As filed with the Securities and Exchange Commission on June 4, 2001
Registration No. 333-_____
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Telecom Communications Inc.
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(Name of small business issuer in its charter)
Indiana 4813 35-2089848
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(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
827 S. Broadway, Los Angeles, CA 90014
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(Address and telephone number of principal executive offices)
827 S. Broadway, Los Angeles, CA 90014 (213) 489-3486
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(Address of principal place of business or intended principal place of
business)
Mr. Tak Hiromoto, President, 827 S. Broadway, Los Angeles, CA 90014,
(213) 489-3486
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(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of the registration statement and date of the
prospectus.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount Proposed Proposed Amount of
Securities Being Being Maximum Maximum Registration
Registered Registered Offering Aggregate Fee
Price Per Offering
Unit (1) Price(1)
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Shares of Common Stock 3,500,000 $ 1.00 $3,500,000 $ 924.00
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TOTAL $3,500,000 $ 924.00
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(1) Estimated for purposes of computing the registration fee pursuant to
Rule 457.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
SUBJECT TO COMPLETION, DATED May 31, 2001
Telecom Communications Inc.
3,500,000 Shares of Common Stock
We are registering 1,500,000 shares of our common stock, par value $.001
per share, to be offered by the Company on a "best effort" basis. We are also
registering 2,000,000 shares of our common stock, on behalf of the selling
shareholders. We will not receive any portion of the proceeds from the resale
of the shares registered on behalf of the selling shareholders.
Prior to this offering, no public market has existed for shares of our
common stock. We cannot guarantee that a trading market in the shares of our
common stock will ever develop. We plan to have our common stock quoted on the
OTC Bulletin Board.
Investing in our common stock involves high risks. Investors may lose
their entire investment. See "Risk Factors" beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission approved or disapproved of these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
TABLE OF CONTENTS
Prospectus Summary ....................................................... 1
The Offering ............................................................. 2
Risk Factors ............................................................. 3
Use Of Proceeds .......................................................... 9
Dividend Policy .......................................................... 9
Capitalization ........................................................... 10
Determination Of Offering Price .......................................... 10
Dilution ................................................................. 11
Management's Discussion And Analysis Of Financial
Condition And Results Of Operations .................................... 12
Management ............................................................... 18
Executive Compensation ................................................... 19
Indemnification Of Directors And Officers ................................ 19
Principal Stockholders ................................................... 20
Description Of Securities ................................................ 21
Shares Eligible For Future Sale .......................................... 22
Rule 144 ................................................................. 22
Plan Of Distribution ..................................................... 22
Selling Security Holders ................................................. 23
Legal Proceedings ........................................................ 28
Legal Matters ............................................................ 28
Experts .................................................................. 28
Additional Information ................................................... 28
Index To Financial Statements ............................................ 29
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all of the information that you
should consider before investing in our common stock. You should read the
entire prospectus carefully, including "Risk Factors" and the financial
statements, before making an investment decision.
Our Business
We are a provider of services enabling users to make high-quality, low-
cost telephone calls over the Internet using traditional telephones. These
services are commonly referred to as Internet telephony. Our Internet
telephony services enable our customers to call individuals and businesses
worldwide using traditional telephones at our sole telephone calling center
located in downtown Los Angeles, California or using their traditional
telephones. We began offering Internet telephony services in September 1999.
Long distance calls made using our Internet telephony services are often
substantially less expensive than long distance calls routed over traditional
voice network. We have one computer server at our telephone calling center to
route all telephone calls to a third party servers to enable
telecommunications over the Internet.
Our strategy for expansion includes the following:
* expanding and enhancing our products and services.
* franchise our telephone calling center concept in the west coast cities
with high concentration of Latino population.
* acquire other internet telephone service providers.
Our Corporate History
Telecom Communications Inc. was incorporated on January 6, 1997 in the
State of Indiana under the corporate name MAS Acquisition XXI Corp. Prior to
December 21, 2000, we were a blank check company seeking a business
combination with unidentified business. On December 21, 2000, we acquired
Telecom Communications of America which was a sole proprietorship doing
business in Los Angeles, California since August 15, 1995 and changed our name
to Telecom Communications Inc. In connection with this acquisition, Aaron
Tsai, our former sole officer and director was replaced by Telecom
Communications of America's owners and associates. We issued 9,000,000 shares
of our common stock or 90% of our total outstanding common shares after giving
effect to the acquisition. MAS Capital Inc. returned 7,272,400 shares of
common stock for cancellation without any consideration.
Our principal executive offices are located at 827 S. Broadway, Los
Angeles, CA 90014. Our telephone number is (213) 489-3486.
1
THE OFFERING
Common Stock Offered
by the Company . . . . . . . 1,500,000
by Selling Shareholders . . . 2,000,000
Use of Proceeds . . . . . . . . . We intend to use the proceeds for
general and administrative expenses,
development of the business, working
capital and other general corporate
purposes. See "Use of Proceeds."
We will not receive any proceeds from
the sale of the shares of common stock
by the selling shareholders.
Risk Factors . . . . . . . . . . . For a discussion of certain factors
you should consider before buying
shares of our common stock, see "Risk
Factors on Page 3"
SUMMARY FINANCIAL DATA
The following table summarizes the historical consolidated financial and
operating information for our business and should be read in conjunction with
the financial statements and the notes to the financial statements.
Year Ended September 30, Three Month Ended December 31,
--------------------------- ------------------------------
1999 2000 1999 2000
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Statement of Operation: (unaudited) (unaudited)
Income $ 1,475,004 $ 1,190,200 $ 411,108 271,155
Cost of Sales:
Cost of Sales 1,308,232 1,050,304 385,707 240,484
General and Admin. Expenses 42,078 49,835 8,697 12,152
------------- ------------ ------------ ------------
Net Income $ 124,694 $ 90,061 $ 16,703 $ 18,519
============= ============ ============ ============
For the Year Ended September 30, Three Month Ended December 31,
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Balance Sheet Data: September 30, 1999 September 30, 2000 1999 2000
- ----------------------------- ------------------ ------------------ ------------ ------------
Current assets $ 13,782 $ 2,443 $ 10,502 $ 9,759
Working Capital 13,782 2,443 10,502 9,759
Current liabilities - - - -
Total stockholders' equity 13,782 2,443 10,502 9,759
2
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. The risks described below are not the only ones facing
our company. Additional risks may also impair our business operations. If any
of the following risks occur, our business, results of operations or financial
condition could be materially and adversely affected. In such case, the
trading price of our common stock could decline, and you may lose all or part
of your investment. You should also refer to the other information set forth
in this prospectus, including our financial statements and the notes to those
statements.
RISKS RELATED TO OUR BUSINESS
We have a limited operating history upon which you may evaluate us.
We commenced our operations on August 15, 1995. We offer services that
enables our customers to make low-cost domestic or international telephone
calls over the Internet using traditional telephones. Accordingly, we have
only a limited operating history upon which you can evaluate our business and
prospects. An investor in our common stock must consider the risks, expenses
and difficulties frequently encountered by early stage companies in new and
rapidly evolving markets. It may be difficult or impossible to accurately
forecast our operating results based on our historical results.
We depend on a limited number of key executives, including Tak Hiromoto and
Elizabeth Hiromoto, who would be difficult to replace.
Our success depends significantly on the continued services of our
management personnel, Tak Hiromoto, our President and Chief Executive Officer
and Elizabeth Hiromoto, our Secretary and Treasurer. Losing Tak Hiromoto or
Elizabeth Hiromoto could seriously harm our business. We cannot assure you
that we will be able to retain our key executives or that we would be able to
replace any of our key executives if we were to lose their services for any
reason. Competition for these executives is intense. If we had to replace any
of these key executives, we would not be able to replace the significant
amount of knowledge that these key executives have about our operations. We do
not maintain "key man" insurance policies on any of our executives. We do not
have employment contracts with any of our executives.
Our growth will be limited if we are unable to attract and retain qualified
personnel.
Our future success depends in significant part on our ability to attract
and retain qualified professionals to perform services for our existing and
future clients. Competition for highly qualified technical, financial and
management personnel is intense. We have in the past experienced difficulty in
attracting new personnel. We may not be able to hire the necessary personnel
to implement our business strategy, or we may need to pay higher compensation
for employees than we currently expect. We cannot assure you that we will
succeed in attracting and retaining the personnel we need to grow.
We intent to grow through acquisitions.
We plan to offer our products and services through subsidiaries we intend
to acquire in the future. However, we cannot guarantee that we will be
successful in acquiring any subsidiaries. Such a failure resulting in reduced
or no expansion could have a material and adverse effect on our business,
operating results, and financial condition.
3
We intent to grow through franchising our operations.
We plan to franchise our operations. We have no experience in
franchising, therefore, we cannot guarantee that we will be successful in
franchising our operations. Such a failure resulting in reduced or no
expansion could have a material and adverse effect on our business, operating
results, and financial condition.
Management of growth.
Our success in the future is dependent upon our ability to grow rapidly
and effectively manage growth. Such growth, if any, will require increased
managerial, technical, sales, and other personnel, expanded information
systems and additional financial and administrative control procedures.
Expansion of our operations will require significant financial and managerial
commitments by us. We cannot assure you that we will be able to effectively
manage such growth, if any. Our failure to do so could have a material and
adverse effect on our business, operating results, and financial condition.
We face intense competition for customers.
Many of our competitors have substantially greater financial, technical
and marketing resources, larger customer bases, longer operating histories,
greater name recognition and more established relationships in the industry
than we have. As a result, certain of these competitors may be able to adopt
more aggressive pricing policies, which could hinder our ability to market our
Internet telephony services. One of our key competitive advantages is the
ability to route calls through the Internet, which allows us to realize
substantial savings compared to traditional telephone service. Any change in
the regulation of an Internet service provider could force us to increase
prices and offer rates that are comparable to traditional telephone call
providers and that could materially and adversely affect our business,
operating results and financial condition.
Failure to build brand awareness.
Our future success will depend, in part, on our ability to increase our
brand awareness. In order to build brand awareness, we must succeed in our
marketing efforts and provide high-quality services. We plan to advertise our
services in various medias including radio, newspapers, and on the Internet.
We have not yet decided on when and how much we plan to spend on each type of
advertising or promotion. If our marketing efforts are unsuccessful or if we
cannot increase our brand awareness, our business, operating results and
financial condition could be materially and adversely affected.
Dependence on Inter-Tel.net to provide Internet based telephone call services.
In April, 1999 we entered into an agreement with Inter-Tel.net, which may
be terminated at any time by either party with a 60 days prior written notice.
Inter-Tel.net has established a network which enables telecommunications over
Internet Protocol ("IP") data networks. We connect our server to Inter-
Tel.net's network to provide Internet based telephone call services.
Currently, we route all our Internet based telephone calls through Inter-
Tel.net. We can not assure you that Inter-Tel.net will not terminate the
agreement or continue to provide services in the future.
4
Our success depends on our ability to handle a large number of simultaneous
calls, which our systems may not be able to accommodate.
We expect the volume of simultaneous calls to increase significantly as we
expand our operations. Our computer hardware and software and Inter-Tel.net's
computer hardware and software may not be able to accommodate this additional
volume. If we fail to maintain an appropriate level of operating performance,
or if our service is disrupted, our reputation could be hurt and we could lose
customers.
Pricing pressures may lessen our competitive pricing advantage.
Our success is based on our ability to provide discounted domestic and
international long distance services by taking advantage of cost savings
achieved by carrying voice traffic over the Internet, as compared to carrying
calls over long distance networks, such as those owned by AT&T, Sprint and MCI
WorldCom. In recent years, the price of long distance calls has fallen. In
response, we have lowered the price of our service offerings. For example,
AT&T, Sprint and MCI WorldCom have adopted recent pricing plans in which the
rates that they charge for U.S. domestic long distance calls are not always
substantially higher than the rates that we charge for our U.S. domestic
service. The price of long distance calls may decline to a point where we no
longer have a price advantage over these traditional long distance services.
Alternatively, other providers of long distance services may begin to offer
unlimited or nearly unlimited use of some of their services for an attractive
monthly rate. We would then have to rely on factors other than price to
differentiate our product and service offerings, which we may not be able to
do.
Governmental regulations regarding the Internet may be passed, which could
impede our business.
The legal and regulatory environment that pertains to the Internet is
uncertain and is changing rapidly as use of the Internet increases. For
example, in the United States, the Federal Communications Commission is
considering whether to impose surcharges or additional regulations upon
certain providers of Internet telephony. New regulations could increase our
costs of doing business and prevent us from delivering our products and
services over the Internet, which could adversely effect our customer base and
our revenue. In addition to new regulations being adopted, existing laws may
be applied to the Internet. New and existing laws may cover issues that
include: sales and other taxes, access charges, pricing controls, consumer
protection, etc.
RISKS RELATED TO THIS OFFERING
The purchasers of shares in this offering will experience immediate and
substantial dilution.
The initial public offering price is expected to be substantially higher
than the net tangible book value per share of the outstanding common stock
immediately after the offering. Accordingly, purchasers of shares in the
offering will experience immediate and substantial dilution of approximately
$0.8737 in net tangible book value per share, or approximately 87.37% of the
offering price of $1.00 per share. In contrast, existing stockholders paid an
average price of $0.00024 per share.
Shares eligible for public sale after this offering could adversely affect our
stock price.
5
After this offering there will be outstanding 11,500,000 shares of our
common stock, assuming all the 3,500,000 shares registered are sold. Of these
shares, the shares sold in this offering will be freely tradable except for
any shares purchased by our "affiliates" as defined in Rule 144 under the
Securities Act. The remaining 8,000,000 shares will be "restricted
securities," subject to the volume limitations and other conditions of Rule
144 under the Securities Act.
We cannot predict if future sales of our common stock, or the
availability of our common stock for sale, will materially and adversely
affect the market price for our common stock or our ability to raise capital
by offering equity securities.
An investment in our common stock may be very illiquid.
We plan to have our shares trade on the Over-The-Counter Bulletin Board
(the "OTC Bulletin Board") of the National Association of Securities Dealers
("NASD"). There is no trading market for our shares, and we cannot assure you
that any such market will ever develop or be maintained. The absence of an
active trading market would reduce the liquidity of an investment in our
shares.
To the extent that brokerage firms act as market makers for our shares on
the OTC Bulletin Board, they may be a dominating influence in any market that
might develop, and the degree of participation by such firms may significantly
affect the price and liquidity of our shares. These firms may discontinue
their market making activities at any time. The prices at which our shares are
traded in the market will be determined by these firms and by the purchasers
and sellers of our shares, but such prices may not necessarily relate to our
assets, book value, results of operations or other established and
quantifiable criteria of value.
The application of the "penny stock" rules could adversely affect the market
for our stock.
The Securities and Exchange Act of 1934 requires additional disclosure
relating to the market for "penny stocks." A penny stock is generally defined
to be any equity security not listed on NASDAQ or a national securities
exchange that has a market price of less than $5.00 per share, subject to
certain exceptions. Among these exceptions are shares issued by companies that
have:
* net tangible assets of at least $2 million, if the issuer has been
in continuous operation for three years;
* net tangible assets of at least $5 million, if the issuer has been
in continuous operation for less than three years; or
* average annual revenue of at least $6 million for each of the last
three years.
We do not currently meet the requirements of these exceptions and,
therefore, our shares would be deemed penny stocks for purposes of the
Exchange Act if and at any time while our common stock trades below $5.00 per
share. In such case, trading in our shares would be regulated pursuant to
Rules 15-g-1 through 15-g-6 and 15-g-9 of the Exchange Act. Under these rules,
brokers or dealers recommending our shares to prospective buyers would be
required, unless an exemption is available, to:
6
* deliver a lengthy disclosure statement in a form designated by the
SEC relating to the penny stock market to any potential buyers,
and obtain a written acknowledgement from each buyer that such
disclosure statement has been received by the buyer prior to any
transaction involving our shares;
* provide detailed written disclosure to buyers of current price
quotations for our shares, and of any sales commissions or other
compensation payable to any broker or dealer, or any other related
person, involved in the transaction;
* send monthly statements to buyers disclosing updated price
information for any penny stocks held in their accounts, and these
monthly statements must include specified information on the
limited market for penny stocks.
In addition, if we are subject to the penny stock rules, all brokers or
dealers involved in a transaction in which our shares are sold to any buyer,
other than an established customer or "accredited investor," must make a
special written determination that our shares would be a suitable investment
for the buyer, and the brokers or dealers must receive the buyer's written
agreement to purchase our shares, as well as the buyer's written
acknowledgement that the suitability determination made by the broker or
dealer accurately reflects the buyer's financial situation, investment
experience and investment objectives, prior to completing any transaction in
our shares.
These Exchange Act rules may limit the ability or willingness of brokers
and other market participants to make a market in our shares and may limit the
ability of our shareholders to sell in the secondary market, through brokers,
dealers or otherwise. We also understand that many brokerage firms will
discourage their customers from trading in shares falling within the "penny
stock" definition due to the added regulatory and disclosure burdens imposed
by these Exchange Act rules.
The SEC from time to time may propose and implement even more stringent
regulatory or disclosure requirements on shares not listed on NASDAQ or on a
national securities exchange. The adoption of the proposed changes that may be
made in the future could have an adverse effect on the trading market for our
shares.
Our chief executive officer, Tak Hiromoto, is in the position to control over
corporate transactions and other matters.
Upon completion of this offering, Tak Hiromoto will beneficially own
approximately 69.57% of the outstanding common stock, assuming all the shares
registered are sold. As a result Tak Hiromoto will have the ability to
control substantially all matters submitted to our stockholders for approval
(including the election and removal of directors and any merger, consolidation
or sale of all or substantially all of our assets) and to control our
management and affairs. Accordingly, this concentration of ownership may have
the effect of delaying, deferring or preventing a change in control of us,
impeding a merger, consolidation, takeover or other business combination
involving us or discouraging a potential acquirer from making a tender offer
or otherwise attempting to obtain control of us, which in turn could
materially and adversely affect the market price of the common stock.
7
Our stock price may be extremely volatile and you may not be able to resell
shares at or above the offering price.
There was no public market for our shares prior to this offering, and
after the offering, a liquid public market for the shares may not develop. You
may not be able to resell your shares at or above the initial public offering
price due to a number of factors, including:
* actual or anticipated fluctuations in our operating results;
* changes in expectations as to our future financial performance or
changes in financial estimates of securities analysts;
* revenue fluctuations caused by changes in the fair value of the equity
compensation we receive for our services or retain in reverse merger
transactions;
* changes in general economic or market conditions; and
* the operating and stock price performance of other comparable
companies.
The stock market in general, and the securities of telecommunication
industry-related companies in particular, has experienced extreme volatility
that often has been unrelated to the operating performance of particular
companies. These broad market and industry fluctuations may adversely affect
the trading price of our common stock, regardless of our actual operating
performance.
We have broad discretion in how we use the proceeds from this offering, and we
may not use these proceeds effectively.
Our management has broad discretion in how we use the proceeds from this
offering because a significant amount of the proceeds from this offering has
not been allocated for a specific purpose. Our management could spend the
proceeds from this offering in ways with which our stockholders may not agree
or that do not yield a favorable return. Our primary purpose in conducting
this offering is to create a public market for our common stock. As of the
date of this prospectus, we plan to use the proceeds from this offering for
general corporate purposes, including working capital, franchise our
operations, and the funding of our anticipated operations. We may also use the
proceeds in future acquisitions but do not have any acquisitions planned.
No intention to pay dividends.
We have never declared or paid any cash dividends on our common stock.
We currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future. See
"Dividend Policy" on page 9.
Need for subsequent funding.
We may need further funding to proceed with our proposed plan of
business. We do not have a commitment with respect to any additional capital.
We do not have loan commitments from, or lines of credit with banks or other
financial institutions. Therefore, the expansion of our business will depend
on our ability to raise additional funds through equity and/or debt financing.
8
We can not assure you that we will be able to obtain additional funding when
it is needed, or that such funding, if available, will be obtainable on terms
favorable to and affordable by us. Our inability to obtain additional
funding, as required, would impair severely our business operations.
This prospectus contains certain "forward-looking statements" based on
our current expectations, assumptions, estimates and projections about us and
our industry. These forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in such forward-looking statements as a result of certain factors,
as more fully described in this section and elsewhere in this prospectus. We
undertake no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events occur in
the future. Such factors include those set forth in this section and elsewhere
in this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of common
stock by the selling shareholders. Based upon an assumed initial offering
price of $1.00, we estimate that we will receive net proceeds from the sale of
1,500,000 shares of common stock by the company in the amount (after deduction
estimated $50,000 offering expenses) of up to $1,450,000 assuming all the
shares offered are sold. Such proceeds will be used for general corporate
purposes, including working capital, franchise our operations, and the funding
of our anticipated operations. We may also use the proceeds in future
acquisitions but do not have any acquisitions planned.
As of the date of this prospectus, we have not allocated any specific
amount of the proceeds for the purposes described above. The amounts to be
expended for the purposes listed above will depend upon a number of factors,
including conditions in the telecommunications market and competitive
developments in the market for Internet based telecommunications. Pending our
use of the net proceeds of this offering, we intend to invest them in short-
term, investment grade, interest bearing securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock and
do not anticipate paying any cash dividends on our common stock for the
foreseeable future.
9
CAPITALIZATION
The following table sets forth the capitalization of Telecom
Communications of America as of September 30, 2000, adjusted to give effect to
the sale of 1,500,000 shares of common stock by the company in this offering
at an assumed initial price to the public of $1.00 per share and the estimated
net proceeds of approximately $1,450,000. The following table is presented as
if Telecom Communications of America was a corporation based on our preferred
and common share structure. Telecom Communications of America was a sole
proprietorship until we acquired it by issuing 9,000,000 shares of common
stock. This table should be read in conjunction with our financial statements
and the notes to those statements included elsewhere in this prospectus.
September 30, 2000
--------------------------
Actual As Adjusted
------------ ------------
Stockholders' equity:
Preferred Stock, $0.001 par value,
20,000,000 shares authorized, none
issued and outstanding......................... $ - $ _
Common Stock, $.001 par value,
80,000,000 shares authorized; 10,000,000
shares issued and outstanding; 11,500,000
shares (as adjusted) issued and outstanding ... 2,443 2,443
Additional paid-in capital .................... _ 1,450,000
Accumulated deficit ............................... _ _
----------- -----------
Total stockholders' equity......................... $ 2,443 $ 1,452,443
=========== ===========
DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no trading market for the shares
of common stock offered. Consequently, the initial public offering price of
the shares of common stock was arbitrarily determined. The factors considered
in determining the offering price were our financial condition and prospects,
our limited operating history and the general condition of the securities
market. The offering price is not an indication of and is not based upon the
actual value of our company. The offering price bears no relationship to the
book value, assets or earnings of our company or any other recognized criteria
of value. The offering price should not be regarded as an indicator of the
future market price of the securities.
10
DILUTION
Purchasers of the shares will experience immediate and substantial
dilution in the value of the common stock. Dilution represents the difference
between the price per share paid by the purchasers in the offering and the net
tangible book value per share. Net tangible book value per share represents
our net tangible assets (total assets less total liabilities), divided by the
number of shares of common stock outstanding upon closing of the offering. As
of September 30, 2000, our net tangible book value was $2,443, or $0.00024 per
share. Giving effect to the sale by the company of shares offered at the
public offering price of $1.00, assuming all of the 1,500,000 shares are sold,
the pro forma net tangible book value would have been $1,452,443 or $0.12630
per share. This represents an immediate increase in net tangible book value of
$0.12606 per share to existing shareholders and an immediate dilution of
$0.8737 to the purchasers of the shares in this offering. The following table
illustrates the pro forma per share dilution, assuming the sale of all of the
1,500,000 shares offered by the company:
Offering price per share . . . . . . . . . . . . . $1.00000
Net tangible book value before the offering . . . $0.00024
Increase per share attributed to new investors . . $0.12606
--------
Pro forma net tangible book value per share after the
Offering . . . . . . . . . . . . . . . . . . . . $0.12630
--------
Dilution in net tangible book value to new investors . . . $0.87370
========
The following table summarizes as of September 30, 2000, the difference
(based on an assumed initial public offering price of $1.00 per share and
assuming all of the 1,500,000 shares offered by the company are sold) between
the existing shareholders and the new shareholders with respect to the number
of shares of common stock purchased, the total consideration paid, and the
average price per share paid:
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- -------- ----------- -------- --------
Existing shareholders.. 10,000,000(1) 87% $ 2,443(2) 0.16% $0.00024
New shareholders....... 1,500,000 13% 1,500,000 99.84% $1.00000
---------- --- ----------- ----
Total.................. 11,500,000 100% $ 1,502,443 100%
========== === =========== ====
(1) 10,000,000 shares outstanding including the issuance of 9,000,000 shares
for the purchase of Telecom Communications of America, a sole proprietorship.
(2) The $2,443 consideration is based on total capital of Telecom
Communications of America, a sole proprietorship on September 30, 2000.
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and the notes to those statements which appear elsewhere in this
prospectus. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors
that could cause or contribute to such differences include, but are not
limited to, those discussed below and elsewhere in this prospectus,
particularly in "Risk Factors".
OVERVIEW
Our main business is to provide voice enhanced Internet communications
service to individuals and businesses. Our services enable our customers to
make low cost telephone calls over the Internet using the traditional
telephone. In September 1999, we introduced a service that enables
international and domestic calls to be made over the Internet using
traditional telephones. Long distance calls made using our services are often
substantially less expensive than long distance calls routed over traditional
voice network. We intend to expand our business through acquisitions.
Currently, we have one telephone calling center with one server located in Los
Angeles, California.
We have only a limited operating history upon which you can evaluate our
business and prospects. We have achieved limited profitability, and expect to
continue to achieve limited profitability in the year 2001 and subsequent
fiscal periods. We expect to continue to limited profitability and, as a
result, will need to increase our revenues to achieve greater profitability,
which may not occur. Even if we do achieve greater profitability, we may be
unable to sustain or increase profitability on a quarterly or annual basis in
the future. We believe that quarter-to-quarter comparisons of our operating
results may not be a good indication of our future performance, nor would our
operating results for any particular quarter be indicative of future operating
results.
RESULTS OF OPERATIONS
Year ended September 30, 1999 compared to year ended September 30, 2000
Total revenue for the year ended September 30, 2000 was $1,190,200
compared to $1,475,004 for the same period in year 1999. The net income was
$90,061 for the year ended September 2000 compared to $124,694 for the year
ended September 30, 1999. The decrease in revenue was due to several one time
event that occurred throughout the year. Following listed the events we
encountered that affected our revenue:
1. There was a strike which closed down MTA public transportation for a
period of one month. This shutdown affected our bus token sales for the
month.
2. We had several bad checks totaled $5,000 and we temporarily stopped check
cashing services to improve our check cashing procedures.
3. In September 1999 we converted our telephone service from PSTN (Public
Switch Telephone Network) to ITSP (Internet Telephone Service Provider). This
conversion caused several interruptions to our telephone services for a period
of two months.
12
The cost of sales for the year ended September 30, 1999 and 2000 were
$1,308,232 and $1,050,304, respectively. Revenue decrease for year 2000
resulted in decrease in the cost of sales.
General and Administrative Expenses were $42,078 for the year ended
September 30, 1999 and $49,835 for the year ended September 30, 2000. The
increased in costs was due to the added expenses of converting our telephone
services from PSTN to ITSP.
CAPITAL AND SOURCE OF LIQUIDITY.
As of September 30, 2000, our cash balance was $2,443 and we had a
working capital of $2,443.
Total cash flows used in operating activities for the twelve months ended
September 30, 1999 aggregated $124,694 as compared to $90,061 for the twelve
months ended September 30, 2000. During the year ended September 30, 2000 and
the year ended September 30, 1999 the use consisted principally of Owner
Draws.
BUSINESS
We are a provider of low cost telephone calls using the Internet to
individuals and businesses. This service is commonly referred to as Internet
telephony. Our Internet telephony services enable our customers to call
individuals and businesses worldwide using their own traditional telephones or
our traditional telephones at our telephone calling center. Long distance
calls made using our services are often substantially less expensive than long
distance calls routed over traditional voice network. We estimated ninety five
percent of our customer base consists of immigrants from Mexico, Central
America and South America who need low cost international telephone call
services to communicate with family and friends in their home country.
INDUSTRY BACKGROUND
The Internet is experiencing unprecedented growth as a global medium for
communications and commerce. Internet telephony has emerged as a low cost
alternative to traditional long distance calls. Internet telephone calls are
less expensive than traditional domestic and international long distance calls
primarily because these calls are carried over the Internet and therefore
bypass a significant portion of local and international long distance tariffs.
The fees and tariffs that are eliminated for our services can be itemized as
follows:
* Calling Plans Charge
* Carrier Access Charge
* Federal Excise Tax
* State and local Tax
* Federal, State and local surcharge
* Federal Universal Service fee
* California High Cost Fund-B surcharge
* California Universal Lifeline Telephone Service surcharge
* California Relay Service and Common Device fund
* California 911 Local charge
The technology by which Internet phone calls are made is also more cost-
effective than the technology by which traditional long distance calls are
made. The growth of Internet telephony has been limited to date due to poor
sound quality attributable to technological issues such as delays in packet
13
transmission and network capacity limitations. However, recent improvements in
packet-switching technology, new software algorithms and improved hardware
have substantially reduced delays in packet transmissions.
PRODUCTS AND SERVICES
Presently, we have one telephone calling center located in Los Angeles,
California. This center has 6 phone booths each with its own traditional
telephone set, table and chair. Phone calls made from these booths are routed
through our computer server and Internet connection to a third party servers
which provide the interconnection to their established network which enables
telecommunications over Internet Protocol (IP) data networks using their
software, hardware and related components. The third party providing this
service is Inter-Tel.net, Inc. with whom Telecom has a contractual agreement.
We do not rely solely on customers visiting our telephone calling center.
We also have 24 phone lines attached to our server which enables customers
accessing our services using telephones away from our location by calling in
to our telephone calling center to be re-routed to our Internet connections.
In addition, the following products and services are also offered at our
telephone calling center:
* Money wiring service
* Check cashing
* Sales of Lotto tickets
* Automatic Telling Machine (ATM)
* Faxing services
* Sales of telephone cards
BUSINESS STRATEGIES
We hope to grow rapidly through franchising our existing operations and
through acquisitions. We have not made any specific business plan for
franchising our existing operations and we have no prior experience in
franchising. Currently, we do not have prospective franchisees or acquisition
targets that are targeted for acquisitions.
Key elements of the company's business strategy are:
* Acquiring and consolidating geographically disparate and usually smaller
independent Internet Telephone Service Providers.
* Developing and offering additional value-added products and services to
customers. For example, offering long distance international calls over the
Internet using cellular phones.
* Selling franchises of our telephone calling center concept throughout the
West Coast and in other areas of high concentration of immigrants.
* Building customer loyalty and gaining market share through brand
recognition.
* Expansion of our sales and marketing operation.
14
MARKETING STRATEGY
We currently market our products in several areas. Our marketing efforts
include newspaper advertisements and advertisements in publications that
potential customers from Latin American countries are likely to see. Other
advertising such as flyers targeting a particular market segment are developed
to compliment and expand the impact of our marketing program.
Our marketing strategy for the future will consist of using medias
designed to reach mass audiences such as audio spot ads., video clips and
banner advertising on the Internet as well as advertising targeted toward
specific markets using radio, television and other publications.
COMPETITION
We have nearly two years of experience building and fine tuning Internet
based telephone call services using traditional telephones at a calling center
environment. We believe we have the ability to deploy information technology
at a faster rate and with fewer errors than new entrants into this field. We
have basic billing capabilities to accommodate the more complex commercial
transactions in which we intend to engage in the future. We already have in
place network management tools and a secure web site capable of taking new
account orders in real-time.
We believe our competitive strength is the ability to build a bridge for
a segment of the urban population to access Internet based telephone
communication services. We also believe we can move faster than larger
telephone companies in identifying and taking advantage of market
opportunities as Internet based telephone communication services continues to
evolve at a rapid pace.
Long Distance Market
The long distance telephony market and, in particular, the Internet
telephony market, is highly competitive. There are several large and numerous
small competitors, and we expect to face continuing competition based on price
and service offerings from existing competitors and new market entrants in the
future. The principal competitive factors in the market include price, quality
of service, breadth of geographic presence, customer service, reliability,
network capacity and the availability of enhanced communications services.
Our competitors include AT&T, MCI WorldCom, Sprint, Net2Phone and other
telecommunications carriers.
Many of our competitors have substantially greater financial, technical
and marketing resources, larger customer bases, longer operating histories,
greater name recognition and more established relationships in the industry
than we have. As a result, certain of these competitors may be able to adopt
more aggressive pricing policies, which could hinder our ability to market our
Internet telephony services.
Web-Based Internet Telephony Services
As consumers and telecommunications companies have grown to understand
the benefits that may be obtained from transmitting voice over the Internet, a
substantial number of companies have emerged to provide voice over the
Internet. In addition, companies currently in related markets have begun to
provide voice over the Internet services or adapt their products to enable
15
voice over the Internet services. These related companies may potentially
migrate into the Internet telephony market as direct competitors or could
become competitors if we move towards their current markets through our stated
intention to grow by acquisition.
Internet Telephony Service Providers. During the past several years, a
number of companies have introduced services that make Internet telephony
services available to businesses and consumers. AT&T Jens (a Japanese
affiliate of AT&T), deltathree.com (a subsidiary of RSL Communications), I-
Link, iBasis (formerly known as VIP Calling), ICG Communications, IPVoice.com,
ITXC and OzEmail (which was acquired by MCI WorldCom) provide a range of voice
over the Internet services. These companies offer PC-to-phone or phone-to-
phone services which could be adapted to provide a similar service to the
services we offer. Some, such as AT&T Jens and OzEmail, offer these services
within limited geographic areas.
INTELLECTUAL PROPERTY
We do not currently own or hold any patents, trademarks, licenses,
franchises concessions, royalty agreements or labor contracts.
GOVERNMENT REGULATION
Regulation of Internet Access Service
We provide Internet access, in part, by using telecommunications services
provided by carriers. Terms, conditions and prices for telecommunications
service are subject to economic regulation by State and Federal agencies. We,
as an Internet Access Provider, are not currently subject to direct economic
regulation by the Federal Communications Commission (FCC) or any State
regulatory body other than the type and scope of regulation that is applicable
to businesses generally.
In April 1998 the FCC reaffirmed that Internet Access Providers should be
classified as unregulated "Information Service Providers" rather than
regulated "Telecommunication Providers" under the terms of the Federal
Telecommunication Act of 1996. As a result, we are not subject to Federal
regulations that apply to telephone companies and similar carriers simply
because we provide our services using telecommunications service provided by a
third party carrier. To date, no State has attempted to exercise economic
regulations over Internet Access Providers.
Governmental regulatory approaches and policies to Internet Access
Providers and others that use the Internet to facilitate Data and
Communication Transmissions are continuing to develop and in the future we
could be exposed to regulation by the FCC or other Federal agencies or by
State regulatory agencies or bodies. For example, the FCC has expressed an
intention to consider whether to regulate providers of voice and fax service
that employ the Internet or Internet Packet Switching as "Telecommunications
Providers" even though Internet access itself would not be regulated. The FCC
is also considering whether providers of Internet based telephone services
should be required to contribute towards the Universal Service Fund, which
subsidizes telephone service for rural and low income consumers, or should pay
carrier access charges on the same basis as applicable to regulated
telecommunications providers. To the extent that we engage in the provision
of Internet or Internet Protocol base telephone or fax service, we may become
subject to regulations promulgated by the FCC or State with respect to such
activities. We cannot assure potential investors that such regulations would
not adversely affect our ability to offer certain enhanced business services
in the future.
16
Regulation of Internet Content
Due to the increase in popularity and use of the Internet by broad
segments of the population it is possible that laws and regulations may be
adopted with respect to web site content, privacy pricing, encryption
standards, consumer protection, electronic commerce, taxation, copyright
infringement and other intellectual property issues. We cannot predict the
effect, if any, that any future regulatory changes or developments may have on
the demand for our access or enhanced business service.
EMPLOYEES
We believe that the success of our business will depend, in part, on our
ability to attract, retain and motivate highly qualified sales, technical and
management personnel, and upon the continued service of our senior management
personnel. As of the date of this registration statement, we have two full-
time and three-part time employees. Two full-time employees are responsible
for management and marketing, one part-time employee is responsible for book
keeping and sales, two other part-time employees are responsible for sales
and other day to day operations. The three part-time employees are sons and
daughter of Mr. Tak Hiromoto and Mrs. Elizabeth Hiromoto. We consider our
employee relations to be good and we have never experienced any work
stoppages. We can not assure you that we will be able to successfully attract,
retain and motivate a sufficient number of qualified personnel to conduct our
business in the future.
DESCRIPTION OF PROPERTY
Our present telephone calling center consists of an approximately 900
square feet facility located on the first floor at 827 South Broadway, Los
Angeles, California. This facility not only hosts the telephone booths but
also all computer equipment, support staff and management employed by the
company. The initial lease was signed in August 1995 for six months with a
rent of $1,200.00 per month. This lease has been subsequently extended and is
due to expire February 28, 2004 with the following rent payment schedule.
March 1, 2000 to February 28, 2001 $1,700.00 per month
March 1, 2001 to February 28, 2002 $1,800.00 per month
March 1, 2002 to February 28, 2003 $1,900.00 per month
March 1, 2003 to February 28, 2004 $2,000.00 per month
17
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following persons are the Directors and Executive Officers of our
Company.
Name Age Position(s)
- --------------------- --- ------------------------------------------
Tak Hiromoto . . . . . 61 President, CEO and Director
Elizabeth Hiromoto . . 50 Secretary, Treasurer and Director
Robert K. Yasui . . . 39 Director
Mervyn M. Dymally . . 74 Director
Masato Saiki 74 Marketing Director
Mr. Tak Hiromoto has served as our President, Chief Executive Officer and
Director since December 2000 and has been a manager of Telecom Communications
of America from September 1995 to present. From March 1990 to December 1995,
Mr. Hiromoto served as President of Apro Inc., a Real Estate Management
Company. From 1982 to Present, Mr. Hiromoto served as Director of Alternative
Energy Resource Inc.
Mrs. Elizabeth Hiromoto has served as our Secretary, Treasurer and
Director since December 2000 and has been a manager of Telecom Communications
of America since from September 1995 to present. From March 1990 to December
1995, Mrs. Hiromoto served as Secretary, Treasurer and Director of Apro Inc.,
a Real Estate Management Company. Mrs. Hiromoto is a licensed Real Estate
Broker. Mrs. Hiromoto is the wife of Mr. Tak Hiromoto.
Mr. Robert K. Yasui has served as our Director since December 2000. Mr.
Yahui leads a group of seven attorneys with international experience in
handling a variety of business transaction and litigation matters from 1995 to
present. Mr. Yahui specializes in corporate transactions including Real
Estate - Secured Financing, commercial and large-scale residential acquisition
and development, land use, leasing and brokerage matters, electronic
entertainment licensing and publishing, film and media transactions as well as
foreign investment in U.S. Real Estate and operating businesses. Mr. Yahui is
serving as an outside counsel to a number of California corporations including
corporations controlled by non-U.S. company and individuals.
Mr. Mervyn M. Dymally has served as our Director since December 2000. Mr.
Dymally retired as a U.S. Congressman in 1992. He was an Assemblyman,
Senator, and Lieutenant Governor of the state of California. From 1992 to
present, Mr. Dymally is the President of Dymally International Group, Inc., a
consulting and financial advisory firm in the United States. Mr. Dynally has
skills in the areas of dispute resolutions and has successfully negotiated
many peace agreements. He serves as a honorary consul for the Republic of
Benin in California and is International Lobbyist for a number of countries
including many African states.
18
Mr. Masato Saiki has served as our Marketing Director since March 2001
on a part time basis. From March 1985 to January 1998, Mr. Saiki was the
president and CEO of Rino Inc., an advertising Agency. From February 1998 to
present, Mr. Saiki worked as an independent marketing consultant.
EXECUTIVE COMPENSATION
We may award stock options and cash bonus to key employees, directors,
officers and consultants under a stock option plan not yet adopted as bonus
based on service and performance. The annual salaries of executive officers
are listed as follows:
Year 2000
Name Position Annual Salary
- --------------------------- --------------------------------- --------------
Tak Hiromoto . . . . . President, CEO and Director $ 75,000
Elizabeth Hiromoto . . Secretary, Treasurer and Director 20,000
Robert K. Yasui . . . Director -
Mervyn M. Dymally . . Director -
Masato Saiki . . . . . Marketing Director -
- --------------------------- --------------------------------- --------------
We intend to pay each of our current officers the same in annual
salary for the year 2001.
We currently do not have written employment agreements with any of our
officers and directors.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
We indemnify to the fullest extent permitted by, and in the manner
permissible under the laws of the State of Indiana, any person made, or
threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he/she is
or was a director or officer of our Company, or served any other enterprise as
director, officer or employee at our request. Our Board of Directors, in its
discretion, shall have the power on behalf of the Company to indemnify any
person, other than a director or officer, made a party to any action, suit or
proceeding by reason of the fact that he/she is or was our employee.
19
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our common stock, by (i) each stockholder known by us
to be the beneficial owner of more than 5% of our Common Stock, (ii) by each
of our executive officer and director and (iii) by all of our executive
officers and directors as a group. Each of the persons named in the table has
sole voting and investment power with respect to common stock beneficially
owned. The shares represented are shares owned as of March 31, 2001.
Number of Shares
Name and Address Beneficially Percent of
of Beneficial Owner Owned Class
- -------------------------- -------------------- --------------
Tak Hiromoto (1) 8,000,000 80.00%
President, CEO and
Director
Mark H. Rhynes (2) 1,000,000 10.00%
Aaron Tsai (3) 977,950 9.78%
All Officers and Directors 8,000,000 80.00%
- -------------------------- -------------------- --------------
(1) The address for Tak Hiromoto is c/o Telecom Communications Inc., 827 S.
Broadway, Los Angeles, CA 90014
(2) The address for Mark H. Rhynes is 555 West 5th Street, Floor 31
Los Angeles, CA 90013
(3) Includes a) 977,600 shares held by MAS Capital Inc. and b) 350 shares
held by John Tsai. John Tsai is Aaron Tsai's brother. Aaron Tsai is the
President and control person of MAS Capital Inc. The address for MAS Capital
Inc. and Aaron Tsai is 17 N. Governor St., Evansville, IN 47711.
20
DESCRIPTION OF SECURITIES
Common Stock
Our Articles of Incorporation currently authorizes us to issue Eighty
Million (80,000,000) shares of Common Stock at $.001 par value. Each holder
of our Common Stock is entitled to one vote for each share of Common Stock
held. As of the date of this prospectus, there are 10,000,000 shares of our
Common Stock outstanding.
Preferred Stock
Our Articles of Incorporation currently authorizes us to issue Twenty
Million (20,000,000) shares of Preferred Stock at $.001 par value. The
Preferred Stock may be divided into Series or Classes, with special voting
rights and preferences, to be established by our management upon the approval
of a majority vote of our Directors. As of the date of this prospectus, there
are no shares of our Preferred Stock outstanding.
If our Board of Directors authorized the issuance of shares of Preferred
Stock with conversion rights, the number of shares of our Common Stock
outstanding could potentially be increased by up to the authorized amount.
Issuance of our Preferred Stock could, under certain circumstances, have the
effect of delaying or preventing a change in control of our Company and may
adversely affect the rights of holders of our other classes of Preferred Stock
or holders of our Common Stock. Also, our Preferred Stock could have
preferences over our Common Stock and other series of our Preferred Stock with
respect to dividends and liquidation rights.
Upon liquidation of our Company, each shareholder is entitled to receive
a proportionate share of our assets available for distribution to shareholders
after the payment of liabilities and after distribution in full of
preferential amounts, if any. All shares of our Common Stock issued and
outstanding are fully-paid and nonassessable. Holders of our Common Stock are
entitled to share pro rata in dividends and distributions with respect to our
Common Stock, as may be declared by our Board of Directors out of funds
legally available therefore.
Transfer Agent
Registrar and Transfer Company is our transfer agent for our Common
Stock. Their address is 10 Commerce Drive, Cranford, NJ 07016-3572, and their
phone number at this location is (800) 456-0596.
21
SHARES ELIGIBLE FOR FUTURE SALE
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days
after the date of this prospectus, a person who has beneficially owned shares
of our common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:
* 1% of the number of shares of common stock then outstanding, which will
equal approximately 115,000 shares assuming all the 1,500,000 shares offered
by the Company are sold; or
* the average weekly trading volume of the common stock on the OTC Bulletin
Board during the four calendar weeks preceding the filing of a notice on Form
144 with respect to such sale.
Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements and to the availability of current public
information about us. 8,000,000 shares of common stock will be eligible for
resale under Rule 144 in December, 2001.
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been one of our
Affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an Affiliate, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.
PLAN OF DISTRIBUTION
The Company hereby offers up to 1,500,000 shares of its Common Stock on
an "as -sold, best efforts" basis at a price of $1.00 per share. All funds
raised during this offering will be available to the Company immediately upon
receipt. The Company may enter into arrangements with registered broker-
dealers to help sell these Shares in which case the Company will be required
to pay commissions or other compensation to these agents. The Company
currently has no understandings or arrangements with anybody to act as selling
agent. The Company also plans to use a portion of the 1,500,000 common shares
to pay for services.
It is anticipated that the selling security holders will offer the shares
in direct sales to private persons and in open market transactions. The
selling security holders may offer the shares to or through registered broker-
dealers who will be paid standard commissions or discounts by the selling
security holders. We believe that no selling security holders have any
arrangements or agreements with any underwriters or broker/dealers to sell the
shares, and they may contact various broker/dealers to identify prospective
purchasers. Additionally, agents, brokers or dealers may acquire shares or
interests in shares and may, from time to time, effect distributions of the
shares or interests in such capacity.
The selling stockholders and any broker-dealers who act in connection
with the sale of the shares hereunder may be deemed to be underwriters within
the meaning of Section 2(11) of the Securities Act, and any commissions
received by them and any profit on any sale of the shares as principal might
be deemed to be underwriting discounts and commissions under the Securities
Act.
22
SELLING SECURITY HOLDERS
This prospectus concerns the transfer by the selling security holders of
an aggregate of 2,000,000 shares of common stock. The selling security
holders may transfer the common stock at those prices that they are able to
obtain in the market or as otherwise negotiated. In addition, the selling
stockholders may transfer the shares in exchange for consideration other than
cash, or for no consideration, as determined by the selling stockholders in
their sole discretion. This prospectus may be used by the selling
stockholders to transfer shares of the common stock to affiliates of the
selling stockholders. We will receive no proceeds from the sale of common
stock by the selling security holders.
The following table sets forth the name of the selling security holders,
the number of shares of common stock owned by the selling security holders
before this offering, the number of shares of common stock being registered,
and the number and percentage of shares of common stock owned after this
offering. None of the selling security holders has held any position or
office, or had any marital relationship with our officers or directors in the
past three years except as noted below.
- -----------------------------------------------------------------------------------------------
Beneficial Ownership Beneficial Ownership
Beneficial Owner Prior to the After the
Offering Number of Offering (1)
--------------------- Shares -----------------------
Number Percent Registered Number Percent
- -----------------------------------------------------------------------------------------------
Mark H. Rhynes 1,000,000 10.00% 1,000,000 0 0
- -----------------------------------------------------------------------------------------------
MAS Capital Inc. (2) 977,600 9.78% 977,600 0 0
- -----------------------------------------------------------------------------------------------
Stanislav Nikolaevich Gemes 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Sergei Konstantinovich Afon 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Pavel Alexandrovich Sidorkin 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Stepan Alexandrovich Dybov 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Ilona Yanochevna Nerba 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Larisa Nikolaevna Timoshina 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Natalya Petrovna Timoshilova 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Anatoly Ivanovich Kim 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Nina Nikolaevna Kern 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Alexei Dmitrievich Basuk 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Vadim Alexandrovich Yuchno 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Maxim Vladimirovitch Golodnitsky 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Ludmila Viktorovna Sandaluk 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Vladimir Viktorovich Knyshov 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Michael Dmitrievich Nerba 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Irina Vladimirovna Kern 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Sergei Michaelovich Nerba 750 * 750 0 0
- -----------------------------------------------------------------------------------------------
Vitaly Alexandrovich Boyarkin 250 * 250 0 0
23
- -----------------------------------------------------------------------------------------------
Victoria Vitalyevna Boyarkina 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Natalya Alexandrovna Boyarkina 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Evgeni Nikolaevich Kern 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Elena Viktorovna Dobrynina 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Alexander Nilolaevich Dobrynin 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Denis Michaelovich Nevzorov 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Tatyana Alexandrovna Nevzorova 250 * 250 0 0
- ---------------------------------------------------------------------------------------------
Michael Nikolaevich Nevzorov 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Olga Nikolaevna Nerba 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Tatyana Tichonovna Rumina 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Nikolai Petrovich Rumin 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Vladimir Yrevich Dobrov 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Natalya Vladimirovna Prishkolnik 250 * 250 0 0
- -----------------------------------------------------------------------------------------------
Charles S. Roberson 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
David E. Carra 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
April K. Carlisle 600 * 600 0 0
- -----------------------------------------------------------------------------------------------
Rich Hemmer 600 * 600 0 0
- -----------------------------------------------------------------------------------------------
Stephen Lee 600 * 600 0 0
- -----------------------------------------------------------------------------------------------
Susan Elizabeth Cormell 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Julie Caroline Avery 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Pamela Avery 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Robert George William Avery 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Roger Thomas Sant 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Victor Charles Bowmer 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Robert Charles Bowmer 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Barbara Jean Ellson 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
John Peter Debney 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Emma Weight 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jean Weight 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jose Luis Guevara Diaz 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
David Guevara Diaz 600 * 600 0 0
- -----------------------------------------------------------------------------------------------
Mevert Aurelio Serrano Selazco 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Pablo Hernandez Gallon 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Juan Dario Hernandez Cano 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Mario J. Lemoine Iragorri 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Frank Enrique Ladera Ladera 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Felipe Enrique Betancourt Garcia 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Fernandez Quintero Reinaldo Alberto 100 * 100 0 0
24
- -----------------------------------------------------------------------------------------------
Mena Matute Mayerling Daliath 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Guevara Diaz Monica 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Carlos Jesus Guevara Diaz 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Eduardo Jose Banco 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jose Luis Loreto Gutierrez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Alexander Luis Barretto 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Leonardo Pedrin Vargas 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jeans Carlos Herrera 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
David Curbenos Garcia 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Pedro Pablo Gutierrez Moreno 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Julio Cesar Rodriguez Revette 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Neil Alberto Alcala Bello 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Victor Jose Monillo 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Angel Jose Oneca 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Leonel Antonio Borreso Herrera 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Carlos Alberto Armas 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Hector Jose Alvarez Mejias 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jose Luis Vegas 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Daisy Oviedo De Lara 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Mitzy Capriles De Ledezma 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Rosalia Romero 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jesus Amoyo Gomez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Amadeo Leyba 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Mercedes Vargas 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Daniela Schadendorf De Esparis 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Leonardo Velazquez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Susana Prada De Allulli 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jose Pimentel Latvaa 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Esdgan Mujica 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jose Feliz Oletta 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Dulce Delgado 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Maria Cristina Parra 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Nelson Jose Lara 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Nancy Montero 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Luis Enrique Oberto 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Mariztza Matiozzi 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jorge Carvajal Morales 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Fernando Pereira 100 * 100 0 0
25
- -----------------------------------------------------------------------------------------------
Wilmer Jose De Abrev Vazquez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jacqueline Carrasco Gamez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Iraida De La Corteza Carrasco De John 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Victor Jovanny Suarez Valdes Pino 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Abranham Giraud L. 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Pablo Rafael Barretto 100 * 100 0 0
- ----------------------------------------------------------------------------------------------
Jhonny Emiliano Diaz Pacheco 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jorge A. Briones Torrealba 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Omar Antonio Morales Mancano 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Williams Montes 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Pedro Pacheco 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Manuel Antonio Gonzalez Gonzalez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Rafael Chenubini Ocando 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Pedro Miguel Cardozo Azuaje 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jose Luis Ferreira 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Brieda Aular Perez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Henry Rossenschein 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Ernesto Fernandez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Dumas Roberto Gomez Gonzalez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Guillermo Paredes 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jose Dominguez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Hugo Cesar Bastidas 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Richard Tovar 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Feliz Morales Marcano 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Mario Olivares Marcano 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
George Dao Dao 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Alejandro Andres H. 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Francis Carolina Maldonado Gonzalez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Leonardo George Bastardo 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Elba Elena Diaz Acero 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Roberto Carlos Diaz 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Silio Antonio Manzanero Lariva 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Eduardo Jose Crespo 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Josueismael Gomez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Eduardo Palomar Lopez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Miguel Enrique Ravelo Vouteris 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Ibain Gregorio Lopez Artiaga 100 * 100 0 0
26
- -----------------------------------------------------------------------------------------------
Gabriel Antonio Caraballo Soto 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Edgar Jose Maldonado Garcia 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Maria Particia Pichardo 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Rafael Angel Chavez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Eric David Domingo Azaujo 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Maikel Lopez Lopez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Gustavo Heiten Aguylar 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Carlos Alfredo Ferreira Moron 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Maria Josefa Cheda Saavedra 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Hermogenes Francisco Gil Suarez 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
William Rommel Montes Rojas 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Miguel Antonio Flores Vargas 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Ruben Silva Boico 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Ersel Susar 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Jeriah D. Civlei 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
John Tsai 350 * 350 0 0
- -----------------------------------------------------------------------------------------------
Guillermo Guevara 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Elizabeth Hudson 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
Graham Bowmer 100 * 100 0 0
- -----------------------------------------------------------------------------------------------
* Less than 1%.
(1) Assuming all shares registered are sold.
(2) MAS Capital Inc. is controlled by Aaron Tsai. Aaron Tsai is officer,
director and control person of MAS Capital Inc. MAS Capital Inc. is a selling
security holder. Aaron Tsai personally is not a selling security holder.
Following selling stockholders have served as our Directors in the past:
Aaron Tsai, Charles S. Roberson, David E. Carra, April K. Carlisle, Rich
Hemmer, Stephen Lee, Ersel Susar, Jeriah D. Civlei, John Tsai, Guillermo
Guevara and Elizabeth Hudson.
27
LEGAL PROCEEDINGS
We are not a party to any legal proceedings.
LEGAL MATTERS
Daniel H. Luciano, Attorney-At-Law, has acted as our counsel in
connection with a legal opinion relating to the validity of the shares under
this prospectus that have been issued to the selling shareholders and that are
to be issued by the Company. No other matters have been passed upon by such
counsel.
EXPERTS
The financial statements of Telecom Communications of America as of and
for the years ended September 30, 2000 and September 30, 1999 appearing in
this Prospectus and Registration Statement have been audited by Robert G.
Ercek, independent certified public accountant, as stated in report appearing
elsewhere herein, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
We filed a registration statement with the SEC on Form SB-2 relating to
the shares offered in this prospectus. This prospectus does not contain all of
the information included in the registration statement. For further
information about us and the shares we are offering in this prospectus, refer
to the registration statement and its exhibits. The statements we make in this
prospectus regarding the content of any contract or other document are
necessarily not complete, and you may examine the copy of the contract or
other document that we filed as an exhibit to the registration statement. All
our statements about those contracts or other documents are qualified in their
entirety by referring you to the exhibits to the registration statement.
As of the effective date of the registration statement, we will be a
reporting company and will be subject to the reporting requirements of the
Securities Exchange Act. Our filings may be inspected and copied without
charge at the public reference facility of the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
Regional Offices located at Seven World Trade Center, Suite 1300, New York,
New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials can be obtained by mail from the Public
Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C.20549, at prescribed rates. In addition, we are required
to file electronic versions of these documents with the SEC through the SEC's
Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. The SEC
maintains a Web site at http://www.sec.gov that contains reports, proxy
statements and other information regarding registrants that file
electronically with the SEC.
28
INDEX TO FINANCIAL STATEMENTS
Content Page
- ----------------------------------------------------------------------- ----
Independent Auditor's Report F-2
Balance Sheet at September 30, 1999 F-3
Income Statement for the Year Ended September 30, 1999 F-4
Statements of Cash Flows for the Year Ended September 30, 1999 F-5
Statement of Stockholders' Equity for the Year Ended September 30, 1999 F-6
Independent Auditor's Report F-7
Balance Sheet at September 30, 2000 F-8
Income Statement for the Year Ended September 30, 2000 F-9
Statements of Cash Flows for the Year Ended September 30, 2000 F-10
Statement of Stockholders' Equity for the Year Ended September 30, 2000 F-11
Notes to Financial Statement for the years ended September 30, 1999
and 2000 F-12
Accountant's Review Report F-13
Balance Sheet at December 31, 2001 F-14
Income Statement for the Three Months Ended December 31, 2001 F-15
Statements of Cash Flows for the Three Months Ended December 31, 2001 F-16
Notes to the Financial Statements for the Three Months Ended Dec 21, 2001 F-17
Accountant's Review Report F-18
Balance Sheet at December 31, 1999 F-19
Income Statement for the Three Months Ended December 31, 1999 F-20
Statements of Cash Flows for the Three Months Ended December 31, 1999 F-21
F-1
ROBERT G. ERCEK, CPA
1756 West Ave, J-12 #107
Lancaster, CA 93534 (661)-726-9448
December 20, 2000
Telecom Communications of America
827 South Broadway
Los Angeles, CA 90014-3201
I have examined the Balance Sheet of Telecom Communications of America as of
September 30, 1999 and the related statements of income, cash flows, and
changes in the owner's equity for the twelve months then ended. These
financial statements are the responsibility of the management of the company.
My responsibility is to express an opinion on them based on my audit.
I conducted the examination in accordance with Generally Accepted Auditing
Standards as set forth by the American Institute of Certifies Public
Accountants. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from 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. I believe that my audit provides a
reasonable basis for my opinion.
Based on the results of my examination, I believe the financial statements
referred to above present fairly in all material respects the financial
position of Telecom Communications of America as of September 30, 1999, the
results of its operations, its cash flows, and changes in owner's equity for
the twelve months then ended in conformity with generally accepted accounting
principles.
These financial statements have been prepared assuming that the Company will
continue as a going concern. Although the Company did show a profit for the
year ended September 30, 1999 all profits were taken as draws by ownership.
Management's plans to handle this contingency are discussed in the notes to
the financial statements.
Very truly yours,
/s/ Robert G. Ercek
Robert G. Ercek, CPA
F-2
TELECOM COMMUNICATIONS OF AMERICA
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
CURRENT ASSETS
Cash In Bank $ 13,782
-----------
TOTAL CURRENT ASSETS $ 13,782
PROPERTY & EQUIPMENT
Equipment 7,450
Less: Accumulated Depr. (7,450)
-----------
NET PROPERTY & EQUIPMENT 0
OTHER ASSETS
-----------
TOTAL OTHER ASSETS 0
-----------
TOTAL ASSETS $ 13,782
===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES
-----------
TOTAL CURRENT LIABILITIES $ 0
LONG TERM LIABILITIES
-----------
TOTAL LONG TERM LIABILITIES 0
-----------
TOTAL LIABILITIES 0
CAPITAL
Beginning Capital $ 8,334
Less: Withdrawals (119,246)
Net Income 124,694
-----------
TOTAL CAPITAL 13,782
-----------
TOTAL LIABILITIES & CAPITAL $ 13,782
===========
SEE INDEPENDENT AUDITOR'S REPORT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
F-3
TELECOM COMMUNICATIONS OF AMERICA
INCOME STATEMENT
TWELVE MONTHS ENDED SEPTEMBER 30, 1999
TWELVE MONTHS
YEAR TO DATE
=====================
INCOME
Sales $ 1,475,004 100.0%
------------
TOTAL INCOME 1,475,004 100.0
COST OF SALES
Cost of Sales 1,308,232 88.7
General & Admin. Expenses 42,078 2.9
-----------
TOTAL COST OF SALES 1,350,310 91.5
-----------
GROSS PROFIT 124,694 8.5
-----------
EXPENSES
OTHER INCOME (EXPENSES)
-----------
NET INCOME (LOSS) $ 124,694 8.5%
===========
SEE INDEPENDENT AUDITOR'S REPORT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
F-4
TELECOM COMMUNICATIONS OF AMERICA
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1999
CASH FLOWS FROM OPERATIONS ACTIVITIES:
SOURCES OF CASH:
Net Income (Loss) $ 124,694
Adjustment to reconcile Net Income
to net cash used in operating Activities:
Add back Depreciation: 0
Changes in assets other than cash: 0
Sub Total: 124,694
Funds from Investing Activities: 0
Funds from Financing Activities: 0
-----------
Net cash provided: 124,694
USES OF CASH:
Investment Activities: 0
Financing Activities: 0
Owner Draws: 119,246
-----------
TOTAL USES OF CASH: 119,246
INCREASE (DECREASE) IN CASH 5,448
Beginning Cash Balance 10-01-98 8,334
-----------
CASH AT SEPTEMBER 30, 1999 $ 13,782
===========
SEE INDEPENDENT AUDITOR'S REPORT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
F-5
TELECOM COMMUNICATIONS OF AMERICA
STATEMENT OF CHANGES IN OWNER'S EQUITY
SEPTEMBER 30, 1999
Beginning Balance......................................$ 8,334
Income (Loss) For The Period........................... 124,694
Less: Owner Draws...................................... ( 119,246)
-----------
Balance at Year End....................................$ 13,782
===========
F-6
ROBERT G. ERCEK, CPA
1756 West Ave, J-12 #107
Lancaster, CA 93534 (661)-726-9448
December 20, 2000
Telecom Communications of America
827 South Broadway
Los Angeles, CA 90014-3201
I have examined the Balance Sheet of Telecom Communications of America as of
September 30, 2000 and the related statements of income, cash flows, and
changes in the owner's equity for the twelve months then ended. These
financial statements are the responsibility of the management of the company.
My responsibility is to express an opinion on them based on my audit.
I conducted the examination in accordance with Generally Accepted Auditing
Standards as set forth by the American Institute of Certifies Public
Accountants. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from 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. I believe that my audit provides a
reasonable basis for my opinion.
Based on the results of my examination, I believe the financial statements
referred to above present fairly in all material respects the financial
position of Telecom Communications of America as of September 30, 2000, the
results of its operations, its cash flows, and changes in owner's equity for
the twelve months then ended in conformity with generally accepted accounting
principles.
These financial statements have been prepared assuming that the Company will
continue as a going concern. Although the Company did show a profit for the
year ended September 30, 2000 all profits were taken as draws by ownership.
Management's plans to handle this contingency are discussed in the notes to
the financial statements.
Very truly yours,
/s/ Robert G. Ercek
Robert G. Ercek, CPA
F-7
TELECOM COMMUNICATIONS OF AMERICA
BALANCE SHEET
SEPTEMBER 30, 2000
ASSETS
CURRENT ASSETS
Cash In Bank $ 2,443
-----------
TOTAL CURRENT ASSETS $ 2,443
PROPERTY & EQUIPMENT
Equipment 7,450
Less: Accumulated Depr. (7,450)
-----------
NET PROPERTY & EQUIPMENT 0
OTHER ASSETS
-----------
TOTAL OTHER ASSETS 0
-----------
TOTAL ASSETS $ 2,443
===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES
-----------
TOTAL CURRENT LIABILITIES $ 0
LONG TERM LIABILITIES
-----------
TOTAL LONG TERM LIABILITIES 0
-----------
TOTAL LIABILITIES 0
CAPITAL
Beginning Capital $ 13,782
Less: Withdrawals (101,400)
Net Income 90,061
-----------
TOTAL CAPITAL 2,443
-----------
TOTAL LIABILITIES & CAPITAL $ 2,443
===========
SEE INDEPENDENT AUDITOR'S REPORT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
F-8
TELECOM COMMUNICATIONS OF AMERICA
INCOME STATEMENT
TWELVE MONTHS ENDED SEPTEMBER 30, 2000
TWELVE MONTHS
YEAR TO DATE
=====================
INCOME
Sales $ 1,190,200 100.0%
------------
TOTAL INCOME 1,190,200 100.0
COST OF SALES
Cost of Sales 1,050,304 88.2
General & Admin. Expenses 49,835 4.2
-----------
TOTAL COST OF SALES 1,100,139 92.4
-----------
GROSS PROFIT 90,061 7.6
-----------
EXPENSES
OTHER INCOME (EXPENSES)
-----------
NET INCOME (LOSS) $ 90,061 7.6%
===========
SEE INDEPENDENT AUDITOR'S REPORT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
F-9
TELECOM COMMUNICATIONS OF AMERICA
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2000
CASH FLOWS FROM OPERATIONS ACTIVITIES:
SOURCES OF CASH:
Net Income (Loss) $ 90,061
Adjustment to reconcile Net Income
to net cash used in operating Activities:
Add back Depreciation: 0
Changes in assets other than cash: 0
Sub Total: 90,061
Funds from Investing Activities: 0
Funds from Financing Activities: 0
-----------
Net cash provided: 90,061
USES OF CASH:
Investment Activities: 0
Financing Activities: 0
Owner Draws: 101,400
-----------
TOTAL USES OF CASH: 101,400
INCREASE (DECREASE) IN CASH ( 11,339)
Beginning Cash Balance 10-01-99 13,782
-----------
CASH AT SEPTEMBER 30, 2000 $ 2,443
===========
SEE INDEPENDENT AUDITOR'S REPORT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
F-10
TELECOM COMMUNICATIONS OF AMERICA
STATEMENT OF CHANGES IN OWNER'S EQUITY
SEPTEMBER 30, 2000
Beginning Balance......................................$ 13,782
Income (Loss) For The Period........................... 90,061
Less: Owner Draws...................................... ( 101,400)
-----------
Balance at Year End....................................$ 2,443
===========
F-11
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 2000
1. Telecom Communications of America was founded as a sole proprietorship in
1995 by Michelle Hiromoto with the assistants and management of her father Tak
Hiromoto. The purpose of the company was to provide low cost access to long
distance carriers for individuals needing to call Latin and South America.
The company operates on the internet as opposed to using conventional long
distance carriers to facilitate lower costs that are past on to the customers.
Many of the extra fees that are found in conventional long distance systems
are avoided this way. In addition the Company also provides various services
such as check cashing, money wiring, the sale of bus tokens and passes, and
tickets from the Californian Lottery known as Lotto.
2. The company uses the accrual method of accounting.
3. Funds are kept in two banks so no more than $100,000 is in any one account.
4. No inventories are maintained as this is a service oriented business with
bus tokens being kept at minimal supply.
5. There are no receivables as all business is done for cash.
6. All capitalized assets are fully depreciated while new ones are currently
being leased.
7. There are no loans outstanding and no material payables.
8. Although no loans are outstanding, the Company does have a computer lease
requiring a monthly payment of $911.00. This lease is good thrue July 1,
2003. The Company is also leasing its occupancy thrue December 31, 2003.
10. The have been no related party transactions.
11. There is no litigation at this time either threatened or pending.
12. There are no large deposits on any assets or prepaid insurance.
13. There is no payroll as the owners take draws. Therefore there are no
payroll tax issues to be concerned about at this time.
14. No provisions for income tax purposes has been made as the company is on a
calendar year basis for tax purposes. All respective tax returns have been
filed with all responsibilities having been met.
15. On December 21, 2000, the Company was acquired by MAS Acquisition XXI
Corp. It is authorized to have one hundred million shares of stock with eighty
million as common and twenty million as preferred. The par value of the stock
will be .001. The Company intends to raise additional capital through the
issuance of new stock to help insure the Company's ability to continue as a
going concern.
F-12
ROBERT G. ERCEK, CPA
COMPUTERIZED ACCOUNTING SERVICES
1756 West Ave. J-12
Lancaster, CA 93534
(661)-726-9448
ACCOUNTANT'S REVIEW REPORT
March 29, 2001
Telecom Communications Inc.
827 South Broadway Ste C
Los Angeles, CA 90014-3201
I have reviewed the Balance Sheet of Telecom Communications Inc. as of
December 31, 2000 and the related statements of Income and Cash Flows for the
three months then ended in accordance with standards established by the
Statement on Accounting Standards as issued by the American Institute of
Certified Public Accountants.
A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than
an audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Very truly yours,
/s/ Robert G. Ercek, CPA
Robert G. Ercek, CPA
F-13
TELECOM COMMUNICATIONS INC.
BALANCE SHEET
THREE MONTHS ENDED DECEMBER 31, 2000
ASSETS
CURRENT ASSETS
Cash In Bank $ 759
---------
TOTAL CURRENT ASSETS $ 759
PROPERTY & EQUIPMENT
Equipment 7,450
Less: Accumulated Depr. (7,450)
---------
NET PROPERTY & EQUIPMENT 0
OTHER ASSETS
Investments 9,000
---------
TOTAL OTHER ASSETS 9,000
---------
TOTAL ASSETS $ 9,759
=========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
---------
TOTAL CURRENT LIABILITIES $ 0
LONG TERM LIABILITIES
---------
TOTAL LONG TERM LIABILITIES 0
---------
TOTAL LIABILITIES 0
SHAREHOLDER'S EQUITY
Capital Stock $ 9,000
Additional Paid in Capital (17,760)
Net Income 18,519
---------
TOTAL SHAREHOLDER'S EQUITY 9,759
---------
TOTAL LIABILITIES & EQUITY $ 9,759
=========
SEE ACCOUNTANT'S REVIEW REPORT
F-14
TELECOM COMMUNICATIONS INC.
INCOME SHEET
THREE MONTHS ENDED DECEMBER 31, 2000
THREE MONTHS
YEAR TO DATE
==================
INCOME
Sales $ 271,155 100.0%
----------
TOTAL INCOME 271,155 100.0
COST OF SALES
Cost of Sales 240,484 88.7
General & Admin. Expenses 12,152 4.5
----------
TOTAL COST OF SALES 252,636 93.2
----------
GROSS PROFIT 18,519 6.8
EXPENSES
OTHER INCOME (EXPENSES)
----------
NET INCOME (LOSS) $ 18,519 6.8%
==========
SEE ACCOUNTANT'S REVIEW REPORT
F-15
TELECOM COMMUNICATIONS INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 2000
CASH FLOWS FROM OPERATIONS ACTIVITIES:
SOURCES OF CASH:
Net Income (Loss) $ 18,519
Adjustment to Reconcile Net Income
To net cash used in operating Activities:
Add back Depreciation: 0
Changes in assets other than cash: 0
Sub Total: 18,519
Funds from Investing Activities: 0
Funds From Financing Activities: 0
----------
Net cash provided: 18,519
USES OF CASH:
Investment Activities: 0
Financing Activities: 0
Owner Draws: 20,203
----------
TOTAL USES OF CASH: 20,203
INCREASE (DECREASE) IN CASH ( 1,684)
Beginning Cash Balance 09-30-2000 2,443
----------
CASH AT DECEMBER 31, 2000 $ 759
==========
SEE ACCOUNTANT'S REVIEW REPORT
F-16
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
1. Telecom Communications of America was founded as a sole proprietorship in
1995 by Michelle Hiromoto with the assistants and management of her father Tak
Hiromoto. The purpose of the company was to provide low cost access to long
distance carriers for individuals needing to call Latin and South America.
The company operates on the internet as opposed to using conventional long
distance carriers to facilitate lower costs that are passed on to the
customers. Many of the extra fees that are found in conventional long
distance systems are avoided this way. In addition the Company also provides
various services such as check cashing, money wiring, the sale of bus tokens
and passes, and tickets from the California Lottery known as Lotto.
2. The company uses the accrual method of accounting.
3. Funds are kept in two banks so no more than $100,000 is in any one
account.
4. No inventories are maintained as this is a service oriented business with
bus tokens being kept at a minimal supply.
5. There are no receivables as all business is done for cash.
6. All capitalized assets are fully depreciated while new ones are currently
being leased.
7. There are no loans outstanding and no material payables.
8. Although no loans are outstanding, the Company does have a computer lease
requiring a monthly payment of $911.00. This lease is good thrue July 1,
2003. The Company is also leasing its occupancy thrue December 31, 2003.
10. There have been no related party transactions.
11. There is no litigation at this time either threatened or pending.
12. There are no large deposits on any assets or prepaid insurance.
13. There is no payroll as the owners take draws. Therefore there are no
payroll tax issues to be concerned about at this time.
14. No provision for income tax purposes has been made as the company is on a
calender year basis for tax purposes. All respective tax returns have been
filed with all responsibilities having been met.
15. On December 21, 2000, the Company was acquired by MAS Acquisition XXI
Corp. It is authorized to have one hundred million shares of stock with
eighty million as common and twenty million as preferred. The par value of
the stock will be .001. The Company intends to raise additional capital
through the issuance of new stock to help insure the Company's ability to
continue as a going concern. Also the Company's new name is Telecom
Communications Inc. Nine Million shares of stock were issued to Tak Hiromoto.
He then transferred one million shares to Mr. Mark Herman Rhyness for
assisting the Company.
F-17
ROBERT G. ERCEK, CPA
COMPUTERIZED ACCOUNTING SERVICES
1756 West Ave. J-12
Lancaster, CA 93534
(661)-726-9448
ACCOUNTANT'S REVIEW REPORT
April 22, 2001
Telecom Communications of America
827 South Broadway Ste C
Los Angeles, CA 90014-3201
I have reviewed the Balance Sheet of Telecom Communications of America as of
December 31, 1999 and the related statements of Income and Cash Flows for the
three months then ended in accordance with standards established by the
Statement on Accounting Standards as issued by the American Institute of
Certified Public Accountants.
A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than
an audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Very truly yours,
/s/ Robert G. Ercek, CPA
Robert G. Ercek, CPA
F-18
TELECOM COMMUNICATIONS OF AMERICA
BALANCE SHEET
THREE MONTHS ENDED DECEMBER 31, 1999
ASSETS
CURRENT ASSETS
Cash In Bank $ 10,502
---------
TOTAL CURRENT ASSETS $ 10,502
PROPERTY & EQUIPMENT
Equipment 7,450
Less: Accumulated Depr. (7,450)
---------
NET PROPERTY & EQUIPMENT 0
OTHER ASSETS
---------
TOTAL OTHER ASSETS 0
---------
TOTAL ASSETS $ 10,502
=========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
---------
TOTAL CURRENT LIABILITIES $ 0
LONG TERM LIABILITIES
---------
TOTAL LONG TERM LIABILITIES 0
---------
TOTAL LIABILITIES 0
SHAREHOLDER'S EQUITY
Capital Stock $ 13,782
Additional Paid in Capital (19,893)
Net Income 16,703
---------
TOTAL SHAREHOLDER'S EQUITY 10,502
---------
TOTAL LIABILITIES & EQUITY $ 10,502
=========
SEE ACCOUNTANT'S REVIEW REPORT
F-19
TELECOM COMMUNICATIONS OF AMERICA
INCOME SHEET
THREE MONTHS ENDED DECEMBER 31, 1999
THREE MONTHS
YEAR TO DATE
==================
INCOME
Sales $ 411,108 100.0%
----------
TOTAL INCOME 411,108 100.0
COST OF SALES
Cost of Sales 385,707 93.8
General & Admin. Expenses 8,697 2.1
----------
TOTAL COST OF SALES 394,405 95.9
----------
GROSS PROFIT 16,703 4.1
----------
EXPENSES
OTHER INCOME (EXPENSES)
NET INCOME (LOSS) $ 16,703 4.1%
==========
SEE ACCOUNTANT'S REVIEW REPORT
F-20
TELECOM COMMUNICATIONS OF AMERICA
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1999
CASH FLOWS FROM OPERATIONS ACTIVITIES:
SOURCES OF CASH:
Net Income (Loss) $ 16,703
Adjustment to Reconcile Net Income
To net cash used in operating Activities:
Add back Depreciation: 0
Changes in assets other than cash: 0
Sub Total: 16,703
Funds from Investing Activities: 0
Funds From Financing Activities: 0
----------
Net cash provided: 16,703
USES OF CASH:
Investment Activities: 0
Financing Activities: 0
Owner Draws: 19,983
----------
19,893
TOTAL USES OF CASH:
INCREASE (DECREASE) IN CASH ( 3,280)
Beginning Cash Balance 09-30-1998 13,782
----------
CASH AT DECEMBER 31, 1999 $ 10,502
==========
SEE ACCOUNTANT'S REVIEW REPORT
F-21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons
of the registrant pursuant to provisions described in Item 14, or otherwise,
the registrant has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a
claim for indemnification by the registrant against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against pubic
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an itemized statement of our expenses in
connection with the registration of our common stock. All the expenses are
estimated, except for the SEC registration fee.
SEC Registration Fee ..................................... $ 924.00
Printing and engraving expenses .......................... $ 2,000.00
Legal fees and expenses .................................. $ 1,000.00
Auditors' fees and expenses .............................. $ 3,000.00
Transfer Agent and Registrar fees ........................ $ 5,000.00
----------
TOTAL $11,924.00
==========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On January 6, 1997, we issued 8,500,000 shares of Common Stock to Aaron Tsai,
our former President for $90, which was below the par value at $.001 per
common share. We relied on exemption provided by Section 4(2) of the
Securities Act of 1933, as amended.
On January 6, 1997, we issued 500 shares of Common Stock and on September 30,
1998 we issued 750 shares of Common Stock to our former directors as
compensation for their consulting services valued at $1 and $1, respectively.
We relied on exemption provided by Section 4(2) of the Securities Act of 1933,
as amended.
On October 1, 1999, we issued 100 shares of Common Stock to an individual as
compensation for consulting service valued at $0. We relied on exemption
provided by Section 4(2) of the Securities Act of 1933, as amended.
On January 6, 1997, Aaron Tsai gifted 50,000 shares of Common Stock each to
three of our former directors for a total of 150,000 shares of Common Stock.
Aaron Tsai relied on exemption provided by Section 4(2) of the Securities Act
of 1933, as amended, for the transfer of the 150,000 shares. On January 6,
1997 and on January 31, 1998, Aaron Tsai gifted 50,000 shares of Common Stock
each to two non-U.S. persons for a total of 100,000 shares of Common Stock as
gift. Aaron Tsai relied on exemption provided by Regulation S of the
Securities Act of 1933, as amended, for the transfer of 100,000 shares of
Common Stock to these two non-U.S. persons.
On March 31, 1997, we completed a distribution of 7,750 shares of Common Stock
to the following 31 non-U.S. persons as gift. We relied on exemption provided
by Regulation S of the Securities Act of 1933, as amended.
- -----------------------------------------------------------------------------------------------
Shares
- -----------------------------------------------------------------------------------------------
Stanislav Nikolaevich Gemes 250
- -----------------------------------------------------------------------------------------------
Sergei Konstantinovich Afon 250
- -----------------------------------------------------------------------------------------------
Pavel Alexandrovich Sidorkin 250
- -----------------------------------------------------------------------------------------------
Stepan Alexandrovich Dybov 250
- -----------------------------------------------------------------------------------------------
Ilona Yanochevna Nerba 250
- -----------------------------------------------------------------------------------------------
Larisa Nikolaevna Timoshina 250
- -----------------------------------------------------------------------------------------------
Natalya Petrovna Timoshilova 250
- -----------------------------------------------------------------------------------------------
Anatoly Ivanovich Kim 250
- -----------------------------------------------------------------------------------------------
Nina Nikolaevna Kern 250
- -----------------------------------------------------------------------------------------------
Alexei Dmitrievich Basuk 250
- -----------------------------------------------------------------------------------------------
Vadim Alexandrovich Yuchno 250
- -----------------------------------------------------------------------------------------------
Maxim Vladimirovitch Golodnitsky 250
- -----------------------------------------------------------------------------------------------
Ludmila Viktorovna Sandaluk 250
- -----------------------------------------------------------------------------------------------
Vladimir Viktorovich Knyshov 250
- -----------------------------------------------------------------------------------------------
Michael Dmitrievich Nerba 250
- -----------------------------------------------------------------------------------------------
Irina Vladimirovna Kern 250
- -----------------------------------------------------------------------------------------------
Sergei Michaelovich Nerba 250
- -----------------------------------------------------------------------------------------------
Vitaly Alexandrovich Boyarkin 250
- -----------------------------------------------------------------------------------------------
Victoria Vitalyevna Boyarkina 250
- -----------------------------------------------------------------------------------------------
Natalya Alexandrovna Boyarkina 250
- -----------------------------------------------------------------------------------------------
Evgeni Nikolaevich Kern 250
- -----------------------------------------------------------------------------------------------
Elena Viktorovna Dobrynina 250
- -----------------------------------------------------------------------------------------------
Alexander Nilolaevich Dobrynin 250
- -----------------------------------------------------------------------------------------------
Denis Michaelovich Nevzorov 250
- -----------------------------------------------------------------------------------------------
Tatyana Alexandrovna Nevzorova 250
- -----------------------------------------------------------------------------------------------
Michael Nikolaevich Nevzorov 250
- -----------------------------------------------------------------------------------------------
Olga Nikolaevna Nerba 250
- -----------------------------------------------------------------------------------------------
Tatyana Tichonovna Rumina 250
- -----------------------------------------------------------------------------------------------
Nikolai Petrovich Rumin 250
- -----------------------------------------------------------------------------------------------
Vladimir Yrevich Dobrov 250
- -----------------------------------------------------------------------------------------------
Natalya Vladimirovna Prishkolnik 250
- -----------------------------------------------------------------------------------------------
On September 30, 1998 we completed a distribution of 10,800 shares of Common
Stock to the following 108 non-U.S. persons as gift. We relied on exemption
provided by Regulation S of the Securities Act of 1933, as amended.
- -----------------------------------------------------------------------------------------------
Shares
- -----------------------------------------------------------------------------------------------
Susan Elizabeth Cormell 100
- -----------------------------------------------------------------------------------------------
Julie Caroline Avery 100
- -----------------------------------------------------------------------------------------------
Pamela Avery 100
- -----------------------------------------------------------------------------------------------
Robert George William Avery 100
- -----------------------------------------------------------------------------------------------
Roger Thomas Sant 100
- -----------------------------------------------------------------------------------------------
Victor Charles Bowmer 100
- -----------------------------------------------------------------------------------------------
Robert Charles Bowmer 100
- -----------------------------------------------------------------------------------------------
Barbara Jean Ellson 100
- -----------------------------------------------------------------------------------------------
John Peter Debney 100
- -----------------------------------------------------------------------------------------------
Emma Weight 100
- -----------------------------------------------------------------------------------------------
Jean Weight 100
- -----------------------------------------------------------------------------------------------
Jose Luis Guevara Diaz 100
- -----------------------------------------------------------------------------------------------
David Guevara Diaz 100
- -----------------------------------------------------------------------------------------------
Mevert Aurelio Serrano Selazco 100
- -----------------------------------------------------------------------------------------------
Pablo Hernandez Gallon 100
- -----------------------------------------------------------------------------------------------
Juan Dario Hernandez Cano 100
- -----------------------------------------------------------------------------------------------
Mario J. Lemoine Iragorri 100
- -----------------------------------------------------------------------------------------------
Frank Enrique Ladera Ladera 100
- -----------------------------------------------------------------------------------------------
Felipe Enrique Betancourt Garcia 100
- -----------------------------------------------------------------------------------------------
Fernandez Quintero Reinaldo Alberto 100
- -----------------------------------------------------------------------------------------------
Mena Matute Mayerling Daliath 100
- -----------------------------------------------------------------------------------------------
Guevara Diaz Monica 100
- -----------------------------------------------------------------------------------------------
Carlos Jesus Guevara Diaz 100
- -----------------------------------------------------------------------------------------------
Eduardo Jose Banco 100
- -----------------------------------------------------------------------------------------------
Jose Luis Loreto Gutierrez 100
- -----------------------------------------------------------------------------------------------
Alexander Luis Barretto 100
- -----------------------------------------------------------------------------------------------
Leonardo Pedrin Vargas 100
- -----------------------------------------------------------------------------------------------
Jeans Carlos Herrera 100
- -----------------------------------------------------------------------------------------------
David Curbenos Garcia 100
- -----------------------------------------------------------------------------------------------
Pedro Pablo Gutierrez Moreno 100
- -----------------------------------------------------------------------------------------------
Julio Cesar Rodriguez Revette 100
- -----------------------------------------------------------------------------------------------
Neil Alberto Alcala Bello 100
- -----------------------------------------------------------------------------------------------
Victor Jose Monillo 100
- -----------------------------------------------------------------------------------------------
Angel Jose Oneca 100
- -----------------------------------------------------------------------------------------------
Leonel Antonio Borreso Herrera 100
- -----------------------------------------------------------------------------------------------
Carlos Alberto Armas 100
- -----------------------------------------------------------------------------------------------
Hector Jose Alvarez Mejias 100
- -----------------------------------------------------------------------------------------------
Jose Luis Vegas 100
- -----------------------------------------------------------------------------------------------
Daisy Oviedo De Lara 100
- -----------------------------------------------------------------------------------------------
Mitzy Capriles De Ledezma 100
- -----------------------------------------------------------------------------------------------
Rosalia Romero 100
- -----------------------------------------------------------------------------------------------
Jesus Amoyo Gomez 100
- -----------------------------------------------------------------------------------------------
Amadeo Leyba 100
- -----------------------------------------------------------------------------------------------
Mercedes Vargas 100
- -----------------------------------------------------------------------------------------------
Daniela Schadendorf De Esparis 100
- -----------------------------------------------------------------------------------------------
Leonardo Velazquez 100
- -----------------------------------------------------------------------------------------------
Susana Prada De Allulli 100
- -----------------------------------------------------------------------------------------------
Jose Pimentel Latvaa 100
- -----------------------------------------------------------------------------------------------
Esdgan Mujica 100
- -----------------------------------------------------------------------------------------------
Jose Feliz Oletta 100
- -----------------------------------------------------------------------------------------------
Dulce Delgado 100
- -----------------------------------------------------------------------------------------------
Maria Cristina Parra 100
- -----------------------------------------------------------------------------------------------
Nelson Jose Lara 100
- -----------------------------------------------------------------------------------------------
Nancy Montero 100
- -----------------------------------------------------------------------------------------------
Luis Enrique Oberto 100
- -----------------------------------------------------------------------------------------------
Mariztza Matiozzi 100
- -----------------------------------------------------------------------------------------------
Jorge Carvajal Morales 100
- -----------------------------------------------------------------------------------------------
Fernando Pereira 100
- -----------------------------------------------------------------------------------------------
Wilmer Jose De Abrev Vazquez 100
- -----------------------------------------------------------------------------------------------
Jacqueline Carrasco Gamez 100
- -----------------------------------------------------------------------------------------------
Iraida De La Corteza Carrasco De John 100
- -----------------------------------------------------------------------------------------------
Victor Jovanny Suarez Valdes Pino 100
- -----------------------------------------------------------------------------------------------
Abranham Giraud L. 100
- -----------------------------------------------------------------------------------------------
Pablo Rafael Barretto 100
- -----------------------------------------------------------------------------------------------
Jhonny Emiliano Diaz Pacheco 100
- -----------------------------------------------------------------------------------------------
Jorge A. Briones Torrealba 100
- -----------------------------------------------------------------------------------------------
Omar Antonio Morales Mancano 100
- -----------------------------------------------------------------------------------------------
Williams Montes 100
- -----------------------------------------------------------------------------------------------
Pedro Pacheco 100
- -----------------------------------------------------------------------------------------------
Manuel Antonio Gonzalez Gonzalez 100
- -----------------------------------------------------------------------------------------------
Rafael Chenubini Ocando 100
- -----------------------------------------------------------------------------------------------
Pedro Miguel Cardozo Azuaje 100
- -----------------------------------------------------------------------------------------------
Jose Luis Ferreira 100
- -----------------------------------------------------------------------------------------------
Brieda Aular Perez 100
- -----------------------------------------------------------------------------------------------
Henry Rossenschein 100
- -----------------------------------------------------------------------------------------------
Ernesto Fernandez 100
- -----------------------------------------------------------------------------------------------
Dumas Roberto Gomez Gonzalez 100
- -----------------------------------------------------------------------------------------------
Guillermo Paredes 100
- -----------------------------------------------------------------------------------------------
Jose Dominguez 100
- -----------------------------------------------------------------------------------------------
Hugo Cesar Bastidas 100
- -----------------------------------------------------------------------------------------------
Richard Tovar 100
- -----------------------------------------------------------------------------------------------
Feliz Morales Marcano 100
- -----------------------------------------------------------------------------------------------
Mario Olivares Marcano 100
- -----------------------------------------------------------------------------------------------
George Dao Dao 100
- -----------------------------------------------------------------------------------------------
Alejandro Andres H. 100
- -----------------------------------------------------------------------------------------------
Francis Carolina Maldonado Gonzalez 100
- -----------------------------------------------------------------------------------------------
Leonardo George Bastardo 100
- -----------------------------------------------------------------------------------------------
Elba Elena Diaz Acero 100
- -----------------------------------------------------------------------------------------------
Roberto Carlos Diaz 100
- -----------------------------------------------------------------------------------------------
Silio Antonio Manzanero Lariva 100
- -----------------------------------------------------------------------------------------------
Eduardo Jose Crespo 100
- -----------------------------------------------------------------------------------------------
Josueismael Gomez 100
- -----------------------------------------------------------------------------------------------
Eduardo Palomar Lopez 100
- -----------------------------------------------------------------------------------------------
Miguel Enrique Ravelo Vouteris 100
- -----------------------------------------------------------------------------------------------
Ibain Gregorio Lopez Artiaga 100
- -----------------------------------------------------------------------------------------------
Gabriel Antonio Caraballo Soto 100
- -----------------------------------------------------------------------------------------------
Edgar Jose Maldonado Garcia 100
- -----------------------------------------------------------------------------------------------
Maria Particia Pichardo 100
- -----------------------------------------------------------------------------------------------
Rafael Angel Chavez 100
- -----------------------------------------------------------------------------------------------
Eric David Domingo Azaujo 100
- -----------------------------------------------------------------------------------------------
Maikel Lopez Lopez 100
- -----------------------------------------------------------------------------------------------
Gustavo Heiten Aguylar 100
- -----------------------------------------------------------------------------------------------
Carlos Alfredo Ferreira Moron 100
- -----------------------------------------------------------------------------------------------
Maria Josefa Cheda Saavedra 100
- -----------------------------------------------------------------------------------------------
Hermogenes Francisco Gil Suarez 100
- -----------------------------------------------------------------------------------------------
William Rommel Montes Rojas 100
- -----------------------------------------------------------------------------------------------
Miguel Antonio Flores Vargas 100
- -----------------------------------------------------------------------------------------------
Ruben Silva Boico 100
- -----------------------------------------------------------------------------------------------
On December 21, 2000 we issued 9,000,000 shares of Common Stock to Tak
Hiromoto, owner of Telecom Communications of America, in accordance with Plan
and Agreement of Reorganization dated December 21, 2000. We relied on
exemption provided by Section 4(2) of the Securities Act of 1933, as amended.
On December 21, 2000 Tak Hiromoto transferred 1,000,000 shares of Common Stock
to Mark H. Rhynes for services provided to the company. Tak Hiromoto relied on
exemption provided by Section 4(2) of the Securities Act of 1933, as amended.
ITEM 27. EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
- ------- --------------------------------------------------------
2.1 Plan and Agreement of Reorganization
3.1 Articles of Incorporation - MAS Acquisition XXI Corp.
3.11 Certificate of Incorporation of MAS Acquisition XXI Corp.
3.2 Articles of Amendment of the Article of Incorporation -
MAS Acquisition XXI Corp.
3.5 By-laws
5.1 Opinion of Counsel
10.1 Standard Office Lease Gross
10.2 Standard Industrial/Commercial Multi-Tenant Lease
10.3 Amendment to Lease
10.4 Consulting Agreement
10.5 Inter-Tel.net Network Agreement
10.6 Memorandum of Understanding
23.1 (Included in Exhibit 5.1)
23.2 Consent of Robert G. Ercek, Certified Public Accountants
- ------------------------------------------------------------------------
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range may
be reflected in the form of prospectus filed with Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(iv) Include any additional or changed material information on the plan
of distribution.
(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities offered
and the offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Arcadia, California.
Telecom Communications Inc.
Date: May 30, 2001 By: /s/ Tak Hiromoto
__________________________________
Tak Hiromoto
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, the
registration statement was signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
- --------------------- ------------------------------------ ---------
/s/ Tak Hiromoto Chairman of the Board, President,
- ---------------------- Chief Executive Officer and Director May 30, 2001
Tak Hiromoto
/s/ Elizabeth Hiromoto Treasurer and Director May 30, 2001
- ----------------------
/s/ Robert K. Yasui Director May 30, 2001
- ----------------------
/s/ Mervyn M. Dymally Director May 30, 2001
- ----------------------
/s/ Masato Saiki Marketing Director May 30, 2001
- ----------------------
EXHIBIT 2.1 Merger Agreement
PLAN AND AGREEMENT OF REORGANIZATION
BETWEEN
MAS Acquisition XXI Corp.
(an Indiana corporation)
AND
Ms. Michele Hiromoto dba Telecom Communications of America
This Plan and Agreement of Reorganization is entered into this 21th day of
December, 2000, by and between MAS Acquisition XXI Corp., an Indiana
corporation, with offices at 17 N. Governor Street, Evansville, Indiana 47711,
hereafter referred to as "MAS" and Ms. Michele Hiromoto dba Telecom
Communications of America, a Sole Proprietorship in the state of California,
with offices at 827 S. Broadway, Los Angeles, CA 90014 hereinafter referred
to as "TELCOM".
This Plan of Reorganization is within the meaning of Section 368 (a)(1)(B) of
the Internal Revenue Code of 1986, as amended, MAS will acquire 100% of TELCOM
in exchange for 90% of the authorized but unissued shares of MAS. TELCOM's
business, assets, liabilities, intellectual properties will then become the
properties of MAS.
AGREEMENT
In order to consummate such plan of reorganization, the parties hereto, in
consideration of the mutual agreements and on the basis of the representations
and warranties hereafter set forth, do hereby agree, as follows:
ARTICLE I
1.01. Transfer of TELCOM properties including and not limited to its assets,
liabilities, and intellectual properties and consideration for transfer:
Subject to the terms and conditions of this Agreement, Owner of TELCOM, prior
to the closing date, who shall, at such closing, deliver ownership of TELCOM's
assets, liabilities, and intellectual properties to MAS in exchange for the
stated number of shares of MAS (subject to the provisions of Section 3(a)(9)
of the Securities Act of 1933, as amended) as set forth in 1.02 below.
1.02. Consideration for transfer to MAS: On the closing date, subject to the
terms and conditions of this Agreement, and in full consideration for the
transfer and delivery of TELECOM properties to MAS. MAS shall cause to be
delivered, 90% shares of the authorized but unissued capital stock of MAS.
Said MAS shares when issued will be fully paid and nonassessable. Such shares
shall not be free trading as they are not at this time registered or covered
by any exemption. Said shares will be restricted in nature and said
restriction shall be reflected on the face of all certificates included in the
MAS shares.
ARTICLE II
2.01. Closing: The time of delivery by TELCOM owner of their respective
properties as provided in Paragraph 1.01 of this Agreement having already
taken place, said properties being held by Ms. Michele Hiromoto, as authorized
agent, and the certificate(s) for MAS shares as authorized by the Board of
Directors of MAS being in hand for delivery to Aaron Tsai, as authorized
agent, closing shall be effective with the signing of this Agreement. For
purposes of record, closing shall be effective as of the 21th day of December,
2000, 5 p.m. Central Time.
ARTICLE III
3.01. Representations and Warranties by TELCOM:
(1) TELCOM is a sole proprietor duly organized and validly existing and in
good standing under the laws of the State of California. It has all requisite
sole proprietor power and authority to carry on its business as now being
conducted, to enter into this Agreement and to carry out and perform the terms
and provisions of this Agreement. TELCOM is duly qualified, licensed, or
domesticated and in good standing as a foreign entity authorized to do
business in each jurisdiction wherein the nature of its activities conducted
or the character of its properties make such qualification, licensing, or
domestication necessary.
(2)(a) TELCOM is not presently liable on account of any indebtedness for
borrowed monies, except as reflected on the Balance Sheet described in
Subparagraph (4), below.
(b) There are no outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, convertible securities, or other agreements
or arrangements of any character or nature whatsoever under which TELCOM is or
may be obligated to issue or purchase shares of its business.
(3) Each TELCOM's owner severally and for himself at the time of the Closing
on the Closing Date will be the lawful owner of the properties of TELCOM held
in his name, free and clear of all liens, claims and encumbrances of every
kind. Each owner has full legal right, power, and authority to sell, assign,
and transfer his shares of properties of TELCOM; and the delivery of such
properties to any person pursuant to the provisions of this Agreement will
transfer valid title thereto, free and clear of all liens, encumbrances and
claims of every kind.
(4) TELCOM has furnished MAS with an unaudited Balance Sheet of TELCOM as of
September 30, 2000, hereinafter referred to as the Balance Sheet. Such
financial statement presents fairly the financial condition of TELCOM at such
date. Specifically, but not by way of limitation, the Balance Sheet discloses
all of the debts, liabilities, and obligations of any nature (whether
absolute, accrued, contingent, or otherwise, and whether due or to become due)
of TELCOM at the date thereof.
(5) TELCOM has not, since September 31, 2000:
(a) Incurred any obligations or liabilities, absolute, accrued, contingent, or
otherwise and whether due or to become due, except current liabilities
incurred in the ordinary course of business, none of which adversely affects
the business or prospects of TELCOM.
(b) Discharged or satisfied any liens or encumbrances, or paid any obligation
or liability, absolute, accrued, contingent or otherwise and whether due or to
become due, other than current liabilities shown on the Balance Sheet and
current liabilities incurred since the closing of business on the date of the
Balance Sheet, in each case, in the ordinary course of business;
(c) Declared or made any payment or distribution to its owners or purchased or
redeemed, or obligated itself to purchase or redeem, any of its properties;
(d) Mortgaged, pledged, or subjected to lien, or other encumbrances or
charges, of its assets, tangible or intangible;
(e) Sold or transferred any of its assets except for inventory sold in the
ordinary course of business or canceled debt or claim;
(f) Suffered any damage, destruction, or loss (whether or not covered by
insurance) affecting the properties, business, or prospects of TELCOM, or
waived any rights of substantial value;
(g) Entered into any transaction other than in the ordinary course of
business.
(6) There are no legal actions, suits, arbitration, or other legal or
administrative proceedings pending against TELCOM which would affect it, its
properties, assets, or business. TELCOM is not in default with respect to any
judgment, order or decree of any government agency or instrumentality.
(7) TELCOM has good and marketable title to all of its properties and assets,
including without limitation those reflected in the Balance Sheet and those
used or located on property controlled by TELCOM in its business on the date
of the Balance Sheet and acquired thereafter (except assets sold in the
ordinary course of business), subject to no mortgage, pledge, lien, charge,
security interest, encumbrance, or restriction except those which (a) are
disclosed on the Balance Sheet as securing specified liabilities; or (b) do
not materially adversely affect the use thereof. The building and equipment of
TELCOM are in good condition and repair, reasonable wear and tear excepted.
TELCOM has not been, to the knowledge of any officer of TELCOM, threatened
with any action or proceeding under any building or zoning ordinance,
regulation or law.
(8) Prior to Closing Date, TELCOM will have delivered to MAS a separate
Schedule of Assets, specifically referring to this paragraph, containing:
(a) A true and complete aged list of accounts receivable (if any) as of a date
no earlier than the Closing Date.
(b) A true and complete list of all capitalized machinery, tools, equipment,
and rolling stock owned by TELCOM, setting forth all liens, claims,
encumbrances, charges, restrictions, covenants, and conditions.
(c) A complete schedule of all fire and other casualty and liability policies
of TELCOM in effect at the time of delivery of said schedule.
(9) TELCOM is not a party to, or otherwise bound by, any written or oral:
(a) Contract or agreement not made in the ordinary course of business;
(b) Lease with respect to any property, real or personal, whether as lessor or
lessee, except as reflected in the Balance Sheet.
(c) Contract or other commitment continuing for a period of more than thirty
days and which is not terminable without cost or other liability to TELCOM or
its successor except as shown on the Balance Sheet.
TELCOM has in all respects performed all obligations required to be performed
by it to date and is not in material default under any of the contracts,
agreements, leases, documents, or other arrangement to which it is a party or
by which it is otherwise bound.
(10) The books of account and ledgers of TELCOM are complete at Closing and
also correct, and there have been no transactions involving the business of
TELCOM which properly should have been set forth in said respective books,
other then those set forth therein.
(11) Since the Balance Sheet there has not been any material adverse change
in, or event or condition materially and adversely affecting the condition
(financial or otherwise) of the properties, assets or liabilities of TELCOM.
3.02 MAS represents and warrants to TELCOM and its owners as follows:
(1) MAS is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Indiana.
(2) MAS is considered a non-reporting company by the SEC.
(3) MAS's authorized capital stock consists of 80,000,000 shares of common
stock and 20,000,000 shares of preferred stock, par value $.001. Immediately
prior to the completion of this Agreement there are 8,272,400 shares of common
stock validly issued and outstanding.
(4) The execution, delivery, and performance of this Agreement has been duly
authorized by all requisite corporate action. This Agreement constitutes a
valid and binding obligation of MAS in accordance with its terms. No provision
of the Articles of Incorporation and the amendments thereto, by-laws and any
amendments thereto, or of any contract to which MAS is a party or otherwise
bound, which prevents MAS from delivering good title to its shares of such
capital stock in the manner contemplated hereunder.
(5) MAS has furnished TELCOM and its owners with a statement of management,
and previous management, that there are little or no assets and no
liabilities, and that the corporation, and its predecessor have had no
activities in which it could have incurred any liabilities since the September
30, 2000 financials.
(6) All of the MAS common shares to be issued to TELCOM owners will, when so
issued, be validly issued and outstanding, fully paid and non-assessable.
(7) Since the financial condition statement, there has not been any material
or adverse change in, or event or condition materially and adversely affecting
the condition of MAS.
ARTICLE IV
4.01 TELCOM covenants that all statements made herein and hereto are true and
correct and may be relied upon by MAS.
4.02. TELCOM covenants and warrants that all books, records and financial
statements employed or used in connection with this Agreement are true and
correct and that the right to examine same has been extended to MAS and its
representatives.
4.03. Federal Securities Act-Unregistered Stock:
(1) Each TELCOM owners acknowledges that the shares of MAS common stock to be
delivered to him pursuant to this Agreement have not and are not registered
under the 1933 Act, as amended, and that accordingly such stock is not fully
transferable except as permitted under various exemptions contained in the
1933 Act, and the rules of the Securities and Exchange Commission interpreting
said Act. The provisions contained in this paragraph are intended to ensure
compliance with the 1933 Act, as amended.
(2) Each TELCOM owners agrees that the certificates evidencing the shares he
will receive shall contain substantially the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THE SAME ARE REGISTERED UNDER THE
SECURITY ACT OF 1933, OR THE COMPANY RECEIVES AN OPINION FROM COUNSEL
SATISFACTORY TO IT THAT SUCH REGISTRATION IS NOT REQUIRED FOR SALE OR TRANSFER
OR THAT THE SHARES HAVE BEEN LEGALLY SOLD IN BROKER TRANSACTIONS PURSUANT TO
RULE 144 OF THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE
COMMISSION PROMULGATED UNDER SECURITY ACT OF 1933."
ARTICLE V
5.01 Conditions Precedent:
(1) The properties including assets, liabilities, and intellectual properties
to transfer by the TELCOM owners at the closing shall constitute 100 percent
of all of the properties including but not limited to assets, liabilities, and
intellectual properties of TELCOM.
ARTICLE VI
6.01 Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.02. This Agreement shall be construed under and in accordance with the laws
of the State of Indiana.
6.03. This Agreement shall be binding on and inure to the benefit of and be
enforceable by the TELCOM owners and MAS, their respective heirs, executors,
administrators, legal representatives, successors, and assigns except as
otherwise expressly provided herein.
6.04. Should there be any litigation arising from this transaction, the
prevailing party shall be entitled to recover reasonable attorney's fees from
the other party, which fees may be set by the court in the trial of such
action or may be enforced in a separate action brought for that purpose.
These fees shall be in addition to any other relief which may be awarded.
6.05. TELECOM and MAS represent that each have taken the necessary due
diligence on
the other party and is not relying on any representation made by a third
party.
6.06. Indemnification - The offer and sale of securities of MAS is made a
registered broker-dealer. TELCOM agrees to indemnify and hold harmless the
broker-dealer for any claims, liabilities, damages or causes of action, known
or unknown, as result of any misrepresentation made by MAS to TELCOM in
connection with this Plan and Agreement of Reorganization.
IN WITNESS WHEREOF, the parties hereto have executed this Plan and Agreement
of Reorganization on the date first set forth, at 827 S. Broadway, Los
Angeles, CA 90014
FOR MAS ACQUISITION XXI CORP.,
an Indiana Corporation
by: /s/ Aaron Tsai
----------------------
Aaron Tsai, President
FOR Ms. Michele Hiromoto dba Telecom Communications of America
by: /s/ Michele Hiromoto
-----------------------------------------
Michele Hiromoto - Owner and Proprietor
EXHIBIT 3.1 Articles of Incorporation - MAS Acquisition XXI Corp.
[SEAL]
ARTICLES OF INCORPORATION SUE ANNIE GILROY
State form 4159 (R10 / 8-95) SECRETARY OF STATE
Approved by State Board of Accounts 1995 CORPORATIONS DIVISION
302 W. Washington St., Rm.E018
Indianapolis, IN 46204
Telephone: (317) 232-6576
INSTRUCTIONS: Use 8 1/2" x 11" white paper Indiana Code 23-1-21-2
for inserts.
Present original and two (2) Filing Fee: $90.00
copies to address in upper right
hand corner of this form.
Please TYPE of PRINT
Upon completion of filing, the Secretary of State will issue
a receipt
ARTICLES OF INCORPORATION
The undersigned, desiring to form a corporation (hereinafter referred to as
"Corporation") pursuant to the provision of:
X Indiana Business Corporation Law Indiana Professional Corporation
Act 1983, Indiana Code 23-1.5-1-
As amended, executes the following 1, et seq. (Professional
Articles of Incorporation: corporations must include
Certificate of Registration.)
ARTICLE I - NAME AND PRINCIPAL OFFICE
Name of Corporation (the name must include the word "Corporation",
"Incorporated", "Limited", "Company" or an abbreviation thereof.)
MAS Acquisition XXI Corp.
Principal Office: The address of the principal office of the Corporation
is:
Post office address City State ZIP Code
1922 North Bedford Ave. Evansville IN 47711
ARTICLE II - REGISTERED OFFICE AND AGENT
Registered Agent: The name and street address of the Corporation's
Registered Agent and Registered Office for service of process are:
Name of Registered Agent
Aaron Tsai
Address of Registered Office (street or building) City ZIP Code
1922 North Bedford Ave. Evansville Indiana 47711
ARTICLE III - AUTHORIZED SHARES
Number of shares of the
Corporation is authorized to 20 million Preferred shares par value $0.001
issue: 80 million Common shares par value $0.001
If there is more than one class of shares, shares with rights and
preferences, list such information as "Exhibit A."
ARTICLE IV - INCORPORATIONS
[the name(s) and address(es) of the incorporators of the corporation]
NUMBER AND STREET
NAME OR BUILDING CITY STATE ZIP CODE
Aaron Tsai 1922 North Bedford Evansville IN 47711
Ave.
In Witness Whereof, the undersigned being all the incorporators of said
Corporation execute these Article of Incorporation and verify, subject to
penalties of perjury, that the statements contained herein are true,
this 28th day of December , 1996.
Signature /s/ Aaron Tsai Printed name Aaron Tsai
Signature Printed name
Signature Printed name
The instrument was prepared by: (name)
Aaron Tsai
Address (number, street, city and state) ZIP code
1922 North Bedford Ave., Evansville IN 47711
EXHIBIT 3.11 Certificate of Incorporation of MAS Acquisition XXI Corp.
Articles of Incorporation - MAS Acquisition XXI Corp.
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
MAS ACQUISITION XXI CORP.
I, SUE ANN GILROY, Secretary of State of Indiana, hereby certify that Articles
of Incorporation of the above corporation have been presented to me at my
office accompanied by the fees prescribed by law; that I have found such
Articles conform to law; all as prescribed by the provisions of the Indiana
Business Corporation Law, as amended.
NOW, THEREFORE, I hereby issue to such corporation this Certificate of
Incorporation, and further certify that its corporate existence will begin
January 06, 1997.
[SEAL] In Witness Whereof, I have hereunto set my
hand and affixed the seal of the State of
Indiana, at the City of Indianapolis, this
Sixth day of January, 1997.
/s/ Sue Anne Gilroy
SUE ANNE GILROY, Secretary of State
EXHIBIT 3.2 Articles of Amendment of the Article of Incorporation -
MAS Acquisition XXI Corp.
ARTICLES OF AMENDMENT OF THE SUE ANNE GILROY
ARTICLES OF INCORPORATION SECRETARY OF STATE
State Form 38333 (R8 /12-96) CORPORATIONS DIVISION
Approved by State Board of Accounts 1996 302W. Washington St.,Rm. E018
Indianapolis, IN 46204
Telephone: (317) 232-6676
INSTRUCTIONS: Use 8 1/2" x 11" white paper Indiana Code 23-1-38-1
et seq.
for inserts Present original and two copies Filing Fee: $30.00
to address in upper right hand corner of this
Please TYPE or PRINT
ARTICLES OF AMENDMENT OF THE
ARTICLES OF INCORPORATION OF:
Name of Corporation Date of incorporation
MAS Acquisition XXI Corp. January 6, 1997
The undersigned officers of the above referenced Corporation
(hereinafter referred to as the 'Corporation) existing pursuant to the
provisions of: (indicate appropriate act)
X Indiana Business Corporation Law
Indiana Professional Corporation Act of 1983
as amended (hereinafter referred to as the "Act'), desiring to give
notice of corporate action effectuating amendment of certain
provisions of its Articles of Incorporation, certify the following
facts:
ARTICLE I Amendment(s)
The exact text of Article(s) I of the
Articles
(NOTE: If amending the name of corporation, write Article "I"
in space above and write "The name of the Corporation is below.)
The name of the Corporation is Telecom Communications Inc.
ARTICLE II
Date of each amendment's adoption:
December15, 2000
(Continued on the reverse side)
ARTICLE III Manner of Adoption and Vote
Mark applicable section: NOTE - Only in limited situations does
Indiana law permit an Amendment without shareholder approval. Because
a name change requires shareholder approval, Section 2 must be marked
and either A or B completed.
SECTION 1 This amendment was adopted by the Board of Directors or
incorporators and shareholder action was not required.
X SECTION 2 The shareholders of the Corporation entitled to vote in respect
to the amendment adopted the proposed amendment. The amendment
was adopted by: (Shareholder approval maybe by either A or B.)
A. Vote of such shareholders during a meeting called by the
Board of Directors. The result of such vote is as follows:
8,272,400 Shares entitled to vote.
8,250,000 Number of shares represented at the meeting.
8,250,000 Shares voted in favor.
0 Shares voted against.
B. Unanimous written consent executed on December 13th, 2000
and signed by all shareholders entitled to vote.
ARTICLE IV Compliance with Legal Requirements
The manner of the adoption of the Articles of Amendment and the vote
by which they were adopted constitute full legal compliance with the
provisions of the Act, the Articles of Incorporation, and the By-Laws
of the Corporation.
I hereby verify, subject to the penalties of perjury, that the statements
contained herein are true this 13th day of December 2000.
Signature of current officer or Printed name of officer or
chairman
chairman of the board of the board
/s/ Aaron Tsai Aaron Tsai
Signature's title
President
EXHIBIT 3.5 By-laws
Telecom Communications Inc.
(An Indiana Corporation)
BYLAWS
ARTICLE ONE: NAME AND OFFICES
1.01 Name. The name of the Corporation is Telecom Communications Inc.,
hereinafter referred to as the "Corporation"
1.02 Registered Office and Agent. The Corporation shall establish,
designate and maintain a registered office and agent in the State of Indiana.
The registered office of the Corporation shall be at 827 S. Broadway, Los
Angeles, CA 90014.
1.03 Change of Registered Office or Agent. The Corporation may change its
registered office or change its registered agent, or both, as the Board of
Directors may from time to time determine.
1.04 Other Offices. The Corporation may have offices at such places both
within and without the State of Indiana, or within or without the United
States and in any foreign countries as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE TWO: SHAREHOLDERS
2.01 Place of Meetings. All meetings of the Shareholders for the election
of Directors and for any other purpose may be held at such time and place,
within or without the State of Indiana, as stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
2.02 Annual Meeting. An annual meeting of the Shareholders for the
election of Directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the first Monday
in January, beginning in 1997, or such other date as may be selected by the
Board of Directors from time to time. At the meeting, the Shareholders shall
elect Directors and transact such other business as may properly be brought
before the meeting.
2.03 Special Meeting. Special meetings of the Shareholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the Articles
of Incorporation, or by these Bylaws, may be called by the President, the
Secretary, the Board of Directors, or the holders of not less than one tenth
of all the shares entitled to vote at the meeting. Business transacted at a
special meeting shall be confined to the subjects stated in the notice of the
meeting.
2.04 Notice. Written or printed notice stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten nor more
than sixty days before the date of the meeting, either personally or by mail,
by or at the direction of the person calling the meeting, to each Shareholder
of record entitled to vote at the meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail addressed to
the Shareholder at his address as it appears on the stock transfer books of
the Corporation, with postage thereon prepaid.
2.05 Voting List. At least ten days before each meeting of Shareholders a
complete list of the Shareholders entitled to vote at such meeting, arranged
in alphabetical order and setting forth the address of each and the number of
voting shares held by each, shall be prepared by the Officer or agent having
charge of the stock transfer books. Such list, for a period of ten days prior
to such meeting, shall be kept on file at the registered office of the
Corporation and shall be subject to inspection by any Shareholder during the
whole time of the meeting.
2.06 Quorum. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
Shareholders for the transaction of business except as otherwise provided by
statute, by the Articles of Incorporation or by these Bylaws. If a quorum is
not present or represented at a meeting of the Shareholders, the Shareholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum is present or represented. At such adjourned
meeting at which a quorum is present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
2.07 Majority Vote: Withdrawal of Quorum. When a quorum is present at any
meeting, the vote of the holders of a majority of the shares having voting
power, present in person or represented by proxy, shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of the statutes or of the Articles of Incorporation or of these
Bylaws, a different vote is required, in which case such express provision
shall govern and control the decision of such question.
2.08 Method of Voting. Each outstanding share, regardless of class, shall
be entitled to one vote on each matter subject to a vote at a meeting of
Shareholders, except to the extent that the voting rights of the shares of any
class or classes are limited or denied by the Articles of Incorporation. The
Board of Directors may, in the future, at their discretion, direct that voting
be cumulative, according to any plan adopted by the Board. At any meeting of
the Shareholders, every Shareholder having the right to vote may vote either
in person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney-in-fact.
No proxy shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy. Each proxy shall be revocable unless
expressly provided therein to be irrevocable or unless otherwise made
irrevocable by law. Each proxy shall be filed with the Secretary of the
Corporation prior to, or at the time of, the meeting. Voting for Directors
shall be in accordance with Section 3.06 of these Bylaws. Any vote may be
taken via voice or by show of hands unless someone entitled to vote objects,
in which case written ballots shall be used. Cumulative voting is not
prohibited.
2.09 Record Date: Closing Transfer Books. The Board of Directors may fix
in advance a record date for the purpose of determining Shareholders entitled
to notice of, or to vote at, a meeting of Shareholders, such record date to be
not less than ten nor more than sixty days prior to such meeting; or the Board
of Directors may close the stock transfer books for such purpose for a period
of not less than ten nor more than sixty days prior to such meeting. In the
absence of any action by the Board of Directors, the date upon which the
notice of the meeting is mailed shall be the record date.
2.10 Action Without Meeting. Unless otherwise provided in the Certificate
of Incorporation, any action required to be taken at any annual or special
meeting of Shareholders or any action which may be taken at any annual or
special meeting of Shareholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, is signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.
Such consent or consents shall have the same force and effect as the requisite
vote of the Shareholders at a meeting. The signed consent or consents, or a
copy or copies thereof, shall be placed in the minute book of the Corporation.
Such consents may be signed in multiple counterparts, each of which shall
constitute an original for all purposes, and all of which together shall
constitute the requisite written consent or consents of the Shareholders, if
applicable. A telegram, telex, cablegram, or similar transaction by a
Shareholder, or a photographic, photostatic, facsimile or similar reproduction
of a writing signed by a Shareholder, shall be regarded as signed by the
Shareholder for purposes of this Section 2.10.
2.11 Order of Business at Meetings. The order of business at annual
meetings, and so far as practicable at other meetings of Shareholders, shall
be as follows unless changed by the Board of Directors:
(a) Call to order
(b) Proof of due notice of meeting
(c) Determination of quorum and, if necessary, examination of proxies
(d) Announcement of availability of voting list (See Bylaw 2.05)
(e) Announcement of distribution of annual reports (See Bylaw 8.03)
(f) Reading and disposing of minutes of last meeting of Shareholders
(g) Reports of Officers and committees, if deemed necessary
(h) Appointment of voting inspectors
(I) Unfinished business
(j) New business
(k) Nomination of Directors
(l) Opening of polls for voting
(m) Recess
(n) Reconvening; closing of polls
(o) Report of voting inspectors
(p) Other business
(q) Adjournment
ARTICLE THREE: DIRECTORS
3.01 Management. The business and affairs of the Corporation shall be
managed by the Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not, by statute or
by the Articles of Incorporation or by these Bylaws, directed or required to
be exercised or done by the Shareholders.
3.02 Number; Qualification; Election; Term. The Board of Directors shall
consist of not less than one member nor more than five members; provided
however, the Board of Directors in effect as of the date of effectiveness of
these Bylaws consists of three members. A Director need not be a Shareholder
or resident of any particular state or country. The Directors shall be
elected at the annual meeting of the Shareholders, except as provided in Bylaw
3.03 and 3.05. Each Director elected shall hold office until his successor is
elected and qualified. Each person elected as a Director shall be deemed to
have qualified unless he states his refusal to serve shortly after being
notified of his election.
3.03 Change in Number. The number of Directors may be increased or
decreased from time to time by amendment to the Bylaws, but no decrease shall
have the effect of shortening the term of any incumbent Director. Any
directorship to be filled by reason of an increase in the number of Directors
shall be filled by the Board of Directors for a term of office continuing only
until the next election of one or more Directors by the Shareholders; provided
that the Board of Directors may not fill more than two such directorships
during the period between any two successive annual meetings of Shareholders.
3.04 Removal. Any Director may be removed either for or without cause at
any special or annual meeting of Shareholders by the affirmative vote of a
majority, in number of shares, of the Shareholders present in person or by
proxy at such meeting and entitled to vote for the election of such Director
if notice of intention to act upon such matter is given in the notice calling
such meeting.
3.05 Vacancies. Any unfilled directorship position, or any vacancy
occurring in the Board of Directors (by death, resignation, removal or
otherwise), shall be filled by an affirmative vote of a majority of the
remaining Directors though less than a quorum of the Board of Directors.
A Director elected to fill a vacancy shall be elected for the unexpired term
of his predecessor in office, except that a vacancy occurring due to an
increase in the number of Directors shall be filled in accordance with Section
3.03 of these Bylaws.
3.06 Election of Directors. Directors shall be elected by majority vote.
3.07 Place of Meeting. Meetings of the Board of Directors, regular or
special, may be held either within or without the State of Indiana.
3.08 First Meeting. The first meeting of each newly elected Board of
Directors shall be held without further notice immediately following the
annual meeting of Shareholders, and at the same place, unless the Directors
change such time or place by unanimous vote.
3.09 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place as determined by the Board of
Directors.
3.10 Special Meetings. Special meetings of the Board of Directors may be
called by the President or by any Director on three days notice to each
Director, given either personally or by mail or by telegram. Except as
otherwise expressly provided by statute, or by the Articles of Incorporation,
or by these Bylaws, neither the business to be transacted at, nor the purpose
of, any special meeting of the Board of Directors need be specified in a
notice or waiver of notice.
3.11 Majority Vote. At all meetings of the Board of Directors, a majority
of the number of Directors then elected and qualified shall constitute a
quorum for the transaction of business. The act of a majority of the
Directors present at any meeting at which a quorum is present shall be the act
of the Board of Directors, except as otherwise specifically provided by
statute or by the Articles of Incorporation or by these Bylaws.
If a quorum is not present at a meeting of the Board of Directors, the
Directors present thereat my adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
Each Director who is present at a meeting will be deemed to have assented to
any action taken at such meeting unless his dissent to the action is entered
in the minutes of the meeting, or unless he files his written dissent thereto
with the Secretary of the meeting or forwards such dissent by registered mail
to the Secretary of the Corporation immediately after such meeting.
3.12 Compensation. By resolution of the Board of Directors, the Directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors and may be paid a fixed sum for attendance of each meeting of the
Board of Directors, or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of any executive, special or
standing committees established by the Board of Director, may, by resolution
of the Board of Directors, be allowed like compensation and expenses for
attending committee meetings.
3.13 Procedure. The Board of Directors shall keep regular minutes of its
proceedings. The minutes shall be placed in the minute book of the
Corporation.
3.14 Interested Directors, Officers and Shareholders.
(a) If Paragraph (b) is satisfied, no contract or other transaction
between the Corporation and any of its Directors, Officers or Shareholders (or
any corporation or firm in which any of them are directly or indirectly
interested) shall be invalid solely because of such relationship or because of
the presence of such Director, Officer or Shareholder at the meeting
authorizing such contract or transaction, or his participation in such meeting
or authorization.
(b) Paragraph (a) shall apply only if:
(1) The material facts of the relationship or interest of each such
Director, Officer or Shareholder are known or disclosed:
(A) To the Board of Directors and it nevertheless authorizes or
ratifies the contract or transaction by a majority of the
Directors present, each such interested Director to be
counted in determining whether a quorum is present but not
in calculating the majority necessary to carry the vote; or
(B) To the Shareholders and they nevertheless authorize or
ratify the contract or transaction by a majority of the
shares present, each such interested person to be counted
for a quorum and voting purposes; or
(2) The contract or transaction is fair to the Corporation as of the
time it is authorized or ratified by the Board of Directors, a
committee of the Board or the Shareholders.
(c) This provision shall not be construed to invalidate a contract or
transaction which would be valid in the absence of this
provision.
3.15 Certain Officers. The President shall be elected from among the
members of the Board of Directors.
3.16 Action Without Meeting. Any action required or permitted to be taken
at a meeting of the Board of Directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all
members of the Board of Directors. Such consent shall have the same force and
effect as unanimous vote of the Board of Directors at a meeting. The signed
consent, or a signed copy thereof, shall be placed in the minute book of the
Corporation. Such consents may be signed in multiple counterparts, each of
which shall constitute an original for all purposes, and all of which together
shall constitute the unanimous written consent of the Directors.
ARTICLE FOUR: EXECUTIVE COMMITTEE
4.01 Designation. The Board of Directors may, by resolution adopted by a
majority of the whole Board, designate an Executive Committee from among its
members.
4.02 Number; Qualification; Term. The Executive Committee shall consist of
one or more Directors. The Executive Committee shall serve at the pleasure of
the Board of Directors.
4.03 Authority. The Executive Committee shall have and may exercise the
authority of the Board of Directors in the management of the business and
affairs of the Corporation except where action of the full Board of Directors
is required by statute or by the Articles of Incorporation, and shall have
power to authorize the seal of the Corporation to be affixed to all papers
which may require it; except that the Executive Committee shall not have
authority to amend the Articles of Incorporation; approve a plan of merger or
consolidation; recommend to the Shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the Corporation other
than in the usual and regular course of its business; recommend to the
Shareholders the voluntary dissolution of the Corporation; amend, alter, or
repeal the Bylaws of the Corporation or adopt new Bylaws for the Corporation;
fill any vacancy in the Board of Directors or any other corporate committee;
fix the compensation of any member of any corporate committee; alter or repeal
any resolution of the Board of Directors; declare a dividend; or authorized
the issuance of shares of the Corporation. Each Director shall be deemed to
have assented to any action of the Executive Committee unless, within seven
days after receiving actual or constructive notice of such action, he delivers
his written dissent thereto to the Secretary of the Corporation.
4.04 Change in Number. The number of Executive Committee members may be
increased or decreased (but not below one) from time to time by resolution
adopted by a majority of the Board of Directors.
4.05 Removal. Any member of the Executive Committee may be removed by the
Board of Directors by the affirmative vote of a majority of the Board of
Directors whenever in its judgment the best interests of the Corporation will
be served thereby.
4.06 Vacancies. A vacancy occurring in the Executive Committee (by death,
resignation, removal or otherwise) shall be filled by the Board of Directors
in the manner provided for original designation in Section 4.01 above.
4.07 Meetings. Time, place and notice, if any, of Executive Committee
meetings shall be as determined by the Executive Committee.
4.08 Quorum: Majority Vote. At meetings of the Executive Committee, a
majority of the members shall constitute a quorum for the transaction of
business. The act of a majority of the members present at any meeting at
which a quorum is present shall be the act of he Executive Committee, except
as otherwise specifically provided by statute or by the Articles of
Incorporation or by these Bylaws. If a quorum is not present at a meeting of
the Executive Committee, the members present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum is present.
4.09 Compensation. By resolution of the Board of Directors, the members of
the Executive Committee may be paid their expenses, if any, of attendance at
each meeting of the Executive Committee and may be paid a fixed sum for
attendance at each meeting of the Executive Committee or a stated salary as a
member thereof. No such payment shall preclude any member from serving the
Corporation in any other capacity and receiving compensation therefor.
4.10 Procedure. The Executive Committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required. The
minutes of the proceedings of the Executive Committee shall be placed in the
minute book of the Corporation.
4.11 Action Without Meeting. Any action required or permitted to be taken
at a meeting of the Executive Committee may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all the
members of the Executive Committee. Such consent shall have the same force
and effect as a unanimous vote at a meeting. The signed consent, or a signed
copy thereof, shall be placed in the minute book. Such consents may be signed
in multiple counterparts, each of which shall constitute an original for all
purposes, and all of which together shall constitute the unanimous written
consent of the Directors.
4.12 Responsibility. The designation of an Executive Committee and the
delegation of authority to it shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
ARTICLE FIVE: NOTICE
5.01 Method. Whenever by statute or the Articles of Incorporation or these
Bylaws notice is required to be given to any Director or Shareholder and no
provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given:
(a) in writing, by mail, postage prepaid, addressed to such Director
or Shareholder at such address as appears on the books of the
Corporation; or
(b) by any other method permitted by law.
Any notice required or permitted to be given by mail shall be deemed to be
given at the time it is deposited in the United States mail.
5.02 Waiver. Whenever, by statute or the Articles of Incorporation or
these Bylaws, notice is required to be given to a Shareholder or Director, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated in such notice, shall be
equivalent to the giving of such notice. Attendance of a Director at a
meeting shall constitute a waiver of notice of such meeting except where a
Director attends for the express purpose of objecting to the transaction of
any business on the grounds that the meeting is not lawfully called or
convened.
5.03 Telephone Meetings. Shareholders, Directors, or members of any
committee, may hold any meeting of such Shareholders, Directors, or committee
by means of conference telephone or similar communications equipment which
permits all persons participating in the meeting to hear each other. Actions
taken at such meeting shall have the same force and effect as a vote at a
meeting in person. The Secretary shall prepare a memorandum of the actions
taken at conference telephone meetings.
ARTICLE SIX: OFFICERS AND AGENTS
6.01 Number: Qualification: Election: Term.
(a) The Corporation shall have:
(1) A Chairman of the Board (should the Board of Directors so
choose to select), a President, a Vice-President, a
Secretary and a Treasurer, and
(2) Such other Officers (including one or more Vice-
Presidents, and assistant Officers and agents) as the
Board of Directors authorizes from time to time.
(b) No Officer or agent need be a Shareholder, a Director or a
resident of Indiana except as provided in Sections 3.15 and 4.02
of these Bylaws.
(c) Officers named in Section 6.01(a)(1) above shall be elected by
the Board of Directors on the expiration of an Officer's term or
whenever a vacancy exists. Officers and agents named in Section
6.01 (a)(2) may be elected by the Board of Directors at any
meeting.
(d) Unless otherwise specified by the Board at the time of election
or appointment, or in an employment contract approved by the
Board, each Officer's and agent's term shall end at the first
meeting of Directors after the next annual meeting of
Shareholders. He shall serve until the end of his term or, if
earlier, his death, resignation or removal.
(e) Any two or more offices may be held by the same person.
6.02 Removal and Resignation. Any Officer or agent elected or appointed by
the Board of Directors may be removed with or without cause by a majority of
the Directors at any regular or special meeting of the Board of Directors.
Any Officer may resign at any time by giving written notice to the Board of
Directors or to the President or Secretary.
Any such resignation shall take effect upon receipt of such notice if
no date is specified in the notice, or, if a later date is specified in the
notice, upon such later date; and unless otherwise specified in the notice,
the acceptance of such resignation shall not be necessary to make it
effective. The removal of any Officer or agent shall be without prejudice to
the contract rights, if any, of the person so removed. Election or
appointment of an Officer or agent shall not of itself create contract rights.
6.03 Vacancies. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal or otherwise) may be filled by the Board of
Directors.
6.04 Authority. Officers shall have full authority to perform all duties
in the management of the Corporation as are provided in these Bylaws or as may
be determined by resolution of the Board of Directors from time to time not
inconsistent with these Bylaws.
6.05 Compensation. The compensation of Officers and agents shall be fixed
from time to time by the Board of Directors.
6.06 Chairman of the Board. The Chairman of the Board, if any, shall
preside at all meetings of the Board of Directors and shall exercise and
perform such other powers and duties as may be assigned to him by the Board of
Directors or prescribed by the Bylaws.
6.07 Executive Powers. The Chairman of the Board, if any, and the
President of the Corporation respectively, shall, in the order of their
seniority, unless otherwise determined by the Board of Directors or otherwise
are positions held by the same person, have general and active management of
the business and affairs of the Corporation and shall see that all orders and
resolutions of the Board are carried into effect.
They shall perform such other duties and have such other authority and
powers as the Board of Directors may from time to time prescribe. Within this
authority and in the course of their respective duties the Chairman of the
Board, if any, and the President of the Corporation, respectively, shall have
the general authority to:
(a) Conduct Meetings. Preside at all meetings of the Shareholders
and at all meetings of the Board of Directors, and shall be ex
official members of all the standing committees, including the
Executive Committee, if any.
(b) Sign Share Certificates. Sign all certificates of stock of the
Corporation, in conjunction with the Secretary or Assistant
Secretary, unless otherwise ordered by the Board of Directors.
(c) Execute Instruments. When authorized by the Board of Directors
or required by law, execute, in the name of the Corporation,
deeds, conveyances, notices, leases, checks, drafts, bills of
exchange, warrants, promissory notes, bonds, debentures,
contracts, and other papers and instruments in writing, and
unless the Board of Directors orders otherwise by resolution,
make such contracts as the ordinary conduct of the Corporation's
business requires.
(d) Hire and Discharge Employees. Subject to the approval of the
Board of Directors, appoint and remove, employ and discharge, and
prescribe the duties and fix the compensation of all agents,
employees and clerks of the Corporation other than the duly
appointed Officers, and, subject to the direction of the Board of
Directors, control all of the Officers, agents and employees of
the Corporation.
6.08 Vice-Presidents. The Vice-Presidents, if any, in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in
the absence or disability of the President, perform the duties and have the
authority and exercise the powers of the President. They shall perform such
other duties and have such other authority and powers as the Board of
Directors may from time to time prescribe or as the senior Officers of the
Corporation may from time to time delegate.
6.09 Secretary. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the Shareholders and record all votes and
minutes of all proceedings in a book to be kept for that purpose, and shall
perform like duties for the Executive Committee when required. He shall:
(a) give, or cause to be given, notice of all meetings of the
Shareholders and special meetings of the Board of Directors;
(b) keep in safe custody the Seal of the Corporation and, when
authorized by the Board of Directors or the Executive Committee,
affix the same to any instrument requiring it, and when so
affixed, it shall be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary. He shall
be under the supervision of the senior Officers of the
Corporation;
(c) perform such other duties and have such other authority and
powers as the Board of Directors may from time to time prescribe
or as the senior Officers of the Corporation may from time to
time delegate.
6.10 Assistant Secretaries. The Assistant Secretaries, if any, in the
order of their seniority, unless otherwise determined by the Board of
Directors, shall, in the absence or disability of the Secretary, perform the
duties and have the authority and exercise the powers of the Secretary. They
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe or as the senior Officers of the
Corporation may from time to time delegate.
6.11 Treasurer. The Treasurer shall:
(a) have the custody of the corporate funds and securities and shall
keep full and accurate accounts of all income, expense, receipts
and disbursement of the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the
Board of Directors.
(b) disburse the funds of the Corporation as may be ordered by the
Board of Directors, taking proper vouchers for such
disbursements, and
(c) render to the senior Officers of the Corporation and Directors,
at the regular meeting of the Board, or whenever they may request
it, accounts of all his transactions as Treasurer and of the
financial condition of the Corporation.
If required by the Board of Directors, he shall:
(a) give the Corporation a bond in such form, in such sum, and with
such surety or sureties as satisfactory the Board, for the
faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books,
paper, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Corporation.
(b) perform such other duties and have such other authority and
powers as the Board of Directors may from time to time prescribe
or as the senior Officers of the Corporation may from time to
time delegate.
6.12 Assistant Treasurers. The Assistant Treasurers, if any, in the order
of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer. They shall perform such other duties
and have such other powers as the Board of Directors may from time to time
prescribe or as the senior Officers of the Corporation may from time to time
delegate.
ARTICLE SEVEN: CERTIFICATE AND TRANSFER REGULATIONS
7.01 Certificates. Certificates in such form as may be determined by the
Board of Directors shall be delivered, representing all shares to which
Shareholders are entitled. Certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued. Each
certificate shall state on the face thereof that the Corporation is organized
under the laws of the State of Indiana, the holder's name, the number and
class of shares, the par value of such shares or a statement that such shares
are without par value, and such other matters as may be required by law.
They shall be signed by the President or a vice-president and either
the Secretary or Assistant Secretary or such other Officer or Officers as the
Board of Directors designates, and may be sealed with the Seal of the
Corporation or a facsimile thereof. If any certificate is countersigned by a
transfer agent, or an assistant transfer agent, or registered by a registrar
(either of which is other than the Corporation or an employee of the
Corporation), the signature of any such Officer may be a facsimile thereof. If
any certificate is countersigned by a transfer agent, or an assistant transfer
agent, or registered by a registrar (either of which is other than the
Corporation or an employee of the Corporation), the signature of any such
Officer may be a facsimile thereof.
7.02 Issuance of Certificates. Shares both treasury and authorized but
unissued may be issued for such consideration (not less than par value) and to
such persons as the Board of Directors determines from time to time. Shares
may not be issued until the full amount of the consideration, fixed as
provided by law, has been paid. In addition, Shares shall not be issued or
transferred until such additional conditions and documentation as the
Corporation (or its transfer agent, as the case may be) shall reasonably
require, including without limitation, the surrender of such stock certificate
or certificates of proper evidence of succession, assignment or other
authority to obtain transfer thereof, as the circumstances may require, and
such legal opinions with reference to the requested transfer as shall be
required by the Corporation (or its transfer agent) pursuant to the provisions
of these Bylaws and applicable law, shall have been satisfied.
7.03 Legends on Certificates.
(a) Shares in Classes or Series. If the Corporation is authorized to
issue shares of more than one class, the certificates shall set
forth, either on the face or back of the certificate, a full or
summary statement of all of the designations, preferences,
limitations relative rights of the shares of such class and, if
the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and
preferences of the shares of each such series so far as the same
have been fixed and determined, and the authority of the Board of
Directors to fix and determine the relative rights and
preferences of subsequent series. In lieu of providing such a
statement in full on the certificate, a statement on the face or
back of the certificate may provide that the Corporation will
furnish such information to any shareholder without charge upon
written request to the Corporation at its principal place of
business or registered office and that copies of the information
are on file in the office of the Secretary of State.
(b) Restriction on Transfer. Any restrictions imposed by the
Corporation on the sale or other disposition of its shares and on
the transfer thereof may be copied at length or in summary form
on the face, or so copied on the back and referred to on the
face, of each certificate representing shares to which the
restriction applies. The certificate may, however, state on the
face or back that such a restriction exists pursuant to a
specified document and that the Corporation will furnish a copy
of the document to the holder of the certificate without charge
upon written request to the Corporation at its principal place of
business, or refer to such restriction in any other manner
permitted by law.
(c) Preemptive Rights. Any preemptive rights of a Shareholder to
acquire unissued or treasury shares of the Corporation which are
or may at any time be limited or denied by the Articles of
Incorporation may be set forth at length on the face or back of
the certificate representing shares subject thereto. In lieu of
providing such a statement in full on the certificate, a
statement on the face or back of the certificate may provide that
the Corporation will furnish such information to any Shareholder
without charge upon written request to the Corporation at its
principal place of business and that a copy of such information
is on file in the office of the Secretary of State, or refer to
such denial of preemptive rights in any other manner permitted by
law.
(d) Unregistered Securities. Any security of the Corporation,
including, among others, any certificate evidencing shares of the
Common Stock or warrants to purchase Common Stock of the
Corporation, which is issued to any person without registration
under the Securities Act of 1933, as amended, or the securities
laws of any state, shall not be transferable until the
Corporation has been furnished with a legal opinion of counsel
with reference thereto, satisfactory in form and content to the
Corporation and its counsel, if required by the Corporation, to
the effect that such sale, transfer or pledge does not involve a
violation of the Securities Act of 1933, as amended, or the
securities laws of any state having jurisdiction. The
certificate representing the security shall bear substantially
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED
UNLESS SUCH OFFER, SALE OR TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE BLUE SKY LAWS. ANY OFFER, SALE OR
TRANSFER OF THESE SECURITIES MAY NOT BE MADE WITHOUT THE PRIOR WRITTEN
APPROVAL OF THE CORPORATION".
7.04 Payment of Shares.
(a) Kind. The consideration for the issuance of shares shall consist
of money paid, labor done (including services actually performed
for the Corporation) or property (tangible or intangible)
actually received. Neither promissory notes nor the promise of
future services shall constitute payment for shares.
(b) Valuation. In the absence of fraud in the transaction, the
judgment of the Board of Directors as to the value of
consideration received shall be conclusive.
(c) Effect. When consideration, fixed as provided by law, has been
paid, the shares shall be deemed to have been issued and shall be
considered fully paid and nonassessable.
(d) Allocation of Consideration. The consideration received for
shares shall be allocated by the Board of Directors, in
accordance with law, between Stated Capital and Capital Surplus
accounts.
7.05 Subscriptions. Unless otherwise provided in the subscription
agreement, subscriptions for shares shall be paid in full at such time or in
such installments and at such times as determined by the Board of Directors.
Any call made by the Board of Directors for payment on subscriptions shall be
uniform as to all shares of the same series. In case of default in the
payment on any installment or call when payment is due, the Corporation may
proceed to collect the amount due in the same manner as any debt due to the
Corporation.
7.06 Lien. For any indebtedness of a Shareholder to the Corporation, the
Corporation shall have a first and prior lien on all shares of its stock owned
by him and on all dividends or other distributions declared thereon.
7.07 Lost, Stolen or Destroyed Certificates. The Corporation shall issue a
new certificate in place of any certificate for shares previously issued if
the registered owner of the certificate.
(a) Claim. Submits proof in affidavit form that it has been lost,
destroyed or wrongfully taken; and
(b) Timely Request. Requests the issuance of a new certificate
before the Corporation has notice that the certificate has been
acquired by a purchaser for value in good faith and without
notice of an adverse claim; and
(c) Bond. Gives a bond in such form, and with such surety or
sureties, with fixed or open penalty, if the Corporation so
requires, to indemnify the Corporation (and its transfer agent
and registrar, if any) against any claim that may be made on
account of the alleged loss, destruction, or theft of the
certificate; and
(d) Other Requirements. Satisfies any other reasonable requirements
imposed by the Corporation.
When a certificate has been lost, apparently destroyed or wrongfully
taken, and the holder of record fails to notify the Corporation within a
reasonable time after he has notice of it, and the Corporation registers a
transfer of the shares represented by the certificate before receiving such
notification, the holder of record shall be precluded from making any claim
against the Corporation for the transfer or for a new certificate.
7.08 Registration of Transfer. The Corporation shall register the transfer
of a certificate for shares presented to it for transfer if:
(a) Endorsement. The certificate is properly endorsed by the
registered owner or by his duly authorized attorney; and
(b) Guaranty and Effectiveness of Signature. If required by the
Corporation, the signature of such person has been guaranteed by
a national banking association or member of the New York Stock
Exchange, and reasonable assurance is given that such
endorsements are effective; and
(c) Adverse Claims. The Corporation has no notice of an adverse
claim or has discharged any duty to inquire into such a claim;
and
(d) Collection of Taxes. Any applicable law relating to the
collection of taxes has been complied with.
7.09 Registered Owner. Prior to due presentment for registration of
transfer of a certificate for shares, the Corporation may treat the registered
owner or holder of a written proxy from such registered owner as the person
exclusively entitled to vote, to receive notices and otherwise exercise all
the rights and powers of a Shareholder.
7.10 Preemptive Rights. No Shareholder or other person shall have any
preemptive rights of any kind to acquire additional, unissued or treasury
shares of the Corporation, or securities of the Corporation convertible into,
or carrying rights to subscribe to or acquire, shares of any class or series
of the Corporation's capital stock, unless, and to the extent that, such
rights may be expressly granted by appropriate action.
ARTICLE EIGHT: GENERAL PROVISIONS
8.01 Dividends and Reserves.
(a) Declaration and Payment. Subject to statute and the Articles of
Incorporation, dividends may be declared by the Board of
Directors at any regular or special meeting and may be paid in
cash, in property or in shares of the Corporation. The
declaration and payment shall be at the discretion of the Board
of Directors.
(b) Record Date. The Board of Directors may fix in advance a record
date for the purpose of determining Shareholders entitled to
receive payment of any dividend, such record date to be not more
than sixty days prior to the payment date of such dividend, or
the Board of Directors may close the stock transfer books for
such purpose for a period of not more than sixty days prior to
the payment date of such dividend. In the absence of any action
by the Board of Directors, the date upon which the Board of
Directors adopts the resolution declaring such dividend shall be
the record date.
(c) Reserves. By resolution, the Board of Directors may create such
reserve or reserves out of the Earned Surplus of the Corporation
as the Directors from time to time, in their discretion, think
proper to provide for contingencies, or to equalize dividends, or
to repair or maintain any property of the Corporation, or for any
other purpose they think beneficial to the Corporation. The
Directors may modify or abolish any such reserve in the manner in
which it was created.
8.02 Books and Records. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
Shareholders and Board of Directors, and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its Shareholders, giving the names and addresses of all
Shareholders and the number and class of the shares held by each.
8.03 Annual Reports. The Board of Directors shall cause such reports to be
mailed to Shareholders as the Board of Directors deems to be necessary or
desirable from time to time.
8.04 Checks and Notes. All checks or demands for money and notes of the
Corporation shall be signed by such Officer or Officers or such other person
or persons as the Board of Directors designates from time to time.
8.05 Fiscal Year. The fiscal year of the Corporation shall be the calendar
year.
8.06 Seal. The Corporation Seal (of which there may be one or more
examples)may contain the name of the Corporation and the name of the state of
incorporation. The Seal may be used by impressing it or reproducing a
facsimile of it, or otherwise. Absence of the Corporation Seal shall not
affect the validity or enforceability or any document or instrument.
8.07 Indemnification.
(a) The Corporation shall have the right to indemnify, to purchase
indemnity insurance for, and to pay and advance expenses to,
Directors, Officers and other persons who are eligible for, or
entitled to, such indemnification, payments or advances, in
accordance with and subject to the provisions of Indiana law, to
the extent such indemnification, payments or advances are either
expressly required by such provisions or are expressly authorized
by the Board of Directors within the scope of such provisions.
The right of the Corporation to indemnify such persons shall
include, but not limited to, the authority of the Corporation to
enter into written agreements for indemnification with such
persons.
(b) To the fullest extent permitted by, and in the manner permissible
under the laws of the State of Indiana, any person made, or
threatened to be made, a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the
Corporation, or served any other enterprise as director, officer
or employee at the request of the Corporation. The Board of
Directors, in its discretion, shall have the power on behalf of
the Corporation to indemnify any person, other than a director or
officer, made a party to any action, suit, or proceeding by
reason of the fact that he/she is or was an employee of the
Corporation. A Director of the Corporation shall not be liable to
the Corporation or its shareholders for monetary damages for an
act or omission in the Director's capacity as a Director, except
that this provision does not eliminate or limit the liability of
a Director to the extent the Director is found liable for:
(1) a breach of the Director's duty of loyalty to the
Corporation or its shareholders;
(2) an act or omission not in good faith that constitutes a
breach of duty of the Director to the Corporation or an act
or omission that involves intentional misconduct or a
knowing violation of the law;
(3) a transaction from which the Director received an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the Director's office; or
(4) an act or omission for which the liability of a Director is
expressly provided by an applicable statute.
8.08 Amendment of Bylaws. These Bylaws may be altered, amended or repealed
at any meeting of the Board of Directors at which a quorum is present, by the
affirmative vote of a majority of the Directors present thereat, provided
notice of the proposed alteration, amendment, or repeal is contained in the
notice of such meeting.
8.09 Construction. Whenever the context so requires, the masculine shall
include the feminine and neuter, and the singular shall include the plural,
and conversely. If any portion of these Bylaws are ever finally determined to
be invalid or inoperative, then, so far as is reasonable and possible:
(a) The remainder of these Bylaws shall be valid and operative; and
(b) Effect shall be given to the intent manifested by the portion
held invalid or inoperative.
8.10 Table of Contents; Headings. The table of contents and headings are
for organization, convenience and clarity. In interpreting these Bylaws, they
shall be subordinated in importance to the other written material.
Signed for Identification,
Telecom Communications Inc.
An Indiana Corporation
BY: /s/ Tak Hiromoto
-------------------------------------------
Its: Chairperson of the Board of Directors
EXHIBIT 5.1 Opinion of Counsel
DANIEL H. LUCIANO
-----------------
ATTORNEY AT LAW
242 A WEST VALLEY BROOK ROAD
CALIFON, NEW JERSEY 07830
MEMBER TEXAS AND TELEPHONE 908-832-5546
NEW JERSEY BARS FACSIMILE 908-832-9601
May 25, 2001
Telcom Communications Inc.
827 S. Broadway
Los Angeles, California 90014
Re Opinion Of Counsel
Ladies and Gentlemen:
The undersigned has acted as counsel for Telcom Communications Inc. (formerly
MAS Acquisition XXI Corp.), an Indiana corporation (the "Company") limited to
certain matters as described herein.
In rendering this opinion, we have examined the Articles of Incorporation of
the Company as filed with the Secretary of State of the State of Indiana on
January 6, 1997, the Articles of Amendment of the Articles of Incorporation of
the Company filed with the Secretary of State of the State of Indiana on
December 18, 2000, the By-Laws of the Company, and such other documents as
deemed necessary or appropriate for he opinion expressed herein. All the
foregoing documents shall be herein referred to as the "Reviewed Documents."
We also refer to the Form SB-2 of the Company to be filed with the Securities
and Exchange Commission ("Form SB-2"). The Form SB-2 relates to 1,500,000
shares of common stock of the Company ("Company Shares") and 2,000,000 shares
of common stock of the Selling Shareholders (as referenced therein) ("Selling
Shareholder Shares").
We have not reviewed any documents other than the Reviewed Documents for
purposes of rendering the opinions expressed herein. We have conducted no
independent factual investigation other than our review of the Reviewed
Documents. In rendering this opinion, we have relied, as to factual matters,
solely upon the Reviewed Documents, and the representations, warranties,
statements and information set forth therein, all of which we assume to be
true, complete and accurate in all material respects.
With respect to the Reviewed Documents, we have assumed and relied upon the
authenticity of all documents submitted to us as originals, the conformity
with the originals of all documents submitted to us as copies or forms, the
genuineness of all signatures, the legal capacity of natural persons and that
the Reviewed Documents, in the forms submitted to us for our review, have not
been and will not be altered or amended in any respect material to this
opinion.
This opinion is limited, we express no opinion with respect to state
securities, blue sky or tax laws. We have not been requested to and do
Page 2.
Telcom Communications Inc.
May 25, 2001
not opine as to the applicability of the laws of any state jurisdiction.
This opinion is given only with respect to laws and regulations presently in
effect. We assume no obligation to advise you of any changes in law or
regulation which may hereafter occur, whether the same or retroactively or
prospectively applied, or to update or supplement this letter in any fashion
to reflect any facts or circumstances which hereafter come to our attention.
For the purpose of rendering the opinions hereinafter expressed, we have made
the following additional assumptions that the Articles of Incorporation, as
amended, and By-laws constitute the articles of incorporation and by-laws of
the Company are presently in effect.
Based upon the foregoing, and subject to and in reliance on the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. The Company Shares when issued pursuant to the Form SB-2 will
be legally and validly issued, fully paid and non-assessable shares of capital
stock of the Company.
2. The Selling Shareholders Shares are legally and validly issued,
fully paid and non-assessable shares of capital stock of the Company.
We hereby consent to the filing of the opinion as Exhibit 5.1 to the Company's
Registration Statement and the reference to our firm in the Prospectus, if
applicable or required.
This opinion is rendered solely for your benefit in connection with the
matters addressed herein. Except as stated in the immediately preceding
sentence, without our prior written consent, this opinion may not be relied
upon by you for any other purpose or be furnished or quoted to, or relied upon
by, any person or entity for any purpose.
Very truly yours,
/s/ Daniel H. Luciano
- ---------------------
Daniel H. Luciano
EXHIBIT 10.1 Standard Shopping Center Lease
STANDARD OFFICE LEASE GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Basic Lease Provisions ("Basic Lease Provisions")
1.1 Parties: This Lease, dated, for reference purposes only JULY 10, 1995 is
made by and between ROBERT CRANE RECEIVER UNDER COURT ORDER NO. BC 106992
SUPERIOR COURT OF LOS ANGELES COUNTY (herein called "Lessor") and BAILEY
ASSOCIATES INC. A DELAWARE CORPORATION, doing business under the name of TO BE
DETERMINED (herein called "Lessee").
1.2 Premises: Suite Number(s) C ON THE FIRST floor, cosisting of approximately
900 SQUARE FEET more or less, as defined in paragraph 2 and as shown on
Exhibit "A" hereto (the "Premises").
1.3 Building: Commonly described as being located at 827 SOUTH BROADWAY PART
OF BUILDING KNOWN AS 801 SOUTH
BROADWAY
in the City of LOS ANGELES
County of LOS ANGELES
State of CALIFORNIA as, more particularly described in Exhibit N/A
hereto, and as defined in paragraph 6.
1.4:Use DISCOUNT TELEPHONE PHONE SERVICES, WESTERN UNION SERVICES, RETAIL
SALES AND ACTIVATION OF PAGERS AND CELLULAR TELEPHONES. subject to paragraph 6
1.5 Term: SIX AND 1/2 MONTHS commencing AUGUST 15,1995 (commencement Date) and
ending FEBRUARY 29, 1996 as defined in paragraph 3.
1.6 Base Rent: $1,200.00 per month, payable on the FIRST day, of each month
per
paragraph 4.1 PRORATED RENT FOR THE MONTH OF AUGUST 15 THROUGH
AUGUST 31 IN THE SUM OF SIX-HUNDRED DOLLARS AND NO/CENTS
($600.00) PAYABLE ON SEPTEMBER 1. 1995.
1.7 Base Rent Increase: MARCH 1, 1996 SUBJECT TO THE PROVISIONS OF ARTICLE
NUMBER 52
1.8 Rent Paid Upon Execution: $1,200.00 RENT FOR THE MONTH OF SEPTEMBER, 1995.
1.9 Security Deposit: ONE THOUSAND TWO HUNDRED DOLLARS AND NO/CENTS
($1,200.00)
1.10 Lessee's Share of Operating Expense Increase: N/A
2. Premises, Parking and Common Areas.
2.1 Premises: The Premises are a portion of a building, herein sometimes
referred to as the "Building" identified in paragraph 1.3 of the Basic Lease
Provisions. The Premises, the Building, the Common Areas, The land upon which
the same are located, along with all other buildings and improvements thereon
or thereunder, are herein collectively referred to as the "Office Building
Project" Lessor hereb leases to Lessee and Lessee leases from Lessor for the
term, at the rental, and upon all of the conditions set forth herein, the real
property referred to in the Basic Lease Provisions, paragraph 1.2. as the
"Premises:' including rights to the Common Areas as hereinafter specified.
2.2 N/A
2.3 Common-Areas-Definition. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary
line of the Office Building Project that are provided and designated by the
Lessor from time to time for the general non-exclusive use of Lessor Lessee
and of other lessees of the Office Building Project and their respective
employees, suppliers, shippers, customers and invitees, including but not
limited to common entrances, lobbies, corridors, stairways and stairwells,
public restrooms, elevators, escalators, parking areas to the extent not
otherwise prohibited by this Lease, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, ramps, driveways, land-
scaped areas and decorative walls.
2.4 Common Areas-Rules and Regulations. Lessee agrees to abide by and
conform to the rules and regulations attached hereto as Exhibit B with respect
to the Office Building Project and Common Areas, and to cause its employees,
suppliers, shippers, customers, and invitees to so abide and conform. Lessor
or such other person(s) as Lessor may appoint shall have the exclusive control
and management of the Common Areas and shall have the right, from time to time
to modify, amend and enforce said rules and regulations. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations
by other lessees, their agents, employees and invitees of the Office Building
Project,
2.5 Common Areas-Changes. Lessor shall have the right, in Lessors sole
discretion, from time to time:
(a) To make changes to the Building interior and exterior and Common
Areas, including, without limitation changes in the location, size, shape
number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways
entrances, parking spaces, parking areas, loading and unloading areas,
ingress, egress, direction of traffic, decorative walls, landscaped areas and
walkways; provided, however, Lessor shall at all times provide the parking
facilities required by applicable law;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land and improvements outside the boundaries of
the Office Building Project to be a part of the Common Areas, provided that
such other land and improvements have a reasonable and functional relationship
to the Office Building Project;
(d) To add additional buildings and improvements to the Common Areas;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
portion thereof;
(f) To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Office Building Project as Lessor
may, in the exercise of sound business judgment deem to be appropriate.
3.TERM.
3.1 Term. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease.
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3.2 Delay in Possession. Notwithstanding said Commencement Date, if for any
reason Lessor cannot deliver possession of the Premises to Lessee on said date
and subject to paragraph 3.2.2, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligations of Lessee hereunder or extend the term hereof, but, in such case,
Lessee shall not be obligated to pay rent or perform any other obli- gation of
Lessee under the terms of this Lease, except as may be otherwise provided in
this Lease. until possession of the Premises is tendered to Lessee, as
hereinafter defined, provided, however, that if Lessor shall not have
delivered possession of the Premises within sixty (60) days following said
Commencement Date, as the same may be extended under the terms of a Work
Letter executed by Lessor and Lessee, Lessee may, at Lessee's option, by
notice in writing to Lessor within ten (10) days thereafter, cancel this
Lease, in which event the parties shall be discharged from all obligations
hereunder, provided, however, that, as to Lessee's obligations, Lessee first
reimburses Lessor for all costs incurred for Non-Standard Improvements and, as
to Lessor's obligations, Lessor shall return any money previously deposited by
Lessee (less any offsets due Lessor for Non-Standard Improvements); and
provided further, that if such written notice by Lessee is not received by
Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect.
3.2.1 Possession Tendered-Defined. Possession of the Premises shall be
deemed tendered to Lessee ("Tender of Possession") when (1) the improvements
to be provided by Lessor under this Lease are substantially completed, (2) the
Building utilities are ready for use in the Premises (3) Lessee has reasonable
access to the Premises.
3.2.2 Delays Caused by Lessee. There shall be no abatement of rent, and the
sixty (60) day period following the Commencement Date before which Lessee's
right to cancel this Lease accrues under paragraph 3.2, shall be deemed
extended to the extent of any delays caused by acts or omissions of Lessee,
Lessee's agents, employees and contractors.
3.3 Early Possession. If Lessee occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Lessee shall
pay rent for such occupancy.
3.4 Uncertain Commencement. In the event commencement of the Lease term is
defined as the completion of the improvements, Lessee and Lessor shall execute
an amendment to this Lease establishing the date of Tender of Possession (as
defined in paragraph 3.2.1) or the actual taking of possession by Lessee,
whichever first occurs, as the Commencement Date.
4. Rent.
4.1 Base Rent. Subject to adjustment as hereinafter provided in paragraph
4.3, and except as may be otherwise expressly provided in this Lease, Lessee
shall pay to Lessor the Base Rent for the Premises set forth in paragraph 1.6
of the Basic Lease Provisions, without offset or deduction. Lessee shall pay
Lessor upon execution hereof the advance Base Rent described in paragraph 1.8
of the Basic Lease Provisions. Rent for any period during the term hereof
which is for less than one month shall be prorated based upon the actual
number of days of the calendar month involved. Rent shall be payable in lawful
money of the United States to Lessor at the address stated herein or to such
other persons or at such other places as Lessor may designate in writing.
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5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the security deposit set forth in paragraph 1.9 of the Basic Lease Provisions
as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or
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other charges due hereunder, or otherwise defaults with respect to any
provision of this Lease, Lessor may use, apply or retain all or any portion of
said deposit for the payment of any rent or other charge in default for the
payment of any other sum to which Lessor may become obligated by reason of
Lessee's default, or to compensate Lessor for any loss or damage which Lessor
may suffer thereby. If Lessor so uses or applies all or any portion of said
deposit, Lessee shall within ten (10) days after written demand therefor
deposit cash with Lessor in an amount sufficient to restore said deposit to
the full amount then required of Lessee. If the monthly Base Rent shall, from
time to time, increase during the term of this Lease, Lessee shall, at the
time of such increase, deposit with Lessor additional money as a security
deposit so that the total amount of the security deposit held by Lessor shall
at all times bear the same proportion to the then current base Rent as the
initial security deposit bears to the initial Base Rent set forth in paragraph
1.6 of the Basic Lease Provisions. Lessor shall not be required to keep said
security deposit separate from its general accounts. If Lessee performs all of
Lessee's obligations hereunder, said deposit, or so much thereof as has not
heretofore been applied by Lessor, shall be returned without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, to
the last assignee, if any, of Lessee's interest hereunderj at the expiration
of the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created herein between Lessor and Lessee with respect to said
Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for the purpose set
forth in paragraph 1.4 of the Basic Lease Provisions or any other use which is
reasonably comparable to that use and for no other purpose.
6.2 Compliance with Law.
(aJ Lessor warrants to Lessee that the Premises, in the state existing on
the date that the Lease term commences, but without regard to alterations or
improvements made by Lessee or the use for which Lessee will occupy the
Premises, does not violate any covenants or restrictions of record, or any
applicable building code, regulation or ordinance in effect on such Lease term
Commencement Date. In the event it is determined that this warranty has been
violated, then it shall be the obligation of the Lessor, after written notice
from Lessee, to promptly, at Lessors sole cost and expense, rectify any such
violation.
(b) Except as provided in paragraph 6.2(a) Lessee shall, at Lessee's
expense, promptly comply with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements of
any fire insurance underwriters or rating bureaus, now in effect or which may
hereafter come into effect, whether or not they reflect a change in policy
from that now existing, during the term or any part of the term hereof,
relating in any manner to the Premises and the occupation and use by Lessee of
the Premises. Lessee shall conduct its business in a lawful manner and shall
not use or permit the use of the Premises or the Common Areas in any manner
that will tend to create waste or a nuisance or shall tend to disturb other
occupants of the Office Building Project.
6.3 Condition of Premises
(a) Lessor shall deliver the Premises to Lessee in a clean condition on the
Lease Commencement Date (unless Lessee is already in possession)
and Lessor warrants to Lessee that the "HVAC," lighting, system in the
Premises shall be in good operating condition. In the event that it is
determined that this warranty has been violated, then it shall be the
obligation of Lessor, after receipt of written notice from Lessee setting
forth with specificity the nature of the violation, to promptly, at Lessor's
sole cost, rectify such violation.
(b) Except as otherwise provided in this Lease, Lessee hereby accepts the
Premises and the Office Building Project in their condition existing as of the
Lease Commencement Date or the date that Lessee takes possession of the
Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and any easements, covenants or restrictions of record,
and accepts this Lease subject thereto and to all matters disclosed thereby
and by any exhibits attached hereto. Lessee acknowledges that it has satisfied
itself by its own independent investigation that the Premises are suitable for
its intended use, and that neither Lessor nor Lasso's agent or agents has made
any representation or warranty as to the present or future suitability of the
Promises, Common Areas, or Office Building Project for the conduct of Lessee's
business.
7. Maintenance, Repairs, Alterations and Common Area Services.
7.1 Lessor's Obligations. Lessor shall keep the Office Building Project,
including the Premises, interior and exterior walls, roof, and common areas,
and the equipment whether used exclusively for the Premises or in common with
other premises, in good condition and repair, provided, however
Lessor shall not be obligated to paint, repair or replace wall coverings, or
to repair or replace any improvements that are not ordinarily a part of the
Building or are above then Building standards. Except as provided in paragraph
9.5, there shall be no abatement of rent or liability of Lessee on account of
any injury or interference with Lesse's business with respect to any
improvements, alterations or repairs made by Lessor to the Office Building
Project or any part thereof. Lessee expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease because
of Lessor's failure to keep the Premises in good order, condition and repair.
7.2 Lessee's Obligations.
(a) Notwithstanding Lessor's obligation to keep the Premises in good
condition and repair, Lessee shall be responsible for payment of the cost
thereof to Lessor as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located)
that serves only Lessee or the Premises, to the extent such cost is
attributable to causes beyond normal wear and tear. Lessee shall be
responsible for the cost of painting, repairing or replacing wall coverings,
and to repair or replace any Premises improvements that are not ordinarily a
part of the Building or that are above then Building standards. Lessor may, at
its option, upon reasonable notice, elect to have Lessee perform any
particular such maintenance or repairs the cost of which is otherwise Lessee's
responsibility hereunder.
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(b) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as
received, ordinary wear and tear excepted, clean and free of debris. Any
damage or deterioration of the Premises shall not be deemed ordinary wear and
tear if the same could have been prevented by good maintenance practices by
Lessee. Lessee shall repair any damage to the Premises occasioned by the
installation or removal of Lessee's trade fixtures, alterations, furnishings
and equipment. Except as otherwise stated in this Lease, Lessee shall leave
the air lines, power panels, electrical distribution systems, lighting
fixtures, air conditioning, window coverings, wall coverings, carpets, wall
panelling, ceilings and plumbing on the Premises and in good operating
condition
7.3 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, Utility Installations or repairs in, on
or about the Premises, or the Office Building Project. As used in this
paragraph 7.3 the term "Utility Installation" shall mean carpeting, window and
wall coverings, power panels, electrical distribution systems, lighting
fixtures, air conditioning, plumbing, and telephone and telecommunication
wiring and equipment. At the expiration of the term, Lessor may require the
removal of any or all of said alterations, impprovements additions or Utility
Installations, and the restoration of the Premises and the Office Building
Project to their prior condition, at Lessee's expense. Should Lessor permit
Lessee to make its own alterations, improvements, additions or Utility
Installations, Lessee shall use only such contractor as has been expressly
approved by Lessor, and Lessor may require Lessee to provide Lessor, at
Lessee's sole cost and expense, a lien and completion bond in an amount equal
to one and one half times the estimated cost of such improvements, to insure
Lessor against any liability for mechanic's and materialmen's
liens and to insure completion of the work. Should Lessee make any
alterations, improvements, additions or Utility Installations without the
prior approval of Lessor, or use a contractor not expressly approved by
Lessor, Lessor may, at any time during the term of this Lease, require that
Lessee remove any part or all of the same.
(b) Any alterations, improvements, additions or Utility Installations in or
about the Premises or the Office Building Project that Lessee shall desire to
make shall be presented to Lessor in written form, with proposed detailed
plans. If Lessor shall give its consent to Lessee's making such alteration,
improvement, addition or Utility Installation, the consent shall be deemed
conditioned upon Lessee acquiring a permit to do so from the applicable
governmental agencies, furnishing a copy thereof to Lessor prior to the
commencement of the work, and compliance by Lessee with all conditions of said
permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use in the
Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building or the Office Building
Project, or any interest therein.
(d) Lessee shall give Lessor not less than ten (10) days' notice prior to
the commencement of any work in the Premises by Lessee, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises or the
Building as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy
any such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises, the Building or the Office
Building Project, upon the condition that if Lessor shall require, Lessee
shall furnish to Lessor a surety bond satisfactory to Lessor in an amount
equal to such contested lien claim or demand indemnifying Lessor against
liability for the same and holding the Premises, the Building and the Office
Building Project free from the effect of such lien or claim. In addition.
Lessor may require Lessee to pay Lessor's reasonable attorneys'fees and costs
in participating in such action if Lessor shall decide it is to Lessor's best
interest so to do.
(e) All alterations, improvements, additions and Utility Installations
(whether or not such Utility Installations constitute trade fixtures of
Lessee)
which may be made to the Premises by Lessee, including but not limited to,
floor coverings, panelings, doors, drapes, built-ins, moldings, sound
attenuation, and lighting and telephone or communication systems, conduit,
wiring and outlets, shall be made and done in a good and workmanlike manner
and of good and sufficient quality and materials and shall be the property of
Lessor and remain upon and be surrendered with the Premises at the expiration
of the Lease term, unless Lessor requires their removal pursuant to paragraph
7.3(a). Provided Lessee is not in default, notwithstanding the provisions of
this paragraph 7.3(e), Lessee's personal property and equipment, other than
that which is affixed to the Premises so that it cannot be removed without
material damage to the Premises or the Building, and other than Utility
Installations, shall remain the property of Lessee and may be removed by
Lessee subject to the provisions of paragraph 7.2.
(f) Lessee shall provide Lessor with as-built plans and specifications for
any alterations, improvements, additions or Utility Installations.
7.4 Utility Additions. Lessor reserves the right to install new or additional
utility facilities throughout the Office Building Project for the benefit of
Lessor or Lessee, or any other lessee of the Office Building Project,
including, but not by way of limitation, such utilities as plumbing,
electrical systems, communication systems, and fire protection and detection
systems, so long as such installations do not unreasonably interfere with
Lessee's use of the Premises.
8. Insurance; Indemnity.
8.1 Liability Insurance-Lessee. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease a policy of Comprehensive
General Liability insurance utilizing an Insurance Services Office standard
form with Broad Form General Liability Endorsement (GL0404) or equivalent, in
an amount of not less than $1,000,000 per occurrence of bodily injury and
property damage combined or in a greater amount as reasonably determined by
Lessor and shall insure Lessee with Lessor as an additional insured against
liability arising out of the use, occupancy or maintenance of the Premises.
Compliance with the above requirement shall not, however, limit the liability
of Lessee hereunder.
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8.2 Liability Insurance-Lessor. Lessor shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other
risks Lessor deems advisable from time to time, insuring Lessor, but not
Lessee, against liability arising out of the ownership, use, occupancy or
maintenance of the Office Building Project in an amount not less than
$5,000,000.00 per occurrence.
8.3 Property Insurance-Lessee. Lessee shall, at Lessee's expense, obtain
and keep in force during the term of this Lease for the benefit of Lessee
replacement cost fire and extended coverage insurance, with vandalism and
malicious mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount sufficient to cover not less than 100% of the full
replacement cost, as the same may exist from time to time, of all of Lessee's
personal property, fixtures. equipment and tenant improvements.
8.4 Property Insurance-Lessor. Lessor shall obtain and keep in force during
the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in the amount of the
full replacement cost thereof, as the same may exist from time to time,
utilizing Insurance Services Office standard form or equivalent providing
protection against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, piate glass, and such other
perils as Lessor deems advisable or may be required by a lender having a lien
on the Office Building Project. In addition, Lessor shall obtain and keep in
force, during the term of this Lease, a policy of rental value insurance
covering a period of one year, with loss payable to Lessor which insurance
shall also cover all Operating Expenses for said period. Lessee will not be
named in any such policies carried by Lessor and shall have no right to any
proceeds therefrom. The policies required by these paragraphs 8.2 and 8.4
shall contain such deductibles as Lessor or the aforesaid lender may
determine. In the event that the Premises shall suffer an insured loss as
defined in paragraph 9.1 (fl hereof, the deductible amounts under the
applicable insurance policies shall be deemed an Operating Expense. Lessee
shall not do or permit to be done anything which shall invalidate the
insurance policies carried by Lessor. Lessee shall pay the entirety of any
increase in the property insurance premium for the Office Building Project
over what it was immediately prior to the commencement of the term of this
Lease if the increase is specified by Lessor's insurance carrier as being
caused by the nature of Lessees occupancy or any act or omission of Lessee.
8.5 Insurance Policies. Lessee shall deliver to Lessor copies of liability
insurance policies required under paragraph 8.1 or certificates evidencing the
existence and amounts of such insurance within seven (7) days after the
Commencement Date of this Lease. No such policy shall be cancellable or
subject to reduction of coverage or other modification except after thirty
(30) days prior written notice to Lessor. Lessee shall, at least thirty (30)
days prior to the expiration of such policies, furnish Lessor with renewals
thereof.
8.6 Waiver of Subrogation, Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other
for direct or consequential loss or damage arising out of or incident to the
perils covered by property insurance carried by such party, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. If necessary all property insurance policies required under this
Lease shall be endorsed to so provide.
8.7 Indemnity. Lessee shall indemnify and hold harmless Lessor and its
agents, Lessor's master or ground lessor, partners and lenders, from and
against any and all claims for damage to the person or property of anyone or
any entity arising from Lessee's use of the Office Building Project, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or else-where and
shall further indemnify and hold harmless Lessor from and against any and all
claims, costs and expenses arising from any breach or default in the
performance of any obligation on Lessee's part to be performed under the terms
of this Lease, or arising from any act or omission of Lessee, or any of
Lessee's agents, contractors, employees, or invitees, and from and against all
costs, attoney's fees, expenses and liabilities incurred by Lessor as the
result of any such use, conduct, activity, work, things done, permitted or
suffered, breach, default or negligence, and in dealing reasonably therewith,
including but not limited to the defense or pursuit of any claim or any action
or proceeding involved therein; and in case any action or proceeding be
brought against Lessor by reason of any such matter, Lessee upon notice from
Lessor shall defend the same at Lessee's expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate With Lessee in such defense.
Lessor need not have first paid any such claim in order to be so indemnified.
Lessee, as a material part of the consideration to Lessor, hereby assumes all
risk of damage to property of Lessee or injury to persons, in, upon or about
the Office Building Project arising from any cause and Lessee hereby waives
all claims in respect thereof against Lessor.
8.8 Exemption of Lessor from Liability. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee, Lessee's employees, invitees, customers, or any other
person in or about the Premises or the Office Building Project, nor shall
Lessor be liable for injury to the person of Lessee, Lessee's employees,
agents or contractors, whether such damage or injury is caused by or results
from theft, fire, steam, electricity, gas, water or rain, or from the breakage
leakage, obstruction or other defects of pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause
whether said damage or injury results from conditions arising upon the
Premises or upon other portions of the Office Building Project, or from other
sources or places, or from new construction or the repair, alteration or
improvement of any part of the Office Building Project, or of the equipment
fixtures or appurtenances applicable thereto, and regardless of whether the
cause of such damage or injury or the means of repairing the same is
inaccessible, Lessor shall not be liable for any damages arising from any act
or neglect of any other lessee, occupant or user of the Office Building
Project, nor from the failure of Lessor to enforce the provisions of any other
lease of any other lessee of the Office Building Project.
8.9 No Representation of Adequate Coverage, Lessor makes no representation
that the limits or forms of coverage of insurance specified in this paragraph
8 are adequate to cover Lessee's property or obligations under this Lease.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.
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(b) "Premises Building Partial Damage" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is less than fifty percent (50%) of the then Replacement Cost
of the building.
(c) "Premises Building Tatal Destruction" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is fifty percent (50%) or more of the then Replacement Cost of
the Building.
(d) "Office Building Project Buildings" shall mean all of the buildings
on the Office Building Project site.
(e) "Office Building Project Buildings Total Destruction" shall mean if
the Office Building Project Buildings are damaged or destroyed to the extent
that the cost of repair is fifty percent (50%) or more of the then Replacement
Cost of the Office Building Project Buildings.
(f) "Insured Loss" shall mean damage or destruction which was caused by
an event required to be covered by the insurance described in paragraph 8. The
fact that an Insured Loss has a deductible amount shall not make the loss an
uninsured loss.
(g) "Replacement Cost" shall mean the amount of money necessary to be
spent in order to repair or rebuild the damaged area to the condition that
existed immediately prior to the damage occurring, excluding all improvements
made by lessees, other than those Installed by Lessor at Lessee's expence.
9.2 Premises Damage; Premises Building Partial Damage.
(a) Insured Loss: Subject to the provisions of paragraphs 9.4 and 9.5,
if at any time during the term of this Lease there is damage which is an
Insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Lessor shall, as soon as reasonably
possible and to the extent the required materials and labor are readily
available through usual commercial channels, at Lessor's expense repair such
damage (but not Lessee's fixtures, equipment or tenant improvements originally
paid for by Lessee) to its condition existing at the time of the damage, and
this Lease shall continue in full force and effect.
(b) Uninsured Loss: Subject to the provisions of paragraphs 9.4 and 9.5,
if at any time during the term of this Lease there is damage which is not an
Insured Loss and which falls within the classification of Premises Damage or
Premises Building Partial Damage, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
which damage prevents Lessee from making any substantial use of the Promises,
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee
within thirty (30) days after the date of the occurrence of such damage of
Lessor's intention to cancel and terminate this Lease as of the date of the
occurrence of such damage, in which event this Lease shall terminate as of the
date of the occurrence of such damage.
9.3 Premises Building Total Destruction; Office Building Project Total
Destruction. Subject to the provisions of paragraphs 9.4 and 9.5, if at any
time during the term of this Lease there is damage, whether or not it is an
Insured Loss, which falls into into the classifications of either (i) Premises
Building Total Destruction, or (ii) Office building Project Total Destruction,
then Lessor may at Lessor's option either (i) repair such damage or
destruction as soon as reasonably possible at Lessor's expense (to the extent
the required materials are readily available through usual commercial
channels) to its condition existing at the time of the damage, but not
Lessee's fixtures, equipment or tenant improvements, and this Lease shall
continue in full force and effect, or (it) give written notice to Lessee
within thirty (30) days after the date of occurrence of such damage of
Lessor's intention to cancel and terminate this Lease, in which case this
Lease shall terminate as of the date of the occurrence of such damage.
9.4 Damage Near End of Term.
(a) Subject to paragraph 9.4(b), if at any time during the last twelve
(12) months of the term of this Lease there is substantial damage to the
Premises, Lessor may at Lessors option cancel and terminate this Lease as of
the date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within 30 days after the date of occurrence of such
damage.
(b) Notwithstanding paragraph 9.4(a), in the event that Lessee has an
option to extend or renew this Lease, and the time within which said option
may be exercised has not yet expired, Lessee shall exercise such option, if it
is to be exercised at all, no later than twenty (20) days after the occurrence
of an Insured Loss failing within the classification of Premises Damage during
the last twelve (12) months of the term of this Lease. If Lessee duty
exercises such option during said twenty (20) day period, Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such - option
during said twenty (20) day period, then Lessor may at Lessor's option
terminate and cancel this Lease as of the expiration of said twenty (20) day
period by giving written notice to Lessee of Lessor's election to do so within
ten (10) days after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of option to the contrary.
9.5 Abatement of Rent; Lessee's Remedies.
(a) In the event Lessor repairs or restores the Building or Premises
pursuant to the provisions of this paragraph 9, and any part of the Premises
are not usable (including loss of use due to loss of access or essential
services), the rent payable hereunder (including Lessee's Share of Operating
Expense Increase) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of the negligence of Lessee, and (2) such abatement shall only be to
the extent the operation and profitability of Lessee's business as operated
from the Premises is adversely affected. Except for said abatement of rent, if
any, Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair or restoration.
7
(b) If Lessor shall be obligated to repair or restore the Premises or the
Building under the provisions of this Paragraph 9 and shall not commence such
repair or restoration within ninety (9o) days after such occurrence, or if
Lessor shall not complete the restoration and repair within six (6) months
after such occurrence, Lessee may at Lesse's option cancel and terminate this
Lease by giving Lessor written notice of Lessee's election to do so at any
time prior to the commencement or completion, respectively, of such repair or
restoration. In such event this Lease shall terminate as of the date of such
notice.
(c) Lessee agrees to cooperate with Lessor in connection with any such
restoration and repair, including but not limited to the approval and/or
execution of plans and specifications required.
9.6 Termination-Advance Payments. Upon termination of this Lease pursuant to
this paragraph 9, an equitable adjustment shall be made concerning advance
rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7 Waiver. Lessor and Lessee waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree
that such event shall be governed by the terms of this Lease.
10. Real Property Taxes.
10. 1 Payment of Taxes. Lessor shall pay the real property tax, as defined in
paragraph 10.3, applicable to the Office Building Project.
10.2 Additional Improvements. Lessee shall not be responsible for paying any
increase in real property tax specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Office
Building Project by other lessees or by Lessor for the exclusive enjoyment of
any other lessee. Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.
10.3 Definiffon of "Real Property Tax" As used herein, the term "real
property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Office Building Project or any
portion thereof by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof as against any legal or equitable interest of Lessor in the Office
Building Project or in any portion thereof, as against Lessor's right to rent
or other income therefrom, and as against Lessor's business of leasing the
Office Building Project. The term "real property tax" shall also include any
tax, fee, levy, assessment or charge (i) in substitution of, partially or
totally, any tax, fee levy, assessment or charge hereinabove included within
the definition of "real property tax" or (ii) the nature of which was
hereinbefore included within the definition "real property tax" or (iii) which
is imposed for a service or right not charged prior to June 1, 1978, or, if
previously charged, has been increased since June 1,1978, or (iv) which is
imposed as a result of a change in ownership, as defined by applicable local
statutes for property tax purposes, of the Office Building Project or which is
added to a tax or charge hereinbefore included within the definition of real
property tax by reason of such change of ownership, or (v) which is imposed by
reason of this transaction, any modifications or changes hereto, or any
transfers hereof.
10.4 Joint Assessment If the improvements or property, the taxes for which
are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
separately assessed, Lessee's portion of that tax shall be equitably
determined by Lessor from the respective valuations assigned in the assessor's
work sheets or such other information (which may include the cost of
construction) as may be reasonably available. Lessor's reasonable
determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes
(a) Lessee shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Premises or elsewhere.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay to Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
11.Utilities.
11.2 Services Exclusive to Lessee. Lessee shall pay for all water, gas, heat,
light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee,
together with any taxes thereon. If any such services are not separately
metered to the Premises, Lessee shall pay at Lessor's option, either Lessee's
Share or a reasonable proportion to be determined by Lessor of all charges
jointly metered with other premises in the Building.
11.3 Hours of Service. Said services and utilities shall be provided during
generally accepted business days and hours or such other days or hours as may
hereafter be set forth. Utilities and services required at other times shall
be subject to advance request and reimbursement by Lessee to Lessor of the
cost thereof.
11.4 Excess Usage by Lessee. Lessee shall not make connection to the utilities
except by or through existing outlets and shall not install or use machinery
or equipment in or about the Premises that uses excess water, lighting or
power, or suffer or permit any act that causes extra burden upon the utilities
or services, including but not limited to security services, over standard
office usage for the
8
Office Building Project. Lessor shall require Lessee to reimburse Lessor for
any excess expenses or costs that may arise out of a breach of this
subparagraph by Lessee. Lessor may, in its sole discretion, install at
Lessee's expense supplemental equipment and/or separate metering applicable to
Lessee's excess usage or loading.
11.5 Interruptions. There shall be no abatement of rent and Lessor shall not
be liable in any respect whatsoever for the inadequacy, stoppage, interruption
or discontinuance of any utility or service due to riot, strike, labor
dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable
control or in cooperation with governmental request or directions.
12. Assignment and Subletiting.
12.1 Lessor's Consent Required. Lessee shall not voluntarily or by operation
of law assign transfer, mortgage, sublet, or otherwise transfer or encumber
all or any part of Lessee's interest in the Lease or in the Premises, without
Lessor's prio;written consent, which Lessor shall not unreasonably withhold.
Lessor shall respond to Lessee's request for consent hereunder in a timely
manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a material
default and breach of this Lease without the need for notice to Lessee under
paragraph 131 "Transfer" within the meaning of this paragraph 12 shall include
the transfer or transfers aggregating: (a) if Lessee is a corporation more
than twenty-five percent (25%) of the voting stock of such corporation, or (b)
if Lessee is a partnership, more than twenty-five percent (250%) of the profit
and loss participation in such partnership.
12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof
without Lessor's consent, to any corporation which controls, is controlled by
or is under common control with Lessee, or to any corporation resulting from
the merger or consolidation with Lessee, or to any person or entity which
acquires all the assets of Lessee as a going concern of the business that is
being conducted on the Premises, all of which are referred to as "Lessee
Affiliate"; provided that before such assignment shall be effective (a) said
assignee shall assume, in full, the obligations of Lessee under this Lease and
(b) Lessor shall be given written notice of such assignment and assumption.
Any such assignment shall not, in any way, affect or limit the liability of
Lessee under the terms of this Lease even if after such assignment or
subletting the terms of this Lease are materially changed or altered without
the consent of Lessee, the consent of whom shall not be necessary.
12.3 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, no assignment or subletting shall
release Lessee of Lessee's obligations hereunder or alter the primary
liability of Lessee to pay the rent and other sums due Lessor hereunder
including Lessee's Share of Operating Expense Increase, and to perform all
other obligations to be performed by Lessee hereunder.
(b) Lessor may accept rent from any person other than Lessee pending
approval or disapproval of such assignment.
(c) Neither a delay in the approval or disapproval of such assignment or
subletting, nor the acceptance of rent, shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for the breach of any of the terms
or conditions of this paragraph 12 or this Lease.
(d) If Lessee's obligations under this Lease have been guaranteed by third
parties, then an assignment or sublease, and Lessor's consent thereto,shall
not be effective unless said guarantors give their written consent to such
sublease and the terms thereof.
(e) The consent by Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the sublessee.
However, Lessor may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Lessee
or anyone else liable on the Lease or sublease and without obtaining their
consent and such action shall not relieve such persons from liability under
this Lease or said sublease, however such persons shall not be responsible to
the extent any such amendment or modification enlarges or increases the
obligations of the Lessee or su61 essee under this Lease or such sublease.
(f) In the event of any default under this Lease, Lessor may proceed
directly against Lessee, any guarantors or any one else responsible for the
performance of this Lease, including the sublessee, without first exhausting
Lessor's remedies against any other person or entity responsible therefor to
Lessor, or any security held by Lessor or Lessee.
(g) Lessor's written consent to any assignment or subletting of the
Premises by Lessee shall not constitute an acknowledgement that no default
then exists under this Lease of the obligations to be performed by Lessee nor
shall such consent be deemed a waiver of any then existing default, except as
may be otherwise stated by Lessor at the time.
(h) The discovery of the fact that any financial statement relied Upon by
Lessor in giving its consent to an assignment or subletting was materially
false shall, at Lessor's election, render Lessor's said consent null and void.
12.4 Additional Terms and Conditions Applicable to Subletlting. Regardless of
Lessor's consent, the following terms and conditions shall apply to any
subletting by Lessee of all or any part of the Premises and shall be deemed
included in all subleases under this Lease whether or not expressly
incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessees interest
in all rentals and income arising from any sublease heretofore or hereafter
made by Lessee, and Lessor may collect such rent and income and apply same
toward Lessee's obligations under this Lease, provided however, that until a
default shall occur in the performance of Lessee's obligations under this
Lease, Lessee may receive, collect and enjoy the rents accruing under such
sublease. Lessor shall not, by reason of this or any other assignment of such
sublease to Lessor nor by reason of the collection of the rents from a
sublessee, be deemed liable to the sublessee for any failure of Lessee to
perform and comply with any of Lessee's obligations to such sublessee under
such sublease. Lessee hereby irrevocably authorizes, and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a
9
default exists in the performance of Lessee's obligations under this Lease, to
pay to Lessor the rents due and to become due under the sublease. Lessee
agrees that such sublessee shall have the right to rely upon any such
statement and request from Lessor, and that such sublessee shall pay such
rents to Lessor without any obligation or right to inquire as to whether such
default exists and 33notwithstanding any notice from or claim from Lessee to
the contrary. Lessee shall have no right or claim against said sublessee or
Lessor for any such rents so paid by said sublessee to Lessor.
(b) No sublease entered into by Lessee shall be effective unless and
until it has been approved in writing by Lessor. In entering into any sublease
Lessee shall use only such form of sublessee as is satisfactory to Lessor, and
once approved by Lessor, such sublease shall not be changed or modified
without Lessor's prior written consent. Any sublease shall, by reason of
entering into a sublease under this Lease, be deemed, for the benefit of
Lessor to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Lessor has expressly consented in writing.
(c) In the event Lessee shall default in the performance of its
obligations under this Lease, Lessor at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of Lessee under such sublease from the time of
the exercise of said option to the termination of such sublease, provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to Lessee or for any other prior defaults of Lessee
under such sublease.
(d) No sublessee shall further assign or sublet all or any part of the
Promises without Lessor's prior written consent.
(e) With respect to any subletting to which Lessor has consented, Lessor
agrees to deliver a copy of any notice of default by Lessee to the sublessee.
Such sublessee shall have the right to cure a default of Lessee within three
(3) days after service of said notice of default upon such sub-lessee, and the
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such defaults cured by the sublessee.
12.5 Lessor's Expenses. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or
if Lessee shall request the consent of Lessor for any act Lessee proposes to
do then Lessee shall pay Lessor's reasonable costs and expenses incurred in
connection therewith, including attorneys, architects: engineers' or other
consultants' fees.
12.6 Conditions to Consent. Lessor reserves the right to condition any
approval to assign or sublet upon Lessor's determination that (a) the proposed
assignee or sublessee shall conduct a business on the Premises of a quality
substantially equal to that of Lessee and consistent with the general
character of the other occupants of the Office Building Project and not in
violation of any exclusives or rights then held by other tenants, and (b) the
proposed assignee or sublessee be at least as financially responsible as
Lessee was expected to be at the time of the execution of this Lease or of
such assignment or subletting, whichever is greater.
13. Default; Remedies.
13.1 Default. The occurrence of any one or more of the following events shall
constitute a material default of this Lease by Lessee:
(a) The vacation or abandonment of the Premises by Lessee. Vacation Gf
the Premises shall include the failure to occupy the Premises for a continuous
period of sixty (60) days or more, whether or not the rent is paid.
(b) The breach by Lessee of any of the covenants, conditions or
provisions of paragraphs 7.3(a), (b) or (d) (alterations), 12.1 (assignment or
subletting), 13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f)
(false statement), 16(a) (estoppel certificate), 30(b) (subordination), 33
(auctions), or 41.1 (easements), all of which are hereby deemed to be
material, non-curable defaults without the necessity of any notice by Lessor
to Lessee thereof.
(c) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due where such
failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes
such Notice to Pay Rent or Quit shall also constitute the notice required by
this subparagraph.
(d) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by
Lessee other than those referenced in subparagraphs (b) and (c), above, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Lessor to Lessee, provided, however, that if the nature of
Lessee's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion.; To the extent permitted by law,
such thirty (30) day notice shall constitute the sole and exclusive notice
required to be given to Lessee under applicable Unlawful Detainer statutes.
(e) (i) The making by Lessee of any general arrangement or general
assignment for the benefit of creditors, (ii) Lessee becoming a "debtor" as
defined in 11 U.S.C. 101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within sixty
(60) days; (iii) the appointment of a trustee or receiver to take possession
of substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease where possession is not restored to Lessee within
thirty (30) days; or (iv) the attachment, execution or other judicial seizure
of substantially all of Lessee s assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within thirty
(30) days. In the event that any provision of this paragraph 13.1 (e) is
contrary to any applicable law, such provision shall be of no force or effect.
(fl The discovery by Lessor that any financial statement given to Lessor
by Lessee, or its successor in interest or by any guarantor of Lessee's
obligation hereunder, was materially false.
10
13.2 Remedies. In the event of any material default or breach of this Lease
by Lessee. Lessor may at any time thereafter, with or without notice or demand
and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease and the term hereof shall terminate and Lessee
shall immediately surrender possession of the Promises to Lessor. In such
event Lessor shall be entitled to recover from Lessee all damages incurred by
Lessor by reason of Lessee's default including, but not limited to, the cost
of recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys'
fees, and any real estate commission actually paid, the worth at the time of
award by the court having jurisdiction thereof of the amount by which the
unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Lessee proves could be
reasonably avoided; that portion of the leasing commission paid by Lessor
pursuant to paragraph 15 applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have vacated or aban-doned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the rent
as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.
Unpaid installments of rent and other unpaid monetary obligations of Lessee
under the terms of this Lease shall bear interest from the date due at the
maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor fails to
perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor and
to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and
thereafter diligently pursues the same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee to
Lessor of Base Rent, or other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed covering the Office Building
Project. Accordingly, if any installment of Base Rent, Operating Expense
Increase, or any other sum due from Lessee shall not be received by Lessor or
Lessor's designee within ten (10) days after such amount shall be due, then,
without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to 6% of such overdue amount. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of late payment by Lessee. Acceptance of such late charge
by Lessor shall in no event constitute a waiver of Lessee's default with
respect to such overdue amount, nor prevent Lessor from exercising any of the
other rights and remedies granted hereunder.
14.Condemnation. If the Premises or any portion thereof or the Office Building
Project are taken under the power of eminent domain, or sold under the threat
of the exercise of said power (all of which are herein called "condemnation"),
this Lease shall terminate as to the part so taken as of the date the
condemning authority takes title or possession, whichever first occurs;
provided that if so much of the Premises or the Office Building Project are
taken by such condemnation as would substantially and adversely affect the
operation and profitability of Lessee's business conducted from the Premises,
Lessee shall have the option, to be exercised only in writing within thirty
(30) days after Lessor shall have given Lessee written notice of such taking
(or in the absence of such notice, within thirty (30) days after the
condemning authority shall have taken possession), to terminate this Lease as
of the date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the portion of the Premises remaining, except
that the rent and Lessee's Share of Operating Expense Increase shall be
reduced in the proportion that the floor area of the Premises taken bears to
the total floor area of the Premises. Common Areas taken shall be excluded
from the Common Areas usable by Lessee and no reduction of rent shall occur
with respect thereto or by reason thereof. Lessor shall have the option in its
sole discretion to terminate this Lease as of the taking of possession by the
condemning authority, by giving written notice to Lessee of such election
within thirty (30) days after receipt of notice of a taking by condemnation of
any part of the Premises or the Office Building Project. Any award for the
taking of all or any part of the Premises or the Office Building Project under
the power of eminent domain or any payment made under threat of the exercise
of such power shall be the property of Lessor, whether such award shall be
made as compensation for diminution in value of the leasehold or for the
taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any separate award for loss of or damage to Lessees trade
fixtures, removable personal property and unamortized tenant improvements that
have been paid for by Lessee. For that purpose the cost of such improvements
shall be amortized over the original term of this Lease excluding any options.
In the event that this Lease is not terminated by reason of such condemnation,
Lessor shall to the extent of severance damages received by Lessor in
connection with such condemnation, repair any damage to the Premises caused by
such condemnation except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall pay any amount in excess of
such severance damages required to complete such repair.
15. N/A
16. Estoppel Certificate.
(a) Each party (as "responding party") shall at any time upon not less than
ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a
statement in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in tull
force and effect) and the date to which the rent and other charges are
paid in advance, if any, and (ii)
11
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Office Building
Project or of the business of Lessee.
(b) At the requesting party's option, the failure to deliver such statement
within such time shall be a material default of this Lease by the party who is
to respond, without any further notice to such party, or it shall be
conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party,
(ii) there are no uncured defaults in the requesting party's performance, and
(iii) if Lessor is the requesting party, not more than one month's rent has
been paid in advance.
(c) If Lessor desires to finance refinance, or sell the Office Building
Project, or any part thereof, Lessee hereby agrees to deliver to any lender or
purchaser designated by Lesso; such financial statements of Lessee as may be
reasonably required by such lender or purchaser. Such statements shall include
the past three (3) years' financial statements of Lessee. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean only the
owner or owners, at the time in question, of the fee title or a lessee's
interest in a ground lease of the Office Building Project, and except as
expressly provided in paragraph 15, in the event of any transfer of such title
or interest, Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor at the time
of such transfer, in which Lessee has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by Lessor
shall, subject as aforesaid, be binding on Lessor's successors and assigns,
only during their respective periods of ownership.
18. Severabiliity. The invalidity of any provision of this Lease as determined
by a court of competent jurisdiction shall in no way affect the validity of
any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law or judgments from the date due. Payment of such interest
shall not excuse or cure any default by Lessee under this Lease; provided,
however, that interest shall not be payable on late charges incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence with respect to the obligations to
be performed under this Lease.
21. Additional Rent. All monetary obligations of Lessee to Lessor under the
terms of this Lease, including but not limited to Lessee's Share of Operating
Expense Increase and any other expenses payable by Lessee hereunder shall be
deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No
prior or contemporaneous agreement or understanding pertaining to any such
matter shall be effective. This Lease may be modified in writing only, signed
by the parties in interest at the time of the modification. Except as
otherwise stated in this Lease, Lessee hereby acknowledges that neither the
real estate broker listed in paragraph 15 hereof nor any cooperating broker on
this transaction nor the Lessor or any employee or agents of any of said
persons has made any oral or written warranties or representations to Lessee
relative to the condition or use by Lessee of the Premises or the Office
Building Project and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable
laws and regulations in effect during the term of this Lease.
23.Notices. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given if delivered or addressed to
Lessee or to Lessor at the address noted below or adjacent to the signature of
the respective parties, as the case may be. Mailed notices shall be deemed
given upon actual receipt at the address required, or forty-eight hours
following deposit in the mail, postage prepaid, whichever first occurs. Either
party may by notice to the other specify a different address for notice
purposes except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for notice purposes. A copy of all
notices required or permitted to be given to Lessor hereunder shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by notice to Lessee.
24.Waivers. No waiver by Lessor of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder
by Lessor shall not be a waiver of any preceding breach by Lessee of any
provision hereof, other than the failure of Lessee to pay the particular rent
so accepted, regardless of Lessor's knowledge of such preceding breach at the
time of acceptance of such rent.
25.Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of
this Lease for recording purposes.
26.Holding Over. If Lessee, with Lessor's consent, remains in possession of
the Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of
this Lease pertaining to the obligations of Lessee, except that the rent
payable shall be two hundred percent (200%) of the rent payable immediately
preceding the termination date of this Lease, and all Options, if any, granted
under the terms of this Lease shall be deemed terminated and be of no further
effect during said month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
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28.Covenants and Conditions. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29.Binding Effect, Choice of Law. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning
this Lease between the parties hereto shall be initiated in the county in
which the Office Building Project is located.
30. Subordination.
(a) This Lease, and any Option or right of first refusal granted hereby, at
Lessor's option, shall be subordinate to any ground lease, mortgage, deed of
trust, or any other hypothecation or security now or hereafter placed upon the
Office Building Project and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof. Notwithstanding such subordination, Lesseehas right to
quiet possession of the Promises shall not be disturbed if Lessee is not in
default and so long as Lessee shall pay the rent and observe and perform all
of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms. If any mortgagee, trustee or ground lessor shall elect
to have this Lease and any Options granted hereby prior to the lien of its
mortgage, deed of trust or ground lease, and shall give written notice thereof
to Lessee, this Lease and such Options shall be deemed prior to such mortgage,
deed of trust or ground lease, whether this Lease or such Options are dated
prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination, or to make this Lease or any Option granted
herein prior to the lien of any mortgage, deed of trust or ground lease; as
the case may be. Lessees failure to execute such documents within ten (10)
days after written demand shall constitute a material default by Lessee
hereunder without further notice to Lessee or, at Lessor's option, Lessor
shall execute such documents on behalf of Lessee as Lessee's attorney-in-fact.
Lessee does hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 30(b).
31. Attorneys' Fees.
31.1 If either party or the broker(s) named herein bring an action to enforce
the terms hereof or declare rights hereunder, the prevailing party in any such
action, trial or appeal thereon, shall be entitled to his reasonable
attorneys' fees to be paid by the losing party as fixed by the court in the
same or a separate suit, and whether or not such action is pursued to decision
or judgment. The provisions of this paragraph shall inure to the benefit of
the broker named herein who seeks to enforce a right hereunder.
31.2 The attorneys' fee award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys'
fees reasonably incurred in good faith.
31.3 Lessor shall be entitled to reasonable attorney's fees and all other
costs and expenses incurred in the preparation and service of notice of
detault and consultations in connection therewith, whether or not a legal
transaction is subsequently commenced in connection with such default.
32.Lessor's Access.
32.1 Lessor and Lessor's agents shall have the right to enter the Premises at
reasonable times for the purpose of inspecting the same, performing any
services required of Lessor, showing the same to prospective purchasers,
lenders, or lessees, taking such safety measures, erecting such scaffolding or
other necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as Lessor may
reasonably deem necessary or desirable and the erecting, using and maintaining
of utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises. Lessor may at any time place on or about the Premises or the
Buildingany ordinary "For Sale" signs and Lessor may at any time during the
last 120 days of the term hereof place on or about the Premises any ordinary
"For Lease" signs.
32.2 All activities of Lessor pursuant to this paragraph shall be without
abatement of rent, nor shall Lessor have any liability to Lessee for the same.
32.3 Lessor shall have the right to retain keys to the Promises and to unlock
all doors in or upon the Premises other than to files, vaults and safes and in
the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forceable, or unlawful entry
or detainer of the Premises or an eviction. Lessee waives any charges for
damages or injuries or interference with Lessees property or business in
connection therewith.
33.Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common
Areas without first having obtained Lessor's prior written consent.
Notwithstanding anything to the contrary in this Lease, Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
grant such consent. The holding of any auction on the Premises or Common Areas
in violation of this paragraph shall constitute a material default of this
Lease.
34.Signs. Lessee shall not place any sign upon the Premises or the Office
Building Project without Lessor's prior written consent. Under no
circumstances shall Lessee place a sign on any roof of the Office Building
Project.
35.Merger. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
36.Consents. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in this Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed.
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37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38.Quiet Possession. Upon Lessee paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Lessee's part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Office Building Project.
39.Options.
39.1 Definition. As used in this paragraph the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option of right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of
first refusal to lease other space within the Office Building Project or other
property of Lessor or the right of first offer to lease other space within the
Office Building Project or other property of Lessor, (3) the right or option
to purchase the Premises or the Office Building Project, or the right of first
refusal to purchase the Premises or the Office Building Project or the right
of first offer to purchase the Premises or the Office Building Project, or the
right or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 Options Personal. Each Option granted to Lessee in this Lease is
personal to the original Lessee and may be exercised only by the original
Lessee while occupying the Premises who does so without the intent of
thereafter assigning this Lease or subletting the Premises or any portion
thereof, and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Lessee, provided,
however, that an Option may be exercised by or assigned to any Lessee
Affiliate as defined in paragraph 12.2 of this Lease. The Options, if any,
herein granted to Lessee are not assignable separate and apart from this
Lease, nor may any Option be separated from this Lease in any manner, either
by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple options to
extend or renew this Lease a later option cannot be exercised unless the prior
option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision in the grant of Option to the contrary, (i) during the
timecommencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1 (c) or 13.1 (d) and continuing until the
noncompliance alleged in said notice of default is cured, or (ii) during the
period of time commencing on the day after a monetary obligation to Lessor is
due from Lessee and unpaid (without any necessity for notice thereof to
Lessee) and continuing until the obligation is paid, or (iii) in the event
that Lessor has given to Lessee three or more notices of default under
paragraph 13.1 (c), or paragraph 13.1 (d), whether or not the defaults are
cured, during the 12 month period of time immediately prior to the time that
'essee attempts to exercise the subject Option. (iv) if Lessee has committed
any non-curable breach, including without limitation those described in
paragraph 13.1 (b), or is otherwise in default of any of the terms, covenants
or conditions of this Lease.
(b) The period of time within which an Option may be exercised shall not
be extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if, after such exercise and during the term
of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of
Lessee for a period of thirty (30) days after such obligation becomes due
(without any necessity of Lessor to give notice thereof to Lessee), or (ii)
Lessee fails to commence to cure a default specified in paragraph 13.1 (d)
within thirty (30) days after the date that Lessor gives notice to Lessee of
such default and/or Lessee fails thereafter to diligently prosecute said cure
to completion, or (iii) Lessor gives to Lessee three or more notices of
default under paragraph 13.1(c), or paragraph 13.1(d), whether or not the
defaults are cured, or (iv) if Lessee has committed any non-curable breach
including without limitation those described in paragraph 13.1 (b), or is
otherwise in default of any of the terms, covenants and conditions of this
Lease.
40.Security Measures-Lessor's Reservations.
40.1 Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole
option, from providing security protection for the Office Building Project or
any part thereof, in which event the cost thereof shall be included within the
definition of Operating Expenses, as set forth in paragraph 4.2(b).
40.2 Lessor shall have the following rights:
(a) To change the name, address or title of the Office Building Project
or building in which the Premises are located upon not less than 90 days prior
written notice;
(b) To, at Lessees expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate;
(c) To permit any lessee the exclusive right to conduct any business as
long as such exclusive does not conflict with any rights expressly given
herein;
14
(d) To place such signs, notices or displays as Lessor reasonably deems
necessary or advisable upon the roof, exterior of the buildings or the Office
Building Project or on pole signs in the Common Areas;
40.3 Lessee shall not:
(a) Use a representation (photographic or otherwise) of the Building or
the Office Building Project or their name(s) in connection with Lessee's
business;
(b) Suffer or permit anyone, except in emergency, to go upon the roof of
the Building.
41. Easements.
41.1 Lessor reserves to itself the right, from time to time, to grant such
easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
41.2 The obstruction of Lessee's view, air, or light by any structure erected
in the vicinity of the Building, whether by Lessor or third parties, shall in
no way affect this Lease or impose any liability upon Lessor.
42.Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment, and there shall survive the
right on the part of said party to institute suit for recovery of such sum. If
it shall be adjudged that there was no legal obligation an the part of said
party to pay such sum or any part thereof, said party shall be entitled to
recover such sum or so much thereof as it was not legally required to pay
under the provisions of this Lease.
43.Authority. If Lessee is a corporation, trust, or general or limited
partnership, Lessee, and each individual executing this Lease on behalf of
such entity represent and warrant that such individual is duly authorized to
execute and deliver this Lease on behalt of said entity. If Lessee is a
corporation trust or partnership, Lessee shall, within thirty (30) days after
execution of this Lease, deliver to Lessor evidence of such authority
satisfactory to Lessor.
44.Conflict. Any conflict between the printed provisions, Exhibits or Addenda
of this Lease and the typewritten or handwritten provisions, if any, shall be
controlled by the typewritten or handwritten provisions.
45. No Offer. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully
executed by both parties.
46. Lender Modification. Lessee agrees to make such reasonable modifications
to this Lease as may be reasonably required by an institutional lender in
connection with the obtaining of normal financing or refinancing of the Office
Building Project.
47. Multitiple parties. If more than one person or entity is named as either
Lessor or Lessee herein, except as otherwise expressly provided herein, the
obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee, respectively.
48.N/A
49.Attachments. Attached hereto are the following documents which constitute a
part of this Lease:.N/A
50. LESSOR SHALL BE RESPONSIBLE FOR REMOVING EXISTING CARPETING AND APPLY
$500.00 (FIVE HUNDRED DOLLARS AND NO/CENTS) TOWARDS THE COST OF REPLACING AND
INSTALLING NEW CARPETING IN THE PREMISES, UPON RECEIPT OF PAID BILL BY LESSEE.
51. LESSEE HAS THE RIGHT TO PLACE BANNER ON THE SPACE IMMEDIATELY ADJACENT TO
THE NORTH OF THE PREMISES' SIGN CAN SPACE. THE DIMENSIONS OF THE BANNER SHALL
NOT EXCEED 3 FEET IN HEIGHT NOR 15 FEET IN WIDTH.
52. LESSEE SHALL HAVE THE OPTION TO EXTEND THE ORIGINAL LEASE TERM FOR AN
ADDITIONAL SIX (6) MONTHS COMMENCING MARCH 1, 1996 SUBJECT TO PARAGRAPH 39.
OPTIONS. NOTWITHSTANDING ANYTHING TO THE CONTRARY, SHOULD LESSEE CHOSE TO
EXERCISE OPTION, LESSEE MUST NOTIFY LESSOR IN WRITING, THIRTY (30) DAYS PRIOR
TO TERMINATION OF ORIGINAL LEASE TERM. THE RENT DURING THE SIX(6) MONTH OPTION
PERIOD SHALL BE $1,350.00 (ONE THOUSAND THREE HUNDRED FIFTY DOLLARS AND
NO/CENTS) PER MONTH.
52.A) SHOULD TENANT CHOOSE TO EXERCISE OPTION, LESSOR WILL PAY 50.00% OF COST
FOR NEW SIGN CAN AND INSTALLATION NOT TO EXCEED ONE THOUSAND DOLLARS AND
NO/CENTS ($1,000.00)
53. LESSOR AGREES TO GRANT TENANT AN EXCLUSIVE RIGHT TO DISCOUNT TELEPHONE
PHONE SERVICES,WESTERN UNION SERVICES, RETAIL SALES AND ACTIVATION OF PAGERS
AND CELLULAR TELEPHONES FOR THE ENTIRE DURAION OF THIS LEASE.
15
54. ADDITIONAL ADDRESS FOR LESSEE
2300 CRENSHAW BLVD. SUITE 108, TORRANCE, CALIFORNIA 91207
PHONE (310) 544-1657
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE. SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR
ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL
AND TAX CONSEQUENCES OF THIS LEASE.
LESSEE: LESSOR:
BAILEY ASSOCIATES INC.
FOR SPACE #C Broadway Trade Center
By: /s/ Elizabeth Hiromoto By: /s/ Robert Crane
- ------------------------- --------------------
Elizabeth Hiromoto Robert Crane
President By Robert Crane, Receiver
Date 12 July 95 Date July 21, 1995
EXHIBIT "A"
Exhibit "A" is a drawing of the location of the leased building (building C)
in relation to adjacent buildings.
AGREEMENT OF GUARANTOR
I, the undersigned, acknowledge I have executed a written Guaranty ("the
Guaranty") of the Lease dated July 10, 1995 between Robert Crane, Receiver and
Bailey Associates Inc, and that I am the guarantor of such Lease; that the
Guaranty remains in full force and effect; that I have read the foregoing
Lease and understand its content; that I agree that each and every term of the
Guaranty which I have signed shall be applicable to the obligations of the
Lessee under this Lease; and I acknowledge that my agreement to be bound to
the obligations of the Lessee under the terms of this Lease is a material
inducement to the Lessor's execution of this Lease.
Guarantor
By
------------------
Guarantor
By: /s/ Elizabeth Hiromoto
- --------------------------
Elizabeth Hiromoto
Date 12, July 95
---------------
EXHIBIT 10.2 Standard Industrial/Commercial Multi-Tenant Lease
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE-GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference
purposes only, November 1 - 1997 is made by and between Robert Crane,
Receiver undercourt order #BC106992 Superior court of Los Angeles Co.
("Lessor") and Bailey & Associates., a Delaware Corporation ("Lessee"),
(collectively the "Parties," or individually a "Party").
1.2(a) Promises: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this
Lease, commonly known by the street address of 827 S. Broadway, Suite C,
located in the City of Los Angeles, County of Los Angeles, state of
California, with zip code 90014, as outlined on Exhibit B attached hereto
("Premises"). The "Building" is that certain building containing the Premises
and generally described as (describe briefly the nature of the Building):
ground floor portion of a larger commercial building at 801 S. Broadway
In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have
any rights to the roof, exterior walls or utility raceways of the Building or
to any other buildings in the Industrial Center. The Premises, the Building,
the Common Areas, the land upon which they are located, along with all other
buildings and improvements thereon, are herein collectively referred to as the
"Industrial Central." (Also see Paragraph 2.)
1.2(b) Parking: N one unreserved vehicle parking spaces
("Unreserved Parking Spaces"); and None reserved vehicle parking spaces
("Reserved Parking Spaces"). (Also see Paragraph 2.6.)
1.3 Term: One (1) years and 0 months ("Original Term")
commending December 1, 1997 ("Commencement Date") and ending November
30, 1998 ("Expiration Date"). (Also see Paragraph 3.)
1.4 Early Possession: N/A ("Early Possession
Date"). (Also see Paragraphs 3.2 and 3.3.)
1.5 Base Rent: $ 1,250.00 per month ("Base Rent"), payable on
the First (1st) day of each month commencing December 1, 1997 (Also
see Paragraph 4.)
[ ] If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum N/A attached hereto.
1.6(a) Base Rent Paid Upon Execution: $ 0 as Base Rent for a period.
1.6(b) Lessee's Share of Common Area Operating Expenses: N/A percent
( %)("Lessee's Share") as determined by
[ ] prorata square footage of the Premises as compared to the total square
footage of the Building or [ ] other criteria as described in Addendum .
1.7 Security Deposit: $ 1,200.00* ("Security Deposit"). (Also see
Paragraph 5.) See also Paragraph 49.
1.8 Permitted Use: Exclusive discount telephone services, Western Union
services, and non-exclusive sales and activation of pagers and cellular
telephones. ("Permitted Use")(Also see Paragraph 6.)
1.9 Insuring Party. Lessor is the "Insuring Party." (Also see
Paragraph 8.)
1.10(a) Real Estate Brokers. The following real estate broker(s)
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
[ ] represents Lessor exclusively ("Lessor's Broker");
[ ] represents Lessee exclusively (Lessee's
Broker"); or
[ ] Grubb & Ellis Co. represents both Lessor and Lessee ("Dual Agency").
(Also see Paragraph 15.)
1.10(b) Payment to Brokers. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate
shares as they may mutually designate in writing, a fee as set forth in a
separate written agreement between Lessor and said Broker(s) (or in the event
there is no separate written agreement between Lessor and said Broker(s), the
sum of $ see invoice ) for brokerage services rendered by said Broker(s) in
connection with this transaction.
1.11 Guarantor. The obligations of the Lessee under this Lease are
to be guaranteed by Michele Hiromoto ("Guarantor"). (Also see Paragraph
37.)
1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs --- through ---, and Exhibits A through C, all of
which constitute a part of this Lease.
2. Premises, Parking and Common Areas.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon
is not subject to revision whether or not the actual square footage is more or
less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, electrical systems, fire sprinkler system, lighting, air
conditioning and heating systems and loading doors, if any, in the Premises,
other than those constructed by Lessee, shall be in good operating condition
on the Commencement Date. If a non-compliance with said warranty exists as of
the Commencement Date, Lessor shall, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If Lessee does not give Lessor written notice of a non-
compliance with this warranty within thirty (30) days after the Commencement
Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to
be made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within six (6) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be
reasonable or appropriate to rectify the non-compliance. Lessor makes no
warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises
under Applicable Laws (as defined in Paragraph 2.4).
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it
has been advised by the Broker(s) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and
fire sprinkler systems, security, environmental aspects, seismic and
earthquake requirements, and compliance with the Americans with Disabilities
Act and applicable zoning, municipal, county, state and federal laws,
ordinances and regulations and any covenants or restrictions of record
(collectively, "Applicable Laws") and the present and future suitability of
the Premises for Lessee's intended use; (b) that Lessee has made such
investigation as it deems necessary with reference to such matters, is
satisfied with reference thereto, and assumes all responsibility therefore as
the same relate to Lessee's occupancy of the Premises and/or the terms of this
Lease; and (c) that neither Lessor, nor any of Lessor's agents, has made any
oral or written representations or warranties with respect to said matters
other than as set forth in this Lease.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
this Paragraph 2 Shall be of no force or effect if immediately prior to the
date set forth in Paragraph 1.1 Lessee was the owner or occupant of the
Premises. In such event, Lessee shall, at Lessee's sole cost and expense,
correct any non-compliance of the Premises with said warranties.
*1,200.00, already on deposit per lease dated July 10, 1995 between Lessee
and Lessor.
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/s/ M.H.
American Industrial Real Estate Association 1993 MULTI-TENANT - GROSS
2.7 Common Area - Definition. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior boundary
line of the Industrial Center and Interior utility raceways within the
Premises that are provided and designated by the Lessor from time to time for
the general non-exclusive use of Lessor, Lessee and other lessees of the
Industrial Center and their respective employees, suppliers, shippers,
customers, contractors and invitees, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways and landscaped areas.
2.8 Common Areas - Lessees Rights. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges
reserved by Lessor under the terms hereof or under the terms Of any rules and
regulations or restrictions governing the use of the industrial Center. Under
no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common Areas. Any Such storage shall be permitted only by the prior
written consent of Lessor or Lessor's designated agent, which consent may be
revoked at any time. in the event that any unauthorized storage shall occur
then Lessor shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove the property and charge the
cost to Lessee, which cost shall be Immediately payable upon demand by Lessor.
2.9 Common Areas-Rules and Regulations. Lessor or Such other
person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
establish, modify, amend and enforce reasonable Rules and Regulations with
respect thereto in accordance with Paragraph 40. Lessee agrees to abide by and
conform to all such Rules and Regulations, and to cause its employees,
suppliers, shippers, customers, contractors and invitees to so abide and
conform. Lessor shall not be responsible to Lessee for the non-compliance with
said rules and regulations by other lessees of the Industrial Center.
2.10 Common Areas-Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas,
ingress, egress, direction of traffic, landscaped areas, walkways and utility
raceways;
(b) To close temporarily any of the Common Area for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land outside the boundaries of the industrial
Center to be a part of the Common Areas;
(d) Tb add additional buildings and improvements to the Common Areas;
(e) To use the Common Area while engaged in making additional
improvements, repairs or alterations to the industrial Center, or any portion
Thereof;
and
(f) To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Industrial Center as Lessor may, in
the exercise of sound business judgment, deem to be appropriate.
3. Term.
3. Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after
the Early Possession Date but prior to the Commencement Date, the obligation
to pay Base Rent shall be abated for the period of such early occupancy. All
other terms of this Lease, however, (including but not limited to the
obligations to pay Lessee's Share of Common Area Operating Expenses and to
carry the insurance required by Paragraph 8) shall be in effect during such
period. Any such early possession shall not affect nor advance the Expiration
Date of the Original Term.
3.3 Delay In Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by
the Commencement Date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease, or the obligations
of Lessee hereunder, or extend the term hereof, but in such case, Lessee shall
not, except as otherwise provided herein, be obligated to pay rent or perform
any other obligation of Lessee under the terms of this Lease until Lessor
delivers possession of the Premises to Lessee. If possession of the Premises
is not delivered to Lessee within sixty (60) days after the Commencement Date,
Lessee may, at its option, by notice In writing to Lessor within ten (10) days
after the end of said sixty (60) day period, cancel this Lease, in which event
the parties shall be discharged from all obligations hereunder; provided
further, however, that if such written notice of Lessee is not received by
Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect. Except as may
be otherwise provided, and regardless of when the Original Term actually com-
mences, if possession is not tendered to Lessee when required by this Lease
and Lessee does not terminate this Lease, as aforesaid, the period free of the
obligation to pay Base Rent, if any, that Lessee would otherwise have enjoyed
shall run from the date of delivery of possession and continue for a period
equal to the period during which the Lessee would have otherwise enjoyed under
the terms hereof, but minus any days of delay caused by the acts, changes or
omissions of Lessee.
4. Rent.
4.1 Base Rent. Lessee shall pay Base Rent and other rent or charges, as
the same may be adjusted from time to time, to Lessor in lawful money of the
United States, without offset or deduction, on or before the day on which it
is due under the terms of this Lease. Base Rent and all other rent and charges
for any period during the term hereof which is for less than one full month
shall be prorated based upon the actual number of days of the month involved.
Payment of Base Rent and other charges shall be made to Lessor at its address
stated herein or to such other persons or at such other addresses as Lessor
may from time to time designate in writing to Lessee.
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American Industrial Real Estate Association 1993 - 2 -
5. Security Deposit. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security
for Lessee's faithful performance of Lessee's obligations under this Lease. If
Lessee fails to pay Base Rent or other rent or charges due hereunder, or
otherwise Defaults under this Lease (as defined in Paragraph 13.1). Lessor may
use, apply or retain all or any portion of said Security Deposit for the
payment of any amount due Lessor or to reimburse or compensate Lessor for any
Liability, cost, expense, loss or damage (including attorneys' fees) which
Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or
any portion of said Security Deposit, Lessee shall within ten (10) days after
written request therefore deposit monies with Lessor sufficient to restore
said Security Deposit to the full amount required by this Lease. Any time the
Base Rent increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional monies with Lessor as an addition to
the Security Deposit so that the total amount of the Security Deposit shall at
all times bear the same proportion to the then current Base Rent as the
initial Security Deposit bears to the Initial Base Rent set forth in Paragraph
1.5. Lessor shall not be required to keep all or any part of the Security
Deposit separate from its general accounts. Lessor shall, at the expiration or
earlier termination of the term hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's option, to the last assignee, if
any, of Lessee's interest herein), that portion of the Security Deposit not
used or applied by Lessor. Unless otherwise expressly agreed in writing by
Lessor, no part of the Security Deposit shall be considered to be held in
trust, to bear interest or other increment for its use, or to be prepayment
for any monies to be paid by Lessee under this Lease.
6. Use.
6.1 Permitted Use.
(a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit
the use of the Premises in a manner that is unlawful, creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage to the
Premises or neighboring premises or properties.
(b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants,
and by prospective assignees and subtenants of Lessee, its assignees and
subtenants, for a modification of said Permitted Use, so long as the same will
not impair the structural integrity of the improvements on the Premises or in
the Building or the mechanical or electrical systems therein, does not
conflict with uses by other lessees, is not significantly more burdensome to
the Premises or the Building and the improvements thereon, and is otherwise
permissible pursuant to this Paragraph 6. If Lessor elects to withhold such
consent, Lessor shall within five (5) business days after such request give a
written notification of same, which notice shall include an explanation of
Lessor's reasonable objections to the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises,
is either: (i) potentially injurious to the public health, safety or welfare,
the environment, or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Lessor
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof. Lessee shall not engage in any activity in or about the Premises
which constitutes a Reportable Use (as hereinafter defined) of Hazardous
Substances without the express prior written consent of Lessor and compliance
in a timely manner (at Lessee's sole cost and expense) with all Applicable
Requirements (as defined in Paragraph 6.3). "Reportable Use" shall mean (i)
the installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with,
any governmental authority, and (iii) the presence in, on or about the
Premises of a Hazardous Substance with respect to which any Applicable Laws
require that a notice be given to persons entering or occupying the Premises
or neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but upon notice to Lessor and in compliance with all
Applicable Requirements, use any ordinary and customary materials reasonably
required to be used by Lessee in the normal course of the Permitted Use, so
long as such use is not a Reportable Use and does not expose the Premises or
neighboring properties to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. In addition, Lessor may (but without
any obligation to do so) condition its consent to any Reportable Use of any
Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited
to the installation (and, at Lessor's option, removal on or before Lease
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the
deposit of an additional Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or the Building, other than as previously consented to by
Lessor, Lessee shall immediately give Lessor written notice thereof, together
with a copy of any statement, report, notice, registration, application,
permit, business plan, license, claim, action, or proceeding given to, or
received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance including but not limited to all such documents as may be involved
in any Reportable Use involving the Premises. Lessee shall not cause or permit
any Hazardous Substance to be spilled or released in, on, under or about the
Premises (including, without limitation, through the plumbing or sanitary
sewer system).
(c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under
Lessee's control. Lessee's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the
cost of investigation (including consultants' and attorneys' fees and
testing), removal, remediation, restoration and/or abatement thereof, or of
any contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.
6.3 Lessee's Compliance with Requirements. Lessee shall, at Lessee's
sole cost and expense, fully, diligently and in a timely manner, comply with
all "Applicable Requirements," which term is used in this Lease to mean all
laws, rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises
(including but not limited to matters pertaining to (i) industrial hygiene,
(ii) environmental conditions on, in, under or about the Premises, including
soil and groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage,
spill, or release of any Hazardous Substance), now in effect or which may
hereafter come into effect. Lessee shall, within five (5) days after receipt
of Lessor's written request, provide Lessor with copies of all documents and
information, including but not limited to permits, registrations, manifests,
applications, reports and certificates, evidencing Lessee's compliance with
any Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of
any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving failure by Lessee or the Premises to comply with
any Applicable Requirements.
6.4 Inspection; Compliance with Law. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lenders") shall have the
right to enter the Premises at any time in the case of an emergency, and
otherwise at reasonable times, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease and all
Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be
entitled to employ experts and/or consultants in connection therewith to
advise Lessor with respect to Lessee's activities, including but not limited
to Lessee's installation, operation, use, monitoring, maintenance, or removal
of any Hazardous Substance on or from the Premises. The costs and expenses of
any such inspections shall be paid by the party requesting same, unless a
Default or Breach of this Lease by Lessee or a violation of Applicable
Requirements or a contamination, caused or materially contributed to by
Lessee, is found to exist or to be imminent, or unless the inspection is
requested or ordered by a governmental authority as the result of any such
existing or imminent violation or contamination. In such case, Lessee shall
upon request reimburse Lessor or Lessor's Lender, as the case may be, for the
costs and expenses of such inspections.
7. Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall,
at Lessee's sole cost and expense and at all times, keep the Premises and
every part thereof in good order, condition and repair (whether or not such
portion of the Premises requiring repair, or the means of repairing the same,
are reasonably or readily accessible to Lessee, and whether or not the need
for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, without
limiting the generality of the foregoing, all equipment or facilities
specifically serving the Premises, such as plumbing, heating, air
conditioning, ventilating, electrical, lighting facilities, boilers, fired or
unfired pressure vessels, fire hose connections if within the Premises,
fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, windows, doors, plate glass, and skylights, but excluding any items
which are the responsibility of Lessor pursuant to Paragraph 7.2 below.
Lessee, in keeping the Premises in good order, condition and repair, shall
exercise and perform good maintenance practices. Lessee's obligations shall
include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order,
condition and state of repair, including replacing light bulbs, and common
cleaning of the Premises.
(c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and
put the Premises in good order, condition and repair, in accordance with
Paragraph 13.2 below.
7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to
reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, exterior roof, fire sprinkler and/or standpipe and hose (if
located In the Common Areas) or other automatic fire extinguishing system
including fire alarm and/or smoke detection
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American Industrial Real Estate Association 1993 - 3 -
systems and equipment, fire hydrants. parking lots, walkways, parkways,
driveways, landscaping, fences, signs and utility systems serving the Common
Areas and all parts thereof, as well as providing the services for which there
is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not
be obligated to paint the exterior or interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises. Lessee expressly waives the benefit of any
statute now or hereafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease because
of Lessor's failure to keep the Building, Industrial Center or Common Areas in
good order, condition and repair.
7,3 Utility installations, Trade Fixtures, Alterations.
(a) Definitions; Consent Required. The term "Utility Installations"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "'Trade Fixtures"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "Alterations" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are defined
as Alterations and/or Utility installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause
to be made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises
(excluding the roof) without Lessor's consent but upon notice to Lessor, so
long as they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or changing
or interfering with the fire sprinkler or fire detection systems and the
cumulative cost thereof during the term of this Lease as extended does not
exceed $2500.00.
(b) Consent. Any Alterations or Utility installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all
applicable permits required by governmental authorities: (ii) the furnishing
of copies of such permits together with a copy of the plans and specifications
for the Alteration or Utility Installation to Lessor prior to commencement of
the work thereon; and (iii) the compliance by Lessee with all conditions of
said permits in a prompt and expeditious manner. Any Alterations or Utility
Installations by Lessee during the term of this Lease shall be done in a good
and workmanlike manner, with good and sufficient materials, and be in
compliance with all Applicable Requirements. Lessee shall promptly upon
completion thereof furnish Lessor with as-built plans and specifications
therefor. Lessor may, (but without obligation to do so) condition its consent
to any requested Alteration or Utility Installation that costs $2,500.00 or
more upon Lessee's providing Lessor with a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such Alteration
or Utility Installation.
(c) Lien Protection. Lessee shall pay when due all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at
or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense, defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor
in an amount equal to one and one-half times the amount of such contested lien
claim or demand, indemnifying Lessor against liability for the same, as
required by law for the holding of the Premises free from the effect of such
lien or claim. In addition, Lessor may require Lessee to pay Lessor's
attorneys' fees and costs in participating in such action if Lessor shall
decide it is to its best interest to do so.
7.4 Ownership, Removal, Surrender, and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal and
to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises
by Lessee shall be the property of and owned by Lessee, but considered a part
of the Premises. Lessor may, at any time and at its option, elect in writing
to Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.
(b) Removal. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be removed
by the expiration or earlier termination of this Lease, notwithstanding that
their Installation may have been consented to by Lessor. Lessor may require
the removal at any time of all or any part of any Alterations or Utility
Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease. Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice. Lessee's Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.
8. Insurance; Indemnity.
8.1 Payment of Premium Increases.
(a) As used herein, the term "Insurance Cost increase" is defined as
any increase in the actual cost of the insurance applicable to the Building
and required to be carried by Lessor pursuant to Paragraphs 8.2(b), 8.3(a) and
8.3(b), ("Required Insurance"), over and above the Base Premium, as
hereinafter defined, calculated on an annual basis. "Insurance Cost Increase"
shall include, but not be limited to, requirements of the holder of a mortgage
or deed of trust covering the Premises, increased valuation of the Premises,
and/or a general premium rate increase. The Term "Insurance Cost Increase"
shall not, however, include any premium increases resulting from the nature of
the occupancy of any other lessee of the Building. If the parties insert a
dollar amount in Paragraph 1.9, such amount shall be considered the "Base
Premium." If a dollar amount has not been inserted in Paragraph 1.9 and if the
Building has been previously occupied during the twelve (12) month period
immediately preceding the Commencement Date, the "Base Premium" shall be the
annual premium applicable to Such twelve (12) month period. If the Building
was not fully occupied during such twelve (12) month period, the "Base
Premium" shall be the lowest annual premium reasonably obtainable for the
Required Insurance as of the Commencement Date, assuming the most nominal use
possible of the Building. In no event, however, shall Lessee be responsible
for any portion of the premium cost attributable to liability insurance
coverage in excess of $1,000,000 procured under Paragraph 8.2(b).
(b) Lessee shall pay any Insurance Cost Increase to Lessor pursuant
to Paragraph 4.2. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with
the corresponding Commencement Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of
the ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence
with an Additional insured-Managers or Lessors of Prenes" endorsement and
contain the "Amendment of the Pollution Exclusion" endorsement for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not
contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this
Lease as an "Insured contract" for the performance of Lessee's Indemnity
obligations under this Lease. The limits of said insurance required by this
Lease or as carried by Lessee shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance to be
carried by Lessee shall be primary to and not contributory with any similar
insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
(b) Carried by Lessor. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be
named as an additional insured therein.
8.3 Property Insurance-Building, improvements and Rental Value.
(a) Building and improvements. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage
to the Premises. Such insurance shall be for full replacement cost, as the
same shall exist from time to time, or the amount required by any Lender(s),
but in no event more than the commercially reasonable and available insurable
value thereof if, by reason of the unique nature or age of the improvements
involved, such latter amount is less than full replacement cast. Lessee-Owned
Alterations and Utility Installations. Trade Fixtures and Lessee's personal
property shall be insured by Lessee pursuant to Paragraph 8.4. If the coverage
is available and commercially appropriate, Lessor's policy or policies shall
insure against all risks of direct physical loss or damage (except the perils
of flood and/or earthquake unless required by a Lender or included in the Base
Premium), including coverage for any additional costs resulting from debris
removal and reasonable amounts of coverage for the enforcement of any
ordinance or law regulating the reconstruction or replacement of any undamaged
sections of the Building required to be demolished or removed by reason of the
enforcement of any building, zoning, safety or land use laws as the result of
a covered loss, but not including plate glass insurance. Said policy or
policies shall also contain an agreed valuation provision in lieu of any co-
insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest to where the Premises are
located.
(b) Rental Value. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s), insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that
in the event the Lease is terminated by reason of an insured loss, the period
of indemnity for such coverage shall be extended beyond the date of the
completion of repairs or replacement of the Premises, to provide for one full
year's loss of rental revenues from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any co-insurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected rental income, Real Property Taxes, insurance premium costs and
other expenses, if any, otherwise payable, for the next 12-month period.
Common Area Operating Expenses shall include any deductible amount in the
event of such loss.
(c) Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas
or other buildings in the Industrial Center if said increase is caused by
Lessee's acts, omissions, use or occupancy of the Premises.
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(d) Lessee's improvements. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's
option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures and Lessee-Owned
Alterations and Utility installations in, on, or about the Premises similar in
coverage to that carried by Lessor as the insuring Party under Paragraph
8.3(a). Such insurance shall be full replacement cost coverage with a
deductible not to exceed $1,000 per occurrence. The proceeds from any such
insurance shall be used by Lessee for the replacement of personal property and
the restoration of Trade Fixtures and Lessee-Owned Alterations and Utility
Installations. Upon request from Lessor, Lessee shall provide Lessor with
written evidence that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are locat-
ed, and maintaining during the policy term a "General Policyholders Rating" of
at least B+, V, or such other rating as may be required by a Lender, as set
forth in the most current issue of "Best's Insurance Guide." Lessee Shall not
do or permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the
existence and amounts of, the insurance required under Paragraph 8.2(a) and
8.4. No such policy shall be cancelable or subject to modification except
after thirty (30) days' prior written notice to Lessor. Lessee shall at least
thirty (30) days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or "Insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand.
8.6 Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and
waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss or damage to their property arising out of or
incident to the perils required to be insured against under Paragraph 8. The
effect of such releases and waivers of the right to recover damages shall not
be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto. Lessor and Lessee agree to have their
respective insurance companies issuing property damage insurance waive any
right to subrogation that such companies may have against Lessor or Lessee, as
the case may be, so long as the insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessor's negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor,
partners and Lenders, from and against any and all claims, loss of rents
and/or damages, costs, liens, judgments, penalties, loss of permits,
attorneys' and consultants' fees, expenses and/or liabilities arising out of,
involving, or in connection with, the occupancy of the Premises by Lessee, the
conduct of Lessee's business, any act, omission or neglect of Lessee, its
agents, contractors, employees or invitees, and out of any Default or Breach
by Lessee in the performance in a timely manner of any obligation on Lessee's
part to be performed under this Lease. The foregoing shall include, but not be
limited to, the defense or pursuit of any claim or any action or proceeding
involved therein, and whether or not (in the case of claims made against
Lessor) litigated and/or reduced to judgment. In case any action or proceeding
be brought against Lessor by reason of any of the foregoing matters, Lessee
upon notice from Lessor shall defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in
such defense. Lessor need not have first paid any such claim in order to be so
indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or
any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or
from the breakage, leakage, obstruction or other defects of pipes, fire
sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said injury or damage results from
conditions arising upon the Premises or upon other portions of the Building of
which the Premises are a part, from other sources or places, and regardless of
whether the cause of such damage or injury or the means of repairing the same
is accessible or not. Lessor shall not be liable for any damages arising from
any act or neglect of any other lessee of Lessor nor from the failure by
Lessor to enforce the provisions of any other lease in the Industrial Center.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall
under no circumstances be liable for injury to Lessee's business or for any
loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility installations
the repair cost of which damage or destruction is fifty percent (50%) or more
of the then Replacement Cost of the Premises (excluding Lessee-Owned
Alterations and Utility installations and Trade Fixtures) immediately prior to
such damage or destruction. In addition, damage or destruction to the
Building, other than Lessee-Owned Alterations and Utility Installations and
Trade Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.
(c) "insured Loss" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or
coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances
or laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Premises Partial Damage-Insured Loss. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in
insurance proceeds or to fully restore the unique aspects of the Premises
unless Lessee provides Lessor with the funds to cover same, or adequate
assurance thereof, within ten (10) days following receipt of written notice of
such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said ten (10) day period. Lessor shall complete them
as soon as reasonably possible and this Lease shall remain in full force and
effect. If Lessor does not receive such funds or assurance within said period,
Lessor may nevertheless elect by written notice to Lessee within ten (10) days
thereafter to make such restoration and repair as is commercially reasonable
with Lessor paying any shortage in proceeds, in which case this Lease shall
remain in full force and effect. If Lessor does not receive such funds or
assurance within such ten (10) day period, and if Lessor does not so elect to
restore and repair, then this Lease shall terminate sixty (60) days following
the occurrence of the damage or destruction. Unless otherwise agreed, Lessee
shall in no event have any right to reimbursement from Lessor for any funds
contributed by Lessee to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3
rather than Paragraph 9.2, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available
for the repairs if made by either Party.
9.3 Partial Damage-Uninsured Loss. If Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (In which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such damage of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the
date of such notice. In the event Lessor elects to give such notice of
Lessor's intention to terminate this Lease, Lessee shall have the right within
ten (10) days after the receipt of such notice to give written notice to
Lessor of Lessee's commitment to pay for the repair of such damage totally at
Lessee's expense and without reimbursement from Lessor. Lessee shall provide
Lessor with the required funds or satisfactory assurance thereof within thirty
(30) days following such commitment from Lessee. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
repairs as soon as reasonably possible after the required funds are available.
If Lessee does not give such notice and provide the funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 9.7.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within thirty (30) days after the date of
occurrence of such damage. Provided, however, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by (a) exercising such option, and (b)
providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten (10) days after Lessee's receipt of Lessor's written
notice purporting to terminate this Lease, or (ii) the day prior to the date
upon which such option expires. If Lessee duly exercises such option during
such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance proceeds, Lessor shall, at Lessor's expense
repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate as of the date set forth in the first sentence of this Paragraph
9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base
Rent, Common Area Operating Expenses and other charges, if any, payable by
Lessee hereunder for the period during which such damage or condition, its
repair, remediation or restoration continues, shall be abated in proportion to
the degree to which Lessee's use of the Premises is impaired, but not in
excess of proceeds from insurance required to be carried under Paragraph
8.3(b). Except for abatement of Base Rent, Common Area Operating Expenses and
other charges, if any, as aforesaid, all other obligations of Lessee hereunder
shall be performed by Lessee, and Lessee shall have no claim against Lessor
for any damage suffered by reason of any such damage, destruction, repair,
remediation or restoration.
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(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at any
time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice of
Lessee's election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice to
Lessor and such Lenders and such repair or restoration is not commenced within
thirty (30) days after receipt of such notice, this Lease shall terminate as
of the date specified in said notice. If Lessor or a Lender commences the
repair or restoration of the Premises within thirty (30) days after the
receipt of such notice, this Lease shall continue in full force and effect.
"Commence" as used in this Paragraph 9.6 shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning of
the actual work on the Premises, whichever occurs first.
9.7 Hazardous Substance Conditions. If a Hazardous Substance
Condition occurs, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by
Applicable Requirements and this Lease shall continue in full force and
effect, but subject to Lessor's rights under Paragraph 6.2(c) and Paragraph
13), Lessor may at Lessor's option either (i) investigate and remediate such
Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) if the estimated cost to investigate and remediate such condition exceeds
twelve (12) times the then monthly Base Rent or $100,000 whichever is greater,
give written notice to Lessee within thirty (30) days after receipt by Lessor
of knowledge of the occurrence of such Hazardous Substance Condition of
Lessor's desire to terminate this Lease as of the date sixty (60) days
following the date of such notice. In the event Lessor elects to give such
notice of Lessor's intention to terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's commitment to pay for the excess costs of (a)
investigation and remediation of such Hazardous Substance Condition to the
extent required by Applicable Requirements, over (b) an amount equal to twelve
(12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with the funds required of Lessee or satisfactory
assurance thereof within thirty (30) days following said commitment by Lessee.
In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such investigation and remediation as soon as reasonably
possible after the required funds are available, if Lessee does not give such
notice and provide the required funds or assurance thereof within the time
period specified above, this Lease shall terminate as of the date specified in
Lessor's notice termination.
9.8 Termination-Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance
payment made by Lessee to Lessor and so much of Lessee's Security Deposit as
has not been, or is not then required to be, used by Lessor under the terms of
this Lease.
9.9 Waiver of Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby
waive the provisions of any present or future statute to the extent it is
inconsistent herewith.
10. Real Property Taxes.
10.1 Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2(a), applicable to the Industrial Center, and except
as otherwise provided in Paragraph 10.3, any increases in such amounts over
the Base Real Property Taxes shall be included in the calculation of Common
Area Operating Expenses in accordance with the provisions of Paragraph 4.2.
10.2 Real Property Tax Definitions.
(a) As used herein, the term "Real Property Taxes" shall include any
form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (other than inheritance, personal income or estate taxes)
imposed upon the Industrial Center by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage, or other improvement
district thereof, levied against any legal or equitable interest of Lessor in
the Industrial Center or any portion thereof. Lessor's right to rent or other
income therefrom, and/or Lessor's business of leasing the Premises. The term
"Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring, or
changes in Applicable Law taking effect, during the term of this Lease,
including but not limited to a change in the ownership of the Industrial
Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated
by the Parties.
(b) As used herein, the term "Base Real Property Taxes" shall be the
amount of Real Property Taxes, which are assessed against the Premises,
Building or Common Areas in the calendar year during which the Lease is
executed. In calculating Real Property Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the
calculation of Real Property Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common.
10.3 Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.
10.4 Joint Assessment. If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable proportion
of the Real Property Taxes for all of the land and improvements included
within the tax parcel assessed, such proportion to be determined by Lessor
from the respective valuations assigned in the assessor's work sheets or such
other information as may be reasonably available. Lessor's reasonable
determination thereof, in good faith, shall be conclusive.
10.5 Lessee's Property Taxes. Lessee shall pay prior to delinquency
all taxes assessed against and levied upon Lessee-Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the Premises or stored within the industrial
Center. When possible, Lessee shall cause its Lessee-Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Lessor. If any of Lessee's said property shall be assessed with Lessor's
real property, Lessee shall pay Lessor the taxes attributable to Lessee's
property within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property.
11. Utilities. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign")
or sublet all or any part of Lessee's interest in this Lease or in the
Premises without Lessor's prior written consent given under and subject to the
terms of Paragraph 36.
(b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-
five percent (25%) or more of the voting control of Lessee shall constitute a
change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a
formal assignment or hypothecation of this Lease or Lessee's assets occurs,
which results or will result in a reduction of the Net Worth of Lessee, as
hereinafter defined, by an amount equal to or greater than twenty-five percent
(25%) of such Net Worth of Lessee as it was represented to Lessor at the time
of full execution and delivery of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction at whichever time
said Net Worth of Lessee was or is greater, shall be considered an assignment
of this Lease by Lessee to which Lessor may reasonably withhold its consent.
"Net Worth of Lessee" for purposes of this Lease shall be the net worth of
Lessee (excluding any Guarantors) established under generally accepted
accounting principles consistently applied.
(d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be
a Default curable after notice per Paragraph 13.1, or a non-curable Breach
without the necessity of any notice and grace period. If Lessor elects to
treat such unconsented to assignment or subletting as a non-curable Breach,
Lessor shall have the right to either: (i) terminate this Lease, or (ii) upon
thirty (30) days' written notice ("Lessor's Notice"), increase the monthly
Base Rent for the Premises to the greater of the then fair market rental value
of the Premises, as reasonably determined by Lessor, or one hundred ten
percent (110%) of the Base Rent then in effect. Pending determination of the
new fair market rental value, if disputed by Lessee, Lessee shall pay the
amount set forth in Lessor's Notice, with any overpayment credited against the
next installment(s) of Base Rent coming due, and any underpayment for the
period retroactively to the effective date of the adjustment being due and
payable immediately upon the determination thereof. Further, in the event of
such Breach and rental adjustment, (i) the purchase price of any option to
purchase the Premises held by Lessee shall be subject to similar adjustment to
the then fair ,market value as reasonably determined by Lessor (without the
Lease being considered an encumbrance or any deduction for depreciation or
obsolescence, and considering the Premises at its highest and best use and in
good condition) or one hundred ten percent (110%) of the price previously in
effect, (ii) any index-oriented rental or price adjustment formulas contained
in this Lease shall be adjusted to require that the base Index be determined
with, reference to the index applicable to the time of such adjustment, and
(iii) any fixed rental adjustments scheduled during the remainder of the Lease
term shall be increased in the same ratio as the new rental bears to the Base
Rent in effect immediately prior to the adjustment specified in Lessor's
Notice.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease. (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach
by Lessee of any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee
or to any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and
assignment of the sublease or any amendments or modifications thereto without
notifying Lessee or anyone else liable under this Lease or the sublease and
without obtaining their consent, and such action shall not relieve such
persons from liability under this Lease or the sublease.
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(d) In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors
or any-one else responsible for the performance of the Lessee's obligations
under this Lease, including any sublessee, without first exhausting Lessor's
remedies against any other person or entity responsible therefor to Lessor, or
any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor determination as to
the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any, together with a non-
refundable deposit of $1,000 or ten percent (10%) of the monthly Base Rent
applicable to the portion of the Premises which is the subject of the proposed
assignment or sublease, whichever is greater, as reasonable consideration for
Lessor's considering and processing the request for consent. Lessee agrees to
provide Lessor with such other or additional information and/or documentation
as may be reasonably requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed, for
the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed
or performed by Lessee during the term of said assignment or sublease, other
than such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
(g) The occurrence of a transaction described in Paragraph 12.2(o)
shall give Leasor the right (but not the obligation) to require that the
Security Deposit be increased by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.
(h) Lessor, as a condition to give its consent to any assignment or
subletting, may require that the amount and adjustment schedule of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment schedule for property similar to the Premises as then constituted,
as determined by Lessor.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all
or any pert of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a
portion of the Premises heretofore or hereafter made by Lessee, and Lessor may
collect such rent and income and apply same toward Lessee's obligations under
this Lease; provided, however, that until a Breach (as defined in Paragraph
13.1) shall occur in the performance of Lessee's obligations under this Lease,
Lessee may, except as otherwise provided in this Lease, receive, collect and
enjoy the rents accruing under such sublease. Lessor shall not, by reason of
the foregoing provision or any other assignment of such sublease to Lessor,
nor by reason of the collection of the rents from a sublessee, be deemed
liable to the sublease for any failure of Lessee to perform and comply with
any of Lessee's obligations to such sublessee under such Sublease. Lessee
hereby irrevocably authorizes and directs any such sublessee, upon receipt of
a written notice from Lessor stating that a Breach exists in the performance
of Lessee's obligations under this Lease, to pay to Lessor the rents and other
charges due and to become due under the sublease. Sublessee shall rely upon
any such statement and request from Lessor and shall pay such rents and other
charges to Lessor without any obligation or right to inquire as to whether
such Breach exists and notwithstanding any notice from or claim from Lessee to
the contrary. Lessee shall have no right or claim against such sublessee, or,
until the Breach has been cured, against Lessor, for any such rents and other
charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or
security deposit paid by such sub-lessee to such sublessor or for any other
prior defaults or breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.
(d) No sublessee under a sublease approved by Lessor shall further
assign or sublet all or any part of the Premises without Lessor's prior
written consent
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.
13. Default; Breach; Remedies.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in
said notice as rent due and payable to cure said default. A "Default" by
Lessee is defined as a failure by Lessee to observe, comply with or perform
any of the terms, covenants, conditions or rules applicable to Lessee under
this Lease. A "Breach" by Lessee is defined as the occurrence of any one or
more of the following Defaults, and, where a grace period for cure after
notice is specified herein, the failure by Lessee to cure such Default prior
to the expiration of the applicable grace period, and shall entitle Lessor to
pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:
(a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent, Lessee's Share of Common Area
Operating Expenses, or any other monetary payment required to be made by
Lessee hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which
endangers or threatens life or property, where such failure continues for a
period of three (3) days following written notice thereof by or on behalf of
Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Requirements
per Paragraph 6.3, (ii) the inspection, maintenance and service contracts
required under Paragraph 7.1(b), (iii) the rescission of an unauthorized
assignment or subletting per Paragraph 12.1, (iv) a Tenancy Statement per
Paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease
per Paragraph 30, (vi) the guaranty of the performance of Lessee's obligations
under this Lease if required under Paragraphs 1.11 and 37, (vii) the execution
of any document requested under Paragraph 42 (easements), or (viii) any other
documentation or information which Lessor may reasonably require of Lessee
under the terms of this lease, where any such failure continues for a period
of ten (10) days following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof
that are to be observed, complied with or performed by Lessee, other than
those described in Subparagraphs 13.1(a), (b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice
thereof by or on behalf of Lessor to Lessee; provided, however, that if the
nature of Lessee's Default is such that more than thirty (30) days are
reasonably required for its cure, then it shall not be deemed to be a Breach
of this Lease by Lessee if Lessee commences such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or
any successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment
of a trustee or receiver to take possession of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where
possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee's assets located at the Premises or of Lessee's interest in this Lease,
where such seizure is not discharged within thirty (30) days; provided,
however, in the event that any provision of this Subparagraph 13.1(e) is
contrary to any applicable law, such provision shall be of no force or effect,
and shall not affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement of Lessee or
of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially
false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory breach basis, and Lessee's failure, within sixty (60) days
following written notice by or on behalf of Lessor to Lessee of any such
event, to provide Lessor with written alternative assurances of security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.
13.2 Remedies. If Lessee falls to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. The costs and expanses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its own option, may require all future payments to be made under
this Lease by Lessee to be made only by cashier's check. In the event of a
Breach of this Lease by Lessee (as defined in Paragraph 13.1), with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the worth at
the time of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (III) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee's failure to perform
its obligations under this Lease or which in the ordinary course' of things
would be likely to result therefrom, including but not limited to the cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys'
fees, and that portion of any leasing commission paid by Lessor in connection
with this Lease applicable to the unexpired term of this Lease. The worth at
the time of award of the amount referred to In provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco or the Federal
Reserve Bank District in which the Premises are located at the time of award
plus the percent (1%). Efforts by Lessor to mitigate damages caused by
Lessee's Default or Breach of this Lease shall not waive Lessor's right to
recover damages under this Paragraph 13.2. If termination of this Lease is
obtained through the provisional remedy of unlawful detainer, Lessor shall
have the right to recover in
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ceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for
such rent and/or damages. If a notice and grace period required under
Subparagraph 13.1(b), (C) or (d) was not previously given, a notice to pay
rent or quit, or to perform or quit, as the case may be, given to Lessee under
any statute authorizing the forfeiture of leases for unlawful detainer shall
also constitute the applicable notice for grace period purposes required by
Subparagraph 1 3.1(b), (c) or (d). In such case, the applicable grace period
under the unlawful detainer statue shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach
and recover the rent as it becomes due, provided Lessee has the right to
sublet or assign, subject only to reasonable limitations. Lessor and Lessee
agree that the limitations on assignment and subletting in this Lease are
reasonable. Acts of maintenance or preservation, efforts to relet the
Premises, or the appointment of a receiver to protect the Lessor's interest
under this Lease, shall not constitute a termination of the Lessee's right to
possession.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.
(d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.
13.3 Inducement Recapture In Event of Breach. Any agreement by Lessor
for free or abates rent or other charges applicable to the Premises, or for
the giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of
which concessions are hereinafter referred to as "Inducement Provisions" shall
be deemed conditioned upon Lessee's full and faithful performance of all of
the terms, covenants and conditions of this Lease to be performed or observed
by Lessee during the term hereof as the same may be extended. Upon the
occurrence of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee,
any such Inducement Provision shall automatically be deemed deleted from this
Lease and of no further force or effect, and any rent, other charge, bonus,
inducement or consideration theretofore abated, given or paid by Lessor under
such an inducement Provision shall be immediately due and payable by Lessee to
Lessor, and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance
by Lessor of rent or the cure of the Breach which initiated the operation of
this Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions
of this Paragraph 13.3 unless specifically so stated in writing by Lessor at
the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering
the Premises. Accordingly, if any installment of rent or other sum due from
Lessee shall not be received by Lessor or Lessor's designee within ten (10)
days after such amount shall be due, then, without any requirement for notice
to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%)
of such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of late payment by Lessee. Acceptance of such late charge by Lessor
shall in no event constitute a waiver of Lessee's Default or Breach with
respect to such overdue amount, nor prevent Lessor from exercising any of the
other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding Paragraph 4.1 or any other
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required
to be performed by Lessor. For purposes at this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after
such notice are reasonably required for its performance, then Lessor shall not
be in breach of this Lease if performance is commenced within such thirty (30)
day period and thereafter diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority
takes title or possession, whichever first occurs. If more than ten percent
(10%) of the floor area of the Premises, or more than twenty-five percent
(25%) of the portion of the Common Areas designated for Lessee's parking, is
taken by condemnation, Lessee may, at Lessee's option, to be exercised in
writing within ten (10) days after Lessor shall have given Lessee written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority shall have taken possession) terminate this
Lease as of the date the condemning authority takes such possession. If Lessee
does not terminate this Lease In accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the Premises
remaining, except that the Base Rent shall be reduced in the same proportion
as the rentable floor area of the Premises taken bears to the total rentable
floor area of the Premises. No reduction of Base Rent shall occur if the
condemnation does not apply to any portion of the Premises. Any award for the
taking of all or any part of the Premises under the power of eminent domain or
any payment made under threat of the exercise of such power shall be the
property of Lessor, whether such award shall be made as compensation for
diminution of value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
compensation, separately awarded to Lessee for Lessee's relocation expenses
and/or loss of Lessee's Trade Fixtures. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any
damage to the Premises caused by such condemnation authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
15. Brokers' Fees.
15.1 Procuring Cause. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.
15.2 Additional Terms. Unless Lessor and Broker(s) have otherwise
agreed in writing, Lessor agrees that: (a) If Lessee exercises any Option (as
defined in Paragraph 39.1) granted under this Lease or any Option subsequently
granted, or (b) if Lessee acquires any rights to the Premises or other
premises in which Lessor has an interest, or (c) if Lessee remains in
possession of the Premises with the consent of Lessor after the expiration of
the term of this Lease after having failed to exercise an Option, or (d) if
said Brokers are the procuring cause of any other lease or sale entered into
between the Parties pertaining to the Premises and/or any adjacent property in
which Lessor has an interest, or (e) it Base Rent is increased, whether by
agreement or operation of an escalation clause herein, then as to any of said
transactions, Lessor shall pay said Broker(s) a fee in accordance with the
schedule of said Broker(s) in effect at the time of the execution of this
Lease.
15.3 Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation
of law, shall be deemed to have assumed Lessor's obligation under this
Paragraph 15. Each Broker shall be an intended third party beneficiary of the
provisions of Paragraph 1.10 and of this Paragraph 15 to the extent of its
interest in any commission arising from this Lease and may enforce that right
directly against Lessor and its successors.
15.4 Representations and Warranties. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person, firm,
broker or finder other than as named in Paragraph 1.10(a) in connection with
the negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.
16. Tenancy and Financial Statements.
16.1 Tenancy Statement. Each Party (as "Responding Party") shall
within ten (10) days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party a
statement in writing in a form similar to the then most current "Tenancy
Statement" form published by the American Industrial Real Estate Association,
plus such additional information, confirmation and/or statements as may be
reasonably requested by the Requesting Party.
16.2 Financial Statement. If Lessor desires to finance, refinance, or
sell the Premises or the Building, or any part thereof, Lessee and all
Guarantors shall deliver to any potential lender or purchaser designated by
Lessor such financial statements of Lessee and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor at the time of such
transfer or assignment. Except as provided in Paragraph 15.3, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be performed by
the Lessor. Subject to the foregoing, the obligations and/or covenants in this
Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of
any other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10)
days following the date on which it was due, shall bear interest from the date
due at the prime rate charged by the largest state chartered bank in the state
in which the Premises are located plus four percent (4%) per annum, but not
exceeding the maximum rate allowed by law, in addition to the potential late
charge provided for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. No Prior or other Agreements; Broker Disclaimer. This Lease contains
all agreements between the Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous agreement or understanding shall
be effective. Lessor and Lessee each represents and warrants to the Brokers
that it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the nature, quality and character of the Premises.
Brokers have no responsibility with respect thereto or with respect to any
default or breach hereof by either Party. Each Broker shall be an intended
third party beneficiary of the provisions of this Paragraph 22.
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23. Notices.
23.1 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified or
registered mall or U.S. Postal Service Express Mail, with postage prepaid, or
by facsimile transmission during normal business hours, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may
by written notice to the other specify a different address for notice
purposes, except that upon Lessee's taking possession of the Premises, the
Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or permitted to
be given to Lessor hereunder shall be concurrently transmitted to such party
or parties at such addresses as Lessor may from time, to time hereafter
designate by written notice, to Lessee.
23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail, the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and mailed with postage
prepaid. Notices delivered by United States Express Mail or overnight courier
that guarantees next day delivery shall be deemed given twenty-four (24) hours
after delivery of the same to the United States Postal Service or courier. If
any notice is transmitted by facsimile transmission or similar means, the same
shall be deemed served or delivered upon telephone or facsimile confirmation
of receipt of the transmission thereof, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday or a Sunday or a legal
holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Lessor's knowledge of a Default or Breach at the time
of accepting rent, the acceptance of rent by Lessor shall not be a waiver of
any Default or Breach by Lessee of any provision hereof. Any payment given
Lessor by Lessee may be accepted by Lessor on account of moneys or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of
no force or effect whatsoever unless specifically agreed to In writing by
Lessor at or before the time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to two hundred percent
(200%) of the Base Rent applicable during the month immediately preceding such
expiration or earlier termination. Nothing contained herein shall be construed
as a consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed at trust, or other
hypothecation or security device (collectively " Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Lessor
under this Lease, but that in the event of Lessor's default with respect to
any such obligation, Lessee will give any Lender whose name and address have
been furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device
and shall give written notice thereat to Lessee, this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(i) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership, (ii) be subject to any
offsets or defenses which Lessee might have against any prior lessor, or (iii)
be bound by prepayment of more than one month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from
the Lender that Lessee's possession and this Lease, including any options to
extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attains to the record owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that upon written request from Lessor or a Lender in connection with
a sale, financing or refinancing of Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
such subordination or non-subordination, attainment and/or non-disturbance
agreement as is provided for herein.
31. Attorneys' Fees. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys' fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement,
judgment, or the abandonment by the other Party or Broker of its claim or
defense. The attorneys' fee award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys'
fees reasonably incurred. Lessor shall be entitled to attorneys' fees, costs
and expenses incurred in preparation and service of notices of Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach.
Broker(s) shall be intended third party beneficiaries of this Paragraph 31.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or Building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred eighty (180) days of the
term hereof place on or about the Premises any ordinary "For Lease" signs. All
such activities of Lessor shall be without abatement of rent or liability to
Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to
the contrary in this Lease, Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to
advertise Lessee's own business so long as such signs are in a location
designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions
of Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures
and Alterations). Unless otherwise expressly agreed herein, Lessor reserves
all rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business: Lessor shall be
entitled to all revenues from such advertising signs.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or lesser estate
in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor's
election to have such event constitute the termination of such Interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be unreasonably
withheld or delayed. Lessor's actual reasonable costs and expenses (including
but not limited to architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee
for any Lessor consent pertaining to this Lease or the Premises, including but
not limited to consents to an assignment a subletting or the presence or use
of a Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering
and responding to Lessee's request. Any unused portion of said deposit shall
be refunded to Lessee without interest. Lessor's consent to any act,
assignment of this Lease or subletting of the Premises by Lessee shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
37. Guarantor.
37.1 Form of Guaranty. If there are to be any Guarantor's of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the
same obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.
Initials: /s/ R.C.
MULTI-TENANT - GROSS /s/ M.H.
American Industrial Real Estate Association 1993 - 9 -
37.2 Additional Obligations of Guarantor. It shall constitute a
Default of the Lessee under this Lease if any such Guarantor fails or refuses,
upon reasonable request by Lessor to give: (a) evidence of the due execution
of the guaranty called for by this Lease, including the authority of the
Guarantor (and of the party signing on Guarantor's behalf) to obligate such
Guarantor on said guaranty, and resolution of its board of directors
authorizing the making of such guaranty, together with a certificate of
incumbency showing the signatures of the persons authorized to sign on its
behalf, (b) current financial statements of Guarantor as may from time to time
be requested by Lessor, (c) a Tenancy Statement, or (d) written confirmation
that the guaranty is still in effect.
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises
and the performance of all of the covenants, conditional and provisions on
Lessee's part to be observed and performed under this Lease, Lessee shall have
quiet possession of the Premises for the entire term hereof subject to all of
the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Lease, the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property
of Lessor; (b) the right of first refusal to lease the Premises or the right
of first offer to lease the Premises or the right of first refusal to lease
other property of Lessor or the right of first offer to lease other property
of Lessor; (c) the right to purchase the Premises, or the right of first
refusal to purchase the Premises, or the right of first offer to purchase the
Premises, or the right to purchase other property of Lessor, or the right of
first refusal to purchase other property of Lessor, or the right of first
offer to purchase other property of Lessor.
39.2 Options Personal to Original Lessee. Each Option granted to
Lessee in this Lease is personal to the original Lessee named In Paragraph 1.1
hereof, and cannot be voluntarily or involuntarily assigned or exercised by
any person or entity other than said original Lessee while the original Lessee
is in full and actual possession of the Premises and without the intention of
thereafter assigning or subletting. The Options, if any, herein granted to
Lessee are not assignable, either as a part of an assignment of this Lease or
separately or apart therefrom, and no Option may be separated from this Lease
in any manner, by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later option cannot be exercised
unless the prior Options to extend or renew this Lease have been validly
exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of
time any monetary obligation due Lessor from Lessee is unpaid (without regard
to whether notice thereof is given Lessee), or (iii) during the time Lessee is
in Breach of this Lease, or (iv) in the event that Lessor has given to Lessee
three (3) or more notices of separate Defaults under Paragraph 13.1 during the
twelve (12) month period immediately preceding the exercise of the Option,
whether or not the Defaults are cured.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a)
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if, after such exercise and during the term
of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of
Lessee for a period of thirty (30) days after such obligation becomes due
(without any necessity of Lessor to give notice thereof to Lessee), or (ii)
Lessor gives to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.
40. Rules and Regulations. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants
or tenants of the Building and the Industrial Center and their invitees.
41. Security Measures. Lessee hereby acknowledges that the rental payable
to Lessor hereunder does not include the cost of guard service or other
security measures, and that Lessor shall have no obligation whatsoever to
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.
42. Reservations. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way,
utility raceways, and dedications that Lessor deems necessary, and to cause
the recordation of parcel maps and restrictions, so long as such easements,
rights of way, utility race-ways, dedications, maps and restrictions do not
reasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute
and deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not
be deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
48. Multiple parties. Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
49. Security Deposit. Notwithstanding anything to the contrary contained
herein, any security deposit or other deposit not paid to Robert Crane,
Receiver, and over which Robert Crane, Receiver has no control shall not be
the obligation of Robert Crane, Receiver.
50. Tenant's acceptance of Premises. Lessee is presently in possession of the
Premises and accepts same for said extended term in present condition as of
the date hereof.
51. Landlord's Right to Relocate. Lessor shall have the right to relocate
the Premises to another part of the Building in accordance with the following:
1) The physical relocation of the Premises shall be accomplished by the
Lessor at Lessor's cost. All incidental costs incurred by Lessee as a result
of the relocation shall be paid by Lessor in a sum not to exceed Five Hundred
Dollars ($500.00).
2) Lessor shall give Lessee at least Thirty (30) days notice of
Lessor's intention to relocate the Premises. Minimum Base Rent payable under
this Lease shall be abated during the period Lessee is forced to close for
business to accommodate such relocation, for a period not to exceed fifteen
(15) days.
3) The new Premises shall be substantially the same in nature as the
Premises described, although the square footage need not be identical as long
as the same services can reasonable be provided from the new Premises. The
Minimum Base Rent for the relocated Premises shall be at the market rate for
that space, but not to exceed the rent then being paid for the original leased
Premises.
Initials: /s/ R.C.
MULTI-TENANT - GROSS /s/ M.H.
American Industrial Real Estate Association 1993 - 10 -
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED. THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY'S
REVIEW AND APPROVAL, FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS, UNDERGROUND
STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS
TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE IF THE SUBJECT PROPERTY IS IN
A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY
IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Irvine, CA Executed at: Los Angeles, CA
on: 12.2.97 on: 5 Nov 97
By LESSOR: Robert Crane, Receiver By LESSEE: Bailey Associates, Inc.
under court order#BC106992 Superior a Delaware Corporation
Court of Los Angeles County
By: /s/ Robert Crane By: /s/ Michelle Hiromoto
Name Printed: Robert Crane Name Printed: Michele Hiromoto
Title: Receiver Title:
By: By:
Name Printed: Name Printed:
Title: Title:
Address: 2201 DuPont Dr., Suite 850 Address: 827 S. Broadway
Irving, Ca 92715 Los Angeles, CA 90014
Telephone:(714) 261-7007 Telephone: (213) 489-2123
Facsimile:(714) 261-8703 Facsimile: (213) 489-9931
BROKER: Grubb & Ellis Co. BROKER: Grubb & Ellis Co.
Executed at: Los Angeles, CA Executed at: Los Angeles, CA
On: on:
By: By:
Name Printed: Kurt Strassman Name Printed: Kurt Strassman
Title: Senior Vice President/District Title: Senior Vice President/District
Mgr. Mgr.
Address: 1000 Wilshire Blvd., Address: 1000 Wilshire Blvd.,
Suite 200 Suite 200
Los Angeles, CA 90017 Los Angeles, CA 90017
Telephone:(213) 622-9595 Telephone:(213) 622-9595
Facsimile:(213) 488-0819 Facsimile:(213) 488-0819
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 South
Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.
Initials: /s/ R.C.
MULTI-TENANT - GROSS /s/ M.H.
American Industrial Real Estate Association 1993 - 11 -
EXHIBIT 'B'
SITE PLAN
PREMISES SUITE "C"
BROADWAY TRADE CENTER
EXHIBIT 'A'
RULES AND REGULATIONS
General Rules
1. Lessee shall not suffer or permit the obstruction of any Common Areas,
including driveways, walkways and stairways.
2. Lessor reserves the right to refuse access to any persons Lessor in
good faith judges to be a threat to the safety, reputation, or property of the
Premises Project And Its Occupants.
3. Lessee shall not make or permit any noise or odors that annoy or
interfere with other lessees or persons having business within the Premises.
4. Lessee shall not keep animals or birds within the Premises, and shall
not bring bicycles, motorcycles or other vehicles into areas not designated as
authorized for same.
5. Lessee shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.
6. Lessee shall not alter any lock or install new or additional locks or
bolts.
7. Lessee shall be responsible for the inappropriate use of any toilet
rooms, plumbing or other utilities. No foreign substances of any kind are to
be inserted therein.
8. Lessee shall not deface the walls, partitions or other surfaces of
the Premises.
9. Lessee shall not suffer or permit any thing in or around the Premises
or building that causes excessive vibration or floor loading in any part of
the Premises.
10. Furniture, significant freight and equipment shall be moved into or out
of the building only with the Lessor's knowledge and consent, and subject to
such reasonable limitations, techniques and timing, as may be designated by
Lessor, Lessee shall be responsible for any damage to the Premises and the
building arising from any such activity.
11. Lessee shall not employ any service or contractor for services or work
to be performed in the building, except as approved by Lessor.
12. Lessor reserves the right to close and lock the building on Saturdays,
Sundays and legal holidays, and on other days between the hours of 7:00 P.M.
and 7:00 A.M. of the following day. If Lessee uses the Premises during such
periods, Lessee shall be responsible for securely locking any doors it may
have opened for entry.
13. Lessee shall return all keys at the termination's of its tenancy and
shall be responsible for the cost of replacing any keys that are lost.
14. No window coverings, shades or awnings shall be installed or used by
Lessee.
15. No Lessee, employee or invitee shall go upon the roof of the building.
16. Lessee shall not suffer or permit smoking or carrying of lighted cigars
or cigarettes in areas reasonably designated by Lessor or by applicable
governmental agencies as no-smoking areas.
17. Lessee shall not use any method of heating or air conditioning other
than as provided by Lessor.
18. Lessee shall not install, maintain or operate any vending machines upon
the Premises without Lessor's written consent.
19. The Premises shall not be used for lodging or manufacturing, cooking or
food preparation.
20. Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.
21. Lessor reserves the right to waive any one of these rules or
regulations, and/or as to any particular Lessee, and any such waiver shall not
constitute a waiver of any other rule or regulation or any subsequent
application thereof to such Lessee.
22. Lessee assumes all risks from theft or vandalism and agrees to keep its
Premises locked as may be required.
23. Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Lessee
agrees to abide by these and such rules and regulations.
By: LESSEE
/s/ Michelle Hiromoto
- ---------------------
Date: 11/5/98
-------
\btc\g&erule.doc
Grubb & Ellis
CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT
AND HAZARDOUS MATERIALS DISCLOSURE
PROPERTY: 830 S. HILL STREET, SUIITE C, LOS ANGELES, CA 90014
The Americans With Disabilities Act is intended to make many business
establishments equally accessible to persons with a variety of disabilities;
modifications to real property may be required. State and local laws also may
mandate changes. The real estate brokers in this transaction are not qualified
to advise you as to what, if any, changes may be required now, or in the
future. Owners and tenants should consult the attorneys and qualified design
professionals of their choice for information regarding these matters. Real
estate brokers cannot determine which attorneys or design professionals have
the appropriate expertise in this area.
Various construction materials may contain items that have been or may in the
future be determined to be hazardous (toxic) or undesirable and may need to be
specifically treated/handled or removed. For example, some transformers and
other electrical components contain PCBs and asbestos has been used in
components such as fire-proofing, heating and cooling systems, air duct
insulation, spray-on and tile acoustical materials, linoleum, floor tiles,
roofing, dry wall and plaster. Due to prior or current uses of the Property or
in the area, the Property may have hazardous or undesirable metals (including
lead-based paint), minerals, chemicals, hydrocarbons, or biological or
radioactive items (including electric and magnetic fields) in soils, water,
building components, above or below-ground containers or elsewhere in areas
that may or may not be accessible or noticeable. Such items may leak or
otherwise be released. Real estate agents have no expertise in the detection
or correction of hazardous or undesirable items. Expert inspections are
necessary. Current or future laws may require clean up by past, present and/or
future owners and/or operators. It is the responsibility of the Seller/Lessor
and Buyer/Tenant to retain qualified experts to detect and correct such
matters and to consult with legal counsel of their choice to determine what
provisions, if any, they may include in transaction documents regarding the
Property.
Sellers/Lessors are required under California Health and Safety Code Section
25915 et seq. to disclose reports and surveys regarding asbestos to certain
persons, including their employees, contractors, co-owners, purchasers and
tenants. Buyers/Tenants have similar disclosure obligations. Sellers/Lessors
and Buyers/Tenants have additional hazardous materials disclosure
responsibilities to each other under California Health and Safety Code Section
25359.7 and other California laws. Consult your attorney regarding this
matter, and make proper disclosures. Grubb & Ellis Company is not qualified to
assist you in this matter or provide you with other legal or tax advice.
Sale, lease, and other transactions can have local, state and federal tax
consequences for the Seller/Lessor and/or Buyer/Tenant. In the event of a
sale, Internal Revenue Code Section 1445 requires that all Buyers of an
interest in any real property located in the United States must withhold and
pay over to the Internal Revenue Service (IRS) an amount equal to ten percent
(10%) of the gross sales price within ten (10) days of the date of the sale
unless the Buyer can adequately establish that the Seller was not a foreigner,
generally by having the Seller sign a Non-Foreign Seller Certificate. Note
that depending upon the structure of the transaction, the tax withholding
liability could exceed the net cash proceeds to be paid to the Seller at
closing. California poses an additional withholding requirement equal to three
and one-third percent (3 1/3%) of the gross sales price not only on foreign
Sellers but also out-of-state Sellers and Sellers leaving the state if the
sale price exceeds $100,000. Generally, withholding is required if the sales
proceeds are disbursed outside of California, if the last known address of the
Seller is outside of California or if a financial intermediary is used.
Consult your tax and legal advisor. Real estate brokers are not qualified to
give legal or tax advice or to determine whether any person is properly
qualified to provide legal or tax advice.
LESSOR: Robert Crane, Receiver under LESSEE: Bailey & Associates,
Inc.
Court order #B106992 Superior A Delaware Corp.
Of Los Angeles Co.
By: /s/ Robert Crane By: /s/ Michele Hiromoto
Robert Crane Michele Hiromoto
Co.: Co.: Bailey & Associates, Inc.
Title: Receiver Title: President
Date: 12-2-97 Date: 11/5/97
4elforms/42.doc (11/15/96)
mk\btc\hazard.doc
EXHIBIT 10.3 Amendment to Lease
AMENDMENT TO LEASE
------------------
This Amendment to Lease dated February 23, 1999 shall amend the Lease
dated November 1, 1997, for space number C located at 827 S. Broadway, by and
between Broadway Trade Center as successor to interest of lessor Robert Crane,
Receiver under court order #BC106992, as Lessor, and Bailey & Associates,
Inc., a Delaware Corporation as Lessee, concerning the Premises knows as Space
C, consisting of 887 square feet, in the building located at 830 South Hill
Street, Los Angeles, California 90014 is hereby amended as follows:
It is mutually agreed by the Lessor and Lessee that effective March 1,
1999:
1. Term: The Term of Lease shall be amended to expire on February 28,
2004.
2. Rent: The Rent as described in paragraph 1.5 of the Lease shall be as
follows:
March 1, 1999 to February 28, 2000 $1,600.00 per month
March 1, 2000 to February 28, 2001 $1,700.00 per month
March 1, 2001 to February 28, 2002 $1,800.00 per month
March 1, 2002 to February 28, 2003 $1,900.00 per month
March 1, 2003 to February 28, 2004 $2,000.00 per month
3. Permitted Use: The Permitted Use as described in paragraph 1.8 of the
Lease shall be deleted in its entirety and the following shall be inserted
in its place:
"Permitted Use: Non-exclusive discount telephone service, non-
exclusive Western Union Service, and non-exclusive sales and activation of
pagers and cellular phones."
4. Guarantor: The guarantee by Michelle Hiromoto is hereby reaffirmed.
Except as modified hereby, said Lease shall remain in full force and
effect, and is hereby ratified and confirmed.
The parties have duly executed this Amendment to Lease the date set
forth under their respective signatures.
Lessor: Lessee:
Broadway Trade Center Bailey Associated, Inc.
By: /s/ Michelle Hiromoto 24 FEB 99
------------------------------- ---------------------------------
Shahram Afshani Date Michelle Hiromoto, President Date
Property Manager
Guarantor:
/s/ Michelle Hiromoto 24 FEB 99
---------------------------------
Michelle Hiromoto Date
EXHIBIT 10.4 Consulting Agreement
MAS Financial Corp.
17 N. Governor St. St. Tel: (812) 425-1050
Evansville, IN 47711 Fax: (812) 425-1051
Consulting Agreement
This agreement is entered into on this 11th day of December, 2000 by and
between MAS Financial Corp. (hereinafter referred to as "MAS"), and Ms.
Michele Hiromoto dba Telecom Communications of America, their heirs, designees
or assignees, (hereinafter referred to as "Client"), and is made with
reference to the following recitations:
Whereas, MAS has skills and expertise in the fields of business consulting,
due diligence, mergers and acquisitions, and public and private offering
structuring and transactions, and,
Whereas, for the purpose of advancing the business plans of Client, Client
wishes to contract for the control stock of an acquisition company from MAS,
and,
Whereas MAS owns or controls the control stock of a public shell corporation
(hereinafter referred to as "Acquisition" company, a corporation organized
under the laws of the State of Indiana, having those classes and numbers of
shares as more fully set forth on the company information sheet attached
hereto and made a part hereof by reference. MAS has control of Acquisition
company and is prepared to transfer the control block. Now, therefore, the
parties hereto hereby agree and covenant as follows:
(1) MAS agrees to take certain actions, and undertake certain obligations for
the orderly transfer of the control block of stock of Acquisition company (90%
of the total shares outstanding):
? Name Change and New Stock Certificates
? Unaudited financial statements brought forward to most recent period.
? Change of officers and directors and resignation of present board.
? Assist Client in the preparation of SB-2 registration statement.
? 15C211 prepared and filed with NASD.
? Deliver control block shares.
? Obtain CUSIP number.
? Obtain a stock symbol for trading on the OTC Bulletin Board.
? Furnish Market Maker.
? Any other document or act needed to make an orderly transfer of control.
All expenses incurred by the Acquisition company, after the transfer of
control by MAS to the Client, shall be the responsibility of the Acquisition
company.
(2) Any offer or sale of securities in connection with this Agreement is made
by each broker-dealer respectively.
(3) At closing, which shall take place at a time and place mutually agreeable
to the parties hereto, MAS shall deliver to Client or its designee the
following:
(a) Certificates representing the shares being sold hereunder; containing the
following legend:
"The securities represented by this Certificate have not been registered under
the Securities Act of 1933 (the "Act") and are "Restricted Securities" as the
term is defined in Rule 144 under the Act. The Common Shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or exemption, the availability
of which is to be established to the satisfaction of the Corporation."
(b) Necessary consents, if any, from the state of domicile of the Acquisition
company;
(c) All corporate books, records, and documents, stock books, ledgers, minute
books, articles and by-laws of the Acquisition company;
(d) Shareholder list of the Acquisition company;
(e) Resignations of all present officers and directors, effective as of the
closing date;
(4) MAS represents and warrants the following:
(a) that the Acquisition company is a corporation duly organized and existing
under the laws of the State of Indiana, unless otherwise noted;
(b) that the Acquisition company will use its best efforts to preserve its
business organization intact.
(c) that the Acquisition company will not enter into any contract, commitment
or transaction, or declare, set aside or pay any dividend, or make any
distribution in respect of its capital stock, or waive any obligation or
liability, or compromise any claim, or cancel any note, loan or other
obligation owed to it, without the consent of Client.
(5) MAS represents and warrants the following prior to closing:
(a) That MAS will not cause any amendment to be made in the Articles of
Incorporation or By-Laws of the Acquisition company, nor issue or cause to be
issued any additional shares of capital stock; nor issue or cause to be issued
any warrants, obligations, subscriptions, options, convertible securities, or
other commitments under which any additional shares of its capital stock may
be directly or indirectly authorized, issued or transferred nor will either
agree to do any of the acts listed above.
(6) Client represents and warrants the following prior to closing:
(a) That Client is solely responsibly for the decision to by acquired by the
Acquisition company,
(b) That the Client to be acquired by the Acquisition company which is the
subject of this agreement shall be suitable in all respects for such merger,
(7) The parties shall at all times keep each other's information, sources,
trade secrets, processes, and confidential information strictly confidential.
(8) MAS is not rendering legal advise to Client. Each party is responsible
for all of it's own professional, legal, accounting, Broker-Dealer, and
consulting fees as they may apply to each party.
(9) Should Client terminate this transaction for any reason other than the
malfeasance or nonperformance of MAS prior to the acquisition of the
Acquisition company, all monies paid to MAS up until that point shall be
retained by MAS as liquidated damages. The parties agree to the
reasonableness of these liquidated damages. All documents and work product
prepared for or on behalf of Client by MAS up until that point shall become
the property of Client.
(10) MAS warrants that the Acquisition company being transferred shall be
transferred with no liabilities and little or no assets, and shall defend and
hold Client and the Acquisition company harmless against any action by any
third party against either of them arising out of, or as a consequence of, any
act or omission of MAS or the Acquisition company prior to, or during the
closing contemplated by this contract of sale. MAS reserves the right, if
necessary, to substitute another Acquisition company acceptable to Client of
like worth.
(11) All of the representations and warranties contained within this contract
of sale, whether made by Client, MAS, or MAS on behalf of the Acquisition
company, will be true and correct on the closing date as if made on that date.
(12) At any time prior to the closing, Client and their counsel, accountants
and other agents shall have full access during normal business hours to all
properties, books, accounts, records, contracts and documents relating to the
Acquisition company.
(13) This agreement shall be governed by the laws of the State of Indiana. The
parties agree to the jurisdiction of the Courts of the State of Indiana and
the United States District Court for the Southern District of Indiana as the
forums for the resolution of any legal disputes between the parties. Client
agrees to pay court costs, attorney fees in a reasonable amount, and interest
on any unpaid balances at the judgment rate then in effect in the State of
Indiana should it become necessary for MAS to engage in legal action to
recover any portion of the purchase price or any other fees from Client.
(14) If any bona fide action or proceeding shall be pending against any party
on the closing date that could result in an unfavorable judgment, decree or
order that would prevent or make unlawful the performance of this agreement,
or if any agency of the federal or of any state government shall have objected
to it on or before the closing date to this transaction, or if any prospectus
contemplated with respect to the issuance and sale of shares by Buyers shall
have been disapproved by any federal or state regulatory agency, either party
may cancel and terminate this agreement without liability to the other. All
representations and warranties of the parties shall expire and terminate and
be extinguished by the closing, and consummation of the closing shall be
conclusive proof that each party is fully satisfied with the facts
constituting the basis of the representations and warranties of the other
party and with the performance of their obligations hereunder. This paragraph
shall not affect any obligation of any party under this contract that is
permitted to be performed in whole or in part after the closing.
(15) Neither party may assign this agreement without the prior written consent
of the other party, which consent shall not be unreasonably withheld.
However, MAS may requires up to 180 days to perform due diligence on any
assignee of Client, and may reject any assignee not qualified by MAS.
(16) This documents contains the entire agreement between the parties hereto.
No oral or other representation or warranty has been given to Client by MAS,
and this agreement controls over any and all oral representations made by any
party to this transaction. This agreement may only be modified by a writing,
signed by the parties.
(17) Each party agrees to execute all of the documents and do all of the
things necessary to effectuate the purpose of this agreement, without delay or
limitations.
Accepted and Agreed: Accepted and Agreed:
/s/ Aaron Tsai /s/ Michele Hiromoto
- ------------------------------ -----------------------------------------
MAS Financial Corp. By: Ms. Michele Hiromoto, Sole Proprietor
By: Mr. Aaron Tsai, President dba Telecom Communications of America
Mailing Address:
MAS Financial Corp. Ms. Michele Hiromoto, Sole Proprietor
17 N. Governor St. dba Telecom Communications of America
Evansville, IN 47711 827 S. Broadway
Los Angeles, CA 90014
EXHIBIT 10.5 Inter-Tel.net Network Agreement
INTER-TEL.NET NETWORK AGREEMENT
This Agreement is made and entered into this --- day of ---, --- between:
- -------------------- ------------------------
(hereinafter referred to as "Customer") and Inter-Tel.net, Inc., a Nevada
corporation with offices at 120 N. 44th Street, Suite 200, Phoenix, Arizona,
85034-1822, U.S.A. ("Inter-Tel").
Whereas, Inter-Tel has established a network which enables telecommunications
over Internet Protocol ("IP") data networks, ("Inter-Tel.net") with
Inter-Tel.net software, hardware and related components, and
Whereas Customer desires to interconnect into Inter-Tel.net with its own
network for the provision of services to the general public; and
Whereas, both parties desire to reduce to writing their agreement for the
interconnection of each party's Servers into the Network.
Now, therefore, in consideration of the mutual covenants hereunder, the
parties hereto agree as follows:
1.0 APPOINTMENT AS INTER-TEL.NET PROVIDER
Inter-Tel hereby authorizes the Customer to interconnect with the
Inter-Tel.net network enabling the customer to transmit IP data network
traffic; subject to the terms and provisions of this Agreement.
1.2 DEFINITIONS
1.2.1 Agreement - "Agreement" shall mean this Network Agreement,
including the attached Schedules.
1.2.2 Confidential Information - "Confidential Information" shall mean
information belonging to either party and delivered to the other Party which
is deemed proprietary and confidential and belonging to the Party delivering
the Confidential Information. In the event confidential information is
required to be disclosed pursuant to a court order is required by any
governmental authority or agency, prompt written notice of such order or
requirement shall be given to the disclosing party and the receiving party
shall fully cooperate with the disclosing party, using its best efforts to
maintain the confidentiality of the information, including but not limited to,
seeking protective orders from the court or governmental authority.
1.2.3 Customer Network - "Customer Network" shall mean the IP data
network constructed, owned and/or operated by Customer.
1.2.4 Inter-Tel.net - "Inter-Tel.net" shall mean the Internet Protocol
(IP) data network constructed, owned, and operated by Inter-Tel.net, Inc.
1.2.5 Local Exchange Carrier - Company certified to provide public
switched telephone network (PSTN) services. Both incumbent and the emerging
competitive LECs are included.
1.2.6 NPA/NXX NPA refers to the area code and NPA/NXX refers to the area
code and prefix (the first six (6) digits) in the long distance dialing
sequence.
1.2.7 Planned Service Outage - "Planned Service Outage" shall mean any
Service Outage caused by scheduled maintenance or planned enhancements or
upgrades to the Network.
1.2.8 Point-Of-Presence - (POP), - The physical location where the
Inter-Tel.net Network interfaces with the customer or a local access vendor.
1.2.9 Public Switched Telephone Network - The public network operated by
common carriers for switched telephone services.
1.2.10 Regional He - I Operative Companies (RBOCs) - The regional
operating companies formed at divestiture from AT&T, to provide local access
to the public,
1.2.11 Service Interconnection Date The later of the date requested in
the Service request by Customer or the date that Service has been installed
and tested by Customer use.
1.2.12 Service Outage - Shall mean a degradation in Service well below
the industry standards, occurring in Inter-Tel.net's network, excluding: (i)
Planned Service Outages; or, (ii) periods of degradation due to causes beyond
the reasonable control of Inter-Tel.net.
1.2.13 Service Re-quest - Shall mean an order for Service transmitted to
Inter-Tel.net via facsimile, online, or mail. Service requests will be
remitted in accordance with Inter-Tel,net order format.
2.0 FEES
Both parties acknowledge and agree for the payment of fees by the party
incurring same including origination, termination, settlement and other
provider fees as set forth on Schedule A attached hereto and made, a part
hereof for all purposes. Customer agrees that Inter-Tel shall have the right
to amend the fees set forth on Schedule A with thirty (30) day's notice.
3.0 SERVICE
3.1 Network Coverage - Inter-Tel.net shall add to or delete from network
coverage, NPA's or NPAs/NXXs and/or other usage designations, at its sole
discretion. Data may be passed by Inter-Tel.net for termination through
Inter-Tel.net, or through the network of the Local Exchange Carrier ("LEC(s)")
serving the area in which the data is to be terminated, or through long
distance carriers.
2
3.2 Prices, Volume and Term Discounts, Service Availability - Usage,
recurring charges, volume discounts, installation and change order charges,
minimum. use commitments, and service availability for such Services are
listed oil Schedule A.
3.3 Operations Support - Customer agrees to provide seven (7) day,
twenty-four (24) hours a day support for their network.
4.0 FORMAT
All data passed between the parties shall be 'in format compatible with
and approved in advance by Inter-Tel.
5.0 UPDATED USAGE ESTIMATES
Customer shall provide monthly updates, 30 days in advance in the format
which will include usage estimates or information which may impact established
trends in usage patterns. Customer acknowledges and agrees that any
significant increases in usage not forecasted by the Customer may jeopardize
the ability of Inter-Tel.net to meet the demand.
6.0 NETWORK BLOCKING CAPABILITY
Based on the Customer submitted estimates of monthly minutes of use and
busy hour minutes of capacity measurements for each terminating location,
Inter-Tel shall have reasonable blocking ability for excess usage above
maximums, or at its discretion. switch out the excess minutes over the PSTN at
the agreed prices in Schedule A. Customer shall have responsibility to provide
an updated usage. forecast with each Service Request.
7.0 NETWORK MANAGEMENT CONTROLS
When call volumes increase substantially and facility augments cannot be
accommodated in a timely manner, Inter-Tel.net may invoke network management
controls to reduce the probability of excessive network congestion.
Substantial call volume increases are changes which exceed the recorded busy
day, busy hour minutes of capacity for the preceding 60 day, seasonally
adjusted period. For new Service Requests, the estimated busy day, busy hour
minutes will be the basis for identifying substantial call volumes.
8.0 NETWORK CONNECTION
8.1 All connections to Inter-Tel.net are made through dedicated data
connections between the Customer POP and Inter-Tel.net with sufficient
bandwidth to insure call quality. All facilities will be designed using
standard usage engineering principles.
8.2 in order to insure call quality, the end to end turnaround time as
measured by the industry standard ping should not exceed 100 milliseconds.
8.3 Customer agrees that all Vocal'Net servers shall be covered under "a
software maintenance agreement with Inter-Tel to insure that all updates,
upgrades and maintenance are consistent with Inter-Tel.net standards.
3
9.0 INSTALLATION, SUPPORT AND MAINTENANCE OF SERVERS
Unless otherwise contracted with Inter-Tel, Customer agrees that it shall
be responsible for the installation, support and maintenance of all customer
owned Servers and related products including, but not limited to, the fees and
rental charges for collocation space and provision of dedicated lines and
circuits necessary for the interconnection of the Customer network and related
equipment and services into Inter-Tel.net up to and including the interface
interconnection point. Customer further acknowledges appointment of Inter-Tel
as agent as set forth on Schedule B, to obtain for Customer any dedicated line
services as are agreed by the parties to be necessary for the installation.
support and maintenance of the Customer's Servers with the Network,
9.1 Service Outage - In the event a service outage occurs within
Inter-Tel.net. Inter-Tel shall act promptly to repair the outage. Customer
shall be relieved of minimum purchase requirements in a pro-rata fashion
determined by the length of the service outage. In the event a service outage
occurs within the Customer Network, customer shall act promptly to repair the
outage.
9.2 Planned Service Outage - Customer shall, when practical, be notified
at least five (5) days in advance of any Planned Service Outage.
10.0 USAGE MEASUREMENT
10.1 Start of Usage Measurement -For all originating usage, measurement
will commence when Inter-Tel.net sends the first supervisory signal, and
answer supervision is received by Inter-Tel.net from the terminating end user,
indicating that the termination end user has answered.
10.2 Termination Of Usage Measurement - For all terminating usage,
measurement will end when Inter-Tel.net receives disconnect supervision from
the terminating end LEC switch and when the appropriate IP call control
release messages is received or sent by Inter-Tel.net.
11.0 TERM AND TERMINATION
This agreement shall be in effect for a period of one (1) year from the
date hereof, and shall continue automatically for one year periods thereafter
unless and until terminated by either party giving the other not less than
sixty (60) days written notice before the expiration date, In the event of a
breach of contract, this agreement shall be terminated by ten (10) days
written notice by one party to the other and failure to cure a breach of any
provision of this Agreement by such party: or in the event either party ceases
to function as a going business, becomes insolvent, commits an act of
bankruptcy, is adjudged a bankrupt, makes a general assignment for the benefit
of creditors, or if a receiver is appointed for all or substantially all of
its property. At the termination of any service or of this Agreement, the
Parties will, within five (5) business days, disconnect the interconnection
circuit(s) provided between the parties.
4
12.0 PAYMENT AND REVIEW PROCESS
12.1 Payment Due Date - Customer agrees to pay all charges as set forth
on Schedule A.
12.2 Disputes - Customer shall have 60 days from invoice date to dispute
any Charges in writing. Written disputes should be addressed to the Vice
President, Finance and sent by registered mail or courier (such as Federal
Express or United Parcel Service). All charges, whether or not disputed in
writing, and received by the due date, are considered payable. The Parties
shall provide one another with reasonably requested information for invoice
validation including, but not limited to, the number of minutes of use.
12.3 Review Process - Inter-Tel.net will review any amounts disputed in
writing within (30) business days after receipt of the written dispute. If
Inter-Tel.net determines that the Customer was billed in error, a credit for
the amount billed incorrectly will appear or the next invoice, If the Customer
does not agree with Inter-Tel.net's assessment, both -parties agree to
resolution through binding arbitration within thirty (30) days of
Inter-Tel.net's determination that the bill was issued properly
12.4 Arbitration - Notwithstanding anything to the contrary herein, any
dispute arising pursuant to or in any way related to this Agreement or the
transactions contemplated hereby shall be settled by arbitration a' a mutually
agreed upon location in Phoenix, Arizona; provided, however. that nothing in
this Section shall restrict the right of either party to apply to a court of
competent jurisdiction for emergency relief pending final determination of a
claim by arbitration in accordance with this Section. All arbitration shall be
conducted in accordance with the rules and regulations of the American
Arbitration Association, in force at the time of any such dispute, by a panel
of three (3) arbitrators, one (1) selected by Inter-Tel.net, one (1) selected
by Customer, and the third (3rd) selected by the other two (2) arbitrators.
Each party shall pay its own expenses associated with such arbitration,
including the expenses of any arbitrator selected by such party and 50% of the
expenses of the third arbitrator. The decision of the arbitrators, based upon
written findings of fact and conclusions of law, shall be binding upon the
parties; and judgment in accordance with that decision may be entered in any
court having jurisdiction thereof. In no event shall the arbitrators be
authorized to grant any punitive, incidental or consequential damages of any
nature or kind whatsoever.
12.5 Suspension of Service - If customer does not make payment,
Inter-Tel.net may suspend or cancel Service and terminate this Agreement after
Inter-Tel.net has given Customer written notice and ten (10) days to cure the
nonpayment.
12.6 Monthly Purchase Minimums - Customer agrees to pay the greater of
actual usage, or minimum usage which is computed by multiplying the total
estimated usage times the billing rate for such usage on Schedule A.
5
12.7 Billing Increments - Billing increments will be as set forth on
Schedule A.
13.0 EQUIPMENT AND INSTALLATION
13.1 Intel-Tel.net shall provide, maintain, repair, operate and control
the. Inter-Tel.net owned facilities necessary for service up to the
interconnection point where the Customer network interfaces with
Inter-Tel.net,
13.2 'Neither Party shall adjust, align, or attempt to repair, the other
Party's equipment except as expressly agreed to in advance in writing by the
other Party. 'Neither Party's equipment shall be removed or relocated by the
other Party.
14.0 WARRANTIES AND NETWORK STANDARDS
14.1 Each party represents and warrants to the other Party that it has
the right to provide the service specified herein, and that it is an entity,
duly organized, validly existing and in good standing under the laws of its
origin, with all requisite power to enter into and perform its obligations
under this Agreement in accordance with its terms.
14.2 Inter-Tel.net represents and warrants to Customer that all service
rendered by it hereunder shall be designed, produced, installed, furnished and
in all aspects provided and maintained in conformance and compliance with
applicable federal, state and local laws, administrative and regulatory
requirements and any other authorities having jurisdiction over the subject
matter of this Agreement that were in effect at the time of such design.
14.3 Inter-Tel represents and warrants to Customer that it shall at all
times, comply with then current industry standards. The parties agree that if
any party, in its sole reasonable discretion, determines that an emergency
action is necessary to protect its own Network, the party may block any
signals being transmitted over its Network by the other party whose signals do
not meet the specifications included herein. The parties further agree that
none of their respective obligations to one another under this Agreement shall
be affected by any such blockage except that the party affected by such
blockage shall be relieved of all obligations to make payments for charges
relating to such service only during the period of time of such blockage and
that no party shall have any obligation to the other party for any claim,
judgment or liability resulting from such blockage.
14.4 THERE ARE NO AGREEMENTS, WARRANTIES OR REPRESENTATIONS, EXPRESSED OR
IMPLIED EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE OR USE, EXCEPT THOSE EXPRESSLY SET FORTH HEREIN.
6
15.0 WARRANTY AND INDEMNIFICATION BY CUSTOMER.
Customer warrants and agrees that all equipment owned and operated by
Customer and interconnected with Inter-Tel.net shall be compatible with
Inter-tel.net and in compliance with any specific standards that may be
additionally set forth on Schedule A. Customer further agrees to be
responsible for any upgrades or enhancements necessary For its network to
remain compatible with the Inter-Tel.net Network. Customer further warrants
and agrees, that if Inter-Tel terminates usage over the network- of Customer,
that Customer will install and maintain all I of Customer's network in
accordance with industry standards for IP network usage in order to insure the
quality of transmission usage equal to that of Inter-Tel.net.
16.0 CONFIDENTIAL OBLIGATION
16.1 Neither party hereto shall disclose any confidential information
("Confidential Information") received from the other party nor use such
information for purposes other than performance of this Agreement without
getting prior written consent from the other party. The Confidential
Information shall be the information (i) disclosed in writing and marked
"Confidential", and (ii) if disclosed verbally, shall be confirmed in writing
within seven (7) days following such disclosure, and (iii) any information
contained in this Agreement and Schedules.
16.2 The following information shall not be regarded as the Confidential
Information:
(i) information which, at the time of disclosure hereunder. was or
thereafter becomes in the public domain through no willfulness or
misconduct of the recipient;
(ii) information which, prior to disclosure hereunder, was already in
the recipient's possession either without limitation on disclosure
to others or subsequently becoming free of such limitation-,
(iii) information obtained by the recipient from a third party having an
independent right to disclose this information; or
(iv) information which is independently developed by the recipient.
16.3 Information shall not be deemed confidential in the following cases:
the information was previously known to the receiving party free of any
obligation to keep it confidential at the time of its disclosures by the
disclosing party; the information is or became publicly known through no
wrongful act of the disclosing party; the information is rightfully received
by the receiving party from a third party having no direct or indirect and/or
confidential obligation to the disclosing party with respect to such
information; the information is disclosed by the disclosing party to the
public, or the information is independently developed by an employee, agent or
contractor of the receiving party.
7
17.0 INDEMNITIES
Each Party agrees to indemnify, defend and hold harmless the other Party
from and against; (i) claims for libel, slander, infringement of copyright or
unauthorized use of trademark, trade name-, or service mark arising out of the
indemnifying Party's use or provision of Service; (ii) claims for patent
infringement arising from the use of the facilities or equipment supplied by
the indemnifying Party's combining or connecting facilities to use
Inter-Tel.net; (iii) claims of third parties for damages and/or personal
injuries arising out of the negligence or willful act or omission of the
indemnifying Party or its agents, servants, employees, contractors
representatives; and (iv) claims of third parties. including patrons or
Customers of the indemnifying Party, arising out of, resulting from, or
related to the indemnifying Party's resale or attempted resale of the
Service(s) under this Agreement.
18.0 SURVIVAL CLAUSES
The provisions of Paragraph 15, 16, and 17 shall -survive the termination
or expiration of this Agreement.
19.0 DEFAULT
19.1 A Party shall be deemed in default of this Agreement upon the
occurrence of any one or more of the following events: (i) the filing of
bankruptcy or making a general assignment for the benefit of creditors which
is not dismissed or set aside within sixty (60) days of filing, (ii) a Party
violates any applicable laws, statutes, ordinances, codes or other legal
requirements with respect to the Service and such violation(s) are not
remedied within ten (10) business days after written notice thereof, or (iii)
a Party fails to perform its obligations under this Agreement and such
nonperformance is not remedied within ten (10) days in the case of payment
obligations and otherwise within thirty (30) days after notice thereof.
19.2 Inter-Tel shall grant customer thirty (30) days after any written
notice of default herein required other than payment obligations, to cure any
default. Should Customer fail to cure the default within the time, Inter-Tel
shall be entitled to suspend Service and/or terminate this Agreement. Should
Inter-Tel terminate this Agreement due to default by Customer, all amounts
owned Inter-Tel shall become immediately due and payable.
19.3 A party shall be deemed to be in default if, without thirty (30)
days written notice, any act or failure to act by the party with respect to
its network causes or allows to be caused a cessation of operations of that
network in such a manner that the other Party can-not terminate usage over the
defaulting party's network for a period in excess of twelve (12) hours. In
such event, the defaulting party ,shall be responsible for the non defaulting
party's losses to the extent necessary to terminate such usage over any other
viable transmission means for said thirty day period.
8
20.0 AMENDMENT
No amendment of this Agreement shall bind either party hereto unless
reduced to writing and signed by authorized representatives of the respective
parties.
21.0 LIMITATION OF LIABILITY
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY, OR TO ANY OTHER ENTITY
OR INDIVIDUAL, FOR INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTIAL OR PUNITIVE
DAMAGES OF ANY KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS
OR REVENUES, REGARDLESS 01, THE FORESEEABILITY THEREOF.
Customer acknowledges and agrees that any product; hardware or software
may or may not have been approved for sale or use in foreign countries. The
Customer agrees that any use or resale of the product into a foreign country
could require regulatory approval of such country. Customer accepts full
responsibility for complying with any and all of such requirements or
regulations for such product(s) prior to distribution or use. Customer further
agrees to indemnify and hold harmless Inter-Tel from and against all claims,
liability, damages and expenses arising from any failure of Customer to obtain
required approvals and/or to comply with any and all such regulations prior to
distribution or use in a foreign country,
22.0 ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between
the parties hereto relative to the subject matter hereof and there are no
understandings, agreements, conditions or representations, oral or written,
expressed or implied, with reference to the subject matter hereof that are not
merged herein or superseded hereby.
23.0 JURISDICTION AND VENUE
This Agreement shall be construed and enforced in accordance with the
laws of the State of Arizona. Should a dispute occur between the parties
hereto arising out of or in relation to implementation of this Agreement, the
parties hereto agree that venue of the dispute shall be in Maricopa County,
Arizona and that substantive and personal jurisdiction shall exist over the
parties by virtue of the fact that payments are due in Phoenix, Arizona.
9
24.0 FORCE MAJEURE
Except as to the payment of monies pursuant to this Agreement, each party
to this Agreement shall be excused from performance hereunder for any Period
of time and to tile extent that it is prevented from performing any of its
obligations pursuant hereto, in whole or in part, as a result of delays caused
by the other party or by an act of God, fire, explosion. transportation
contingencies, unusually severe weather, quarantine, restriction, epidemic,
natural catastrophe, war, civil disturbance, acts of the government of the
United States or of any State or governmental agency or official thereof,
court order, labor dispute or shortage, third-party nonperformance, or other
cause, events or circumstances beyond its reasonable control, and such
nonperformance shall not be a default under this Agreement nor a ground for
termination of this Agreement as long as the excused party makes reasonable
efforts to remedy, if and to the extent reasonably possible, the cause for
such nonperformance.
25.0 TAXES
Each Party shall be fully responsible for the payment of any and all ad
valorem, property franchise, gross receipts, excise, access, bypass, sales or
other local, state or federal taxes or charges applicable to property owned by
it and for taxes on its net income. Customer agrees to any sales, use, gross
receipts. excise, access, bypass or other local, state and federal taxes or
charges applicable to the provisioning or sale of the. Service provided by
Inter-Tel,net. Any taxes to be paid by Customer shall be separately stated on
the invoice. Prices shall not include any taxes for which Customer has
furnished a valid exemption certificate
26.0 REGULATIONS
Each Party represents that it is not aware of any facts that would
justify a complaint to the Federal Communications Commission or any state
regulatory authority concerning the prices, terms or conditions of the
transactions contemplated by this Agreement. The Parties also agree that in
the event a decision by a telecommunications regulatory authority A the
federal, state, or local level necessitates modifications in this Agreement,
the Parties will negotiate in good faith to modify this Agreement in light of
such decision.
27.0 MISCELLANEOUS
27.1 This Agreement does not appoint either Party as the agent or legal
representative of the other Party and does not create a partnership or joint
venture between Customer and Inter-Tel.net. Neither Party shall have any
authority to make any agreement for or bind the other Party in any manner
Whatsoever except as set forth on Schedule B. This Agreement confers no rights
of any kind upon any third party.
27.2 The failure of either Party to give notice of default or to enforce
or insist upon compliance with any of the terms of conditions of this
Agreement shall not be considered the waiver of any other term or condition,
or of future compliance of the terms of this Agreement,
10
27.3 If any part of any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts or provisions of this Agreement.
27.4 Inter-Tel.net may terminate this Agreement without liability if; (i)
the facilities used to provide Service are taken by exercise of condemnation
or eminent domain; or (ii) the Inter-Tel.net facilities shall, in Inter-Tel.
net's reasonable judgment, be made inoperable and beyond economically or
technologically feasible repair.
27.5 Acceptance of this Agreement is contingent upon signature by a
representative of Inter-Tel duly authorized to execute this Agreement.
27.6 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original and when taken together shall constitute
one document.
27.7 In the event that suit is brought and an attorney is retained by
either Party to enforce the terms of this Agreement or to collect any money as
due. hereunder or to collect any money damages for breach hereof, the
prevailing party shall be entitled to recover, in addition to any other
remedy, the reimbursement for reasonable attorney's fees, court costs, costs
of investigations and other related expenses incurred in connection therewith.
27.8 The parties agree not to disclose any of the items and conditions of
this Agreement without the express written consent of the other party, except
as may be required by law or governmental rule or regulations. or to establish
either party's rights under this Agreement, provided, however, that if one
party seeks to disclose for reasons not requiring the other party's consent,
that party will limit the disclosure to the extent required, will allow the
other party to review the information disclosed and will apply where
available, for confidentiality, protective orders and the like. Any review
under this paragraph will not be construed to make the reviewing party
responsible for the content of any disclosure,
28.0 ASSIGNMENT
The Customer may not assign this Agreement without the prior written
consent of Inter- which shall not be reasonably withheld. Any such assignment
of this Agreement by Customer without consent shall be null and void.
29.0 NOTICES
Notices under this Agreement shall be in writing and delivered by
certified mail, return receipt requested, to the persons whose names and
business addresses appear below and such notice shall be effective on the date
of receipt, or refusal of delivery, by the receiving Party.
11
If so Inter-Tel.net (except billing disputes)
Attention: President
INTER-TEL.NET
120 North 44th Street
Suite #200
Phoenix, AZ 85034-1822
Billing Disputes:
Attention: Vice President, Finance
INTER-TEL.NET
120 N. 44th Street
Suite #200
Phoenix, AZ 85034-1822
If to Customer:
----------------------
----------------------
----------------------
Service Request or Modifications or Cancellations:
Attention: Director, Customer Service
INTER-TEL.NET
120 N. 44th Street
Suite #200
Phoenix, AZ 85034-1822
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30.0 FINAL AGREEMENT
This Agreement sets forth the entire understanding of the parties and
supersedes any and all prior agreements, arrangements or understanding related
to the Services described herein, and no representation, promise, inducement
or statement of intention has been made by either party, which is not.
embodied herein. Inter-Tel shall not be bound by any agent's or employee's
representations, promises or inducements not set forth herein,
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duty authorized representatives on the day and year first
above written
INTER-TEL.NET, INC. TELECOM COMMUNICATIONS OF AMERICA
---------------------------------
Customer
By: Craig Steen or Ross McAlpine By: Michele Hiromoto
---------------------------- -------------------------
Signed: Signed: /s/ Michele Hiromoto
Its: VP of Sales or President Its:
---------------------------- -------------------------
Date: Date: 4/27/99
---------------------------- -------------------------
13
EXHIBIT 10.6 Memorandum of Understanding
Memorandum of Understanding for the Interconnection and Settlement between
Welltel Network, Inc. and Inter-Tel.net, Inc.
November 18, 1998
This Memorandum of Understanding (MOU) contains the plans, terms and
conditions under which Telecom Communications of America (CUSTOMER) and Inter-
Tel.net, Inc. (ITN) will provide for the testing of the interconnection of
their IP Telephony Networks.
1. Interconnection
By DEC 1998, CUSTOMER's servers in --- (xx servers), --- (xx servers) and ---
(xx servers) will be programmed to route calls to ITN's servers in Phoenix,
Los Angeles, San Jose, Reno, Chicago and New York and Washington DC. ITN's
servers may be programmed to route calls to CUSTOMER's servers, provided voice
quality is at an acceptable level.The necessary information for
interconnection will be provided to each party on a data sheet that schedules
the POP (Point of Presence), server number, IP address, server name, Vocoder,
dialing rule, destination priority, test call number and termination rate. The
datasheets will be provided in a timely manner prior to testing. The Service
Provider ID numbers for CUSTOMER and ITN will be entered into each other CAS
(Call Accounting System).
Beginning on about DEC 4, 98, test calls will be made on each network to the
numbers set forth on the data sheets. The test period will be from DEC to JAN
1999.
Provided testing between CUSTOMER's and ITN's networks is acceptable to both
parties, commercial traffic will begin, once a full network agreement has been
executed by both parties. Such Network Agreement will be provided by ITN prior
to the end of the test period.
2. Termination Rates
Calls from CUSTOMER to Inter-Tel.net
Calls terminating on established IT.net POPs (see USD $0.045 per minute
Exhibit -- For Listing of area codes -
Calls terminating on additional continental US area USD $0.045 per minute
Codes -
Area codes where ITN will not terminate calls (800,
877, 900, 888) * potentially other pay service area
codes
Alaska and Hawaii $0.080 per minute
Canada $0.130 per minute
Other int'l destinations Per Schedule
Billing increments - one minute, such that on a per call basis, a call
duration of 15 seconds = 1 billing minute, a call duration of 1 minute 15
seconds = 2 billing minutes
Calls from ITN to CUSTOMER
Calls terminating on established CUSTOMER POP's (see $ -- per minute
Exhibit - for listing of destinations)
Calls terminating on additional locations To be determined
Billing increments - one minute, such that on a per call basis, a call
duration of 15 seconds = 1 billing minute, a call duration of 1 minute 15
seconds = 2 billing minutes
3. Exchange of Call Detail Records
ITN will allow CUSTOMER to have access to its account information via ITN's
web page on a continuous basis. Access is through www.inter-tel.net and
CUSTOMER's SPID (Service Provider Identification) account number. This access
can be limited by password a CUSTOMER's discretion. In addition to viewing
call detail on the web site, ITN will provide to CUSTOMER a listing of all
call detail records for the test period via e-mail in an ascii format file no
later than 10 days after the end of each calendar month period. Within 10 days
from the end of the test period, ITN will provide to CUSTOMER a final test
file for review. CUSTOMER shall provide to ITN the appropriate e-mail address
for the call detail information prior to the beginning of the test. The
contact for this test file information is Tak Hiromoto.
4. Billing and Payment for inter-network calls
Invoicing
ITN will setup a test account for CUSTOMER prior to --. This test account will
be credited for the amount of $200.00 (USD) by ITN. Usage originating on the
CUSTOMER's servers and terminating on ITN's network will be subtracted from
CUSTOMER's test account using the pricing information listed in section 4 of
this document. Testing between CUSTOMER's and ITN's networks will cease on --.
Or when the CUSTOMER's test account is at $0.00, which ever comes first. At
that point, a full network agreement will need to be executed by both parties
before additional traffic can be exchanged between networks. Additional
billing questions can be directed towards:
ITN Invoicing contact - Inter-Tel.net
9475 Double R Blved.
Suite 15
Reno, NV 89511
Attn: John Abbott
John_abbott@inter-tel.com
CUSTOMER Invoicing contact - Tak Hiromoto
- ------------------------------------------------------------------------------
Payments
Since CUSTOMER's test account will be setup as a prepaid account and paid for
by ITN, no payment will be required under this MOU.
- ------------------------------------------------------------------------------
Agreed and Accepted:
Inter-Tel.net, Incorporated
/s/ Michele Hiromoto
- ------------------------- ----------------------------
President Ross McAlpine, President
EXHIBIT 23.2 Consent of Independent Certified Public Accountants
ROBERT G. ERCEK, CPA
1756 West Ave. J-12 Ste 107
Lancaster, CA 93534 (661)-726-9448
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in this Registration Statement on Form SB-2 of my
report dated December 20, 2000 relating to the financial statements of Telecom
Communications Inc. as of September 30, 2000.
Date: May 30, 2001 /s/ Robert G. Ercek
Lancaster, California --------------------
Robert G. Ercek
Certified Public Accountant