are for convenience of reference
only and shall in no way affect the interpretation of this Agreement.
(L) PARTICIPATIONS AND SALE. The Bank reserves the right to assign or
participate or sell or otherwise dispose of the Term Loan without restrictions.
No participant shall be entitled to receive any greater payment with regard to
yield protection or otherwise than the Bank would have been entitled to receive
under this Agreement. The Bank may furnish to participants, purchasers and
assignees (including prospective participants and assignees) any information
concerning the Borrower and the Guarantors received by the Bank from time to
time
-20-
<PAGE>
pursuant to this Agreement.
(M) LITIGATION, JURISDICTION. In the event of any litigation with respect
to this Agreement, the Security Agreement or the Guarantees, the Borrower and
the Guarantors hereby waive the right of a trial by jury and all rights of set
off and irrevocably consent to the jurisdiction of the courts of the State of
New York and of any Federal court located in such State in connection with any
action or proceeding arising out of or relating to such documents.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Agreement to
be duly executed as of the day and year first above written.
CHEMICAL BANK
By:
-----------------------------
Vice President
AUDITS & SURVEYS, INC.,
A New York corporation
Attest: By:
-----------------------------
Anthony Timiraos,
Senior Vice President
and Chief Financial Officer
- -------------------------
Leonard Spector,
Secretary
Attest: By:
-----------------------------
Solomon Dutka,
Chairman and
Chief Executive Officer
- -------------------------
Leonard Spector,
Secretary
-21-
<PAGE>
JOINDER BY GUARANTORS
The undersigned hereby join in this Agreement in order to confirm its
obligations to be bound thereby in accordance with the terms of the guaranty of
payment executed and delivered by the undersigned.
-------------------
Solomon Dutka
-------------------
Carl Ravitch
Attest:
- -------------------
-22-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On the 22nd day of February 1994, before me personally came Solomon
Dutka, to me known, who, being by me duly sworn did depose and say that he
resides at ____________ _______________________; that he is the Chairman and
Chief Executive Officer of AUDITS & SURVEYS, INC., the corporation described in
and which executed the above instruments; and that he signed his name thereto by
order of the board of directors of said corporation.
-----------------------------
Notary Public
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On the 22nd day of February 1994, before me personally came Anthony
Timiraos, to me known, who, being by me duly sworn did depose and say that he
resides at ______________ ____________________________; that he is the Senior
Vice President and Chief Financial Officer of AUDITS & SURVEYS, INC., the
corporation described in and which executed the above instruments; and that he
signed his name thereto by order of the board of directors of said corporation.
-----------------------------
Notary Public
-23-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On the 22nd day of February 1994, before me personally came Karen
Tolley, to me known, who, being by me duly sworn did depose and say that she
resides at ______________ ____________________________; that she is a Vice
President of CHEMICAL BANK, the corporation described in and which executed the
above instruments; and that she signed her name thereto by order of the board of
directors of said corporation.
-----------------------------
Notary Public
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On the 22nd day of February 1994, before me personally came CARL
RAVITCH, to me known and known to me to be the individual described in and who
executed the foregoing instrument and acknowledged before me that he executed
the same.
-----------------------------
Notary Public
-24-
<PAGE>
SCHEDULE I
(Pursuant to Section IX. (E))
LITIGATION
None
-25-
<PAGE>
SCHEDULE II
(Pursuant to Section IX. (G) hereof)
LIEN ON EQUIPMENT
Lease Equipment
Lease Period (60 Months)
<TABLE>
<CAPTION>
DATE OF
SUPPLIER EQUIPMENT SERIAL # AGREEMENT PAYMENT
<S> <C> <C> <C> <C> <C> <C>
Xerox 5100 Processor 52K-309633 3-1-93 $1,876.43
Xerox 5090 Dell Sys W81-076193 12-30-92 $2,923.56
Northern
Telecom Telephone Equip -- 1-14-91 $1,792.06
GE Capital Data Proc Equip -- Pre Feb '91 $2,310.00
GE Capital UPS Mailing Sys 8-8-93 $571.07
Xerox 5775 Sort Copier 05Y-015437 3-1-93 $0
</TABLE>
-26-
<PAGE>
SCHEDULE III
(Pursuant to Section IX. (M) hereof)
SUBSIDIARIES:
A&S Europe
6 Duke of York Street
London, SWIY 6LA
A&S Pacific
Komazawa Unosawa Bldg. 1OF
2-11-5, Komazawa, Setagaya-ku
Tokyo 154, Japan
AFFILIATES:
Totum Audits & Surveys
1027 Yonge Street, Suite 303
Toronto, Ontario
Canada M4W 2K9
IPSA Argentina
Cerrito 1054 (1010)
Buenos Aires, Republica Argentina
-27-
<PAGE>
SCHEDULE IV
(Pursuant to Section IX (O))
CONTINGENT LIABILITIES
OPERATING LEASE
The Company conducts its operations from leased facilities under
leases expiring February 28, 2003 with an option to renew. The company subleases
part of its New York facility under a non-cancelable lease also expiring
February 28, 2003.
Minimum lease commitments and sublease income are as follows:
<TABLE>
<CAPTION>
YEARS ENDED LEASE SUBLEASE
NOVEMBER 30, 1992 COMMITMENT INCOME
<S> <C> <C>
1993 $ 1,318,715 $ 952,024
1994 $ 1,351,012 $ 974,000
1995 $ 1,350,970 $ 974,000
1996 $ 1,351,000 $ 977,582
1997 $ 1,351,000 $ 1,017,000
Thereafter $ 8,504,257 $ 5,765,544
----------- -----------
$15,226,954 $10,660,150
</TABLE>
-28-
<PAGE>
SCHEDULE V
(Pursuant to Section XII (A) (ii) hereof)
COMPANY'S INDEBTEDNESS TO OTHERS
Amount Owed To Leonard Spector:
Principal Amount of Note $254,091
Interest rate: 7%
Duration: June 1993 - December 1995
Current Balance: $194,734
Amount Owed to GE Capital - (Data Processing Equipment)
Balance at 11/30/93: $52,469
To be fully repaid by 2/l/1996
-29-
<PAGE>
SCHEDULE VI
(Pursuant to Section XII. (H) (iv) hereof)
JOINT VENTURES
None
-30-
<PAGE>
SCHEDULE VII
(Pursuant to Section XII (H) (v)
INVESTMENTS AND ADVANCES
<TABLE>
<CAPTION>
DATE INVESTMENTS ADVANCES TOTAL
<S> <C> <C> <C>
Totum A&S Various $ 85,532 $160,303 $245,835
A&S Europe May '92 1,106 169,322 170,428
A&S Pacific Oct '93 47,846 56,459 104,305
IPSA 1976 33,000 0 33,000
-------- ------------ --------
$167,484 $386,084 $553,568
-------- -------- --------
</TABLE>
-31-
<PAGE>
TERM NOTE
$937,500.00. New York, New York
November 30, 1993
FOR VALUE RECEIVED, the undersigned, AUDITS & SURVEYS, INC., a New York
corporation (the "Borrower"), DOES HEREBY PROMISE to pay to the order of
CHEMICAL BANK (the "Bank"), in lawful money of the United States of America, in
immediately available funds, the principal amount of Nine Hundred Thirty Seven
Thousand Five Hundred Dollars ($937,500.00) in fifteen (15) equal consecutive
quarterly installments payable on the last day of each quarter commencing on
March 31, 1994, and on September 30, 1997, as provided in the Term Loan
Agreement ("Agreement") dated as of November 30, 1993 among the Borrower, the
Guarantors (as defined in the Agreement) and the Bank, and to pay interest from
the date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Article III of
the Agreement and, upon default, on demand from time to time, on any overdue
principal and on any overdue charge or fee, and, to the extent permitted by law,
on any overdue interest, for each day from the due date thereof (by acceleration
or otherwise) until such sum is paid in full, at a rate of 3% per annum in
excess of the rate in effect from time to time on such amount.
This Term Note is the Term Note referred to in Article II of the
Agreement, and is subject to prepayment and acceleration of maturity as set
forth in the Agreement. All terms defined in the Agreement are used herein with
their defined meanings unless otherwise provided.
This Note shall be governed by and construed in accordance with the
laws of the State of New York and any applicable laws of the United States of
America.
AUDITS & SURVEYS, INC.,
A New York corporation
Attest: By:
----------------------------
Anthony Timiraos,
Senior Vice President
_________________________ and Chief Financial Officer
Leonard Spector,
Secretary
Attest: By:
----------------------------
Solomon Dutka,
Chairman and
__________________________ Chief Executive Officer
Leonard Spector,
Secretary
-32-
AMENDMENT and WAIVER (the "Amendment"), dated as of March 21, 1994 of a
certain Term Loan Agreement (the "Agreement") dated as of November 30, 1993
between AUDITS & SURVEYS, INC. (the "Company") and CHEMICAL BANK (the "Bank").
WITNESSETH:
WHEREAS, the Company and the Bank are parties to the Agreement; and
WHEREAS, the Company has requested the Bank to modify the Agreement and to
waive certain violations of the Agreement, and the Bank is agreeable to
such requests;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto hereby agree as follows:
1. DEFINITIONS. Except as otherwise stated, capitalized terms defined in
the Agreement and used herein without definition shall have the respective
meanings assigned to them in the Agreement.
2. WAIVERS. The Bank hereby waives the violations of the Agreement
described below (which have taken place on or before the date hereof) and any
Defaults or Events of Default resulting therefrom, solely to the extent set
forth below:
(a) Article XII(G) of the Agreement provides that the Company will not
permit Consolidated Capital Expenditures to exceed $500,000 during any
fiscal year of the Company; Consolidated Capital Expenditures of the
Company were $1,000,000 for the fiscal year of the Company ended November
30, 1993;
(b) Article XII(I) of the Agreement provides that the Company will not
permit Capital Funds to be less than $3,500,000 for the fiscal year of the
Company ended November 30, 1993; Capital Funds of the Company were
$1,255,000 for such fiscal year;
(c) Article XII(J) of the Agreement provides that the Company will not
permit its Current Ratio to be less than 1. 1: 1 at the end of any fiscal
year of the Company; the Current Ratio of the Company was 1: 1 at the end
of the fiscal year of the Company ended November 30, 1993;
(d) Article XII(L) of the Agreement provides that the Company will not
permit the ratio of Total Consolidated Unsubordinated Liabilities to
Consolidated Tangible Net Worth plus Subordinated Debt to exceed 2.25:1 for
the fiscal year of the Company ended November 30, 1993; such ratio was 9:1
for such fiscal year.
<PAGE>
3. AMENDMENTS OF THE AGREEMENT.
The Agreement is amended effective the effective date as follows:
(a) Article XII(G) is deleted in its entirety;
(b) Article XII(L) is amended by deleting such provision in its entirety
and substituting the following therefor:
"CAPITAL FUNDS. Permit Capital Funds (as hereinafter defined) to be
less than $1,200,000 for any fiscal year of the Company commencing the
fiscal year of the Company ended November 30, 1994 or for any
trimester period of any fiscal year of the Company commencing the
trimester period of the Company ended July 31, 1994. For purposes of
this section (I) "Capital Funds" shall mean the sum of Consolidated
Tangible Net Worth and Subordinated Debt."
(c) Article XII(J) of the Agreement is deleted in its entirety;
(d) Article XII(L) of the Agreement is deleted in its entirety;
(e) Article XII(M) of the Agreement is deleted in its entirety.
4. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into this
Amendment, the Company hereby represents and warrants that:
(a) The Company has the power, authority and legal right to make and
deliver this Amendment and to perform its obligations under the
Agreement, as amended by this Amendment, without any notice, consent,
approval or authorization not already obtained, and the Company has
taken all necessary action to authorize the same.
(b) The making and delivery of this Amendment and the performance of
the Agreement as amended by this Amendment do not violate any
provision of law or any regulation or of the Company's charter or
by-laws or result in the breach of or constitute a default under or
require any consent under any indenture or other agreement or
instrument to which the Company is a party or by which the Company or
any of its property may be bound or affected. The Agreement as amended
by this Amendment constitutes a legal, valid and binding obligation of
the Company, enforceable against it in accordance with its terms,
except as the enforceability thereof may be limited by any applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally.
(c) The representations and warranties contained in Article IX of the
Agreement are true and correct on and as of the date of this Amendment
and after giving effect thereto.
-2-
<PAGE>
(d) No Default or Event of Default has occurred and is continuing
under the Agreement as of the date of this Amendment and after giving
effect thereto.
5. EFFECTIVE DATE. This Amendment shall become effective as of March 21,
1994 (the "Effective Date") when all of the following shall have occurred (all
documents to be in form and substance satisfactory to the Bank):
(a) The Bank shall have received counterparts of this Amendment, duly
executed by each of the parties hereto.
(b) The Bank shall have received a copy of the resolution of the Board
of Directors of the Company authorizing the execution, delivery and
performance of this Amendment, certified by an appropriate officer of
the Company.
(c) The Bank shall have received an endorsement (the "Endorsement") to
the Term Note in the form of Exhibit A hereto.
6. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original and all of which taken together
shall constitute a single instrument with the same effect as if the signatures
thereto and hereto were upon the same instrument.
7. FULL FORCE AND EFFECT. Except as expressly modified by this Amendment,
all of the terms and provisions of the Agreement shall continue in full force
and effect, and all parties hereto shall be entitled to the benefits thereof.
All references in the Agreement to "this Agreement", and the terms "herein",
"hereof', "hereunder" and similar terms used in the Agreement, shall refer to
the Agreement as amended by this Amendment and all references to the "Term Note"
shall refer to the Term Note as modified by the Endorsement.
8. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the date set forth above.
CHEMICAL BANK
By:/S/
-----------------------
Title: Vice President
AUDITS & SURVEYS, INC.
Attest: By:/S/ ANTHONY TIMIRAOS
-----------------------
Anthony Timiraos
/S/ LEONARD SPECTOR Senior Vice President
- -------------------------- and Chief Financial Officer
Leonard Spector
Secretary
By:/S/ SOLOMON DUTKA
-----------------------
Solomon Dutka
Chairman and Chief
Attest: Executive Officer
/S/ LEONARD SPECTOR
Leonard Spector
Secretary
The undersigned hereby acknowledge the foregoing Amendment and
confirm that their obligations under the Guaranty of Payment dated as of
November 30, 1993 remain in full force and effect with respect to the Term Loan
Agreement dated as of November 30, 1993 as amended by the Amendment.
/S/ SOLOMON DUTKA
-----------------------
Solomon Dutka
/S/ CARL RAVITCH
-----------------------
Carl Ravitch
Attest
/S/ LEONARD SPECTOR
- ------------------------
Leonard Spector
Secretary
-4-
<PAGE>
EXHIBIT "A"
ENDORSEMENT
March 21, 1994
AUDITS & SURVEYS, INC., a New York corporation, hereby agrees that the Term Note
dated as of-November 30, 1993 to which this Endorsement is attached be and
hereby is amended by inserting in the first paragraph thereof, at the end of
line 8, the words "as amended by an Amendment and Waiver Agreement dated as of
March 21, 1994."
AUDITS & SURVEYS, INC.
Attest: By:/S/ ANTHONY TIMIRAOS
-----------------------
Anthony Timiraos
Senior Vice President
/S/ LEONARD SPECTOR and Chief Financial Officer
- ----------------------------
Leonard Spector
Secretary
By:/S/ SOLOMON DUTKA
-----------------------
Solomon Dutka
Chairman and Chief
Attest: Executive Officer
/S/ LEONARD SPECTOR
- ----------------------------
Leonard Spector
Secretary
-5-
SECURITY AGREEMENT 2-56572
#64
This Agreement made this 14 day of November, 1991, between 1375 Broadway (herein
called "Bank") and Audits & Surveys, Inc. (Bank Designation)
(herein called "Borrower")
1. DEFINITIONS OF TERMS USED HEREIN. (a) "Borrower" includes
all individuals executing this agreement as parties hereto and
all members of a partnership when Borrower is a partnership, each
of whom shall be jointly and severally liable individually and as
partners hereunder. (b) "Liability" or "liabilities" includes all
liabilities (primary, secondary, direct, contingent, sole, joint
or several) due or to become due, or that may be hereafter
contracted or acquired, of Borrower (including Borrower and any
other person) to Bank. (c) "Proceeds" means whatever is received
when Collateral is sold, exchanged, leased, collected or
otherwise disposed of and includes the account arising when the
right to payment is earned under a contract. (d) "Security
interest" means a lien or other interest in Collateral which
secures payment of a liability or performance of an obligation.
(e) "Collateral" means the following described property in which
the Bank has a security interest:
All accounts receivable, whether now owned or hereafter existing,
or now owned or hereafter acquired and wherever located, together
with proceeds thereof.
COMPLETE If the Collateral is crops or oil, gas or minerals to be
IF extracted or timber to be cut, or if it is or is to become a
APPLICABLE fixture, describe the real estate and give the name of the record
owner thereof.
2. SECURITY INTEREST. As security for the payment of all
loans now or in the future made hereunder and all other
liabilities of Borrower to Bank, Borrower hereby grants to Bank a
security interest in the above described Collateral and all any
proceeds arising therefrom and all and any products of the
Collateral.
DELETE The proceeds of the loan hereby obtained by the Borrower
IF NOT will be used to purchase the Collateral.
APPLICABLE
Borrower is the sole lawful owner of the Collateral, free
and clear of any liens and encumbrances, and has the right and
power to pledge, sell, assign and transfer absolute title thereto
to Bank and that no financing statement covering the Collateral,
other than the Bank's, is on file in any public office.
3. USE OF COLLATERAL. Until default, Borrower may use the
Collateral in any lawful manner. If the Collateral is or is about
to become affixed
<PAGE>
to realty, Borrower will, at Bank's request, furnish the Bank a
writing executed by the mortgagee of the realty whereby the
mortgagee subordinates its rights and priorities to the Bank's
security interest in the Collateral. If the Collateral is or may
become subject to a landlord's lien, the Borrower will at Bank's
request, furnish the Bank with a landlord's waiver satisfactory
in form to the Bank.
COMPLETE If goods, the Collateral will be used primarily as
IF __________________ (Equipment in business, Inventory for sale or
APPLICABLE lease, Farming, Personal, Family or Household.)
4. INSURANCE. Borrower will have and maintain insurance on
the Collateral until this Agreement is terminated against all
expected risks to which it is exposed, including fire, theft and
collision, and those which the Bank may designate, such insurance
to be payable to Bank and Borrower as their interests may appear;
all policies shall provide for ten (10) days' written minimum
cancellation notice to the Bank. Bank may act as attorney for
Borrower in obtaining, adjusting, settling and canceling such
insurance.
5. DEFAULT. Default shall exist hereunder (1) if the
Borrower shall fail to pay any amount of the liabilities when
due. (2) if the Borrower shall or shall attempt to (a) remove or
allow removal of the Collateral from the county where the
Borrower now resides. (b) sell, encumber or otherwise dispose of
the Collateral or any interest therein. (c) conceal, hire out or
let the Collateral. (d) misuse or abuse the Collateral, or (e)
use or allow the use of the Collateral in connection with any
undertaking prohibited by law. (3) if bankruptcy or insolvency
proceedings shall be instituted by or against the Borrower, or
(4) if the Collateral shall be attached, levied upon, seized in
any legal proceedings, or held by virtue of any lien or distress,
or (5) if the Borrower shall make any assignment for the benefit
of creditors, or (6) if the Borrower shall fail to pay promptly
all taxes and assessments upon the Collateral or the use thereof,
or (7) if the Borrower shall die, or (8) if the Bank with
reasonable cause determines that its interest in the Collateral
be in jeopardy, or (9) if Borrower should fail to keep the
Collateral suitably insured. In the event of default or the
breach of any undertaking of or conditions to be performed by the
Borrower (1) all liabilities shall become immediately due and
payable, and (2) the Borrower agrees upon demand to deliver the
Collateral to the Bank, or the Bank may, with or without legal
process, and with or without previous notice or demand for
performance, enter any premises wherein the Collateral may be,
and take possession of the same, together with anything therein;
and the Bank may make disposition of the Collateral subject to
any and all applicable provisions of the law. If the Collateral
is sold at public sale, Bank may purchase the Collateral at such
sale. The Bank provided it has sent the statutory notice of
default, may retain from the proceeds of such sale all reasonable
costs incurred in the said taking and sale and also, all sums
then owing by the Borrower, and any overplus of any such sale
shall be paid to the Borrower.
-2-
<PAGE>
6. GENERAL AGREEMENTS. (a) Borrower agrees to pay the costs
of filing financing statements and of conducting searches in
connection with this Agreement. (b) Borrower agrees to allow the
Bank through any of its officers or agents, at all reasonable
times, to examine or inspect any of the Collateral and to
examine, inspect and make extracts from the Borrower's books and
records relating to the Collateral. (c) Borrower will promptly
pay when due all taxes and assessments upon the Collateral or for
its use or operation or upon the proceeds thereof or upon this
Agreement or upon any instrument or instruments evidencing the
liabilities. (d) At its option, the Bank may discharge taxes,
liens or security interests or other encumbrances at any time
levied or placed on the Collateral, and may pay for the
maintenance and preservation of the Collateral and the Borrower
agrees to reimburse the Bank on demand for any payment made or
any expense incurred by the Bank pursuant to the foregoing
authorization, including counsel fees and disbursements incurred
or expanded by the Bank in connection with this Agreement. (e)
Borrower hereby authorizes the Bank to file the financing
statement and any amendments thereto without the signature of
Borrower. Such authorization is limited to the security interest
granted by this Agreement. (f) The Bank shall not be deemed to
have waived any of its rights hereunder or under any other
agreement, instrument or paper signed by the Borrower unless such
waiver is in writing and signed by the Bank. No delay or omission
on the part of the Bank in exercising any right shall operate as
a waiver thereof or of any other right. A waiver upon any one
occasion shall not be construed as a bar or a waiver of any right
or remedy on any future occasion. All of the rights and remedies
of the Bank, whether evidenced hereby or by any other Agreement,
instrument or paper, shall be cumulative and may be exercised
singly or concurrently.
7. EXECUTION BY BANK. This Agreement shall take effect
immediately upon execution by the Borrower, and the execution
hereof by the Bank shall not be required as a condition to the
effectiveness of this Agreement. The provision for execution of
this Agreement by the Bank is only for purposes of filing this
Agreement as a Security Agreement under the Uniform Commercial
Code, if execution hereof by the Bank is required for purposes of
such filing.
-------------------------------
(Borrower)
By--------------------------------
-3-
<PAGE>
Borrower's Address
-------------------------------
(Number and Street)
-------------------------------
(City, County, State)
Places of business in counties other than above
-------------------------------------------
-------------------------------------------
-------------------------------------------
CHEMICAL BANK
- --------------------------------
(Bank Designation)
By:_____________________________
(Name and Title)
Address_________________________
(Number, Street, City)
-4-
EXHIBIT 21.01
Subsidiaries of the Company
Audits & Surveys Europe Ltd. (UK)
Rawn Company, Inc. (Delaware)
Inactive subsidiaries:
The Triangle Tool Group, Inc. (Delaware)
Tri-South, Inc. (Delaware)
Tri-North, Inc. (Delaware)
Tri-World Export, Inc. (U.S. Virgin Islands)
Triangle International, Inc. (Delaware)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000099703
<NAME> AUDITS & SURVEYS WORLDWIDE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-31-1995
<PERIOD-END> DEC-31-1996
<CASH> 936
<SECURITIES> 0
<RECEIVABLES> 11,053
<ALLOWANCES> (150)
<INVENTORY> 1,320
<CURRENT-ASSETS> 14,898
<PP&E> 5,855
<DEPRECIATION> (2,728)
<TOTAL-ASSETS> 24,887
<CURRENT-LIABILITIES> 13,009
<BONDS> 2,869
0
0
<COMMON> 131
<OTHER-SE> 6,496
<TOTAL-LIABILITY-AND-EQUITY> 24,887
<SALES> 0
<TOTAL-REVENUES> 54,626
<CGS> 0
<TOTAL-COSTS> 26,732
<OTHER-EXPENSES> 26,175
<LOSS-PROVISION> 92
<INTEREST-EXPENSE> 435
<INCOME-PRETAX> 1,553
<INCOME-TAX> 707
<INCOME-CONTINUING> 846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 846
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
