Inuvo, Inc.
|
(Exact name of registrant as specified in its charter)
|
Nevada
|
87-0450450
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
1111 Main St Ste 201
Conway, AR
|
72032
|
(Address of principal executive offices)
|
(Zip Code)
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Large accelerated filer
o
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Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
x
|
Title of Class
|
|
April 24, 2015
|
Common Stock
|
|
24,269,457
|
|
|
|
Page No.
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Part I
|
|||
|
|||
Item 1.
|
Financial Statements.
|
|
|
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Consolidated Balance Sheets
|
|
|
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Consolidated Statements of Comprehensive Income
|
|
|
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Consolidated Statements of Cash Flows
|
|
|
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Notes to Consolidated Financial Statements
|
|
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
|
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk.
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|
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Item 4.
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Controls and Procedures.
|
|
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|
|||
Part II
|
|||
|
|||
Item 1.
|
Legal Proceedings.
|
|
|
Item 1A.
|
Risk Factors.
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
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Item 3.
|
Defaults upon Senior Securities.
|
|
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Item 4.
|
Mine Safety and Disclosures.
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Item 5.
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Other Information.
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Item 6.
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Exhibits.
|
|
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Signatures
|
|
•
|
material dependence on our relationships with Yahoo! and Google;
|
•
|
dependence on our financing arrangements with Bridge Bank, N.A. which is collateralized by our assets;
|
•
|
covenants and restrictions in our grant agreement with the state of Arkansas;
|
•
|
dependence of our Partner Network segment on relationships with distribution partners; and the introduction of new products and services, which require significant investment;
|
•
|
dependence of our Owned and Operated Network segment on our ability effectively market and attract traffic;
|
•
|
ability to acquire traffic through other search engines;
|
•
|
lack of control over content and functionality of advertisements we display from third-party networks;
|
•
|
ability to effectively compete;
|
•
|
need to keep pace with technology changes;
|
•
|
fluctuations in our quarterly earnings and the trading price of our common stock;
|
•
|
possible interruptions of services;
|
•
|
possible need to raise additional capital;
|
•
|
dependence on third-party providers;
|
•
|
dependence on key personnel;
|
•
|
regulatory and legal uncertainties;
|
•
|
failure to protect our intellectual property;
|
•
|
risks from publishers who could fabricate clicks;
|
•
|
history of losses;
|
•
|
outstanding restricted stock grants warrants and options and potential dilutive impact to our stockholders; and
|
•
|
seasonality of our business.
|
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
1,923,617
|
|
|
$
|
3,714,525
|
|
Accounts receivable, net of allowance for doubtful accounts of $86,642 and $86,722, respectively
|
7,398,031
|
|
|
5,106,300
|
|
||
Unbilled revenue
|
19,629
|
|
|
23,541
|
|
||
Prepaid expenses and other current assets
|
232,727
|
|
|
299,873
|
|
||
Total current assets
|
9,574,004
|
|
|
9,144,239
|
|
||
Property and equipment, net
|
999,267
|
|
|
959,475
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
5,760,808
|
|
|
5,760,808
|
|
||
Intangible assets, net of accumulated amortization
|
9,331,821
|
|
|
9,530,322
|
|
||
Other assets
|
200,032
|
|
|
211,833
|
|
||
Total other assets
|
15,292,661
|
|
|
15,502,963
|
|
||
Total assets
|
$
|
25,865,932
|
|
|
$
|
25,606,677
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
7,001,628
|
|
|
$
|
5,714,158
|
|
Accrued expenses and other current liabilities
|
3,052,266
|
|
|
3,704,464
|
|
||
Term and credit notes payable - current portion
|
959,942
|
|
|
959,942
|
|
||
Total current liabilities
|
11,013,836
|
|
|
10,378,564
|
|
||
|
|
|
|
||||
Long-term liabilities
|
|
|
|
||||
Deferred tax liability
|
3,552,500
|
|
|
3,552,500
|
|
||
Term and credit notes payable - long term
|
2,500,000
|
|
|
2,666,667
|
|
||
Other long-term liabilities
|
98,711
|
|
|
735,211
|
|
||
Total long-term liabilities
|
6,151,211
|
|
|
6,954,378
|
|
||
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, $.001 par value:
|
|
|
|
||||
Authorized shares 500,000, none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value:
|
|
|
|
|
|
||
Authorized shares 40,000,000; issued shares 24,621,832
and 24,087,627, respectively; outstanding shares
24,245,305 and 23,711,100, respectively
|
24,621
|
|
|
24,087
|
|
||
Additional paid-in capital
|
128,535,067
|
|
|
128,734,759
|
|
||
Accumulated deficit
|
(118,462,244
|
)
|
|
(119,088,552
|
)
|
||
Treasury stock, at cost - 376,527 shares
|
(1,396,559
|
)
|
|
(1,396,559
|
)
|
||
Total stockholders' equity
|
8,700,885
|
|
|
8,273,735
|
|
||
Total liabilities and stockholders' equity
|
$
|
25,865,932
|
|
|
$
|
25,606,677
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net revenue
|
$
|
13,420,947
|
|
|
$
|
10,121,717
|
|
Cost of revenue
|
6,069,219
|
|
|
3,676,755
|
|
||
Gross profit
|
7,351,728
|
|
|
6,444,962
|
|
||
Operating expenses
|
|
|
|
||||
Marketing costs
|
4,922,146
|
|
|
3,663,687
|
|
||
Compensation
|
1,191,057
|
|
|
1,099,915
|
|
||
Selling, general and administrative
|
987,766
|
|
|
1,010,609
|
|
||
Total operating expenses
|
7,100,969
|
|
|
5,774,211
|
|
||
Operating income
|
250,759
|
|
|
670,751
|
|
||
Interest expense, net
|
(51,161
|
)
|
|
(97,802
|
)
|
||
Income from continuing operations before taxes
|
199,598
|
|
|
572,949
|
|
||
Income tax benefit
|
406,453
|
|
|
75,698
|
|
||
Net income from continuing operations
|
606,051
|
|
|
648,647
|
|
||
Net income from discontinued operations
|
20,259
|
|
|
26,112
|
|
||
Net income
|
626,310
|
|
|
674,759
|
|
||
Total comprehensive income
|
$
|
626,310
|
|
|
$
|
674,759
|
|
|
|
|
|
||||
Per common share data
|
|
|
|
||||
Basic and diluted:
|
|
|
|
||||
Net income from continuing operations
|
$
|
0.03
|
|
|
$
|
0.03
|
|
Net income from discontinued operations
|
—
|
|
|
—
|
|
||
Net income
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
||||
|
|
|
|
||||
Weighted average shares
|
|
|
|
||||
Basic
|
24,086,705
|
|
|
23,444,053
|
|
||
Diluted
|
24,240,258
|
|
|
23,481,415
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
626,310
|
|
|
$
|
674,759
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
||||
Settlement of tax liability
|
(406,453
|
)
|
|
—
|
|
||
Depreciation and amortization
|
370,883
|
|
|
454,473
|
|
||
Deferred income taxes
|
—
|
|
|
(75,698
|
)
|
||
Amortization of financing fees
|
9,533
|
|
|
4,167
|
|
||
Adjustment of European liabilities related to discontinued operations
|
(20,461
|
)
|
|
30,871
|
|
||
(Recovery) Provision of doubtful accounts
|
(80
|
)
|
|
17,000
|
|
||
Stock based compensation
|
51,924
|
|
|
130,448
|
|
||
Other, net
|
(251,084
|
)
|
|
(96,289
|
)
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable and unbilled revenue
|
(2,287,739
|
)
|
|
(327,790
|
)
|
||
Prepaid expenses and other assets
|
57,613
|
|
|
98,940
|
|
||
Accounts payable
|
1,307,931
|
|
|
(541,985
|
)
|
||
Accrued expenses and other liabilities
|
(837,934
|
)
|
|
11,173
|
|
||
Other, net
|
11,801
|
|
|
—
|
|
||
Net cash (used in) provided by operating activities
|
(1,367,756
|
)
|
|
380,069
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of equipment and capitalized development costs
|
(239,427
|
)
|
|
(178,423
|
)
|
||
Net cash used in investing activities
|
(239,427
|
)
|
|
(178,423
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from revolving line of credit
|
—
|
|
|
750,000
|
|
||
Payments on revolving line of credit
|
—
|
|
|
(761,469
|
)
|
||
Payments on term note payable and capital leases
|
(183,725
|
)
|
|
(604,349
|
)
|
||
Net cash used in financing activities
|
(183,725
|
)
|
|
(615,818
|
)
|
||
Net change – cash
|
(1,790,908
|
)
|
|
(414,172
|
)
|
||
Cash, beginning of year
|
3,714,525
|
|
|
3,137,153
|
|
||
Cash, end of period
|
$
|
1,923,617
|
|
|
$
|
2,722,981
|
|
Supplemental information:
|
|
|
|
||||
Interest paid
|
$
|
37,075
|
|
|
$
|
74,667
|
|
Income taxes paid
|
$
|
97,483
|
|
|
$
|
—
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Furniture and fixtures
|
$
|
69,940
|
|
|
$
|
67,341
|
|
Equipment
|
2,589,021
|
|
|
2,585,659
|
|
||
Software
|
9,055,777
|
|
|
8,822,310
|
|
||
Leasehold improvements
|
66,903
|
|
|
66,903
|
|
||
Subtotal
|
11,781,641
|
|
|
11,542,213
|
|
||
Less: accumulated depreciation and amortization
|
(10,782,374
|
)
|
|
(10,582,738
|
)
|
||
Total
|
$
|
999,267
|
|
|
$
|
959,475
|
|
|
Term
|
|
Carrying
Value
|
|
Accumulated Amortization and Impairment
|
|
Net Carrying Value
|
|
Year-to-date Amortization
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Customer list, Google
|
20 years
|
|
$
|
8,820,000
|
|
|
$
|
(1,359,750
|
)
|
|
$
|
7,460,250
|
|
|
$
|
110,250
|
|
Customer list, all other
|
10 years
|
|
1,610,000
|
|
|
(496,429
|
)
|
|
1,113,571
|
|
|
40,251
|
|
||||
Trade names, ALOT (1)
|
5 years
|
|
960,000
|
|
|
(592,000
|
)
|
|
368,000
|
|
|
48,000
|
|
||||
Trade names, web properties (2)
|
-
|
|
390,000
|
|
|
—
|
|
|
390,000
|
|
|
—
|
|
||||
Intangible assets classified as long-term
|
|
|
$
|
11,780,000
|
|
|
$
|
(2,448,179
|
)
|
|
$
|
9,331,821
|
|
|
$
|
198,501
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, Partner Network
|
|
|
$
|
1,776,544
|
|
|
$
|
—
|
|
|
$
|
1,776,544
|
|
|
$
|
—
|
|
Goodwill, Owned and Operated Network
|
|
|
3,984,264
|
|
|
—
|
|
|
3,984,264
|
|
|
—
|
|
||||
Goodwill, total
|
|
|
$
|
5,760,808
|
|
|
$
|
—
|
|
|
$
|
5,760,808
|
|
|
$
|
—
|
|
(1)
|
We determined the ALOT trade name should be amortized over
five
years.
|
(2)
|
We have determined that the trade names related to our web properties have an indefinite life, and as such it is not amortized.
|
2015
|
$
|
595,503
|
|
2016
|
794,004
|
|
|
2017
|
634,004
|
|
|
2018
|
602,004
|
|
|
2019
|
602,004
|
|
|
Thereafter
|
5,714,302
|
|
|
Total
|
$
|
8,941,821
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Term note payable - 4.25 percent at March 31, 2015 (prime plus 1 percent), due September 10, 2017
|
|
$
|
1,666,667
|
|
|
$
|
1,833,334
|
|
Revolving credit line - 3.75 percent at March 31, 2015 (prime plus 0.5 percent), due September 29, 2016
|
|
1,793,275
|
|
|
1,793,275
|
|
||
Total
|
|
3,459,942
|
|
|
3,626,609
|
|
||
Less: current portion
|
|
(959,942
|
)
|
|
(959,942
|
)
|
||
Term note payable and revolving credit line - long term portion
|
|
$
|
2,500,000
|
|
|
$
|
2,666,667
|
|
2015
|
$
|
500,000
|
|
2016
|
666,667
|
|
|
2017
|
500,000
|
|
|
Total
|
$
|
1,666,667
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Accrued marketing costs
|
$
|
1,283,025
|
|
|
$
|
1,744,143
|
|
Accrued sales reserve
|
539,875
|
|
|
567,517
|
|
||
Accrued expenses and other
|
350,078
|
|
|
552,288
|
|
||
Loss contingency
|
308,000
|
|
|
308,000
|
|
||
Deferred Arkansas grant, current portion and accrued reserve
|
248,109
|
|
|
224,994
|
|
||
Accrued taxes
|
155,622
|
|
|
267,905
|
|
||
Accrued payroll and commission liabilities
|
138,360
|
|
|
5,236
|
|
||
Capital leases, current portion
|
29,197
|
|
|
34,381
|
|
||
|
|
|
|
|
|
||
Total
|
$
|
3,052,266
|
|
|
$
|
3,704,464
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Taxes payable
|
$
|
—
|
|
|
$
|
506,453
|
|
Deferred Arkansas grant, less current portion
|
39,431
|
|
|
142,276
|
|
||
Deferred rent
|
55,533
|
|
|
70,861
|
|
||
Capital leases, less current portion
|
3,747
|
|
|
15,621
|
|
||
Total
|
$
|
98,711
|
|
|
$
|
735,211
|
|
|
Options Outstanding
|
|
RSUs Outstanding
|
|
Options and RSUs Exercised
|
|
Available Shares
|
|
Total
|
|||||
2010 ECP
|
250,498
|
|
|
127,836
|
|
|
1,911,422
|
|
|
1,546,189
|
|
|
3,835,945
|
|
2005 LTIP
|
29,998
|
|
|
254,940
|
|
|
695,145
|
|
|
19,917
|
|
|
1,000,000
|
|
Total
|
280,496
|
|
|
382,776
|
|
|
2,606,567
|
|
|
1,566,106
|
|
|
4,835,945
|
|
|
|
For the Three Months Ended
|
|
||||
|
|
March 31, 2015
|
|
March 31, 2014
|
|
||
Weighted average shares outstanding for basic EPS
|
|
24,086,705
|
|
|
23,444,053
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
||
Options
|
|
5,770
|
|
|
9,553
|
|
|
Restricted stock units
|
|
127,607
|
|
|
13,796
|
|
|
Warrants
|
|
20,176
|
|
|
14,013
|
|
|
Weighted average shares outstanding for diluted EPS
|
|
24,240,258
|
|
|
23,481,415
|
|
|
|
Lease Payments
|
|
Sublease income
|
||||
2015
|
$
|
475,481
|
|
|
$
|
455,661
|
|
2016
|
219,360
|
|
|
50,753
|
|
||
2017
|
176,024
|
|
|
—
|
|
||
2018
|
179,545
|
|
|
—
|
|
||
2019
|
183,136
|
|
|
—
|
|
||
2020
|
123,708
|
|
|
—
|
|
||
Total
|
$
|
1,357,254
|
|
|
$
|
506,414
|
|
|
For the Three Months Ended
|
||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||||||
|
$
|
|
% of Revenue
|
|
$
|
|
% of Revenue
|
||||
Partner Network
|
7,573,380
|
|
|
56.4
|
%
|
|
5,451,617
|
|
|
53.9
|
%
|
Owned and Operated Network
|
5,847,567
|
|
|
43.6
|
%
|
|
4,670,100
|
|
|
46.1
|
%
|
Total net revenue
|
13,420,947
|
|
|
100.0
|
%
|
|
10,121,717
|
|
|
100.0
|
%
|
|
For the Three Months Ended
|
||||||||||
|
March 31, 2015
|
|
March 31, 2014
|
||||||||
|
$
|
|
Gross Profit %
|
|
$
|
|
Gross Profit %
|
||||
Partner Network
|
1,520,895
|
|
|
20.1
|
%
|
|
1,858,403
|
|
|
34.1
|
%
|
Owned and Operated Network
|
5,830,833
|
|
|
99.7
|
%
|
|
4,586,559
|
|
|
98.2
|
%
|
Total gross profit
|
7,351,728
|
|
|
54.8
|
%
|
|
6,444,962
|
|
|
63.7
|
%
|
|
For the Three Months Ended March 31,
|
|||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
% Change
|
|||||||
Partner Network
|
$
|
7,573,380
|
|
|
$
|
5,451,617
|
|
|
$
|
2,121,763
|
|
|
38.9
|
%
|
Owned and Operated Network
|
5,847,567
|
|
|
4,670,100
|
|
|
1,177,467
|
|
|
25.2
|
%
|
|||
Net Revenue
|
$
|
13,420,947
|
|
|
$
|
10,121,717
|
|
|
$
|
3,299,230
|
|
|
32.6
|
%
|
|
For the Three Months Ended March 31,
|
|||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
% Change
|
|||||||
Partner Network
|
$
|
6,052,485
|
|
|
$
|
3,593,214
|
|
|
$
|
2,459,271
|
|
|
68.4
|
%
|
Owned and Operated Network
|
16,734
|
|
|
83,541
|
|
|
(66,807
|
)
|
|
(80.0
|
%)
|
|||
Cost of revenue
|
$
|
6,069,219
|
|
|
$
|
3,676,755
|
|
|
$
|
2,392,464
|
|
|
65.1
|
%
|
|
For the Three Months Ended March 31,
|
|||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
% Change
|
|||||||
Marketing costs
|
$
|
4,922,146
|
|
|
$
|
3,663,687
|
|
|
$
|
1,258,459
|
|
|
34.3
|
%
|
Compensation
|
1,191,057
|
|
|
1,099,915
|
|
|
91,142
|
|
|
8.3
|
%
|
|||
Selling, general and administrative
|
987,766
|
|
|
1,010,609
|
|
|
(22,843
|
)
|
|
(2.3
|
%)
|
|||
Operating expenses
|
$
|
7,100,969
|
|
|
$
|
5,774,211
|
|
|
$
|
1,326,758
|
|
|
23.0
|
%
|
•
|
pay fees to the lender associated with the credit facility;
|
•
|
meet prescribed financial covenants;
|
•
|
maintain our corporate existence in good standing;
|
•
|
grant the lender a security interest in our assets;
|
•
|
provide financial information to the lender; and
|
•
|
refrain from any transfer of any of our business or property, subject to customary exceptions.
|
Exhibit No.
|
|
Description of Exhibit
|
10.30
|
|
Lease Agreement, dated April 8, 2015, with Arkansas Democrat-Gazette, Inc.*
|
10.31
|
|
Google Services Agreement, effective February 1, 2015, with Google, Inc.*
/
**
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer *
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer *
|
32.1
|
|
Section 1350 certification of Chief Executive Officer *
|
32.2
|
|
Section 1350 certification of Chief Financial Officer *
|
101.INS
|
|
XBRL Instance Document *
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document *
|
1010.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document *
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document *
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document *
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document *
|
|
Inuvo, Inc.
|
|
|
|
|
|
|
April 29, 2015
|
By:
|
/s/ Richard K. Howe
|
|
|
|
Richard K. Howe,
|
|
|
|
Chief Executive Officer, principal executive officer
|
|
|
|
|
|
April 29, 2015
|
By:
|
/s/
Wallace D. Ruiz
|
|
|
|
Wallace D. Ruiz,
|
|
|
|
Chief Financial Officer, principal financial officer
|
|
LANDLORD
|
THIS AGREEMENT ("Lease"), dated the
__8th_____ day of April, 2015
|
TENANT
|
between
ARKANSAS DEMOCRAT-GAZETTE, INC.,
with a notice address of 200 River Market Avenue, Suite 501, Little Rock, Arkansas 72201, (hereinafter referred to as “Landlord”) and
INUVO, INC.
(hereinafter referred to as "Tenant").
|
PREMISES
|
1.1
That Landlord does hereby grant, demise and lease unto Tenant the premises or space in the Museum Center (hereinafter referred to as "Building"), 500 President Clinton Ave, Little Rock, Pulaski County, Arkansas, as outlined in red on the floor plan attached hereto (hereinafter referred to as Exhibit “A"), which shall be on the third floor of the Building, consisting in the aggregate of
12,245
square feet of net rentable area as follows: (i) Suite 300 consisting of 5,359 square feet of net rentable area; (ii) Suite 303 consisting of 486 square feet of net rentable area; and (iii) Suite 305 consisting of 6,400 square feet of net rentable area (hereinafter referred to as "Premises").
|
PREMISES
|
1.2
The Premises are to be used and occupied continuously throughout the term hereof for the business of
general office
exclusively, and for no other purpose whatever.
|
LEASE
|
1.3
The Premises are hereby demised unto Tenant for a period of sixty (60) months from the Commencement Date. Landlord shall deliver possession and access to the Premises with keys upon a fully executed Lease and a copy of Tenant’s insurance as described herein so that Tenant may commence their construction in the Premises.
|
RENTAL
|
1.4
(a) Tenant shall pay to Landlord as rent for the Premises during the term of this Lease a monthly installment, payable in advance on the first day of every month without notice, demand, offset or deduction, and such rent beginning with the commencement of the term; provided, however, that in the event the term shall commence pursuant to Section 1.3 hereof on a date other than the first day of a month then the monthly installments for the first month of the term and the last month of the term shall be pro-rated accordingly and such pro-rated installment for the first month of the term shall be payable with and in addition to the monthly installment due on the first day of the first full month following commencement of the term (the date the first monthly installment of rent is due, whether the term shall have commenced on a date other than the first day of a month or not, is hereinafter referred to as the "Initial Rent Payment Date". If rent has not been paid by the 10th of the month in which it is due, 5% of the monthly payment will be assessed as a late charge. The amount of each such installment shall be equal to the following:
|
(i)
|
For the period commencing on the first month of the term and ending
one (1) year
subsequent to the Initial Rent Payment Date ("Initial Rent Period") the amount of each monthly installment ("Initial Monthly Rent") shall be equal to the amount of
$14,285.83
per month (see paragraph 4.16).
|
(ii)
|
After the Initial Rent Period and each subsequent twelve month period during the term of this Lease, the monthly rent payable by Tenant shall be increased by an additional two percent (2%) over the rent payable for the immediately preceding year.
|
SECURITY
|
1.5
Landlord acknowledges receipt of Tenant's check in the amount of
$14,285.83
Dollars
be held as security for the performance of Tenant's covenants herein contained. Upon default by Tenant in making any payment or performing any obligation herein provided, Landlord shall have the right but not the obligation to apply said deposit toward payment of any arrearage of rent or other payments required of Tenant hereunder, or toward payment of any other damages, injury, cost or expense incurred by Landlord and caused by Tenant. If all or any part of the deposit shall be so applied by Landlord, then within ten (10) days after Landlord shall make demand upon Tenant for a replacement deposit equal in amount to the deposit so applied, which shall be delivered to Landlord by Tenant. Upon any transfer by Landlord of its interest in the Premises or this Lease, Landlord shall have the right without consent of Tenant to assign the deposit to the transferee who shall assume all liability or obligations to Tenant in regard thereto, and Landlord shall thereupon be released and discharged of all such liability or obligations. The provisions of this Subsection 1.5 shall not be construed as liquidated damages, and shall not operate in any manner to reduce or release the obligations of Tenant hereunder, except insofar as the application of this money may reduce or satisfy an obligation to make payment of money. If Tenant is not in default hereunder, any remaining balance of such deposit shall be returned by Landlord to Tenant without interest within thirty (30) days after termination of this Lease.
|
RENEWAL OPTIONS
|
1.6
Tenant shall have the renewal options set forth in Exhibit “C” attached hereto.
|
TAXES, SPECIAL
|
1.7
Tenant shall pay prior to delinquency at any time during the term of the Lease that
|
LICENSES, ETC.
|
and special assessments against the Premises or any personal property thereon resulting from any improvements or alterations to the above-described use of the Premises by Tenant which are in excess of the amount of such prior to the beginning of the Lease term, (b) all license, franchise and permit fees or taxes. Promptly after demand thereof, Tenant shall furnish to Landlord satisfactory proof of payment of any or all items stated herein which are payable by Tenant.
|
FINISH BY LANDLORD/
|
2.1
Tenant shall occupy space in “as-is” condition unless Landlord agrees to perform work pursuant to Exhibit “D”. Notwithstanding the foregoing, (i) Landlord represents and warrants that it has all appropriate permits and licenses to make the building available to Tenant and that the public portions of the building comply with all applicable state, county and local regulations, and (ii) Landlord acknowledges that there is mold in the southwest side of the Premises and that Landlord, at Landlord’s expense, shall fully remediate such mold in compliance with all state, local and federal regulations within fifteen (15) days of the date this Agreement is executed (the “Mold Remediation”).
|
QUIET POSSESSION
|
2.3
Tenant shall keep and perform all of its covenants under this Lease on the part of Tenant to be performed, and so long as Tenant is not in default under this Lease Landlord shall guarantee to Tenant the quiet, peaceful and uninterrupted possession of the Premises.
|
LAWFUL USES
|
3.1
Tenant will maintain the Premises in a clean and healthful condition; and comply with all laws, ordinances, orders, rules, and regulations (state, federal, municipal and other agencies or bodies having any jurisdiction thereof) with reference to use, conditions, or occupancy of the Premises.
|
WASTE
|
3.3
Tenant shall not commit or permit any waste to be committed whatsoever.
|
NUISANCES
|
3.4
Tenant shall not create or allow any nuisance to exist in the Premises, and it shall abate promptly and free of expense to Landlord any nuisance that may arise. Landlord's determination of what constitutes a nuisance shall be binding on Tenant.
|
INVALIDATION OF
|
3.5
Tenant shall not suffer anything to be or remain upon or about the Premises which
|
INSURANCE
|
will invalidate any policy of insurance, which Landlord may now or hereafter have upon the Building.
|
INCREASED
|
3.6
Tenant shall not suffer anything to be or remain upon or about the Premises nor
|
PREMIUMS
|
carry on nor permit upon the Premises any trade or occupation or suffer to be done anything which may render an increased or extra premium payable for any insurance of the Premises or the Building against fire, casualty, liability or any other insurable causes, unless consented to in writing by Landlord. Regardless of whether Landlord has so consented or not, Tenant shall pay any such increased or extra premium within ten days after Tenant shall have been advised by Landlord of the amount thereof.
|
ALTERATIONS
|
3.7
Except as otherwise permitted herein or in the Building rules and regulations, Tenant shall not have the right to make changes, alterations, or additions to the Premises (including without limitation, floor coverings and fixtures) until Tenant has first obtained Landlord's approval in writing, which approval shall not be unreasonably withheld. Such changes, alterations, or additions, when made to the Premises by Tenant, shall at once become the property of Landlord and shall be surrendered to Landlord upon the termination for any reason of this Lease; but this clause shall not apply to movable equipment or furniture (including partitioned office cubicle or furniture) of Tenant or such changes, alterations or additions to the Premises as may be removed from the Premises without causing damages thereto other than the diminution in value to the Premises resulting from such removal. In the event Tenant elects to remove any such item, it shall do so at its sole expense. Title to any item so removed shall immediately vest in Tenant without any action on the part of Landlord being required.
|
USE OF BUILDING
|
3.8
Tenant shall not, except to designate Tenant's business address (and then only in a
|
NAME
|
conventional manner and without emphasis or display) use the Building name or any simulation or abbreviation of such name for any purpose whatsoever. Landlord shall have the right to change the name of the Building at any time after six (6) months’ notice to all Tenants. Tenant will discontinue using any such name and any simulation or abbreviation thereof for the purpose of designating Tenant's business address before the date Landlord shall specify in its notice to Tenant after which the Building shall no longer be known by such name.
|
SIGNS
|
3.9
Tenant shall not paint, display, inscribe, maintain or affix any sign, picture, advertisement, notice, lettering or direction on any area outside the Premises except on hallway doors of the Premises, and then only such name or names or matter and in such color, size, style, character and materials as may first be approved by Landlord in writing. Landlord shall have the right to remove, at Tenant's expense, all matter other than that above provided for without notice to Tenant. Landlord shall install Tenant’s name on the Building directories and glass plaque on the third floor hallway leading to Suite 305.
|
AND OVERLOADING
|
door, partition, wall or window, which may be unsightly from outside the Premises, and Tenant shall not place or permit to be placed any article of any kind on any window ledge or on the exterior walls. Blinds, shades, awnings or other forms of inside or outside window coverings, or window ventilators or similar devices, shall not be placed in or about the outside windows in the Premises except to the extent that the character, shape, color, material and make thereof is approved by Landlord, and Tenant shall not do any painting or decorating in the Premises or make, paint, cut or drill into, or in any way deface any part of the Premises or the Building without the written consent of Landlord. Tenant shall not overload any floor or part thereof in the Premises, or any facility in the Building or any public corridors or elevators therein while bringing in or removing any large or heavy articles, and Landlord may direct and control the location of safes and all other heavy articles. Furniture and other large or heavy articles may not be brought into the Building, removed therefrom or moved from place to place within any portion of the Premises or other portion of the Building or its equipment that would exceed the standard load limits as set forth in the rules of the Building.
|
REPAIRS
|
3.11
Tenant shall, at its costs and expense, repair and replace any damage or injury done to the Premises, or the Building, or any part thereof, caused by Tenant or its agents, employees, invitees, or visitors. Tenant shall also repair in the Premises: (1) floor covering and/or raised flooring; (2) interior partitions; (3) doors; (4) the interior side of demising walls; (5) electronic, phone and data cabling and related equipment that is installed by or for the benefit of Tenant and located in the Premises or other portions of the Building; (6) supplemental air conditioning units, private showers and kitchens, including hot water heaters, plumbing, dishwashers, ice machines and similar facilities serving Tenant exclusively; (7) phone rooms used exclusively by Tenant; (8) alterations performed by contractors retained by or on behalf of Tenant, including related HVAC balancing; and (9) all of Tenant’s furnishings, trade fixtures, equipment and inventory. Should Tenant fail to make such repairs or replacements within 15 days of occurrence of such damage or injury, Landlord may, at its option, make such repairs and replacements and Tenant shall pay the cost thereof to Landlord upon demand.
|
ASSIGNMENT OR
|
3.12
Tenant shall not assign or sublet the Premises, this Lease or any part thereof without
|
SUBLETTING
|
the prior written consent of Landlord, which shall not be unreasonably withheld, provided that Tenant provides Landlord notice of such sublessee or assignee (“transferee”) with copies of the proposed documentation, and the following information about the proposed transferee: name and address; reasonably satisfactory information about its business and business history; its proposed use of the Premises; banking, financial, and other credit information; and general references sufficient to enable Landlord to determine the proposed transferee's experience and credit worthiness and character. Tenant shall reimburse Landlord for its attorneys' fees and other expenses incurred in connection with considering any request for its consent to a Transfer. Notwithstanding any assignment or subletting, Tenant and any guarantor of Tenant's obligations under this Lease shall at all times remain fully responsible and liable for the payment of the rent herein specified and for compliance with all of Tenant's other obligations under this Lease. Landlord’s consent to any transfer shall not be deemed consent to any subsequent transfers.
|
ATTORNEY FEES
|
3.13
Tenant shall pay all costs of collection, including reasonable attorney fees, if all or any part of the rent reserved herein is collected after maturity with the aid of any attorney; and Tenant shall also pay reasonable attorney fees in the event it becomes necessary for Landlord to employ an attorney to force Tenant to comply with any of the covenants, obligations or conditions imposed by this Lease
|
RULES OF BUILDING
|
3.14
Tenant and Tenant's agents, employees and invitees will comply fully with all requirements of Rules of the Building which are attached hereto and, which are a part of this Lease as though fully set out herein. Landlord shall at all times have the right to change such rules and regulations or to amend them in such reasonable manner, not inconsistent with the terms of this Lease, as may be deemed advisable for safety, care and cleanliness of the Premises and for preservation of good order therein. Provided, however, Landlord shall notify Tenant of any change in such rules at least ninety (90) days before such rules are to go into effect. All rule and regulation changes and amendments will be forwarded to Tenant in writing and shall be carried out and observed by Tenant after the effective date.
|
ENTRY FOR REPAIRS
|
3.15
Landlord, its officers, agents, partners and representatives, and any mortgagee,
|
INSPECTING, ETC.
|
secured party or other creditor to whom or for whose benefit a lien against the interest of Landlord in the Building has been granted as security for the payment of any indebtedness of Landlord, shall each have the right to enter into and upon the Premises at all reasonable times, or in the case of emergency at any time, to inspect the same or make such repairs or alterations as they may deem necessary or desirable. However, such entry may only be made for a purpose reasonably related to the preservation of such party's security. Tenant shall also permit Landlord at all reasonable times or, in case of emergency, at any time to inspect, erect, use and maintain pipes, ducts, conduits and similar devices in, above and through the Premises, and to make any necessary repairs or alterations. Landlord shall be allowed to take all material into and upon the Premises that may be required therefor without the same constituting an eviction of Tenant in whole or in part and the rent reserved shall in no wise abate while said repairs and maintenance are being made, by reason or loss or interruption of the business of Tenant, or otherwise. Anything to the contrary contained in this Section 3.15 notwithstanding, except in the case of any emergency, any such repairs or alterations which are made by Landlord, unless and except they are made at the request of Tenant, shall not be made at times when they would unreasonably interrupt the normal business operations of Tenant, except with prior written approval of Tenant.
|
|
( a ) Tenant shall immediately vacate and surrender the Premises to Landlord in good order, condition and repair, reasonable wear and tear or casualty damage to be repaired by Landlord pursuant to Section 4.9 excepted.
|
|
( b ) Tenant shall surrender all door keys for the Premises to Landlord.
|
|
( c ) Tenant grants to Landlord full authority and right to enter upon the Premises and take possession thereof.
|
LIENS
|
3.17
Tenant shall keep the Premises free from all liens which might arise from a third party's transaction with Tenant, including but not limited to the provision of services and the sale of goods and materials. If such lien does arise, then Tenant shall work diligently to cause such lien to be removed, extinguished or satisfied within thirty (30) days following written notice at the expense of Tenant.
|
BROKER
|
broker
MOSES TUCKER REAL ESTATE, INC.
, Little Rock, Arkansas, (“Landlord’s Broker”) and
REMAX PROPERTIES
, Little Rock, Arkansas, (“Tenant’s Broker”) in connection with this Lease, and that insofar as Tenant knows, no other broker negotiated or participated in the negotiations of this Lease or submitted or showed the Premises or is entitled to any commission in connection with this Lease. Tenant shall indemnify, defend and hold Landlord harmless from and against all costs, expenses, attorneys’ fees, liens and other liability for commissions or other compensation claimed by any broker or agent claiming the same by, through, or under Tenant. The foregoing indemnity shall survive the expiration or earlier termination of the Lease.
|
RIGHTS RESERVED
|
4.1
Landlord shall have the following rights exercisable without notice or demand and
|
TO LANDLORD
|
without
liability to Tenant for damage or injury to property, persons or business (all claims for damage thereof being hereby released by Tenant), and without effecting an eviction or disturbance of Tenant's use or possession of the Premises or giving rise to any claim for setoffs or abatement of rent.
|
|
( a ) To name the Building and change the name or street address of the Building as set out in Section 3.8 above.
|
|
( b ) To install and maintain signs on the exterior and interior of the Building.
|
|
( c ) To retain at all times, and to use in appropriate instances, keys to all doors within and into the Premises, and Tenant shall not replace any locks without the prior written consent of Landlord except locations within the Premises as Tenant determines, in its good faith business judgment, to have restricted access in order preserve, protect and maintain the security of Tenant’s confidential or security sensitive information or equipment. With regard to such restricted areas, Tenant shall permit Landlord and Landlord’s agents to access, and shall provide keys or cards keys as necessary to access, such areas to address emergency situations. An emergency situation is one that poses a threat of imminent bodily harm or property damage. If Landlord makes an emergency entry into a restricted area when no authorized representative of Tenant is present, Landlord shall provide notice to Tenant as soon as reasonably possible after that entry and shall take reasonable steps to secure the restricted area until a representative of Tenant arrives at the Premises.
|
|
( d ) To decorate, remodel, repair, alter or otherwise prepare the Premises for re-occupancy during the last six months of the term hereof, provided that Tenant shall have then vacated the Premises, or at any time after Tenant abandons the Premises.
|
|
( e ) To enter the Premises at reasonable hours to make inspections, or to exhibit the Premises to prospective tenants, purchasers or others, or for other reasonable purposes.
|
|
( f ) To have access to all mail chutes according to the rules of the United States Post Office.
|
|
( g ) To take all such reasonable measures as Landlord may deem advisable for the security of the Building and its occupants, including without limitation, the search of all persons entering or leaving the Building, the evacuation of the Building for cause, suspected cause, or for drill purposes, the temporary denial of access to the Building, and the closing of the Building after normal business hours and on Saturdays, Sundays and holidays, subject, however, to Tenant's right to admittance when the Building is closed after normal business hours under such reasonable regulations as Landlord may prescribe from time to time which may include by way of example but not of limitation, that persons entering or leaving the Building, whether or not during normal business hours, identify themselves to a security officer by registration or otherwise and that such persons establish their right to enter or leave the Building.
|
|
( h ) To approve the weight, size and location of safes, computers and other heavy articles in and about the Premises and the Building and to require all such items and other office furniture and equipment to be moved in and out of the Building and the Premises only at such times and in such manner as Landlord shall direct and in all events at Tenant's sole risk and responsibility.
|
|
( j ) To do or permit to be done any work in or about the Premises or the Building or any adjacent or nearby building, land, street or alley.
|
|
( k ) To grant to anyone the exclusive right to conduct any business or render any service in the Building.
|
|
( l ) To close the Building at 6:00 p.m. or such other reasonable time as Landlord may determine, subject, however, to Tenant's right to admittance under such regulations as shall be prescribed from time to time by Landlord and set out in the Rules of the Building, provided however, no such changes shall prohibit employees of Tenant from 24/7 access to the Building.
|
|
( m ) To designate and approve, prior to installation, all types of window shades, blinds, drapes, awnings, window ventilators and other similar equipment, and to approve all internal lighting that may be visible from the exterior of the Building.
|
|
( n ) To have and retain a paramount title to the Premises free and clear of any act of Tenant.
|
|
( o ) To sell, assign or transfer all of Landlord's interest in the Lease.
|
|
( p ) To prohibit the placing of vending or dispensing machines of any kind in or about the Premises without the prior written permission of Landlord, and to regulate the use thereof.
|
DEFAULT
|
4.2
The following events shall be deemed to be events of default by Tenant under the Lease:
|
|
( a ) Tenant shall fail to pay any installment of rent hereby reserved and such failure shall continue for a period of ten days after same is due.
|
|
( b ) Tenant shall fail to comply with any material term, provision or covenant of this Lease, other than the payment of rent, and shall not cure such failure within thirty (30) days after written notice thereof to Tenant.
|
|
( c ) Tenant or any guarantor of Tenant's obligations shall make an assignment for the benefit of creditors.
|
|
( e ) A receiver or trustee shall be appointed for all or substantially all of the assets of Tenant or any guarantor of Tenant's obligations and such receivership shall not be terminated or stayed within the time permitted by law.
|
|
( f ) Tenant shall desert, vacate or abandon any substantial portion of the Premises.
|
ESTOPPEL CERTIFICATE
|
4.3
From time to time, upon not less than ten (10) days prior request by Landlord, Tenant shall execute and deliver to Landlord and to any other person designated by Landlord a written
estoppel certificate in the form attached hereto as Exhibit “F”, and containing such other matters as may be reasonably requested by Landlord.
|
NON DISTURBANCE
|
deeds
of trust, mortgages, security agreements, lease assignments or other instruments of security, as well as to any ground leases or primary leases, that now or hereafter cover all or any part of the Building, the land situated beneath the Building or any interest of Landlord therein, and to any and all advances made on the security thereof, and to any and all increase, renewals, modifications, consolidations, replacements and extensions of any of the foregoing. This provision is hereby declared by Landlord and Tenant to be self-operative and no further instrument shall be required to effect such subordination of this Lease. Tenant shall, however, upon demand at any time or times execute, acknowledge and deliver to Landlord any and all instruments and certificates that in the judgment of Landlord may be necessary or proper to confirm or evidence such subordination. Notwithstanding the generality of the foregoing provisions of this Section 4.4, Tenant agrees that any such mortgagee, secured party or assignee shall have the right at any time to subordinate any such deeds of trust, mortgages, security agreements, lease assignments or other instruments of security to this Lease on such terms and subject to such conditions as they may deem appropriate in their discretion. Provided, however, so long as Tenant is not in default in the payment of rent or in the performance of any of the terms of the Lease, Tenant's possession of the Premises and Tenant's rights and privileges under the Lease or any renewal thereof shall not be diminished or interfered with by any aforesaid mortgagee, secured party or assignee. Landlord shall include such a non-disturbance clause in any instrument creating a lien on the Building, provided that the form thereof shall be satisfactory to the holder of such lien. Tenant hereby irrevocably appoints Landlord as attorney in fact for Tenant with full power and authority to execute and deliver in the name of Tenant any such instruments. Tenant agrees to pay all rent due hereunder directly to any aforesaid mortgagee, secured party or assignee, or as Tenant may be directed by the same, upon the receipt of notice from the same that Landlord is in default under their particular security instrument. Tenant agrees in the event it is requested by such mortgagee, secured party or assignee, or any proceedings are brought for the foreclosure or enforcement of any such security instrument, to attorn to the holder of the same and to recognize them as Landlord under this Lease. Tenant agrees to execute and deliver at any time and from time to time upon the request of Landlord any instrument, which may be necessary or appropriate in any such event to evidence such attornment. Tenant hereby irrevocably appoints Landlord and the holder of such security instrument, or any of them, the attorney in fact for Tenant with full power and authority to execute and deliver in the name of Tenant any such instrument. Tenant further waives the provisions of any statute or law now or hereafter in effect which may give or support to give Tenant any right to terminate or otherwise adversely affect this Lease in the event any such foreclosure proceeding is brought. Tenant and Landlord further agree that any agreement by either of them to pay any leasing commissions in regard to the Lease shall not be enforceable against any party other than the party entering into such agreement, and such agreement shall at all times be subordinate and inferior to the lien of any aforesaid security instrument.
|
AMENDMENT
|
is in writing and signed by Landlord and Tenant.
|
HOLDING OVER
|
4.6
Should Tenant or any of its successors in interest hold over the Premises or any part thereof after the expiration of the term of this Lease with Landlord’s consent, such holding over shall constitute and be construed as a tenancy from month to month only. In the event of a hold over without Landlord’s written consent, Tenant shall be deemed a tenant at sufferance and Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such hold over, including any claims made by any succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefrom. Tenant will pay as liquidated damages on the first day of each month during the holdover period an amount equal to one hundred twenty five percent (125%) of the rent paid or due to be paid during the last month of the term of this Lease. No receipt of money by Landlord from Tenant after termination of this Lease shall reinstate or extend this Lease or affect any prior notice given by Landlord to Tenant. Any extension of this Lease shall be in writing signed by Landlord and Tenant.
|
WAIVER OF
|
4.7
As part of the consideration for this Lease, Tenant hereby releases Landlord from all
|
LIABILITY
|
liability for damage to any property of Tenant located in or upon the Building which results from the negligence of Landlord to the extent any such loss or damage is covered by insurance maintained by Tenant. Also, as part of the consideration for this Lease, Landlord hereby releases Tenant from all liability for damage to any property of Landlord located in or upon the Building which results from the negligence of Tenant to the extent any such loss or damage is covered by insurance maintained by Landlord. Tenant and Landlord further covenant that any insurance maintained by either party shall contain an appropriate provision whereby the insurance company or companies consent to the foregoing mutual release of liability and so waive insurance subrogation rights to the extent of the agreement contained in this Section 4.7; provided that Landlord's release shall only be operative upon proof of insurance coverage and approval of said insurance by Landlord and its insurer.
|
COVENANTS TO RUN
|
4.8
All covenants, conditions, agreements, and undertakings in this Lease shall extend
|
TO HEIRS, ETC.
|
and inure to the benefit of Landlord and its successors and assigns, and to the heirs, executors, administrators, successors and assigns of Tenant the same as if they were in every case named and expressed; and except as herein otherwise provided, all said covenants, conditions and agreements shall be binding upon the successors and assigns, heirs, executors, and administrators of the respective parties.
|
DAMAGE BY FIRE OR
|
4.9
If any part of the Premises or a material portion of the building which affects
|
OTHER CASULATY
|
Tenant's occupancy is rendered untenantable by fire or other casualty, Landlord may elect (a) to terminate this Lease as of the date of the fire or casualty by notice to Tenant within sixty (60) days after the date, or (b) to repair, restore or rehabilitate the Building or the Premises at Landlord's expense (provided that Landlord’s obligation to repair or restore the Premises shall be limited to the extent of the insurance proceeds actually received by Landlord for the casualty in question), in which event this Lease shall not terminate but rent shall be pro-rated for that portion of the Premises that are untenantable and abated on a per diem basis for that portion of the Premises that is untenantable. If such damage is due to an act or omission of Tenant, then Landlord shall have such rights as are set forth herein at Tenant's cost and expense. If Landlord elects so to repair, restore, or rehabilitate the Building or the Premises, said work shall be undertaken and prosecuted with all due diligence and speed. In the event of termination of the lease pursuant to this Section 4.9, rent shall be apportioned on a per diem basis and paid to the date of the fire or casualty.
|
CONDEMNATION
|
4.10
If the land or the building, or any part thereof, or any interest therein, be taken by virtue of eminent domain or for any public or quasi-public use or purpose, Landlord shall have the right to terminate this Lease at the date of such taking or within six months thereafter by giving Tenant thirty (30) days' prior notice of the date of such termination. Any interest which Tenant may have or claim to have in any award resulting from any condemnation proceedings shall be limited solely to the unamortized value of any permanent improvements to the structure of the Building paid for directly by Tenant and that portion of any award if it includes compensation for furniture, equipment or relocation expenses. All other condemnation awards, including but not limited to any award made on the basis of the leasehold estate created by this Lease, shall be the sole and separate property of Landlord.
|
NOTICES
|
4.11
Any notice required or desired to be given in connection with this Lease shall be in writing and shall be: (1) mailed by first class, United States Mail, postage prepaid, certified, with return receipt requested, and addressed to the parties hereto at the address specified below; (2) hand delivered to the intended addressee; (3) sent by a nationally recognized overnight courier service; or (4) sent by facsimile transmission during normal business hours followed by a copy of such notice sent in another manner permitted hereunder. All notices shall be effective upon the earlier to occur of actual receipt, one (1) business day following deposit with a nationally recognized overnight courier service, or three (3) days following deposit in the United States mail. Such notices shall be sent to the persons at the addresses reflected below or any other persons or addresses designated in writing by any such person entitled to receive notice pursuant to the terms of this Lease:
|
EXHIBITS AND
|
4.12
Submission of the Lease for examination does not constitute a reservation of or
|
EFFECTIVE DATE
|
option for leasing the Premises. The Lease becomes effective only upon execution and delivery by both Landlord and Tenant and approval by Landlord's mortgagee where such approval is required. All exhibits and riders attached to this Lease and initialed by Landlord and Tenant are incorporated into and made a part of this Lease.
|
CAPTIONS
|
4.14
The captions used in this Lease are for convenience only and do not in any way limit or amplify the terms and provisions hereof.
|
OTHER AGREEMENTS
|
4.15
This Lease contains the entire agreement of the parties hereto with respect to the matters contained herein and no other representations, promises, or agreements, oral or otherwise, have been made between the parties.
|
|
|
|
|
|
|
Rentable
|
Annual
|
Monthly
|
Annual
|
Period
|
Square Feet
|
Base Rate
|
Amount
|
Total
|
Year 1
|
12,245
|
$14.00
|
$14,285.83
|
$171,429.96
|
Year 2
|
12,245
|
$14.28
|
$14,571.55
|
$174,858.60
|
Year 3
|
12,245
|
$14.57
|
$14,867.47
|
$178,409.64
|
Year 4
|
12,245
|
$14.86
|
$15,163.39
|
$181,960.68
|
Year 5
|
12,245
|
$15.16
|
$15,469.52
|
$185,634.24
|
ELECTRICAL METERING
|
4.17
Access to building standard electrical power is available. However, any additional or upgrades of electrical power, including but not limited to additional electrical circuits, installation of auxiliary HVAC, Uninterruptible Power Source/UPS, (the System), must be approved in writing by Landlord and paid for by Tenant. The System's power consumption may be determined by any means mutually determined by the parties to be reasonable, accurate and efficient, including metering, sub-metering, sample measurement or other means. The meter, its installation, metering, maintenance and associated utility costs with the System, shall be at the sole expense of Tenant.
|
FORCE MAJEURE
|
4.18
Other than for Tenant’s obligations under this Lease that can be performed by the payment of money (e.g., payment of Rent and maintenance of insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, terrorism, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party.
|
HAZARDOUS MATERIALS
|
4.19
Tenant shall not generate, use, treat, store, handle, release or dispose of, or permit the generation, use, treatment, storage, handling, release or disposal of Hazardous Materials (as defined by applicable law) on the Premises, or the Building, or transport or permit the transportation of Hazardous Materials to or from the Premises or the Building except for limited quantities of household cleaning products and office supplies used or stored at the Premises and required in connection with the routine operation and maintenance of the Premises, and in compliance with all applicable environmental laws.
|
PARKING
|
4.20
Prior to the Commencement Date and continuing through the Term,
Landlord shall secure thirty (30) parking spaces from the City of Little Rock in the River Market Parking Deck. Tenant shall lease the spaces back from Landlord at a cost of $65.00 per space per month plus any applicable tax. Tenant shall pay the cost for the parking along with their Rent. Notwithstanding anything to the contrary herein, in the event Landlord does not fulfill its obligations under this Section 4.20 Tenant may terminate this Lease without any further liability to Landlord upon thirty (30) days written notice. From time to time, Tenant may request additional spaces and if reasonably available, Landlord will secure such additional spaces for Tenant.
|
Landlord’s Representative:
|
Arkansas Democrat-Gazette, Inc.
c/o Moses Tucker Real Estate, Inc. |
Tenant’s Representative:
|
c/o Telephone: Telecopy: |
1.
|
Landlord shall provide all locks for doors in Tenant's leased area and no tenant shall alter any lock or install a new or additional bolt on any door for the Premises without prior written consent of Landlord.
|
2.
|
Landlord will provide and maintain in the lobby of the Building an alphabetical directory of the tenants and no other directory shall be permitted without previous consent in writing by Landlord.
|
3.
|
The Tenant shall not use the name of the Building, or any simulation or abbreviation thereof, or any name which, regardless of the spelling thereof, has the same or a similar sound as its name, or as part of its name without Landlord's prior written consent. Tenant may use the address of the Building as the address of its business but shall not use pictures of the Building without Landlord's prior written consent.
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4.
|
No signs will be allowed in any form on windows inside or out, and no signs will be permitted on exterior identification pylons, if any, or in the public corridors or on corridor doors or entrances to Tenant's space, except in uniform locations and uniform styles affixed by the Landlord. Landlord for Tenant will contract for all signs at the rate fixed by Landlord from time to time, and Tenant will be billed and will pay for such service.
|
5.
|
Tenant will refer all contractors, contractor's representatives and installation technicians rendering any service to Tenant to Landlord for Landlord's supervision, approval and control before performance of any contractual service. This provision shall apply to all work performed in the Building, including installation of telephones, telegraph equipment, electrical devices and attachments and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings and equipment or any other physical portion of the Building.
|
6.
|
Movement into or out of the Building of furniture, office equipment or other bulky materials, or movement through Building entrances or lobbies shall be restricted to hours designated by Landlord. All such movement shall be under supervision of Landlord or its agent and in the manner agreed upon in writing between Tenant and Landlord by prearrangement before performance. Such prearrangement initiated by Tenant shall include determination by Landlord, and subject to his decision and control, of the time, method, and routing of movement, limitations imposed by safety or other matters which may prohibit any article, equipment or other item from being brought into the Building. Tenant shall assume all risk for damage to articles moved, other property, and injury to persons or public regardless of whether they are engaged in such movement, including equipment, property and personnel of Landlord if damaged or injured as a result of acts in connection with such movement; and Landlord shall not be liable for acts of any person engaged in or damage or loss to any of said property or persons or otherwise resulting from any act in connection with such service performed for Tenant. Tenant hereby agrees to indemnify and hold Landlord harmless from and against any such damage, injury or loss, including attorney's fees.
|
7.
|
Tenant and its Tenant and its employees will present adequate identification when entering and/or leaving the Building on Saturday, Sunday, and holidays, and before or after normal working hours on other days.
|
8.
|
Landlord will not be responsible for lost or stolen property, equipment, money or jewelry from the Premises or public areas regardless of whether such loss occurs where the area is secured against entry.
|
9.
|
No portion of Premises or any other part of the Building shall at any time be used or occupied as sleeping or lodging quarters.
|
10.
|
No birds, animals or bicycles shall be brought into or kept in, about or on the Building except dogs used to assist physically impaired individuals.
|
11.
|
Tenant shall not place, install or operate on the Premises or in any part of the Building any engines, stove or machinery, or conduct mechanical operations or cook thereon or therein, or place or use in or about the premises any explosives, gasoline, kerosene, oil, acids, caustics or any other inflammable, explosive or hazardous materials without the prior written consent of the Landlord. Notwithstanding the foregoing Tenant is permitted to use microwave ovens in the Premises.
|
12.
|
None of the entries, passages, doors or hallways shall be blocked or obstructed, or any rubbish, litter, trash or material of any nature placed, emptied or thrown into these areas or such areas be used at anytime, except for access or egress by Tenant, tenant's agents, employees or invitees.
|
13.
|
Tenant and its employees, agents and invitees, shall observe and comply with the driving and the parking signs and markers surrounding the Building.
|
14.
|
Tenant shall not overload floors and Tenant must have Landlord's prior written consent as to size, maximum weight, routing and location of business machines, safes and heavy objects. All damage done to the Building by placing in or taking out any property of Tenant from the Building shall be repaired promptly at the expense of the Tenant.
|
15.
|
To insure orderly operation of the Building, no ice, minerals or other beverage, food, towels, newspapers, etc. shall be delivered to the Premises except by persons and at times approved by Landlord in writing.
|
16.
|
Toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than for which they were constructed, no foreign substance of any kind whatsoever shall be thrown therein, and Tenant shall bear the expense to repair any breakage, or stoppage on the Premises or otherwise caused by Tenant, its agent, employee or invitee
|
17.
|
Tenant shall not make any room canvass to solicit business from other Tenants in the Building and shall not exhibit, or sell or offer to sell, use, rent or exchange any item of service in or from the Premises unless ordinarily embraced within Tenant’s use of the Premises specified herein.
|
18.
|
No Tenant shall install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building without written consent of the Landlord.
|
19.
|
No Tenant, agent, employee, or invitee shall use a hand truck except those equipped by rubber tires and side guards. No other vehicle of any kind shall be brought into the Building or kept in or about the Premises.
|
20.
|
Each Tenant shall store all its trash and garbage within its Premises and mark and place excess trash near the front door at the end of each business day for removal by the janitorial personnel. No materials shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the City of Little Rock without being in violation of any law or ordinance governing such disposal. All garbage and refuse disposal shall be made only through entryways and elevators provided for such purposes and at such times as Landlord shall designate.
|
21.
|
Tenant shall not permit odors to emanate from the Premises nor allow any objectionable noise to emanate from the Premises. Tenant, its customers, invitees and guests shall not obstruct sidewalks, entrances, passages, courts, corridors, vestibules, halls, elevators and stairways in and about the Building. Tenant shall not place objects against glass partitions or doors or windows, which would be unsightly from the Building corridor or from the exterior of the Building and will promptly remove same upon notice from Landlord.
|
22.
|
Tenant shall not waste electricity, water or air conditioning and shall cooperate fully with Landlord to assure the most effective operation of the Building's heating and air conditioning and shall refrain from attempting to adjust any controls other than room thermostats installed for Tenant's use.
|
23.
|
Tenant shall keep corridor doors closed.
|
24.
|
Peddlers, solicitors and beggars shall be reported to the building management.
|
25.
|
No person or contractor not employed by Landlord shall be used to perform janitorial work, window washing, cleaning, decorating, repair or other work on the premises without express written consent of Landlord.
|
26.
|
Tenant shall comply with all applicable federal, state, and municipal laws, ordinances and regulations and shall not directly or indirectly make any use of the Premises which may be prohibited by the same or which may be dangerous to person or property or may increase the cost of insurance or require additional insurance coverage.
|
27.
|
Tenant shall not make any improvements, alterations, additions or installations in or to the Premises without Landlord's prior written consent. Landlord's decision to refuse such consent shall be conclusive. If Landlord consents to such improvements, alterations, additions or installations before commencement of the work or delivery of any materials onto the Premises or into the Building, Tenant shall furnish Landlord with plans and specifications, names and addresses of contractors, copies of contracts, necessary permits and licenses and indemnification in such form and amount as may be satisfactory to Landlord and waivers of lien against any and all claims, cost, expenses, damages and liabilities which may arise in connection with the work.
|
28.
|
Tenant hereby covenants and agrees not to place or permit to be placed any lien or liens on or against the Premises, the Building and the property. Further, Tenant does hereby waive, relinquish and disclaim any right or power to cause any lien to attach to the Landlord's interest in the Premises, the Building and the property, and Tenant does hereby agree to hold harmless, indemnify and defend Landlord from and against any such lien or liens.
|
29.
|
Landlord may waive any one or more of these rules and regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such rules and regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such rule and regulations against any or all of the tenants in the Building.
|
30.
|
Smoking is prohibited in all areas of the Building.
|
31.
|
Landlord reserves the right to make additional rules and regulations which in its judgment are needed for the safety, care and cleanliness of the Building, and the preservation of good order.
|
32.
|
The use of portable space heaters is strictly prohibited.
|
34.
|
The use of live (natural) seasonal greenery is strictly prohibited, including, but not limited to trees, garland, etc.
|
35.
|
The use, exhibition or concealment of handguns is strictly prohibited in the building. The only exceptions to the rule are those persons authorized by their job to be in possession of a firearm (i.e., police, etc.)
|
COMPANY INFORMATION
|
COMPANY: VERTRO, INC.
|
|||
|
Business Contact:
|
Legal Contact:
|
Technical Contact:
|
Name:
|
Don “Trey” Barrett III
|
John Pisaris
|
Rick Anderson
|
Title:
|
COO
|
General Counsel
|
CIO
|
Address, City, State,
Postal Code: |
1111 Main Street, Suite 201
Conway, AR 72032
|
1111 Main Street, Suite 201
Conway, AR 72032
|
1111 Main Street, Suite 201
Conway, AR 72032
|
Phone:
|
501-205-4965
|
501-205-8508 X224
|
501-205-1656
|
Email:
|
Trey.Barrett@inuvo.com
|
John.Pisaris@inuvo.com
|
Rick.Anderson@inuvo.com
|
|
TERM
|
TERM:
Starting on February 1, 2015 (“
Effective Date
”) and continuing through
January 31, 2017 (inclusive)
|
SEARCH SERVICES
|
WEBSEARCH SERVICE (“WS”)
|
Search Fees
|
***
|
***
|
ADVERTISING SERVICES
|
ADSENSE FOR SEARCH (“AFS”)
|
AFS Revenue Share Percentage
|
AFS Deduction Percentage
|
***
|
See Exhibit A
|
***
|
ADSENSE FOR CONTENT (“AFC”)
|
AFC Revenue Share Percentage
|
AFC Deduction Percentage
|
Sites approved for AFC: See Exhibit B
|
***
|
***
|
CURRENCY
|
AUD JPY
CAD KRW
EUR USD
GBP Other
|
2.
|
Launch, Implementation and Maintenance of Services.
|
10.
|
Payment.
|
Google
|
Company
|
By: /s/ Omid Kordestani
|
By: /s/ Don W. Barrett III
|
Print Name: Omid Kordestani
|
Print Name: Don W. Barrett III
|
Title: Authorized Signatory
|
Title: COO
|
Date: 2015.01.23
|
Date: 1/23/2015
|
1.
|
I have reviewed this annual report on Form 10-K of Inuvo, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of Inuvo, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.
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